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Bank of Baroda
Standing Tall in Tough Times
Performance Analysis: Q1, 2011-12 (FY12)
Dr Rupa Rege Nitsure
Chief Economist
July 27, 2011
Bank of Baroda: Key Strengths
Bank of Baroda is a 103 years old State-owned Bank with modern & contemporary personality, offering
banking products and services to Large industrial, SME, retail & agricultural customers across the
country.
Uninterrupted Record Overseas Business Modern & Contemporary
in Profit-making and Operations extend across Personality
Dividend Payment 25 countries
through 86 Offices
Strong Domestic
Pioneer in many Presence through
Customer-Centric 3, 409 Branches
Initiatives
Provides Financial
Services to over
First PSB to receive 40.5 mln Customers
Corporate Governance Globally
Rating (CGR-2)
Relatively Strong Presence
Robust Technology
A well-accepted & in Progressive States like
Gujarat & Maharashtra Platform with 100%
recognised Brand in
Indian banking industry CBS in Indian Branches
Domestic Branch Network
No. of Domestic Branches
3409
3500 31 06 •Bank’s network of domestic branches
2851 2927
3000 2735 as on 30th June, 2011 was 3,409 & no. of
ATMs were 1,657.
2500
•During Q1, FY12, the Bank opened
2000
45 new branches.
1500
•In FY12, the Bank plans to open 269
1000 branches in Tier-1 & Tier-2 centres and
253 branches in Tier-3 to Tier-6 centres.
500
•Also, 126 branches under the Branch
0
Jun'07 Jun'08 Jun'09 Jun'10 Jun'11
Expansion Plan of FY11 are yet to be
opened.
•Newly opened branches in Q1, FY12
Regional Break-up of
are mainly in Maharashtra followed by
Domestic Branches as on 30th June, 2011 Gujarat, M.P. & A.P.
Metro Urban Semi- Rural •Around 34.4% of the Bank’s network
Urban at the end-June, FY12 was situated in
756 639 842 1,172 rural areas.
Robust Technology Platform
•As on 30th June 2011, the Bank’s entire domestic, overseas and RRBs [i.e., five sponsored
RRBs] related operations were on the CBS platform.
•Even the branches of Memon Co-op. Bk. Ltd. taken over by the Bank in April’11 are
successfully migrated to the CBS platform.
•Bank has developed IT facilities for online/offline account opening through Business
Correspondents under Financial Inclusion.
• Bank’s retail & corporate customers enjoy several facilities under its Internet Banking
delivery channel such as fund transfers to self & third party (within BoB); online payment
of bills & taxes, rail-ticket booking, temple donations, online subscription to IPOs/FPOs
thru’ ASBA & institutional fee payment.
•Bank has implemented Internet Banking in several of its overseas territories & a Special
Fund Mgmt Solution in UAE & New Zealand.
•Bank has built a State-of-the-Art Data Centre conforming to Uptime Institute Tier-3
standard & a Disaster Recovery Site in different seismic zones to ensure uninterrupted
banking services delivery to customers.
• Bank’s Mobile Banking (Baroda M-Connect) provides various facilities to its customers
like balance-enquiry, mini-statements, linking of multiple accounts, funds’ transfer, bill
payments, ticket booking, shopping, feedback facilities, etc.
•Anti Money Laundering (AML) has been implemented in India and 20 overseas
territories.
Robust Technology Platform
•Bank has successfully implemented an Integrated Global Treasury Solution in its major
territories like U.K., UAE, Bahamas, Bahrain, Hong Kong, Singapore, Belgium, USA and
India to achieve reduced cost of operations & better fund mgmt.
•Enterprise-wide General Ledger (EWGL) has been successfully implemented for the
Bank’s domestic and overseas business.
•Bank has introduced the facility of Multiple Accounts being linked to a single Debit Card
(verified by Visa, CVV2) and also Mobile Number registration thru’ ATMs in CBS for SMS
Alerts.
•E-tax payments thru’ ATMs are also facilitated and Mobile ATMs are introduced in
Ahmedabad, Pune, Lucknow & New Delhi.
•Back Office functions have been centralised in the Bank at City Back Offices & five
Regional Back Offices ( at Baroda, Jaipur, Lucknow, Bhopal & Coimbtore) to improve the
delivery of services.
•On a pilot basis, Automated Cheque Processing Centre (Inward & Outward) has been set
up in Mumbai.
•BoB IIT – an exclusive IT Training Centre has been set up in Ghandhinagar to educate the
Bank’s staff in all IT related products & services.
Concentration (%): Domestic Branch Network
Rest of India, 22.23 Gujarat, 21.77
Maharashtra, 11.64
UP & Uttaranchal,
22.06
South, 11.01 Rajasthan, 11.29
Pattern of Shareholding: 30th June, 2011
As on 30th June, 2011
Corp.
Indian
Bodies •Share Capital: Rs 392.81 crore
Public
4.8% Others
5.2% •No. of Shares: 391.55 million
0.3%
FIIs
• Net worth: Rs 20,785.30 crore
16.6% • B. V. per share: Rs 530.85
•Return on Equity: 19.88%
Insurance • BOB is a Part of the following Indexes
Cos Govt. of BSE 100, BSE 200, BSE 500 & Bankex
7.4% India
57.0% Nifty Junior, BankNifty, CNX 100, CNX 500
Mutual
Funds • BOB’s Share is listed on BSE and NSE in
8.7% ‘Future and Options’ segment also.
Comparative Performance of BoB Stock: Jun’10 to Jun’11
Value Value
Index/Stock
(30th June’10) (30th June’11) % Change
Sensex 17,700.90 18,845.87 6.5%
Nifty 5,312.50 5,647.40 6.3%
Bankex 10,765.03 12,821.05 19.1%
BankNifty 9,464.60 11,244.65 18.8%
BoB-BSE 701.95 871.90 24.2%
BoB-NSE 701.85 870.80 24.1%
India’s Macro Health: Q1, FY11 to Q1, FY12
Economic Indicator Q1, FY11 Q2, FY11 Q3, FY11 Q4, FY11 Q1, FY12
Real GDP growth (%) 8.8 8.9 8.2 7.8 NA
Agriculture (%) 2.8 4.4 8.9 7.5 NA
Industry (%) 11.4 9.0 5.7 5.3 NA
Services (%) 9.4 9.7 8.7 8.6 NA
Private Consumption Expenditure 26.5 19.5 18.4 17.0 NA
growth (%) (at current market
prices)
Gross Fixed Capital Formation (% 29.8 32.4 27.3 29.6 NA
to GDP) (at current market prices)
SCB Credit growth (%, y-o-y) 21.7 19.0 24.4 21.4 19.9
SCB Deposit growth (%, y-o-y) 14.9 14.3 16.5 15.8 18.4
SCB Incremental Credit-Deposit 100.85 93.02 105.13 97.50 79.61
Ratio (%)
WPI-Inflation (%) 10.6 9.3 8.9 9.6 9.4
(end-period)
Trade Balance ( US $ Billion) -32.2 -35.1 -21.3 -21.7 -31.6
Rupee-USD (%, end-period) 46.60 44.92 44.81 44.65 44.72
Foreign Exchange Reserves (end- 278.27 294.16 297.33 305.49 315.72
period, US $ Billion)
Quick Economic Observations
•Tempo of global economic recovery has slowed down on account of various factors like
elevated prices of crude oil & other commodities, political tensions in Middle East,
earthquake & tsunami in Japan, sovereign debt problems of Europe and fiscal fragility of
the U.S., etc.
•Chronically high inflation pressures have started impacting adversely the investment
sentiment and industrial production growth in India as well
•Higher interest rates on term deposits have improved the pace of deposit mobilisation
and reduced the gap between deposit and credit growth
•While bank credit growth has decelerated to some extent, it is still above the indicative
target of the RBI and has not shown a seasonal slack.
•Rupee-USD Exchange Rate has shown a two-way movement
•Equity markets remained sluggish, private placement market for bonds too was lack-
lustre during Q1, FY12
•Investments in physical assets improved & non-bank finance to commercial sector
remained healthy
•Notwithstanding the partial signs of growth slowdown, the RBI has warned of
inflationary risks and hence continuation of the anti-inflationary stance with a close watch
on new information
Bank’s Business Growth (Y-O-Y): Jun’06 to Jun’11
Growth: Total Deposits (%) Growth: Total Advances (%)
42.1
28.2 45.0
26.5 28.23 37.5
30.0 40.0 30.7
20.1 22.7 22.88 35.0
25.0 27.5 27.7
30.0 25.2
20.0 25.0
15.0 20.0
15.0
10.0
10.0
5.0 5.0
0.0 0.0
Jun'06
Jun'07
Jun'08
Jun'09
Jun'10
Jun'11
Jun'06
Jun'07
Jun'08
Jun'09
Jun'10
Growth: Total Business (%) Jun'11
Domestic CASA Growth (%)
32.6
35.0 29.3
28.0 27.5
26.2
30.0 23.9 30.0 25.0
24.6
25.0 25.0 18.8
20.3
16.1
20.0 20.0
15.0 15.0 11.1
10.0 10.0
5.0 5.0
0.0 0.0
Jun'06
Jun'07
Jun'08
Jun'09
Jun'10
Jun'11
Jun'06
Jun'07
Jun'08
Jun'09
Jun'10
Jun'11
Bank’s Profitability: Jun’06 to Jun’11
2000.00
Rs crore
1818.27
1800.00 •During the last five years, the Bank’s First Quarter
Net Profit has grown at the robust CAGR of 44.6% .
1600.00
1527.87
1400.00
1200.00
1032.86
1009.94
1000.00
859.16
800.19
800.00 685.38
644.45
600.00 503.53
370.86
400.00 330.83
163.33
200.00
0.00
Jun'06 Jun'07 Jun'08 Jun'09 Jun'10 Jun'11
Gross Profit Net Profit
Bank’s Asset Quality: Jun’06 to Jun’11
%
4 2
%
1.8
3.5
1.6
3 2.78
1.4
2.5
1.2
1.86
2 1 Gross NPA
1.44 1.41
1.46 Net NPA
0.92 0.8
1.5
0.67
0.6
1
0.52
0.44 0.4
0.5 0.39
0.27 0.2
0 0
Jun'06 Jun'07 Jun'08 Jun'09 Jun'10 Jun'11
Bank’s Business Performance: Jun’10 to Jun’11
Change
Particular Y-O-Y
Jun’10 Mar’11 Jun’11 Over
(Rs crore) (%)
Mar’11 (%)
Global Business 4,40,262 5,34,116 5,45,283 23.9 2.1
Domestic Business 3,31,878 4,02,731 4,05,156 22.1 0.6
Overseas Business 1,08,384 1,31,385 1,40,127 29.3 6.7
Global Deposits 2,54,668 3,05,439 3,12,943 22.9 2.5
Domestic Deposits 1,96,166 2,33,323 2,36,536 20.6 1.4
Overseas Deposits 58,502 72,116 76,407 30.6 6.0
Global CASA Deposits 74,784 87,589 87,221 16.6 -0.4
Domestic CASA 69,114 80,181 80,225 16.1 0.05
Overseas CASA 5,670 7,407 6,996 23.4 -5.5
•Share of Domestic CASA was at 33.92% in terms of Aggregate Deposits and at 35.90% in terms of
Core Deposits as on 30th June, 2011.
Bank’s Business Performance: Jun’10 to Jun’11
Change
Particular Y-O-Y
Jun’10 Mar’11 Jun’11 Over
(Rs crore) (%)
Mar’11 (%)
Global advances (Net) 1,85,595 2,28,676 2,32,340 25.2 1.6
Domestic Advances 1,35,712 1,69,408 1,68,621 24.3 -0.5
Overseas Advances 49,882 59,269 63,719 27.7 7.5
Retail Credit
24,994 32,435 30,934 23.8 -4.6
Of which:
Home Loans 10,779 12,539 12,910 19.8 3.0
SME Credit 21,593 27,365 28,367 31.4 3.7%
Farm Credit* 20,475 24,529 23,211 13.4 -5.4%
Credit to Weaker Sections*
11,012 13,245 13,248 20.3 0.02%
* As of Last Reporting Friday
Bank’s Business Performance: Jun’10 to Jun’11
Change
Particular Y-O-Y
Jun’10 Mar’11 Jun’11 Over
(Rs crore) (%)
Dec’10 (%)
Global Saving Deposits 56,061 64,454 65,654 17.1 1.8
Domestic Savings Deposits 54,769 62,959 64,162 17.2 1.9
Overseas Savings Deposits 1,292 1,495 1,491 15.4 -0.3
Global Current Deposits 18,723 23,135 21,567 15.2 -6.8
Domestic Current Deposits 14,345 17,222 16,063 12.0 -6.7
Overseas Current Deposits
4,378 5,912 5,505 25.7 -6.9
Bank’s Profits & NII: Apr-Jun, FY11 & FY12
Particular Y-O-Y
Apr-Jun’10 Apr-Jun’11
(Rs crore) (%)
Gross Profit 1,527.87 1,831.28 19.9
Net Profit 859.16 1,032.85 20.2
Net Interest Income
1,857.99 2,297.19 23.6
Other Highlights: Q1,FY11 to Q1,FY12
Particular (in %) Q1, Q2, Q3, Q4, Q1,
FY11 FY11 FY11 FY11 FY12
Global Cost of Deposits 4.39 4.50 4.53 4.79 5.36
Domestic Cost of Deposits 5.09 5.27 5.27 5.63 6.41
Overseas Cost of Deposits 1.95 2.02 1.94 1.83 1.80
Global Yield on Advances 8.17 8.40 8.58 8.74 9.11
Domestic Yield on Advances 9.79 10.17 10.34 10.65 11.23
Overseas Yield on Advances 3.67 3.75 3.70 3.54 3.38
Other Highlights: Q1, FY11 to Q1,FY12
Particular (in %) Q1, Q2, Q3, Q4, Q1,
FY11 FY11 FY11 FY11 FY12
Global Yield on Investment 6.66 7.06 7.39 7.45 7.47
Domestic Yield on Investment 6.83 7.24 7.56 7.60 7.59
Overseas Yield on Investment 3.71 3.71 3.85 4.34 4.86
Global NIM 2.90 3.02 3.20 3.45 2.87
Domestic NIM 3.43 3.62 3.82 4.16 3.39
Overseas NIM 1.31 1.33 1.40 1.41 1.37
Key Financial Ratios : Q1, FY12 versus Q1, FY11
Return on Average Assets at 1.13% [ 1.19% in Q1, FY11]
Earning per Share at Rs 105.52 [Rs 94.36 in Q1, FY11]
Book Value per Share at Rs 530.85 [Rs 402.08 in Q1, FY11]
Return on Equity (ROE) at 19.88% [ 23.46% in Q1, FY11]
Capital Adequacy Ratio at 13.10% with Tier I Capital at 9.06%
• Cost-Income Ratio at 38.11% [ 38.27% in Q1, FY11]
Gross NPA ratio at 1.46% -- is one of the lowest for large-sized banks in India
Net NPA ratio too low at 0.44%
NPA Coverage at the healthy level of 82.52% (including the technical write-offs)
Incremental Delinquency Ratio contained at 0.25% for Q1, FY12; This means 1.0% in
annualised terms – the best level by the international standards.
Key Productivity Indicators Q1, FY12 versus Q1, FY11
Q1, FY11 Q1, FY12
Business per Employee (Rs crore) 10.57 12.65
Business per Branch (Rs crore) 129.07 146.97
Profit per Employee (Rs lakh) 2.23 2.57
Profit per Branch (Rs lakh) 27.22 29.83
Non-Interest Income: Q1, FY11 and Q1, FY12
% Change
(Rs crore) Q1, FY11 Q1, FY12 (Y-O-Y)
Commission, Exchange,
201.54 274.77 36.3
Brokerage
Incidental Charges 77.14 79.55 3.1
Other Miscellaneous Income 32.89 43.76 33.0
Total Fee-Based Income 311.57 398.08 27.8
Trading Gains 127.94 74.02 -42.4
Profit on Exchange Transactions 121.61 140.01 15.1
Recovery from PWO 56.12 28.76 -48.7
Total Non-Interest Income 617.25 640.87 3.8
Provisions & Contingencies: Q1, FY11 and Q1, FY12
(Rs crore) Q1, FY11 Q1, FY12 Absolute
Change
Provision for NPA & Bad Debts
277.54 131.95 -146
Written-off
Provision for Depreciation on
-58.91 138.54 +197
Investment
Provision for Standard Advances 28.81 112.94 +84
Other Provisions (including
3.89 7.62 +4
Provision for staff welfare)
Tax Provisions 417.38 394.37 -23
Total Provisions 668.71 785.42 +117
Bank’s Treasury Highlights: Q1, FY12
• Treasury Income stood at the level of Rs 214.02 crore in Q1, FY12
• Out of this, Trading Gains Stood at Rs 74.01 crore in Q1, FY12 despite the
hardening of 31 bps in the benchmark yields on GoI paper & lack-lustre equity
markets.
• As of June 30, 2011, the share of SLR Securities in Total Investment was 87.95%
• The Bank had 84.5% of SLR Securities in HTM and 14.8% in AFS at end-June
2011.
• The per cent of SLR to NDTL as on 30th June, 2011 was 25.96%.
• While the modified duration of AFS investments is 2.50 years; that of HTM
securities is 4.90 years.
• Total size of Bank’s Domestic Investment Book as on 30th June, 2011 stood at Rs
79,818 crore.
• Total size of Bank’s Overseas Investment Book as on 30th June, 2011 stood at Rs
3,084 crore.
Overseas Business: Q1, FY12
• As on 30th June, 2011, the “Overseas Business” contributed 25.7% to the Bank’s
Total Business, 19.4% to its Gross Profit and 35.5% to its Core Fee income.
• While the Cost-Income Ratio for Domestic Operations stood at 41.53% in Q1,
FY12, it was more favourable at 18.31% for the Bank’s Overseas Operations.
• While the Gross NPA (%) in Domestic Operations stood at 1.77% at end-June,
2011, that for Overseas Operations was lower at 0.62%.
• The Gross Profit to Avg. Working Funds (%) for Overseas Operations stood at
1.40% in Q1, FY11 and at 1.49% in Q1, FY12.
• NIM as % of Interest Earnings Assets in Overseas Operations improved from
1.31% in Q1, FY11 to 1.37% in Q1, FY12.
• Return on Equity in Overseas Operations too improved from 17.55% in Q1, FY11
to 21.44% in Q1, FY12.
NPA Movement (Gross): Q1, FY12
Particular ( Rs crore)
A. Opening Balance 3,152.50
B. Additions during Q1, FY12 584.82
Out of which, Fresh Slippages 566.19
C. Reduction during Q1, FY12 311.86
Recovery 125.47
Upgradation 71.48
PWO & WO 114.91
Exchange Difference 0.00
NPA as on 30th June, 2011 3,425.46
Recovery in PWO in Q1, FY12 28.76
Sector-wise Gross NPAs: Q1, FY12 versus Q1, FY11
Sector Gross NPA (%) Gross NPA (%)
Q1, FY11 Q1, FY12
Agriculture
3.43 4.10
Large & Medium
1.69 1.80
Industries
Retail
2.41 2.11
Housing
2.41 1.96
SSI (Mfg)
1.73 1.50
Total MSME
2.91 2.50
Overseas Operations
0.54 0.62
Cumulative Position of Restructured Assets (Domestic)
• During the past 39 months (1 Apr’08 to 30 June’11), the Bank has restructured
74,050 accounts amounting Rs 7,166.28 crore.
• Within this, the loans worth Rs 454.85 crore were restructured in Q1, FY12; Rs
1,597.81 crore were restructured in FY11, Rs 2,455.05 crore in FY10 & Rs 2,658.57
crore in FY09.
• For the period of 39 months, out of the total amount restructured, Rs 4,089.13
crore (57.1%) belonged to wholesale banking, Rs 1,710.88 crore (23.9%) to SMEs,
Rs 583.83 crore (8.1%) to retail and Rs 782.44 crore (10.9%) to agriculture sector.
• About 71 accounts (of Rs 1 crore & above) restructured on/after 1st Apr, 2008 with
aggregate outstanding of Rs 897.88 crore slipped to NPA after restructuring and
most of them belonged to the SME segment.
• Industry-wise break-up shows that the Bank’s restructured accounts are well
spread over different sectors, the major ones being iron & steel, cotton textiles,
engineering, infrastructure, real estate, etc.
• The Bank has primarily helped genuine borrowers who suffered from temporary
cash flow problems due to the global crisis. These accounts are restructured
looking into the internal strength and the financial viability of such borrowers.
Sectoral Deployment of Credit at end-June, 2011
Sector % share in Gross
Domestic Credit
Agriculture 13.6
Retail 18.1
SME 16.6
Wholesale 37.4
Misc. including 14.3
Trade
Total 100.0%
Bank’s BPR Project - Navnirmaan
•Project Navnirmaan has altogether 18 activities covering both BPR & Organisational
Restructuring, aimed at transforming the Bank’s branches into a sales & service centres to
make possible a sustained sales growth, superior customer experience and alternate channel
migration.
•The most important initiatives were
•Conversion of all metro & urban branches into Baroda Next branches within a
timeline [310 branches rolled out so far across five zones & 22 regions]
•Creation of automated & leaner Back Offices like:
•City Back Office (Automated cheque processing introduced in Mumbai on 17 Jan,
2011)
•Regional Back Office [five more offices are being opened coupled with technology
changes for faster account opening].
•Establishment of two Call Centres
•Introduction of frontline automation at select branches for customer convenience
•Creation of an Academy of excellence
•Organisational Restructuring
• The initial impact of Baroda Next migration has been found to be rewarding both in terms
of increased customer satisfaction and CASA growth.
•The said impact has been sustained at 110 Baroda Next branches recently evaluated on (a)
sales and (b) customer satisfaction.
Bank’s HR Initiatives
•Recruitment during FY11 [Exercise Concluded]
•Probationary Officers – 1,200
•Specialist Officers (in various specialised disciplines) – 319
•Clerks – 2,000
•Campus Recruitment – 608
•(Bank visited nearly 102 institutes including some of the premier Business schools of the
country)
•Recruitment proposed in FY12
•Probationary Officers – 1,200
•Campus Recruitment – around 600 [Currently in the process of joining]
•Specialist officers (in various disciplines) – 200
•Clerks – 2,000
•New Hires Planned for Recruitment in FY12: 4,000
•Bank introduced a massive Leadership Development Programme in Aug’10 under which 700
Senior Executives (AGMs/DGMs] have been rigorously trained so far.
•Bank proposes to inaugurate Baroda-Manipal School of Banking in August’10 to create the future
stream of professionally trained bankers for itself
Thank you.
