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
in Profit-making and
Dividend Payment
Overseas Business
Operations extend across
25 countries
through 86 Offices
Strong Domestic
Presence through
3, 409 Branches
Pioneer in many
Customer-Centric
Initiatives
Provides Financial
Services to over
40.5 mln Customers
Globally
First PSB to receive
Corporate Governance
Rating (CGR-2)
A well-accepted &
recognised Brand in
Indian banking industry
Modern & Contemporary
Personality
Relatively Strong Presence
in Progressive States like
Gujarat & Maharashtra
Robust Technology
Platform with 100%
CBS in Indian Branches
Domestic Branch Network
No. of Domestic Branches
3409
3500
•Bank’s network of domestic branches
as on 30th June, 2011 was 3,409 & no. of
ATMs were 1,657.
31 06
2735
3000
2851
2927
2500
•During Q1, FY12, the Bank opened
45 new branches.
2000
•In FY12, the Bank plans to open 269
branches in Tier-1 & Tier-2 centres and
253 branches in Tier-3 to Tier-6 centres.
1500
1000
500
0
Jun'07
Jun'08
Jun'09
Jun'10
Jun'11
Regional Break-up of
Domestic Branches as on 30th June, 2011
Metro
Urban
SemiUrban
Rural
756
639
842
1,172
•Also, 126 branches under the Branch
Expansion Plan of FY11 are yet to be
opened.
•Newly opened branches in Q1, FY12
are mainly in Maharashtra followed by
Gujarat, M.P. & A.P.
•Around 34.4% of the Bank’s network
at the end-June, FY12 was situated in
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
Indian
Public
5.2%
Corp.
Bodies
4.8%
Others
0.3%
FIIs
16.6%
•Share Capital:
Rs 392.81 crore
•No. of Shares:
391.55 million
• Net worth:
Rs 20,785.30 crore
• B. V. per share:
Rs 530.85
•Return on Equity: 19.88%
• BOB is a Part of the following Indexes
Insurance
Cos
7.4%
Mutual
Funds
8.7%
Govt. of
India
57.0%
BSE 100, BSE 200, BSE 500 & Bankex
Nifty Junior, BankNifty, CNX 100, CNX 500
• BOB’s Share is listed on BSE and NSE in
‘Future and Options’ segment also.
Comparative Performance of BoB Stock: Jun’10 to Jun’11
Value
(30th June’10)
Value
(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%
Index/Stock
India’s Macro Health: Q1, FY11 to Q1, FY12
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
growth (%) (at current market
prices)
26.5
19.5
18.4
17.0
NA
Gross Fixed Capital Formation (%
to GDP) (at current market prices)
29.8
32.4
27.3
29.6
NA
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
100.85
93.02
105.13
97.50
79.61
WPI-Inflation (%)
(end-period)
10.6
9.3
8.9
9.6
9.4
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 (endperiod, US $ Billion)
278.27
294.16
297.33
305.49
315.72
Economic Indicator
SCB Incremental Credit-Deposit
Ratio (%)
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 lacklustre 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 Advances (%)
Growth: Total Deposits (%)
26.5
30.0
45.0
28.23
40.0
22.88
22.7
42.1
37.5
35.0
20.0
27.5
27.7
25.2
25.0
20.0
15.0
15.0
10.0
Growth: Total Business (%)
5.0
5.0
0.0
0.0
18.8
Jun'11
Jun'10
16.1
11.1
Jun'11
10.0
20.3
Jun'10
10.0
Jun'11
15.0
Jun'10
15.0
Jun'09
20.0
Jun'08
20.0
Jun'07
25.0
27.5
25.0
Jun'09
24.6
30.0
Jun'08
23.9
25.0
Jun'06
Jun'09
29.3
Jun'07
28.0
26.2
Domestic CASA Growth (%)
Jun'06
32.6
35.0
Jun'08
Jun'11
Jun'10
Jun'09
Jun'08
0.0
Jun'07
0.0
Jun'06
5.0
Jun'07
10.0
5.0
30.0
30.7
30.0
Jun'06
25.0
20.1
28.2
Bank’s Profitability: Jun’06 to Jun’11
2000.00
Rs crore
1800.00
1818.27
•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
400.00
370.86
330.83
163.33
200.00
0.00
Jun'06
Jun'07
Gross Profit
Jun'08
Jun'09
Jun'10
Net Profit
Jun'11
%
4
%
Bank’s Asset Quality: Jun’06 to Jun’11
2
1.8
3.5
1.6
2.78
3
1.4
2.5
1.2
1.86
2
1
1.44
1.5
1.41
0.92
1.46
0.67
1
0.8
0.6
0.52
0.44
0.5
0.27
0.4
0.39
0.2
0
0
Jun'06
Jun'07
Jun'08
Jun'09
Jun'10
Jun'11
Gross NPA
Net NPA
Bank’s Business Performance: Jun’10 to Jun’11
Particular
(Rs crore)
Change
Over
Mar’11 (%)
Jun’10
Mar’11
Jun’11
Y-O-Y
(%)
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
Particular
(Rs crore)
Change
Over
Mar’11 (%)
Jun’10
Mar’11
Jun’11
Y-O-Y
(%)
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
Of which:
24,994
32,435
30,934
23.8
-4.6
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%
11,012
13,245
13,248
20.3
0.02%
Home Loans
Credit to Weaker Sections*
* As of Last Reporting Friday
Bank’s Business Performance: Jun’10 to Jun’11
Jun’11
Y-O-Y
(%)
Change
Over
Dec’10 (%)
64,454
65,654
17.1
1.8
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
4,378
5,912
5,505
25.7
-6.9
Particular
(Rs crore)
Jun’10
Mar’11
Global Saving Deposits
56,061
Domestic Savings Deposits
Overseas Current Deposits
Bank’s Profits & NII: Apr-Jun, FY11 & FY12
Particular
(Rs crore)
Gross Profit
Net Profit
Net Interest Income
Apr-Jun’10
Apr-Jun’11
Y-O-Y
(%)
1,527.87
1,831.28
19.9
859.16
1,032.85
20.2
1,857.99
2,297.19
23.6
Other Highlights: Q1,FY11 to Q1,FY12
Particular (in %)
Q1,
FY11
Q2,
FY11
Q3,
FY11
Q4,
FY11
Q1,
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,
FY11
Q2,
FY11
Q3,
FY11
Q4,
FY11
Q1,
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
Q1, FY11
Q1, FY12
% Change
(Y-O-Y)
Commission, Exchange,
Brokerage
201.54
274.77
36.3
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
(Rs crore)
Provisions & Contingencies: Q1, FY11 and Q1, FY12
(Rs crore)
Q1, FY11
Q1, FY12
Absolute
Change
Provision for NPA & Bad Debts
Written-off
277.54
131.95
-146
Provision for Depreciation on
Investment
-58.91
138.54
+197
Provision for Standard Advances
28.81
112.94
+84
Other Provisions (including
Provision for staff welfare)
3.89
7.62
+4
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
A. Opening Balance
( Rs crore)
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
NPA as on 30th June, 2011
Recovery in PWO in Q1, FY12
0.00
3,425.46
28.76
Sector-wise Gross NPAs: Q1, FY12 versus Q1, FY11
Sector
Agriculture
Large & Medium
Industries
Retail
Housing
SSI (Mfg)
Total MSME
Overseas Operations
Gross NPA (%)
Q1, FY11
Gross NPA (%)
Q1, FY12
3.43
4.10
1.69
1.80
2.41
2.11
2.41
1.96
1.73
1.50
2.91
2.50
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
Trade
14.3
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.