Bank of Baroda -- Bank of Baroda -- Riding High on Riding High on Sustainable PerformanceSustainable Performance ( Apr-Mar & Q4, 2009-10)( Apr-Mar & Q4, 2009-10)

Dr Rupa Rege NitsureDr Rupa Rege NitsureChief EconomistChief EconomistApril 28, 2010April 28, 2010

Bank of Baroda: Key StrengthsBank of Baroda: Key Strengths Bank of Baroda is a 101 years old State-owned Bank with modern and

contemporary personality, offering banking products and services to industrial and commercial, retail and agricultural customers across the country.

Relatively Strong Presence In Progressive States like

Maharashtra & Gujarat

Uninterrupted Record in Profit-making and

Dividend Payment

Overseas Business Operations extend across

25 countries through 78 Offices

First PSB to receiveCorporate Governance

Rating (CAGR-2)

All Domestic OperationsCovered under

the CBS

Pioneer in many Customer-Centric

Initiatives

Strong Domestic Presence through

3, 100 branches

Modern & ContemporaryPersonality

Provides Financial Services to over

36 million customers globally

A well-accepted & recognised Brand in

Indian banking industry

Domestic Branch NetworkDomestic Branch Network

2732

2853

2926

3100

2500

2600

2700

2800

2900

3000

3100

FY07 FY08 FY09 FY10

No. of Domestic Branches

Regional Break-up of Domestic Branches as on 31st

Mar, 2010

Metro Urban Semi-Urban

Rural

673 580 721 1,126

•Bank’s network of domestic branches as on 31st Mar, 2010 was 3,100 & no. of ATMs were 1,315.

•During FY10, Bank opened 178 new branches & merged four existing branches.

•Around 36.3% of the Bank’s branch network is located in rural areas.

•New branches are primarily opened in Semi-Urban, Urban & Metro areas from U.P., Gujarat, Maharashtra, Rajasthan, A.P., Tamilnadu, Uttaranchal, etc.

•Bank proposes to open around 400 more branches during FY10.

Robust Technology PlatformRobust Technology Platform

•Bank achieved 100.0% CBS implementation in its domestic operations in September, 2009.

•As on date, 94.0% of its overseas business is covered under the CBS.

•All CBS branches are enabled for inter bank remittances through RTGS and NEFT.

•Bank’s Retail & Corporate Customers enjoy several facilities like internet banking, phone banking, rapid funds2india – an online money transfer service, e-tax payment, NEFT/RTGS thru’ e-banking, sms alerts, cash mgmt services, online institutional trading, etc.

•As on 31st Mar, 2010, Bank had 1,315 ATMs – 841 Onsite ATMs & 474 Offsite ATMs.

• An Integrated Global Treasury Solution is implemented in UK, UAE, Bahamas, Baharain, Hong Kong & India.

•AML System has been implemented in India & 14 overseas territories.

• Bank has created an Online Centralised-Database of its employees, which enables speedy decision-making, promotions, selection, etc. through automated processes.

• Payment Messaging Solution has been implemented in 13 overseas territories & all B category branches in India.

•A module for School Fee Collection has been implemented.

•Debit cards are now CVX2 enabled for online payment & 3D Secure (3DS) has been implemented.

•Enterprise wide GL has been implemented in India & 19 overseas territories, providing integrated GL on a press of a button.

•All Back-Office functions have now been effectively centralised in Bank of Baroda.

Concentration (%): Domestic Branch Concentration (%): Domestic Branch NetworkNetwork

Rest of India, 21.42

UP & Uttaranchal, 21.96

South, 11Rajasthan, 11.81

Maharashtra, 11.29

Gujarat, 22.52

Pattern of Shareholding: 31Pattern of Shareholding: 31stst Mar, 2010 Mar, 2010

FIIs17.1%

Corp. Bodies4.9%

Indian Public6.0%

Others0.1%

Mutual Funds9.1%

Insurance Cos9.1%

Govt. of India53.8%

• BOB is a Part of the following Indexes

BSE 100, BSE 200 and BSE 500

Nifty Junior and Bankex.

• BOB’s Share is listed on BSE and NSE in ‘Future and Options’ segment also.

As on 31st Mar, 2010

• Share Capital Rs 365.53 crore

•No. of Shares 364.27 million

• Net worth Rs 13,785.14 crore

• B. V. per share Rs 378.40

•Return on Equity (annualised): 22.19%

Comparative Performance of BoB Stock: FY10

Index/StockValue(31st

Mar’09)

Value(31st

Mar’10)% Change

Sensex 9,708.50 17,527.77 80.5%

Nifty 3,020.95 5,249.10 73.8%

Bankex 4,490.97 10,652.35 137.2%

BankNifty 4,133.20 9,459.60 128.9%

BoB-BSEBoB-BSE 234.55234.55 639.25639.25 172.5%172.5%

BoB-NSEBoB-NSE 234.35234.35 639.05639.05 172.7%172.7%

Indian Macro Scene Quite Mixed in FY10

IIP Growth (%)

15.1

16.717.6

1.12.1

8.3

7.2

10.6

9.3

10.212

02468

101214161820

Apr'0

9

May

'09

Jun'09

Jul'0

9

Aug'0

9

Sep'09

Oct

'09

Nov'0

9

Dec'09

Jan'10

Feb'10

WPI (%)

9.899.9

8.56

7.31

5.55

1.460.46

-0.17-0.67-1.01

1.38

1.31

-2

0

2

4

6

8

10

12

Apr

'09

Jun'

09

Aug

'09

Oct

'09

Dec

'09

Feb

'10

Bank Credit Growth (%)

12.2

15.114.8

16.7

109.5

12.614.1

15.815.115.9

18

02468

101214161820

Rs/USD- Exchange Rate

46.53 46.17 46.08

44.9

46.5146.95

48.148.8247.9447.9

47.07

50.08

42434445464748495051

Indian Macro Scene Quite Mixed in FY10

•Indian economy passed through many “pluses” and “minuses” in FY10

•A worst drought in last three decades gave rise to a decline of 8.0% in foodgrains & 5.0% in oilseeds production (y-o-y).

•A strong recovery in Mfg, Mining & Services sectors, however, is likely to give a real GDP growth of 7.2% in FY10 (Official Estimate).

•Both Govt. and Pvt. Final Consumption Expd. slowed down but investment demand (gross fixed capital formation) showed a gradual recovery.

•WPI-based inflation, after remaining subdued during H1, FY10, increased at a faster pace in the second half and reached 9.90% (y-o-y) in Mar’10.

•Both exports & imports returned to positive zones by Nov-Dec, 2009 after contracting for 12-13 months. But a fall in invisibles’ surplus has led to a higher current account deficit in FY10.

•Equity markets surged on higher FII inflows at US$ 29 bln. Even FDI during Apr-Feb, FY10 amounted to US$ 33.1 bln.

•In nominal terms, Rupee appreciated by 11.5% in FY10.

•Record market borrowing programme and rising inflation gave rise to hardening of bond yields. Yield on 10-year GoI benchmark paper increased from 6.94% at the beginning of FY10 to 7.17% by mid-FY10 to 7.85% by end of FY10. It hovered above 8.0% for several days during the month of March, 2010.

Bank’s Business Growth (Y-O-Y): FY06 to Business Growth (Y-O-Y): FY06 to FY10FY10

15.2

33.4

21.726.6 25.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

FY06 FY07 FY08 FY09 FY10

Growth: Total Deposits (%)

38.039.6

27.6

34.3

22.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

FY06 FY07 FY08 FY09 FY10

Growth: Total Advances (%)

23.1

35.8

24.1

29.7

24.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

FY06 FY07 FY08 FY09 FY10

Growth: Total Business (%)

20.6

16.114.1

20.0

25.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

FY06 FY07 FY08 FY09 FY10

Domestic CASA Growth (%)

Bank’s Profitability: FY06 to FY10Bank’s Profitability: FY06 to FY10

1917.51

2415.01

2928.55

4209.99

4935.26

3058.33

2227.20

1435.52

1026.47826.97

0.00

1000.00

2000.00

3000.00

4000.00

5000.00

6000.00

FY06 FY07 FY08 FY09 FY10

Rs crore

Gross Profit Net Profit

•Bank’s Net Profit has grown at a strong CAGR of 38.7% between FY06

& FY10

Bank’s Asset Quality: FY04 to FY10Bank’s Asset Quality: FY04 to FY10

1.361.27

1.84

2.47

3.9

7.3

0.340.31

0.470.6

0.87

1.45

2.99

0

1

2

3

4

5

6

7

8

9

FY04 FY05 FY06 FY07 FY08 FY09 FY10

%

0

0.5

1

1.5

2

2.5

3

3.5

4 %

Gross NPA

Net NPA

Bank’s Business Performance: FY10 over Bank’s Business Performance: FY10 over FY09FY09

Particular(Rs crore)

FY09 FY10 % Change

Global Business 3,35,648 4,16,080 24.0%

Domestic Business 2,59,958 3,16,926 21.9%

Overseas Business 75,691 99,153 31.0%

Global Deposits 1,92,397 2,41,044 25.2%

Domestic Deposits 1,51,409 1,85,283 22.4%

Overseas Deposits 40,988 55,762 36.0%

Global CASA Deposits 56,939 71,468 25.5%

Domestic CASA 52,789 66,024 25.1%

Overseas CASA 4,149 5,444 31.2%

•Share of Domestic CASA improved from 34.87% at end-Mar’09 to 35.63% at end-Mar’10.

Bank’s Business Performance: FY10 over Bank’s Business Performance: FY10 over FY09FY09

Particular(Rs crore)

FY09 FY10 % Change

Global Advances (Net) 1,43,251 1,75,035 22.2%

Domestic Advances (Net) 1,08,549 1,31,644 21.3%

Overseas Advances (Net) 34,703 43,392 25.0%

Out of Gross Domestic Credit,

Retail Credit Of which:

19,628 24,248 23.5%

Home Loans 8,263 10,313 24.8%

SME Credit 14,662 21,111 43.98%

Farm Credit 16,964 21,617 27.4%

Credit to Weaker Sections

8,156 10,945 34.2%

•Excluding loans to Retail Trade (that is included under the SME sector as per the new RBI guidelines) the growth in SME advances works out to 28.2% (y-o-y) in FY10.

Bank’s Business Performance: FY10 over Bank’s Business Performance: FY10 over FY09FY09

Particular(Rs crore) FY09 FY10 % Change

Global Saving Deposits42,487 52,544 23.7%

Domestic Savings Deposits41,327 51,258 24.0%

Overseas Savings Deposits 1,160 1,286 10.9%

Global Current Deposits14,451 18,924 31.0%

Domestic Current Deposits11,462 14,766 28.8%

Overseas Current Deposits2,989 4,158 39.1%

Bank’s Profits & NII: Yearly & Quarterly for FY09 Bank’s Profits & NII: Yearly & Quarterly for FY09

& FY10& FY10

Particular(Rs crore) FY09 FY10 % Change

Gross Profit 4,209.99 4,853.81 15.3%

Net Profit 2,227.20 3,058.33 37.3%

Net Interest Income 5,123.41 5,939.48 15.9%

Particular(Rs crore)

Jan-Mar,FY09

Jan-Mar,FY10

% Change

Gross Profit 1,304.48 1,547.33 18.6%

Net Profit 752.69 906.28 20.4%

Net Interest Income 1,470.79 1,744.95 18.6%

• Net Profit for FY09 includes an exceptional item of Rs 95.01 crore due to winding up/dilution of Bank’s holdings in its subsidiaries & Net Profit of FY10 includes an exceptional item of Rs 81.45 crore due to sale of stake in UTI AMC & UTI Trustee companies.

Key Financial Ratios : FY10Key Financial Ratios : FY10

Return on Average Assets at 1.21% [1.09% in FY09]

Earning per Share (annualised) at Rs 83.96 [Rs 61.14 in FY09]

Book Value per Share at Rs 378.40 [Rs 312.61 in FY09]

Return on Equity (ROE) at 22.19% [19.56% in FY09]

Capital Adequacy Ratio at 14.36% with Tier I Capital at 9.20%

• Cost-Income Ratio declined from 45.38% to 43.57%(Y-o-Y).

Gross NPA ratio increased marginally from 1.27% to 1.36% (Y-o-Y).

Net NPA ratio increased marginally from 0.31% to 0.34%(Y-o-Y).

NPA Coverage at the healthy level of 74.90% & Incremental Delinquency Ratio at 1.13% in FY10.

Other Highlights: FY09 & FY10Other Highlights: FY09 & FY10

Particular (in %) FY09 FY10

Global Cost of Deposits 5.71 4.90

Domestic Cost of Deposits 6.30 5.60

Overseas Cost of Deposits 3.29 2.37

Global Yield on Advances 9.50 8.55

Domestic Yield on Advances

10.86 10.05

Overseas Yield on Advances

5.19 4.21

Other Highlights: FY09 & FY10Other Highlights: FY09 & FY10

Particular (in %) FY09 FY10

Global Yield on Investment 7.05 6.75

Domestic Yield on Investment

7.18 6.97

Overseas Yield on Investment

5.68 3.89

Global NIM 2.91 2.74

Domestic NIM 3.21 3.12

Overseas NIM 1.73 1.42•NIM indicates Net Interest Income as % of Interest Earning

Assets.

Other Highlights: Jan-Mar, FY09 & Other Highlights: Jan-Mar, FY09 & FY10FY10

Particular (in %) Jan-Mar’09

Jan-Mar’10

Global Cost of Deposits 5.68 4.42

Domestic Cost of Deposits 6.47 5.08

Overseas Cost of Deposits 2.75 2.06

Global Yield on Advances 9.34 8.23

Domestic Yield on Advances

10.75 9.76

Overseas Yield on Advances

5.13 3.74

Other Highlights: Jan-Mar, FY09 & Other Highlights: Jan-Mar, FY09 & FY10FY10

Particular (in %) Jan-Mar’09

Jan-Mar’10

Global Yield on Investment

7.12 6.51

Domestic Yield on Investment

7.30 6.72

Overseas Yield on Investment

5.09 3.68

Global NIM 3.17 2.97

Domestic NIM 3.38 3.50

Overseas NIM 2.07 1.30

•Sequentially, the NIM has improved from 2.37% in Q1, FY10 to 2.63% in Q2, FY10 to 2.95% in Q3, FY10 & 2.97% in Q4, FY10 in global operations & from 2.57% to 2.89% to 3.40% to 3.50%in domestic operations.

Non-Interest Income: FY09 & FY10Non-Interest Income: FY09 & FY10

(Rs crore) FY09 FY10%

Change

Comm., Exchange, Brokerage

745.50 897.29 20.4%

Incidental Charges 362.92 308.57 -15.0%

Profit on Exchange Transactions

372.39 385.97 3.6%

Recovery from PWO 263.15 300.17 14.1%

Trading Gains 805.13 641.78 -20.3%

Other Misc. Income 113.56 191.13 68.3%

Total Non-Interest Income

2,662.64 2,724.91 2.34%

Non-Interest Income: Jan-Mar, FY09 & Non-Interest Income: Jan-Mar, FY09 & FY10FY10

(Rs crore) Jan-Mar, 2009

Jan-Mar, 2010

%Change

Comm., Exchange, Brokerage

253.88 273.34 7.7%

Incidental Charges 86.38 84.16 -2.6%

Profit on Exchange Transactions

106.73 106.70 0.0%

Recovery from PWO 82.62 118.13 43.0%

Trading Gains 300.85 125.36 -58.3%

Other Misc. Income 23.17 59.19 155.5%

Total Non-Interest Income

853.63 766.89 -10.2%

Provisions & Contingencies: FY09 & FY10Provisions & Contingencies: FY09 & FY10

(Rs crore) FY09 FY10

Provision for NPA / Bad Debts Written-off

337.58 955.46

Prov. For Dep. on Investment

536.75 -380.74

Prov. For Std. Adv. 75.47 106.63

Other Provisions (including Prov. For staff welfare)

12.26 15.85

Tax Provisions 1,115.74 1,179.73

Total Provisions 2,077.80 1,876.93

Provisions & Contingencies: Jan-Mar, FY09 & Provisions & Contingencies: Jan-Mar, FY09 & FY10FY10

(Rs crore) Jan-Mar’09

Jan-Mar’10

Provision for NPA/ Bad debts written-off

236.27 231.83

Prov. For Dep. on Investment

-33.67 61.69

Prov. For Std. Adv. 15.81 79.21

Other Provisions (including Prov. For staff welfare)

-8.67 4.60

Tax Provisions 342.05 345.17

Total Provisions 551.79 722.50

Bank’s Treasury Highlights: FY10Bank’s Treasury Highlights: FY10

• Treasury Income stood at the healthy level of Rs 1,109.20 crore in FY10 despite volatile bond and currency markets.

• As of Mar 31st 2010, the share of SLR Securities in Total Investment was 86.78%.

• The Bank had 80.13% of SLR Securities in HTM and 19.56% in AFS at end-Mar 2010.

• The per cent of SLR to NDTL as on 31st Mar., 2010 was 26.91%.

• While the modified duration of AFS investments is 2.18 years; that of HTM securities is 4.70 years.

• Total size of Bank’s Domestic Investment Book as on 31st Mar 2010 stood at Rs 57,912 crore.

• Total size of Bank’s Overseas Investment Book as on 31st Mar 2010 stood at Rs 3,487 crore.

Overseas Business: FY10Overseas Business: FY10

• In FY10, the “Overseas Business” contributed 23.8% to the Bank’s Total Business, 19.6% to its Gross Profit and 36.0% to its Fee-based income.

• While the Cost-Income Ratio for Domestic Operations stood at 47.11% in FY10, it was just 22.15% for Overseas Operations.

• While the Gross NPA (%) in Domestic Operations stood at 1.64% at end-Mar, 2010, that for Overseas Operations was just 0.47%.

• “Gross Profit to Avg. Working Funds” ratio for Overseas Operations was 1.57% in FY10 comparable to 2.11% for Domestic Operations.

• The ROAA of overseas operations was at 1.42% and the ROE at 24.0% in FY10.

• During FY10, the Bank raised FE resources in the form of syndicated loan of USD 175 mln for 3 yrs; bilateral loan of USD 100 mln for 3 yrs and MTN funds of USD 350 mln for 5.5 yrs for deployment in its overseas business.

Capital Adequacy & Capital Raising: FY10Capital Adequacy & Capital Raising: FY10

• Bank’s CRAR as on 31st Mar, 2009 stood at 14.36%; of which Tier1 was at 9.20% and Tier 2 at 5.16%.

• The size of Bank’s risk-weighted assets as on 31st Mar, 2010 was Rs 1,56,091 crore.

• Bank proposes to maintain its CRAR in the band of 13.0% to 13.5% in the coming years (with the Tier 1 at 8.5% to 9.0%).

• Bank has raised Rs 1,900 crore during FY10 by way of the following issues.

• Subordinated Upper Tier II Bonds: Rs 500 crore in June, 2009

• Subordinated Upper Tier II (Fixed Rate) Bonds: Rs 500 crore in July 2009.

• Fixed Rate Perpetual Bonds (Innovative): Rs 300 crore in Oct, 2009

• Fixed Rate Perpetual Bonds (Innovative): Rs 600 crore in Nov, 2009

NPA Movement (Gross): FY10NPA Movement (Gross): FY10

Particular Amount in Rs crore

A. Opening Balance 1,842.92

B. Additions during FY10 1,671.22

Out of which, Fresh Slippages

1,615.64

C. Reduction during FY10 1,113.45

Recovery 383.27

Upgradation 194.63

PWO & WO 514.81

Exchange Difference 20.74

NPA as on 31st Mar, 2010 2,400.69

Recovery in PWO in FY10 300.17

Gross NPAs: Sectoral Break-up at end-Gross NPAs: Sectoral Break-up at end-Mar, 2010Mar, 2010

Sector Gross NPA (%)

FY09

Gross NPA (%)

FY10Agriculture 1.68% 3.33%

Large & Medium Ind.

0.74% 1.43%

Retail 2.48% 2.11%

Housing 3.01% 2.31%

SME 2.58% 2.60%

Restructured Loans : FY10Restructured Loans : FY10

• During 24 months (1 Apr’08 to 31 Mar’10), Bank has restructured 61,174 accounts amounting Rs 5,113.62 crore.

• Within this, the loans worth Rs 463.26 were restructured in Q4, FY10.

• For the period of 24 months, out of the total amount restructured Rs 2,682.11 cr belonged to wholesale banking, Rs 1,272.69 cr to SMEs, Rs 557.58 cr to retail and Rs 601.24 cr to agriculture sector.

• About 79 accounts above Rs 25 lakh restructured during the last 24 months slipped during FY10 and they were Rs 417.88 crore.

• Industry-wise break-up shows that-- Bank’s restructured accounts are well spread over different sectors, the major ones being cotton textiles, engineering goods, iron & steel, food processing, infrastructure, etc.

• Bank has primarily helped genuine borrowers who suffered from temporary cash flow problems due to global crisis. These accounts are restructured looking into their internal strength & after ensuring their financial viability.

Sectoral Deployment of Credit in FY10Sectoral Deployment of Credit in FY10

Sector % share in Gross Domestic

Credit

Agriculture 16.18%

Retail 18.15%

SME 15.80%

Trading plus Others 15.14%

Wholesale 34.73%

Total 100.0%

Emerging Economic ScenarioEmerging Economic Scenario

• Global economic recovery, currently underway, faces risks because of large public debt in advanced countries.

• Advanced countries still suffer from loss of capacity output, high unemployment rates, impaired financial systems, etc.

• However, Asia is much better placed as domestic demand in Asian countries is replacing exports as the main growth driver, led by China & India.

• While India is likely to post the growth around 7.2% in FY10, the growth is expected to rebound to 8.0% in FY11 backed by stronger than expected growth momentum in industry & services.

• Food inflation- a major macro concern for India until the next normal monsoon season.

• With both growth & inflation heading towards 8.0%, the pace of monetary tightening is going to increase putting upward pressure on interest rates.

• Indian currency is headed for appreciation despite faster widening of current account deficit.

• Key risks: high food & oil prices, a double-dip, etc.• Positives: strong net capital inflows (both FIIs & FDI) & good

signs of investment rebound.

Bank’s Guidance & VisionBank’s Guidance & Vision

•The Bank would continue with its thrust on sustainable & qualitative growth --

•Will try to grow at above industry average to steadily expand its market share.

•The Bank would protect the current soundness of its key financials like ROAA, ROE, EPS, BVPS, NPL Position etc., through its dedicated focus on CASA Mobilisation, Efficient Pricing of Retail Deposits & Loans, Steady Reduction in Bulk Business and Credit Origination & Monitoring.

•The Bank would try to grow its Fee-based Income in tandem with its Loan-Book growth.

•The Bank is building Strong Foundation for Future Growth by

•Recruiting the best possible talent in the country from the Premier Institutions

•Working on BPR project in consultation with Mckinsey & Co. so as to achieve the optimum use of technology and right skilling of the manpower to yield maximum customer satisfaction.

•Aggressively launching a series of marketing campaigns to promote its Brand value, such as the recently launched Baroda Next Reinforcement Campaign – II.

Thank you.