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Presentation to Analysts Performance Highlights ( Q1, 2008-09) by Dr Rupa Rege Nitsure

Presentation to Analysts Performance Highlights ( Q1, 2008-09) by Dr Rupa Rege Nitsure Chief Economist July 29, 2008. Bank of Baroda: Key Strengths.

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Presentation to Analysts Performance Highlights ( Q1, 2008-09) by Dr Rupa Rege Nitsure

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  1. Presentation to Analysts Performance Highlights ( Q1, 2008-09) by Dr Rupa Rege Nitsure Chief Economist July 29, 2008

  2. Bank of Baroda: Key Strengths • BoB is a leading 100 years old PSB in India with modern and contemporary personality, offering banking products and services to industrial and commercial, retail and agricultural customers across the country. Overseas Business Operations extend across 25 countries through 72 Offices Modern & Contemporary Personality Uninterrupted Record in Profit-making and Dividend Payment Strong Domestic Presence through 2,851 branches Pioneer in many Customer-Centric Initiatives Provides Financial Services to around 33 million customers globally First PSB to receive Corporate Governance Rating (CAGR-2) Steady Movement towards International best practices – Preparing financials under US GAAP Rapid & Significant Technology Progression in FY06,FY07 & FY08 A well-accepted & recognised Brand in Indian banking industry

  3. Strong Domestic Branch Network • The Bank has a network of 2,851 domestic branches, as it merged 2 branches in Q1, FY09. • About 38.44% of the domestic branches are located in rural areas. • Of the total no of 2,851 branches, 350 are Agriculture Thrust branches. • Around 661 branches are located in minority concentrated districts. • There are 127 specialised branches (including 19 service branches) as on date.

  4. Robust Technology Platform • As of date, the Bank has completed CBS Rollout in 1,759 domestic branches covering more than 90.0% of the Bank’s domestic business. • All CBS branches are enabled for inter bank remittances through RTGS and NEFT. • CBS has also been implemented in 62 overseas branches of Bank/its Subsidiaries. • The Bank’s ATM network has increased to 1,146 from a mere 170 in 2005. • This includes two Biometric ATMs installed on a pilot basis in Balsar/Rae Bareli districts. • Bank has installed 47 ATMs at Railway Stations. • Many novel products like RapidFunds2India, Baroda Connect, Online Tax Payment Facility, Depository Facility, Baroda Easy Pay, Online Payment of Railway Ticket Booking, etc. have been developed.

  5. Concentration (%): Domestic Branch Network

  6. Present Pattern of Shareholding As on 3oth June 2008 • Share Capital Rs 365.53 crore • No. of Shares 364.27 million • Net worth Rs 9,907.08 crore • B. V. per share Rs 271.97 • Return on Equity: 14.97% • 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.

  7. Business Growth: June’04 to June’08

  8. Profits: June’03 to June’08

  9. Asset Quality: June’03 to June’08 Gross NPAs (%) Net NPAs (%)

  10. Business Performance: Q1, 2008-09 • Global Business up 32.6%(Y-o-Y) to Rs 2,66,122 crore at end-June 2008 • Domestic Business up 29.4%(Y-o-Y) to Rs 2,09,135 crore • Overseas Business up 24.6%(Y-o-Y) to Rs 56,987 crore • Global Deposits up 26.5%(Y-o-Y) to Rs 1,54,908 crore • Domestic Deposits up 25.2%(Y-o-Y) to Rs 1,23,816 crore • Overseas Deposits up 31.7%(Y-o-Y) to Rs 31,093 crore • Domestic CASA share improved from 35.93%at end-Mar’08 to 36.86% at end-June’08 • Global Advances up 42.1% (Y-o-Y) to Rs 1,11,214 crore • Domestic Advances up 35.8% to Rs 85,319 crore • Overseas Advances up 67.7% to Rs 25,895 crore

  11. Business Performance: Q1, 2008-09 • Retail Credit up 18.8%(Y-o-Y) to Rs 16,908 crore at end-June 2008 • Retail Credit now forms 19.6% of Gross Domestic Credit • Home Loan Book up 15.1%(Y-o-Y) to Rs 7,267 crore • SME Credit up 19.5% (Y-o-Y) to Rs 12,087 crore • Farm Credit up 31.0% (Y-o-Y) to Rs 13,729 crore • Priority Sector Credit up 28.02%(Y-o-Y) to Rs 32,836 crore. • Bank’s credit to weaker sections was up 63.6% (Y-o-Y) to Rs 6,247 crore. • Debt waiver & relief scheme was successfully implemented by the Bank in given timeframe involving debt waiver amount of Rs 502 crore & debt relief of Rs 164 crore, thereby upgrading/liquidating the NPA of Rs 242 crore.

  12. Key Financial Ratios : Q1, 2008-09 • Return on Average Assets (ROAA) at 0.81%[1.01% at Q1, FY08] • Earning per Share (annualised) at Rs 40.72 [Rs 36.32 at Q1, FY08] • Book Value per Share at Rs 271.97 [Rs 240.56 at Q1, FY08] • Return on Equity (ROE) at 14.97% [15.10% at Q1, FY08] • Capital Adequacy Ratio at 13.19% (Tier 1 : 7.89%, Tier 2 : 5.30%) • Cost-Income Ratio declined from 53.69% to 45.20%(Y-o-Y). • Gross NPA ratio declined to1.86% from 2.78% (Y-o-Y). • Net NPA ratio declined to0.52% from 0.67%(Y-o-Y). • NPA Coverage at the level of 72.48%

  13. Operating Profits: Q1, 2008-09 • Increase in “Net Interest Income” of 16.9% (Y-o-Y), “Non-Interest income” of 20.8% and a moderate growth in “Total Expenses” of 23.8% enabled the Bank to increase its Operating Profits by a decent 33.5% in Q1, FY09 (Y-o-Y). 33.5%

  14. Net Profits: Q1, 2008-09 • The level of quarterly Net Profit at Rs 370.86 crore at end-June, 2008 reflects a growth of 12.10% (Y-o-Y) despite severe pressures on cost of funds and a downturn in economic cycle. 12.10%

  15. Other Highlights: Q1, 2008-09 • Net Interest Margin (as % of interest-bearing assets) in Global Operations stood at 2.76% at end-June, 2008as against 3.02% at end-June 2007 (after making adjustment for the “amortization” factor as per the RBI guidelines). • Cost of Deposits in Global Operations increased from 5.42% to 5.55% • Cost of Deposits in Domestic Operations increased from 5.52% to 6.05% • Cost of Deposits in Overseas Operations decreased from 4.99% to 3.43% • Yield on Advances in Global Operations declined from 9.51% to 9.08% • Yield on Advances in Domestic Operations marginally improved from 10.24% to 10.34% • Yield on Advances in Overseas Operations declined sharply from 6.49% to 4.91%. • Yield on Investments in Global Operations, however, improved from 6.31% to 7.22%.

  16. Other Highlights: Q1, 2008-09 • Treasury Income (Profit on Sale of Investments) declined by 31.7% (Y-o-Y) to Rs 88.99 crore. • Fee-based Income (Commission, Exchange & Brokerage) sharply improved by 44.5% (Y-o-Y) to Rs 155.52 crore. • Cash Recovery (NPA & PWO) during Q1, 2008-09 stood at healthy Rs 177 crore as against Rs 128 crore during 2006-07 reflecting a growth of 38.0%. • Profit from Exchange Transactions grew by a robust 49.8% (Y-o-Y) to Rs 94.23 crore.

  17. Other Income: Q1, 2008-09

  18. Provisions & Contingencies: Q1, 2008-09

  19. Treasury Highlights: Q1, 2008-09

  20. Overseas Business: Q1, 2008-09 • At end-June, 2008, the “Overseas Business” contributed 21.4% to Total Business and 31.8% to Net Profit. • In Q1, FY09, the “Overseas Business” contributed 29.5% to the Bank’s pure Fee-based Income. • While the Cost-Income Ratio for Domestic Operations stood at 49.29% in Q1, FY09, it was just 20.35% for Overseas Operations. • While the Gross NPA (%) in Domestic Operations stood at 2.24% at end-June 2008, that for Overseas Operations was just 0.63%. • As a result, the “Net Profit to Avg. Working Funds” ratio for Overseas Operations was 1.26% in Q1, FY09 as against 0.70% for Domestic Operations.

  21. NPA Movement (Gross): Q1, 2008-09

  22. Gross NPAs: Sectoral Break-up at end-June, 2008

  23. Sectoral Deployment of Credit at end-June, 2008

  24. Road Ahead • Challenging Economic Environment in FY09 • with industrial growth slipping to 5.0% in Apr-May’08 as against 10.9% in Apr-May’09, inflation close to 12.0%, slowing corporate profitability & lack-lustre performance of monsoon in July’08 • A Restrictive Monetary Policy Environment to continue • RBI raised the CRR by a cumulative 125 bps in Apr-July’08 & Repo Rate by 75 bps in June’08 • Further tightening is expected as M3 growth is still at 20.5% (Y-o-Y) • Weaker Rupee (depreciated by 8.0% in Calendar 2008 till July 28) as crude oil prices still ruling at $125 per barrel • Banks’ NIM as well as other income streams under pressure due to sustained tightening and volatile markets.

  25. Proposed Business Strategies for FY09 • Primary thrust on protecting the NIM by • Improving the CASA share • Improving the effective rates of lending • Improving the share of Retail/SME business in total business without compromising the asset quality. • Leveraging technology/re-branding exercise to extract maximum benefits, recruitment of specialised marketing staff • Special focus on improving “relations” with the existing corporate customers as well as efforts to add new quality customers to the Bank’s Book • Thrust on business process reengineering to reduce the “transaction costs” • A dedicated effort to add 2.5 to 3.0 million quality customers to Bank’s book in FY09 and in subsequent years.

  26. Thank you.

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