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Presentation to Analysts Performance Highlights ( H1 & Q2, 2009-10) by Dr Rupa Rege Nitsure Chief Economist October 28, 2009. Bank of Baroda: Key Strengths.
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Presentation to Analysts Performance Highlights ( H1 & Q2, 2009-10) by Dr Rupa Rege Nitsure Chief Economist October 28, 2009
Bank 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. Overseas Business Operations extend across 25 countries through 76 Offices Modern & Contemporary Personality Uninterrupted Record in Profit-making and Dividend Payment Strong Domestic Presence through 3,029 branches Pioneer in many Customer-Centric Initiatives Provides Financial Services to over million customers globally First PSB to receive Corporate Governance Rating (CAGR-2) Relatively Strong Presence in Industrially Progressive States of India All Domestic Operations Covered under the CBS A well-accepted & recognised Brand in Indian banking industry
Domestic Branch Network • Bank’s network of domestic branches as on 30th Sept. 2009 was 3,029. • During H1, FY10, Bank opened 107 new branches & merged four existing branches. • Almost 37.0% of the total branch network is located in rural areas. • New branches are primarily opened in Metro, Urban & Semi-Urban areas from Southern States, Gujarat, UP & Uttaranchal and Northern States like Delhi & Chandigarh. • Bank still has 74 pending applications with the RBIfor opening of new branches during FY10.
Robust Technology Platform • Bank achieved 100.0% CBS implementation in its domestic operations on 19th Sept’09. • Additionally, 43 br. in 12 overseas territories & 25 br. in seven overseas subsidiaries covering 79.0% of total overseas business is also on the CBS. • All CBS branches are enabled for inter bank remittances through RTGS and NEFT. • Bank’s customers enjoy facilities like internet banking, phone banking, rapid funds2india – an online money transfer service, etc. • Bank has implemented Global Treasury Solution in UK, UAE, Baharain & Hong Kong. • Bank has made operational Corporate Cash Mgmt Services in Mumbai. • Back office functions have been centralised for the branches & two regional back offices at Baroda & Jaipur have commenced operations for centralised account opening & issuance of personal cheque-books. • AML System has been implemented in India & 14 overseas territories. • Bank has introduced HRNES System comprising a Centralised-Database of its employees, which enables speedy decision-making, promotions, selection, etc. through automated processes. • Payment Messaging Solution has been implemented in 11 overseas territories & all B category branches in India. • A module for School Fee Collection has also been implemented.
Pattern of Shareholding: 30th Sept, 2009 As on 30th Sept, 2009 • Share Capital Rs 365.53 crore • No. of Shares 364.27 million • Net worth Rs 12,703.10 crore • B. V. per share Rs 348.70 • Return on Equity (annualised): 20.78% • 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.
Half-yearly Profits: Sept’05 to Sept’09 • Net Profit has grown at a CAGR of 33.5% between Sept’05 & Sept’09
Business Performance: Sept’09 over Sept’08 • Share of Domestic CASA improved to 36.17% by end-Sept’09.
Key Financial Ratios : Apr-Sept, 2009-10 • Return on Average Assets at 1.13% [0.83% at end-Sept, 2008] • Earning per Share (annualised) at Rs 72.46 [Rs 42.06 at end-Sept, 2008] • Book Value per Share at Rs 348.70 [Rs 282.88 at end-Sept, 2008] • Return on Equity (ROE) at 20.78% [14.87% at end-Sept, 2008] • Capital Adequacy Ratio at 14.67% withTier I Capital at 8.86% • Cost-Income Ratio declined from 50.12% to 47.54%(Y-o-Y). • Gross NPA ratio declined from1.62% to 1.30% (Y-o-Y). • Net NPA ratio declined from0.43% to 0.27%(Y-o-Y). • NPA Coverage improved to79.29% [73.94% last yr]on prudent provisioning.
Operating Profits: Sept’09 over Sept’08 28.7% • NII grew by 18.40% (Y-o-Y) in H1, FY10 and by 22.5% (y-o-y) in Q2, FY10.
Net Profits: Sept’09 over Sept’08 72.2% • The Operating profit grew by 31.3% to Rs 1,031.59 crore and Net Profit by 60.4% to Rs 634.18 crore in Q2, FY10.
Other Highlights: Apr-Sept, FY09 & FY10 • NIM indicates Net Interest Income as % of Avg. Interest Earning Assets.
Other Highlights: July-Sept, FY09 & FY10 • Sequentially, the NIM has improved from 2.37% in Q1, FY10 to 2.63% in Q2, FY10 in global operations & from 2.57% to 2.89% in domestic operations.
Treasury Highlights: Apr-Sept, 2009-10 • Treasury Income increased by 67.6% from Rs 332.74 crore in H1, FY09 to Rs 557.67 crore in H1, FY10. • As of Sept 30, 2009, the share of SLR Securities in Total Investment was 85.83%. • The Bank had 77.79% of SLR Securities in HTM and 19.90% in AFS at end-Sept 2009. • While the modified duration of AFS investments is 2.13 years; that of HTM securities is 4.08 years. • Total size of Bank’s Domestic Investment Book as on 30th Sept 2009 stood at Rs 54,068 crore. • Total size of Bank’s Overseas Investment Book as on 30th Sept 2009 stood at Rs 3,880 crore.
Overseas Business: Apr-Sept, 2009-10 • In H1, FY10, the “Overseas Business” contributed 24.2% to the Bank’s Total Business, 23.1% to its Gross Profit and 36.6% to its Fee-based income. • While the Cost-Income Ratio for Domestic Operations stood at 52.28% in H1, FY10, it was just 21.62% for Overseas Operations. • While the Gross NPA (%) in Domestic Operations stood at 1.58% at end-Sept, 2009, that for Overseas Operations was just 0.50%. • “Gross Profit to Avg. Working Funds” ratio for Overseas Operations was 1.63% in Q1, FY10 comparable to 1.78% for Domestic Operations. • On the Overseas Investment Book of Rs 3,880 crore, the Bank held Provisions worth Rs 217.29 crore during H1, FY10.
Economic Scenario • While Indian economy is slowly reverting to the growth track, there are strains in the form of continuing contraction in exports & the worst drought since 1972. • Positive factors: Marked improvement in industrial production in recent months, upturn in primary capital market activity, revival in debt/equity capital inflows and easy liquidity conditions. • Concerns: Origination of inflation from supply shocks, sluggishness in bank credit growth & private consumption demand, a decline of min. 2% expected in agricultural production & the services sector growth still below trend. • The RBI has kept the GDP projection for FY10 at 6.0% with an upward bias in the Mid-Term Policy Review unveiled on Oct 27, 2009. • It has also raised its projection for inflation at end-Mar 2010 to 6.5% with an upward bias. • Continuous upward pressure on rupee/USD due to strong capital inflows & weakening of the USD overseas – a major challenge for the RBI going forward. • The RBI has lowered the target growth in M3 to 17% from 18% earlier; Aggregate deposit growth for the banking system is kept at 18% but adjusted non-food credit growth is revised downwards to 18% from 20% earlier.
Bank’s Guidance & Vision • The Bank would continue with its thrust on growth with quality & 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.
