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Presentation to Analysts Performance Highlights ( Q1, 2009-10) by Dr Rupa Rege Nitsure Chief Economist July 27, 2009. Bank of Baroda: Key Strengths.
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Presentation to Analysts Performance Highlights ( Q1, 2009-10) by Dr Rupa Rege Nitsure Chief Economist July 27, 2009
Bank of Baroda: Key Strengths • Bank of Baroda is a third largest PSU Bank 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 74 branches/ Offices Modern & Contemporary Personality Uninterrupted Record in Profit-making and Dividend Payment Strong Domestic Presence through 2,927 branches Pioneer in many Customer-Centric Initiatives Provides Financial Services to over 36.6million customers globally First PSB to receive Corporate Governance Rating (CAGR-2) Relatively Strong Presence in Industrially Progressive States of India Rapid & Significant Technology Progression Since FY06 A well-accepted & recognised Brand in Indian banking industry
Domestic Branch Network • The Bank’s network of domestic branches on 30th June 2009 was 2,927. • During Q1, FY10, Bank opened three new branches & merged two existing branches. • On 20th July, 2009, Bank opened 61 new branches including upgradation of its six extension counters to branches. • New branches are mainly concentrated in Urban & Semi-Urban centres from Maharashtra, Gujarat, Southern States, U.P. & Uttaranchal. • Bank still has 115 pending applications with the RBIfor opening of new branches during FY10
Robust Technology Platform • By 30 June, 2009, the Bank completed CBS Rollout in 1,987 domestic branches & 66 overseas offices, covering 94% of Bank’s business under the CBS. (Two overseas branches were opened in T & T on 10.07.2009). • The Bank proposes to bring its Total Business under CBS by end-Sept, 2009. • Bank’s ATM network increased to 1,183 by end-June 2009 from a mere 170 in 2005. • Bank has taken the following new IT initiatives in the recent past. • NEFT /RTGS through e-banking • Multiple accounts linkage to single debit card • AML implementation in CBS branches in India • Trinidad & Tobago ATMs made live through India switch Base 24 • To enhance the Bank’s fee-based income, the Bank has introduced various products & services like corporate cash Mgmt, facility for e-tax payment for non-customers & non-Baroda connect customers, shopping mall facility on e-banking, temple donations through ATMs and school fee module for collection of fees, etc.
Pattern of Shareholding: 30th June, 2009 As on 30th June, 2009 • Share Capital Rs 365.53 crore • No. of Shares 364.27 million • Net worth Rs 12,066.77 crore • B. V. per share Rs 331.26 • Return on Equity (annualised): 22.72% • 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.
Quarterly Profits: June’05 to June’09 • Net Profit has grown at a CAGR of 44.6% between Jun’05 & Jun’09
Business Performance: Jun’09 over Jun’08 • Share of Domestic CASA is at the healthy level of 35.09% in Q1, 2009-10.
Key Financial Ratios : Apr-June, 2009-10 • Return on Average Assets at 1.19% [0.81% at end-June, 2008] • Earning per Share (annualised) at Rs 75.28 [Rs 40.72 at end-June, 2008] • Book Value per Share at Rs 331.26 [Rs 271.97 at end-June, 2008] • Return on Equity (ROE) at 22.72% [14.97% at end-June, 2008] • Capital Adequacy Ratio at 14.56% withTier I Capital at 8.81% • Cost-Income Ratio declined from 49.02% to 47.06%(Y-o-Y). • Gross NPA ratio declined from1.86% to 1.44% (Y-o-Y). • Net NPA ratio declined from0.52% to 0.27%(Y-o-Y). • NPA Coverage improved to81.70% [72.48% last yr]on prudent provisioning
Operating Profits: Jun’09 over Jun’08 26.21% • NII grew at 14.0% (Y-o-Y) during Q1, 2009-10
Other Highlights: Apr-June, FY09 & FY10 • NIM indicates Net Interest Income as % of Avg. Interest Earning Assets.
Treasury Highlights: Apr-June, 2009-10 • Treasury Income increased from Rs 91.17 crore in Q1, FY09 to Rs 255.44 crore in Q1, FY10. • As of June 30, 2009, the share of SLR Securities in Total Investment was 86.96%. • The Bank had 77.89% of SLR Securities in HTM and 21.67% in AFS at end-June 2009. • On 28th Apr, 2009, the Bank shifted Securities worth Rs 1,961 crore from HTM to AFS. • While the modified duration of AFS investments is 2.98 years; that of HTM securities is 4.35 years. • Total size of Bank’s Domestic Investment Book as on 30th June 2009 stood at Rs 52,862 crore. • Total size of Bank’s Overseas Investment Book as on 30th June 2009 stood at Rs 3,677 crore.
Overseas Business: Apr-June, 2009-10 • In Q1, FY10, the “Overseas Business” contributed 23.5% to the Bank’s Total Business, 23.2% to its Gross Profit and 38.8% to its Fee-based income. • While the Cost-Income Ratio for Domestic Operations stood at 51.98% in Q1, FY10, it was just 19.80% for Overseas Operations. • While the Gross NPA (%) in Domestic Operations stood at 1.75% at end-June, 2009, that for Overseas Operations was just 0.52%. • “Gross Profit to Avg. Working Funds” ratio for Overseas Operations was 1.73% in Q1, FY10 comparable to 1.79% for Domestic Operations. • On the Overseas Investment Book of Rs 3,677 crore, the Bank held Provisions worth Rs 281.43 crore during Q1, FY10.
Economic Scenario • Uncertain agricultural outlook – Total rainfall since the beginning of Jun’09 is 19.0% below average so far. Rainfall in the remaining monsoon season remains important for sufficiency of sugarcane, rice, corn, oilseeds & cotton output. • Industrial production growth has started improving, albeit at a gradual pace. Export-oriented and capital goods sectors are still reeling under the pressures of global crisis. • Within Services sector, a weak global economic situation is still exerting negative influence on services like IT, ITES, Aviation, Hotels & Tourism. • The Real GDP growth for FY10 is expected to be in the range of 6.0% to 6.5%. • Inflation is likely to emerge as macro risk in Q4, FY10 on the back of continuously rising prices of primary articles, firming up of crude oil prices & statistical base effect. We expect inflation (WPI) to cross 5.0% by end-March, 2010.
Economic Scenario • Management of record govt. borrowings of Rs 4.51 trln for FY10 without upsetting the bond market remains a major challenge for the RBI. • The spread between 1-year & 10-year bond widened to 318 bps last week reflecting uncertain outlook for the bond market. • High CPI-based inflation and surging capital market activity offer limited scope for banks to reduce deposits rates, which, in turn, would put upward pressure on interest rates. • Large-sized market borrowings can be put through either by raising interest rates or a large increase in created money resulting in unbridled monetary expansion. • In short, interest rates have developed an upward bias & would start hardening once the credit demand picks up. • Non-food credit growth for banks is expected to improve in the remaining part of FY10 on the back of budget stimuli & growing consumption sentiment.
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 optimum use of technology and right skilling of the manpower to yield maximum customer satisfaction.
