Bank of Baroda: Banking on Consistent Leadership Performance Analysis: Q3 & Apr-Dec, 2012-13 (FY13) Dr Rupa Rege Nit

1. Bank of Baroda: Banking on Consistent Leadership Performance Analysis: Q3 & Apr-Dec, 2012-13 (FY13) Dr Rupa Rege Nitsure Chief Economist February 4, 2013

2. Bank of Baroda: Key strengths Bank of Baroda is a 104 years old State-owned Bank with modern & contemporary personality, offering banking products and services to Large Industrial, SME, Retail & Agricultural customers across India and 24 other countries. Uninterrupted Record in Profit-making and Dividend Payment Overseas Business Operations extend across 24 countries through 97 Offices Modern & Contemporary Personality Strong Domestic Presence through 4,134 Branches Pioneer in many Customer-Centric Initiatives Provides Financial Services to over 49 mln Customers Globally First PSB to receive Corporate Governance Rating (CGR-2) Relatively Strong Presence in Progressive States like Gujarat & Maharashtra Robust Technology Platform with 100% CBS in global operations A well-accepted & recognised Brand in Indian banking industry

3. Results at a glance

4. Performance since FY08 ……. • In four yrs & nine months, Bank’s assets have grown 2.66 times. • Bank’s nine-monthly net profit in Apr-Dec, FY13 is bigger than its full year’s profit in FY10.

5. Impressive CAGR for key parameters (FY08 thru’ FY12)

6. Sustained expansion of global branch network

7. Features of domestic branch network • In a year’s time (Dec’11 to Dec’12), the Bank added 443 brs to its domestic network comprising 91 in metro; 49 in urban; 169 in semi-urban & 134 in rural areas. • During Apr-Dec, FY13, the Bank opened 231 new brs (22 in metro, 23 in urban, 81 in semi-urban and 105 in rural areas) and merged one rural br in June, 2012 & converted that into a satellite unit. • In the remaining part of FY13, the Bank plans to open365new brs with 196 brs in Tier-I & Tier-II centres & 169 brs in Tier-III to Tier-VI centres. • Newly opened branches in H1, FY13 majorly belong to Rajasthan; Eastern UP; Bihar, Jharkhand & Orissa; Maharashtra & Gujarat. • Around 33.14% of the Bank’s network at the end-Dec, FY13 was situated in rural areas. • Moreover, the Bank’s ATM tally improved from 1,838 at end-Dec, 2011 to 2,288 at end-Dec, 2012.

8. Deepening of overseas business .. No. branches, offices, countries

9. Other strengths: Robust technology platform • Bank’s entire domestic, overseas and RRB framework is CBS-compliant. • All domestic branches are migrated on MPLS network. New branches are directly opened in MPLS network. • Bank has 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); RTGS/NEFT, online payment of bills & taxes, Custom duty payments, rail-ticket booking, temple donations, online subscription to IPOs/FPOs thru’ ASBA & institutional fee payment etc. The SMS alerts & RTGS/NEFT transactions are also implemented in the Internet Banking Portal. • Bank has implemented Internet Banking in 13 of its overseas territories, notably Oman, Tanzania, Uganda, Kenya, Mauritius, Seychelles, Botswana, New Zealand, UAE, Fiji, UK ,Ghana. And Australia. • To provide safe online banking services to its customers & protect them from phishing attacks, Bank has implemented a Fraud Management Solution. SMS alerts facility is also provided to customers. • Bank has implemented the RaidFunds2India solution in all its major territories. • 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. IMPS facility is also launched for customers. Bank’s Mobile Banking application is available on all Leading Brands including Blackberry, Android, iPhone, Windows, etc. • NationalUnified USSD Platform is also enabled through Mobile Banking. Account transfers through IMPS is also made available through Mobile Banking.

10. Other strengths: Robust technology platform • Internet Payment Gateway has been implemented to facilitate e-commerce transactions in multi currencies across the globe. • ATMswitch is upgraded to handle increasing volume of ATM transactions ; the ATM Switch also support eight international territories. • Bank has introduced Rupay Card, Rupay KCC Card. The eight Brown Label ATMs are also made live. • 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 several cities. • Bank has set up two Contact Centresin Lucknow & Baroda to fast address the customer queries & grievances. • Cash Management Solution is implemented to provide operational support to customers’ ALM. • Anti Money Laundering (AML) has been implemented in India and 23 of Bank’s overseas territories. • Online Trading (Corporate and Retail) has been implemented in India. • Bank has 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. • Bank has a centralisedSWIFT system for India & its 23 overseas territories. • CTS -Cheque Truncation System implemented in Delhi and Grid based CTS was implemented in Chennai, Coimbatore and Bangalore. CTS will be shortly implemented in Western Grid also.

11. Other strengths: Robust technology platform • ACPC (Automated Cheque Processing Centre) for centralised Inward/Outward clearing has been implemented in Mumbai, Surat and Ahmedabad. • Back Office functions have been centralised in the Bank at City Back Offices & ten Regional Back Offices (at Baroda, Jaipur, Lucknow, Bhopal, Coimbatore, Kolkata, Mumbai, Jamshedpur, New Delhi, Pune) to improve the delivery of services. • Travel Card in foreign currency is introduced. • HRNes- A centralised database of employees for facilitating promotion, selection exercise and automating HR policies with transparency is implemented. • Payroll- A centralised online mechanism for salary payment of employees and leave maintenance has also been implemented. • Online application for SME and Agriculture Loan enabled along-with Housing Loan, Education and Auto Loan. Online tracking of those applications has also been enabled. • 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. • Various technology projects like Virtualization, CPU and Memory up-gradation, Backupconsolidation, RACimplementation, bandwidth up-gradation of branches are undertaken to support increasing business requirement. • BoB IIT – an exclusive IT Training Centre has been set up in Gandhi-Nagar to educate the Bank’s staff in all IT related products & services.

12. Other strengths: Rich human resource base ….

13. Other strengths: Steady improvement in capital strength

14. Other strengths: Relatively stronger presence in progressive states

15. Pattern of shareholding: 31st Dec, 2012 As on 31st Dec, 2012 • Share Capital: Rs 412.38 crore • No. of Shares: 411.12 million • Net worth: Rs 30,167 crore (up 24.8% , y-o-y) • B. V. per share: Rs 733.78 (up 18.9%, y-o-y) • Return on Equity: 15.3% in Apr-Dec, FY13 • BOB is a Part of the following Indexes BSE 100, BSE 200, BSE 500 & Bankex Nifty, BankNifty, CNX 100, CNX 200, CNX 500 • BOB’s Share is also listed on BSE and NSE in the ‘Future and Options’ segment.

16. Sustained growth in financial value

17. Bank had consistent performance despite a non-supportive macro backdrop

18. Total business growth from FY09.. • During the last three yrs & nine months, the Bank’s total business has expanded 2.13 times. • However, the pace of change in domestic business has been modest in Apr-Dec, FY13 due to the macro headwinds.

19. Total deposit growth from FY09.. • During the past three yrs & nine months, the Bank’s total deposits have grown 2.16 times. • The pace of deposit mobilisation has been consistently well maintained avoiding any kind of liquidity stress.

20. Total advances growth from FY09.. • During the past three & a half years, the Bank’s total advances (net terms) too have more than doubled. • However, the pace of advances growth has slowed down during FY13 on the back of lack-lustre credit demand.

21. Steady gains in market share …..

22. Consistency in profit-making • During the last five years, the Bank’s Nine-monthly Net Profit has grown at the decent CAGR of 24.4%.

23. Relatively lower NPL ratios in the industry

24. Bank’s business: Dec’11 to Dec’12 • Share of Domestic CASA was at 32.22% in terms of Aggregate Deposits and at 34.35% in terms of Core Deposits as on 31st December, 2012.

25. Bank’s business: Dec’11 to Dec’12

26. Bank’s business: Dec’11 to Dec’12

27. Other highlights: Q3,FY12 versus Q3,FY13

28. Other highlights: Q3, FY12 versus Q3,FY13 • The Bank’s NIM in Domestic Operations stood at 3.17% and in Overseas Operations at 1.62% and in Global Operations at 2.73% during Apr-Dec, FY13.

29. Key productivity indicators: Q3, FY12 versus Q3, FY13

30. Non-Interest income: Q3, FY12 and Q3, FY13

31. Provisions & contingencies: Q3, FY12 and Q3, FY13

32. Bank’s domestic treasury highlights: Q3, FY13 • Trading Gains sequentially improved from Rs 112 cr in Q2, FY13 to Rs 136 cr in Q3, FY13 on account of improved market dynamics during the quarter. Even Forex profits remained firm on sequential basis. • As of Dec 31, 2012, the share of SLR Securities in Total Investment was 84.87%. • The Bank had 78.59% of SLR Securities in HTM and 21.12% in AFS at end-Dec 2012. • During the year FY13, the Bank shifted SLR securities worth Rs 1,265.42 cr (at book value) from AFS to HTM on 3rd April and provided Rs 20.69 cr as “depreciation” on shifting. • The benchmark G-sec yield at the time of shifting ruled at 8.57%. • The per cent of SLR to NDTL as on 31st Dec, 2012 was closer to 28.0%. • As on 31st Dec, 2012, the modified duration of AFS investments was 3.34 years & that of HTM securities was 5.00 years. • Total size of Bank’s Domestic Investment Book as on 31st Dec, 2012 stood at Rs 98,612.48 crore.

33. Highlights of overseas business: Apr-Dec, FY13 • As on 31st Dec, 2012, the Bank’s “Overseas Business” contributed 30.4% to its TotalBusiness, 24.4% to Gross Profit and 37.7% to Core Fee-based income (i.e., Commission, Exchanges, brokerage, etc.) • Out of the Total Overseas Loan-book, 53.6% was Buyers’ Credit/ Export Credit; 27.4% in was Syndicated Loans/ECBs (mostly to Indian corporates) & 19.01% was Local Credit. • Less riskiness of the Overseas Loan-book was responsible in keeping Gross NPA (%) in Overseas Assets at 0.73% as on 31st Dec, 2012. • Even the Cost-Income Ratio in Overseas operations was more favourable at 17.59% in Apr-Dec, FY13 versus 43.62% in Domestic operations. • In Q3, FY13, the NIM (as % of interest-earning assets) in Overseas operations stood at the healthy level of 1.58%; Gross Profit to Avg. Working Funds ratio at 1.42% and Return on Equity at 15.66%. • During Apr-Dec, FY13, Bank opened nine new branches in its overseas territories, out of which two belonged to New Zealand; two to Uganda and one each was opened in Mauritius, Ghana, Oman, Kampala & Australia.

34. NPA movement (Gross): Apr-Dec, FY13

35. Sector-wise gross NPAs: End-Dec, FY12 & FY13

36. Bank’s domestic exposure to different industries, 31st Dec, 2012

37. Cumulative position of restructured assets • During the past 57 months (1 Apr’08 to 30 Sept’12), Bank has restructured 89,050 accounts amounting Rs 18,268 crore in its Domestic operations. • Within this, the loans worth Rs 771 cr were restructured in Q1, FY13, Rs 933 cr in Q2, FY13; Rs 1,587 cr in Q3, FY13; Rs 8,265.41 cr in FY12, Rs 1,597.81 cr in FY11, Rs 2,455.05 cr in FY10 & Rs 2,658.57 cr in FY09. • For the period of 57months, out of the total amount restructured, Rs 13,974 cr (76.5%) belonged to wholesale banking, Rs 2,600cr (14.2%) to SMEs, Rs 624 cr (3.4%) to retail and Rs 1,069 cr (5.9%) to agriculture sector. • About 118 accounts (of Rs 1 crore & above) restructured on/after 1st Apr, 2008 with aggregate outstanding of Rs 2,496 cre slipped to NPA after restructuring and most of them belonged to the SME segment. • In cumulative terms, the Bank has restructured 89accounts in its Overseas operations involving the amount of Rs 4,725 crore. • Out of these, the accounts restructured during Apr-Dec, FY13 are 20 involving the amount of Rs 1,069 crore.

38. Sectoral deployment of credit at end-Dec, 2012

39. Bank’s BPR Project - Navnirmaan • Project Navnirmaan has altogether -18- initiatives covering both Business Process Re-engineering and Organization Re-structuring, aimed at transforming the Bank’s branches into a sales and service centres through sustained Centralization to make possible Sales growth, superior customer experience and alternate channel migration. • The most important initiatives are:- • Conversion of all metro and urban branches into Baroda Next within a timeline [-1328- branches rolled out so far across -13- Zones and -56- Regions]. • Creation of automated and lean Back Offices like: • City Back Office [Automated cheque processing introduced at Mumbai, Surat and Ahmedabad]. • Regional Back Office [-10- RBOs functioning] for CASA opening [No. of branches linked –2710] & issuance of Personalized Cheque Books [[No. of branches linked - 3788]. More than 5,700 CASA are being opened per day. • Establishment of -2- Contact Centres [at Lucknow and Baroda]. • Introduction of frontline automation [viz. Queue Management System and Cheque deposit Machines] at select branches for customer convenience. • Conducting Trainings and Boot camps. • Organization Re-structuring [creation of Selling roles at branch, R.O. and Z.O.] •  The initial impact of Baroda Next migration has been found to be rewarding both in terms of increased customer satisfaction and CASA growth.

40. Bank’s BPR Project - Navnirmaan • The said impact has been sustained at 110 Baroda Next branches evaluated on (a) sales and (b) customer satisfaction during first stage of evaluation. • Another evaluation carried out recently on (a) Customer satisfaction [at -177-] and (b) Employee satisfaction [at -171] Baroda Next branches, shows significant improvement. • A certification procedure for Baroda Next branches have been introduced in terms of which process compliance/ adherence are being evaluated by Bank’s Internal inspectors and CSAT / ESAT externally evaluated by engaging Market Research Agencies. • To sustain Sales Growth, a new Sales Operating Model has been rolled out in -629- branches in -25- Regions over 20 cities. • Out of -15- Mid-corporate branches planned, all are functional. • Further centralization initiatives are being piloted to enable the branches to become a “Sales-cum-Service Outlet”. • Bank’s Hi-tech City branch, Hyderabad has been transformed into an e-branch.

41. Bank’s HR initiatives • Recruitment - FY13 The Bank has been hiring on a sustained basis year after year, to cater to the “gap” created by superannuation, sustained business growth and rapid branch expansion. (Joined up to 31.12.2012) • New Hiring in FY12-13: -3400 (2700) • Probationary Officers - 600 (429) • Specialist officers - 150 (54) • Baroda Manipal Trainees - 400 (342) • Campus Recruitment - 250 (237) • Clerks - 2,000 (1,638) • Massive skills’ up-gradation and several structured programmes for new joinees werec carried out during the year to develop important Banking skills with a focus on skills needed for Credit & Forex operations, soft skills, etc.

42. Bank’s HR initiatives • A dedicated HR transformation project – ‘SPARSH has been initiated by the Bank - to revamp its existing HR processes, structures and policies. Various measures in the direction of talent management, succession planning, creating a scientific staffing model & manpower planning, development and capability building, performance management, etc. have been initiated. • Opening of the ‘Baroda Manipal School of Banking’ as an innovative and new channel of resourcing of trained manpower in the Bank. Around 180 students are being inducted into this school every quarter for a focussed grooming and for a one-year full-time PG course in banking which is tailored to the Bank’s specific requirements.

43. Future Outlook & Guidance • Since mid-Sept, 2012, India’s government has taken several corrective measures to improve fiscal consolidation and investment climate. • RBI also has cut both the CRR and key policy rates to address the risks to growth & liquidity. • Advancing of long-awaited reforms has helped lift the stock market and the rupee. • Yet, given the intensity of macro headwinds, the nation is likely to post the growth between 5.2% to 5.5% in FY13. • As the “outlook” for credit is still not very positive, the Bank will continue with its Cautious stance. • Strategic thrust will be on protecting the “Financial Soundness” that the Bank has consistently maintained throughout the period of global turbulence. • With a primary focus on asset quality management, CASA mobilisation, recovery, liquidity management, etc. • The positive factor for the Bank, going ahead is the “Consistent Leadership”. I would like to conclude by giving the “quote” of Tom Seaver • “In baseball my theory is to strive for consistency, not to worry about the numbers. If you dwell on statistics you get shortsighted, if you aim for consistency, the numbers will be there at the end”. Thank you.