1. Bank of Baroda: A Journey of Sustained Soundness
Performance Analysis: Q1, (FY13)
Dr Rupa Rege Nitsure
Chief Economist
July 30, 2012

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 93 Offices
Modern & Contemporary
Personality
Strong Domestic
Presence through
3, 913 Branches
Pioneer in many
Customer-Centric
Initiatives
Provides Financial
Services to over
45.16 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 Indian Branches
A well-accepted &
recognised Brand in
Indian banking industry

3. Results at a Glance .. Net Profit up 10.3%(y-o-y) to Rs 1,139 crore
Operating Profit up 23.0% (y-o-y) to Rs 2,253 crore
Net Interest Income up 21.8% (y-o-y) to Rs 2,798 crore
Total Business up 22.6% (y-o-y) to Rs 6,68,552 crore
Total Advances up 23.02% (y-o-y)
Total Deposits up 22.3% (y-o-y)
Net NPAs (%) at 0.65%
Capital Adequacy Ratio at 13.74%
NIM at 2.73% in Global & at 3.22% in Domestic operations
ROAA (annualized) at 1.01%
CRAR at 13.74% with Tier 1 at 10.13%

4. Domestic Branch Network
In a year’s time, the Bank added 504 brs to its domestic network comprising 121 in metro; 77 in urban; 204 in semi-urban & 102 in rural areas.
During Q1, FY13, the Bank opened 10 new brs (3 in metro, 5 in rural & one each in urban & semi-urban) and merged one of its rural branches.
In the remaining part of FY13, the Bank plans to open 572 new brs including 160 brs from its Branch Expansion Plan of FY12.
Newly opened branches in Q1, FY13 are from Maharashtra & Goa; Rajasthan, U.P, Southern & Eastern states.
Around 32.6% of the Bank’s network at the end-June, FY13 was situated in rural areas.
Moreover, the Bank’s ATM tally improved from 1,657 at end-June, 2011 to 2,130 at end-June, 2012.
Regional Break-up of
Domestic Branches as on 30th June, 2012
Metro
Urban
Semi-Urban
Rural
877
716
1,046
1,274

5. Robust Technology Platform
Bank’s entire domestic, overseas and RRBs Framework is CBS-compliant
All domestic branches are migrated to MPLS (Multi-Protocol Label Switching) 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 has implemented Internet Banking in 12 of its overseas territories , notably Oman, Tanzania, Uganda, Kenya, Mauritius, Seychelles, Botswana, New Zealand, UAE, Fiji, UK & Ghana.
For provision of Safe Online Banking & to protect customers from Phishing Attacks, the Bank has implemented a Fraud Management Solution. A SMS alerts facility is also being provided to customers
Bank has implemented a 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. The IMPS facility is also being introduced for its customers.
Bank’s Mobile Banking application is available on all Leading Brands including Blackberry, Android, iPhone and Windows.
Internet Payment Gateway is implemented by the Bank to facilitate E-commerce Transactions in multi currencies across the globe.

6. Robust Technology Platform
Bank’s ATM Switch is upgraded to handle increasing volume of ATM transactions ; the Bank’s ATM count has increased to 2,130 by 30th June, 2012; its ATM switch also supports eight international territories.
Bank has a Facility of Multiple Accounts being linked to a single Debit Card (verified by Visa, CVV2) and also a Mobile Number registration thru’ ATMs in CBS for the SMS Alerts.
E-tax payments thru’ ATMs are also facilitated by the Bank and Mobile ATMs are introduced in several cities.
Bank has set up two Contact Centres in Lucknow & Baroda to address customer queries and grievances without much delay.
Cash Management Solution is implemented to provide Operational Support to the Customers’ ALM.
Anti Money Laundering (AML) is implemented in India and 20 of the Bank’s overseas territories.
Bank has developed an Integrated Global Treasury Solution in its major territories like U.K., UAE, Bahamas, Bahrain, Hong Kong, Singapore, Belgium, USA and India to reduce the cost of operations and improve the funds’ management.
A Centralised SWIFT is being implemented within India & the Bank’s 22 overseas territories.
The CTS -Cheque Truncation System is implemented in Delhi and a Grid based CTS System is implemented in Chennai, Coimbatore and Bangalore.

7. Robust Technology Platform
ACPC (Automated Cheque Processing Centre) for centralised Inward / Outward clearing has been implemented in Mumbai, Surat and Ahmedabad regions of the Bank.
Back Office functions are centralised in the Bank at its City Back Offices & ten Regional Back Offices (at Baroda, Jaipur, Lucknow, Bhopal, Coimbtore, Kolkata, Mumbai, Jamshedpur, New Delhi, Pune) to improve the service delivery to customers.
RTGS & NEFT straight through processing has been implemented for all sponsored RRBs of the Bank.
Ebiz Suit (EWGL, HRMS & CRM) is upgraded to R12 Platform for better performance.
Bank has built a State-of-the-Art Data Centre conforming to Uptime Institute Tier-3 standard and a Disaster Recovery Site in different seismic zones to ensure uninterrupted banking services to its customers.
Various Technology projects like Virtualisation, Back-up Consolidation & RAC (Realtime Application Cluster) are being undertaken to support increasing business requirement.
BoB IIT – an exclusive IT Training Centre has been set up in Ghandhinagar to educate the Bank’s Staff in all IT related products & services.

8. Concentration (%): Domestic Branch Network

9. Pattern of Shareholding: 30th June, 2012
As on 30th June, 2012
Share Capital: Rs crore
No. of Shares: million
Net worth: Rs crore (up 34.2%, y-o-y)
B. V. per share: Rs (up 27.8%, y-o-y)
Return on Equity: %
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.

10. India’s Macro Health: Q1, FY12 to Q1, FY13
Economic Indicator
Q1, FY12
Q2, FY12
Q3, FY12
Q4, FY12
Q1, FY13
Real GDP growth (%)
8.0
6.7
6.1
5.3 NA
Agriculture (%)
3.7
3.1
2.8
1.7
Industry (%)
5.7
0.8
0.7
Services (%)
10.2
8.7
7.5
Private Consumption Expenditure growth (%) (at current market prices)
14.2
14.1
15.2
13.9
Gross Fixed Capital Formation (% to GDP) (at current market prices)
31.2
30.9
27.8
28.6
SCB Credit growth (%, Avg Basis)
21.4
20.0
17.9
16.8
17.7
SCB Deposit growth (%, Avg Basis)
17.5
18.0
15.3
13.8
SCB Incremental Credit-Deposit Ratio (%, end-period)
51.1
55.0
68.3
84.3
46.6
WPI-Inflation, Core Inflation (%)
(end-period)
9.51
(7.73)
10.00
(7.99)
7.74
(7.91)
7.69
(4.96)
7.25
(4.85)
Trade Balance ( US $ Billion)
38.90
34.89
45.98
43.83
40.05
Rupee-USD (%, end-period)
44.70
48.97
53.10
50.88
55.60
Foreign Exchange Reserves (end-period, US $ Billion)
315.72
311.48
296.69
294.40
289.99

11. Bank’s Business Growth (Y-O-Y): Jun’07 to Jun’12

12. Bank’s Profitability: Jun’07 to Jun’12
During the last five years, the Bank’s First Quarter Net Profit has grown at the rich CAGR of 28.1% .

13. Bank’s Asset Quality: Jun’06 to Jun’12

14. Bank’s Business Performance: Jun’11 to Jun’12
Particular
(Rs crore)
Jun’11
Mar’12
Jun’12
Y-O-Y
(%)
Change
Over
Mar’11 (%)
Global Business
5,45,283
6,72,248
6,68,552
22.6%
-1.0%
Domestic Business
4,05,156
4,82,211
4,73,825
17.0%
-1.7%
Overseas Business
1,40,127
1,90,038
1,94,726
39.0%
2.5%
Global Deposits
3,12,943
3,84,871
3,82,739
22.3%
-0.6%
Domestic Deposits
2,36,536
2,80,135
2,77,839
17.4%
-0.8%
Overseas Deposits
76,407
1,04,736
1,04,899
37.3%
0.2%
Global CASA Deposits
87,221
1,03,524
99,776
14.4%
-3.6%
Domestic CASA
80,225
92,948
89,551
11.6%
-3.7%
Overseas CASA
6,996
10,576
10,225
46.2%
-3.3%
Share of Domestic CASA was at 32.23% in terms of Aggregate Deposits and at 33.72% in terms of Core Deposits as on 30th June, 2012.

15. Bank’s Business Performance: Jun’11 to Jun’12
Particular
(Rs crore)
Jun’11
Mar’12
Jun’12
Y-O-Y
(%)
Change
Over
Mar’11 (%)
Global advances (Net)
2,32,340
2,87,377
2,85,813
23.0%
-0.5%
Domestic Advances
1,68,621
2,02,075
1,95,986
16.2%
-3.0%
Overseas Advances
63,719
85,302
89,827
41.0%
5.3%
Retail Credit
Of which:
30,934
35,668
32,922
6.4%
-7.7%
Home Loans
12,910
14,133
14,520
12.5%
2.7%
SME Credit
28,367
34,512
34,346
21.1%
Farm Credit*
23,211
29,036
27,774
19.7%
-4.3%
Credit to Weaker Sections*
13,248
15,863
15,627
18.0%
-1.5%
* As of Last Reporting Friday

16. Bank’s Business Performance: Jun’11 to Jun’12
Particular
(Rs crore)
Jun’11
Mar’12
Jun’12
Y-O-Y
(%)
Change
Over
Dec’10 (%)
Global Saving Deposits
65,654
74,580
75,562
15.1%
1.3%
Domestic Savings Deposits
64,162
72,575
73,519
14.6%
Overseas Savings Deposits
1,491
2,004
2,043
37.0%
1.9%
Global Current Deposits
21,567
28,944
24,214
12.3%
-16.3%
Domestic Current Deposits
16,063
20,372
16,033
-0.2%
-21.3%
Overseas Current Deposits
5,505
8,572
8,181
48.6%
-4.6%

17. Bank’s Profits & NII: Apr-Jun, FY12 & FY13
Particular
(Rs crore)
Apr-Jun’11
Apr-Jun’12
Y-O-Y
(%)
Gross Profit
1,831
2,253
23.0%
Net Profit
1,033
1,139
10.3%
Net Interest Income
2,297
2,798
21.8%

18. Other Highlights: Q1,FY12 versus Q1,FY13
Particular (in %)
Q1, FY12
Q2, FY12
Q3, FY12
Q4, FY12
Q1, FY13
Global Cost of Deposits
5.36
5.61
5.65
5.81
5.89
Domestic Cost of Deposits
6.41
6.84
6.90
7.17
7.30
Overseas Cost of Deposits
1.80
1.82
1.96
1.74
1.86
Global Yield on Advances
9.11
9.64
9.45
9.33
9.08
Domestic Yield on Advances
11.23
12.14
12.01
11.71
11.65
Overseas Yield on Advances
3.38
3.37
3.60
3.75
3.52

19. Other Highlights: Q1, FY12 versus Q1,FY13
Particular (in %)
Q1, FY12
Q2, FY12
Q3, FY12
Q4, FY12
Q1, FY13
Global Yield on Investment
7.47
7.58
7.67
7.53
7.71
Domestic Yield on Investment
7.59
7.72
7.79
7.69
7.83
Overseas Yield on Investment
4.86
4.24
4.90
3.84
4.91
Global NIM
2.87
3.07
2.99
2.96
2.73
Domestic NIM
3.39
3.67
3.51
3.44
3.22
Overseas NIM
1.37
1.42
1.64
1.68
1.55

20. Key Financial Ratios : Q1, FY13
Return on Average Assets at 1.01%
Earning per Share at Rs
Book Value per Share at Rs
Return on Equity (ROE) at 16.33%
Capital Adequacy Ratio at 13.74% with Tier I Capital at 10.13%
Cost-Income Ratio at 37.21%
Gross NPA ratio at 1.84%
Net NPA ratio too low at 0.65%
NPA Coverage at the healthy level of 79.02%
Incremental Delinquency Ratio at 0.43% for Q1, FY13 – consistent with a long lasting slowdown in industry and weak monsoon so far.

21. Key Productivity Indicators: Q1, FY12 versus Q1, FY13
Particulars
Q1, FY12
Q1, FY13
Business per Employee (Rs crore)
12.65
14.79
Business per Branch (Rs crore)
157.45
169.49
Profit per Employee (Rs lakh)
10.26
10.81
Profit per Branch (Rs lakh)
119.30
114.80

22. Non-Interest Income: Q1, FY12 and Q1, FY13
(Rs crore)
Q1, FY12
Q1, FY13
% Change
(Y-O-Y)
Commission, Exchange, Brokerage
274.77
275.93
0.4%
Incidental Charges
79.55
82.82
4.1%
Other Miscellaneous Income
43.76
55.45
55.5%
Total Fee-Based Income
398.08
414.20
Trading Gains
74.02
81.51
10.1%
Profit on Exchange Transactions
140.01
192.10
37.2%
Recovery from PWO
28.76
82.99
188.6%
Total Non-Interest Income
640.87
770.80
20.3%

23. Provisions & Contingencies: Q1, FY12 and Q1, FY13
(Rs crore)
Q1, FY12
Q1, FY13
Absolute
Change
Provision for NPA & Bad Debts Written-off
131.95
812.11
680.16
Provision for Depreciation on Investment
138.54
75.99
-62.55
Provision for Standard Advances
112.94
3.34
-109.6
Other Provisions (including Provision for staff welfare)
7.62
2.36
-5.26
Tax Provisions
394.37
208.08
Total Provisions
785.42
1,101.88
316.46

24. Bank’s Treasury Highlights: Q1, FY12
Treasury Income stood at the level of Rs crore (up 27.8%, y-o-y) in Q1, FY13.
Out of this, Trading Gains Stood at Rs crore in Q1, FY13 despite extremely volatile financial market conditions.
As of June 30, 2012, the share of SLR Securities in Total Investment was 83.57%.
The Bank had 85.37% of SLR Securities in HTM and 13.73% in AFS at end-June 2012.
The per cent of SLR to NDTL as on 30th June, 2012 was 25.05%.
While the modified duration of AFS investments is 2.57 years; that of HTM securities is 5.08 years.
Total size of Bank’s Domestic Investment Book as on 30th June, 2012 stood at Rs 94,504 crore.
Total size of Bank’s Overseas Investment Book as on 30th June, 2012 stood at Rs 3,943 crore.

25. Overseas Business: Q1, FY12
As on 30th June, 2012, the “Overseas Business” contributed 29.1% to the Bank’s Total Business, 23.7% to its Gross Profit and 36.2% to its Core Fee income.
While the Cost-Income Ratio for Domestic Operations stood at 41.51% in Q1, FY13, it was more favourable at 17.78% for the Bank’s Overseas Operations.
While the Gross NPA (%) in Domestic Operations stood at 2.56% at end-June, 2012, that for Overseas Operations was lower at 0.69%.
The Gross Profit to Avg. Working Funds (%) for Overseas Operations stood at 1.49% in Q1, FY12 and at 1.62% in Q1, FY13.
NIM as % of Interest Earnings Assets in Overseas Operations improved from 1.37% in Q1, FY12 to 1.55% in Q1, FY13.
During Q1, FY13, the Bank opened two branches in New Zealand, notably at Wellington and Manukau and two branches in Uganda, notably at Entebbe and Kabale.

26. NPA Movement (Gross): Q1, FY13
Particular
( Rs crore)
A. Opening Balance
4,464.75
B. Additions during Q1, FY13
1,256.66
Out of which, Fresh Slippages
1,221.22
C. Reduction during Q1, FY13
454.62
Recovery
124.92
Upgradation
134.18
PWO & WO
195.52
Exchange Difference
52.62
NPA as on 30th June, 2012
5,319.41
Recovery in PWO in Q1, FY12
82.99

27. Sector-wise Gross NPAs: Q1, FY12 versus Q1, FY13
Agriculture
4.10
4.66
Large & Medium Industries
1.80
1.63
Retail
2.11
2.00
Housing
1.96
1.70
SSI (Mfg)
1.50
4.78
Total MSME
2.50
3.49
Overseas Operations
0.62
0.69

28. Cumulative Position of Restructured Assets
During the past 51 months (1 Apr’08 to 30 June’12), the Bank has restructured 86,596 accounts amounting Rs 15, crore in its Domestic operations.
Within this, the loans worth Rs crore were restructured in Q1, FY13; Rs 8, crore were restructured in FY12, Rs 1, crore were restructured in FY11, Rs 2, crore in FY10 & Rs 2, crore in FY09.
For the period of 51 months, out of the total amount restructured, Rs 11, crore (75.7%) belonged to wholesale banking, Rs 2, crore (13.9%) to SMEs, Rs crore (3.9%) to retail and Rs 1, crore (6.5%) to agriculture sector.
About 100 accounts (of Rs 1 crore & above) restructured on/after 1st Apr, 2008 with aggregate outstanding of Rs 1, crore slipped to NPA after restructuring and most of them belonged to the SME segment.
In cumulative terms, the Bank has restructured 88 accounts in its Overseas operations involving the amount of Rs 3, crore.
Out of these three accounts were restructured during Q1, FY13 involving the amount Rs crore.

29. Sectoral Deployment of Credit at end-June, 2011
% share in Gross Domestic Credit
Agriculture
13.9%
Retail
16.5%
SME
17.2%
Wholesale
37.8%
Misc. including Trade
14.6%
Total
100.0%

30. Bank’s BPR Project - Navnirmaan
Project Navnirmaan has altogether 18 activities covering both BPR & Organisational Restructuring, aimed at transforming the Bank’s branches into a sales & service centres to make possible a sustained sales growth, superior customer experience and alternate channel migration.
The most important initiatives are-
Conversion of all metro & urban branches into Baroda Next branches within a timeline [1134 branches rolled out so far across 13 zones & 56 regions]
Creation of automated & lean Back Offices like:
City Back Office (Automated cheque processing introduced at Mumbai, Surat & Ahmedabad)
Regional Back Office [Ten RBOs functioning (one in each zone); five RBOs opened during FY13]; for CASA opening [ No. of brs linked – 1,531 ]; for issuance of personalised cheque books [ no. of brs linked – 2,590].
Establishment of two Contact (or Call) Centres
Introduction of frontline automation [Queue Management System & Cheque Deposit Machines] at select branches for customer convenience
Creation of an Academy of excellence [Thru’ Training & Boot Camps]
Organisational Restructuring [ Creation of Selling roles at branch, R.O. & Z.O.]

31. Bank’s BPR Project - Navnirmaan
The initial impact of Baroda Next migration has been observed to be rewarding both in terms of increased customer satisfaction & CASA growth.
The said impact has been sustained at 110 Baroda Next brs evaluated on sales, customer satisfaction, etc., during the first stage of evaluation.
Another evaluation carried out recently at Baroda Next brs on (a) customer satisfaction [at 177 brs] and (b) employee satisfaction [at 171 brs] showed significant improvement.
Further evaluation initiatives are on.
To sustain Sales growth, a new Sales Operating Model has been rolled out in 255 brs in Mumbai, Surat, Baroda, Ahmedabad, Delhi & Kanpur
Out of 15 Mid Corporate Brs planned, 14 are already functional and one more is expected to be opened soon.
Further centralisation initiatives are going to be piloted soon to enable the brs to become a “Sales-cum-Service” outlet.
Bank’s Hi-Tech City Branch at Hyderabad has been transformed into an e-branch.

32. Bank’s HR Initiatives Recruitment – 2012-13
Bank’s HR Function has focused on hiring efforts on a sustained basis to bridge the “gap” created by superannuation and to cater to the Bank’s consistent business growth and branch expansion
Bank’s Proposed New Hiring in FY13: 3,400
Probationary Officers: 600
Specialist Officers: 150
Baroda Manipal Trainees: 400
Campus Recruitment: 250
Clerks: 2,000
Bank carried out a three-month long residential programme involving massive skills’ upgradation for its new recruits during FY13 with a focus on development of key banking skills covering the major areas like credit, forex operations, soft skills, etc.
Other path-breaking initiatives in Employee Development are –
Baroda Next: A comprehensive leadership development training covering almost 1,500 leaders {all branch heads of urban/metro branches & AGMs/DGMs in the Bank
Project Sparsh: A transformational HR project focusing on talent management, succession planning, creation of a scientific staffing model & manpower planning, capability building & performance management.
Baroda-Manipal School of Banking: An innovative & new channel of resourcing of trained manpower in the Bank. Around 180 students are being inducted in this school every quarter for a focused grooming and a one-year full-time PG Course in Banking that is tailored to the Bank’s specific requirements.

33. Future Outlook & Guidance
The ongoing industrial slowdown, deficient monsoon & continued stresses in the global economy imply that India’s growth could be in the band of 6.0% to 6.2% in FY13.
According to the latest assessment by ICRA Ltd., Nominal GDP for India will expand by 14.0%, Bank Deposits by 13.5–15.0% and Bank Credit by % during FY13.
Credit offtake growth is expected to be muted in FY13, given the weak investment sentiment, substantial borrowing programme of GoI, the expected size of the borrowings to be raised by State Governments and the anticipation for muted deposit growth in FY13.
Bank of Baroda will continue with its cautious stance and try to grow at 1.0% to 1.5% over the banking industry’s average growth, given its strong presence in the industrially progressive states and the support it receives from its overseas operations.
Strategic thrust will be on protecting the “Financial Soundness” that the Bank has consistently maintained throughout the past four, post-global-crisis years.
With a primary focus on risk management, improvement of systems & controls, liquidity and capital strength, development of human capital and customer-friendly branch structures, etc.
To quote Michael Porter (Harvard University), “ The ability to change constantly and effectively is made easier by high-level continuity”.
Bank of Baroda’s proven track record in high-level continuity would help it tide over the present long stretched downturn quite effectively.
Thank you.