Bank of Baroda A Bank of Credible Track

Bank of Baroda A Bank of Credible Track Record ( Q 2 & H 1 , 2010 -11) Dr Rupa Rege Nitsure Chief Economist October 28, 2010

Bank of Baroda: Key Strengths § Bank of Baroda is a 102 years old State-owned Bank with modern & contemporary personality, offering banking products and services to Large industrial, SME, retail & agricultural customers across the country. Uninterrupted Record in Profit-making and Dividend Payment Overseas Business Operations extend across 26 countries through 81 Offices Pioneer in many Customer-Centric Initiatives Strong Domestic Presence through 3, 202 Branches Provides Financial Services to over 37. 153 mln Customers Globally First PSB to receive Corporate Governance Rating (CAGR-2) A well-accepted & recognised Brand in Indian banking industry Modern & Contemporary Personality Relatively Strong Presence in Progressive States like Gujarat & Maharashtra Robust Technology Platform with 100% CBS in Indian Branches

Domestic Branch Network • Bank’s network of domestic branches as on 30 th Sept. , 2010 was 3, 202 & no. of ATMs were 1, 443. • During H 1, FY 11, Bank opened 104 new branches and merged two existing branches. • Around 35. 98% of the Bank’s branch network is located in rural areas. Regional Break-up of Domestic Branches as on 30 th Sept, 2010 Metro Urban Semi. Urban Rural 692 591 767 1, 152 • Newly opened branches are primarily situated in UP & Uttaranchal (38), Gujarat (13), Northern (13) & Rajasthan (10) zones. • Bank proposes to open 300 more branches by the end of FY 11, for which it has already received authorisations.

Robust Technology Platform • As on 30 Sept 2010, all domestic branches, that is 3, 202 branches and 38 extension counters were on CBS. • Additionally, 47 branches of 15 overseas territories and 28 branches of eight overseas subsidiaries are on the CBS covering 96. 15% of the Bank’s overseas network. • A pilot roll out has started for the Bank’s RRBs and the Bank plans to achieve 100. 0% roll out in its RRBs in the current financial year. • Bank’s Retail & Corporate Customers enjoy several facilities like internet banking, phone banking, rapid funds 2 india – an online money transfer service, retail depository services, e-tax payment, NEFT/RTGS through e-banking, sms alerts, cash mgmt services, online institutional trading, etc. • As on 30 Sept. , 2010, Bank had 1, 443 ATMs – 910 Onsite ATMs & 533 Offsite ATMs. • An Integrated Global Treasury Solution is implemented in UK, UAE, Bahamas, Baharain, Hong Kong, Singapore & in India. • AML System has been implemented in India and in 19 overseas territories. • Bank has created an Online Centralised-Database of its employees, which enables speedy decisionmaking, promotions, selection, etc. through automated processes. • Payment Messaging Solution has been implemented in 18 territories including India. • Bank has implemented multiple accounts being linked to a single Debit Card (verified by Visa; CVV 2) & has also implemented 3 DSecure feature & Back Office for Merchant Mgmt in the Internet Payment Gateway. • Document Mgmt System has been rolled out for Centralised Pension Payment Cell at Baroda. • All Back-Office functions have now been effectively centralised in Bank of Baroda. • Bank has also implemented the NRHM (software) for National Rural Health Mission for Gujarat & Rajasthan and Solar Power Generation System – a Green Initiative in 64 branches.

Concentration (%): Domestic Branch Network

Pattern of Shareholding: 30 th Sept, 2010 As on 30 th Sept. , 2010 • Share Capital Rs 365. 53 crore • No. of Shares 364. 27 million • Net worth Rs 15, 669. 06 crore • B. V. per share Rs 430. 15 • Return on Equity (annualised): 23. 98% • BOB is a Part of the following Indexes BSE 100, BSE 200, BSE 500 & Bankex Nifty Junior, Bank. Nifty, CNX 100, CNX 500 • BOB’s Share is listed on BSE and NSE in ‘Future and Options’ segment also.

Comparative Performance of Bo. B Stock: Sept’ 09 to Sept’ 10 Value (30 th Sept’ 09) Value (30 th Sept’ 10) % Change Sensex 17, 126. 84 20, 069. 12 17. 2% Nifty 5, 083. 95 6, 029. 95 18. 6% Bankex 9, 855. 60 14, 025. 04 42. 3% Bank. Nifty 8, 812. 35 12, 366. 35 40. 3% Bo. B-BSE 482. 40 872. 80 80. 9% Bo. B-NSE 481. 70 872. 50 81. 1% Index/Stock

Awards & Accolades • The Bank has received several awards during the calendar 2010 for its consistent outstanding performance (both business & financial), superior management, dedication to excellence and contribution to rural economy & financial inclusion. • It is the only Indian bank whose “Rank” has improved by 69 notches in just a year’s time from 283 to 214 in the Banker’s (London) Top 1, 000 World Banks. • To list a few select awards that the Bank has received in the recent past, • Business India’s “Best Bank” award for the year 2010 • Dainik Bhaskar-DNA India Pride Award 2010 – A Silver Trohy • Dalal Street-KPMG DSIJ PSU Award 2010 • Runner Up in Financial Express Best Bank Awards under the Nationalised Bank Category • Innovative Brand Builder Award by CMO Asia Awards, Singapore • Skoch Challenger Award for “Bank of the Year”

Indian Macro Scene during Sep’ 09 to Sep’ 10

Economic & Policy Environment in H 1, FY 11 • The IMF’s latest World Economic Outlook (Oct. 6) says global economic recovery is proceeding, but it is an unbalanced recovery. • Global recovery is sluggish in advanced countries but much stronger in emerging and developing economies. • India’s GDP grew 8. 8% in Q 1, FY 11 over & above 8. 6% in Q 4, FY 10. • Growth in Q 1, FY 11 was driven by a strong growth rebound in manufacturing sector and a few segments of services sector like hospitality & communications. • India’s industrial output grew 10. 6% (y-o-y) in Apr-Aug, FY 11 versus 5. 9% a year ago. • However, the growth is still quite lop-sided and stresses are seen in sectors like power generation, beverages, textiles, chemicals, wood products, consumer nondurables, etc. • Thanks to good monsoon rains, India’s kharif foodgrain production in FY 11 is estimated at 114. 63 mln tns – 10. 4% higher than the last year’s level. • India’s exports grew 28. 6% (y-o-y) in Apr-Aug’ 10, while imports grew 33. 1%, taking trade deficit to US$56. 62 bln in Apr-Aug’ 10, versus UD $40. 28 bln a year ago. • Higher trade deficit combined with the lower invisibles surplus has been putting sustained adverse pressure on current account deficit.

Economic & Policy Developments in H 1, FY 11 • However, capital account surplus on the back of short term credit, ECBs, banking capital, etc. , has been adequately financing the current account deficit. • Net investment of portfolio investors in India’s debt & equity segments amounted to US $27. 12 bln in H 1, FY 11. • Indian rupee that depreciated against the USD by 3. 5% in Q 1, FY 11 to 46. 46 as on 30 Jun, 2010 bounced back in Q 2 and appreciated by 3. 3% during Q 2, FY 11 to 44. 93 as on 30 Sept, 2010. • Indian government’s Fiscal Deficit declined 16. 9% (y-o-y) during Apr-Aug, FY 11 mainly on account of windfall from 3 G & broadband spectrum auctions and decent revenue generation. • Inflation has emerged as a major concern in macroeconomic management and is still sticky in the band of 8. 5% to 9. 0%. • To counter inflationary pressures, the RBI has cumulatively raised Repo rate by 125 bps and Reverse Repo rate by 175 bps since Mar’ 10. • Banking industry’s aggregate deposit growth at 14. 3% (y-o-y) and credit growth at 19. 0% (y-o-y) as on Sept 24, 2010 were way below market expectations. The broad money supply expansion was also controlled at 14. 7% (y-o-y).

Bank’s Business Growth (Y-O-Y): Sept’ 05 to Sept’ 10

Bank’s Profitability: H 1, FY 06 to H 1, FY 11 • During the last five years, the Bank’s Half-yearly Net Profit has grown at the CAGR of 35. 2%

Bank’s Asset Quality: Sept’ 04 to Sept’ 10 Gross NPA Net NPA

Bank’s Business Performance: Sep’ 09 to Sep’ 10 Sep’ 09 Mar’ 10 Sep’ 10 Y-O-Y (%) Change Over March (%) Global Business 3, 56, 274 4, 16, 080 4, 62, 619 29. 9 11. 2 Domestic Business 2, 70, 250 3, 16, 926 3, 47, 733 28. 7 9. 7 Overseas Business 86, 025 99, 153 1, 14, 885 33. 6 15. 9 Global Deposits 207355 2, 41, 044 2, 69, 660 30. 1 11. 9 Domestic Deposits 1, 609 1, 85, 283 2, 06, 001 28. 3 11. 2 Overseas Deposits 46, 746 55, 762 63, 659 36. 2 14. 2 Global CASA Deposits 62705 71, 468 79, 815 27. 3 11. 7 Domestic CASA 58, 091 66, 024 73, 944 27. 3 12. 0 Overseas CASA 4, 614 5, 444 5, 870 27. 2 7. 8 Particular (Rs crore) • Share of Domestic CASA improved from 35. 23% in Q 1, FY 11 to 35. 89% in Q 2, FY 11.

Bank’s Business Performance: Sep’ 09 to Sep’ 10 Sep’ 09 Mar’ 10 Sep’ 10 Y-O-Y (%) Change Over March (%) Global advances (Net) 1, 48, 919 1, 75, 035 1, 92, 959 29. 6 10. 2 Domestic Advances 1, 09, 641 1, 31, 644 1, 41, 732 29. 3 7. 7 Overseas Advances 39, 278 43, 392 51, 227 30. 4 18. 1 21, 403 24, 248 27, 192 27. 0 12. 1 9, 353 10, 313 11, 324 21. 1 9. 8 SME Credit 16, 666 21, 111 23, 506 41. 0 11. 3 Farm Credit 17, 744 21, 617 21, 555 21. 5 -0. 3 Credit to Weaker Sections 8, 961 10, 945 11, 976 33. 6 9. 4 Particular (Rs crore) Out of Gross Domestic Credit, Retail Credit Of which: Home Loans

Bank’s Business Performance: Sep’ 09 to Sep’ 10 Y-O-Y (%) Change Over March (%) 52, 544 59, 349 26. 3 13. 0 45, 749 51, 258 57, 994 26. 8 13. 1 Overseas Savings Deposits 1, 239 1, 286 1, 355 9. 3 5. 4 Global Current Deposits 15, 717 18, 924 20, 466 30. 2 8. 1 Domestic Current Deposits 12, 343 14, 766 15, 950 29. 2 8. 0 Overseas Current Deposits 3, 375 4, 158 4, 516 33. 8 8. 6 Particular (Rs crore) Sep’ 09 Mar’ 10 Global Saving Deposits 46, 988 Domestic Savings Deposits

Bank’s Profits & NII: Jul-Sep, FY 10 & FY 11 Particular (Rs crore) Gross Profit Net Interest Income Jul-Sep’ 09 Jul-Sep’ 10 Y-O-Y (%) 1, 031. 59 1, 656. 74 60. 6 634. 18 1, 019. 30 60. 7 1, 388. 60 2, 038. 14 46. 8 • The Bank’s NII grew sequentially from Rs 1, 744. 95 crore in Jan. Mar’ 10 to Rs 1, 857. 99 crore in Apr-Jun’ 10 to Rs 2, 038. 14 crore on the back of a healthy growth in credit and prudent management of liabilities.

Other Highlights: For Last Select Quarters Particular (in %) Q 2, FY 10 Q 4, FY 10 Q 1, FY 11 Q 2, FY 11 Global Cost of Deposits 5. 15 4. 42 4. 39 4. 50 Domestic Cost of Deposits 5. 87 5. 08 5. 09 5. 27 Overseas Cost of Deposits 2. 49 2. 06 1. 95 2. 02 Global Yield on Advances 8. 71 8. 23 8. 17 8. 40 Domestic Yield on Advances 10. 23 9. 76 9. 79 10. 17 Overseas Yield on Advances 4. 48 3. 74 3. 67 3. 75

Other Highlights: For Last Select Quarters Particular (in %) Q 2, FY 10 Q 4, FY 10 Q 1, FY 11 Q 2, FY 11 Global Yield on Investment 6. 69 6. 51 6. 66 7. 06 Domestic Yield on Investment 6. 87 6. 72 6. 83 7. 24 Overseas Yield on Investment 4. 33 3. 68 3. 71 Global NIM 2. 63 2. 97 2. 90 3. 02 Domestic NIM 2. 89 3. 50 3. 43 3. 62 Overseas NIM 1. 59 1. 30 1. 31 1. 33

Key Financial Ratios : H 1, FY 10 and H 1, FY 11 § Return on Average Assets at 1. 27% [1. 13% in H 1, FY 10] § Earning per Share (annualised) at Rs 103. 14 [Rs 72. 46 in H 1, FY 10] § Book Value per Share at Rs 430. 15 [Rs 348. 70 in H 1, FY 10] § Return on Equity (ROE) at 23. 98% [20. 78% in H 1, FY 10] § Capital Adequacy Ratio at 13. 22% with Tier I Capital at 8. 16% • Cost-Income Ratio declined from 47. 54% to 38. 69% (Y-o-Y) § Gross NPA ratio increased marginally from 1. 30% to 1. 39% (Y-o-Y) § Net NPA ratio increased from 0. 27% to 0. 38% (Y-o-Y). § NPA Coverage at the healthy level of 73. 11% (without technical write-offs) and at 85. 56% (with technical write-offs) § Incremental Delinquency Ratio at 1. 05% (annualised) in H 1, FY 11.

Key Financial Ratios : Q 2, FY 10 and Q 2, FY 11 § Return on Average Assets at 1. 34% [ 1. 07% in Q 2, FY 10] § Earning per Share (annualised) at Rs 111. 92 [Rs 69. 64 in Q 2, FY 10] § Return on Equity (ROE) at 26. 02% [ 19. 97% in Q 2, FY 10] § Cost-Income Ratio declined from 48. 00% in Q 2, FY 10 to 39. 08% in Q 2, FY 11 § Incremental Delinquency Ratio at 0. 16% (non-annualised) in Q 2, FY 11 versus 0. 37% (non-annualised) in Q 1, FY 11.

Non-Interest Income: Q 2, FY 10 and Q 2, FY 11 Q 2, FY 10 Q 2, FY 11 % Change (Y-O-Y) Commission, Exchange, Brokerage 192. 05 248. 28 29. 3 Incidental Charges 78. 22 90. 50 15. 7 Other Miscellaneous Income 53. 67 63. 20 17. 8 Total Fee-Based Income 323. 94 401. 98 24. 1 Trading Gains 120. 54 110. 13 -8. 6 Profit on Exchange Transactions 84. 24 100. 02 18. 7 Recovery from PWO 66. 61 69. 16 3. 8 Total Non-Interest Income 595. 33 681. 29 14. 4 (Rs crore)

Provisions & Contingencies: Q 2, FY 10 and Q 2, FY 11 (Rs crore) Q 2, FY 10 Q 2, FY 11 % Change (Y-O-Y) Provision for NPA & Bad Debts Written-off 172. 16 142. 26 -17. 4 Provision for Depreciation on Investment -61. 07 -20. 11 -- Provision for Standard Advances 1. 49 52. 04 3392. 6 Other Provisions (including Provision for staff welfare) 3. 75 11. 30 201. 3 Tax Provisions 281. 08 451. 95 60. 8 Total Provisions 397. 41 637. 44 60. 4

Bank’s Treasury Highlights: Q 2 and H 1, FY 11 • Treasury Income stood at the healthy level of Rs 210. 15 crore in Q 2, FY 11 and at Rs 459. 70 crore in H 1, FY 11. • The Bank’s Trading Gains Stood at Rs 110. 13 crore in Q 2, FY 11 and at Rs 238. 07 crore in H 1, FY 11. • As of September 30, 2010, the share of SLR Securities in Total Investment was 85. 85%. • The Bank had 78. 35% of SLR Securities in HTM and 20. 92% in AFS at end. September 2010. • The per cent of SLR to NDTL as on 30 th September, 2010 was 26. 79%. • While the modified duration of AFS investments is 2. 52 years; that of HTM securities is 5. 15 years. • Total size of Bank’s Domestic Investment Book as on 30 th September, 2010 stood at Rs 63, 081. 12 crore. • Total size of Bank’s Overseas Investment Book as on 30 th September, 2010 stood at Rs 3, 193 crore.

Overseas Business: H 1, FY 11 • As on 30 Sept, 2010, the “Overseas Business” contributed 24. 8% to the Bank’s Total Business, 16. 9% to its Gross Profit and 31. 6% to its Core Fee income. • While the Cost-Income Ratio for Domestic Operations stood at 41. 51% in H 1, FY 11, it was more favourable at 19. 74% for the Bank’s Overseas Operations. • While the Gross NPA (%) in Domestic Operations stood at 1. 68% at end. September, 2010, that for Overseas Operations was lower at 0. 58%. • The ROAA for Overseas Operations stood at 1. 05% in Q 2, FY 11 and at 0. 98% in H 1, FY 11. • The Return on Avg. Net Worth for Overseas Operations improved from 16. 41% at end-June, 2010 to 19. 23% at end-Sept, 2010. • During H 1, FY 11, the Bank raised US $350 mln for 5. 5 years at 4. 75% coupon (YTM: 4. 886) under its MTN programme to finance asset growth in overseas operations.

Capital Adequacy & Capital Raising in H 1, FY 11 • The Bank’s CRAR (Basel II) as on 30 th Sept. , 2010 was at 13. 22%; of which Tier 1 was at 8. 16% and Tier 2 at 5. 07%. • The size of Bank’s risk-weighted assets as on 30 th September, 2010 was Rs 1, 85, 282 crore. • The Bank proposes to maintain its CRAR in the band of 13. 0% to 13. 5% in the coming years (with the Tier 1 between 8. 0% and 8. 5%). • The Bank raised Rs 2, 211. 50 crore during H 1, FY 11 by way of the following issues. • Subordinated Upper Tier II Bonds (maturing in 2025): Rs 500 crore in May, 2010 • Subordinated Upper Tier II Bonds (maturing in 2025): Rs 500 crore in June, 2010 • Subordinated Upper Tier II Bonds (maturing in 2025): Rs 500 crore in August, 2010 • Perpetual [IPID] (maturing in 2020): Rs 711. 50 crore in August, 2010

NPA Movement (Gross): H 1, FY 11 Particular A. Opening Balance ( Rs crore) 2, 400. 69 B. Additions during H 1, FY 11 954. 31 Out of which, Fresh Slippages 919. 63 C. Reduction during H 1, FY 11 635. 15 Recovery 242. 45 Upgradation 144. 67 PWO & WO 248. 03 Exchange Difference NPA as on 30 th September, 2010 Recovery in PWO in H 1, FY 11 -2, 719. 85 125. 28

Sector-wise Gross NPAs: H 1, FY 10 & FY 11 Sector Gross NPA (%) H 1, FY 10 Gross NPA (%) H 1, FY 11 Agriculture 2. 09 3. 44 Large & Medium Industries 1. 21 1. 56 Retail 2. 38 2. 12 Housing 2. 67 2. 13 SME 1. 70 2. 94

Cumulative Position of Restructured Assets (Domestic) • During 30 months (1 Apr’ 08 to 30 Sep’ 10), the Bank has restructured accounts amounting Rs 5, 432. 66 crore. • Within this, the loans worth Rs 319. 04 crore were restructured in H 1, FY 11. • For the period of 30 months, out of the total amount restructured, Rs 2, 845. 44 crore (52. 4%) belonged to wholesale banking, Rs 1, 345. 59 crore (24. 8%) to SMEs, Rs 566. 08 crore (10. 4%) to retail and Rs 675. 55 crore (12. 4%) to agriculture sector. • About 41 accounts (of Rs 1 crore & above) restructured on/after 1 st Apr, 2008 with aggregate outstanding of Rs 539. 01 crore slipped to NPA after restructuring and most of them belonged to the SME segment. • Industry-wise break-up shows that the Bank’s restructured accounts are well spread over different sectors, the major ones being iron & steel, cotton textiles, engineering, infrastructure, real estate, etc. • The Bank has primarily helped genuine borrowers who suffered from temporary cash flow problems due to the global crisis. These accounts are restructured looking into the internal strength and the financial viability of such borrowers.

Sectoral Deployment of Credit at end-Sept, 2010 Sector % share in Gross Domestic Credit Agriculture 15. 0 Retail 18. 9 SME 16. 3 Wholesale 36. 3 Miscellaneous 13. 5 Total 100. 0%

Economic Outlook • • The IMF forecasts global output to increase by 4. 8% in 2010 and by 4. 2% in 2011 reflecting a temporary slowdown spanning the second half of this year. It has revised upwards India’s economic growth forecast for 2010 from 9. 4% to 9. 7% citing strengthening local consumer demand. • However, it has maintained its 2011 economic growth forecast for India at 8. 4%. • Indian policymakers project India’s economy to expand by 8. 0% to 8. 5% in FY 11. • While a good harvest season augurs well for domestic consumption, inflation inertia and appreciating rupee pose significant challenges for policymakers. • Credit growth is still not highly broad-based and is expected to stay in the band of 18% to 20% for the banking industry in FY 11. • Slow pace of deposit mobilisation and large IPO issues have created shortterm tightness in liquidity and pressure on short term interest rates. Busy season of H 2, FY 11 & continuation of tightening cycle are supportive of an upward bias in long-term interest rates. Banks will continue to focus on the CASA franchise and recovery from the non performing loans. Pressures on asset quality have eased on the back of improving rating upgrades for the corporates. • • •

Bank’s Guidance & Vision • The Bank would continue with its thrust on sustainable & qualitative growth - • Would maintain its growth above the industry average to steadily expand the market share. From Sep’ 07 to Sep’ 10, the Bank’s market share in Deposits has gone up from 3. 62% to 3. 65% and in Advances from 3. 45% to 3. 71%. • The Bank would grow its deposits in the band of 20% to 22. 0%; credit in the range of 23. 0% to 24. 0%, fee-based income in line with the loan-book and overall profitability by 25. 0%, factoring in various downside risks stemming from the economic environment. • The Bank is building Strong Foundation for Future Growth by • working aggressively on enhancing the HR capabilities • working in a dedicated fashion on its BPR project in consultation with Mckinsey & Co. • focusing on development of marketing and sales & service culture • expanding the market share in both Indian and overseas territories • raising capital at every appropriate opportunity

Bank’s BPR Project - Navnirmaan • Roadmap of the Project Navnirmaan • Design : 4 Months • Pilot & Execution: 5 to 12 months • Roll-Out: 2 to 3 years • Project Navnirmaan has already entered the Implementation stage • There are in all 18 activities underway focusing on superior customer experience, customer convenience, capacity building of employees & leveraging technology. • As a part of rollout, all branches at metro & urban centres shall be brought under the new model of Baroda Next branch • Training system is being revamped an Academy of Excellence is being created to meet the soft skill requirement of the employees besides developing a pipeline of business leaders • Organisational restructuring is being undertaken to align the Bank with redesigned processes and prepare it for the challenges of ambitious growth

Bank’s HR Initiatives • Recruitment during FY 11 • Probationary Officers – 1, 200 • Specialist Officers (in various specialised disciplines) – 345 • Clerks – 2, 000 (in progress) • Campus Recruitment – 616 • (Bank visited nearly 75 institutes including some of the premier Business schools of the country) • Total New Hires Joining Bo. B in FY 11 : 4, 161 • Tentative Recruitment Plans for FY 12 • Probationary Officers – 1, 500 • Campus Recruitment – around 800 • Specialist officers (in various disciplines) – 200 • Clerks – 1, 700 • New Hires Planned for Recruitment in FY 12: 4, 200 • Bank has launched two massive Leadership Development Programmes for 1, 200 of its branch heads, 300 AGMs/DGMs – unparalleled in industry & first of its kind for an Indian state-owned Bank.

Thank you.