Bank of Baroda: Consistently Sound Performance Achieved through Best Practices of People, Processes & Technology Performance Analysis: Q 2 & H 1, 2012 -13 (FY 13) Dr Rupa Rege Nitsure Chief Economist October 22, 2012
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 96 Offices Strong Domestic Presence through 4, 021 Branches Pioneer in many Customer-Centric Initiatives Provides Financial Services to over 47 mln Customers Globally First PSB to receive Corporate Governance Rating (CGR-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
Results at a glance Q 2, FY 13 H 1, FY 13 • Net Profit up 11. 6%(y-o-y) to Rs 1, 301. 39 crore • Net Profit up 11. 0%(y-o-y) to Rs 2, 440. 25 crore • Operating Profit up 11. 3% (y-o-y) to Rs 2, 382. 58 crore • Operating Profit up 16. 7% (y-o-y) to Rs 4, 635. 76 crore • Net Interest Income up 11. 5% (y-o-y) to Rs 2, 862. 30 crore • Net Interest Income up 16. 4% (y-o-y) to Rs 5, 660. 37 crore • NIM at 2. 71% in Global & at 3. 23% in Domestic operations • NIM at 2. 73% in Global & at 3. 22% in Domestic operations • ROAA (annualized) at 1. 12% • ROAA (annualized) at 1. 06% • Total Business up 23. 2% (y-o-y) to Rs 7, 00, 330 crore by end-Sept, 2012 • Total Advances up 22. 2% (y-o-y) to Rs 2, 92, 181 crore by end-Sept, 2012 • Total Deposits up 24. 0% (y-o-y) to Rs 4, 08, 150 crore by end-Sept, 2012 • Net NPAs (%) at 0. 82% as on 30 th Sept, 2012 • Provision Coverage Ratio at the healthy level of 75. 72% as on 30 th Sept, 2012 • CRAR at 12. 91% with Tier 1 at 9. 57% as on 30 th Sept, 2012 • Cost-Income ratio at 36. 48% in H 1, FY 13.
Sustained sound performance from FY 08 2007 -08 (Annual) 2008 -09 (Annual) 2009 -10 (Annual) 2010 -11 (Annual) 2011 -12 (Annual) H 1, 2012 -13 (Half-Yearly) Assets (Rs crore) 1, 83, 479 2, 26, 672 2, 78, 317 3, 58, 397 4, 47, 321 4, 75, 827 Net Profit (Rs crore) 1, 436 2, 227 3, 058 4, 242 5, 007 2, 440. 25 Tier 1 Capital (Rs crore) 8, 496 11, 070 14, 357 20, 974 27, 498 26, 712 Return on Equity (%) 15. 07% 19. 48% 22. 19% 21. 48% 19. 04% 16. 90% Cost-Income Ratio (%) 50. 89% 45. 38% 43. 57% 39. 87% 37. 55% 36. 48% NPL (Net, %) 0. 47% 0. 31% 0. 34% 0. 35% 0. 54% 0. 82% • In four & a half yrs, Bank’s assets have grown 2. 6 times. • Bank’s half-yearly net profit in H 1, FY 13 is bigger than its full year’s profit in FY 09.
Impressive CAGR for key parameters (FY 08 thru’ FY 12) Parameter CAGR (FY 08 thru’FY 12) Assets 24. 96% Gross Profit 31. 02% Net Profit 36. 65% Net Worth 28. 90% Total Capital 26. 84% Tier-1 Capital 34. 13%
Sustained expansion of global branch network
Features of domestic branch network • In a year’s time (Sept’ 11 to Sept’ 12), the Bank added 529 brs to its domestic network comprising 120 in metro; 76 in urban; 205 in semi-urban & 128 in rural areas. • During H 1, FY 13, the Bank opened 118 new brs (11 in metro, 10 in urban, 38 in semi-urban and 59 in rural areas) and merged one rural br in June, 2012 & converted that into a satellite unit. • In the remaining part of FY 13, the Bank plans to open 475 new brs with 241 brs in Tier-I & Tier-II centres & 234 brs in Tier-III to Tier-VI centres. • Newly opened branches in H 1, FY 13 majorly belong to Eastern UP, Rajasthan, Maharashtra, Gujarat & Eastern states. • Around 33. 03% of the Bank’s network at the end-Sept, FY 13 was situated in rural areas. • Moreover, the Bank’s ATM tally improved from 1, 800 at end-Sept, 2011 to 2, 230 at end-June, 2012. Regional Break-up of Domestic Branches as on 30 th Sept, 2012 Metro Urban Semi-Urban Rural 885 725 1, 083 1, 328
Deepening of overseas business. . No. branches, offices, countries • 120 • 100 • 80 • 72 • 74 • 78 • 76 • 74 • 81 • 78 • 82 • 81 • 60 • 47 • 48 • 46 • 48 • 50 • 48 • 54 • 51 • 50 • 86 • 85 • 54 • 86 • 54 • 89 • 86 • 55 • 54 • 96 • 93 • 57 • 55 • 40 • 25 • 25 • 26 • 25 • 24 • 20 , F Y 13 13 , F Y 12 12 , F Y 11 , F Y • Q 2 • Q 1 • Q 4 • Q 3 • Q 2 Number of Countries where present • Q 1 11 • Q 3 • Q 2 • Q 1 • Q 4, • • Q 4 , F Y 11 , F Y 10 FY 10 , F Y Y 10 Number of Overseas Offices • Q 3 • • Q 2 • Q 1 • Q 4 • Q 3 Overseas Branches , F 10 , F Y 09 09 , F Y • • Q 2 • Q 1 , F Y 09 • 0
Other strengths: 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’s retail e-banking portal has been made more use-friendly through enhancement of its look & feel for customers. • 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 Raid. Funds 2 India solution in all its major territories. • Bank’s Mobile Banking (Baroda M-Connect) provides various facilities to its customers like balanceenquiry, 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, i. Phone and Windows; National Unified USSD Platform also being enabled thru’ mobile banking. • Internet Payment Gateway is implemented by the Bank to facilitate E-commerce Transactions in multi currencies across the globe.
Other strengths: 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, 230 by 30 th Sept, 2012; its ATM switch also supports eight international territories. • Bank has introduced a Rupay card. • Bank has a Facility of Multiple Accounts being linked to a single Debit Card (verified by Visa, CVV 2) 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 speedily. • Cash Management Solution is implemented to provide Operational Support to the Customers’ ALM. • Anti Money Laundering (AML) is implemented in India and 21 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 fund management. • Bank has a Centralised SWIFT system for India & its 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. • Online Trading (Corporate & Retail) has been implemented in India.
Other strengths: 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. • Bank’s intranet portal is revamped into a complete Knowledge Mgmt Solution for the employees’ benefit. • Travel card has been introduced in Foreign Currency. • Online loan applications have been rolled out for SME, Agriculture, Housing, Educational & Auto loans along with the facility of online tracking of these applications. • 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. • Bo. B IIT – an exclusive IT Training Centre has been set up in Ghandhinagar to educate the Bank’s Staff in all IT related products & services.
Other strengths: Rich human resource base …. Period No. of Employees No. of Officers Q 1, FY 09 36, 344 13, 643 Ratio of Officers to Total Employees 37. 5% Q 2, FY 09 36, 255 13, 615 37. 6% Q 3, FY 09 36, 045 13, 502 37. 5% Q 4, FY 09 36, 838 13, 346 36. 2% Q 1, FY 10 37, 007 14, 163 38. 3% Q 2, FY 10 38, 609 14, 378 37. 2% Q 3, FY 10 37, 039 14, 358 38. 8% Q 4, FY 10 38, 960 14, 431 37. 0% Q 1, FY 11 38, 551 14, 335 37. 2% Q 2, FY 11 38, 724 15, 148 39. 1% Q 3, FY 11 38, 629 15, 838 41. 0% Q 4, FY 11 40, 046 15, 759 39. 4% Q 1, FY 12 40, 250 15, 681 39. 0% Q 2, FY 12 40, 967 16, 426 40. 1% Q 3, FY 12 41, 345 16, 646 40. 3% Q 4, FY 12 42175 16, 953 40. 2% Q 1, FY 13 42, 136 16, 991 40. 3% Q 2, FY 13 43, 587 17, 316 39. 7%
Other strengths: Steady improvement in capital strength Capital Adequacy Ratio (Basel-II) Tier-I (%) Tier-II (%) Q 1, FY 09 13. 04% 7. 79% 5. 25% Q 2, FY 09 12. 57% 7. 57% 5. 00% Q 3, FY 09 13. 20% 8. 53% 4. 67% Q 4, FY 09 14. 05% 8. 49% 5. 56% Q 1, FY 10 14. 56% 8. 81% 5. 75% Q 2, FY 10 14. 67% 8. 86% 5. 81% Q 3, FY 10 14. 65% 9. 31% 5. 34% Q 4, FY 10 14. 36% 9. 20% 5. 16% Q 1, FY 11 13. 25% 8. 16% 5. 09% Q 2, FY 11 13. 22% 8. 16% 5. 06% Q 3, FY 11 12. 45% 7. 70% 4. 75% Q 4, FY 11 14. 52% 9. 99% 4. 53% Q 1, FY 12 13. 10% 9. 06% 4. 04% Q 2, FY 12 12. 73% 8. 82% 3. 91% Q 3, FY 12 13. 45% 9. 31% 4. 14% Q 4, FY 12 14. 67% 10. 83% 3. 84% Q 1, FY 13 13. 74% 10. 13% 3. 61% Q 2, FY 13 12. 91% 9. 57% 3. 34%
Other strengths: Relatively stronger presence in progressive states
Pattern of shareholding: 30 th Sept, 2012 As on 30 th Sept, 2012 • Share Capital: Rs 412. 38 crore • No. of Shares: • Net worth: • B. V. per share: 411. 12 million Rs 28, 880. 09 crore (up 28. 7% , y-o-y) Rs 702. 47 (up 22. 6%, y-o-y) • Return on Equity: 16. 9% in H 1 & 18. 02% in Q 2, FY 13 • BOB is a Part of the following Indexes BSE 100, BSE 200, BSE 500 & Bankex Nifty, Bank. Nifty, CNX 100, CNX 200, CNX 500 • BOB’s Share is also listed on BSE and NSE in the ‘Future and Options’ segment.
Sustained growth in financial value Period Net Worth Growth Rate (y-o-y) Q 1, FY 09 9, 907 13. 05% Q 2, FY 09 10, 304 13. 44% Q 3, FY 09 11, 011 14. 84% Q 4, FY 09 11, 387 19. 52% Q 1, FY 10 12, 067 21. 80% Q 2, FY 10 12, 703 23. 28% Q 3, FY 10 13, 533 22. 90% Q 4, FY 10 13, 785 21. 06% Q 1, FY 11 14, 646 21. 37% Q 2, FY 11 15, 669 23. 35% Q 3, FY 11 16, 741 23. 70% Q 4, FY 11 19, 751 43. 28% Q 1, FY 12 20, 785 41. 92% Q 2, FY 12 22, 440 43. 21% Q 3, FY 12 24, 169 44. 37% Q 4, FY 12 26, 303 33. 18% Q 1, FY 13 27, 889 34. 20% Q 2, FY 13 28, 880 28. 70%
Bank has performed consistently well despite a non-supportive macro backdrop Economic Indicator Q 2, FY 12 Q 3, FY 12 Q 4, FY 12 Q 1, FY 13 Q 2, FY 13 Real GDP growth (%) 6. 7 6. 1 5. 3 5. 5 NA Agriculture (%) 3. 1 2. 8 1. 7 2. 9 NA Industry (%) 2. 8 0. 7 0. 8 NA Services (%) 8. 7 7. 5 7. 4 NA Private Consumption Expenditure growth (%) (at current market prices) 14. 1 15. 2 13. 9 12. 6 NA Gross Fixed Capital Formation (% to GDP) (at current market prices) 30. 9 27. 8 28. 6 29. 9 NA SCB Credit growth (%, Avg Basis) 20. 0 17. 9 16. 8 17. 7 16. 7 SCB Deposit growth (%, Avg Basis) 18. 0 16. 8 15. 3 13. 8 14. 2 SCB Incremental Credit-Deposit Ratio (%, end-period) 55. 0 68. 3 84. 3 46. 6 46. 2 WPI-Inflation, Core Inflation (%) (end-period) 10. 00 (7. 99) 7. 74 (7. 91) 7. 69 (4. 96) 7. 25 (4. 85) 7. 81 (5. 56) Trade Balance ( US $ Billion) -43. 9 -47. 7 -51. 7 -42. 50 -49. 3 Rupee-USD (%, end-period) 48. 97 53. 10 50. 88 55. 60 52. 86 Foreign Exchange Reserves (endperiod, US $ Billion) 311. 48 296. 69 294. 40 289. 99 294. 81
Total business growth from FY 09. . • 800, 000 • 672248 • 700, 000 • 600, 000 • 534116 • 482211 • 500, 000 • 416297 • 400, 000 • 300, 000 • 335, 648 • 473825 • 491561 • 402731 • 316928 • 259958 • 190, 038 • 200, 000 • 100, 000 • 700330 • 668552 • 75, 690 • 0 • FY 09 • 99, 152 • Total Business • FY 10 • 194, 726 • 208, 769 • 131, 385 • Domestic Business • FY 12 • Overseas Business FY 13 • FY 11 • Q 1, • Q 2, FY 13 • In just three & a half years, the Bank’s total business has more than doubled.
Total deposit growth from FY 09. . • 450000 • 408149 • 384871 • 400000 • 382739 • 350000 • 305439 • 280135 • 300000 • 241044 • 250000 • 200000 • 192397 • 277839 • 292877 • 233323 • 185283 • 151409 • 150000 • 104, 736 • 100000 • 50000 • 40, 988 • 0 • FY 09 • 55, 762 • Total Deposits • FY 10 • 104, 899 • 115, 273 • 72, 116 • Domestic Deposits • FY 12 • Overseas Deposits FY 13 • FY 11 • Q 1, • Q 2, FY 13 • In just three & a half years, the Bank’s total deposits have grown 2. 12 times.
Relatively well-protected domestic CASA share • 120, 000 • 45% • 105, 259 • 40% • 39. 81% • 100, 000 • 35% • 31. 75% • 80, 000 • 30% • 25% • 60, 000 • 49, 290 • 20% • 16. 72% • 15% • 15. 02% • 40, 000 • 10% • 20, 000 • 5% • 0% • Q 2 • Q 1 , F Y 09 • Q 3, FY 09 • Q 4, FY 09 • Q 1, FY 10 • Q 2, FY 10 • Q 3, FY • Q 10 4, FY 10 • Q 1, FY 11 • Q 2, FY 11 • Q 3, FY 11 • Q 4, FY 11 • Q 1, FY 12 • Q 2, FY 12 • Q 3, FY 12 • Q 4, FY 12 • Q 1, FY 13 • Q 2, FY 13 • 0 • CASA Deposits • CASA as % to Dom. Dep. • CASA Deposits Growth Rate (y-o-y)
Total advances growth from FY 09. . • 300, 000 • 250, 000 • 287377 • 285813 • 292181 • 40. 00% • 35. 00% • 34. 25% • 228676 • 30. 00% • 200, 000 • 30. 70% • 25. 70% • 25. 00% • 175035 • 150, 000 • 143251 • 22. 19% • 23. 00% • 22. 19% • 20. 00% • 15. 00% • 100, 000 • 10. 00% • 50, 000 • 5. 00% • 0 • FY 09 • Net Advances • FY 11 • Net Advances Growth Q 1, FY 13 • FY 10 • FY 12 • Rate (y-o-y) • Q 2, FY 13 • 0. 00% • In just three & a half years, the Bank’s total advances (net terms) have also more than doubled.
Steady gains in market share …. . • 4. 80% • 4. 60% • 4. 40% • 4. 32% • 4. 20% • 4. 00% • 3. 80% • 4. 18% • 3. 63% • 3. 60% • 3. 40% • 3. 42% • 3. 20% • Q 1, • Q FY 2, 09 • Q FY 3, 09 • Q FY 4, 09 • Q FY 1, 09 • Q FY 2, 10 • Q FY 3, 10 • Q FY 1 4 0 • Q , FY 1, 10 • Q FY 2, 11 • Q FY 3, 11 • Q FY 4, 11 • Q FY 1, 11 • Q FY 2, 12 • Q FY 3, 12 • Q FY 4, 12 • Q FY 1, 12 • Q FY 2, 13 FY 13 • 3. 00% • Deposits Domestic Market Share • Advances Domestic Market Share
Consistency in profit-making • During the last five years, the Bank’s Half-yearly Net Profit has grown at the rich CAGR of 30. 0%.
Relatively lower NPL ratios in the industry Period Q 1, FY 09 Q 2, FY 09 Q 3, FY 09 Q 4, FY 09 Q 1, FY 10 Q 2, FY 10 Q 3, FY 10 Q 4, FY 10 Q 1, FY 11 Q 2, FY 11 Q 3, FY 11 Q 4, FY 11 Q 1, FY 12 Q 2, FY 12 Q 3, FY 12 Q 4, FY 12 Q 1, FY 13 Q 2, FY 13 Gross NPA (%) 1. 86% 1. 62% 1. 50% 1. 27% 1. 44% 1. 30% 1. 43% 1. 36% 1. 41% 1. 39% 1. 32% 1. 36% 1. 41% 1. 48% 1. 53% 1. 84% 1. 98% Net NPA (%) 0. 52% 0. 43% 0. 37% 0. 31% 0. 27% 0. 31% 0. 34% 0. 39% 0. 38% 0. 36% 0. 35% 0. 44% 0. 47% 0. 51% 0. 54% 0. 65% 0. 82%
Bank’s business: Sept’ 11 to Sept’ 12 Y-O-Y (%) Change Over Mar’ 12 (%) 6, 72, 248 7, 00, 330 23. 2 4, 13, 753 4, 82, 211 4, 91, 561 18. 8 1. 9 Overseas Business 1, 54, 552 1, 90, 038 2, 08, 769 35. 1 9. 9 Global Deposits 3, 29, 185 3, 84, 871 4, 08, 150 24. 0 6. 0 Domestic Deposits 2, 44, 720 2, 80, 135 2, 92, 877 19. 7 4. 5 Overseas Deposits 84, 466 1, 04, 736 1, 15, 273 36. 5 10. 1 Global CASA Deposits 90, 179 1, 03, 524 1, 05, 259 16. 7 1. 7 Domestic CASA 83, 250 92, 948 92, 979 11. 7 0. 03 Overseas CASA 6, 929 10, 576 12, 280 77. 2 16. 1 Particular (Rs crore) Sept’ 11 Mar’ 12 Global Business 5, 68, 306 Domestic Business • Share of Domestic CASA was at 31. 75% in terms of Aggregate Deposits and at 33. 43% in terms of Core Deposits as on 30 th Sept, 2012.
Bank’s business: Sept’ 11 to Sept’ 12 Y-O-Y (%) Change Over Mar’ 12 (%) 2, 87, 377 2, 92, 181 22. 2 1. 7 1, 69, 034 2, 075 1, 98, 685 17. 5 -1. 7 Overseas Advances 70, 087 85, 302 93, 496 33. 4 9. 6 Retail Credit Of which: 29, 885 35, 668 34, 245 14. 6 -4. 0 13, 304 14, 133 14, 789 11. 2 4. 6 SME Credit 30, 149 34, 512 36, 915 22. 4 7. 0 Farm Credit* 22, 043 29, 036 25, 735 16. 8 -11. 4 Credit to Weaker Sections* 13, 650 15, 863 14, 780 8. 3 -6. 8 Particular (Rs crore) Sept’ 11 Mar’ 12 Global advances (Net) 2, 39, 120 Domestic Advances Home Loans * As of Last Reporting Friday
Bank’s business: Sept’ 11 to Sept’ 12 Y-O-Y (%) Change Over Mar’ 12 (%) 74, 580 77, 824 13. 5 4. 3 67, 013 72, 575 75, 821 13. 1 4. 5 Overseas Savings Deposits 1, 528 2, 004 2, 002 31. 1 -0. 1 Global Current Deposits 21, 639 28, 944 27, 436 26. 8 -5. 5 Domestic Current Deposits 16, 237 20, 372 17, 158 5. 7 -15. 8 5, 401 8, 572 10, 278 90. 2 19. 9 Particular (Rs crore) Sept’ 11 Mar’ 12 Global Saving Deposits 68, 541 Domestic Savings Deposits Overseas Current Deposits
Other highlights: Q 2, FY 12 versus Q 2, FY 13 Particular (in %) Q 2, FY 12 Q 3, FY 12 Q 4, FY 12 Q 1, FY 13 Q 2, FY 13 Global Cost of Deposits 5. 61 5. 65 5. 81 5. 89 5. 85 Domestic Cost of Deposits 6. 84 6. 90 7. 17 7. 30 7. 36 Overseas Cost of Deposits 1. 82 1. 96 1. 74 1. 86 1. 73 Global Yield on Advances 9. 64 9. 45 9. 33 9. 08 9. 07 Domestic Yield on Advances 12. 14 12. 01 11. 71 11. 65 11. 75 Overseas Yield on Advances 3. 37 3. 60 3. 75 3. 52 3. 49
Other highlights: Q 2, FY 12 versus Q 2, FY 13 Particular (in %) Q 2, FY 12 Q 3, FY 12 Q 4, FY 12 Q 1, FY 13 Q 2, FY 13 Global Yield on Investment 7. 58 7. 67 7. 53 7. 71 7. 79 Domestic Yield on Investment 7. 72 7. 79 7. 69 7. 83 7. 92 Overseas Yield on Investment 4. 24 4. 90 3. 84 4. 91 4. 64 Global NIM 3. 07 2. 99 2. 96 2. 73 2. 71 Domestic NIM 3. 67 3. 51 3. 44 3. 22 3. 23 Overseas NIM 1. 42 1. 64 1. 68 1. 55 1. 54
Key productivity indicators: Q 2, FY 12 versus Q 2, FY 13 Particulars Q 2, FY 12 Q 2, FY 13 Business per Employee (Rs crore) 12. 98 14. 84 Business per Branch (Rs crore) 160. 27 171. 73 Profit per Employee (Rs lakh) 2. 85 2. 98 Profit per Branch (Rs lakh) 32. 89 31. 91
Non-Interest income: Q 2, FY 12 and Q 2, FY 13 Q 2, FY 12 Q 2, FY 13 % Change (Y-O-Y) Commission, Exchange, Brokerage 313. 65 310. 40 -1. 0 Incidental Charges 74. 85 84. 88 13. 4 Other Miscellaneous Income 66. 38 72. 36 9. 0 Total Fee-Based Income 454. 88 467. 64 2. 8 Trading Gains 10. 15 112. 02 1003. 7 Profit on Exchange Transactions 147. 33 183. 18 24. 3 Recovery from PWO 121. 97 65. 47 -46. 3 Total Non-Interest Income 734. 33 828. 31 12. 8 (Rs crore)
Provisions & contingencies: Q 2, FY 12 and Q 2, FY 13 Q 2, FY 12 Q 2, FY 13 Absolute Change Provision for NPA & Bad Debts Written-off 298. 13 722. 93 424. 81 Provision for Depreciation on Investment 144. 99 -134. 04 -279. 03 Provision for Standard Advances 46. 92 40. 79 -6. 13 Other Provisions (including Provision for staff welfare) -6. 68 16. 73 23. 41 Tax Provisions 477. 54 422. 34 -55. 20 Total Provisions 960. 90 1068. 75 107. 85 (Rs crore)
Bank’s domestic treasury highlights: Q 2, FY 12 • Treasury Income stood at the level of Rs 295. 20 crore in Q 2, FY 13 up 87. 5% (y-o-y). • Out of this, Trading Gains stood at Rs 112. 02 crore in Q 2, FY 13 as financial market conditions improved significantly in Q 2, FY 13. • As of Sept 30, 2012, the share of SLR Securities in Total Investment was 84. 61%. • The Bank had 81. 80% of SLR Securities in HTM and 17. 95% in AFS at end-Sept 2012. • During the year FY 13, the Bank shifted SLR securities worth Rs 1, 265. 42 cr (at book value) from AFS to HTM on 3 rd 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 30 th Sept, 2012 was 27. 94%. • As on 30 th Sept, 2012, the modified duration of AFS investments was 3. 52 years & that of HTM securities was 5. 07 years. • Total size of Bank’s Domestic Investment Book as on 30 th Sept, 2012 stood at Rs 98, 375 crore.
Highlights of overseas business: Q 2, FY 13 • During H 1, FY 13, Bank’s “Overseas Business” contributed 29. 8% to its Total Business, 24. 7% to Gross Profit and 38. 9% to Core Fee-based income (i. e. , Commission, Exchanges, brokerage, etc. ) • Out of the Total Overseas Loan-book, 54. 4% was Buyers’ Credit/ Export Credit; 26. 3% in was Syndicated Loans (mostly to Indian corporates) & 19. 3% was Local Credit. • Less riskiness of the Overseas Loan-book was responsible in keeping Gross NPA (%) in Overseas Assets at 0. 63% as on 30 th Sept, 2012. • Even the Cost-Income Ratio in Overseas operations was more favourable at 16. 44% in H 1, FY 13 versus 41. 13% in Domestic operations. • In Q 2, FY 13, the NIM (as % of interest-earning assets) in Overseas operations stood at the healthy level of 1. 54%; Gross Profit to Avg. Working Funds ratio at 1. 76% and Return on Equity at 17. 26%. • During H 1, FY 13, Bank opened branches in Wellington and Manukau, New Zealand; Entebbe and Kabale, Uganda, Rose Belle in Mauritius, Tema in Ghana and Sohar in Oman.
NPA movement (Gross): H 1, FY 13 Particular ( Rs crore) A. Opening Balance 4, 464. 75 B. Additions during H 1, FY 13 2, 728. 12 Out of which, Fresh Slippages 2, 613. 34 C. Reduction during H 1, FY 13 1, 313. 84 Recovery 298. 95 Upgradation 238. 07 PWO & WO 773. 81 Exchange Difference NPA as on 30 th Sept, 2012 Recovery in PWO in H 1, FY 12 3. 01 5, 879. 03 148. 46
Sector-wise gross NPAs: End-Sept, FY 12 & FY 13 Sector Gross NPA (%) End-Sept, FY 12 Gross NPA (%) End-Sept, FY 13 Agriculture 4. 58 Large & Medium Industries 1. 38 1. 63 Retail 2. 17 2. 29 Housing 1. 89 1. 99 1. 65 4. 14 3. 06 3. 55 0. 69 0. 63 SSI (Mfg) Total MSME Overseas Operations
Cumulative position of restructured assets • During the past 54 months (1 Apr’ 08 to 30 Sept’ 12), Bank has restructured 88, 288 accounts amounting Rs 16, 680. 44 crore in its Domestic operations. • • For the period of 54 months, out of the total amount restructured, Rs 12, 582. 17 cr (75. 4%) belonged to wholesale banking, Rs 2, 422. 49 cr (14. 5%) to SMEs, Rs 620. 12 cr (3. 7%) to retail and Rs 1, 055. 66 cr (6. 3%) to agriculture sector. • • Within this, the loans worth Rs 933. 03 cr were restructured in Q 2, FY 13; Rs 770. 57 cr in Q 1, FY 13; Rs 8, 265. 41 cr were restructured in FY 12, Rs 1, 597. 81 cr were restructured in FY 11, Rs 2, 455. 05 cr in FY 10 & Rs 2, 658. 57 cr in FY 09. About 94 accounts (of Rs 1 crore & above) restructured on/after 1 st Apr, 2008 with aggregate outstanding of Rs 1, 500. 53 cr slipped to NPA after restructuring and most of them belonged to the SME segment. In net terms, the outstanding amount of restructured loans in the Bank’s Overseas Business was Rs 4, 398. 65 crore against 87 accounts as on 30/09/2012. • Out of these twelve accounts were restructured during H 1, FY 13 involving the amount Rs 457. 47 crore.
Sectoral deployment of credit at end-Sept, 2012 Sector % share in Gross Domestic Credit Agriculture 12. 7 Retail 16. 9 SME 18. 2 Wholesale Misc. including Trade Total 37. 8 14. 4 100. 0%
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 [1, 273 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 FY 13]; for CASA opening [No. of brs linked – 2, 210]; for issuance of personalised cheque books [ no. of brs linked – 3, 185]. More than 6, 500 CASA are being opened per day. • 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. ]
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. • A certification procedure for Baroda Next brs has been introduced for process compliance/adherence, etc. ; CSAT/ESAT externally evaluated by engaging market research agencies. • 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.
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 FY 13: 3, 400 { 2, 280 joined up to 30 th Sept, 2012} • Probationary Officers: 600 { 403 joined up to 30/09/12} • Specialist Officers: 150 { 25 joined up to 30/09/12} • Baroda Manipal Trainees: 400 { 169 joined up to 30/09/12} • Campus Recruitment: 250 { 220 joined up to 30/09/12} • Clerks: 2, 000 { 1, 463 joined up to 30/09/12} • Bank carried out a three-month long residential programme involving massive skills’ upgradation for its new recruits during FY 13 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 & HR 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 oneyear full-time PG Course in Banking that is tailored to the Bank’s specific requirements.
Future Outlook & Guidance • Recently, India’s government hiked administered domestic diesel prices, resumed privatization & permitted FDI in multi-brand retail and aviation. • RBI also cut the CRR, but kept the policy rates unchanged. • Advancing of long-awaited reforms helped lift the stock market and the rupee. • Due to delayed monsoon & weak external demand, India likely to grow in the band of 5. 2% to 5. 5% in FY 13. At present, the growth in non-food credit is in the band of 15. 0%-16. 0% and deposits in 13. 0%-14. 0% and M 3 around 13. 0%. • 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 five years vitiated by global financial & economic turbulence. • 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. • Coming to the imminent change in the Top Leadership, I would like to give a quote of Walter Lippman ( a famous American Writer) – “The final test of a leader is that he leaves behind him in other men, the conviction and the will to carry on”. • In the times to come, all Barodians will collectively prove that our revered leaders have passed the test with flying colours. Thank you.
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