Bank of Baroda - 4QFY2012 Result Update

4QFY2012 Result Update | Banking
May 4, 2012
Bank of Baroda
Performance Highlights
Particulars (` cr) NII Pre-prov. profit PAT

Source: Company, Angel Research
BUY
CMP Target Price
% chg (qoq) 5.3 (21.4) 17.7 4QFY11 2,614 1,946 1,294 % chg (yoy) 7.0 5.4 17.3
`687 `926
12 months
4QFY12 2,797 2,051 1,518
3QFY12 2,656 2,608 1,290
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code
Banking 26,901 0.8 919/630 76,029 10 16,831 5,087 BOB.BO BOB@IN
For 4QFY2012, Bank of Baroda (BOB) posted a moderate set of numbers on the operating front. Deterioration in asset quality was also witnessed during 4QFY2012 due to higher slippages and restructuring. However, tax write back of `425cr led to bottom-line growing by 17.3% yoy. We recommend a Buy rating on the stock. Asset quality sees some stress: For FY2012, the banks advances and deposits grew by a strong 25.7% yoy and 26.0% yoy respectively. The banks domestic CASA growth remained reasonably healthy at 15.9% yoy. The banks domestic yield on advances declined by 30bp qoq to 11.7%, while domestic cost of deposits came in higher by 27bp qoq to 6.9%, leading to a 7bp fall in reported NIM to 3.4% during 4QFY2012. The fee income of the bank remained muted in 4QFY2012 growing by a marginal 0.4% qoq (up a moderate 6.6% yoy). Commission and brokerage income was higher in 4QFY2012 (up 17.7% qoq), however was negated by lower income from Forex transactions and incidental charges. Employee expenses for the bank increased by 51.2% qoq on back of additional pension provisioning of ~`300cr. The slippage levels for the bank which had increased to `952cr in 3QFY2012 (quarterly run rate of `500cr) increased further to `1,323cr in 4QFY2012 (on back of a chunky media account). The banks restructured book increased by 51.7% qoq (`5,139cr restructured during 4QFY2012) on back of restructuring of SEBs (`2,000cr) and Air India (`2,400cr). The bank reported a tax write-back of `425cr during 4QFY2012 on account of pending tax credit and higher tax exemptions during 4QFY2012 due to higher NPA write-offs (`530cr during 4QFY2012).
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 54.3 20.5 14.0 11.2
Abs. (%) Sensex Bank of Baroda
3m (4.4) (9.9)
1yr (8.9) (19.1)
3yr 38.7 111.6
Outlook and valuation: BOB has been rerated in recent years due to healthy improvement in its core profitability. The banks current valuations at 0.8x FY2014E ABV are similar to valuations at which its peers are trading, while in our view the bank has a relatively better asset quality and earnings outlook as compared to peers. As a result, it is one of our preferred picks amongst large PSU banks. Hence, we maintain a Buy on the stock with a target price of `926.
Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%)
FY2011 8,802 48.2 4,242 38.7 2.8 108.0 6.8 1.4 1.3 23.5
FY2012 10,317 17.2 5,007 18.0 2.6 121.4 6.0 1.1 1.2 20.7
FY2013E 12,451 20.7 5,250 4.9 2.6 121.5 6.0 1.0 1.1 17.8
FY2014E 14,718 18.2 6,183 17.8 2.6 143.1 5.1 0.9 1.1 18.2
Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com
Varun Varma
022 3935 7800 Ext: 6847 varun.varma@angelbroking.com
Sourabh Taparia
022 3935 7800 Ext: 6872 sourabh.taparia@angelbroking.com
Please refer to important disclosures at the end of this report

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Bank of Baroda | 4QFY2012 Result Update
Exhibit 1: 4QFY2012 performance

Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee Income - Treasury Income - Recoveries from written off a/cs - Others Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies - Provisions for NPAs - Provisions for Standard adv. - Provisions for Investments - Other Provisions PBT Provision for Tax PAT Effective Tax Rate (%)
4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy) 8,119 6,074 1,640 233 172 5,321 2,797 898 761 345 137 106 310 3,695 1,644 1,020 625 2,051 854 926 189 (271) 11 1,197 (322) 1,518 (26.9) 7,672 5,736 1,646 234 56 5,016 2,656 1,149 764 293 386 71 400 3,805 1,197 674 523 2,608 850 509 100 224 17 1,758 469 1,290 26.6 5.8 5.9 (0.4) (0.4) 206.3 6.1 5.3 (21.9) (0.4) 17.7 (64.5) 49.6 (22.5) (2.9) 37.4 51.3 19.5 (21.4) 0.6 82.0 89.7 NA (37.5) (32.0) NA 17.7 NA 6,334 4,587 1,318 134 295 3,720 2,614 834 714 326 121 86 301 3,448 1,503 990 513 1,946 590 424 106 35 25 1,355 61 1,294 4.5 28.2 32.4 24.4 74.3 (41.8) 43.0 7.0 7.6 6.6 5.6 13.4 23.9 2.7 7.2 9.4 3.0 21.8 5.4 44.7 118.2 77.9 NA (57.6) (11.7) NA 17.3 NA
Exhibit 2: 4QFY2012 Actual vs. Estimates

Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Actual 2,797 898 3,695 1,644 2,051 854 1,197 -322 1,518
Estimates 2,804 957 3,761 1,321 2,440 623 1,817 521 1,297
Var. (%) (0.2) (6.2) (1.7) 24.5 (15.9) 37.2 (34.2) (161.8) 17.1
May 4, 2012
Exhibit 3: 4QFY2012 performance analysis

Particulars Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) Global CASA ratio (%) Domestic CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Cost of deposits Yield on advances Yield on investments Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) PCR incl. tech. w/offs (%) Annualized slippage ratio (%) NPA prov. to avg. assets (%)
4QFY12 287,377 384,871 74.7 28,944 74,580 103,524 26.9 33.2 14.7 10.8 7.2 11.7 7.7 3.4 44.5 4,465 1.5 1,544 0.5 80.1 2.3 0.9
3QFY12 260,661 349,206 74.6 22,981 71,842 94,823 27.2 34.1 13.5 9.3 6.9 12.0 7.8 3.5 31.5 3,895 1.5 1,325 0.5 80.5 1.7 0.5
%chg (qoq) 10.2 10.2 2bp 25.9 3.8 9.2 (26)bp (87)bp 122bp 152bp 27bp (30)bp (10)bp (7)bp 1305bp 14.6 5bp 16.5 3bp (46)bp 65bp 35bp
4QFY11 228,676 305,439 74.9 23,135 64,454 87,589 28.7 34.4 14.5 10.0 5.6 10.7 7.6 4.2 43.6 3,153 1.4 791 0.4 85.0 1.5 0.5
%chg (yoy) 25.7 26.0 (20)bp 25.1 15.7 18.2 (178)bp (119)bp 15bp 84bp 154bp 106bp 9bp (72)bp 92bp 41.6 17bp 95.2 19bp (495)bp 79bp 37bp
May 4, 2012
Strong growth in both advances and deposits

For 4QFY2012, the bank witnessed healthy growth in its balance sheet with both advances and deposits growing by 10.2% each. On a yoy basis too, the banks advances and deposits grew by a strong 25.7% yoy and 26.0% yoy respectively. The banks domestic CASA growth remained reasonably healthy at 15.9% yoy. Saving account deposits grew by 15.3% yoy, while current account deposits growth was relatively higher at 18.3% yoy. The bank opened 213 branches during the quarter (compared to preceding 8 quarter average of 80 branches) taking the total number of branch additions for FY2012 to 540 branches. The bank aims to open another 572 branches in FY2013, which along with the recent additions should help the bank clock similar growth levels as witnessed in the past, going ahead.
Exhibit 4: Business growth at above-industry levels

Adv. yoy chg (%) 35.0 28.0 21.0 14.0 74.9 74.2 72.6 72.0 Dep. yoy chg (%) 74.6 CDR (%, RHS) 74.7 76.0
Exhibit 5: Moderation in CASA growth during FY2012

Domestic CASA ratio 35.0 21.4 CASA yoy growth (%, RHS) 30.0
74.0
34.0
16.1 12.6
14.8
15.9
20.0
33.0
10.0
30.6 26.6
25.2 22.9
23.9 22.1
25.8 24.0
25.7 26.0
34.4
33.9
34.0
34.1
7.0 -
70.0 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12
32.0 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12
33.2
NIMs decline on lower yield on advances

The banks domestic yield on advances declined by 30bp qoq to 11.7%, while domestic cost of deposits came in higher by 27bp qoq to 6.9%, leading to a 7bp fall in reported NIM to 3.4% during 4QFY2012. The banks overseas NIMs improved by 4bp qoq to 1.7%, leading to only a 3bp fall in overall NIMs to 2.96%.
Exhibit 6: Yield on advances lower sequentially

(%) 12.50 11.50 10.65 10.50 9.50 8.50 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 11.23 12.14 12.01 11.71
Exhibit 7: NIMs decline by 7bp sequentially

(%) 4.25 4.00 3.75 3.50 3.25 3.00 2.75 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 3.39 3.67 3.51 3.44 4.16
Source: Company, Angel Research; Note: 4QFY11 adj. NIM at 3.70%
May 4, 2012
Fee income remains subdued in 4QFY2012

The fee income of the bank remained muted in 4QFY2012 growing by a marginal 0.4% qoq (up a moderate 6.6% yoy). Commission and brokerage income was higher in 4QFY2012 (up 17.7% qoq), however was negated by lower income from Forex transactions and incidental charges. Recoveries from written off accounts remained healthy growing by 49.6% qoq (up 23.9% yoy). The treasury income of the bank declined by 64.5% qoq, primarily due to a high base (profits on liquid investments booked during 3QFY2012).
Asset quality deterioration visible during 4QFY2012

The bank witnessed deterioration in its asset quality during 4QFY2012, with gross and net NPA levels rising by 14.6% qoq and 16.5% qoq, respectively. Gross NPA ratio as of 4QFY2012 stood at 1.5% (1.4% in 3QFY2012), while net NPA ratio stood at 0.54% (0.51% in 3QFY2012). The slippage levels for the bank which had increased to `952cr in 3QFY2012 (quarterly run rate of `500cr) increased further to `1,323cr in 4QFY2012 (on back of a chunky media account). The banks restructured book increased by 51.7% qoq (`5,139cr restructured during 4QFY2012) taking the proportion of total restructured loans to overall loans to 5.2% (3.8% in 3QFY2012). As of 4QFY2012, the international restructured book stands at `350cr (4.1% of the overseas loan book), while the domestic restructured book stands at `11,584cr (5.7% of the domestic advances). The sharp rise in the restructured book in 4QFY2012 can be attributed to restructuring of SEBS (`2,000cr) and Air India (`2,400cr). The management indicated that the NPV loss on restructuring of Air India will be borne from 1QFY2013 onwards (amortised over 8 quarters). The bank reported a tax write-back of `425cr during 4QFY2012 on account of pending tax credit and higher tax exemptions during 4QFY2012 due to higher NPA write-offs (`530cr during 4QFY2012). The management also indicated higher profits from overseas business as a reason for lower effective tax rate (16.9%) for the year. The bank however also did ad-hoc provisioning of `342cr during 4QFY2012.
May 4, 2012
Exhibit 8: NPA ratios higher but still stable

Gross NPAs (%) 2.0 1.6 1.2 0.8 85.0 82.5 Net NPAs (%) 82.0 80.5 PCR (%, RHS) 90.0 80.1 80.0 70.0 60.0
Exhibit 9: Slippages up for 4QFY2012

Slippages (%) 2.8 2.4 2.0 1.6 1.2 0.8 0.1 0.3 0.5 0.5 Credit cost (%, RHS) 0.9 1.0 0.8 0.6 0.4
1.4 0.4
1.5 0.4
1.4 0.5
1.5 0.5
1.5 0.5
1.5
1.0
1.0
1.7
4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

50.0
2.3
0.4
0.4 -
0.2 -
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
Exhibit 10: Branch expansion continues at healthy pace

4,050 3,900 3,750 3,600 3,450 3,300 3,150 3,000 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 3,364 3,409 3,492 3,691 3,904
Exhibit 11: Opex-to-average assets higher for 4QFY12

Cost-to-income ratio (%) 49.0 43.0 37.0 1.8 1.5 1.2 1.2 1.2 1.5 1.0 Opex to average assets (%, RHS) 2.0
43.6
37.7
35.2
31.5
31.0 25.0
0.5
44.5
4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

Investment arguments
Credit market share gains with reasonable asset quality
The banks advances growth (28.0% CAGR) outpaced the sectors growth (18.6% CAGR) during FY200712, leading to credit market share gains of ~200bp. The banks domestic NIM as well as its asset quality have been reasonably healthy relative to peers, as reflected in the RoE of 20.7% and net NPA of 0.5% (as of FY2012). The banks RoA has been increasing consistently since FY2007 (0.8% in FY2007 and 1.2% in FY2012); and by increasing its leverage from 15-16x to 1718x over FY200712, the bank has managed to nearly double its RoE in the last four years.
Managements focus on channel improvement

Management is focusing on new business, customers and technology initiatives to further strengthen its operations and leverage its considerable domestic footprint. The bank offers multiple service channels such as Baroda Connect (Internet Banking), Phone Banking, Baroda Cash Management Services, NRI Services and Depository Services. The bank has implemented an Integrated Global Treasury Solution in its major overseas territories. The bank has also started providing online institutional trading to its corporate customers. This has aided the bank to
May 4, 2012
register healthy CASA at a 20.1% CAGR over FY200712 and a decline in opex-to-average assets from 2.0% in FY2007 to 1.3% in FY2012.
Outlook and valuation

The bank has been able to grow its bottom line at a 37.3% CAGR over FY200712, driven by strong CASA ratio and market share gains in credit and deposits and opex leverage. At the CMP, the stock is trading at 0.8x FY2014E ABV. Historically, the stock has traded at 0.8x1.3x one-year forward P/ABV multiple, with a five-year median of 1.0x, but it had been rerated over the past two years to a 1.2x average on the back of consistent improvement in profitability, underpinned by fruitful investments in channel modernization, healthy CASA and balance sheet growth and declining operating expenses (1.3% of average assets in FY2012). The bank has witnessed some amount of concerns on the asset quality front in 2HFY2012, particularly on its restructuring book which has almost doubled in the last 2 quarters. However, most of the restructuring has been on account of SEBs and Air India where we do not expect any slippages and NPV losses (except Air India which will be ammortised over the next 8 quarters). Also lower than average valuations, in our view, provide adequate level of comfort. The banks strong branch network expansion plans, in our view, augur well for credit as well as CASA market share gains, going forward. The bank opened 540 branches during FY2012 and aims to open another 572 branches in FY2013, which in our view, should help the bank clock similar growth levels as witnessed in the past, going ahead. In our view, the bank has a better asset quality and earnings outlook as compared to peers. As a result, it is one of our preferred picks amongst large PSU banks. Hence, we maintain our Buy rating on the stock with a target price of `926.
Exhibit 12: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Treasury gain/(loss) (% of investments)
Earlier estimates FY2013 18.0 20.0 26.2 2.7 4.8 17.0 17.0 1.6 76.0 FY2014 20.0 20.0 25.5 2.6 18.5 17.0 17.0 1.7 75.0
Revised estimates FY2013 18.0 20.0 25.6 2.6 3.5 17.0 17.0 1.5 76.0 FY2014 20.0 20.0 24.9 2.6 18.6 17.0 17.0 1.5 75.0
May 4, 2012
Exhibit 13: Change in estimates

FY2013 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT Earlier estimates 12,363 3,650 16,013 5,599 10,414 2,391 8,023 2,603 5,420 Revised estimates 12,451 3,542 15,993 5,977 10,016 2,244 7,772 2,522 5,250 % chg 0.7 (3.0) (0.1) 6.8 (3.8) (6.2) (3.1) (3.1) (3.1) Earlier estimates 14,523 4,326 18,849 6,551 12,298 2,937 9,360 3,037 6,323 FY2014 Revised estimates 14,718 4,201 18,918 6,994 11,925 2,773 9,152 2,969 6,183 % chg 1.3 (2.9) 0.4 6.8 (3.0) (5.6) (2.2) (2.2) (2.2)
Exhibit 14: P/ABV band

Price (`) 1,600 1,400 1,200 1,000 800 600 400 200 0 0.5x 0.8x 1.1x 1.4x 1.7x
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Source: Company, Angel Research;
May 4, 2012
Oct-12
Apr-06
Apr-07
Apr-08
Apr-09
Apr-10
Apr-11
Apr-12
Exhibit 15: Recommendation summary

Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Reco. Buy Neutral Accumulate Buy Neutral Buy Accumulate Neutral Buy Accumulate Buy Buy Neutral Buy Buy Buy Accumulate Buy Neutral Buy Buy Buy Buy Reduce Buy Buy Neutral CMP (`) 1,010 413 537 834 23 333 170 114 687 353 52 426 93 385 87 96 209 84 906 228 804 1,994 97 72 217 64 55 Tgt. price (`) 1,587 567 1,201 470 194 926 386 62 532 522 118 117 240 104 285 1,138 2,593 128 67 266 87 Upside (%) 57.1 5.6 44.1 40.9 14.2 34.8 9.4 20.1 24.8 35.5 36.1 22.0 15.0 24.7 25.0 41.5 30.1 31.4 (6.9) 22.7 36.3 FY2014E P/ABV (x) 1.4 1.0 3.1 1.4 1.0 1.7 0.7 0.7 0.8 0.8 0.6 0.7 0.8 0.5 0.5 0.6 0.7 0.5 0.8 0.5 0.8 1.2 0.6 0.8 0.7 0.5 0.7 FY2014E Tgt P/ABV (x) 2.2 3.3 1.9 2.4 0.8 1.1 1.0 0.8 0.9 0.7 0.7 0.7 0.8 0.7 0.6 1.1 1.6 0.8 0.8 0.9 0.7 FY2014E P/E (x) 7.3 7.2 15.1 10.3 5.9 8.0 4.2 4.2 4.8 5.2 3.8 4.5 4.6 3.4 3.4 4.0 4.3 4.0 4.6 3.6 4.5 7.4 3.5 5.3 4.4 3.0 4.7 FY2012-14E EPS CAGR (%) 16.4 13.0 27.0 20.4 6.7 22.5 (2.1) 6.5 8.6 16.4 26.8 10.9 45.7 5.3 6.2 22.7 5.4 29.9 8.8 27.7 8.8 23.6 8.7 4.6 27.2 11.4 11.0 FY2014E RoA (%) 1.5 1.3 1.7 1.5 0.9 1.4 1.0 1.0 1.1 0.8 0.9 0.9 0.5 0.8 0.9 0.9 1.2 0.6 1.4 0.8 1.1 1.0 0.8 0.5 0.8 0.7 0.5 FY2014E RoE (%) 20.3 14.5 22.1 16.0 17.7 23.3 16.8 16.7 18.2 16.9 17.5 16.7 13.8 16.5 16.9 14.8 18.2 13.9 18.6 14.3 18.5 19.1 17.2 12.9 17.4 16.0 13.7
Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF
May 4, 2012
Income statement
Y/E March (` cr) NII - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%) FY08 3,912 3.3 2,051 47.6 5,963 15.2 2,934 15.3 3,029 15.1 821 (16.3) 2,207 33.8 772 35.0 1,436 39.9 FY09 5,123 31.0 2,758 34.5 7,881 32.2 3,576 21.9 4,305 42.1 962 17.1 3,343 51.5 1,116 33.4 2,227 55.1 FY10 5,939 15.9 2,806 1.8 8,746 11.0 3,811 6.6 4,935 14.6 697 (27.5) 4,238 26.8 1,180 27.8 3,058 37.3 FY11 8,802 48.2 2,809 0.1 11,611 32.8 4,630 21.5 6,982 41.5 1,331 90.9 5,650 33.3 1,409 24.9 4,242 38.7 FY12E 10,317 17.2 3,422 21.8 13,739 18.3 5,109 10.3 8,630 23.6 2,605 95.6 6,026 6.6 1,019 16.9 5,007 18.0 FY13E 12,451 20.7 3,542 3.5 15,993 16.4 5,977 17.0 10,016 16.1 2,244 (13.8) 7,772 29.0 2,522 32.4 5,250 4.9 FY14E 14,718 18.2 4,201 18.6 18,918 18.3 6,994 17.0 11,925 19.1 2,773 23.6 9,152 17.8 2,969 32.4 6,183 17.8
Balance sheet
Y/E March (` cr) Share Capital Reserves & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab & Prov. Total Liabilities Cash balances Bank balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY08 366 10,678 21.7 3,927 5,423 7,172 9,370 12,930 43,870 27.6 2,427 4,302 25.5 FY09 366 12,514 26.5 5,636 7,132 8,628 10,596 13,491 52,446 34.3 2,310 4,578 26.2 FY10 366 14,741 25.4 6,160 7,190 8,598 13,540 21,927 61,182 22.2 2,285 4,347 22.8 FY11 393 20,600 26.6 12,906 9,402 9,657 19,868 30,066 71,261 30.6 2,300 6,226 28.8 FY12E 412 27,065 26.0 16,108 7,465 11,400 21,651 42,517 FY13E 432 31,135 20.0 19,274 8,808 13,736 18,474 50,873 FY14E 432 35,937 20.0 23,062 10,570 16,206 22,169 60,871
152,034 192,397 241,262 305,439 384,871 461,845 554,214
179,599 226,672 278,317 358,397 447,321 535,231 640,421
83,209 111,827 132,663 25.7 2,342 10,225 24.8 18.0 2,718 12,234 19.7 20.0 3,154 14,639 19.7
106,701 143,251 175,035 228,676 287,377 339,105 406,926
179,599 226,672 278,317 358,397 447,321 535,231 640,421
May 4, 2012
10
Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage RoE 2.4 0.5 1.9 0.3 2.2 0.9 3.2 1.8 1.4 0.5 0.9 16.4 14.6 2.5 0.5 2.0 0.4 2.5 0.9 3.4 1.8 1.6 0.5 1.1 17.0 18.6 2.4 0.3 2.1 0.3 2.4 0.8 3.2 1.5 1.7 0.5 1.2 18.0 21.9 2.8 0.4 2.3 0.1 2.5 0.7 3.2 1.5 1.8 0.4 1.3 17.6 23.5 2.6 0.6 1.9 0.2 2.1 0.7 2.8 1.3 1.5 0.3 1.2 16.6 20.7 2.5 0.5 2.1 0.0 2.1 0.7 2.8 1.2 1.6 0.5 1.1 16.6 17.8 2.5 0.5 2.0 0.0 2.1 0.7 2.7 1.2 1.6 0.5 1.1 17.3 18.2 17.5 2.3 1.2 11.3 1.9 1.3 8.2 1.7 2.2 6.4 1.3 2.4 5.7 1.0 2.5 5.7 0.9 3.4 4.8 0.8 4.0 39.3 302.1 8.0 60.9 352.4 9.0 83.7 413.3 15.0 108.0 534.4 16.5 121.4 666.3 17.0 121.5 730.7 23.5 143.1 841.9 27.5 1.8 0.5 1.2 0.3 75.0 1.3 0.3 0.9 0.1 75.6 1.4 0.3 1.2 0.4 86.0 1.4 0.3 1.1 0.3 85.0 1.5 0.5 1.5 0.5 80.1 2.2 0.8 1.5 0.4 76.0 2.7 0.9 1.5 0.4 75.0 31.2 70.2 12.9 7.6 29.6 74.5 14.1 8.5 29.6 72.5 14.4 9.2 28.7 74.9 14.5 10.0 26.9 74.7 14.7 11.3 25.6 73.4 14.2 10.8 24.9 73.4 13.7 10.4 2.5 49.2 0.9 14.6 2.6 45.4 1.1 18.6 2.4 43.6 1.2 21.9 2.8 39.9 1.3 23.5 2.6 37.2 1.2 20.7 2.6 37.4 1.1 17.8 2.6 37.0 1.1 18.2 FY08 FY09 FY10 FY11 FY12E FY13E FY14E
May 4, 2012
11
Research Team Tel: 022 - 39357800
E-mail: research@angelbroking.com
Website: www.angelbroking.com
DISCLAIMER
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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
Bank of Baroda No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
Buy (> 15%) Reduce (-5% to 15%)
Accumulate (5% to 15%) Sell (< -15%)
Neutral (-5 to 5%)
May 4, 2012
12

Bank of Baroda - 4QFY2012 Result Update

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Bank of Baroda - 4QFY2012 Result Update

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4QFY2012 Result Update | Banking

Particulars (` cr) NII Pre-prov. profit PAT

4QFY12 2,797 2,051 1,518

3QFY12 2,656 2,608 1,290

Banking 26,901 0.8 919/630 76,029 10 16,831 5,087 BOB.BO BOB@IN

Abs. (%) Sensex Bank of Baroda

1yr (8.9) (19.1)

3yr 38.7 111.6

Please refer to important disclosures at the end of this report

Bank of Baroda | 4QFY2012 Result Update

Exhibit 1: 4QFY2012 performance

Exhibit 2: 4QFY2012 Actual vs. Estimates

Bank of Baroda | 4QFY2012 Result Update

Exhibit 3: 4QFY2012 performance analysis

Bank of Baroda | 4QFY2012 Result Update

Strong growth in both advances and deposits

Exhibit 4: Business growth at above-industry levels

Exhibit 5: Moderation in CASA growth during FY2012

70.0 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

32.0 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

Source: Company, Angel Research

Source: Company, Angel Research

NIMs decline on lower yield on advances

Exhibit 6: Yield on advances lower sequentially

Exhibit 7: NIMs decline by 7bp sequentially

Source: Company, Angel Research

Source: Company, Angel Research; Note: 4QFY11 adj. NIM at 3.70%

Bank of Baroda | 4QFY2012 Result Update

Fee income remains subdued in 4QFY2012

Asset quality deterioration visible during 4QFY2012

Bank of Baroda | 4QFY2012 Result Update

Exhibit 8: NPA ratios higher but still stable

Exhibit 9: Slippages up for 4QFY2012

4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

Source: Company, Angel Research

Exhibit 10: Branch expansion continues at healthy pace

Exhibit 11: Opex-to-average assets higher for 4QFY12

4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

Source: Company, Angel Research

Managements focus on channel improvement

Bank of Baroda | 4QFY2012 Result Update

Outlook and valuation

Exhibit 12: Key assumptions

Bank of Baroda | 4QFY2012 Result Update

Exhibit 13: Change in estimates

Source: Company, Angel Research

Exhibit 14: P/ABV band

Source: Company, Angel Research;

Bank of Baroda | 4QFY2012 Result Update

Exhibit 15: Recommendation summary

Bank of Baroda | 4QFY2012 Result Update

152,034 192,397 241,262 305,439 384,871 461,845 554,214

179,599 226,672 278,317 358,397 447,321 535,231 640,421

106,701 143,251 175,035 228,676 287,377 339,105 406,926

179,599 226,672 278,317 358,397 447,321 535,231 640,421

Bank of Baroda | 4QFY2012 Result Update

Bank of Baroda | 4QFY2012 Result Update

Research Team Tel: 022 - 39357800

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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