RESULTS REVIEW 3QFY17 13 FEB 2017

Bank of Baroda
BUY
INDUSTRY BANKS Fumbling but not tumbling
CMP (as on 10 Feb 2017) Rs 188
BOBs 3Q earnings were a mixed bag. The key Highlights of the quarter
Target Price Rs 208
disappoints were (1) higher slippages, (2) sharp drop Slippages were elevated at Rs 41.3bn (4.7% vs. 3.2%
Nifty 8,794
in NIM, (3) dip in Tier I and (4) below estimates core QoQ) incl. fresh slippages of Rs 30bn. We note BOB has
Sensex 28,334
and net earnings. However, on the positive front (1) utilised RBI dispensation for loans of Rs 4.2bn. Despite
KEY STOCK DATA
PCR further improved to 65% (best amongst peers), this, we are comfortable with the banks asset quality
Bloomberg BOB IN as (1) slippages of ~Rs 27bn were from the watch list,
(2) watch-list (-27%) and SMA II (-32%) significantly
No. of Shares (mn) 2,304 (2) GNPAs were stable QoQ at Rs 426bn i.e. 11.4%, (3)
MCap (Rs bn) / ($ mn) 433/6,483
dropped QoQ, (3) net stressed were assets stable at smaller proportion of SMA II (2.3% of loans) and watch
6m avg traded value (Rs mn) 1,591
9.4% and (4) CASA surged 25% (33%, +560bps QoQ). list (2.1%), and (4) massive cleanup over the last few
quarters is inspiring. Our slippage (2.83%) and LLP
STOCK PERFORMANCE (%) While the volatile performance is disappointing, we
(1.8%) assumptions over FY17-19E provide an upside
52 Week high / low Rs 192/109 believe BOB is one of the best placed among PSBs to risk to our estimates.
3M 6M 12M ride the gradual improvement in macros. We like its
Absolute (%) 14.0 17.2 60.9 focus on profitable growth, higher CRAR, superior NIM dipped 23bps QoQ to 2.1%, led by interest
Relative (%) 11.0 15.2 41.6 PCR, diversified book and lower stressed assets. We reversals of Rs 2.6bn towards SDR and S4A exposures
and Rs 920mn towards NPAs. Focus on profitable
SHAREHOLDING PATTERN (%) expect ROAA to improve ~35bps to 0.63% by FY19,
growth, improving CD ratio (domestic CD ratio at a
Promoters 59.2 with further upside risk to our conservative mere 57% - lowest amongst peers) and increasing
FIs & Local MFs 21.2 estimates on growth, NIM and LLP. Maintain BUY share of domestic book provide an upside to our
FIIs 11.7 with TP of Rs 208 (1.4x Dec-18 ABV of Rs 149). conservative NIM estimate of ~2.3% over FY16-18E.
Public & Others 7.9 Financial Summary
Source : BSE (Rs mn) 3QFY17 3QFY16 YoY (%) 2QFY17 QoQ (%) FY16 FY17E FY18E FY19E
Net Interest Income 31,344 27,053 15.9% 34,261 -8.5% 127,399 133,518 157,735 180,086
PPOP 25,952 17,041 52.3% 26,902 -3.5% 88,156 106,428 126,845 144,587
PAT 2,527 (33,420) -107.6% 5,521 -54.2% (53,955) 19,832 35,876 47,884
EPS (Rs) 1.1 (14.5) -107.6% 2.4 -54.2% (23.4) 8.6 15.5 20.7
ROAE (%) (ex revaluations) (14.4) 5.4 9.1 11.1
ROAA (%) (0.78) 0.29 0.51 0.63
Adj. BVPS (Rs) 72.1 89.1 123.2 157.2
Darpin Shah P/ABV (x) 2.61 2.11 1.53 1.20
darpin.shah@hdfcsec.com P/E (x) (8.1) 21.9 12.1 9.1
+91-22-6171-7328 Source: Company, HDFC sec Inst Research
HDFC securities Institutional Research is also available on Bloomberg HSLB <GO> & Thomson Reuters
 BANK OF BARODA : RESULTS REVIEW 3QFY17

Overall loans declined-grew ~9/1% YoY/QoQ with a On an avg. basis, domestic CASA grew 32/17% to form
~20/7% YoY/QoQ decline in the overseas book (29% of ~37% of deposits.
loans vs. 31% YoY). BOB continues to rationalise its
overseas loan book by lowering the proportion of
After three consecutive quarters of NIM improvement,
BOBs NIM dipped ~23bps QoQ to 2.1% led by 36bps
buyers credit (~44%). On an avg. basis, loans declined-
drop in domestic NIM (2.5%). Interest reversals of Rs
~8/1% YoY/QoQ with a sharp drop in overseas book
2.6bn on SDR and S4A exposures and Rs 920mn
(~23% YoY and 5% QoQ). We note, FCNR redemption
towards slippages led to a sharp drop in NIM. With
lowered loans by Rs 100bn. From the domestic book,
managements focus on profitable growth, improving
SME and Agri loans marginally grew QoQ, while Retail
CD ratio (domestic CD ratio at 57%), lower slippages
loans remain flat. Despite higher Tier I, presence
and increasing share of the domestic book, we expect
across segments and domestic CD ratio at a mere
NIM improvement to continue. We have factored
57%, we have factored lower loan CAGR of 6% with
NIM of ~2.3% over FY16-18E - which provides upside
moderation in the overseas book.
to our earnings estimates.
Deposits grew a mere 4% QoQ with decline in overseas
LLP was flat QoQ at Rs 16.4bn (1.86% ann.) even as
deposits of 14/7% YoY/QoQ, led by FCND redemption
BOB continued to improve its PCR (64.5%, +155bps
of Rs 110bn. Domestic deposits grew ~6/8% YoY/QoQ
QoQ). We have factored LLP of 1.8% over FY16-18E,
led by 43/28% growth in CASA (+40.5%, +620bps QoQ).
which too provide an upside risk to estimates.

P/ABV Band Chart

3.0
250

2.5 1.7x
200

2.0 1.4x
+1SD 150
1.1x
1.5 100
Avg. 0.8x

1.0 -1SD 50

0.5 0
Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17
Source: Company, HDFC sec Inst Research

Page | 2
 BANK OF BARODA : RESULTS REVIEW 3QFY17

Five Quarters At A Glance

Rs mn 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY Growth QoQ Growth Lower than estimates led by sharp dip in
Net Interest Income 27,053 33,304 33,711 34,261 31,344 15.9% -8.5% NIMs
Non-interest Income 11,129 17,747 14,444 15,614 17,750 59.5% 13.7%
Treasury Gains 2,890 5,090 5,570 5,460 8,330 188.2% 52.6%
Fees were flat QoQ and recoveries dipped
Operating Income 38,183 51,051 48,155 49,875 49,093 28.6% -1.6%
~28% QoQ
Operating Expenses 21,141 25,326 21,460 22,973 23,141 9.5% 0.7%
Pre-provision Profits 17,041 25,725 26,695 26,902 25,952 52.3% -3.5%
Led by lower staff costs (-2.5% QoQ),
Provisions And Contingencies 61,646 68,577 20,041 17,958 20,795 -66.3% 15.8%
other opex jumped 4% QoQ
NPA Provisions 64,740 48,800 19,860 16,305 16,378 -74.7% 0.5%
PBT (44,604) (42,852) 6,654 8,944 5,157 -111.6% -42.3%
Provision For Tax (11,184) (10,551) 2,418 3,422 2,630 -123.5% -23.1% Despite rise in PCR (+155bps QoQ)
PAT (33,420) (32,301) 4,236 5,521 2,527 -107.6% -54.2%
Other Details
Balance Sheet Items/Ratios FCNR redemption of Rs 110bn; on avg.
Deposits (Rs bn) 5,897 5,740 5,622 5,675 5,899 0.0% 3.9% basis deposits grew ~4% led by domestic
CASA Deposits (Rs bn) 1,415 1,513 1,518 1,568 1,962 38.7% 25.2% deposits growth of 6%; Avg CASA grew
Advances (Rs bn) 3,843 3,838 3,628 3,541 3,500 -8.9% -1.2% ~15% to form 30% (+300bps QoQ)
CD Ratio (%) 65.2 66.9 64.5 62.4 59.3 -584 bps -307 bps
CAR (%) 12.2 13.2 13.1 12.9 12.6 37 bps -39 bps Avg loans declined ~1% QoQ with 5%
Tier I (%) 9.6 10.8 10.7 10.6 9.3 -29 bps -131 bps drop in overseas book; Domestic CD ratio
Profitability
at 57% - lowest in industry
Yield On Advances (%) 7.0 6.9 7.2 7.3 7.2 19 bps -3 bps
Cost Of Deposits (%) 5.0 5.0 4.7 4.8 6.0 101 bps 124 bps
NIM (%) 1.7 2.2 2.2 2.3 2.1 34 bps -23 bps Dragged by interest reversals of Rs 2.6bn
Domestic NIM (%) 2.1 2.7 2.8 2.9 2.5 38 bps -36 bps towards S4A and SDR exposures and Rs
Overseas NIM (%) 0.9 0.9 1.0 1.0 1.0 11 bps 0 bps 920mn due to NPA
Cost-Income Ratio (%) 55.4 49.6 44.6 46.1 47.1 -823 bps 108 bps
Tax Rate (%) NA NA 36.3 38.3 51.0 NA 1274 bps
Asset Quality Stable QoQ driven by higher
Gross NPA (Rs bn) 389.3 405.2 429.9 429.5 426.4 9.5% -0.7% recoveries/upgrades, despite higher
Net NPA (Rs bn) 218.1 194.1 207.8 193.4 190.1 -12.8% -1.7% slippages
Gross NPAs (%) 9.7 10.0 11.2 11.4 11.4 172 bps 5 bps
Net NPAs (%) 5.7 5.1 5.7 5.5 5.4 -24 bps -3 bps
Delinquency Ratio (%) 15.8 6.2 6.5 3.2 4.7 -1110 bps 151 bps Fresh slippage at Rs 30bn, of which Rs
O/s Domestic Restructured Pool (%) 4.0 3.6 3.9 3.9 4.0 6 bps 10 bps 27bn from watch list
Coverage Ratio (%, incl. w/o) 52.7 60.1 60.2 63.0 64.5 1180 bps 155 bps
Coverage Ratio (%, excl. w/o) 44.0 52.1 51.7 55.0 55.4 1144 bps 46 bps
SMA II (%) NA 4.7 5.0 3.5 2.5 246 bps -109 bps
Watch list fell to Rs 75bn, including AI of
Watch list (%) 3.9 2.9 2.1 213 bps -74 bps Rs 18bn; SMA II at a mere Rs 79bn (ex.
Source: HDFC sec Inst Research Restructured book)

Page | 3
 BANK OF BARODA : RESULTS REVIEW 3QFY17

Overseas book (28.6% of Advances Degrew ~9%; Avg Basis -8% YoY QoQ Retail Share Inched Up
loans) continued to decline (- Advances (Rs bn) YoY Growth (RHS) Retail Agri SME Corporate Overseas
~20/7% YoY/QoQ) in line with 4,500 Rsbn % YoY 25.0%
rationalisation of overseas 20.0%
33 32 33 31 32 33 34 32 32 33 33 31 31 30 29
4,000
book; domestic loans grew 15.0%
~1.4% QoQ 3,500
10.0%
5.0% 29 29 30
32 33 32 36 33 31 30 33 30 32 31 33
BOB buyers credit book stood 0.0%
3,000
-5.0% 16 15 15
at ~44% of the overseas book 15 15 15 14 15 15 15 14 15 14 14 14
-10.0% 11 11
2,500 8 8 8 7 8 9 9 9 10 9 9 9 10
-15.0%
On an avg basis, loans 12 12 12 12 12 12 12 12 13 13 13 13 14 14 15
2,000 -20.0%
declined ~8% with overseas

1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
loans down ~23% and flat
domestic loans
Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research
Domestic CASA (~40.5%, Deposit Mix
+620bps QoQ) grew largely 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Rs bn
due to demonetisation FY14 FY14 FY14 FY14 FY15 FY15 FY15 FY15 FY16 FY16 FY16 FY16 FY17 FY17 FY17
Overseas CASA was up Overseas 1,428 1,554 1,628 1,898 1,862 1,873 1,821 2,033 1,879 1,885 1,766 1,792 1,688 1,628 1,518
~130bps QoQ. % Total Deposit 30.6 32.0 32.3 33.4 33.8 33.0 32.3 32.9 31.7 30.8 29.9 31.2 30.0 28.7 25.7
W/w CASA % 12.0 12.9 13.5 13.8 13.0 14.4 13.8 12.9 12.9 9.9 10.0 10.5 11.1 11.2 12.5
On an avg basis, CASA grew CA % 10.3 11.2 11.8 12.1 11.3 12.6 11.9 11.2 11.1 8.1 8.0 8.6 8.8 8.9 9.7
~27/15% YoY/QoQ, led by SA % 1.7 1.8 1.7 1.6 1.7 1.8 1.9 1.7 1.9 1.8 2.0 1.9 2.2 2.3 2.8
Domestic 3,242 3,296 3,409 3,791 3,654 3,797 3,825 4,143 4,052 4,239 4,131 3,948 3,934 4,048 4,381
~32% rise in domestic CASA;
W/w CASA % 31.2 32.7 32.3 31.8 31.3 31.9 32.4 33.0 31.9 32.0 30.0 33.6 33.8 34.2 40.5
overseas CASA was flat
CA % 6.1 6.7 6.6 7.1 5.9 6.3 6.4 7.2 6.1 6.4 4.2 4.9 4.5 4.5 5.9
sequentially
SA % 25.0 26.0 25.7 24.6 25.4 25.6 26.0 25.8 25.8 25.5 25.8 28.7 29.4 29.7 34.6
Overall CASA % 25.3 26.3 26.2 25.7 25.1 26.1 26.4 26.4 25.9 25.2 24.0 26.4 27.0 27.6 33.3
Overall SA grew ~42% YoY Source: Bank, HDFC sec Inst Research
while overall CA grew by
~28% YoY

Page | 4
 BANK OF BARODA : RESULTS REVIEW 3QFY17

Non-interest Income
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Fees up ~9% YoY albeit flat Rs bn
FY14 FY14 FY14 FY14 FY15 FY15 FY15 FY15 FY16 FY16 FY16 FY16 FY17 FY17 FY17
QoQ Fee 4.5 5.7 4.9 6.0 4.8 5.3 5.6 6.3 5.2 5.9 5.6 6.8 5.8 6.8 6.3
% Ann. 0.39 0.46 0.37 0.45 0.36 0.35 0.38 0.42 0.33 0.35 0.34 0.47 0.36 0.42 0.42
Recoveries doubled YoY Treasury 4.1 1.2 1.3 0.9 2.2 1.8 2.4 3.6 1.6 2.2 2.9 5.1 5.6 5.5 8.3
(down 28% QoQ) % OP 17% 6% 6% 3% 9% 7% 10% 13% 7% 10% 17% 20% 21% 20% 32%
FX 2.5 2.6 2.6 3.7 2.6 2.5 2.5 2.4 2.8 2.5 2.4 4.8 2.6 2.7 2.6
Others 1.2 0.3 0.5 2.7 0.6 0.3 0.4 0.6 0.1 0.8 0.2 1.0 0.4 0.7 0.5
Treasury gains were up ~2x Total 12.3 9.7 9.3 13.3 10.2 9.9 10.9 13.0 9.7 11.4 11.1 17.7 14.4 15.6 17.7
YoY YoY % 60% 18% 11% 11% -17% 2% 17% -2% -6% 15% 2% 37% 49% 36% 59%
Source: Bank, HDFC sec Inst Research

Domestic CD Ratio at 57%; Dropped 380bps QoQ Domestic NIM Contracted Sequentially
As the domestic CD ratio Domestic CD Overseas CD Domestic NIM Overseas NIM
76.0 4.0
continues to fall (down
74.0

3.02
2.95
3.5

2.94
~380bps QoQ at ~57%) there

2.92

2.89
2.85

2.85
2.84

2.84

2.80
2.76

2.70
2.69
72.0

2.49
is ample scope for higher 3.0
70.0

2.11
credit growth 68.0
2.5

66.0 2.0

1.32
1.19
1.18

1.18
1.16
With interest reversals of Rs

1.09

0.98
0.98
0.98
0.96
1.5

0.93

0.92

0.92
64.0

0.87
0.85
2.56bn in SDR and S4A 62.0 1.0
exposures and Rs 920mn due 60.0 0.5
to slippages, domestic NIM
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17

1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
contracted 36bps QoQ
s

Global NIM fell 23bps QoQ to Source: Bank, HDFC sec Inst Research Source: Bank, HDFC sec Inst Research
2.06%
Provisions
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Rs bn
FY14 FY14 FY14 FY14 FY15 FY15 FY15 FY15 FY16 FY16 FY16 FY16 FY17 FY17 FY17
NPA 6.7 8.4 8.2 6.4 7.7 5.8 11.5 14.9 5.7 18.4 64.7 48.8 19.9 16.3 16.4
% Ann. 0.83 1.01 0.95 0.68 0.79 0.61 1.18 1.45 0.54 1.78 6.74 5.09 2.19 1.84 1.87
MTM 1.2 (0.9) (1.2) 2.9 (3.2) 1.8 (0.5) 0.4 0.2 1.1 0.3 1.8 0.2 0.4 0.4
Std Asset 2.3 0.9 0.3 1.9 0.8 0.1 1.4 3.1 0.1 (0.8) (3.7) 1.8 (0.3) 1.2 4.3
Others (0.0) 0.3 0.4 0.3 (0.1) 1.1 0.2 (0.3) 0.0 0.2 0.3 16.1 0.3 0.1 (0.3)
Total 10.2 8.6 7.6 11.5 5.3 8.9 12.6 18.2 6.0 18.9 61.6 68.6 20.0 18.0 20.8
YoY % 14% 33% -26% -28% -48% 3% 66% 58% 14% 113% 388% 277% 234% -5% -66%
Source : Bank, HDFC sec Inst Research

Page | 5
 BANK OF BARODA : RESULTS REVIEW 3QFY17

C-I Ratio Up Marginally At ~47% Other Provisions Up ~16% Sequentially

C/I ratio % Opex/Non interest income (x, RHS) Non-tax provisons (Rs bn) % PPoP
60 2.4 80.0 400%
70.0 350%
55 2.2
60.0 300%
2.0
50 50.0 250%
1.8
45 40.0 200%
1.6 30.0 150%
40
Slippages were elevated at Rs 1.4 20.0 100%
41.4bn inc. fresh slippage at 35 1.2 10.0 50%
Rs 30.7bn 30 1.0 - 0%

1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
For FY17, mgmt maintains
slippage guidance of Rs 150bn
Source: Bank, HDFC sec Inst Research Source: Bank, HDFC sec Inst Research
and recoveries of Rs 100bn

O/S std. SDR of Rs 41.9bn; Std

Asset Quality Movement
5:25 at Rs 74.1bn and S4A at 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Rs 19.5bn Rs bn
FY14 FY14 FY14 FY14 FY15 FY15 FY15 FY15 FY16 FY16 FY16 FY16 FY17 FY17 FY17
Op. GNPA 79.8 97.6 108.9 119.3 118.8 120.9 130.6 154.5 162.6 172.7 237.1 389.3 405.2 429.9 429.5
SMA II stands at Rs 86bn Slippages 21.7 20.2 15.3 11.2 20.2 18.5 30.4 17.9 19.1 69.6 157.9 59.3 61.0 28.6 41.4
including overseas book at a % Ann. 2.67 2.44 1.77 1.19 2.08 1.93 3.12 1.74 1.82 6.77 15.80 6.18 6.53 3.19 4.70
mere Rs 7bn Upgrades 1.5 1.9 3.0 0.5 7.4 2.4 0.8 1.9 5.3 0.8 0.1 17.7 14.0 10.3 13.2
Recoveries 2.0 2.4 2.0 6.3 5.6 2.8 2.4 4.2 3.0 3.3 3.1 14.3 10.8 16.5 13.5
Write-Off 0.1 4.4 0.2 4.9 5.0 3.7 3.3 3.7 0.7 1.1 2.4 11.4 11.4 2.2 17.8
Restructured book stood at Rs
Closing
140bn (4% of loans) GNPA
97.9 109.1 119.0 118.8 121.0 130.6 154.5 162.7 172.7 237.1 389.3 405.2 429.9 429.5 426.4
QoQ % 22% 12% 10% 0% 2% 8% 18% 5% 6% 37% 64% 4% 6% 0% -1%
Source: Bank, HDFC sec Inst Research

Page | 6
 BANK OF BARODA : RESULTS REVIEW 3QFY17

Stable GNPA with higher Stable Asset Quality RoAA Dip Led BY Lower NII
NII Non-int income Opex
recoveries and upgrades, GNPA NNPA GNPA % (RHS) NNPA % (RHS)
Other provision Tax RoAA (RHS)
despite higher slippages 480 Rs bn 12.0%
1.0 2.0
420 10.0%
360 1.0
8.0% 0.5
300
Lower NII and higher -
240 6.0%
provisions led to a drop in 0.0
180 4.0% -1.0
RoA (0.15% ann. v/s 0.33% 120 -0.5
ann. in 2QFY17) 2.0% -2.0
60
- 0.0% -1.0 -3.0

1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17

1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Source : Company, HDFC sec Inst Research Source : Company, HDFC sec Inst Research

Change In Estimates
FY17E FY18E
(Rs mn)
Old New Change Old New Change
NII 133,594 133,518 -0.1% 159,479 157,735 -1.1%
PPOP 103,866 106,428 2.5% 126,484 126,845 0.3%
PAT 20,969 19,832 -5.4% 37,608 35,876 -4.6%
Adj. BVPS (Rs) 88 89 1.3% 121 123 1.4%
Source : HDFC sec Inst Research
Peer Valuations
MCap CMP TP ABV (Rs) P/E (x) P/ABV (x) ROAE (%) ROAA (%)
BANK Rating
(Rs bn) (Rs) (Rs) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
ICICIBC # 1,639 282 BUY 312 115 131 148 12.9 12.2 9.9 2.00 1.69 1.42 10.7 9.8 10.8 1.40 1.30 1.37
KMB # 1,427 779 BUY 936 135 155 179 35.0 27.8 22.0 4.75 4.01 3.34 13.2 14.6 15.6 1.65 1.74 1.81
AXSB 1,169 489 NEU 501 195 222 260 31.9 19.2 11.5 2.51 2.20 1.88 6.7 10.3 15.5 0.66 0.96 1.38
IIB 787 1,323 BUY 1,329 325 379 443 26.8 21.2 17.3 4.07 3.49 2.98 15.9 17.4 18.3 1.88 1.92 1.89
FB 145 84 BUY 93 44 51 56 18.5 14.8 12.1 1.91 1.67 1.50 9.3 10.8 12.1 0.77 0.81 0.84
CUB 94 157 BUY 163 52 61 70 18.6 16.3 14.1 2.98 2.57 2.24 15.4 15.5 15.7 1.49 1.47 1.47
DCBB 39 136 BUY 143 64 73 82 19.6 16.4 13.1 2.12 1.86 1.67 10.7 11.4 12.5 0.93 0.90 0.91
SBIN # 2,145 276 BUY 310 112 129 148 15.6 12.6 9.4 1.79 1.51 1.21 7.4 8.3 9.6 0.43 0.46 0.53
BOB 434 188 BUY 208 89 123 157 21.9 12.1 9.1 2.11 1.53 1.20 5.7 9.6 12.1 0.29 0.51 0.63
Ujjivan 52 437 NEU 390 146 164 189 23.0 23.2 17.6 3.00 2.66 2.31 15.4 12.1 14.0 3.33 2.55 2.61
Source: Company, HDFC sec Inst Research, # Adjusted for subsidiaries value

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 BANK OF BARODA : RESULTS REVIEW 3QFY17

Income Statement Balance Sheet

(Rs mn) FY15 FY16 FY17E FY18E FY19E (Rs mn) FY15 FY16 FY17E FY18E FY19E
Interest Earned 429,636 440,613 420,162 445,532 485,806 SOURCES OF FUNDS
Interest Expended 297,763 313,214 286,645 287,797 305,721 Share Capital 4,436 4,621 4,621 4,621 4,621
Net Interest Income 131,872 127,399 133,518 157,735 180,086 Reserves 393,918 397,369 414,881 446,559 488,841
Other Income 44,020 49,989 62,243 65,207 70,733 Shareholders' Funds 398,353 401,990 419,502 451,180 493,462
Fee Income (CEB) 14,820 15,015 14,142 14,909 17,329 Savings 1,101,722 1,167,054 1,546,347 1,778,299 2,027,260
Treasury Income 10,070 11,789 21,219 19,098 17,188 Current 527,967 346,291 405,160 441,624 485,787
Total Income 175,892 177,387 195,760 222,942 250,819 Term Deposit 4,545,907 4,227,034 3,866,944 3,995,973 4,290,160
Total Operating Exp 76,741 89,231 89,332 96,096 106,232 Total Deposits 6,175,595 5,740,379 5,818,451 6,215,896 6,803,207
Employee Expense 42,613 49,780 50,433 54,301 60,592 Borrowings 352,643 334,717 357,765 386,097 358,300
PPOP 99,151 88,156 106,428 126,845 144,587 Other Liabilities 223,294 236,679 248,515 259,571 272,395
Provisions & Contingencies 44,945 155,137 74,888 75,494 75,015 Total Liabilities 7,149,885 6,713,765 6,844,233 7,312,744 7,927,364
Prov. For NPAs (Incl. Std Prov.) 43,340 137,496 73,888 74,494 73,815
PBT 54,206 (66,981) 31,539 51,351 69,572 APPLICATION OF FUNDS
Provision for Tax 20,222 (13,025) 11,707 15,475 21,688 Cash & Bank Balance 1,483,532 1,339,003 1,114,900 1,145,038 1,208,468
PAT 33,984 (53,955) 19,832 35,876 47,884 Investments 1,168,122 1,204,505 1,781,963 1,775,861 1,728,576
Source: Bank, HDFC sec Inst Research G-Secs 968,976 1,004,284 1,570,982 1,553,974 1,496,706
Advances 4,280,651 3,837,702 3,607,440 4,040,332 4,626,181
Fixed Assets 28,748 62,538 63,163 65,058 67,660
Other Assets 188,832 270,017 276,767 286,454 296,480
Total Assets 7,149,885 6,713,765 6,844,233 7,312,744 7,927,364
Source: Bank, HDFC sec Inst Research

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 BANK OF BARODA : RESULTS REVIEW 3QFY17

Key Ratios
FY15 FY16 FY17E FY18E FY19E FY15 FY16 FY17E FY18E FY19E
VALUATION RATIOS ASSET QUALITY
EPS (Rs.) 15.3 (23.4) 8.6 15.5 20.7 Gross NPLs (Rsm) 162,614 405,210 426,644 412,006 411,672
Earnings Growth (%) (26.2) (258.8) (136.8) 80.9 33.5 Net NPLs (Rsm) 80,695 194,065 192,928 148,074 111,694
BVPS (Rs.) 175.2 156.1 163.7 177.4 195.7 Gross NPLs (%) 3.76 10.13 11.60 10.02 8.77
Adj. BVPS(Rs.) 138.8 72.1 89.1 123.2 157.2 Net NPLs (%) 1.89 5.06 5.35 3.66 2.41
ROAA (%) 0.49 (0.78) 0.29 0.51 0.63 Coverage Ratio (%) 65.0 60.1 62.7 71.1 78.6
ROAE (%) 9.21 (14.40) 5.37 9.10 11.11 Provision/Avg. Loans (%) 0.92 3.45 1.90 1.85 1.61
P/E (x) 12.3 (8.1) 21.9 12.1 9.1 ROAA TREE
P/ABV (x) 1.4 2.6 2.1 1.5 1.2 Net Interest Income 1.92% 1.84% 1.97% 2.23% 2.36%
P/PPOP (x) 0.8 1.0 0.8 0.7 0.6 Non Interest Income 0.64% 0.72% 0.92% 0.92% 0.93%
Dividend Yield (%) 1.7 - 0.5 0.8 1.1 Treasury Income 0.15% 0.17% 0.31% 0.27% 0.23%
PROFITABILITY Operating Cost 1.12% 1.29% 1.32% 1.36% 1.39%
Yield On Advances (%) 7.47 7.34 7.20 7.20 7.36 Provisions 0.65% 2.24% 1.10% 1.07% 0.98%
Yield On Investment (%) 8.10 9.00 8.72 8.42 8.27 Provisions for NPAs 0.55% 2.02% 1.04% 1.00% 0.91%
Cost Of Funds (%) 4.73 4.97 4.68 4.50 4.44 Tax 0.29% -0.19% 0.17% 0.22% 0.28%
Cost Of Deposits (%) 4.65 4.90 4.56 4.42 4.37 ROAA 0.49% -0.78% 0.29% 0.51% 0.63%
Core Spread (%) 2.73 2.37 2.52 2.70 2.91 Leverage (x) 18.63 18.50 18.35 17.96 17.68
NIM (%) 2.03 1.98 2.13 2.38 2.50 ROAE 9.21% -14.40% 5.37% 9.10% 11.11%
OPERATING EFFICIENCY Source: Bank, HDFC sec Inst Research
Cost/Avg. Asset Ratio (%) 1.12 1.29 1.32 1.36 1.39
Cost-Income Ratio (Excl Treasury) 46.3 53.9 51.2 47.1 45.5
BALANCE SHEET STRUCTURE
Loan Growth (%) 7.8 (10.3) (6.0) 12.0 14.5
Deposit Growth (%) 8.6 (7.0) 1.4 6.8 9.4
C/D Ratio (%) 69.3 66.9 62.0 65.0 68.0
Equity/Assets (%) 5.6 6.0 6.1 6.2 6.2
Equity/Advances (%) 9.3 10.5 11.6 11.2 10.7
CASA (%) 26.4 26.4 33.5 35.7 36.9
Capital Adequacy Ratio (CAR, %) 13.1 13.2 13.4 13.4 13.4
W/w Tier I CAR (%) 10.4 10.8 11.1 11.2 11.3

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 BANK OF BARODA : RESULTS REVIEW 3QFY17

RECOMMENDATION HISTORY
Date CMP Reco Target
BOB TP 15-Feb-16 114 BUY 142
220
21-Mar-16 144 BUY 147
200 8-Apr-16 143 BUY 149
16-May-16 155 BUY 170
180
12-Aug-16 146 BUY 162
160 7-Oct-16 165 BUY 174
140 15-Nov-16 161 BUY 195
2-Jan-17 149 BUY 195
120 13-Feb-17 188 BUY 208
100 Rating Definitions
BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period
Apr-16
Feb-16

Sep-16

Feb-17
Jun-16

Jul-16
Mar-16

Dec-16
Oct-16
Aug-16

Nov-16

Jan-17
May-16

NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

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 BANK OF BARODA : RESULTS REVIEW 3QFY17

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