Presentation to Analysts

Performance Highlights ( Q1, 2009-10) by Dr Rupa Rege Nitsure Chief Economist July 27, 2009

Bank of Baroda: Key Strengths

Bank of Baroda is a third largest PSU Bank in India with modern and contemporary personality, offering banking products and services to industrial and commercial, retail and agricultural customers across the country.
Uninterrupted Record in Profit-making and Dividend Payment
Pioneer in many Customer-Centric Initiatives First PSB to receive Corporate Governance Rating (CAGR-2)

Overseas Business Operations extend across 25 countries through 74 branches/ Offices

Modern & Contemporary Personality

Strong Domestic Presence through 2,927 branches Provides Financial Services to over 36.6million customers globally

A well-accepted & recognised Brand in Indian banking industry

Relatively Strong Presence in Industrially Progressive States of India

Rapid & Significant Technology Progression Since FY06

Domestic Branch Network

No. of Domestic Branches 2927
2950 2900 2850 2800 2750 2700 2650 2600 Jun'07 Jun'08 Jun'09

2851

The Banks network of domestic branches on 30th June 2009 was 2,927. During Q1, FY10, Bank opened three new branches & merged two existing branches. On 20th July, 2009, Bank opened 61 new branches including upgradation of its six extension counters to branches. New branches are mainly concentrated in Urban & SemiUrban centres from Maharashtra, Gujarat, Southern States, U.P. & Uttaranchal. Bank still has 115 pending applications with the RBI for opening of new branches during FY10

2735

Regional Break-up of Domestic Branches as on 30 June, 2009 Metro 637 Urban 540 SemiUrban 649 Rural 1,101

Robust Technology Platform

By 30 June, 2009, the Bank completed CBS Rollout in 1,987 domestic branches & 66 overseas offices, covering 94% of Banks business under the CBS. (Two overseas branches were opened in T & T on 10.07.2009).
The Bank proposes to bring its Total Business under CBS by end-Sept, 2009.

Banks ATM network increased to 1,183 by end-June 2009 from a mere 170 in 2005. Bank has taken the following new IT initiatives in the recent past.
NEFT /RTGS through e-banking Multiple accounts linkage to single debit card AML implementation in CBS branches in India Trinidad & Tobago ATMs made live through India switch Base 24

To enhance the Banks fee-based income, the Bank has introduced various products & services like corporate cash Mgmt, facility for e-tax payment for non-customers & non-Baroda connect customers, shopping mall facility on ebanking, temple donations through ATMs and school fee module for collection of fees, etc.

Concentration (%): Domestic Branch Network

Rest of India, 20.66

Gujarat, 23.16

Maharashtra, 11.34

UP & Uttaranchal, 22.13 South, 10.68 Rajasthan, 12.03

Pattern of Shareholding: 30th June, 2009

As on 30th June, 2009
Indian Public 6.0% FIIs 18.3% Others 0.1% Corp. Bodies 3.6%

Share

Capital

Rs 365.53 crore 364.27 million Rs 12,066.77 crore Rs 331.26

No. of Shares Net worth B. V. per share

Return on Equity (annualised): 22.72%

Insurance Cos 8.1%

Govt. of India 53.8% Mutual Funds 10.1%

BOB is a Part of the following Indexes BSE 100, BSE 200 and BSE 500 Nifty Junior and Bankex.

Banks 0.2%

BOBs Share is listed on BSE and NSE in Future and Options segment also.

Annualised Business Growth: Jun05 to Jun09

Growth: Total Deposits (%)
30.0 25.0 20.0 15.0 10.0 5.0 0.0 12.9 20.1 22.7 26.5

Growth: Total Advances (%)

28.2
45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 42.1 37.5 27.5 20.0

28.3

Jun'05 Jun'06 Jun'07 Jun'08 Jun'09

Jun'05 Jun'06 Jun'07 Jun'08 Jun'09

Growth: Total Business (%)

35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 15.3 26.2 24.6 32.6

Domestic CASA Growth (%)

28.2
25.0 25.0 20.0 15.0 10.0 5.0 12.4 11.1 20.3

18.8

Jun'05 Jun'06 Jun'07 Jun'08 Jun'09

0.0
Jun'05 Jun'06 Jun'07 Jun'08 Jun'09

Quarterly Profits: June05 to June09

1200.00 1000.00 800.00
644.45 Rs crore

Net Profit has grown at a CAGR of 44.6% between Jun05 & Jun09
800.19

1009.93

685.38

600.00
455.62

503.53 370.86 330.83

400.00 200.00 0.00 Jun'05 Jun'06

156.94 163.33

Jun'07

Jun'08

Jun'09

Gross Profit

Net Profit

Asset Quality: Jun04 to Jun09

%
11 4

10.41
3.5 9

7.21
7

2.94
2.5

Gross NPA

4.06 2.78

1.47 0.92

1.86 1.44 0.67 0.52

Jun'08 Jun'09

1.5

Net NPA

0.5

Jun'04 -1

Jun'05

Jun'06

Jun'07

0.27
0

Business Performance: Jun09 over Jun08

Particular (Rs crore) Global Business Jun08 2,66,121.82 Jun09 3,41,281.71 % Change 28.2%

Domestic Business
Overseas Business

2,09,134.78 56,987.04
1,54,908.23 1,23,815.73

2,60,997 80,284.31
1,98,609.45 1,54,434.59

24.8% 40.9%
28.2% 24.7%

Global Deposits
Domestic Deposits

Overseas Deposits
Global CASA Deposits

31,092.50 49,289.37 11,361.85

37,927.52

44,174.86 58,483.43 14,246.36

44,237.07

42.08% 18.7% 25.4%

16.6%

Current
Savings

Share of Domestic CASA is at the healthy level of 35.09% in Q1, 2009-10.

Business Performance: Jun09 over Jun08

Particular (Rs crore) Global Advances (Net) Jun08 1,11,213.59 Jun09 1,42,672.26 % Change 28.3%

Domestic Advances (Net)

Overseas Advances (Net) Retail Credit Of which:
Home Loans

85,319.05 25,894.54

1,06,562.81 36,109.45

24.9% 39.5%

Out of Gross Domestic Credit,

16,893 20,221 19.7%

7,282 12,087
13,726 5,193

8,741 15,136
18,010 7,647

20.0% 25.2%
31.2% 47.2%

SME Credit
Farm Credit Credit to Weaker Sections

Key Financial Ratios : Apr-June, 2009-10

Return on Average Assets at 1.19% [0.81% at end-June, 2008] Earning per Share (annualised) at Rs 75.28 [Rs 40.72 at end-June, 2008]

Book Value per Share at Rs 331.26 [Rs 271.97 at end-June, 2008]

Return on Equity (ROE) at 22.72% [14.97% at end-June, 2008] Capital Adequacy Ratio at 14.56% with Tier I Capital at 8.81%

Cost-Income Ratio declined from 49.02% to 47.06%(Y-o-Y). Gross NPA ratio declined from 1.86% to 1.44% (Y-o-Y). Net NPA ratio declined from 0.52% to 0.27%(Y-o-Y). NPA Coverage improved to 81.70% [72.48% last yr] on prudent provisioning

Operating Profits: Jun09 over Jun08

Rs Crore
1200.00 1000.00 800.00 600.00
26.21%

1009.93 800.19

400.00 200.00 0.00

Jun'08

Jun'09

NII grew at 14.0% (Y-o-Y) during Q1, 2009-10

Net Profits: Jun09 over Jun08

685.38

Rs Crore
700.00 600.00 500.00 400.00 300.00 200.00 100.00 0.00
84.81%

370.86

Jun'08

Jun'09

Other Highlights: Apr-June, FY09 & FY10

Particular (In %)
Global Cost of Deposits Domestic Cost of Deposits Overseas Cost of Deposits Global Yield on Advances

Apr-Jun08
5.55% 6.05% 3.43% 9.08%

Apr-Jun09
5.41% 6.16% 2.65% 8.72%

Domestic Yield on Advances

Overseas Yield on Advances

10.34%
4.91%

10.10%
4.69%

Other Highlights: Apr-June, FY09 & FY10

Particular (In %)
Global Yield on Investment Domestic Yield on Investment Overseas Yield on Investment Global NIM

Apr-Jun08
7.22% 7.39% 5.39% 2.76%

Apr-Jun09
6.83% 7.07% 3.87% 2.37%

Domestic NIM
Overseas NIM

2.92%
1.75%

2.57%
1.48%

NIM indicates Net Interest Income as % of Avg. Interest Earning Assets.

Non-Interest Income: Apr-June, FY09 & FY10

(Rs crore) Apr-Jun, 2008 272.67 Apr-Jun, 2009 301.34 % Change 10.5%

Comm., Exchange, Brokerage & Incidental Charges

Profit on Exchange Transactions Recovery from PWO Trading Gains Total Non-Interest Income

94.23 54.48 91.17 512.55

96.32 49.94 255.44 703.04

2.2% -8.3% 180.2% 37.2%

Provisions & Contingencies: Apr-June, FY10

(Rs crore) Provision for NPA Bad-debts written off Prov. For Dep. on Investment Prov. For Std. Adv. Other Provisions (including Prov. For staff welfare) Tax Provisions Total Provisions AprJun08 -41.58 20.09 218.61 16.54 6.65 AprJun09 304.37 4.15 -359.80 8.58 3.75 % Change --79.3% -264.6% -48.1% -43.6%

209.02 429.33

363.51 324.55

73.9% -24.4%

Treasury Highlights: Apr-June, 2009-10

Treasury Income increased from Rs 91.17 crore in Q1, FY09 to Rs 255.44 crore in Q1, FY10. As of June 30, 2009, the share of SLR Securities in Total Investment was 86.96%. The Bank had 77.89% of SLR Securities in HTM and 21.67% in AFS at end-June 2009. On 28th Apr, 2009, the Bank shifted Securities worth Rs 1,961 crore from HTM to AFS. While the modified duration of AFS investments is 2.98 years; that of HTM securities is 4.35 years. Total size of Banks Domestic Investment Book as on 30th June 2009 stood at Rs 52,862 crore. Total size of Banks Overseas Investment Book as on 30th June 2009 stood at Rs 3,677 crore.

Overseas Business: Apr-June, 2009-10

In Q1, FY10, the Overseas Business contributed 23.5% to the Banks Total Business, 23.2% to its Gross Profit and 38.8% to its Fee-based income. While the Cost-Income Ratio for Domestic Operations stood at 51.98% in Q1, FY10, it was just 19.80% for Overseas Operations. While the Gross NPA (%) in Domestic Operations stood at 1.75% at end-June, 2009, that for Overseas Operations was just 0.52%. Gross Profit to Avg. Working Funds ratio for Overseas Operations was 1.73% in Q1, FY10 comparable to 1.79% for Domestic Operations. On the Overseas Investment Book of Rs 3,677 crore, the Bank held Provisions worth Rs 281.43 crore during Q1, FY10.

Sectoral Break-up of Credit: Q1, FY10

Outstanding As on 30th June 2009 (Rs crore) (%)

Metals, Iron & Steel Infrastructure Chemical & Fertilizer Incl. Drugs & Pharma Textile (Cotton, Jute & Others) Trading Engineering Food & Beverages Crude & Petro Construction Gems & Jewellery NBFCs Others TOTAL

5,747.86 12,096.43 5,115.41 5,677.83 5,640.75 2,977.48 1,061.31 793.20 1,742.29 496.53 3,839.53 62,366.89 1,07,555.50

5.34 11.25 4.76 5.28 5.24 2.77 0.99 0.74 1.62 0.46 3.57 57.99 100.00

NPA Movement (Gross): Q1, 2009-10

Particular A. Opening Balance B. Additions during Q1, FY10 Amount in Rs crore 1,842.93 450.95

C. Reduction during Q1, FY10

Of which, Recovery Upgradation PWO & WO Exchange Difference NPA as on 30th Jun, 2009

225.72
72.10 134.44 11.82 7.36 2,068.16

Recovery in PWO in Q1, FY10

49.94

Gross NPAs: Sectoral Break-up at end-June, 2009

Sector
Agriculture

Gross NPA (%) Apr-Jun08

3.16%

Gross NPA (%) Apr-Jun09

2.15%

Large & Medium Ind.

Retail Housing SME

1.24%
3.52% 4.63% 3.31%

1.05%
2.65% 2.99% 2.47%

Sectoral Deployment of Credit in Q1, FY10

Sector % share in Gross Domestic Credit 16.74%

Agriculture

Retail
SME Wholesale

18.80%
14.07% 50.39%

Total

100.0%

Economic Scenario
Uncertain agricultural outlook Total rainfall since the beginning of Jun09 is 19.0% below average so far. Rainfall in the remaining monsoon season remains important for sufficiency of sugarcane, rice, corn, oilseeds & cotton output. Industrial production growth has started improving, albeit at a gradual pace. Export-oriented and capital goods sectors are still reeling under the pressures of global crisis. Within Services sector, a weak global economic situation is still exerting negative influence on services like IT, ITES, Aviation, Hotels & Tourism. The Real GDP growth for FY10 is expected to be in the range of 6.0% to 6.5%. Inflation is likely to emerge as macro risk in Q4, FY10 on the back of continuously rising prices of primary articles, firming up of crude oil prices & statistical base effect. We expect inflation (WPI) to cross 5.0% by end-March, 2010.

Economic Scenario
Management of record govt. borrowings of Rs 4.51 trln for FY10 without upsetting the bond market remains a major challenge for the RBI. The spread between 1-year & 10-year bond widened to 318 bps last week reflecting uncertain outlook for the bond market. High CPI-based inflation and surging capital market activity offer limited scope for banks to reduce deposits rates, which, in turn, would put upward pressure on interest rates.

Large-sized market borrowings can be put through either by raising interest rates or a large increase in created money resulting in unbridled monetary expansion.
In short, interest rates have developed an upward bias & would start hardening once the credit demand picks up. Non-food credit growth for banks is expected to improve in the remaining part of FY10 on the back of budget stimuli & growing consumption sentiment.

Banks Guidance & Vision

The Bank would continue with its thrust on growth with quality & try to grow at above industry average to steadily expand its market share. The Bank would protect the current soundness of its key financials like ROAA, ROE, EPS, BVPS, NPL Position etc., through its dedicated focus on CASA Mobilisation, Efficient Pricing of Retail Deposits & Loans, Steady Reduction in Bulk Business and Credit Origination & Monitoring.

The Bank would try to grow its Fee-based Income in tandem with its Loan-Book growth.
The Bank is building Strong Foundation for Future Growth by
Recruiting the best possible talent in the country from the Premier Institutions Working on BPR project in consultation with Mckinsey & Co. so as to achieve optimum use of technology and right skilling of the manpower to yield maximum customer satisfaction.

Thank you.