Bob

Industry Overview Company Over view SWOT Analysis Financial Analysis Basel 2 and Implications ALM Implementation and Comparison Valuation

Sustainable growth momentum Under penetration of financial products Retail credit on the rise

Agri credit12%

Industries41%

Retail22%

Real Estate4%

NBFC's4%

Others17%

Loans

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

India

China

Indonesia

HK

Singapore

Thailand

Phillipines

Malaysia

Korea

Taiwan

Loan CAGR 2003 - 2008

Loan CAGR

0% 50% 100% 150% 200% 250%

HK

Taiwan

Singapore

China

Malaysia

Korea

Thailand

India

Phillipines

Indonesia

Credit/GDP Ratio

Credit/GDP

0% 10% 20% 30% 40% 50%

HDFC

BOB

OBC

ICICI

Corp Bank

SBI

Sector

Union

PNB

BOI

Canara

Credit CAGR, FY 04-09

Credit CAGR

0% 10% 20% 30% 40% 50% 60%

Retail

Non Food Credit

Industries

Agri Credit

Others

Bank-credit CAGR, FY 04-09

Bank-credit CAGR

Target market expanding New players a threat to banks (Insurance

companies, Mutual Fund etc)

31.2

29.1

26.1

23.9

21.4

20.6

17.7

14.4

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0

India

Indonesia

Brazil

Thailand

China

US

UK

Germany

Percentage Population below 15

0 0.5 1 1.5 2

New Private Banks

Sector

PSU Banks

Old Private Banks

Deposit per branch (Rsbn)

Deposit per branch

0 0.2 0.4 0.6

New Private Banks

Sector

PSU Banks

Old Private Banks

CASA deposit per branch (Rsbn)

CASA deposit per branch

0 0.1 0.2 0.3 0.4 0.5 0.6

New Private Banks

Sector

PSU Banks

Old Private Banks

Advances per branch (Rsbn)

Advances per branch

0.00% 0.50% 1.00% 1.50%

New Private Banks

Sector

PSU Banks

Old Private Banks

Fee generation as a share of assets

Fee generation as a shareof assets

GDP dip to reduce Deposit growth Rising competition Lower Long term resources

>5 years15%

Up to 1 year48%

1-3 years29%

3-5 years8%

Maturity of Deposits

Traditional lending to be commoditised Basel II Norms Banks service to be a differentiator

Superior soft skills Higher Fees Technological gap reducing Innovative products Better non-branch distribution model

Globalization Need for a single system From 8 systems to Finacle – One solution,

One stategy Time, Cost & Risk minimization MIS Reporting Cross country product introduction Direct India Remittance

Founded in 1908, Bank of Baroda is the 3rd largest public sector bank in India

Holds total assets in excess of Rs 2.27 lakh cr Network of over 3000 branches and offices Offers a wide range of banking products and

financial services Government holds approximately 54% stake 7 International subsidiaries

PERSONAL

• Deposits

• Retail Loans

• Credit cards

• Debit Cards

• Services

BUSINESS/ CORPORATES

• Deposits

• Loans and Advances

• Services

• Lockers

• Wholesale Banking

INTERNATIONAL

• NRI services

• ECB

• FCNR(B) Loans

• Offshore Banking

• Export Finance

• Import Finance

• Trade Finance

• International Treasury

TREASURY

• Domestic Operations

• Forex Operations

• Wholesale Banking

• SME Banking

• Retail Banking

• Rural/Agri Banking

• Wealth Management

• Demat

• Product Enquiry

• Deposit Products

• Loan Products

• ATM/ Debit cards

• Internet Banking

• NRI remittances

• Baroda e-trading

• Interest Rates

25%

29%

30%

16%

Revene Earnings 2008-09

Treasury Operations

Corporate/Wholesale Banking

Retail Banking

Banking Operations

26%

30%

28%

16%

Revenue Earnings 2007-08

Treasury Operations

Corporate/Wholesale Banking

Retail Banking

Banking Operations

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Geographic Revenue

Domestic

International

Financial Analysis

60.93

32.13

57.26

155.74

57.23

0

20

40

60

80

100

120

140

160

180

BOB ICICI BOI SBI HDFC

EPS

EPS

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%


Net Interest Margin

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%


Tier 2 Risk based Capital Ratio

11.50%

12.00%

12.50%

13.00%

13.50%

14.00%

14.50%

15.00%

15.50%

16.00%


Capital Adequcay Ratio (CAR)

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%


Tier 1 Risk based Capital Ratio

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%


Cost of Deposits

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%


Yield on Advances

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%


Cost Income Ratio

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%


Return on Net Worth (ROE)

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%


Return on Assets

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%


Return on Average Assets

35000

35500

36000

36500

37000

37500

38000

38500

39000

39500

40000

2005 2006 2007 2008 2009

Number of Employees

2600

2650

2700

2750

2800

2850

2900

2950

3000

2005 2006 2007 2008 2009

Number of Branches

0

2

4

6

8

10

2005 2006 2007 2008 2009

Business per employee (Rs. in crore)

0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009

Gross Profit per employee (Rs. in lakhs)

0

1

2

3

4

5

6

7

2005 2006 2007 2008 2009

Net Profit per employee (Rs. in lakhs)

0

20

40

60

80

100

120

2005 2006 2007 2008 2009

Business per branch (Rs. in cr)

0

0.5

1

1.5

2

2005 2006 2007 2008 2009

Gross Profit per branch (Rs. in crore)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2005 2006 2007 2008 2009

Net Profit per branch (Rs. in crore)

0

50

100

150

200

250

300

350

2005 2006 2007 2008 2009

Earnings per share (Rupees)

Book Value per share (Rupees)

Gross NPA to gross advances – 1.27% Net NPA to net advances – 0.31% Net NPA of 451.15 crores One of the lowest gross NPA levels in the

industry.

• HDFC – 2%

• ICICI Bank – 4.4%

• SBI -2.8%

• BOI – 1.7%

0

10

20

30

40

50

60

70

80

90

2007 2008 2009

Non Interest Income/ Total Income

Net Interest Income/ Total Income

Well diversified branch distribution Strong concentration in the western region

makes sure that it is CASA rich Better focus on international market Improvement on the ROE margins in the last

fiscal year Strong asset quality with healthy coverage

ratio

Inadequate talent pool to compete with strong private banks

Not very strong on technology front Lesser expansion of branches in past few

years. Lesser strategic initiatives as compared to

larger private banks Late on introducing latest products in the

market

Cost to Income could improve in coming years

Scope to improve non interest income

Focus more aggressively on retail banking

Contribution from the foreign business of the bank is around 25% on the bottom line

NPA levels could rise as there is over reliance on corporate and SME’s.

Continued slow down in the economy could slow down credit growth

BASEL -2 Approaches and Comparison

Bank of Baroda follows following approaches for Basel 2 pillar 1

• Credit risk – Standardised Approach• Operational risk – Basic Indicator Approach• Market risk – Duration based Approach

SBI, ICICI and HDFC Bank follow the same approaches

We were not able to find out risk weighted assets due to market risk as there is no data available regarding exact investments.

From Annual report – 8951.35 crores

ICICI Bank has the highest risk weighted assets for market risk as compared to other banks.

Private banks have higher risk weights for interest rate risk as compared to PSU banks.

PSU banks have higher risk weights for equity risk as compared to private banks

Asset and Liability Management Implementation

and Comparison

On the foreign exchange front BOB and SBI have done better than HDFC.

HDFC has the best ALM followed by SBI and ICICI. BOB needs to improve on ALM.

BOB needs to improve on reporting for Basel 2 disclosures of ALM

Bob

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