Presentation to MediaPresentation to Media Performance HighlightsPerformance Highlights

( Q2 & H1, 2008-09)( Q2 & H1, 2008-09)byby

Dr Rupa Rege NitsureDr Rupa Rege NitsureChief EconomistChief Economist

October 25, 2008October 25, 2008

Bank of Baroda: Key StrengthsBank of Baroda: Key Strengths BoB is a leading 100 years old PSB in India with modern and

contemporary personality, offering banking products and services to industrial and commercial, retail and agricultural customers across the country.

Steady Movement towards International best practices –

Preparing financials under US GAAP

Uninterrupted Record in Profit-making and

Dividend Payment

Overseas Business Operations extend across

25 countries through 72 Offices

First PSB to receiveCorporate Governance

Rating (CAGR-2)

Rapid & Significant Technology Progression

Since FY06

Pioneer in many Customer-Centric

Initiatives

Strong Domestic Presence through

2,886 branches

Modern & ContemporaryPersonality

Provides Financial Services to around

33 million customers globally

A well-accepted & recognised Brand in

Indian banking industry

Domestic Branch Network at End-Domestic Branch Network at End-Sept, 2008Sept, 2008

2709

2775

2886

2600

2650

2700

2750

2800

2850

2900

Sep'06 Sep'07 Sep'08

No. of Branches •The Bank has a network of 2,886 domestic branches & it merged five branches in H1, FY09.

•About 37.84% of the domestic branches are located in rural areas.

•Of the total no of 2,886 branches, 350 are Agriculture Thrust branches.

•Around 670 branches are located in minority concentrated districts.

• There are 128 specialised branches (including 19 service branches) as on date.

Regional Break-up of Domestic Branches

Metro Urban Semi-Urban

Rural

627 525 642 1,092

Robust Technology PlatformRobust Technology Platform

•By 30 Sept, 2008, the Bank has completed CBS Rollout in 1,912 domestic branches including 31 extension counters.

•All CBS branches are enabled for inter bank remittances through RTGS and NEFT.

•CBS has also been implemented in 65 overseas branches of Bank/its Subsidiaries.

•The Bank’s ATM network has increased to 1,167 from a mere 170 in 2005.

•The Bank has installed 47 ATMs at Railway Stations.

•Many novel products like RapidFunds2India, Baroda Connect, Online Tax Payment Facility, Depository Facility, Baroda Easy Pay, Online Payment of Railway Ticket Booking, etc. have been developed by the Bank to enhance customer convenience.

Concentration (%): Domestic Branch Concentration (%): Domestic Branch NetworkNetwork

Rest of India, 20.79

UP & Uttaranchal, 21.73

South, 10.62 Rajasthan, 12.16

Maharashtra, 11.32

Gujarat, 23.38

Pattern of Shareholding: 30 Sept, Pattern of Shareholding: 30 Sept, 20082008

Govt. of India53.8%Banks

0.1%Mutual Funds11.8%

Corp. Bodies1.5%

FIIs18.9%

Indian Public6.1%

Insurance Cos6.5%

Others1.3%

• BOB is a Part of the following Indexes

BSE 100, BSE 200 and BSE 500

Nifty Junior and Bankex.

• BOB’s Share is listed on BSE and NSE in ‘Future and Options’ segment also.

As on 3oth Sept, 2008

• Share Capital Rs 365.53 crore

•No. of Shares 364.27 million

• Net worth Rs 10,304.23 crore

• B. V. per share Rs 282.88

•Return on Equity (annualised): 14.87%

Business Growth: Sept’04 to Sept’08Business Growth: Sept’04 to Sept’08

14.87

9.59

24.96 22.00 22.60

0.00

5.00

10.00

15.00

20.00

25.00

Sep'04 Sep'05 Sep'06 Sep'07 Sep'08

Growth: Total Deposits (%)

13.57

30.87

44.95

27.14

32.44

0

5

10

15

20

25

30

35

40

45

Sep'04 Sep'05 Sep'06 Sep'07 Sep'08

Growth: Total Advances (%)

14.4516.45

32.20

24.0426.61

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Sep'04 Sep'05 Sep'06 Sep'07 Sep'08

Growth: Total Business (%)

37.36

40.7541.76

37.4735.85

32

34

36

38

40

42

Sep'04 Sep'05 Sep'06 Sep'07 Sep'08

Domestic CASA Share (%)

Profits: Apr-Sept’03 to Apr-Sept’08Profits: Apr-Sept’03 to Apr-Sept’08

1705.81

1149.19 1146.41

1002.151066.67

1281.70

766.14

658.03

451.68416.01

506.30504.03

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

1400.00

1600.00

1800.00

Sept'03 Sept'04 Sept'05 Sept'06 Sept'07 Sept'08

Rs crore

Gross Profit Net Profit

Bet.’ Sept’05 & Sept’08, the Gross Profit has grown at the CAGR of 19.4%

Asset Quality: Sept’03 to Sept’08Asset Quality: Sept’03 to Sept’08

11.65

9.41

6.34

3.442.33

1.62

3.37

2.27

1.130.77 0.55 0.43

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Sept'03

Sept'04

Sept'05

Sept'06

Sept'07

Sept'08

Gross NPAs (%)

Net NPAs (%)

Business Performance: Sept’07 to Business Performance: Sept’07 to Sept’08Sept’08•Global Business up 26.6%(Y-o-Y) to Rs 2,80,544 crore at end-Sept 2008

•Domestic Business up 26.8%(Y-o-Y) to Rs 2,22,336 crore

•Overseas Business up 25.8%(Y-o-Y) to Rs 58,208 crore

•Global Deposits up 22.6%(Y-o-Y) to Rs 1,61,069 crore

•Domestic Deposits up 23.5%(Y-o-Y) to Rs 1,31,019 crore

•Overseas Deposits up 18.8%(Y-o-Y) to Rs 30,050.36 crore

•Domestic CASA share 35.85% at end-Sept’08

•Global Advances up 32.44% (Y-o-Y) to Rs 1,19,475 crore

•Domestic Advances up 31.9% to Rs 91,318 crore

•Overseas Advances up 34.4% to Rs 28,157 crore

Business Performance: Sept’07 to Business Performance: Sept’07 to Sept’08Sept’08•Retail Credit up 22.7%(Y-o-Y) to Rs 17,745 crore at end-Sept 2008

•Retail Credit now forms 19.3% of Gross Domestic Credit

•Home Loan Book up 20.4%(Y-o-Y) to Rs 7,588 crore

•SME Credit up 24.1% (Y-o-Y) to Rs 12,684 crore

•Farm Credit up 31.1% (Y-o-Y) to Rs 14,946 crore

•Priority Sector Credit up 28.6%(Y-o-Y) to Rs 35,389 crore.

•Bank’s credit to weaker sections was up 51.1% (Y-o-Y) to Rs 6,475 crore.

•The eligible amount under Agricultural Debt Waiver for the Bank is Rs 509 crore, out of which Rs 163 crore will be paid by the government in Q3, FY09 as the first instalment.

Key Financial Ratios : Apr-Sept, 2008-Key Financial Ratios : Apr-Sept, 2008-0909 Return on Average Assets (ROAA) at 0.83%[0.95% in H1, FY08]

Earning per Share (annualised) at Rs 42.06 [Rs 36.12 in H1, FY08]

Book Value per Share at Rs 282.88 [Rs 249.36 in H1, FY08]

Return on Equity (ROE) at 14.87% [14.49% in H1, FY08]

Capital Adequacy Ratio at 12.86% (Tier 1 : 7.75%, Tier 2 : 5.11%)

• Cost-Income Ratio declined from 53.63% to 46.35%(Y-o-Y).

Gross NPA ratio declined to 1.62% from 2.33% (Y-o-Y).

Net NPA ratio declined to 0.43% from 0.55%(Y-o-Y).

NPA Coverage at the level of 73.94%

Operating Profits: Apr-Sept, 2008-09Operating Profits: Apr-Sept, 2008-09

•Increase in “Net Interest Income” of 16.2% (Y-o-Y), “Non-Interest income” of 12.5% and a moderate growth in “Total Expenses” of 20.7% enabled the Bank to increase its Operating Profits by a decent 33.09% in H1, FY09 despite challenging economic environment.

1281.70

1705.81

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

1400.00

1600.00

1800.00

Rs Crore

Sept'07 Sept'08

33.09%

Net Profits: Apr-Sept, 2008-09Net Profits: Apr-Sept, 2008-09

658.03

766.14

600

620

640

660

680

700

720

740

760

780

Sept'07 Sept'08

•The level of half-yearly Net Profit at Rs 766.14 crore at end-Sept, 2008 reflects a modest growth of 16.17% (Y-o-Y) primarily due to higher provisions against write-downs in investments consequent to global turmoil & higher provisions on account of expected wage revisions.

16.43%

Other Highlights: H1, 2008-09Other Highlights: H1, 2008-09 Net Interest Margin (as % of interest-bearing assets) in Global

Operations stood at 2.77% in Apr-Sept, 2008 and 2.80% in Jul-Sept, 2008.

Cost of Deposits in Global Operations increased from 5.51% to 5.59%

Cost of Deposits in Domestic Operations increased from 5.66% to 6.12%

Cost of Deposits in Overseas Operations decreased from 4.82% to 3.38%

Yield on Advances in Global Operations declined from 9.61% to 9.37%

Yield on Advances in Domestic Operations improved from 10.49% to 10.73%

Yield on Advances in Overseas Operations declined sharply from 6.25% to 5.00%.

Yield on Investments in Global Operations marginally improved from 6.72% to 6.78%.

Other Highlights: H1, 2008-09Other Highlights: H1, 2008-09

Treasury Income (Profit on Sale of Investments) declined by 28.5% (Y-o-Y) to Rs 183.43 crore.

Fee-based Income (Commission, Exchange & Brokerage) improved by a strong 39.02% (Y-o-Y) to Rs 318.75 crore.

Cash Recovery (NPA & PWO) during H1, 2008-09 stood at healthy Rs 424.15 crore despite visible signs of industrial slowdown.

Profit from Exchange Transactions grew by 15.63% (Y-o-Y) to Rs 149.31 crore.

Overseas Business: Apr-Sept, 2008-09Overseas Business: Apr-Sept, 2008-09

In H1, FY09, the “Overseas Business” contributed 20.75% to Total Business and 20.5% to Net Profit.

In H1, FY09, the “Overseas Business” contributed 32.01% to the Bank’s income from commission/exchange/brokerage.

While the Cost-Income Ratio for Domestic Operations stood at 51.13% in H1, FY09, it was just 20.06% for Overseas Operations.

While the Gross NPA (%) in Domestic Operations stood at 1.95% at end-Sept 2008, that for Overseas Operations was just 0.56%.

Whereas the “Gross Profit to Avg. Working Funds” ratio for Overseas Operations was 2.05% in H1, FY09, it was 1.77% for Domestic Operations.

NPA Movement (Gross): H1, 2008-09NPA Movement (Gross): H1, 2008-09

Particular Amount in Rs crore

A. Opening Balance 1,981.38

B. Additions during the year

544.91

C. Reduction during the year

571.90

Of which,

Recovery 326.40

Upgradation 144.85

PWO & WO 99.44

Ex diff. 1.21

NPA as on 30 Sept, 2008 1,954.39

Recovery in PWO 97.75

Economic ScenarioEconomic Scenario

•Visible signs of economic slowdown with IIP growth slipping to 4.9% in Apr-Aug, 2008 from 10.0% in Apr-Aug, 2007

•The RBI has revised its GDP growth forecast downwards in Mid-Term Review of Policy (Oct 24) to 7.5–8.0% from 8.0% earlier

•Inflation still in the double digit level (11.07% as on Oct 11, 2008).

•Global financial turbulence is having significant impact on domestic markets and the RBI’s recent measures will not give results overnight

•Sensex has lost 44% since the beginning of Apr’08 due to massive outflows of portfolio capital

•Rupee has depreciated 25% since beginning of Apr’08 & touched 50 against USD

Banking EnvironmentBanking Environment

•Hyper inflationary phase has resulted in higher interest rates on term deposits leading to migration of deposits from CASA to term deposits.

•Incremental credit-deposit ratio at 85%-90% for the industry during Apr-Sept’08 as credit growth outpaced deposit growth.

•Uncertain liquidity situation due to volatility in portfolio capital, drying up of external sources of finance, etc., Bulk deposit rates still ruling high.

•Given the unprecedented severity of the global crisis and significant economic slowdown thru’ trade and investment channels, next 12 to 18 months will be highly critical for asset quality.

•Concerns that government will over shoot its borrowing target and cause a glut in supply of bonds continues to dampen the sentiment in the G-sec market.

Proposed Business Strategies Proposed Business Strategies •Aggressive efforts to improve “Profitability” by

•Improving the CASA share

•Focusing more on domestic operations & Fee-based income

•Lowering the dependence on bulk business

•Paying focused attention to asset quality

•Leveraging technology/re-branding exercise to extract maximum benefits

•Special focus on improving “relations” with the existing corporate customers as well as efforts to add new quality customers to the Bank’s Book

•Thrust on business process reengineering to reduce the “cost-income” ratio, and,

• A dedicated effort to add 2.5 to 3.0 million quality customers to Bank’s book in FY09 and in subsequent years.

Thank you.