Bank of Baroda India s Largest Nationalised Bank: Well Poised for Growth Performance Analysis: Q4 & Full Year, (FY13)

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1 Bank of Baroda India s Largest Nationalised Bank: Well Poised for Growth Performance Analysis: Q4 & Full Year, (FY13) Dr Rupa Rege Nitsure Chief Economist May 13, 2013

2 Bank of Baroda: Key Strengths Bank of Baroda is a 104 years old State-owned Bank with modern & contemporary personality, offering banking products and services to Large industrial, SME, retail & 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 (CGR-2) A well-accepted & recognised Brand in Indian banking industry Overseas Business Operations extend across 24 countries through 100 Offices Relatively Strong Presence in Progressive States like Gujarat & Maharashtra Modern & Contemporary Personality Strong Domestic Presence through 4, 276 Branches Provides Financial Services to around mln Customers Globally Robust Technology Platform with 100% CBS in Indian Branches

3 Results At A Glance (FY13) Global Business Size: Rs 8,02,069 crore on 31 st Mar, 2013 [up 19.3%, y-o-y] Market Share in Aggregate Deposits up from 3.70% in Mar 07 to 4.35% in Mar 13 Market Share in Credit up from 3.53% in Mar 07 to 3.99% in Mar 13 Global Loan-book: Rs 3,28,186 crore on 31 st Mar, 2013 versus Rs 2,87,377 crore in FY12 Global Deposit-base: Rs 4,73,883 crore on 31 st Mar, 2013 versus Rs 3,84,871 crore in FY12 Operating Profit at Rs 9,074 crore in FY13 [Rs 8,630 crore in FY13] Net Profit at Rs 4,481 crore in FY13 [Rs 5,007 crore in FY12] ROAA at 0.90% for FY13 ROE at 14.59% for FY13 NIM (Domestic): 3.11% for Domestic Operations & 2.66% for Global Operations CRAR (Basel II): 13.30%; Tier 1 Capital Ratio: 10.13% Gross NPA: 2.40% Net NPA: 1.28%

4 Domestic Branch Network No. of Domestic Branches 4, FY08 FY09 FY10 FY11 FY12 FY13 During the last five yrs, the Bank has added 1,423 brs to its domestic network. During FY13, the Bank opened 373 new brs and merged one branch in Jun 12. During FY14, the Bank proposes to open 625 new brs, with 143 brs in Tier I & II centres and 249 brs in Tier III to VI centres. Out of the newly opened brs during FY13, 82 belonged to metro & urban areas; 121 to semi-urban areas & 170 to rural areas including 101 brs in unbanked rural centres. Regional Break-up of Domestic Branches as on 31 st Mar, 2013 Metro Urban Semi- Urban Rural ,162 1,436 Out of the newly opened brs during FY13, 84 were opened in UP & Uttaranchal; 53 in Gujarat, 38 in Southern States, 48 in Rajasthan & 32 in Maharashtra & Goa (including Mumbai). Around 33.6% of the Bank s network at the end of FY13 was situated in rural areas.

5 Rich Technology Platform. Bank s entire domestic, overseas and RRB framework is CBS-compliant. While all domestic branches are migrated on MPLS network, the new branches are directly opened in MPLS network. Bank has IT facilities for online/offline account opening through Business Correspondents under Financial Inclusion. Bank s retail & corporate customers enjoy several facilities under its Alternate Delivery Channels. Under Internet banking Bank offers various features such as fund transfers to self & third party (within BoB); RTGS/NEFT, online payment of bills & taxes, Custom duty payments, rail-ticket booking, temple donations, other donations, online subscription to IPOs/FPOs thru ASBA & institutional fee payment, IMPS (Immediate Payment services thru e-banking), Credit to Loan accounts etc. Bank s Internet Banking portal is made available on all smart phones/ipads. The SMS alerts for all transactions are also implemented in the Internet Banking Portal. A View-based e-banking is enabled for all the RRBs sponsored by the Bank. Bank has implemented Internet Banking in 13 of its overseas territories, notably Oman, Tanzania, Uganda, Kenya, Mauritius, Seychelles, Botswana, New Zealand, UAE, Fiji, UK,Ghana. and Australia. To provide safe online banking services to its customers & protect them from phishing attacks, Bank has implemented a Fraud Management Solution including two factor authentication. Bank has also implemented RaidFunds2India solution in all the major territories. Internet Payment Gateway has been implemented to facilitate e-commerce transactions in multi currencies across the globe.

6 Rich Technology Platform. Bank s Mobile Banking (Baroda M-Connect) provides various facilities to its customers like balanceenquiry, mini-statements, linking of multiple accounts, funds transfer, bill payments, ticket booking, shopping, feedback facilities, etc. The IMPS (Immediate Payment services) facility for Mobile to Account fund transfer and Mobile to Mobile Fund transfer is also launched for its customers. Bank s Mobile Banking application is available on all Leading Brands including Blackberry, Android, iphone, ipads, Windows, etc. A National Unified USSD Platform is also enabled through Mobile Banking. Bank s ATM switch is upgraded to handle increasing volumes of ATM transactions ; the Bank s ATM count has increased to 2,630 by 31 st March, Bank s ATM Switch also supports 8 international territories. Talking ATMs for visually impaired individuals, Regional Language screen selection option in Gujarati, Marathi and Tamil, receipt-printing in Hindi, etc.,are enabled in all ATMs. Bank has introduced Rupay Card, Rupay KCC Card, Brown Label ATMs. Bank has implemented Fraud management Solution in all its ATMs and POS. Bank has introduced the facility of Multiple Accounts being linked to a single Debit Card (verified by Visa, CVV2) and also Mobile Number registration thru ATMs in CBS for SMS Alerts. E-tax payments through ATMs, school fee payments are facilitated and Mobile ATMs are introduced in several cities. Bank has set up two Contact Centres in Lucknow & Baroda to address the customer queries & grievances in a speedy fashion. Cash Management Solution is implemented to provide operational support to customers ALM.

7 Rich Technology Platform. Anti Money Laundering (AML) has been implemented in India and 22 of Bank s overseas territories. Online Trading (Corporate and Retail) has been implemented in India. Bank has implemented an Integrated Global Treasury Solution in its major territories like U.K., UAE, Bahamas, Bahrain, Hong Kong, Singapore, Belgium, USA and India to achieve reduced cost of operations & better fund mgmt. Bank has a centralised SWIFT system for India & its 23 overseas territories. CTS -Cheque Truncation System implemented in Delhi and Grid based CTS was implemented in all southern States, Kolkata, Ludhiana and Chandigarh. CTS will be shortly implemented in Mumbai and Western Grid of Maharashtra, Gujrat and Madhya Pradesh. ACPC (Automated Cheque Processing Centre) for centralised and automated Inward/Outward clearing has been implemented in Mumbai, Surat and Ahmedabad. Back Office functions have been centralised at 70 City Back Offices & 10 Regional Back Offices (at Baroda, Jaipur, Lucknow, Bhopal, Coimbatore, Kolkata, Mumbai, Jamshedpur, New Delhi, Pune) to improve the delivery of services. Bank s intranet portal has been revamped into a complete KNOWLEDGE MANAGEMENT solution with e-learning facilities. Travel Card in foreign currency is introduced. HRMs- A centralized database of employees is created to facilitate promotion exercise. HR policies are automated to promote transparency. Payroll- A centralised online system is created for salary payment, leave maintenance, etc.

8 Rich Technology Platform. Bank has created a Data Warehouse for providing flexible and interactive source of strategic information, CRM support, etc. to Top Management. Bank has fully automated its Loan Processing (Retail, Agri and SME) modules for better and quick customer service. Bank also provides a single click Online loan Application feature for Home Loan, Auto Loan and Education Loan. Bank has initiated Direct Benefit Transfer under Adhaar Payment Bridge System (APBS) and wages payment for Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Bank has built a State-of-the-Art Data Centre conforming to Uptime Institute Tier-3 standard & a Disaster Recovery Site in different seismic zones to ensure uninterrupted banking services delivery to customers. Various technology projects like Virtualization, CPU and Memory up-gradation, Backup consolidation, RAC implementation, bandwidth up-gradation of branches are undertaken to support increasing business requirement. A robust Information Security Management System is put in place to protect technology against security threats. Bank s Data Centre and Disaster Recovery Centre are ISO certified. A comprehensive Audit by external agencies is being carried out for all applications including CBS and DC/DR Infrastructure. BoB IIT an exclusive IT Training Centre has been set up in Gandhi-Nagar to educate the Bank s staff in all IT related products & services.

9 Concentration (%): Domestic Branch Network Rest of India, Gujarat, Maharashtra, UP & Uttaranchal, South, Rajasthan, 11.00

10 Pattern of Shareholding: 31 st Mar, 2013 As on 31 st Mar, 2013 Indian Public 4.8% FIIs 17.2% Corp. Bodies 4.7% Others 0.3% Share Capital: Rs crore No. of Shares: million Net worth: Rs 30,714 crore (up 17.0%, yoy) B. V. per share: Rs (up 14.0%, yoy) Return on Equity: 14.59% for FY13 Insurance Cos 11.9% Mutual Funds 5.7% Govt. of India 55.4% BOB is a Part of the following Indexes BSE 100, BSE 200, BSE 500 & Bankex Nifty, BankNifty, CNX 100, CNX 200, CNX 500 BOB s Share is also listed on BSE and NSE in the Future and Options segment.

11 Select Awards & Accolades in FY13 Bloomberg UTV Financial Leadership Award Best PSU bank , Mumbai Best CIO Award of BFSI sector from Institute of Public Enterprises, 2012 June, Hyderabad The Sunday Standard FINWIZ 2012 Awards , New Delhi Best Indian Bank Large (Runner Up) Best Public Sector Banker Large (Runner Up) Dun & Bradstreet Polaris Financial Technology Banking Awards , Mumbai Best Public Sector bank under the category Global Business Development Overall Best Public Sector Bank Banking Technology Award-2011 by IBA , Mumbai Use of Technology in Training & e-learning Winner Best Customer Relationship initiatives 1 st Runner up Best use of Business Intelligence 1 st Runner up Best use of mobility tech in Banking 2 nd Runner up Best Risk management & Security initiatives 2 nd Runner up Silver Trophy for effective implementation of Automated storage Management & Oracle RAC from SKOCH Digital Inclusion Award- 2012, , New Delhi Business India Best Bank Award , Mumbai

12 Select Awards & Accolades in FY13 Forbes India Leadership Award Best CEO Public Sector, , Mumbai to the Bank s CEO CNBC TV18 India Best Banks and Financial Institutions Award 2012 Best Public Sector Bank, , Mumbai. Best Large Bank 2012 Business World November 26 th 2012 Issue Best Large Bank 2012 Business Today KPMG December 2012 Best Public Sector Bank Award by State Forum of Bankers Club, Kerala, December 2012, at Ernakulam Business Standard Banker of the Year ( ) was conferred on the Bank s CEO on My FM Stars of the Industry Award for Excellence in Banking (PSU) Silver awarded by Radio FM on in Mumbai. My FM Stars of the Industry Award for Excellence in Home Loan Banking Bronze awarded by Radio FM on in Mumbai FE Best Banks Award for Best PSU Bank awarded by Financial Express Group on in Mumbai Strategic Communication and Leadership Award by Asian Confederation of Business and World CSR Congress at Corporate Affairs Award Ceremony, Mumbai on 18/02/2013 The Most Efficient Public Sector Bank by Dalal Street Investment Journal on 23/03/2013

13 India s Macro Health: FY13. India s economic growth reached the decade s low of 5.0% in FY13 on the back of stalled mining and manufacturing sectors, weaker agricultural performance due to deficient rains and moderation in business related services. Headline (WPI) inflation declined from the average of 8.9% in FY12 to 7.3% in FY13, which allowed RBI to reduce the key policy rates by 100 bps and CRR by 75 bps during FY13. However, continued weaknesses in economic activity kept both the deposit & credit growth rates muted though the differential between deposit and credit growth hovered around 250 to 300 bps throughout the year with deposit growth outpacing the credit growth. This created persistent liquidity tightness in the system. Historically high level of current account deficit (estimated at 5.0% of GDP in FY13) and double-digit retail (CPI-based) inflation did not allow RBI to ease the monetary policy aggressively despite accentuated growth risks. Exports kept on contracting throughout the year and contracted by 1.8% in FY13 as a whole, imports increased by 0.44% and trade deficit expanded to US$ 191 billion. Yet Rupee/USD rate depreciated by 6.7% on y-o-y basis thanks to the strong FII inflows. India s Government managed to contain fiscal deficit at 5.3% of GDP in FY13 & focusing on alleviating supply-side constraints by stepping up efforts to lift investments & remove bureaucratic impediments that have stalled a large number of projects in coal, power, steel and road sectors.

14 Business Expansion Change Particular (Rs crore) Mar 12 Dec 12 Mar 13 Y-O-Y (%) Over Dec 12 (%) Global Business 6,72,248 7,14,051 8,02, Domestic Business 4,82,211 4,96,595 5,66, Overseas Business 1,90,038 2,17,456 2,36, Global Deposits 3,84,871 4,14,733 4,73, Domestic Deposits 2,80,135 2,95,388 3,41, Overseas Deposits 1,04,736 1,19,346 1,32, Global CASA Deposits 1,03,524 1,07,937 1,19, Domestic CASA 92,948 95,188 1,03, Overseas CASA 10,576 12,749 16, Share of Domestic CASA at to 30.38% as on 31 st Mar, 2013 in terms of Total Deposits & at 32.64% in terms of Core Deposits.

15 Business Expansion Particular (Rs crore) Mar 12 Dec 12 Mar 13 Y-O-Y (%) Change Over Dec 12(%) Global advances (Net) 2,87,377 2,99, Domestic Advances 2,02,075 2,01, Overseas Advances 85,302 98, Retail Credit Of which: 35,668 35,392 38, Home Loans 14,133 15,205 16, SME Credit 34,512 39,083 44, Farm Credit 28, , Credit to Weaker Sections 15,863 16,091 17,

16 CASA Position Particular (Rs crore) Mar 12 Dec 12 Mar 13 Y-O-Y (%) Change Over Dec 12 (%) Global Saving Deposits 74,580 79,980 84, Domestic Savings Deposits Overseas Savings Deposits 72,575 77,888 82, ,004 2,092 2, Global Current Deposits 28,944 27,958 35, Domestic Current Deposits Overseas Current Deposits 20,372 17,300 21, ,572 10,658 13,

17 Bank s Profits & Its Components: Q4, FY12 & FY13 Particular (Rs crore) Q4, FY12 Q4, FY13 YOY (%) Interest Income 8,119 9, Interest Expenses 5,321 6, NII (Spread) 2,798 2, Other Income 898 1, Staff Expenses 1,020 1, Total Expenses 6,965 8, Operating Profit 2,051 2, Provisions 522 1, Net Profit 1,518 1,

18 Bank s Profits & Its Components: FY12 & FY13 Particular (Rs crore) FY12 FY13 YOY (%) Interest Income 29,674 35, Interest Expenses 19,357 23, NII (Spread) 10,317 11, Other Income 3,422 3, Staff Expenses 2,986 3, Total Expenses 24,466 29, Operating Profit 8,630 9, Provisions 3,574 4, Net Profit 5,007 4,

19 Deposit & Loan Costs: Q4,FY12 to Q4,FY13 Particular (in %) Q4, FY12 Q1, FY13 Q2, FY13 Q3, FY13 Q4, FY13 Global Cost of Deposits Domestic Cost of Deposits Overseas Cost of Deposits Global Yield on Advances Domestic Yield on Advances Overseas Yield on Advances Bank s COD stood at 7.36% in domestic, at 1.62% in overseas & at 5.80% in global operations during FY13. Bank s YOA stood at 11.58% in domestic, at 3.32% in overseas & at 8.90% in global operations during FY13.

20 Investment Yields & NIMs: Q4, FY12 to Q4,FY13 Particular (in %) Q4, FY12 Q1, FY13 Q2, FY13 Q3, FY13 Q4, FY13 Global Yield on Investment Domestic Yield on Investment Overseas Yield on Investment Global NIM Domestic NIM Overseas NIM The Bank s NIM in Domestic Operations stood at 3.11% and in Overseas Operations at 1.57% and in Global Operations at 2.66% during FY13.

21 Key Financial Ratios : FY13 ROAA at 0.90% for FY13 ROE at 14.59% for FY13 NIM at 3.11% in Domestic Operations & at 2.66% in Global Operations Provision Coverage Ratio at 68.24% as on 31 st March, 2013 CRAR (Basel II) at 13.30% & Tier 1 Capital at 10.13% as on 31 st March, 2013 Cost-Income Ratio at 39.79% for FY13 Earnings per Share at Rs for FY13 Book Value Per Share at Rs for FY13

22 Non-Interest income: Q4, FY12 and Q4, FY13 (Rs crore) Q4, FY12 Q4, FY13 % Change (Y-O-Y) Commission, Exchange, Brokerage Incidental Charges Other Miscellaneous Income Total Fee-Based Income Trading Gains Profit on Exchange Transactions Recovery from PWO Total Non-Interest Income ,

23 Non-Interest income: FY12 and FY13 (Rs crore) FY12 FY13 % Change (Y-O-Y) Commission, Exchange, Brokerage 1, , Incidental Charges Other Miscellaneous Income Total Fee-Based Income 1, , Trading Gains Profit on Exchange Transactions Recovery from PWO Total Non-Interest Income 3, ,

24 Provisions & contingencies: Q4, FY12 and Q4, FY13 (Rs crore) Q4, FY12 Q4, FY13 Absolute Change Provision for NPA & Bad Debts Written-off Provision for Depreciation on Investment Provision for Standard Advances Other Provisions (including Provision for staff welfare) Tax Provisions Total Provisions

25 Provisions & contingencies: FY12 and FY13 (Rs crore) FY12 FY13 Absolute Change Provision for NPA & Bad Debts Written-off Provision for Depreciation on Investment Provision for Standard Advances Other Provisions (including Provision for staff welfare) Tax Provisions Total Provisions

26 Bank s domestic treasury highlights: Q4, FY13 Trading Gains sequentially improved from Rs 82 cr in Q1 to Rs 112 cr in Q2 to Rs 136 cr in Q3 to Rs 288 cr in Q4 due to improving market dynamics. Even Forex Profits firmed up sequentially. As of Mar 31, 2013, the share of SLR Securities in Total Investment was 78.99%. The Bank had 79.71% of SLR Securities in HTM and 20.03%in AFS at end-mar During the year FY13, the Bank shifted SLR securities worth Rs 1, cr (at book value) from AFS to HTM on 3 rd April and provided Rs cr as depreciation on shifting. The benchmark G-sec yield at the time of shifting ruled at 8.57%. The per cent of SLR to NDTL as on 31 st Mar, 2013 was closer to 28.51%. As on 31 st Mar, 2013, the modified duration of AFS investments was 2.66 years & that of HTM securities was 5.18 years. Total size of Bank s Domestic Investment Book as on 31 st Mar, 2013 stood at Rs 1,18,275 crore.

27 Highlights of Overseas Business: FY13 During FY13, the Bank s Overseas Business contributed 29.4% to its Total Business, 24.6% to Gross Profit and 34.2% to Core Fee-based income (i.e., Commission, Exchanges, brokerage, etc.) Out of the Total Overseas Loan-book, 54.87% was Buyers Credit/ Export Credit; 26.37% in was Syndicated Loans/ECBs (mostly to Indian corporates) & 18.76% was Local Credit. While the GNPA (%) in domestic operations was at 2.87%, it was 1.37% for overseas operations as on 31 st March, The Cost-Income Ratio in Overseas operations was more favourable at 16.83% in FY13 versus 44.77% in Domestic operations. In FY13, the NIM (as % of interest-earning assets) in Overseas operations stood at 1.57%; Gross Profit to Avg. Working Funds ratio at 1.49% and Return on Equity at 12.65%. During FY13, Bank opened 12 new branches in various countries like New Zealand, Uganda, Mauritius, Ghana, Oman, Kampala, Australia, Botswana & Dubai. The Outstanding Balance of restructured loans in overseas operations as on 31 st Mar, 2013 was at Rs 3, crore.

28 NPA Movement (Gross): FY13 Particular ( Rs crore) A. Opening Balance 4, B. Additions during FY13 6, Out of which, Fresh Slippages 6, C. Reduction during FY13 3, Recovery Upgradation PWO & WO 2, Other Adjustments 3.09 NPA as on 31 st March, , Recovery in PWO in FY

29 GNPA movement in Domestic Advances: Quarter-Wise Particular Q1, FY13 Q2, FY13 Q3, FY13 Q4, FY13 A. Opening Balance 3, , , ,98.90 B. Additions 1, , , , Out of which, Fresh Slippages 1, , , , C. Reduction , Recovery Upgradation PWO & WO D. Closing Balance 4, , , ,550.82

30 Sector-wise gross NPAs: End-Mar, FY12 & FY13 Sector Gross NPA (%) End-Mar, FY12 Gross NPA (%) End-Mar, FY13 Agriculture Large & Medium Industries Retail Housing SSI (Mfg) Total MSME Overseas Operations

31 Restructured Accounts (Domestic) Year Outstanding as on 31 st March (Rs crore) Standard Category NPA Category Grand total No. of A/Cs Amount No of A/Cs Amount No of A/Cs Amount Up to Total , , Less std restructured a/cs ceased to attract higher provision and/or additional risk weight at end- Mar, TOTAL 20,668 16, ,610 2, ,278 18,639.42

32 Restructured Accounts (Domestic) Restructured accounts include the following amounts pertaining to other facilities of the borrowers not restructured but included in the restructured portfolio as per the RBI guidelines: Rs cr up to end-mar, 2008; Rs cr in FY09; Rs cr in FY10, Rs cr in FY11; Rs cr in FY12 and Rs 773 cr in FY13. Upgradation/Degradation in Restructured Accounts during FY13 No of Accounts Amount (Rs crore) Std. Restructured A/cs slipped to NPA Restructured NPA a/cs upgraded to Standard 1,580 1, Segment wise outstanding in Restructuring as on (Rs crore) Standard NPA Total Restructured Accounts No of borrowers Amount (O/s) No of borrowers Amount (O/s) No of borrowers Amount (O/s) Under CDR Under SME Other than CDR Total

33 Sectoral Deployment of Credit at end-mar, 2013 Sector % share in Gross Domestic Credit Agriculture 12.6% Retail 16.6% SME 19.7% Wholesale Misc. including Trade 37.5% 13.6% Total 100.0%

34 Bank s BPR Project Navnirmaan.. Project Navnirmaan has altogether -18- initiatives covering both Business Process Reengineering and Organization Re-structuring, aimed at transforming the Bank s branches into a sales and service centres through sustained Centralization to make possible Sales growth, superior customer experience and alternate channel migration. The most important initiatives are:- Conversion of all metro and urban branches into Baroda Next within a timeline [ branches rolled out so far across -13- Zones and -56egions]. Creation of automated and lean Back Offices like: City Back Office [Automated cheque processing introduced at Mumbai]. Regional Back Office [-10- RBOs functioning (One in each Zone) 5- RBOs opened during current year] & issuance of Personalized Cheque Books [[No. of branches linked 3908], more than 5,400 CASA are being opened per day. Establishment of -2- Contact Centres [at Lucknow and Baroda]. Introduction of frontline automation [viz. Queue Management System and Cheque deposit Machines] at select branches for customer convenience. Creation of an Academy of Excellence Organization Restructuring

35 Bank s BPR Project Navnirmaan.. The initial impact of Baroda Next migration has been found to be rewarding both in terms of increased customer satisfaction and CASA growth. The said impact has been sustained at 110 Baroda Next branches evaluated on (a) sales and (b) customer satisfaction during first stage of evaluation. Another evaluation carried out recently on (a) Customer satisfaction [at -177-] and (b) Employee satisfaction [at -171] Baroda Next branches, shows significant improvement. A certification procedure for Baroda Next branches has been introduced in terms of which process compliance/ adherence are being evaluated by Bank s Internal inspectors and CSAT/ ESAT externally evaluated by engaging Market Research Agencies. To sustain Sales Growth, a new Sales Operating Model has been rolled out in branches in -32- Regions over 27 cities. Out of -15- Mid-corporate branches planned, all are functional. Further centralization initiatives are being piloted to enable the branches to become a Sales-cum-Service Outlet. Bank s Hi-tech City branch, Hyderabad has been transformed into an e-branch.

36 Bank s HR Initiatives Recruitment in FY13 Focused hiring efforts on a sustained basis year on year, to cater to superannuation, sustained business growth and rapid branch expansion New Hiring in FY12: 3,400 [2,973 joined up to 31 st March, 2013) Probationary Officers Clerks Campus Recruitment Specialist officers Baroda Manipal Trainees 600 [ 429 joined up to Mar 13] 2,000 [1726 joined up to Mar 13] 250 [237 joined up to Mar 13] 150 [ 56 joined up to Mar 13] [525 joined up to Mar 13] Massive skill upgradation and one structured three-month on-boarding programme was carried out for the new joinees during FY13 to develop various Banking skills, esp. in the specialised areas of Credit, Forex, Treasury, Soft Skills, etc.

37 Bank s HR Initiatives.. Project Udaan: A Large scale, comprehensive Leadership Development training covering almost 1,500 people (all branch heads of Urban / Metro Branches & AGMs/DGMs in the Bank) Project Sparsh: A focused HR transformation project SPARSH has been initiated by the Bank - to revamp its existing HR processes, structures and policies. Various initiatives like Talent management, Succession planning, Creating a Scientific Staffing Model & Manpower Planning,, Development and Capability Building, Performance Management, etc. have been undertaken during FY12 and FY Baroda Manipal School of Banking: A school is opened as an innovative and new channel of resourcing of trained manpower in the Bank. Around 180 students are being inducted into this school every quarter for a focused grooming and a one-year full-time PG course in Banking is tailored to the Bank s specific requirements.

38 Economic Outlook & Guidance.. A growing list of global agencies including the World Bank are predicting a turnaround in India s economy in FY14 on account of slowing inflation & narrowing trade deficit World Bank expects India s growth to recover to 6.1% in FY14 & 6.7% in FY15 from 5.0% in FY13 the lowest in a decade. Asian Development Bank says India will lead the upturn in South Asia growing 6.0% in FY14 & 6.5% in FY15 aided by the progress on reforms, expected normal monsoon & recovery in services sector growth. Institute of International Finance, Washington estimates GDP to rise to 5.8% in FY14 & 6.5% in FY15 on the back of moderating inflation, monetary policy easing & renewed thrust on reforms Goldman Sachs (a global investment firm) expects India s growth to recover to 6.4% in FY14 on account of likely fiscal stimulus linked with elections, reform push to fasttrack projects & improving global economic prospects. According to Citi group s Report (Apr 30), investor sentiments towards India is improving due to falling commodity prices, expansionary global liquidity conditions & prospects of a good monsoon. The Report says The consensus view of about 40 institutional investors in Europe across Indian asset classes - equities, rates and forex was positive."

39 Major reasons for a likely pick-up in FY14 Prospect of likely normal monsoon This should help boost growth, rural incomes and help in moderating stubborn food inflation. Improvement in global food outlook - Record crops are expected in all the major agricultural nations of the world, which is reflected in the recent falling prices of major food grains. This too augurs well for food prices. Recent big crash in gold & crude oil prices- In average terms, crude oil prices have fallen by 11.4% & gold prices by 10.0% in y-o-y terms. As India is a large importer of both these commodities, a sharp fall in their prices means lower inflation, lower current account deficit and faster interest rate cuts. General elections in 2014 Elections are typically accompanied by fiscal expansion in the preceding year. The Budget for FY14 too suggests an expansionary policy (29.4% increase in Plan expenditure). CCI is moving the needle: The Cabinet Committee on Investments is fast-tracking the projects. On Apr 22, it cleared investments in 25 oil & gas blocks (16 with conditional clearances but 9 without any conditions). This wil put to use US$ 13.4 bln in oil & gas exploration, which has already been incurred & will also bring in additional investment of US$ 2.5 bln. It has approved 13 projects of the power sector amounting US$ 6 bln. This includes 10 transmission, 2 thermal and 1 hydro project. Collectively, the CCI has approved projects worth more than 1% of GDP in its 4 meetings thus far.

40 Major reasons for a likely pick-up in FY14 Progress on power debt restructuring As per the plan, the state governments will take on half of the debt given to SEBs and convert them into long-term bonds. In return, banks will restructure the remaining 50% and provide a 3-year moratorium. The SEBs will have to raise power tariffs to prevent further operational losses. The key states are UP, Tamil Nadu, Rajasthan and Haryana. Of these, restructuring has already happened in Tamil Nadu. In UP, they are finalizing the total funding requirement from the banks. A majority of the states raised power tariffs in FY13. In FY14, another eight states have raised tariffs ranging from 3% to 24%. This is critical to ensure the long term viability of new power capacity. The Ministry of Power expects the discussions between bankers, SEBs, and state government officials to conclude over the next 15 days, and subsequently, lending to the SEBs to resume. Financial conditions are easing - This means interest rates are gradually coming down. Based on the VAR analysis, a 2.0% reduction in short-term rates seen over the past year can increase fixed investment by 5.4%. With further easing of interest rates, short-term rates may continue to decline and investment demand could increase further. Exports likely to recover on improving global outlook (esp. for the US) and government efforts. The new trade policy on Apr 18 th has announced steps like greater market and product diversification, extension of Zero Duty Export Promotion Capital Goods (EPCG) Scheme to all sectors, to revive exports. Slowdown in China s growth This is good for India as it will have depressing effect on major commodity prices like oil, coal, iron ore, steel, copper, etc.

41 Bank s Guidance for FY14 RBI s Guidance - Aggregate Deposits to grow by 14.0% & Non-food credit by 15.0% in FY14 for the Indian banking industry Bank s Guidance: The Bank would like to avoid aggression as the economy is still in the recovery mode, but will try to grow 1.5% to 2.0% over and above the industry average to protect its market share. With its strong liability franchise, the Bank is well poised to grow in FY14, if the investment climate improves along the expected lines. The focal points of business will be CASA expansion, marginal realignment in sectoral composition of credit in favour of retail and SME units (esp. agro-based & export-oriented units); fee-based income, domestic foreign business and aggressive credit monitoring and recovery efforts. On the qualitative side, the Bank s endeavours at Business Process Re-Engineering, Creation of Future Pipeline of Leaders, Further development of Sales & Service Culture will continue with full vigour. This year, the Bank also been focusing on Organisational Restructuring to achieve its desired goals. In the past, it had created special outfits like RLFs, SMELFs, RBOs, Call Centres, MICR Centres and specialised branches for Recovery, NRI Business, Mid-Corporates, etc. which have paid off well It is now focusing on Wealth Management & Marketing and Government Business by creating special business verticals. As in the past, Information Technology will play an important role as a Business Enabler.

42 Thank you.