Bank of Baroda Financial Results Q2 and H1, 2014-15 (FY15) November 7, 2014 Operating Profit at Rs 2,403 crore in Q2, FY15, up 13.1% (y-o-y) Net Interest at Rs 3,401 crore in Q2, FY15, up 17.5% (y-o-y) Net Profit at Rs 1,104 crore in Q2, FY15 versus Rs 1,168 crore in Q2, FY14 Total Business at Rs 9,52,692 crore at end-sept, 2014, up 15.5%, (y-o-y) NIM (Domestic)further improved to 3.02% from 2.94% last quarter Gross NPA at 3.32% & Net NPA at 1.74% Provision Coverage Ratio at a relatively higher level of 65.39% ROAA (annualized) at 0.75% in H1, FY15 ROE (annualized) at 13.11% in H1, FY15 CRAR (Basel II) at 12.69% and CRAR (Basel III) at 12.19% Bank of Baroda has announced its reviewed results for the second quarter of 2014-15 (Q2, FY15) following the approval of its Board of Directors on November 7, 2014. Results at a Glance Quarterly Results Half-Yearly Results Particular Q2:FY15 Q2:FY14 % H1:FY15 H1:FY14 % (Rs cr) (Rs cr) Change (Rs cr) (Rs cr) Change Total 11817.32 10447.31 13.1 23499.82 21164.80 11.0 Interest 10825.67 9473.45 14.3 21483.63 18960.39 13.3 Interest Expenses 7424.56 6578.66 12.9 14754.21 13176.50 12.0 Net Interest 3401.11 2894.79 17.5 6729.42 5783.89 16.3 Other 991.65 973.86 1.8 2016.19 2204.41-8.5 Total Expenses # 9414.39 8322.73 13.1 18617.29 16588.60 12.2 Operating Expenses # 1989.83 1744.07 14.1 3863.08 3412.10 13.2 Staff Expenses 1107.83 1030.15 7.5 2213.33 2044.13 8.3 Operating Profit # 2402.93 2124.58 13.1 4882.53 4576.20 6.7 Provision for Tax 410.67 80.10 412.7 1001.68 330.44 203.1 Provision (other than tax) & 888.04 860.83 3.2 1414.75 1878.69-24.7 contingencies Net Profit 1104.22 1,168.10-5.5 2466.10 2335.97 5.6. Note: #: excludes the exceptional items of Rs 15.55 crore for Q2, FY14 as a share of the total deficit of Rs 186.58 crore on account of the take-over by the Bank of the specified Assets & Liabilities of The Memon Co-operative Bank Ltd. as per the approval granted by RBI vide letter no. DBOD.No.BP.1311/21.04.048/2010-11 dated 25 th July 2011. 1
PROFIT In spite of subdued industrial growth and anaemic credit offtake for the Indian banking sector, Bank of Baroda could richly grow its Operating Profit by 13.1% (y-o-y) in Q2, FY15 to Rs 2,402.93 crore by posting good gains in Net Interest and controlling Operating Expenses. Even its Net Profit attained the level of Rs 1,104.22 crore in Q2, FY15 despite higher tax and non-tax provisions. INCOME The Bank s Total grew decently by 13.1% (y-o-y) to Rs 11,817.32 crore in Q2, FY15 supported by a rich growth of 17.5% (y-o-y) in Net Interest to Rs 3,401.11 crore on the back of efficient management of deposit franchise and loan-book. Other, however, increased modestly by 1.8% to Rs 991.65 crore primarily due to changed dynamics of financial markets and weaker fee-based income on account of lacklustre credit growth. EXPENSES The Bank s Total Expenses grew at the controlled pace of 13.1% (y-o-y) to Rs 9,414.39 crore in Q2, FY15 aided by a modest growth of 14.1% (y-o-y) in Operating Expenses to Rs 1, 989.83 crore and relatively slower growth of 12.9% (y-o-y) in Interest Expenses to Rs 7,424.56 crore. Relatively slower growth in Interest Expenses was achieved by improving the CASA (domestic) share to 31.89% and sharply reducing the holding of high-cost bulk deposits during Q2, FY15. A growth of 7.5% (y-o-y) in Staff Expenses (at Rs 1,107.83 cr) factors in the AS-15 provisions that the Bank is consistently making since the first quarter of the previous year (FY14). PROVISIONS AND CONTINGENCIES Provisions and Contingencies (excluding tax provisions) made by the Bank stood at Rs 888.04 crore in Q2, FY15 versus Rs 860.83 crore in Q2, FY14 reflecting a growth of 3.2%. An increase in non-tax provisions during Q2, FY15 was mainly on account of higher provisions against investment depreciation on equity portfolio during Q2, FY15. It may be noted that the index returns became negative in September, 2014 after almost eight months. Provisions against NPAs/Bad Debts written off stood at Rs 584.25 crore in Q2, FY15 in line with the mandatory requirements. The Bank s Tax Provisions expanded by more than five times in Q2, FY15 to Rs 410.67 crore, as the Bank had to create a DTL on Special Reserve and the usual deduction of Bad Debt Written Off was not available due to the recent legislative changes. PROVISION COVERAGE RATIO (PCR) The Bank s prudent provisioning practices prompted it to protect its Provision Coverage Ratio (PCR) at 65.39% in Q2, FY15 the highest level in the large-sized PSU banking segment. 2
BUSINESS EXPANSION The Bank s Total Business expanded by 15.5% (y-o-y) to Rs 9,52,692 crore in Q2, FY15. Out of this, Total Deposits increased by 16.9% (y-o-y) to Rs 5,66,926 crore, whereas Total Advances increased by 13.5% (y-o-y) to Rs 3,85,766 crore. Domestic CASA Deposits share improved sequentially to 31.89% due to a dedicated effort at the field level and capacity-building. The growth in domestic loan-book was well-balanced and diversified. For instance, the Bank s Retail Credit increased by 15.8% (y-o-y) to Rs 47,379 crore and formed 17.85% of its Gross Domestic Credit as on 30 th Sept, 2014. While the Bank s Farm Credit grew by 28.5% (y-o-y) to Rs 33,539 crore, its Credit to MSME sector grew by 13.5% (y-o-y) to Rs 58,899 crore. It may be noted that the y-o-y growth in Farm Credit appears stronger primarily on account of the new guidelines of RBI that now allow SCBs to include funds with RIDF, NABARD, etc., into the definition of Farm Credit. ASSET QUALITY Gross NPA of the Bank increased to Rs 13,057.57 crore as on Sept 30, 2014 from Rs 12,086.81 crore as on June 30, 2014 in line with the Bank s guidance based on the assessment of its own portfolio and economic conditions. The Gross NPA ratio stood at 3.32% as on 30 th Sept, 2014, while the Net NPA ratio stood at 1.74%. CAPITAL ADEQUACY The Bank s Capital Adequacy Ratio (Basel II) was at 12.69% on 30 th Sept, 2014 with Tier 1 ratio at 9.47%. The CRAR (Basel III) was at 12.19% as on 30 th Sept, 2014. Out of this, the share of Tier 1 capital was 9.26% and that of Core Tier 1 Capital was 8.94%. KEY FINANCIAL RATIOS The Bank s Net Worth expanded by 9.5% (y-o-y) to Rs 37,612 crore as on 30 th Sept, 2014. In annualized terms, the Bank s Return on Equity stood at 13.11% in H1, FY15. In annualized terms, the EPS stood at Rs 114.86. Its Return on Average Assets stood at 0.75% in H1, FY15. The Bank s Book Value per Share improved to Rs 875.9 as on 30 th Sept, 2014 from Rs 815.22 as on 30 th Sept, 2013 (up 7.4% y-o-y). OVERSEAS BUSINESS The Bank s Overseas Business continued to occupy a significant position in its overall business. It posted a y-o-y growth of 18.9% as at end-sept, 2014. During Q2, FY15, the Overseas Operations contributed 32.98% to the Bank s Global Business, 24.94% to its Gross Profit and 3
23.81% to its Core Fee. The Gross NPA (%) in overseas business marginally increased to 1.25% in Q2, FY15 from 1.18% in Q1, FY15. As on 30 th Sept, 2014, the Bank s Overseas Operations were spread across 24 countries through 104 offices. During H1, FY15, the Bank opened two new branches in its overseas subsidiaries, notably in Kenya and Tanzania. MAJOR STRATEGIC INITIATIVES in H1, FY15 During H1, FY15, the Bank s term deposits with preferential rate of interest declined sharply from Rs 11,792 crore to Rs 9,460 crore; even the share of CDs to Term Deposits fell from 7.5% at end-mar 14 to 1.9% at end-sept 14. The Bank gave boost to its retail business by launching loan campaigns in home/car/traders loans, opening 15 new Retail Loan Factories (taking the network to 60), and streamlining the schemes for housing/educational loans and strengthening its lending automation processing system (LAPS). To promote the growth of its MSME loan-book, it focused on micro/cgtmse accounts and introduced area-specific schemes for MSME units in the sectors like ceramic tiles, marbles, plastic, textiles, agro- based industries, automobile, RTO, minerals, brass, hosiery, tea processing, shoe-making, etc. It opened 147 new branches in its Domestic Operations and set up 771 new ATMs and 1,530 new POS machines (Point of Sale Machines) in H1,FY15. It also opened 6 new e- Lobbies during this period to offer 24*7 basic banking operations. In its overseas operations, it opened a new branch at Meru in its subsidiary in Kenya and Mwanza in its subsidiary in Tanzania. During H1, FY15, the Bank focused on massive recruitment and talent acquisition to take care of the HR gap and further strengthened its systems of training & skill development for the existing as well as new employees. The Bank converted 22 more Metro and Urban branches into Baroda Next branches during H1, FY15 taking the total number of such high-tech branches to 1,457. As on 30 th Sept 2014, 18,599 villages were covered under the Bank s Financial Inclusion drive and the Bank set up 2,571 Ultra Small Branches across the country to support this initiative. Under Prime Minister Jan Dhan Yojna (PMJDY), the Bank has opened 28.31 lakh accounts and issued 22.2 lakh RuPay cards. Select AWARDS H1, FY15 The Bank received Golden Peacock National Training Award on 23 rd May, 2014 from Institute of Directors, New Delhi for its novel initiatives in training and skilling of its employees. It received Order of Merit in India s Best Financial Inclusion & Financial Deepening Projects 2014 by Skoch Consultancy Services Pvt. Ltd. on 20 th June, 2014. 4
The Bank was awarded Best PSU for MSME by India SME Forum on 11 th July, 2014 at New Delhi. The Bank received Best Bank Global Business Development (Public Sector) & Best Bank Overall (Public Sector) Award in Dun & Bradstreet Polaris Financial Technology Banking Awards 2014, held in Mumbai on 27 th August, 2014. November 7, 2014 Mumbai P. Srinivas Executive Director 5