Bank of Baroda

Bank of Baroda has come out with modest performance for the quarter ended June 2010 with 54% jump in NII at Rs 1857.99 crore and 25% rise in Net Profit at Rs 859.16 crore. NIM has improved to 3.43% in quarter under review against 3.50% in Q4FY10 and 2.57% in Q1FY10. Other income declined by 12% to RS 617.24 crore while cost to income ratio has declined by 880 bps and paved Operating Profit up by 51% to Rs 1527.87 crore. Provisions and contingencies were reported at Rs 251.33 crore as against write back of Rs 38.96 crore in the corresponding previous year and restricted growth in the Net Profit.

Asset Quality:

• In absolute terms Gross NPA has moved up by 28% on y-o-y basis and 11% on q-o-q basis to Rs 2657.42 crore in the quarter ended June 2010. The Net NPA has surged up by 89% on y-o-y basis and 19% on q-o-q basis to Rs 717.33 crore in the quarter under review.
• The % on Gross NPA to Gross advances stood at 1.41% in Q1FY11 from 1.44% in Q1FY10 and 1.36% in Q4FY10. The Gross NPA ratio in overseas business continued to remain at the modest level of 0.54% in Q1FY11. The % of Net NPA to Net Advances stood at 0.39% in Q1FY11 from 0.27% in Q1FY10 and 0.34% in Q4FY10.
• Provision Coverage Ratio for stood at the healthy level of 73.01% without technical write-offs and at 85.65% with technical write-offs.

Business Highlights:

• The Bank's Total Business expanded by 29% to Rs 440262 crore in Q1FY11. Of this, Total Deposits increased by 28% to Rs 254668 crore, whereas Total Advances increased by 31% to Rs 185595 crore.
• Domestic CASA Deposits grew at the pace of 27.5% and stood at the healthy level of 35.23% during the quarter under review.
• Retail Credit increased by 23.6% to Rs 24994 crore and formed 18.15% of Gross Domestic Credit of the Bank as on 30th June 2010. Farm Credit grew by 17.7% to Rs 21089 crore, its Credit to MSME sector grew by 42.7% to Rs 21,593 crore.
• Capital Adequacy Ratio (Basel II) was at 13.25% as on 30th June, 2010. Out of 13.25%, the share of Tier I capital was 8.16% and that of Tier II Capital was 5.09%
• The domestic cost of deposits fell from 6.16% in June 2009 to 5.09% in June 10 while yield on advances fell to 9.79% in the quarter under review from 10.10% a year ago. NIM has improved to 3.43% against 3.50% in Q4FY10 and 2.57% in Q1FY10.
• Net Worth expanded by 21.4% to Rs 14646.26 crore as on 30th June, 2010. The Bank's Book Value per Share improved to Rs 402.08 as on 30th June, 2010 from Rs 331.26 as on 30th June, 2009.
• In annualized terms, the Bank's Return on Equity (%) stood at 23.46% and Return on Average Assets (%) at 1.19% in the first quarter of FY11.
• As on 30th June, 2010, all domestic branches i.e., 3,106 branches and 26 extension counters were on the CBS platform. Additionally, 43 branches in 12 overseas territories and 28 branches in eight overseas subsidiaries were on the CBS covering 94.0% of the Bank's total overseas business.
• The Bank's Overseas Business continues to remain the mainstay of its overall operations. During Q1FY11, it contributed 24.6% to the Bank's Global Business and 16.4% to its Operating Profit.
• The Cumulative restructured assets book by end of June 2010 stood at Rs 5283.41 crore. OF this Rs 169.79 crore of assets were restructured during the quarter under review.

Quarterly Performance:

Bank of Baroda has reported robust 54% rise in the NII at Rs 1857.99 crore on the back of 17% jump in the Interest earned at Rs 4726.96 crore and marginal 1% rise in the Interest Expended at Rs 2868.97 crore. The domestic cost of deposits fell from 6.16% in June 2009 to 5.09% in June 10 while yield on advances fell to 9.79% in the quarter under review from 10.10% a year ago. NIM has improved to 3.43% against 3.50% in Q4FY10 and 2.57% in Q1FY10.

The Other income has declined by 12% to Rs 617.24 crore on the back of 50% dip in the trading gains at Rs 127.94 crore. The core fee income has increased marginally by 4% to Rs 311.57 crore in the quarter under review. The bank has reported 26% jump in the profit on exchange transaction at Rs 121.61 crore and 12% rise in recovery from PWO at Rs 56.12 crore. As a result, Net Total income has improved by 30% to Rs 2475.23 crore in the quarter under review.

The Operating expenses have marginally increased by 6% on a higher base to Rs 947.36 crore. The bank has charged a sum of Rs 45.05 crore to Profit and Loss a/c during the quarter, on proportionate basis of the Transitional liability of Rs.901 crore up to 31.03.2007, as per the Revised Accounting Standard (AS) 15 on Employee Benefits issued by the Institute of Chartered Accountants of India based on actuarial valuation. The balance amount of Rs.315.35 crore is to be charged proportionately by the end of March 2012. The cost to income ratio has declined by 880 bps to 38.3% and aided 51% growth in the Operating profit at Rs 1527.87 crore.

The Provisions and contingencies were reported at Rs 251.33 crore as against write off of Rs 38.96 crore in the corresponding previous year. Further, the bank has made an additional provision of Rs.153.65 crore in certain identified Non Performing domestic Advance accounts. As a result, PBT was restricted to growth of 22% at Rs 1276.54 crore. Finally dip in effective tax rate by 200 bps to 32.7% has made Net Profit at 25% to Rs 859.16 crore.

Yearly Performance:

For the year ended March 2010, Bank of Baroda has posted 37% jump in the Net Profit to Rs 3058.33 crore on the back of 16% rise in the NII to Rs 5929.48 crore. Marginal increase in the other income by 2% to Rs 2724.91 crore has totaled Net total income up by 11% to Rs 8664.39 crore. Further, 7% increase the operating expenses to Rs 3810.58 crore coupled with 28% dip in provisions and contingencies at Rs 697.20 crore and 14% dip in the profit on sale of investment at Rs 81.45 crore has together drived PBT up by 27% to Rs 4238.06 crore. Finally 6% increase in provisions for taxation to Rs 1179.73 crore has led Net Profit up by 37% on y-o-y basis.

Other Information:

• In terms of Agriculture debt waiver and relief Scheme 2008, framed by the Govt. of India, the bank has received Rs.329.94 crore up to 30th June 2010 from RBI against final claim of Rs.505.19 crore as certified by the Statutory Central Auditors of the Bank under Debt Waiver Scheme.
• During the quarter, the bank has raised Upper Tier II Bonds amounting to Rs. 1000 crore.

Valuation:

• The Scrip is hovering at Rs 734.25 on BSE

• Considering TTM EPS of Rs 88.4 per share, PE of the bank stands at 8.3 times.
• At a Book Value (BV) per share of Rs 402.1 and Adjusted Book Value (ABV) of Rs 344.9 for the quarter ended June 2010, the P/BV and P/ABV of the bank works out to 1.8 and 2.1 respectively.

Bank of Baroda: Financial Results