ANALYSIS OF BANK OF BARODA

PROJECT ON ANALYSIS OF BANK OF BARODA

SUBMITTED TO:
Prof. Shyam Ji Mehrotra RMCB Faculty

SUBMITTED BY:
Shruti Kulshreshtha Tajinder Singh Shobhit Srivastava Shikha Kassodhan Shikha Bhandari

ANALYSIS OF BANK OF BARODA

ACKNOWLEDGEMENT

This is to certify that while completing this project, we want to give our sincere thanks and gratitude to all of them who have helped us to complete our project report. This project report would not have completed without the guidance of our faculty PROF. SHYAM JI MEHROTRA. We sincerely thank him for his valuable support and guidance in completing the project. We would also like to thank to all the people who have actually helped us directly and indirectly for the completion of our project.

Shruti Kulshreshtha Shobhit Srivastava Shikha Kassodhan Shikha Bhandari Tajinder Singh PGDM 2

ANALYSIS OF BANK OF BARODA

PREFACE
The report is on Analysis of Bank of Baroda on the basis of four performance parameters of the Indian banks as well as few other parameters also. The four parameters of our main analysis are: Business Parameters Efficiency Parameters Productivity Parameters Vulnerability Parameters

A care was taken that there is no manipulation or false information provided in the project report. This was extremely great to work on this project as it provided us with immense knowledge and inestimable chance to learn.

ANALYSIS OF BANK OF BARODA

INTRODUCTION-AN OVERVIEW OF BANK OF BARODA

Date of Establishment Revenue Market Cap Corporate Address 1908 4908.26 ( USD in Millions ) 267425.971957 ( Rs. in Millions ) Baroda House,Mandvi,Vadodara-390006, Gujarat www.bankofbaroda.com Chairperson - M D Mallya MD - M D Mallya Directors - A Somasundaram, Ajay Mathur, Alok Nigam, Amarjit Chopra, Amitabh Verma, Atul Agarwal, Deepak B Patak, Deepak B Pathak, Deepak B Phatak, Dharmendra Bhandari, M D Mallya, M L Jain, Masarrat Shahid, Maulin A Vaishnav, Milind N Nadkarni, N S Srinath, R Gandhi, R K Bakshi, Rajiv Kumar Bakshi, Ranjit Kumar Chatterjee, Satya Dev Tripathi, Srinath, Sudarshan Sen, V B Chavan, V Santhanaraman, Vinay A Shah, Vinil Kumar Saxena Bank - Public Bank of Baroda (BoB) was founded by Maharaja Sayajirao Gaekwad in July 1908. It started with a paid up capital of Rs10 lakh. Bank of Baroda is a pioneer in various customer centric initiatives in the Indian banking sector. Bank is amongst first in the industry to complete an all-inclusive rebranding exercise wherein various novel customer centric initiatives were undertaken along with the cha Total Income - Rs. 246951.016 Million ( year ending Mar 2011) Net Profit - Rs. 42416.797 Million ( year ending Mar 2011) Vinay A Shah BC Jain & Co, Gupta Nayar & Co, A Sachdev & Co, Ashwani & Associates, NC Banerjee & Co, SK Kapoor & Co

Management Details

Business Operation

Background

Financials Company Secretary Auditors

BANK HISTORY
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ANALYSIS OF BANK OF BARODA

Bank of Baroda (BoB) was founded by Maharaja Sayajirao Gaekwad in July 1908. It started with a paid up capital of Rs.10 lakhs. Bank of Baroda is a pioneer in various customer centric initiatives in the Indian banking sector. Bank is amongst first in the industry to complete an all-inclusive rebranding exercise wherein various novel customer centric initiatives were undertaken along with the change of logo. The initiatives include setting up of specialized NRI Branches, Gen-Next Branches and Retail Loan Factories/ SME Loan Factories with an assembly line approach of processing loans for speedy disbursal of loans. Ever since its rebranding in 2005, Bank has consistently promoted its major strengths viz. large international presence; technological advancement and superior customer service etc. Bank had introduced the sub brand BARODA NEXT-State of the ArtStraight from the Heart to showcase how it has utilized technology to nurture long term relationships for superior customer experience. The sub brand has been reinforced by alternate delivery channels such as internet banking, ATMs, mobile banking etc and robust delivery outfits like Retail Loan Factories, SME Loan Factories, City Sales Office etc. Banks constant endeavour to strengthen its branch/ATM network combined with well informed staff offering personalized service at its various touch points have enhanced customer interactions and satisfaction. Thus the Bank has firmly positioned itself as a technologically advanced customer-centric bank. Presently it has a network of 3454 branches across India and 86 branches overseas, spread in Australia, Bahamas, Bahrain, Belgium, Botswana, China, Fiji islands, Ghana, Guyana, Hong Kong, Kenya, Mauritius, Malaysia, Seychelles, SouthAfrica, Singapore, Oman, Tanza nia, Thailand, Trinidad, Uganda, UAE, UK, US and Zambia. Bank of Baroda (BoB) is planning to expand its network in Africa for its incremental business growth by opening ten new branches in the next four to five months.

ANALYSIS OF BANK OF BARODA

Business
Retail banking It offers products and services such as deposits, loans, credit and debit cards, demat services, remittances, ECS (electronic clearing services, government business, etc. Rural and agri banking It offers products and services such as deposits, agricultural loans, lockers services, etc to rural customers and agricultural sector. Corporate banking It provides project finance, film finance, foreign currency loans, working capital finance, treasury products, etc to the corporate sector. SME BOB also offers products and services to SME sector. Wealth Management It provides wealth management services to companies in areas of insurance and mutual funds. In insurance it offers services to HDFC and National Insurance Company. In mutual funds it provides services to UTI, Birla Sun Life, Reliance Mutual Fund, Sundaram BNP Paribas, Franklin Templeton Investments and Baroda Pioneer Asset Management Company.

Its subsidiaries are:

Domestic

BOBCARDS Ltd. BOB Capital Markets Ltd. Nainital Bank Ltd.

Overseas

Bank of Baroda (Botswana) Ltd. Bank of Baroda (Kenya) Ltd. Bank of Baroda (Uganda) Ltd. Bank of Baroda (Guyana) Ltd. Bank of Baroda (New Zealand) Ltd Bank of Baroda (Tanzania) Ltd Bank of Baroda (Trinidad & Tobago) Ltd. Bank of Baroda (Ghana) Ltd.

ANALYSIS OF BANK OF BARODA

BANKS VISION & MISSION

Banks Mission Statement

A saga of vision and enterprise

It has been a long and eventful journey of almost a century across 25 countries. Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai, it is a saga of vision, enterprise, financial prudence and corporate governance. It is a story scripted in corporate wisdom and social pride. It is a story crafted in private capital, princely patronage and state ownership. It is a story of ordinary bankers and their extraordinary contribution in the ascent of Bank of Baroda to the formidable heights of corporate glory. It is a story that needs to be shared with all those millions of people - customers, stakeholders, employees & the public at large who in ample measure, have contributed to the making of an institution.

ANALYSIS OF BANK OF BARODA

BANKS LOGO

Their new logo is a unique representation of a universal symbol. It comprises dual B letter forms that hold the rays of the rising sun. They call this the Baroda Sun. The sun is an excellent representation of what their bank stands for. It is the single most powerful source of light and energy its far reaching rays dispel darkness to illuminate everything they touch. At Bank of Baroda, they seek to be the source that will help all their stakeholders realise their goals. To their customers, they seek to be a one-stop, reliable partner who will help them address different financial needs. To their employees, they offer rewarding careers and to their investors and business partners, maximum return on their investment. The single-colour, compelling vermillion palette has been carefully chosen, for its distinctiveness as it stands for hope and energy. They also recognize that their bank is characterised by diversity. Their network of branches spans geographical and cultural boundaries and rural-urban divides. Their customers come from a wide spectrum of industries and backgrounds. The Baroda Sun is a fitting face for their brand because it is a universal symbol of dynamism and optimism it is meaningful for their many audiences and easily decoded by all. Their new corporate brand identity is much more than a cosmetic change. It is a signal that they recognize and are prepared for new business paradigms in a globalised world. At the same time, they will always stay in touch with their heritage and enduring relationships on which their bank is founded. By adopting a symbol as simple and powerful as the Baroda Sun, they hope to communicate both.

ANALYSIS OF BANK OF BARODA

MAJOR COMPETITORS
Company SBI Bank Of Baroda PNB Canara Bank Bank Of India Union Bank Of India IDBI Indian Bank Oriental Bank Allahabad Bank Indian Overseas Bank CentralBank of India Syndicate Bank UCO Bank StateBank Bikane&Jai Vijaya Bank Bank of Maharashtra Dena Bank United Bank Sales Current Change Market Cap. 52-Week P/E Ratio (Rs.Million) Price (%) (Rs Million) High/Low 813943.64 218859.16 269864.80 230640.13 217517.24 164526.15 186008.23 93610.28 120878.14 110146.92 1676.15 691.15 782.50 376.30 281.35 174.15 81.75 185.00 198.70 120.55 350.80 75.10 67.10 71.10 48.75 311.50 46.15 39.90 50.70 46.75 2.85 3.35 2.18 2.65 5.20 0.64 3.81 1.87 1.82 3.39 1.40 2.11 3.47 2.45 3.72 0.94 3.24 2.31 3.79 1.63 14.64 5.86 5.38 4.59 7.03 4.58 4.37 4.40 4.59 3.62 3.49 4.30 4.07 3.37 2.91 3.88 4.51 4.98 2.49 2.84 1060638.81 267425.97 247620.38 164441.60 151429.71 91260.06 79655.33 79507.45 58060.48 57145.85 51735.29 46344.33 43193.30 40817.94 30528.73 21770.00 21742.67 19027.65 16752.80 16015.56 2960/1576 1007/630 1237/751 672/349 498/265 359/156 168/77 255/167 412/193 240/114 658/336 164/73 170/66 133/67 122/45 600/302 104/45 69/38 119/48 114/46

Corporation Bank 91352.48 121014.65 152205.66 114508.59 113708.02 47964.83 58440.60 55630.88 50335.26 63414.57

BANKS PRODUCTS AND SERVICES

ANALYSIS OF BANK OF BARODA

Loan Products Wholesale Banking Mobile Banking Internet Banking DEMAT NRI Remittances Baroda Health ATM / Debit Cards Deposit Products SME Banking Retail Banking Rural / Agri Banking Wealth Management CPPC - Pension Pre-paid Gift Card Interest Rates

FINANCIAL PERFORMANCE

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ANALYSIS OF BANK OF BARODA Mar201 BANK OF BARODA Rs. Crores Interest income Investment / dividend income Interest expended Provision for contingencies / NPA etc. PBDT PBT PAT Cash & bank balance Money at call Balance with RBI Investments Advances Equity capital Deposits Borrowings Other liabilities & provisions Total assets /liabilities
2006 Net worth Growth (%) Interest income Interest expended Provision for contingencies / NPA etc. PAT Deposits Advances Margins ratios (%) PBDT (incl. NPA, etc.) / operating income PAT / operating income Returns ratios (%) PAT / net worth PAT / total assets PBDT / total assets PBDT / capital employed Investment deposite Cash deposit Credit deposit ratio

Mar201 0 9

Mar200 8

Mar200 Mar2007

12 mths 12 mths 12 mths 12 mths 12 mths 21,885.92 16,698.34 15,091.58 11,813.48 9,212.64 2,809.19 2,806.36 2,757.66 2,051.04 1,381.79 13,083.66 10,758.86 9,968.17 7,901.67 5,426.56 1,699.88 5,650.32 5,650.32 4,241.68 976.28 4,238.06 4,238.06 3,058.33 1,809.20 3,342.94 3,342.94 2,227.20 In Crores 13,490.77 10,596.34 52,445.88 143,985.9 0 365.53 192,396.9 5 5,636.09 16,538.15 227,406.7 3 1,157.05 2,207.15 2,207.15 1,435.52 1,369.95 1,654.26 1,654.26 1,026.47

30,065.89 19,868.18 71,260.63 228,676.36 392.81 305,439.48 22,307.85 9,656.73 358,397.18

21,927.09 13,539.97 61,182.38 175,035.29 365.53 241,044.26 13,350.09 8,815.97 278,316.71

12,929.56 9,369.72 43,870.07 106,701.32 365.53 152,034.13 3,927.05 12,594.41 179,599.50

11,866.85 6,413.52 34,943.63 83,620.87 365.53 124,915.98 1,142.56 8,437.70 143,146.18

2007 8,649.94 27.77 40.03 13.46 24.12 33.03 39.57

2008 11,043.93 28.23 45.61 -16.0 39.85 21.74 27.60

2009 12,835.54 27.74 26.15 56.0 55.14 26.54 34.94

2010 15,106.39 10.64 7.93 -46.0 37.31 25.28 21.56

2011 20,993.11 31.06 21.60 74.0 38.69 26.71 30.64

25.81

25.38

22.15

18.68

17.95

19.38

18.31

14.75

12.15

11.14

20.2 1.18 1.57 26.91 32.05 4.46

72.68

20.24 1.09 1.52 28.05 28.46 5.70

72.33

17.35 0.97 1.47 26.04 27.96 5.80

70.45

12.99 0.79 1.22 19.98 26.22 5.57

69.91

11.86 1.86 1.15 16.49 24.24 6.11

72.56

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ANALYSIS OF BANK OF BARODA

Operating income / total assets (times) Capital adequacy

0.061
11.80

0.059
12.91

0.066
14.05

0.065
14.36

0.064
14.52

2011 NIM(%) Capital Adequacy (%) BASEL BASEL 1 BASEL 2 2.456007048 -

2010 2.134072367 12.94% 7.64% 5.30%

2009 2.252972021 14.05% 8.49% 5.56%

2008 2.178073992 14.36% 9.20% 5.16%

2007 2.64490467 14.52% 9.99% 4.53%

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ANALYSIS OF BANK OF BARODA

RISK MANAGEMENT OF BANK OF BARODA

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ANALYSIS OF BANK OF BARODA

Credit Risk The credit risk mechanism consists of policies and practices that ensure credit risk is measured, and monitored at account level and portfolio level. The Credit Risk Management policy along with Real Estate Lending Policy and Collateral Management Policy address the Credit Risk related to lending. Credit Approving Authority, Prudential Exposure Limits, Risk Rating System, Risk Based Pricing, Portfolio Management are the various instruments for management of Credit Risk. Bank has set up Credit Approval Grids at Regional Offices/ Field General Managers Offices and Central Office. Bank has also developed credit rating models for exposure above ` 2 lakh and scoring model for Retail lending schemes. Entire credit portfolio of the bank is subject to internal credit rating. Bank has credit rating migration and default probability data for the last 9years. Market Risk Asset Liability Management Policy and Treasury Policy aid the management of Market Risk in the Banking and trading books. Overall responsibility of managing the market risk lies with the Asset Liability Committee (ALCO). Bank has also developed a framework for quantifying the Pillar-2 risks and has put in place comprehensive Internal Capital Adequacy Assessment Process (ICAAP) framework in line with RBI guidelines. Bank is also in the process of introducing a Risk Based Performance measurement system to assess the profitability of its business units, products and customers. Operating Income Bank has implemented the New Capital Adequacy Framework as per the timelines prescribed by RBI. While the Bank, to start with, has adopted Standardized Approach for Credit Risk, Standardize duration method for market risk and Basic Indicator approach for Operational risk, the initiatives so far undertaken/ envisaged are geared towards enabling the Bank to comply with the standards set out for more advanced capital measurement approaches in the Basel-II Accord.

LIQUIDITY MANAGEMENT BY BANK OF BARODA

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ANALYSIS OF BANK OF BARODA

Overview / Introduction Bank of Baroda is technology led and service driven Bank and operates out of large expanding network of 3100 plus outlets across the country. 100% outlets are electronically linked i.e. working under Core Banking Solution (CBS). Baroda Cash Management Services (BCMS) is a software application that facilitates management of customers fund, particularly, of corporate customers. BCMS is our thrust area and technology advantage helps us in delivering superior products. This provides them competitive advantage and we may route our voluminous collection/payment through them for faster credit to Corporate/ their suppliers. BCMS is based on robust technology capable to cater to collection/receivables or payment/payable requirement of Large Corporate Small and Medium Enterprises NBFCs Mutual Funds Financial intermediaries

Liquidity Management Corporate main challenge revolves around ensuring that the companys cash resources are utilized to maximum advantage. Liquidity Management helps in managing funds in various accounts called Contributing Account by sweeping in one account called Concentration Account at specified time (may be end of day) and funding of different contributing accounts through Concentration Account at specified time (may be beginning of day). Liquidity Ratios
key variables for Liquidity 31.3.2011 499,340,678 3583,97,17,54 305439,48,19 228676,36,09 71260,63,09

Liquid Assets Total Assets Total deposits Loans Investments

31.3.2010 354,670,576 2783,16,70,28 241261,92,52 175035,28,59 61182,37,54

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ANALYSIS OF BANK OF BARODA

Liquidity Ratios (%) Liquid Assets to Total Assets Liquid Assets to Total deposits Loans to Total deposits Loans to Total Assets Loans to Investments (times) 31.3.2011 13.93 16.34 74.86 63.80 3.20 31.3.2010 12.74 14.70 72.24 62.89 2.86

Liquid Assets to Total Assets This ratio indicate the net liquidity out of the total assets held by the bank, where liquidity means cash and cash equivalent assets which can be converted in cash within one day. Higher the proportion of this ratio higher the liquidity of the bank, but up to sum extent this also decrease the asset utilization given no productivity generated by cash, The ratio for Bank of Baroda has increased marginally which shows adequate liquidity held by the bank i.e. 12.47%, 13.93%. Liquid Assets to Total depositsThis ratio indicate extent of liquidity maintained by the bank for meeting out the demand made by the depositors, in Bank of Baroda the ratio maintained by the bank seems quite better 16.34% and 14.70% for 2011 and 2010 respectively. Loans to Total depositsThis ratio indicate the degree to which the bank has already used up the available resources to accommodate the credit needs of customers ,For Bank of Baroda 74.86% and 72.24% for 2011 and 2010 respectively, shows increase in last year by new loan creation comparatively to deposits. The figure above for bank is quite reasonable managing earning and liquidity both. Loans to Total AssetsThis ratio indicates liquid assets out of total assets, where loan are the liquid assets for the bank, For Bank of Baroda 63.80% and 62.89% for 2011 and 2010 respectively, the ratio increased during 2010 to 2011 which leading to pressure on liquidity of the bank.

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ANALYSIS OF BANK OF BARODA

Loans to InvestmentsBank has two main channels for deployment of resource viz, loan and investment where loans are expected to provide the higher yield but also have higher credit risk ans are more liquid then investments thus proper mix of loans and investments. For Bank of Baroda 3.20 and 2.86 times for 2011 and 2010 respectively. This is on increasing trend during last fiscal year indicating higher return with higher credit risk and liquidity WhereLiquid Assets = cash + balance with RBI + Balances with Banks and Money at Call and Short Notice.

BANK PROFITABILITY ANALYSIS

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ANALYSIS OF BANK OF BARODA

2011 Spread Provision Burden operating income Profit/Loss from Investments PBDT Depreciation PBT TAX PAT SPREAD 8,802.26 1,699.88 2,860.69 4,241.68

2010 5,939.48 976.28 1,904.87 3,058.33

2009 5,123.41 1,809.20 -1,087.00 2,227.20

2008 3,911.81 1,157.05 1,319.23 1,435.52

2007 3,786.08 1,369.95 -1,389.66 1,026.46

5,650.32 0 5,650.32 1,408.64 4,241.68

4,238.06 0 4,238.06 1,179.73 3,058.33

3,342.94 0 3,342.94 1,115.74 2,227.20

2,207.15 0 2,207.15 771.63 1,435.52

1,654.26 0 1,654.26 627.79 1,026.47

It is the difference between the interest income and interest expenses. It contributes to banks profit, after providing for loan losses. It 2007 it was 3786.08 which rose to 8802.26 in the year 2011. Thus, the increasing spread would help in earning more profit. It also shows the good quality of loan and investments of the bank BURDEN It is the difference between non-interest income and non-interest expenses. The burden is usually negative as non-interest expense exceeds the non-interest income. Even after high burden the bank can increase, it profits by increasing its fee income and saving on operating cost. NIM It is measure of difference between the interest income generated by banks and the amount of interest paid out to the lenders. Year NIM(%) 2011 2.456007048 2010 2.13407236 7 2009 2.25297202 1 2008 2.17807399 2007

2 2.64490467

It can be seen through the table that the NIM is positive in the past five years but doesnt follow any particular trend. It was maximum in the year 2007.

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ANALYSIS OF BANK OF BARODA

ANALYSIS OF BANK OF BARODA BASED UPON THE PERFORMANCE PARAMETERS

Bank of Baroda is one of the oldest banks in India and the third largest commercial public sector bank after State Bank of India and Punjab National Bank in terms of net profit and total business. The parameters under which bank are evaluated in real life are:-

1) EFFICIENCY PARAMETERS
Income to Asset Ratio 2007 PAT / total 0.82 assets interest 7.44 income / total assets other 0.38 income / total assets 2008 0.89 8.14 0.43 2009 1.09 8.16 0.35 2010 1.21 7.56 0.30 2011 1.33 7.50 0.25

Income to Asset Ratio provides a standard for evaluating how efficiently financial management employs the amount invested in the firms assets. That means it measures how optimally profits are being generated from the assets employed. As the trend is increasing it shows that the bank is efficient in generating profits by the use of its assets. Though it has declined in 2011, it shows the increase in the non performing assets which is a matter of concern. Expenditure to Asset Ratio 2007 4.23 2008 4.90 2009 4.90 2010 4.25 2011 4.11

Interest expenses to Total assets ratio Operating 2.01 expenses to Total asset ratio

1.94

1.78

1.77

1.70

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ANALYSIS OF BANK OF BARODA

Interest expense is the money the bank pays out in interest on loans. There is a decrease in the interest expense which indicates the increase in the deposit portfolio of the bank. Operating expense consists of salaries paid to employees, research and development costs, legal fees, accountant fees, bank charges, office supplies, electricity bills, business licenses, and more. Here the operating expense to total asset ratio is decrease over a period of time. More the operating expense more is the burden. As it is decreasing in 2011 it shows the decrease in the burden. 2) BUSINESS PARAMETERS Under business parameters business growth and market share are specific parameters: a) Business growth: Business growth is the cardinal objective of a bank .i is measured in terms of: Year Growth in Growth in Growth in deposits (%) advances (%) Investments (%) 2007 33.36 39.57 -.048 2008 21.70 26.73 25.54 2009 26.54 34.94 19.54 2010 25.28 21.56 16.65 2011 26.17 30.64 16.47

i) Growth in deposits: Growth is calculated on a year-on-year basis. BOB deposits are grown by 26.17% in 2010-2011.year by year the deposits always keep on increasing, it seems that there is more growth perspective in banking sectors .the economy of the India is blooming. ii) Growth in advances: Similarly Bank of Baroda had aggregate advances of Rs.228676, 36, 09 as on 2011.Growth in advances has been 30.64%

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ANALYSIS OF BANK OF BARODA

iii) Growth in investments: Bank has investments of Rs.71260, 63, 09 in 2011.Growth in investments has been 16.47% 2010-2011.each year the investments have been increasing by certain percentage which indicate that the bank have been performing well in banking sector and found growth in its performance. b) Market shares: Even in a rising fixed (or term) deposit interest scenario, the Banks Domestic Low-cost or CASA deposits richly grew by 26.72% (y-o-y) forming 34.4% share of the total Domestic Deposits. The Banks Priority Sector Credit too recorded a decent growth of 18.2% during 2010-11. The Bank has managed to gain market share consistently during the past three years amidst maintaining high profitability and asset quality standards. Some initiatives taken by Bank of Baroda The Bank comfortably surpassed this target and extended banking services to 1,228 villages in the year 2010-11. Education Loan Interest Subsidy Scheme for students belonging to Economically Weaker Sections was launched as per the directives of Ministry of Human Resource Development, Government of India.
A Tie-up Arrangement was made with IndiaFirst Life Insurance Company for providing Life Insurance Cover to the Banks Home Loan borrowers. The Bank has opened 157 new branches in rural and semi-urban areas during 201011.

If we analyze the credit deposit ratio, it defines the extent to which the bank has been able to deploy funds in earning assets. Year Credit Deposit Ratio(times) 2007 65.67 2008 68.72 2009 72.78 2010 73.60 2011 73.87

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ANALYSIS OF BANK OF BARODA

7 6 7 4 7 2 7 0 6 8 6 6 6 4 6 2 6 0 20 07 20 08 20 09 21 00 21 01

Ce itD p s r d e o it R t ( im s aiot e )

3) PRODUCTIVITY PARAMETERS
a. Average business per employee Year 2007 Business per employee 5.15 (Rs. in crore) Average Business per 4.64 employee (Rs in crore) 2008 6.65 2009 8.63 2010 9.81 2011 12.29

5.94

7.57

8.94

11.26

14 12 10 8 6 4 2 0 2007 2008 2009 2010 2011 Average Business per employee is a measure of how efficiently a particular bank is
utilizing its employees. Ideally, a bank wants the highest business per employee possible, as it denotes higher productivity. Rising revenue per employee is a positive sign that suggests the bank is finding ways to squeeze more sales/revenues out of each of its employee. Business per Employee =Total Income/ No. of Employees 22

ANALYSIS OF BANK OF BARODA

From 2010 to 2011, the business per employee increased by 20.17% that is a good sign. b. Average yield on Advances Year Yield on Advances 2007 8.37% 2008 9.53% 2009 9.50% 2010 8.55% 2011 8.49%

10.00% 9.50% 9.00% 8.50% 8.00% 7.50% 2007 c. Average cost of Deposits
Year Cost of Deposits 2007 4.77%

9.53%

9.50%

8.37%

8.55%

8.49%

2008
2008 5.69%

2009
2009

2010
2010

2011
2011 4.56%

5.71%

4.90%

6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2007 2008 2009 2010 2011

Trend follow by both the parameters is same and significant difference between the two parameters shows ample earning opportunities for the bank

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ANALYSIS OF BANK OF BARODA

4. NPA Ratio

Following graph shows the NPA ratio of Bank of Baroda as compare to its competitors, which is maintaining and reducing its NPAs year on year basis. Currently in 2011, value is .35%.

4) VULNERABILITY PARAMETERS a) Capital Adequacy Ratio (in Cr)

2011

Total Tier I Capital Out of which: Paid up share capital Innovative Perpetual Debt Instrument Deductions Eligible Tier I Capital

22084.29 392.81 1911.70 679.52

21404.76

Year

2007

2008

2009

2010

2011

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ANALYSIS OF BANK OF BARODA

Capital adequacy ratio(Basal1) Tier I Tier II Capital adequacy ratio(BASEL II) Tier I Tier II

11.80 8.74 3.06

12.91 7.63 5.28 112.94 7.64 5.30

12.88 7.79 2.09 14.05 8.49 5.56

12.84 8.22 4.62 14.36 9.20 5.16

13.02 8.96 4.06 14.52 9.99 4.53

b) Contingent Liabilities
Year Contingent Liability 2011 112272.64 2010 77997.01 2009 64745.82 2008 75364.33 2007 54999.86

Contingent liabilities arise due to off-balance sheet activities like forward contracts, guarantees, acceptance and deposits. The contingent liability in 2007 was 54999.86 it grew to 112272.64 in 2011. The growth percentage is 51%, which is not large as compare to business growth.

c) Advances to Sensitive Sectors

Priority Sector Priority Sector Advances of the Bank surged from Rs 48,552.36 crores as at the endMarch 2010 to Rs 57,363.60 crores as at the end-March 2011 and formed 43.57% of the Adjusted Net Bank Credit (ANBC) against the mandated target of 40.00%. Agriculture Advances (both direct and indirect) of the Bank recorded a growth of 13.47% over the previous year and rose to Rs 24,529.22 crores as at end-March 2011. However, the Banks lending to Direct Agriculture depicted a stronger growth of 28.72% (y-o-y) to Rs 17,157.83 crores during 2010-11. Under its flagship agriculture loan product Baroda Kisan Credit Card, the Bank issued as many as 2, 44,558 Credit Cards during 2010-11 to provide credit to farmers. The Bank financed as many as 2, 72,415 new farmers during the year under review. As a part of its microfinance initiatives, the Bank credit-linked 19,257 Self Help Groups (SHGs) with an amount of Rs 163.77 crores during 2010-11, thereby taking the total number of SHGs credit-linked to 1, 34,942 amounting to Rs 956.96 crore.

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ANALYSIS OF BANK OF BARODA

The growth in lending to MSME Sector during the last three years is given in the table below.

Year 2008-09 2009-10 2010-11 d) Rural and Agricultural Lending

Growth (%, YoY) 24.18% 43.98% 29.63%

Bank sponsored Regional Rural Banks (RRBs) in various states with a network of 1,223 branches and total business of Rs 18,800 crore as of end-March, 2011.

ROE Analysis 2007 Return on Assets F.L. (%) Return on Net Worth 0.72% 16.9 12.17% 2008 0.80% 18.8375 15.07% 2009 0.98% 19.8775 19.48% 2010 1.10% 20.172 22.19% 2011 1.18% 18.203 21.48%

ROE = Return on Assets * Financial leverage ROA is PAT/Total assets denoting the profitability of bank assets Financial Leverage (Equity Multiplier) is Assets/Equity: Banks owners earn profits on the spread between interest on lending and the interest on deposits. When the advantage (EM) is high, banks are accepting many deposits and can earn highincome levels. A high multiplier multiplies profits when profits are positive. However, in periods with negative profits, negative profits may also be multiplied. A high EM is a risk factor since it reduces the amount of assets that can go bad without the bank itself going bankrupt.

FINANCIAL INCLUSION BY THE BANK

Bank has been allocated -2864- villages having population more than 2000 by SLBCs for providing banking facilities under financial inclusion by March 2012. 26

ANALYSIS OF BANK OF BARODA

Bank has utilized Information & Communication Technology based BC Model to render banking services in most of the villages under financial inclusion. As per convenience, bank has also adopted Mobile Van model and Brick and Mortar Branches to cover villages.

Their Bank has, by now, established 52 Baroda Grameen Paramarsh Kendras (BGPKs) to provide credit counseling and financial literacy to rural community. Also, during the year under review, their Bank opened 11 more Baroda Swarojgar Vikas Sansthans (BSVSs) / Baroda R-SETI Centres taking the total number of BSVS to 36. Their Bank opened 14 new financial literacy and credit counselling centres, christened as SARATHEE, to promote financial inclusion and economic upliftment. Besides, Their Bank has already implemented the Business Facilitators model across the country to accelerate Financial Inclusion of the excluded segment as well as to augment agriculture portfolio. This year, their Bank also set up a Micro Loan Factory at Raebareli and Sultanpur in U.P. to facilitate SHG financing through a mobile van.

TABLE SHOW KEY FINANCIAL INDICATORS

S.No. Particulars (In Percentage) 31.03.2007 31.03.2008 31.03.2009 31.03.2010 31.03.2011

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ANALYSIS OF BANK OF BARODA

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Interest Income / Average 7.22% Working Funds (AWF) Interest expenses / AWF 4.35% Net Interest Margin (NIM) 3.05% Interest spread / AWF 2.87% Non-Interest Income / AWF 1.11% Operating expenses / AWF 2.04% Cost Income Ratio 51.30% Gross (Operating) profit / AWF 1.94% Net profit / AWF 0.82% Return on Net Worth 12.17% Return on Assets 0.72% Return on Average Assets 0.80% Yield on Advances 8.37% Cost of Deposits 4.77% Dividend payout Ratio (including Corporate Dividend 24.59% Tax) Credit -- Deposit Ratio 74.35% Credit + Non SLR Investment (excluding Investments in 80.21% Subsidiaries) -- Deposit Ratio Capital Adequacy (BASEL I) Tier I Tier II Ratio 11.80% 8.74% 3.06% Ratio -

7.63% 5.10% 2.90% 2.53% 1.32% 1.96% 50.89% 1.89% 0.93% 15.07% 0.80% 0.89% 9.53% 5.69% 23.75% 77.32% 82.78%

7.78% 5.14% 2.91% 2.64% 1.42% 1.84% 45.38% 2.22% 1.15% 19.48% 0.98% 1.10% 9.50% 5.71% 17.22% 81.94% 87.44%

6.86% 4.42% 2.74% 2.44% 1.15% 1.56% 43.57% 2.03% 1.26% 22.19% 1.10% 1.21% 8.55% 4.90% 20.90% 84.47% 88.74%

6.97% 4.16% 3.12% 2.80% 0.89% 1.47% 39.87% 2.22% 1.35% 21.48% 1.18% 1.33% 8.49% 4.56% 17.76% 86.77% 90.29%

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12.91% 7.63% 5.28% 12.94% 7.64% 5.30%

12.88% 7.79% 5.09% 14.05% 8.49% 5.56%

12.84% 8.22% 4.62% 14.36% 9.20% 5.16%

13.02% 8.96% 4.06% 14.52% 9.99% 4.53%

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Capital Adequacy (BASEL II) Tier I Tier II

MEASURE TO IMPROVE PROFITABILITY BY THE BANK

The action plan for this involves improvisation of resources embodying measures to improve income and contain costs and risks.

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ANALYSIS OF BANK OF BARODA

1. Plan for profitability It is important to know the profit objectives and the way to achieve them. The plan should determine the acceptable level of risks to achieve the profit objectives. 2. Determine the asset portfolio Within the constraints of regulatory guidelines, the bank should determine the thrust areas for loans and advances. The bank may choose consumer loans while other might opt for corporate loans. 3. Target for ceiling on loan losses Losses are inevitable. However, their needs to be ceiling on the loan losses so that provision are less. 4. Maximize earning asset Banks should have more earning assets if they have more investment in fixed asset and low NPAs. Recovery from NPAs is also a way of increasing earning assets. 5. Keep cash reserves to minimum There are banks which have a large padding of cash reserves to avoid default. it may not be necessary and large funds can be released for higher assets. Similarly, the branches should keep the cash balance to the minimum and transfer the idle cash balance to the currency chest of the RBI to avoid payment of interest. This option is however applicable only to Indian banks operating currency chest on behalf of reserve bank of India. 6. Optimize investment income Banks should have strong treasury functions so that funds are not kept idle during the period of low credit off-take. Besides, the investments of the funds will bring income through churning of assets and capital gain.

BANK STOCK PRICING BANK CAPITAL

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ANALYSIS OF BANK OF BARODA

Balance Sheet of Bank Of Baroda Mar '11 12 mths Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities 392.81 392.81 0.00 0.00 20,600.30 0.00 20,993.11 305,439.48 22,307.85 327,747.33 9,656.73 358,397.17 Mar '11 12 mths Assets Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs) 19,868.18 30,065.89 228,676.36 71,260.63 4,548.16 2,248.44 2,299.72 0.00 6,226.40 358,397.18 112,272.64 33,735.67 536.16 13,539.97 21,927.09 175,035.29 61,182.38 4,266.60 1,981.84 2,284.76 0.00 4,347.22 278,316.71 77,997.01 27,949.60 414.71 10,596.34 13,490.77 143,985.90 52,445.88 3,954.13 1,644.41 2,309.72 0.00 4,578.12 227,406.73 64,745.82 22,584.64 352.37 9,369.72 12,929.56 106,701.32 43,870.07 3,787.14 1,360.14 2,427.00 0.00 4,301.83 179,599.50 75,364.33 15,105.51 303.18 6,413.52 11,866.85 83,620.87 34,943.63 2,244.62 1,155.81 1,088.81 0.00 5,212.50 143,146.18 54,999.86 12,976.53 237.46 365.53 365.53 0.00 0.00 14,740.86 0.00 15,106.39 241,044.26 13,350.09 254,394.35 8,815.97 278,316.71 Mar '10 12 mths 365.53 365.53 0.00 0.00 12,470.01 0.00 12,835.54 192,396.95 5,636.09 198,033.04 16,538.15 227,406.73 Mar '09 12 mths 365.53 365.53 0.00 0.00 10,678.40 0.00 11,043.93 152,034.13 3,927.05 155,961.18 12,594.41 179,599.52 Mar '08 12 mths 365.53 365.53 0.00 0.00 8,284.41 0.00 8,649.94 124,915.98 1,142.56 126,058.54 8,437.70 143,146.18 Mar '07 12 mths ------------------- in Rs. Cr. ------------------Mar '10 12 mths Mar '09 12 mths Mar '08 12 mths Mar '07 12 mths

Stock Info Sector Market Cap (` cr) Banking 33,226 30

ANALYSIS OF BANK OF BARODA

Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty ROE

0.7 1,050/655 82,886 10 19,136 5,750 19.88%

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 57.0 16.0 17.1 9.9

CONCLUSION
By analyzing the factors, we can conclude that the banks performance has been improving over the past 5 years.

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ANALYSIS OF BANK OF BARODA

Bank of Baroda India's third largest public sector lender total business to grow by about 24% on-year to over Rs 6.5 trillion in the current fiscal year 2011-12. Bank of Baroda has a network of 3454 branches across India and 86 branches overseas. Bank of Baroda (B0B) is planning to expand its network in Africa for its incremental business growth by opening ten new branches in the next four to five months.

Total Business (Deposit & Advances) increased to Rs 5,34,116 crore reflecting a growth of 28.30%.. Gross Profit and Net Profit were Rs 6,981.61 crore and Rs 4,241.68 crore respectively. Net Profit registered a growth of 38.7% over previous year.

Bank has been allocated -2864- villages having population more than 2000 by SLBCs(state level banker committee) for providing banking facilities under financial inclusion by March 2012.

Bank opened 14 new financial literacy and credit counseling centers, christened as SARATHEE, to promote financial inclusion and economic upliftment.

A Bank Tie-up Arrangement was made with India First Life Insurance Company for providing Life Insurance Cover to the Banks Home Loan borrowers.

Thus the growth prospects of the bank are good, even the bank is working on the improving the services provided to the customers, which would in turn result in the over all prosperity of the bank.

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