Description
Presentation about analysis of bank of baroda in terms of SWOT, financial analysis, basel 2 and implications on bank of baroda.
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Industry Overview Company Over view SWOT Analysis Financial Analysis Basel 2 and Implications ALM Implementation and Comparison Valuation
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Sustainable growth momentum Under penetration of financial products Retail credit on the rise
Others 17% NBFC's Real Estate 4% 4% Retail 22% Industries 41%
Loans
Agri credit 12%
Loan CAGR 2003 - 2008
Taiwan
Korea
Malaysia
Phillipines
Thailand
Singapore Loan CAGR
HK
Indonesia
China
India 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
Credit/GDP Ratio
Indonesia
Phillipines
India
Thailand
Korea
Malaysia Credit/GDP
China
Singapore
Taiwan
HK 0% 50% 100% 150% 200% 250%
Credit CAGR, FY 04-09
Canara BOI PNB Union Sector SBI Corp Bank ICICI OBC BOB HDFC 0% 10% 20% 30% 40% 50%
Credit CAGR
Bank-credit CAGR, FY 04-09
Others Agri Credit Industries Non Food Credit Retail 0% 10% 20% 30% 40% 50% 60%
Bank-credit CAGR
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Target market expanding New players a threat to banks (Insurance companies, Mutual Fund etc)
Percentage Population below 15
14.4 17.7 20.6 21.4 23.9 26.1
Germany UK US China Thailand Brazil Indonesia India 0.0 5.0 10.0
29.1 31.2
15.0 20.0 25.0 30.0 35.0
Deposit per branch (Rsbn)
Old Private Banks
PSU Banks Deposit per branch Sector
New Private Banks 0 0.5 1 1.5 2
CASA deposit per branch (Rsbn)
Old Private Banks
PSU Banks CASA deposit per branch Sector
New Private Banks 0 0.2 0.4 0.6
Advances per branch (Rsbn)
Old Private Banks
PSU Banks Advances per branch Sector
New Private Banks 0 0.1 0.2 0.3 0.4 0.5 0.6
Fee generation as a share of assets
Old Private Banks
PSU Banks Fee generation as a share of assets
Sector
New Private Banks 0.00% 0.50% 1.00% 1.50%
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GDP dip to reduce Deposit growth Rising competition Lower Long term resources
3-5 years 8%
Maturity of Deposits
>5 years 15%
1-3 years 29% Up to 1 year 48%
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Traditional lending to be commoditised Basel II Norms Banks service to be a differentiator
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? ?
?
?
Superior soft skills Higher Fees Technological gap reducing Innovative products Better non-branch distribution model
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? ? ? ?
?
?
Globalization Need for a single system From 8 systems to Finacle – One solution, One stategy Time, Cost & Risk minimization MIS Reporting Cross country product introduction Direct India Remittance
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Founded in 1908, Bank of Baroda is the 3rd largest public sector bank in India Holds total assets in excess of Rs 2.27 lakh cr Network of over 3000 branches and offices Offers a wide range of banking products and financial services Government holds approximately 54% stake 7 International subsidiaries
PERSONAL
• Deposits • Retail Loans • Credit cards • Debit Cards • Services
BUSINESS/ CORPORATES
• Deposits • Loans and Advances • Services • Lockers • Wholesale Banking
INTERNATIONAL
• NRI services • ECB • FCNR(B) Loans • Offshore Banking • Export Finance • Import Finance • Trade Finance • International Treasury
TREASURY
• Domestic Operations • Forex Operations
PERSONAL
• Deposits • Retail Loans • Credit cards • Debit Cards • Services
BUSINESS/ CORPORATES
• Deposits • Loans and Advances • Services • Lockers • Wholesale Banking
INTERNATIONAL
• NRI services • ECB • FCNR(B) Loans • Offshore Banking • Export Finance • Import Finance • Trade Finance • International Treasury
TREASURY
• Domestic Operations • Forex Operations
• Wholesale Banking • SME Banking • Retail Banking • Rural/Agri Banking • Wealth Management
• • • •
Demat Product Enquiry Deposit Products Loan Products
• • • • •
ATM/ Debit cards Internet Banking NRI remittances Baroda e-trading Interest Rates
Revene Earnings 2008-09
16% 25%
Revenue Earnings 2007-08
Treasury Operations
16% 26%
Corporate/Wholesale Banking Retail Banking Banking Operations Treasury Operations Corporate/Wholesale Banking Retail Banking
30%
28%
29%
Banking Operations
30%
Geographic Revenue
18000 16000 14000 12000 10000 Domestic 8000 6000 4000 2000 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 International
Financial Analysis
EPS
180 160 140 120 100 80 60 40 20 0 BOB ICICI BOI SBI HDFC 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 32.13 60.93 57.26 57.23 EPS 155.74
Net Interest Margin
0.00%
BOB ICICI BOI SBI HDFC
Capital Adequcay Ratio (CAR)
16.00% 15.50% 15.00% 14.50% 14.00% 13.50% 13.00% 12.50% 12.00% 11.50% BOB ICICI BOI SBI HDFC 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% BOB ICICI BOI SBI HDFC
Tier 2 Risk based Capital Ratio
Tier 1 Risk based Capital Ratio
14.00% 12.00% 10.00%
8.00%
6.00% 4.00% 2.00% 0.00% BOB ICICI BOI SBI HDFC
Cost of Deposits
8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% BOB 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% BOB ICICI BOI SBI HDFC ICICI BOI SBI Cost Income Ratio HDFC 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00%
Yield on Advances
2.00%
0.00% BOB ICICI BOI SBI HDFC
Return on Net Worth (ROE)
25.00%
20.00% 1.40% 15.00% 10.00% 5.00% 0.00% BOB ICICI BOI SBI HDFC 1.20% 1.00%
Return on Assets
0.80%
0.60%
0.40%
0.20%
0.00%
Return on Average Assets
1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% BOB ICICI BOI SBI HDFC
BOB
ICICI
BOI
SBI
HDFC
Number of Employees
40000 39500 39000 38500 38000 37500 37000 36500 36000 35500 35000 2005 2006 2007 2008 2009
Number of Branches
3000 2950 2900
2850
2800 2750 2700 2650
Business per employee (Rs. in crore)
10 8 6 4 2 0 2005 2006 2007 2008 2009
2600 2005 2006 2007 2008 2009
Gross Profit per employee (Rs. in lakhs)
14 12 10 8 6 4 2 0 2005 2006 2007 2008 2009
Net Profit per employee (Rs. in lakhs)
7 6 5 4 3 2 1
0
2005 2006 2007 2008 2009
Business per branch (Rs. in cr)
120 100 80 60 40 20 0 2005 2006 2007 2008 2009 2 1.5
Gross Profit per branch (Rs. in crore)
1
0.5 0 2005 2006 2007 2008 2009
Net Profit per branch (Rs. in crore)
0.8 0.7
0.6
0.5 0.4 0.3 0.2 0.1 0 2005 2006 2007 2008 2009
350 300 250
200
150 100 50 0 2005 2006 2007 2008 2009
Earnings per share (Rupees) Book Value per share (Rupees)
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Gross NPA to gross advances – 1.27% Net NPA to net advances – 0.31% Net NPA of 451.15 crores One of the lowest gross NPA levels in the industry.
• HDFC – 2%
• ICICI Bank – 4.4%
• SBI -2.8% • BOI – 1.7%
90 80 70
60
50 Non Interest Income/ Total Income 40 30 Net Interest Income/ Total Income
20
10 0 2007 2008 2009
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?
?
?
Well diversified branch distribution Strong concentration in the western region makes sure that it is CASA rich Better focus on international market Improvement on the ROE margins in the last fiscal year Strong asset quality with healthy coverage ratio
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?
?
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Inadequate talent pool to compete with strong private banks Not very strong on technology front Lesser expansion of branches in past few years. Lesser strategic initiatives as compared to larger private banks Late on introducing latest products in the market
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Cost to Income could improve in coming years Scope to improve non interest income
Focus more aggressively on retail banking
?
?
?
Contribution from the foreign business of the bank is around 25% on the bottom line NPA levels could rise as there is over reliance on corporate and SME’s. Continued slow down in the economy could slow down credit growth
?
?
BASEL -2 Approaches and Comparison
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Bank of Baroda follows following approaches for Basel 2 pillar 1 Credit risk – Standardised Approach Operational risk – Basic Indicator Approach Market risk – Duration based Approach
SBI, ICICI and HDFC Bank follow the same approaches
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• • ?
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We were not able to find out risk weighted assets due to market risk as there is no data available regarding exact investments.
From Annual report – 8951.35 crores
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ICICI Bank has the highest risk weighted assets for market risk as compared to other banks. Private banks have higher risk weights for interest rate risk as compared to PSU banks. PSU banks have higher risk weights for equity risk as compared to private banks
Asset and Liability Management Implementation and Comparison
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On the foreign exchange front BOB and SBI have done better than HDFC. HDFC has the best ALM followed by SBI and ICICI. BOB needs to improve on ALM. BOB needs to improve on reporting for Basel 2 disclosures of ALM
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?
doc_224858506.pptx
Presentation about analysis of bank of baroda in terms of SWOT, financial analysis, basel 2 and implications on bank of baroda.
?
? ?
?
? ?
?
Industry Overview Company Over view SWOT Analysis Financial Analysis Basel 2 and Implications ALM Implementation and Comparison Valuation
?
? ?
Sustainable growth momentum Under penetration of financial products Retail credit on the rise
Others 17% NBFC's Real Estate 4% 4% Retail 22% Industries 41%
Loans
Agri credit 12%
Loan CAGR 2003 - 2008
Taiwan
Korea
Malaysia
Phillipines
Thailand
Singapore Loan CAGR
HK
Indonesia
China
India 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
Credit/GDP Ratio
Indonesia
Phillipines
India
Thailand
Korea
Malaysia Credit/GDP
China
Singapore
Taiwan
HK 0% 50% 100% 150% 200% 250%
Credit CAGR, FY 04-09
Canara BOI PNB Union Sector SBI Corp Bank ICICI OBC BOB HDFC 0% 10% 20% 30% 40% 50%
Credit CAGR
Bank-credit CAGR, FY 04-09
Others Agri Credit Industries Non Food Credit Retail 0% 10% 20% 30% 40% 50% 60%
Bank-credit CAGR
?
?
Target market expanding New players a threat to banks (Insurance companies, Mutual Fund etc)
Percentage Population below 15
14.4 17.7 20.6 21.4 23.9 26.1
Germany UK US China Thailand Brazil Indonesia India 0.0 5.0 10.0
29.1 31.2
15.0 20.0 25.0 30.0 35.0
Deposit per branch (Rsbn)
Old Private Banks
PSU Banks Deposit per branch Sector
New Private Banks 0 0.5 1 1.5 2
CASA deposit per branch (Rsbn)
Old Private Banks
PSU Banks CASA deposit per branch Sector
New Private Banks 0 0.2 0.4 0.6
Advances per branch (Rsbn)
Old Private Banks
PSU Banks Advances per branch Sector
New Private Banks 0 0.1 0.2 0.3 0.4 0.5 0.6
Fee generation as a share of assets
Old Private Banks
PSU Banks Fee generation as a share of assets
Sector
New Private Banks 0.00% 0.50% 1.00% 1.50%
?
? ?
GDP dip to reduce Deposit growth Rising competition Lower Long term resources
3-5 years 8%
Maturity of Deposits
>5 years 15%
1-3 years 29% Up to 1 year 48%
?
? ?
Traditional lending to be commoditised Basel II Norms Banks service to be a differentiator
?
? ?
?
?
Superior soft skills Higher Fees Technological gap reducing Innovative products Better non-branch distribution model
?
? ? ? ?
?
?
Globalization Need for a single system From 8 systems to Finacle – One solution, One stategy Time, Cost & Risk minimization MIS Reporting Cross country product introduction Direct India Remittance
?
?
?
?
?
?
Founded in 1908, Bank of Baroda is the 3rd largest public sector bank in India Holds total assets in excess of Rs 2.27 lakh cr Network of over 3000 branches and offices Offers a wide range of banking products and financial services Government holds approximately 54% stake 7 International subsidiaries
PERSONAL
• Deposits • Retail Loans • Credit cards • Debit Cards • Services
BUSINESS/ CORPORATES
• Deposits • Loans and Advances • Services • Lockers • Wholesale Banking
INTERNATIONAL
• NRI services • ECB • FCNR(B) Loans • Offshore Banking • Export Finance • Import Finance • Trade Finance • International Treasury
TREASURY
• Domestic Operations • Forex Operations
PERSONAL
• Deposits • Retail Loans • Credit cards • Debit Cards • Services
BUSINESS/ CORPORATES
• Deposits • Loans and Advances • Services • Lockers • Wholesale Banking
INTERNATIONAL
• NRI services • ECB • FCNR(B) Loans • Offshore Banking • Export Finance • Import Finance • Trade Finance • International Treasury
TREASURY
• Domestic Operations • Forex Operations
• Wholesale Banking • SME Banking • Retail Banking • Rural/Agri Banking • Wealth Management
• • • •
Demat Product Enquiry Deposit Products Loan Products
• • • • •
ATM/ Debit cards Internet Banking NRI remittances Baroda e-trading Interest Rates
Revene Earnings 2008-09
16% 25%
Revenue Earnings 2007-08
Treasury Operations
16% 26%
Corporate/Wholesale Banking Retail Banking Banking Operations Treasury Operations Corporate/Wholesale Banking Retail Banking
30%
28%
29%
Banking Operations
30%
Geographic Revenue
18000 16000 14000 12000 10000 Domestic 8000 6000 4000 2000 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 International
Financial Analysis
EPS
180 160 140 120 100 80 60 40 20 0 BOB ICICI BOI SBI HDFC 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 32.13 60.93 57.26 57.23 EPS 155.74
Net Interest Margin
0.00%
BOB ICICI BOI SBI HDFC
Capital Adequcay Ratio (CAR)
16.00% 15.50% 15.00% 14.50% 14.00% 13.50% 13.00% 12.50% 12.00% 11.50% BOB ICICI BOI SBI HDFC 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% BOB ICICI BOI SBI HDFC
Tier 2 Risk based Capital Ratio
Tier 1 Risk based Capital Ratio
14.00% 12.00% 10.00%
8.00%
6.00% 4.00% 2.00% 0.00% BOB ICICI BOI SBI HDFC
Cost of Deposits
8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% BOB 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% BOB ICICI BOI SBI HDFC ICICI BOI SBI Cost Income Ratio HDFC 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00%
Yield on Advances
2.00%
0.00% BOB ICICI BOI SBI HDFC
Return on Net Worth (ROE)
25.00%
20.00% 1.40% 15.00% 10.00% 5.00% 0.00% BOB ICICI BOI SBI HDFC 1.20% 1.00%
Return on Assets
0.80%
0.60%
0.40%
0.20%
0.00%
Return on Average Assets
1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% BOB ICICI BOI SBI HDFC
BOB
ICICI
BOI
SBI
HDFC
Number of Employees
40000 39500 39000 38500 38000 37500 37000 36500 36000 35500 35000 2005 2006 2007 2008 2009
Number of Branches
3000 2950 2900
2850
2800 2750 2700 2650
Business per employee (Rs. in crore)
10 8 6 4 2 0 2005 2006 2007 2008 2009
2600 2005 2006 2007 2008 2009
Gross Profit per employee (Rs. in lakhs)
14 12 10 8 6 4 2 0 2005 2006 2007 2008 2009
Net Profit per employee (Rs. in lakhs)
7 6 5 4 3 2 1
0
2005 2006 2007 2008 2009
Business per branch (Rs. in cr)
120 100 80 60 40 20 0 2005 2006 2007 2008 2009 2 1.5
Gross Profit per branch (Rs. in crore)
1
0.5 0 2005 2006 2007 2008 2009
Net Profit per branch (Rs. in crore)
0.8 0.7
0.6
0.5 0.4 0.3 0.2 0.1 0 2005 2006 2007 2008 2009
350 300 250
200
150 100 50 0 2005 2006 2007 2008 2009
Earnings per share (Rupees) Book Value per share (Rupees)
?
? ?
?
Gross NPA to gross advances – 1.27% Net NPA to net advances – 0.31% Net NPA of 451.15 crores One of the lowest gross NPA levels in the industry.
• HDFC – 2%
• ICICI Bank – 4.4%
• SBI -2.8% • BOI – 1.7%
90 80 70
60
50 Non Interest Income/ Total Income 40 30 Net Interest Income/ Total Income
20
10 0 2007 2008 2009
?
?
?
?
?
Well diversified branch distribution Strong concentration in the western region makes sure that it is CASA rich Better focus on international market Improvement on the ROE margins in the last fiscal year Strong asset quality with healthy coverage ratio
?
?
?
? ?
Inadequate talent pool to compete with strong private banks Not very strong on technology front Lesser expansion of branches in past few years. Lesser strategic initiatives as compared to larger private banks Late on introducing latest products in the market
?
Cost to Income could improve in coming years Scope to improve non interest income
Focus more aggressively on retail banking
?
?
?
Contribution from the foreign business of the bank is around 25% on the bottom line NPA levels could rise as there is over reliance on corporate and SME’s. Continued slow down in the economy could slow down credit growth
?
?
BASEL -2 Approaches and Comparison
?
Bank of Baroda follows following approaches for Basel 2 pillar 1 Credit risk – Standardised Approach Operational risk – Basic Indicator Approach Market risk – Duration based Approach
SBI, ICICI and HDFC Bank follow the same approaches
•
• • ?
?
We were not able to find out risk weighted assets due to market risk as there is no data available regarding exact investments.
From Annual report – 8951.35 crores
?
?
?
?
ICICI Bank has the highest risk weighted assets for market risk as compared to other banks. Private banks have higher risk weights for interest rate risk as compared to PSU banks. PSU banks have higher risk weights for equity risk as compared to private banks
Asset and Liability Management Implementation and Comparison
?
On the foreign exchange front BOB and SBI have done better than HDFC. HDFC has the best ALM followed by SBI and ICICI. BOB needs to improve on ALM. BOB needs to improve on reporting for Basel 2 disclosures of ALM
?
?
doc_224858506.pptx