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Please refer to important disclosures at the end of this report
 1 
Particulars (
`
cr) 1QFY12 1QFY12
% chg (qoq)
1QFY11
% chg (yoy)
NII 2,297 2,614
(12.1)
1,858
23.6
Pre-prov. profit 1,831 1,946
(5.9)
1,528
19.9
PAT 1,033 1,294
(20.2)
859
20.2
 Source: Company, Angel Research
For 1QFY2012, Bank of Baroda reported a decent set of results, with net profit growthof 20.2% yoy to
 ` 
1,033cr, above our estimates of
 ` 
1,001cr primarily due tolower-than-estimated provisioning expenses. Healthy traction in core fee incomecoupled with reduction in annualised slippage ratio for the quarter to 1.0% wasthe key highlight of the results.
We maintain our Buy view on the stock.NIM decline in-line with expectations; slippages come off 4QFY2011 levels:
For1QFY2012, the bank’s overall business momentum moderated in-line with peers.However, business growth remained ahead of the industry, with advancesgrowing by 25.2% yoy (up 1.6% qoq) and deposits increasing by 22.9% yoy (2.5%qoq). With the widening differential between FD and savings account interestrates, CASA deposit growth moderated further to 16.6% yoy. While global CASA ratio came off by 81bp qoq to 27.9%, domestic CASA ratio declined by 45bp qoqto 33.9%. After adjusting for interest on income tax refund received in 4QFY2011,reported domestic NIM declined by ~30bp qoq to 3.4% due to a sharp 78bp qoqrise in cost of funds as compared to a 58bp rise in yield on advances. Core feeincome increased by an impressive 36.3% yoy to
 ` 
275cr in 1QFY2012. Assetquality of the bank was largely stable during the quarter, with the annualisedslippage ratio declining to 1.0% from 1.5% each in 4QFY2011 and 1QFY2011.The bank has already completed migration to system-based NPA recognition. NetNPAs, however, rose by rather steep 29.5% qoq.
Outlook and valuation:
 The stock is trading at 1.2x FY2013E ABV. Historically, thestock has traded at 0.8x–1.3x one-year forward P/ABV multiple, with a five-yearmedian of 1.0x, but it has been rerated over the past two years to a 1.3x averageon the back of the bank’s consistent improvement in profitability, underpinned by fruitful investments in channel modernisation, healthy CASA and balance sheetgrowth and declining operating expenses (1.5% of avg. assets in FY2011). We maintain our Buy recommendation on the stock with a target price of
 ` 
1,018.
Key financials
 
Y/E March (
`
cr) FY2010 FY2011 FY2012E FY2013ENII 5,939 8,802 9,736 11,105
% chg
15.9 48.2 10.6 14.1
Net profit 3,058 4,242 4,610 5,205
% chg
37.3 38.7 8.7 12.9NIM (%) 2.4 2.8 2.5 2.5
EPS (
`
) 83.7 108.0 117.4 132.5
P/E (x) 10.4 8.1 7.4 6.6P/ABV (x) 2.1 1.6 1.4 1.2RoA (%) 1.2 1.3 1.2 1.1RoE (%) 21.9 23.5 20.2 19.6
 Source: Company, Angel Research
 
BUY
CMP
 ` 
870Target Price
 ` 
1,018
Investment Period
12 months
 
Stock InfoSector BankingMarket Cap (
 ` 
cr) 34,068Beta 0.852 Week High / Low 1,050/715 Avg. Daily Volume 71,767Face Value (
 ` 
) 10BSE Sensex 18,210Nifty 5,488Reuters Code BOB.BOBloomberg Code BOB@INShareholding Pattern (%)Promoters 57.0MF / Banks / Indian Fls 16.3FII / NRIs / OCBs 16.6Indian Public / Others 10.1 Abs. (%) 3m 1yr 3yrSensex (6.4) 1.4 27.6Bank of Baroda (12.1) 21.5 244.9
Vaibhav Agrawal
022 – 3935 7800 Ext: 6808vaibhav.agrawal@angelbroking.com
Shrinivas Bhutda
022 – 3935 7800 Ext: 6845shrinivas.bhutda@angelbroking.com
Varun Varma
022 – 3935 7800 Ext: 6847varun.varma@angelbroking.com
Bank of Baroda
Performance Highlights
1QFY2012 Result Update | Banking
July 28, 2011
 
 
 Bank of Baroda
|
1QFY2012 Result Update 
July 28, 2011
 2
Exhibit 1:
 
1QFY2012 performance
Particulars (
`
cr) 1QFY12 4QFY11
% chg (qoq)
1QFY11
% chg (yoy)
Interest earned 6,632 6,334
4.7
4,727
40.3
- on Advances / Bills 5,077 4,587
10.7
3,566
 42.4
- on investments 1,352 1,318
 2.6
1,022
32.3
- on balance with RBI & others 163 134
 21.8
127
 27.9
- on others 39 295
(86.7)
11
 243.2
Interest Expended 4,335 3,720
16.5
2,869
51.1
Net Interest Income 2,297 2,614
(12.1)
1,858
23.6
Other income 641 834
(23.2)
617
3.8
Other income excl. treasury 567 714
(20.6)
489
15.9
- Fee Income 275 326
(15.8)
202
36.3
- Treasury Income 74 121
(38.8)
128
(42.1)
- Recoveries from written off a/cs 29 86
(66.5)
56
(48.7)
- Others 263 301
(12.7)
232
13.7
Operating income 2,938 3,448
(14.8)
2,475
18.7
Operating expenses 1,107 1,503
(26.3)
947
16.8
- Employee expenses 645 990
(34.8)
577
11.9
- Other Opex 461 513
(10.0)
371
 24.5
Pre-provision Profit 1,831 1,946
(5.9)
1,528
19.9
Provisions & Contingencies 404 590
(31.6)
251
60.8
- Provisions for NPAs 132 424
(68.9)
278
(52.5)
- Provisions for Standard adv. 113 106
6.4
29
 292.2
- Provisions for Investments 139 35
300.6
(59)
(335.2)
- Other Provisions 21 25
(18.6)
4
 424.7
PBT 1,427 1,355
5.3
1,276
11.8
Provision for Tax 394 61
546.0
417
(5.5)
PAT 1,033 1,294
(20.2)
859
20.2
Effective Tax Rate (%) 27.6 4.5
 2,313bp
32.7
(507)bp
 Source: Company, Angel Research
Exhibit 2:
 
1QFY2012 Actual vs. Estimates
Particulars (
`
cr) Actual Estimates
Var. (%)
NII 2,297 2,411
(4.7)
Non-interest income 641 678
(5.4)
Operating income 2,938 3,088
(4.9)
Operating expenses 1,107 1,126
(1.7)
Pre-prov. profit 1,831 1,962
(6.7)
Provisions & cont. 404 532
(24.1)
PBT 1,427 1,430
(0.2)
Prov. for taxes 394 429
(8.1)
PAT 1,033 1,001
3.2
 Source: Company, Angel Research
 
 Bank of Baroda
|
1QFY2012 Result Update 
July 28, 2011
 3
Exhibit 3:
 
1QFY2012 performance analysis
Particulars 1QFY12 4QFY11
%chg (qoq)
1QFY11
%chg (yoy)
Balance sheet
 Advances (
 ` 
cr) 232,340 228,676
1.6
185,595
 25.2
Deposits (
 ` 
cr) 312,943 305,439
 2.5
254,668
 22.9
Credit-to-Deposit Ratio (%) 74.2 74.9
(62)bp
72.9
137bp
Current deposits (
 ` 
cr) 21,567 23,135
(6.8)
18,723
15.2
Saving deposits (
 ` 
cr) 65,654 64,454
1.9
56,061
17.1
CASA deposits (
 ` 
cr) 87,221 87,589
(0.4)
74,784
16.6
Global CASA ratio (%) 27.9 28.7
(81)bp
29.4
(149)bp
Domestic CASA ratio (%) 33.9 34.4
(45)bp
35.2
(132)bp
CAR (%) 13.1 14.5
(142)bp
13.3
(15)bp
Tier 1 CAR (%) 9.1 10.0
(93)bp
8.2
90bp
Profitability Ratios (%)
Cost of deposits 6.4 5.6
78bp
5.1
132bp
Yield on advances 11.2 10.7
58bp
9.8
144bp
Yield on investments 7.6 7.6
(1)bp
6.8
76bp
Reported NIM 3.4 4.2*
(77)bp
3.4
(4)bp
Cost-to-income ratio 37.7 43.6
(590)bp
38.3
(60)bp
Asset quality
Gross NPAs (
 ` 
cr) 3,425 3,153
8.7
2,657
 28.9
Gross NPAs (%) 1.5 1.4
10bp
1.4
5bp
Net NPAs (
 ` 
cr) 1,024 791
 29.5
717
 42.8
Net NPAs (%) 0.4 0.4
9bp
0.4
5bp
PCR incl. tech. w/offs (%) 82.5 85.0
(248)bp
85.7
(313)bp
Slippage ratio (%) 1.0 1.5
(50)bp
1.5
(50)bp
NPA to avg. assets (%) 0.1 0.5
(35)bp
0.4
(24)bp
 Source: Company, Angel Research; Note * 3.7% after adjusting for interest on income tax refund
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