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Bank of Baroda (PG-10-04)

Bank of Baroda (`in Crs)

Sr.

No Ratio Formula 2008-09 2009-10 2010-11

1 Capital Adequacy Ratio Tier I Capital 11069.64 14356.88 20974.23

Tier II Capital 7244.12 8060.36 9509.19

Risk Weighted Assets 130324.89 156091.41 209890.48

14.05% 14.36% 14.52%

2 Asset Quality Net NPA 451.15 602.32 790.88

Loans & Advances 143985.89 175035.28 228676.36

0.31% 0.34% 0.35%

3 Management Quality Non Interest Expense 3576.06 3810.58 4629.83

Total Assets 227406.73 278316.70 358397.17

1.57% 1.37% 1.29%

4 Earnings Ability

4.1 ROCE NPAT 2227.20 3058.33 4241.67

Total Capital Employed 18471.63 28456.48 73300.97

12.06% 10.75% 5.79%

4.2 EBITDA Margin EBIT 3342.94 4238.06 5650.32

Total Income 17849.23 19504.69 24695.10

18.73% 21.73% 22.88%

4.3 Leverage Ratio Debt 5636.08 13350.08 22307.85

Total Funds 18471.63 28456.48 73300.97

30.51% 46.91% 30.43%

4.4 ROE Net Profit After Tax 2227.20 3058.33 4241.67Equity Capital 12835.53 15106.37 20993.10

17.35% 20.25% 20.21%

4.5 ROA Net Profit After Tax 2227.20 3058.33 4241.67

Total Assets 227406.73 278316.70 358397.17

0.98% 1.10% 1.18%

4.6 Net Interest Margin Interest IncomeInterest Expense 5123.41 5939.49 8802.26

Total Assets 227406.73 278316.70 358397.17

2.25% 2.13% 2.46%

5 Liquidity Risk Reserves & Surplus 12835.53 15106.37 20993.10

Total Assets 227406.73 278316.70 358397.17

5.64% 5.43% 5.86%

6 Sensitivity to Beta 0.81 0.87 0.69

Market Risk

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Bank of Baroda (PG-10-04)

Capital Adequacy Ratio (CAR):CAR shows the ability of a bank to deal with probable loan defaults. The banks CAR is around 14.36%under Basel II as on March 2010, 14.05% as on March 2009 and 14.52% as on March 2011. In 2011, Bankstrengthened its capital-base by rising `1,000crore through unsecured subordinated bonds and `900crorethrough innovative perpetual bonds.

Asset quality:

It helps to determine the robustness of financial institutions against loss of value in the assets. Bankhas high asset quality as Net NPA/Loans and advances ratio has been in the range of 0.31% to 0.35%.A low level of NPAs suggests low probability of a large number of credit defaults that affect theprofitability and net-worth of banks and also wear down the value of the asset.

Management Quality:This reflects the efficiency of the Management of the bank. This ratio has reduced from 1.57% in March2010 to 1.37% as on 2010 and then further to 1.29% as on March 2011. This shows that management isable to manage the bank efficiently.

ROCEThis ratio has reduced from 12.06% in 2009 to 5.79% in 2011 due to increase in Debt and Shareholdersfunds diluting the returns. Thus it can be said the profit has not increased in relation to Equty

EBITA Margin:

EBITDA Margin has shown a increase trend continually YoY from 18.73% in 2009 to 22.88% in 2011.There has been a minor increase in 2011 compared to 2010

Leverage Ratio:The Leverage ratio is high in 2008-10. However, in 2009-10 it encountered a very steep increase in thedebt and total funds. This may be because of Lehman crises starting in October 2008. Banks wereallowed to borrow due to slow down, RBI was dovish and the interest rates had fallen, so the cost ofborrowing is less. The present ratio stands at 30.43%.

ROE:

ROE has been showing a decreasing tend from 2008 to 2011. The NPAT has increased but less comparedto Equity Capital.

ROA:

Return on Asset Ratio shows that how much return bank can get from their total asset. Higher the ratiois good for the bank. Because if ratio is higher than we can say that the return of bank is high. Abovewe can see that in 2009 this ratio is 0.98% and it has increased in 2010 to 1.10% and further increasedto 1.18%

Net Interest Margin:NIM has seen a moderate decrease from 2008 to 2009 but again there is an increase in 2011 to 2.46%.This can be attributed to the fact that funds were availed at a very low cost during slow down.

Liquidity Risk

There has been increase in the reserves and surplus as a proportion of Total assets from 2009 to 2011.Thus the present ratio stands at 5.86%. It is used to measure how solvent is bank in case of liquidation.This ratio is around 5.5% from 2008-11. This indicates that bank has good amount of reserves toovercome liquidity risks.

Sensitivity to market:The Beta of ICICI Bank is moderate, which shows that it is not an aggressive stock with a Beta at 0.81.