Mumbai: The 95-year-old Bank of Baroda (BoB) has crossed the Rs 100,000-crore business mark in the financial year 2002-03 and has declared the highest-ever dividend of 60 per cent and an actual payout of Rs 180 crore.
P S Shenoy, chairman and MD, Bank of Baroda
BoB's growth in income at 5.9 per cent was much higher than the growth in expenses, which was restricted to 0.1 per cent, resulting in a growth of 31.1 per cent in the operating profit, which rose to Rs 1716.63 crore. Its net profit grew at 41.6 per cent to Rs 772.78 crore.
The bank's strict control over costs saw the cost-income ratio fall from 54.42 per cent last year to 48.99 per cent in 2003. There was also an appreciable improvement in financial ratios: the ratio of profits after tax to average assets (1.05 per cent), the net interest margin (2.94 per cent), earnings per share (Rs 26.11) and the book value (Rs 139.36).
The bank's focused emphasis on treasury operations has helped in boosting profits and increasing income. BoB's international operations in 16 countries also did well and contributed 11 per cent to the operating profit and 13.2 per cent to the overall business during the financial year ended March 2003.
BoB's board has also cleared a proposal to return the capital to the extent of Rs 91.90 crore to the central government, which will reduce the government's stake in the bank from 67 per cent to 51 per cent. The bank's total business stood at Rs 1,01,714.45 crore as on 31 March 2003.
BoB's priority sector advances rose by 9.1 per cent to Rs 11,274.58 crore, forming 46.24 per cent of the net bank credit. This is far above the mandatory level of 40 per cent. Another highlight of the bank's performance was a reduction in the net NPA (non-performing assets) ratio to 3.72 per cent from the 4.98 per cent recorded in the previous year.
BoB now plans to position itself as a "universal financial services provider," offering more customer-oriented products and services. In the domestic market, for suitable customer segmentation, each of its 2,753 branches will be classified under one of four main 'lines of business' (LOBs): corporate financial services (CFS), business financial services (BFS), personal financial services (PFS) and Baroda rural (BR).
Several new products have already been launched: super savings bank account, overdraft against property, Baroda property loan and assured additional advance (AAA). An international debit card has also been launched in affiliation with VISA. Two new loan products are SME short-term loan and SME medium-term loan for small- and medium-sized corporates, businesses and trading houses.
Says BoB chairman and managing director P S Shenoy: "Eighty-six per cent of the bank's business has been computerised. This will soon become 100 per cent, enabling us to attend to customers on a 365x24x7 basis from anywhere in the world. Instant transmission of funds through BoB e-payments has also been launched.
"Our capital adequacy has risen from 11.30 per cent to 12.65 per cent and we have achieved LAAA rating from the Investment and Credit Rating Agency (ICRA). Our global ranking is now 352 as compared to 432 earlier. The business per employee has increased to Rs 2.52 crore per year from Rs 2.45 crore in 2002 and Rs 1.76 crore in 2001. Our costs are steadily coming down."
"We will soon be completing 100 years of operation. We now have to position the bank for success over the next 100 years. We have developed our 'Bobvision Plan' for this purpose. We must develop as a national bank, which operates as per international standards.
"The macro-economic scenario for 2003-04 is very encouraging. Economic and GDP [gross domestic product] growth will keep rising, and credit offtake would increase. Foreign exchange reserves are expected to rise by almost $1 billion per month. Also, interest rates would continue to fall and ultimately converge with international rates. This should encourage a steady growth in investments and demand for credit."