Bank of Baroda (BOB) : Company Overview

Bank of Baroda (BOB) is the third largest public sector bank (PSB) in India in terms of asset size and the fourth largest bank in terms of branches as of FY17. The bank has strong domestic presence with 5,451 branches and 10,136 ATM’s across the country. BOB is also known as the international bank of India as it has one of the largest branch networks in foreign countries. BOB has presence in over 27 countries with 139 overseas branches/offices, which generates close to 27% of its total business.

Return ratios to improve steadily

BOB’s return ratios declined mainly on account of higher credit cost as a result of significant deterioration in asset quality. Hence, BOB reported net loss of Rs5,396cr in FY16. However, the bank has taken several measures to address the concern. Therefore, we expect credit costs to decline from hereon given the declining trend in delinquencies. With the growth in core income as well as non-core income coupled with improving operating metrics, the bank’s ROE will improve steadily from 3.4% in FY17 to 8.5% in FY19E