Bank of Maharashtra Q2 net doubles YoY to Rs 535 cr as NIM improves

Lender eyes equity offering by Q4FY23 or early FY24

Bank of Maharashtra’s (BoM's) net profit rose by 103 per cent year on year (YoY) to Rs 535 crore in the quarter ended September (Q2FY23), on the back of an improvement in its net interest margin (NIM).

The Pune-based public sector lender had posted a net profit of Rs 264 crore in (Q2FY22).

The bank’s stock was trading 4.74 per cent higher at Rs 18.8 per share on BSE on Monday.

BoM's net interest income (NII) was up 25.84 per cent YoY in Q2FY23 to Rs 1,887 crore. Its NIM improved to 3.55 per cent in Q2FY23 from 3.27 per cent in Q2FY22. The margins will remain steady and be around 3.5 per cent for FY23, said A S Rajeev, the bank's managing director and CEO in a media interaction after the Q2FY23 results.

The lender's non-interest income dipped 40 pet cent YoY to Rs 502 crore during the quarter under review.

Its asset quality profile improved with gross non-performing assets (GNPAs) at 3.4 per cent till September 2022, compared with 5.56 per cent a year ago. Net NPAs dipped to 0.68 per cent from 1.73 per cent.

The bank expects to transfer 2-3 of its loans to National Asset Reconstruction Company Ltd (NARCL) in the current quarter and recover about Rs 170 crore, bank officials said in the media interaction.

The provision coverage ratio rose to 96.06 per cent for the quarter under review from 92.38 per cent a year ago.

The bank’s loan book grew 28.65 per cent YoY, at a much higher rate than the banking system’s pace of loan book expansion (16.4 cent YoY) in September 2022. Outstanding advances stood at Rs 1.48 trillion as of September 2022. The bank expects to expand loan book by about 25 pet cent in FY23. The growth is sustainable with sound asset quality and prudent borrower selection.

Earlier the lender had said that as the loan base expands, YoY growth could moderate to 21-22 per cent in FY23.

The deposits grew by 7.86 per cent YoY to Rs 1.95 trillion in September 2022. This was lower than the banking sector deposit growth of 9.2 per cent. Sequentially, BoM’s deposit growth moderated from 12.35 per cent YoY in June 2022. It will monetise excess Statutory Liquidity Ratio investments in government bonds to make funds available for lending.

The credit-to-deposit (C\D) ratio was 75.69 per cent at the end of September 2022 up from 63.47 per cent a year ago. Sequentially C\D ratio rose from 71.75 per cent in June 2022.

The bank’s total capital adequacy ratio (CAR) stood at 16.71. per cent in September 2022, up from 14.67 per cent a year ago. The present capital level is comfortable to support loan growth and BoM may look at raising equity capital in last quarter of FY23 or early next financial year to reduce government stake (91 per cent)., Rajeev added.