Bank of Maharashtra Q3 net up 34 % at Rs 1,036 cr, slows corporate lending

State-owned lender says it has increased share of loans in retail, agriculture and MSME segments

Bank of Maharashtra (BoM) said on Tuesday its net profit increased by 34 per cent year-on-year (YoY) to Rs 1,036 for the quarter ended December 2023 (Q3 FY24) on the back of healthy rise in net interest income (NII) and stable asset quality. The lender had posted a profit of Rs 775 crore in Q3 FY23.

Sequentially, the public sector lender’s profit rose marginally from Rs 920 crore in the quarter ended September (Q2 FY24). Capital adequacy ratio stood at 16.85 per cent at the end of December 2023.

A S Rajeev, the bank’s managing director and chief executive officer, said the capital base is comfortable and above regulatory norms. The bank does not plan to raise additional capital as that would have cost implications.

 

BoM raised Rs 1,000 crore in equity capital through qualified institutional placement and Rs 774 crore via Tier-II bonds.

The Pune-based bank’s NII expanded 24.56 per cent to Rs 2,466 crore in Q3 FY24, compared to Rs 1,980 crore in the same quarter a year ago. Sequentially, NII rose by 1.39 per cent from Rs 2,432 crore in Q2 of FY24.

Net interest margin (NIM) expanded to 3.95 per cent in Q3 FY24, compared to 3.6 per cent in Q3 of FY23. Sequentially, NIM was up 3.89 per cent.

The bank will be able to maintain NIM between 3.75 per cent and 4.0 per cent in the fourth quarter, said Rajeev during a post earnings media interaction.

Non-interest income comprising fees, commissions, treasury income and recoveries rose by 6 per cent YoY to Rs 680 crore in Q3 FY24. Sequentially, it rose marginally from Rs 668 crore in Q2 FY24.

Fees income declined YoY to Rs 341 crore from Rs 339 crore a year ago.

Sequentially, it fell from Rs 379 crore. A change in business strategy to go slow on corporate lending pulled down fees. Treasury income shrunk by 13 per cent YoY to Rs 88 crore in December quarter. It, however, rose from Rs 63 crore in Q2Fy24.

The lender’s provisions for non-performing assets (NPAs) rose to Rs 581 crore in Q3 FY24, from Rs 539 crore in the year-ago period. Sequentially, provisions declined from Rs 597 crore.

Advances grew 20.2 per cent YoY to Rs 1.88 trillion in Q3 of FY24. The bank expects to grow its loan book by 20-21 per cent in the current financial year.

BoM has changed its loan strategy and will go slow on corporate lending due to increased competition on the pricing front. It has increased the share of loans in retail, agriculture and MSME (RAM) segments, Rajeev said.

Total deposits increased 17.89 per cent YoY to Rs 4.34 trillion. The share of low-cost deposits – current account and saving account (CASA) – declined to 50.19 per cent at the end of December, down from 52.5 per cent a year ago. CASA ratio is expected to remain at current level, he said.

Asset quality improved with gross NPAs declining to 2.04 per cent in December from 2.94 per cent a year ago. Sequentially, it was down 2.19 per cent in September 2023.

Net NPAs declined from 0.22 per cent in December from 0.47 per cent in the year-ago. Sequentially, net NPAs were down 0.23 per cent.

The provision coverage ratio, including technical write-offs, improved to 98.4 per cent in December from 97.18 per cent a year ago.