Bank of Maharashtra's net profit jumps 117.24% to Rs 451.9 crore in Q1

Lender eyeing equity offering of Rs 1,000 cr in second half of FY23

Bank of Maharashtra’s net profit jumped 117.24 per cent year-on-year (YoY) to Rs 451.9 crore in the quarter ended June (Q1FY23) on the back of improvement in its net interest margins (NIMs).

The Pune-based public sector lender had posted a net profit of Rs 208.01 crore during the same period last year (Q1FY22). Sequentially, its net profit grew 27.22 per cent from Rs 355.2 crore in Q4FY22.

The bank’s stock closed 3.73 per cent higher at Rs 16.7 per share on BSE on Monday.

Its net interest income (NII) rose by 19.9 per cent in Q1FY23 to Rs 1,685.7 crore from Rs 1,405.9 crore in Q1FY22. Its NIM improved to 3.28 per cent in Q1FY23 from 3.05 per cent a year ago.

A S Rajeev, managing director and chief executive officer of the bank, said NIM was expected to be in the range of 3.0-3.25 per cent in the current financial year.

With bond portfolio under pressure due to hardening yields, its non-interest income fell on a YoY basis to Rs 317 crore in Q1FY23 from Rs 687 crore in Q1FY22. It also dipped sequentially from Rs 522 crore in Q4FY22.

The bank’s asset quality profile improved with gross non-performing assets (GNPAs) at 3.74 per cent till June 2022 from 6.35 per cent till the year-ago quarter. Net NPAs dipped to 0.88 per cent during the quarter from 2.22 per cent a year ago.

NPA provisions rose to Rs 637.4 crore in Q1FY23 from Rs 500.9 crore in Q1FY22. The provision coverage ratio rose to 95.04 per cent for the quarter under review from 90.7 per cent a year ago.

The bank had an exposure of Rs 281 crore to one account from the sugar industry that became an NPA in the first quarter. The bank had made a 100 per cent provision for the account. 

Bank of Maharashtra is expecting to make cash recoveries worth Rs 3,000 crore in FY23 and has identified three accounts worth Rs 660 crore for transfer to National Asset Reconstruction Company Ltd.

The bank’s loan book grew 27.1 per cent YoY, almost double the rate at which the banking system’s loan book expanded (14.4 per cent YoY) in June 2022. The outstanding advances stood at Rs 1.4 trillion as of June 2022. 

As the base of loans expands, YoY growth would moderate to 21-22 per cent in FY23, Rajeev said. 

The deposits grew by 12.35 per cent YoY to Rs 1.95 trillion in June 2022. The credit-to-deposit ratio was 71.75 per cent at the end of June 2022 up from 63.42 per cent a year ago.

The deposits grew by 12.35 per cent YoY to Rs 1.95 trillion in June 2022.

The bank’s total capital adequacy ratio (CAR) stood at 16.15 per cent in June 2022, up from 14.46 per cent in June 2021.

As regards capital raising plans, the lender has board approval to raise Rs 5,000 crore through tier I and tier II instruments. It has already tied up for Rs 1,000 crore of tier II bonds and is negotiating its pricing.

Rajeev said while the bank does not need equity capital this year, the lender would look at an equity share issue of Rs 1,000 crore in the second half of FY23, depending on market conditions. This is to bring down the stake of the government, which stood at 91 per cent as of June 2022.