NII growth, low provisioning boost Bank of Maharashtra profit

Bank of Maharashtra on Thursday reported a 115.19% year-on-year jump in its net profit to Rs 355 crore for the March quarter. The net interest margin (NIM) improved to 3.17% from 3.11% while the net interest income grew 16.56% to Rs 1,612 crore. Gross NPAs declined to 3.94% from 7.23% last year. Net NPAs get reduced to 0.97% from 2.48%.

AS Rajeev, managing director and CEO, said the growth in profit was on account of the growth in NII. The bank was able to report higher profit despite reduction in the profit on sale of investments. In the last eight to 10 quarters, the bank’s NII growth rate had been around 15-20%, he said.

In addition, there was reduction in operating costs, including employee and pension costs. The bank had been able to control operating costs and the cost to income ratio was contained to 44.76%. Higher CASA base was also improving profitability, Rajeev said. BoM’s CASA touched 57.85% as a share of total deposits. There was an overall improvement in asset quality while provisioning for bad loans and contingencies was down to Rs 824 crore, compared to Rs 1,376 crore in the year-ago period.

During Q4, the bank reported growth in all business segments, including an 18.66% growth in retail, agriculture and MSME loans. The corporate loan segment too picked up. These led to a 26% growth in advances to Rs 1,35,240 crore. Total deposits grew 16.26% to Rs 2,02,294 crore.

The bank’s board on Thursday approved plans to raise Rs 5,000 crore in FY23 to fund growth. This would be through follow-on public offer, rights issue, qualified institutional placement, preferential issue or any other mode or combination thereof or through issue of Basel III compliant bonds.

The bank does not foresee any adverse impact of interest rate hikes on growth. Advances are expected to grow at 16-18% while deposit growth would be in the 12-15% range.

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