Bank of Maharashtra (BoM) on Monday reported a 102% jump in its net profit to Rs 535 crore for the quarter ended September, aided by lower provisioning and higher net interest income (NII).

The net interest margin improved to 3.55% during the September quarter from 3.27% a year ago. NII grew 25.84% year-on-year to Rs 1,887 crore. Provisions and contingencies declined 38.22% to Rs 579 crore for the quarter under review.

AS Rajeev, managing director and CEO, said BoM would stick to the credit growth rate guidance of 22-23% for the fiscal as it expects to maintain the momentum for the rest of the year. The NIM would remain at 3.50 levels for FY23.

The bank reported a decline in gross NPA to 3.4% and the net NPA reduced to 0.68%, The bank’s gross NPA was at 5.56% and net NPA at 1.73% a year ago.

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Deposit rates were increasing and liquidity was stressed, but the lender was able to grow both NII and NIM, Rajeev said. The bank already achieved a credit-to-deposit ratio of 76%, a target it had set for March 2023.

Instead of increasing deposits, BoM has opted for reducing its investment portfolio. The bank has an investment portfolio of Rs 70,000 crore. It also had a 7-8% excess SLR of Rs 14,000-15,000 crore which would be diverted to expand credit in the second half of FY23, Rajeev said.

The CASA ratio was at 56.27% as on September 30 and CASA deposits increased 13% YoY to Rs 1,10,205 core. There was a slight shift seen from CASA accounts to higher interest-yielding accounts, but it would not impact the CASA ratio and the bank would be able to maintain it at above 55% levels, Rajeev said.

According to Rajeev, while the industry grew by 10-12%, BoM could grow the total business by 16%. In the case of advances, the bank growth was 28-29%, compared with the industry growth of 15-16%.

However, other income fell by 60% and was adversely impacted by lower treasury income and the bank also did not sell any priority sector lending certificates during the quarter.

The government of India held a 91% stake in the bank as of September 30, 2022. The lender will raise equity capital in the last quarter of FY23 or the first quarter of FY24 to reduce the government stake.
BoM’s provisional coverage ratio stood at 96,06% as on September 30, 2022, compared with 92% in the year-ago period.