Bank of Maharashtra Q2 net profit jumps 72% to Rs 920 crore

State-owned Bank of Maharashtra (BoM) on Monday posted a 72 per cent jump in net profit at Rs 920 crore for the September quarter, aided by a decline in bad loans and a rise in interest income. The lender had reported a standalone profit of Rs 535 crore in the year-ago period.

Total income rises

The total income increased to Rs 5,796 crore during the quarter under review, as against Rs 4,317 crore in the same period last year, BoM said in a regulatory filing. The bank earned interest income of Rs 5,068 crore during the quarter, compared to Rs 3,815 crore in the same period a year ago.

Net Interest Income

Net Interest Income (NII) grew by 28.88 per cent to Rs 2,432 crore in Q2FY23, as against Rs 1,887 crore in the same period a year ago. Talking about the financial performance, BoM managing director A S Rajeev said the operating profit has shown a growth of 31 per cent to Rs 1,920 crore, as against Rs 1,462 crore in the same period a year ago.

Net Interest Margin

Net Interest Margin (NIM) increased to 3.89 per cent, from 3.55 per cent in the same quarter a year ago, he said, adding the NIM in the remaining part of the current fiscal is expected to remain around 3.5 per cent.

Asset quality improves

On the asset quality front, the lender reported an improvement as the gross non-performing assets. NPAs, or bad loans, fell to 2.19 per cent of the gross advances as of end-September 2023, from 3.40 per cent by end of second quarter of previous financial year. Likewise, net NPAs or bad loans came down to 0.23 per cent, from 0.68 per cent at the end of the second quarter of the previous fiscal.

Provisions

Provision Coverage ratio improved to 98.40 per cent, as against 96.06 per cent in September, 2022. Provisions for bad loans for the second quarter increased to Rs 597 crore, from Rs 532 crore earmarked for the year-ago period. The increase in provision due to slippages was recorded in the agriculture sector portfolio due to erratic rainfall. The bank has made additional provision of Rs 300 crore to deal with the deficit rainfall situation having implication on agri-loans, he said.

Advances and Deposits

During the quarter, the gross advances increased by 23.55 per cent to Rs 1,83,122 crore at the end of September 2023. With regard to Capital Adequacy Ratio, Rajeev said it has increased to 17.61 per cent with Common Equity Tier 1 (CET1) ratio of 12.28 per cent.

Interest rates

Asked if further hike in interest rate is expected, Rajeev said it has peaked on both deposit and lending side and there may not be any change for the next two quarters. There may be some pressure on Current Account Savings Account (CASA) accretion side due to increase in deposit rare, he said, adding, this should stabilise in the couple of quarters.

In a separate development, the bank said its board has approved raising up to Rs 2,000 crore through issuance of Basel III compliant Additional Tier 1 (AT1) bonds.