Bank of Maharashtra Reports 44% Surge in Q2 Profit to Rs 1,327 Crore Driven by Interest Income Growth

Bank of Maharashtra (BoM), a state-owned entity, reported a 44% increase in its profit for the second quarter ending September 2024, reaching Rs 1,327 crore. This rise is attributed to improved interest income. In the same quarter last year, the Pune-based bank had recorded a net profit of Rs 920 crore.

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Total income for BoM rose to Rs 6,809 crore during this quarter, compared to Rs 5,736 crore in the corresponding period of the previous year. The bank's Managing Director, Nidhu Saxena, highlighted that the Net Interest Margin (NIM) increased to 3.98% from 3.88% a year earlier.

Interest Income and Asset Quality

The bank's interest income for the quarter was Rs 6,017 crore, up from Rs 5,068 crore in the same period last year. Net Interest Income (NII) saw a growth of 15.41%, reaching Rs 2,807 crore compared to Rs 2,432 crore a year ago.

BoM has shown improvement in asset quality with gross Non-Performing Assets (NPAs) reducing to 1.84% of gross loans by September 2024, down from 2.19% a year earlier. Similarly, net NPAs decreased to 0.20% from 0.23% at the end of the second quarter last fiscal.

Capital and Stake Details

During this quarter, BoM raised Rs 3,500 crore through Qualified Institutional Placement and Rs 1,000 crore via Tier II bonds. As a result of the QIP, government ownership in the bank reduced to 79.60% from 86.46% in the previous quarter.

Saxena mentioned that further stake dilution by the government is not anticipated this financial year despite having board approval for raising Rs 5,000 crore through equity sale.

Financial Targets and Provisions

The bank aims for its net profit to surpass Rs 5,000 crore in the current fiscal year. In the first half of this fiscal year alone, profits have already exceeded Rs 2,500 crore. Last fiscal year, BoM earned a net profit of Rs 4,055 crore.

Provisions for bad loans remained steady at Rs 598 crore for this quarter compared to Rs 597 crore in the same period last year. The Provision Coverage Ratio slightly decreased to 98.31% from 98.40% in September 2023.

Business Growth and Capital Adequacy

The total business of BoM expanded by 16.90%, reaching Rs 493,793 crore. However, the Current Account Savings Account (CASA) ratio declined to 49.29% from last year's figure of 50.71%. The Capital Adequacy Ratio stood at a healthy 17.26%, with a Common Equity Tier 1 (CET1) ratio of 11.97%.

Saxena noted that among public sector banks, BoM boasts the highest NIM and targets a range between 3.75% and 3.85% for this fiscal year due to an expected rate cut.