Bank of Maharashtra is planning to raise Rs 500-750 crore through a qualified institutional placement (QIP) in February, CEO and managing  director AS Rajeev said, while announcing the state-owned bank’s record quarterly profit.

The equity raise will help the bank to reduce the government stake marginally from 91% stake.

The bank also plans to raise Rs 1,000 crore in tier 1 bonds in the first quarter of next financial year to shore up its capital and fund its next phase of growth. The bank reported a 111% rise in its fiscal third quarter net profit to Rs 325 crore, from Rs 154 crore a year ago. This is the highest profit the bank has reported in a single quarter as it improved its lending initiatives, particularly on agriculture advances, ramped up its low-cost CASA (current account savings account) ratio and kept a check on the asset quality.

“The net interest income (NII) of the bank grew 20% over the preceding quarter. We improved our lending activities. The agriculture lending of the bank rose to 19%, which helped to sell the excess priority sector lending certificates of about Rs 41 crore during the quarter. The credit-to-deposit ratio improved to 67% and improvement in our CASA ratio helped to keep the overall costs down. All this led to better profitability of the bank,” Rajeev said in a media conference call. 

The CASA ratio of the bank was 55.05% of total deposits. In the December quarter, total deposits rose 15.21% year-on-year to Rs 1,86,614 crore.

The bank’s net interest margin (NIM) for the quarter ended December 31, 2021, was at 3.11% compared to 3.06% a year ago as the yield on advances improved.  Sequentially, NIM was higher at 3.27% in the September quarter. 

Net interest income (NII) grew 16.9% to Rs 1,527 crore versus Rs 1,306 crore a year ago. Sequentially, growth was flat with NII at Rs 1,500 crore in the September quarter.The non-Interest income rose 6.35% year-on-year to Rs 611 crore as the yields on 10-year bonds inched up. 

The asset quality of the bank also improved with the gross non-performing assets (NPAs) falling to 4.73% in December 2021 from 7.69% a year ago and 5.56% a quarter ago. The Net NPA declined to 1.24% from 2.59% a year ago and 1.73% a quarter ago.

The bank wrote-off NPAs of Rs 500 crore in Q3FY22 while upgrading and recovering loans of Rs 1,499 crore. A major chunk of the NPAs came from its agriculture book at Rs 3,345 crore, while the MSME portfolio accounted for Rs 1,653 crore, retail of Rs 429 crore and corporate of Rs 677 crore bad loans.

Bank of Maharashtra is planning to transfer Rs 1,400 crore to the National Asset Reconstruction Company Ltd (NARCL). The bank has restructured Rs 5,500 crore of loans under the special restructuring window of the Reserve Bank of India (RBI).

Gross advances grew 22.98% year-on-year to Rs 1,29,006 crore, led by corporate growth which grew  30.76% to Rs 53,080 crore. This was followed by the MSME sector, which grew 23.54% to Rs 25,092 crore. The retail sector loans rose 18.8% to Rs 32,743 crore and the agriculture sector by 9.87% to Rs 18,092 crore during the quarter. 

“The home loans saw a significant growth under our special ‘Ghar Wapasi’ scheme focusing on a risk-based approach where customers with a Cibil score of 850 and above were offered credit at 6.4%, the lowest in the market,” Rajeev said.

“The credit growth is expected to be 17-20% in the current financial year (FY22). The liabilities (deposits) are expected to grow by 10-12 % in FY22. The focus is on growth with stability and compliance,” he addded.

The bank’s provisions for NPAs were higher at Rs 587 crore in Q3FY22, up from Rs 385 crore in the year-ago period. In Q2FY22, provisions were down at Rs 921crore.

The Provision Coverage Ratio (PCR) improved to 93.77% at end-December from 89.55% cent a year ago and 92.38% a quarter ago.