Aided by a Rs 340-crore recovery from its written off accounts, state-owned Bank of Maharashtra has doubled its net profit to Rs 264 crore in the fiscal second quarter ended September from Rs 130 crore a year ago.

The Pune-headquartered bank recovered Rs 258 crore from Dewan Housing Finance (DHFL) and another Rs 82 crore from miscellaneous accounts. The exposure of Rs 550 crore to the beleaguered Srei Group is fully provided for and written off from the books of the bank.

Net interest income (NII) saw a steep climb, contributing to the bank’s profitability. “Healthy improvement in the net interest income by 34% to Rs1,500 crore was a major contributor to the net profit,” said Bank of Maharashtra managing director and CEO AS Rajeev. 

In the year-ago quarter, NII stood at Rs1,120 crore.

“The fresh provisions for the quarter are from the bank’s operating profit. Profit from the sale of investments have also come down this quarter by Rs 200 crore. Despite this we have been able to report healthy profits,” Rajeev explained to reporters after announcing the bank’s results.

“With the economy gradually opening, up we expect to see a good credit growth. We are projecting a credit growth of 14% to 15% during the year. The green shoots are visible in the hotel industry, travel and entertainment with theatres opening up from tomorrow in Maharashtra,” he added.

The bank’s gross advances grew 11.44% year-on-year to Rs 1,15,236 crore in the quarter ended September 30, 2021. 

Deposits rose 14.47% YoY to Rs 1,81,572 crore. The total business of the bank grew by 13.27% to Rs 2,96,808 crore.

The bank reported Rs 553 crore of fresh slippages during the September quarter. Of this, Rs 14.5 crore of slippages came from the restructured book of the bank. 

Bank of Maharashtra has restructured Rs 5,596 crore of loans under the special restructuring scheme of the Reserve Bank of India (RBI) and Rs 2,298 crore under the standard restructuring scheme.

The bank has Rs 3,212 crore of loans in the Special Mention Accounts (SMA-1) where repayment is due for 30 days and Rs 1,276 crore under Special Mention Accounts (SMA-2) where the repayment is due for 60 days.

The bank’s asset quality improved with the gross non-performing assets (NPAs) ratio falling to 5.56% at the end of September from 8.81% a year ago. Net NPA narrowed to 1.7% from 3.3%.

The provision coverage ratio improved to 92.38% at the end of the quarter as against 87.15% a year ago. The bank holds a cumulative Covid-19 provision of Rs 973 crore at the end of the reporting quarter.

The bank undertook loan loss provisions of Rs 583 crore, including towards increase in provisions on account of implementation of resolution plans under the RBI’s restructuring scheme called the Resolution Framework for Covid-19 related stress. 

The bank plans to up its capital adequacy ratio (CAR), which is at 14.67%, to 15%. Earlier this week the bank raised Rs 1,000 crore in capital through tier 2 bonds at 7.8% coupon. Plans are afoot to raise another Rs 1,000 crore in tier 2 bonds later in the year, Rajeev said.

The bank is likely to raise equity capital in the first quarter of the next fiscal to trim government holding from 91%.