Bank of Maharashtra’s fiscal second-quarter net profit surged 44.25% to Rs 1,327 crore as net interest margin and other growth parameters continued to stay healthy.

Net profit is expected to cross Rs 5,000 crore during the current fiscal, the bank’s managing director and CEO Nidhu Saxena said. For the first half of FY25, the state-owned lender’s net profit has already crossed Rs 2,500 crore.

In FY24, Bank of Maharashtra had posted a net profit of Rs 4,055 crore.

For the fiscal second-quarter ended September, the Pune-headquartered bank’s net interest margin (NIM) rose to 3.98% from 3.88% a year ago. Bank of Maharashtra’s NIM, in fact, is the highest among the 12 public sector banks. 

Anticipating an interest rate cut during the course of the financial year, Saxena said the bank’s NIM target for FY25 is 3.75-3.85%. 

Net interest income (NII) rose 15.4% to Rs 2,807 crore during the quarter ended September 2024 versus Rs 2,432 crore in the same period a year ago.

Operating profit for Q2FY25 grew 14.66% to Rs 2,202 crore, up from Rs 1,920 crore in the corresponding quarter of the previous year. 

Total income increased to Rs 6,809 crore during the September quarter compared to Rs 5,736 crore in the same period last year.

Asset quality improves

The bank’s asset quality showed further improvement, with gross non-performing assets (NPAs) moderating to 1.84% by the end of September 2024 from 2.19% a year ago.

Net NPAs or bad loans declined to 0.20% from 0.23% at the end of the second quarter of the previous fiscal.

Provision coverage ratio fell marginally to 98.31% from 98.40% in September 2023.

Provisions for bad loans for the second quarter remained flat at Rs 598 crore, from Rs 597 crore a year ago.

Loan growth

The bank’s loan book grew 19% to Rs 217,504 crore.  

Retail loans grew 22.53%, MSME advances by 33.86% and agriculture advances by 24.96%. 

Corporate banking growth was moderate. Infrastructure, pharma, renewable energy and tie-ups with term lending institutions are the preferred sectors. “Wherever is the emphasis of the government and where we get good margins, we would like to participate,” said Saxena.

Deposit growth

Total deposits grew 15.46% to Rs 2,76,289 crore. 

CASA (current account savings account) deposits grew 12.23% to touch Rs 1,36,174 crore.

However, CASA as percentage of total deposits declined to 49.29% from 50.71% a year ago.

The bank’s total business grew 16.90% year-on-year to Rs 4,93,793 crore. The RAM (retail, agri and MSME) segment showed a healthy 26% growth.

Capital raise

During the quarter, Bank of Maharashtra raised Rs 3,500 crore from qualified institutional placement (QIP).

With this, the government stake in the bank fell to 79.60%.

The capital adequacy ratio stood at 17.26% with a common equity tier 1 (CET1) ratio of 11.97%.