Bank of Maharashtra Q2 profit doubles to ₹535 cr. on higher interest income

State-owned Bank of Maharashtra (BoM) on Monday posted a twofold jump in its net profit to ₹535 crore in the September quarter, aided by a decline in bad loans and a rise in net interest income.

The lender had reported a standalone profit of ₹264 crore in the year-earlier period.

Total income increased to ₹4,317 crore during the quarter under review against ₹4,039 crore in the same period last year, BoM said in a regulatory filing.

Talking about the financial performance, BoM managing director A. S. Rajeev said the increase in profit can be attributed to various factors, including a jump in net interest income.

The bank was able to reduce gross Non-Performing Assets (NPAs) to 3.40% of the gross loans by the end of September 2022 from 5.56% a year ago.

Likewise, net NPAs or bad loans came down to 0.68% from 1.73% at the end of the second quarter of the previous fiscal.

As a result, provisions for bad loans for the second quarter declined to ₹532 crore from ₹922 crore earmarked for the year-ago period.

The operating profit of the bank increased by 4.43% to ₹1,462 crore during the September quarter as against ₹1,400 crore for Q2FY22.

Net Interest Income (NII) grew by 25.84% to ₹1,887 crore as compared to ₹1,500 crore last year.

During the quarter, the gross advances increased by 28.62% to ₹1,48,216 crore at the end of September 2022.

With regard to Capital Adequacy Ratio, Mr. Rajeev said it has increased to 16.71% of which Tier I is 12.89%.

Asked about the NPA account transfer to the National Asset Reconstruction Company (NARCL) or bad bank, he said, “we have identified 2-3 accounts for transfer which should reduce NPA by ₹500 crore in the ongoing third quarter.”

The recovery expected from these accounts should be around ₹170 crore, he added.

To a question on the reduction of government stake in the bank, he said that the call in this regard would be taken either in the fourth quarter of the current financial year or the first quarter of FY24 depending on market conditions.

The government of India holds a 90.97% stake in the bank at the end of September 2022.

Markets regulator Securities and Exchange Board of India (Sebi) has given an exemption to all public sector banks from meeting minimum public holding norms of at least 25% till October next year.

The provision coverage ratio of the bank improved to 96.06% as on September 30 against 92.38% at the end of the second quarter of the previous financial year.

Net Interest Margin (NIM) increased to 3.55% from 3.27% in the same quarter a year ago.

During the quarter that ended September 30, 2022, the bank identified 17 fraud cases amounting to ₹154.74 crore.

The bank has raised Basel III Additional Tier I bonds of ₹710 crore during the first half of the current fiscal.