Bank of Maharashtra’s net profit rose 117.24% year-on-year to Rs 451.9 crore in the quarter ended June (Q1FY23) on the back of an improvement in net interest margin (NIM).

The Pune-based public sector lender posted a net profit of Rs 208.01 crore in the same period last year (Q1FY22). Subsequently, its net profit rose by 27.22% from Rs 355.2 crore in Q4FY22.

Shares in the bank rose 3.73% to Rs 16.7 per share on the BSE on Monday.

Its net interest income (NII) grew 19.9% to Rs 1,685.7 crore in Q1FY23 from Rs 1,405.9 crore in 1QFY22. Its NIM improved to 3.28% in Q1FY23 from 3.05% a year ago.

The bank’s MD and CEO, A S Rajeev, said the net interest margin for the current financial year is expected to be between 3.0-3.25%.

Its non-interest income fell yearly to Rs 317 crore in Q1FY23 from Rs 687 crore as solid yields weighed on the bond portfolio. It also fell sequentially from Rs 522 crore in Q4FY22.

The bank’s asset quality profile improved in June 2022, with gross non-performing assets (GNPA) rising from 6.35% a year ago to 3.74% in June 2022. Net NPAs fell to 0.88% in the quarter from 2.22% a year ago.

NPA provision increased from Rs 500.9 crore in Q1FY22 to Rs 637.4 crore in Q1FY23. The provision coverage ratio rose 95.04% in the quarter from 90.7% a year ago.

The bank had Rs 281 crore exposure in its sugar account that became an NPA in the first quarter. The bank has set aside 100% of the reserves for this account.

Bank of Maharashtra expects to recover cash worth Rs 3,000 crore in FY23 and has identified three accounts worth Rs 660 crore to be transferred to National Asset Reconstruction Company Ltd.

The bank’s loan book grew by 27.1% year-on-year, almost double the growth rate of the banking system’s loan book in June 2022 (14.4% year-on-year). As of June 2022, outstanding advances stood at Rs 1.4 trillion.

Rajeev said that year-on-year growth in FY23 will slow to 21-22% as the loan base expands.

In June 2022, deposits rose 12.35% year-on-year to Rs 1.95 trillion. The loan-to-deposit ratio stood at 71.75% at the end of June 2022, up from 63.42% a year ago. In June 2022, deposits rose 12.35% year-on-year to Rs 1.95 trillion.
The bank’s total capital adequacy ratio (CAR) stood at 16.15% in June 2022, up from 14.46% in June 2021.

As for the fundraising plan, the lender has obtained board approval to raise Rs 5,000 crore through primary and secondary vehicles. It has bundled Rs 1,000 crore of secondary bonds and is in talks on its pricing.

Rajeev said that while the bank does not require equity capital this year, the bank will consider issuing shares of Rs 1,000 crore in the second half of FY23 based on market conditions. This is to reduce the government’s stake, which is 91% as of June 2022.