Bank of Maharashtra Q3 net doubles on robust NII

Bank of Maharashtra posted a 110.7 per cent rise in net profit at Rs 325 crore for the third quarter ended December 2021 (Q3FY22) on robust growth in net interest income.

The net profit was Rs 154 crore in Q3FY21 and Rs 263 crore in the second quarter ended September 2021 (Q2FY22).The Pune-based lender's stock was trading 2.56 per cent lower at Rs 20.95 per share on BSE.

Net Interest Income (NII) grew by 16.90 per cent to Rs 1,527 crore in Q3FY22 as against Rs 1,306 crore for Q3FY21. Sequentially, growth was flat with NII of Rs 1,500 crore in Q2FY22.Public sector lender’s net interest margin (NIM) improved to 3.11 per cent in Q3FY22 from 3.06 per cent in Q3FY21. Sequentially, NIM declined from 3.27 per cent in Q2FY22.

The non-Interest income rose by 6.35 per cent on YoY basis to Rs 611 crore in Q3FY22 from Rs 575 crore in Q3FY21. Sequentially, it declined substantially from Rs 832 crore in the quarter ended September 2021.

Its gross Advances grew by 22.98 per cent on YoY basis to Rs 1,29,006 crore in Q3FY22 as against Rs 1,04,904 crore in Q3FY21.The total Deposits up by 15.21 per cent to Rs 1,86,614 crore in Q3FY22 from Rs 1,61,971

A S Rajeev, managing director and chief executive said the credit growth is expected to be 17-20 per cent in the current financial year (FY22). The liabilities (deposits) are expected to grow by 10-12 per cent growth in FY22. The focus is on growth with stability and compliance.

Its provisions for non-performing assets were higher at Rs 587 crore in Q3FY22, up from Rs 385 crore in Q3FY21. Provisions were down from Rs 921crore in Q2 FY22.The Provision Coverage Ratio (PCR) improved to 93.77 per cent at end of December 2021 from 89.55 per cent a year ago and 92.38 per cent as of September 2021.

Its Gross NPA declined to 4.73 per cent in December 2021 from 7.69 per cent a year agoas and 5.56 per cent in September 2021. The bank wrote-off NPAs of Rs 500 crore in Q3FY22.The Net NPA reduced to 1.24 per cent in December 2021 from 2.59 per cent a year ago and 1.73 per cent in September 2021.

The current capital adequacy level is adequate for regulatory and business requirements. Yet, the bank plans to raise equity capital of Rs 500-750 crore in the current quarter for future growth considerations. It will approach institutional investors to raise fresh capital.

Bank may also look at Rs 1,000 crore through tier I bonds in the first quarter of next financial year (FY23), Rajeev said.Its Capital adequacy ratio stood at 14.85 per cent in December 2021, up from 13.65 per cent in December 2020.

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Bank of Maharashtra Q2 Net profit doubles

 

State-owned Bank of Maharashtra has doubled its net profit at Rs 264 crore in the September quarter as against Rs 130 crore in the year-ago period, riding on sharp rise in net interest income and recovery from the Dewan Housing Finance (DHFL) exposure.

Its net interest margin, a gauge for efficiency, has improved to 3.27 per cent from 2.57 per cent over the same period. Operating profit grew 40.22 per cent at Rs 1061 crore as against Rs 756 crore. Its net interest income grew 34 per cent at Rs 1500 crore.

The bank recovered Rs 258 crore following DHFL's corporate resolution exercise.

Its asset quality also improved with gross non-performing assets ratio falling to 5.6 per cent at the end of September compared with 8.8 per cent a year ago. Net NPA reduced to 1.7 per cent from 3.3 per cent. Its provision coverage ratio was at 92.4 per cent.

The Pune-based lender grew its advances by 11.44 per cent year-on-year to Rs 1.15 lakh crore. "We are envisaging credit growth of 14-15 per cent for the entire FY22," chief executive AS Rajeev said.

It raised Rs 1,000 crore in bonds Wednesday to augment capital. The fund is raised at 7.8 per cent coupon.

"We have decided to raise another Rs 1000 crore in tier 2 bonds later in the year to keep its capital adequacy ratio (CAR) at around 14.5 per cent level," the CEO said.

Its CAR now stands at 14.67 per cent, an improvement from 13.18 per cent a year back.

Rajeev said the bank may consider raising equity capital in the first quarter next fiscal which would help it bring down government’s holding from 91 per cent. It had raised Rs 403 crore of equity through share sales to institutional investors that helped pare government holding marginally from 93.33 per cent.

The bank restructured loans worth Rs 1181 crore in the quarter under review, taking the total restructuring of standard loans to Rs 6,000 crore. The micro small and medium enterprise (MSME) borrowers accounted for about Rs 2400 crore of loan restructuring while restructuring of retail loans amounted to Rs 2,077 crore and corporate loans amounted to Rs 1000 crore. The balance amount is related to the farm sector.

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Bank of Maharashtra(BoM) Q4 results: Net profit jumps nearly three times

 

State-owned Bank of Maharashtra reported nearly three times jump in net profit for the fourth quarter at Rs 165 crore owing to the rise in net interest income and recovery from written off accounts which more than offset the additional Rs 508 crore provision to cover the pandemic-related risks.Its net profit was Rs 57 crore in the year ago period.

The bank is expecting to grow its credit book by around 15% this year, as against the 13% rise seen last year, and will be looking to raise equity to support credit expansion. The size of equity raising for the full year has not been firmed up while the bank’s board has created an enabling resolution to raise up to Rs 5,000 crore. Its advances portfolio stood at Rs 1.08 lakh crore.

Bank managing director AS Rajeev attributed the sharp rise in net profit to “all round performance”. He expressed hope that the impact of the second wave might not be severe like last year, when the economic activities plummeted amid prolonged national lockdowns.

Its operating profit grew 2.6 times at Rs 1,540 crore from Rs 595 crore in the year ago period, supported by 35% rise in net interest income at Rs 1,383 crore. Net interest margin, a parameter to gauge profitability, improved to 3.1% for the quarter under review as against 2.4% in the year ago period.

The lender recovered Rs 738 crore from errant borrowers and this includes recovery from written off accounts. Recovery from written off accounts adds to the profit as these were fully provided for.

The bank’s fee based income rose 22% to Rs 315 crore while other income jumped 86% to Rs 727 crore.

Its asset quality improved with gross non-performing assets ratio falling to 7.23% at the end of March against 12.81% a year back. Net NPA was 2.48%, improved from 4.77% over the same period. It has however made 44% higher provision at Rs 1,311 crore which includes taking additional cover against the possibility of further economic stress on account of the second wave of pandemic.

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Government is considering mid-sized to small banks for its first round of privatisation.

Government has shortlisted four mid-sized state-run banks for privatization, under a new push to sell state assets and shore up government revenues, three government sources said.

Privatisation of the banking sector, which is dominated by state-run behemoths with hundreds of thousands of employees, is politically risky because it could put jobs at risk but Prime Minister Narendra Modi's administration aims to make a start with second-tier banks.

The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India, two officials told Reuters on condition of anonymity as the matter is not yet public.

Two of those banks will be selected for sale in the 2021/2022 financial year which begins in April, the officials said. The shortlist has not previously been reported.

The government is considering mid-sized to small banks for its first round of privatisation to test the waters. In the coming years it could also look at some of the country's bigger banks, the officials said.

The government, however, will continue to hold a majority stake in India's largest lender State Bank of India, which is seen as a 'strategic bank' for implementing initiatives such as expanding rural credit.

A finance ministry spokesman declined to comment on the matter.

India's deepest economic contraction on record caused by the pandemic is driving the push for bolder reforms, economists say.

Government also wants to overhaul a banking sector reeling under a heavy load of non-performing assets, which are likely to rise further once banks are allowed to categorise loans that soured during the pandemic as bad.

PM Modi's office initially wanted four banks to be put up for sale in the coming fiscal year, but officials have advised caution fearing resistance from unions representing the employees.

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Another Privatisation news- Two of these three banks are likely privatisation candidates

The market is betting on Punjab & Sind Bank, Bank of Maharashtra and Bank of India as the likely candidates for the finance minister’s ambitious bank privatisation plan. In her Budget speech, finance minister Nirmala Sitharaman said the government planned to privatise two sate-run banks, other than IDBI Bank. Analysts believe that the likely candidates will be from the pool of banks which were not part of the merger process. The government had earlier allowed merger of 13 banks into five banks.

Anil Gupta – vice-president and sector head, financial sector ratings, ICRA, said Punjab and Sind Bank and Bank of Maharashtra looked probable candidates for privitisation. Of the six banks kept out of merger, Indian Overseas Bank, Central Bank and UCO Bank are under PCA (prompt-corrective action), he explained. The Reserve Bank of India had kept the three banks in the PCA framework after a massive asset quality deterioration, losses in the books and lower capital levels. Gupta said PCA banks were unlikely to be offered for privatisation due to poor investor demand.

Leaving State Bank of India and five merged banks, there are six public sector banks in the banking system. The six banks include Bank of India, Punjab and Sind Bank, Bank of Maharashtra, Indian Overseas Bank (IoB), Central Bank of India and Uco Bank. Gupta also said the government was unlikely to consider privitisation of Bank of India due its large size. “The government may want to test the water with smaller banks first,” he added.

According to JM Financial, “While the details are awaited, we believe the most likely candidates will be from the pool of banks which were not part of consolidation. While these candidates are small and are not expected to provide any material resources to the government, we believe that this is a step in the right direction and can act as a test case for privatisation of other major public sector banks in future.”

In a note to its clients, Kotak Institutional Equities said the task of privatising two PSU banks may be difficult to achieve but could result in more privatisations, if successful. Lack of interest among potential buyers remains a key concern given the structure of these banks, Kotak said.

In an interview with CNN News 18, Niramala Sitharaman said the government wanted more public sector banks which are functionally strong, professionally managed and can meet the demands of growing aspirational India. “If I am going to be sitting around with such public sector banks which are just not in a mood or a position to stand up, is it right to pour tax-payers money into such banks? When there may be buyers who can buy and run it efficiently,” she said.

The government has proposed to introduce required legislative amendments for privatisation of two PSBs in the Budget session itself.

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Bank of Maharashtra (BoM) Q3 net profit up 14%

Bank of Maharashtra (BoM) on Tuesday reported 13.91% year-on-year growth in net profit for the quarter ended December 2020 to Rs 154 crore. The rise in net profit was driven by 10.12% y-o-y growth in net interest income to Rs 1,306 crore coupled with net interest margin (NIM) improving to 3.06%. BoM MD & CEO AS Rajeev said it was for the first time in four years that the bank had crossed the NIM of 3%.

The bank’s gross NPAs as on December 31, 2020, were 7.69% against 16.77% on December 31, 2019, while net NPAs reduced to 2.59% in the quarter under review against 5.46% in the same period last year. The bank has made a cumulative Covid-19 provision of Rs 955 crore. According to the Supreme Court order, the bank has not classified these accounts as NPAs but had made additional provision of Rs 150 crore, of which Rs 30 crore was in the third quarter.

Its cost to income ratio had gone down slightly and this was mainly because of a one-time expenditure of Rs 230 crore on wage arrears payable to retired employees and retirement benefits contribution, which was completely absorbed in the December quarter, the MD said.

Rajeev said the bank’s CASA deposits improved by 300 basis points to 50.91%, while provision coverage ratio improved to 90%. There was 22% growth in the retail, agriculture and MSME advances during the quarter. BoM’s retail advances grew 28.89% to Rs 27,540 crore while MSME advances were up 26.31% to Rs 20,304 crore during the quarter under review. According to the MD, this was not just pent up demand or festival sales. The bank expects growth in retail loans to continue in the fourth quarter of FY21 and even improve further. Banks have benefitted from the withdrawal of NBFC from the market, Rajeev said. This has helped in retail growth, so compared to 16%-18% growth last fiscal year, they had seen 26% to 28% growth in the retail loans this year, he added. He expects the NBFCs to bounce bank once the Covid situation is over, but this window of opportunity is available to the banks for another five to six months, he said.

In addition to growth in retail demand, investment in infrastructure and new projects had started pouring in, adding to the optimism, he said. With the government’s PLI scheme, the BoM MD expects a 2-3% increase in the share of corporate loans. Corporate loans now account for 40% of the bank’s advances.

The BoM board has already approved capital raising plans with Rs 2,000 crore to be raised through bonds and Rs 1,000 crore through equity, Rajeev said. During Q4FY21, the bank would look at raising either Tier -I or Tier-II capital of Rs 500 crore through bonds to be utilised next year, he said. They will look at raising equity next year, depending on the situation.

The bank’s total business increased 13.15 % to Rs 2,66,875 crore with total deposits increasing 14.08% to Rs 1,61,971 crore and gross advances were up 11.74 % to Rs 1,04,904 crore. The bank’s net revenues in Q2FY21 grew 15% on y-o-y basis to Rs 1,572 crore.

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Eye on this PSBs to be privatise: Govt mulls corporate, foreign bank participation

 

Indian policymakers are discussing ways to open up the banking sector via easing norms for corporate and foreign bank participation in acquiring public sector banks that the central govt is looking to privatise, sources with knowledge of the matter told ET Now.

Currently, industrial houses that have less than 60% of their turn over from non-financial entities are not allowed to apply for bank licences and their equity participation is also limited to 10%, as regulators have feared that this could risk financial stability because of the propensity of the corporates to milk banks for ‘self-loans.’

ET Now learns that there’s a rethink on the existing policy between policymakers even as the discussions are at an “early stage”. Sources say the government and the central bank may move with “abundant caution” and will take into account global experience and prior experience as well. 

Greater regulatory vigilance in terms of preferring corporate players with a long term 10-year business plan, “Fit & Proper Criteria” for corporate participation for taking equity in banks, tighter norms for related party transactions could be put in to ensure no excessive concentration or risks to financial stability. 

"We need to open up the banking system but the move will be designed with “abundant caution” and will need stonewalling from misuse. Opening up banking sector will come with greater regulatory vigilance on banks, fin institutions," one of the officials told ET Now.

Policymakers are also discussing allowing foreign banks with Indian subsidiaries to participate in buying government stake when state-owned banks like Central Bank of India, Bank of India, Punjab and Sind Bank, IOB and UCO Bank are privatised. 

The banking sector has been plagued with rising bad loans leading to decline in capital adequacy ratios and in some cases failure. Recently, Yes Bank was saved through government and RBI intervention when SBI lead consortium infused more capital into the private lender to save it from bankruptcy. Last week the government and RBI had to intervene to aid the rescue of Lakshmi Vilas Bank by the Indian subsidiary of DBS Bank, a move that reflected a change in thinking of the central bank and the government. 

Besides DBS, there are only one other foreign bank that has Indian subsidiaries -- SBM Bank. SBM Bank (India) Limited (Subsidiary of SBM Group) and DBS Bank India Limited have been issued licence on December 6, 2017, and October 4, 2018, respectively for carrying on banking business in India through a wholly-owned subsidiary. 

The widening of this move to allow foreign banks to buyout public sector banks when the government decides to privatise them will not only increase competition in the sector leading to efficiency but will also make a paradigm shift in the sector. The larger aim is to make Indian banks globally competitive. 

The discussion on this is at early stage but the policy could be timed with the government's larger privatisation policy that will allow selling of some Indian public sector banks. Bank of India, Central Bank of India, Bank of Maharashtra, Punjab & Sind Bank are some of the state-run lenders that the government is looking to privatise.

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Bank of Maharashtra Q2 profit up 13% on higher interest income, lower provisioning

 

Bank of Maharashtra on Monday reported 13.44 per cent growth in standalone net profit at Rs 130 crore for September quarter, helped by lower provisioning and higher interest income. “The bank logged a profit after tax of Rs 115 crore in the second quarter of 2019-20. On a consolidated basis, its profit stood at Rs 130.44 crore, compared to Rs 115.15 crore in the year-ago period.”

“Profit increase was mainly due to the net interest income (NII), which grew by around 5 per cent. There was considerable reduction in operating expenses by around Rs 75 crore. Provisions have also come down as asset quality improved,” Managing Director and CEO A S Rajeev told reporters.

He said the bank had an interest reversal of Rs 300 crore which it kept as provisions in the second quarter for COVID-19 and for some of the accounts that were not classified as NPA. Rajeev said had the bank not kept aside the interest reversal amount as provisions, NII growth would have been 14-15 per cent in the second quarter.

Net interest margin stood at 2.62 per cent for the quarter as against 2.77 per cent in the year-ago quarter. Rajeev said, “so far the bank has restructured 800 small accounts, including MSMEs, worth Rs 40 crore, under the Reserve Bank of India’s one-time restructuring scheme for accounts affected by COVID-19 related stress.” It has restructured 25 MSME accounts worth Rs 4-5 crore. For the corporate loans, the lender received two applications, of which one is not eligible.

“The other application of amount (bank’s exposure) Rs 200 crore is pending. It is a consortium account and a decision will be taken at the consortium level,” he said. “Gross NPA reduced to 8.81 per cent from 16.86 per cent. Net NPA declined to 3.30 per cent as against 5.48 per cent. Total provisions stood at Rs 676 crore as against Rs 637 crore. Provision for NPAs was Rs 43 crore as against Rs 404 crore.” Provision Coverage ratio improved to 87.15 per cent as compared to 82.71 per cent. The bank holds cumulative COVID-19 provision including interest of Rs 925 crore (out of which Rs 500 crore provision was made in the second quarter).

“In pursuance of the Supreme court order, the bank has not declared those accounts as NPA which were not declared NPA till August 31, 2020.” As a matter of prudence, the lender made additional provision of Rs 120 crore. Capital adequacy stood at 13.18 per cent with common equity tier 1 ratio of 10.31 per cent as at end-September. The bank’s total deposits grew 12.15 per cent year-on-year to Rs 1,58,626 crore. Gross advances rose 13.13 per cent to Rs 1,03,408 crore.

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