The Bank of Maharashtra (BoM) has reported an impressive 36% year-on-year growth in net profit for the third quarter ending December 2024, totaling ₹1,406 crore. This growth reflects the bank’s focus on maintaining high asset quality, adopting rigorous underwriting standards, and executing a balanced growth strategy.
Key Financial Highlights
- Net Profit: The bank achieved a 36% increase in net profit, driven by higher net interest income and better cost efficiency.
- Operating Profit: Operating profit rose by 14.5% year-on-year, reaching ₹2,303 crore for the December quarter.
- Advances and Deposits: Gross advances grew by 21% year-on-year to ₹2.29 lakh crore, while total deposits increased by 13.5% to ₹2.79 lakh crore.
- Net Interest Margin (NIM): The NIM, a critical measure of profitability, stood at a robust 3.79%, reflecting efficient capital deployment.
Focus on Asset Quality
The bank’s Managing Director, A.S. Rajeev, attributed the strong performance to its emphasis on asset quality. He stated, “We have adopted stringent underwriting standards to ensure the quality of advances. While this approach might moderate growth, it ensures long-term sustainability.” The gross non-performing asset (NPA) ratio improved to 1.66%, down from 2.94% a year ago, highlighting the bank’s effective risk management strategies. The net NPA ratio also decreased to 0.27%, one of the lowest in the industry.
Capital Adequacy and Expansion Plans
BoM’s capital adequacy ratio under Basel III stood at a healthy 16.56%, providing ample room for future growth. The bank announced plans to raise ₹2,500 crore through a Qualified Institutional Placement (QIP) in the next fiscal year. This move aims to reduce the government’s shareholding from the current 79.6% to below 75%, aligning with regulatory norms.
Rajeev emphasized, “The capital raise will further strengthen our financial position and support the bank’s expansion initiatives. However, we are already well-capitalized to sustain our current growth trajectory.”
Technology and Digital Initiatives
The Bank of Maharashtra has been investing heavily in technology to improve customer service and operational efficiency. Its focus on digital transformation has led to an increase in the number of digital transactions, contributing to better cost management. The bank plans to introduce new digital products and services to cater to the evolving needs of its customers, particularly in retail and small and medium enterprises (SMEs).
Comparison with Industry Peers
BoM’s performance stands out in the public sector banking space. While many banks focus on aggressive growth, BoM’s strategy of balanced expansion with a strong emphasis on underwriting standards has proven effective. The bank’s low NPA levels and high NIM make it a frontrunner among public sector banks, providing a template for others to emulate.
Economic Impact
The bank’s robust financial performance comes at a time when the Indian economy is witnessing steady growth, driven by strong credit demand across sectors. BoM’s ability to grow its advances while maintaining asset quality reflects its crucial role in supporting economic activities, particularly in infrastructure, agriculture, and MSME sectors.
Future Outlook
Looking ahead, the Bank of Maharashtra plans to expand its retail and corporate banking portfolios while ensuring a continued focus on asset quality. With its strong financial foundation, the bank aims to maintain its leadership position in the public sector banking space.
Rajeev concluded, “Our strategy remains focused on sustainable growth. By maintaining a disciplined approach to risk management and leveraging technology, we aim to create long-term value for our stakeholders.”
Conclusion
The Bank of Maharashtra’s stellar performance in Q3 FY24 underscores the effectiveness of its balanced growth strategy, rigorous underwriting standards, and focus on asset quality. As the bank prepares for future growth, its commitment to financial prudence and innovation positions it as a key player in India’s banking sector
