Bank of Maharashtra expects a 25-30% increase in net profit this fiscal year, thanks to strong growth in net interest income (NII) and lower provisions for impaired assets. The Pune-based state-run bank declared a profit after tax (PAT) of ₹1,152 crore in the fiscal year ended on March 31, 2022, compared to ₹550 crore in the previous fiscal year. The strong increase in NII, the difference between the money a bank gets from its lending activities and the interest it pays to depositors, will also drive higher profitability.
“Now, more provisioning (for bad loans) may not be required, which will automatically improve our net profit… I think a 25-30% growth in net profit over the previous year’s will be there this fiscal,” Bank of Maharashtra Managing Director and Chief Executive Officer A S Rajeev told PTI in an interview.
“Our net profit will increase further this fiscal. Last year we had made more provisioning from our operating profit to improve our asset quality. So we have reached the bottom, with net NPA below one% and gross NPA lower than 4%.
“We are optimistic to scale up NII (in FY2023) on account of strong business growth and good asset quality with a target of more than 20% rise over FY2022 to around ₹7,500 crore,” he said.
NII grew by 23.42% on a year-on-year basis to ₹6,044 crore in FY2022, as against ₹4,897 crore in FY2021.
In addition, Bank of Maharashtra will focus on additional routes to increase profitability, such as further issuances of Priority Sector Lending Certificates (PSLCs). Because of the issuing of PSLCs, the lender was able to improve its operating profit by ₹250 crore last year, he said.
Net Interest Margin (NIM) during the year is expected to be above 3%.
In the previous fiscal, the bank’s gross NPA declined to 3.94% from 7.23%. Net NPA reduced to 0.97%, as against 2.48% in FY2021.
In the current fiscal year, it aims to keep net NPAs below 1% and gross NPAs below 3%, according to Rajeev.
In FY2023, recoveries and upgrades are likely to quadruple to ₹3,000 crore, up from ₹1,517 crore last fiscal.
Fresh slippages will be around ₹2,000 crore in 2022. However, slippages will not be from any large ticket loans but mainly from the micro, small and medium enterprises (MSME) segment, he said.
Rajeev remarked that the corporate lending market has seen a lot of traction in terms of credit growth.
“This year, we are looking at a credit growth of around 17 to 18% and deposit growth of 13-15%,” he said.
In the previous fiscal, growth was seen in sectors like pharma, infrastructure, textile, cement and iron ore, which is likely to continue this year as well, Rajeev said.
The lender has a sanctioned pipeline of ₹20,000-23,000 crore in the corporate loans, spread over two-three years. This pipeline is from various sectors, including infrastructure, road projects, manufacturing and pharma.
Its retail loan segment grew at 24% in FY2022 due to growth in housing, vehicle, personal and gold loans, driven by low-interest rates and higher discounts.
“We are expecting to grow at a pace of around 20% in FY 2022-23 in the retail loan portfolio,” he said.
According to Rajeev, Bank of Maharashtra is also promoting credit and deposit growth by adding branches in new areas. It has opened 300 branches in 300 new districts during the last two and a half years, contributing 3-4 percent to overall business growth.
According to Rajeev, the bank plans to boost its branch count to 2,100 by March 2023, up from 2,030 at the moment.