Detailed Narrative
Exceptional Q3 FY26 Performance and Guidance Outperformance
Bank of Maharashtra achieved its highest ever quarterly profit of ₹1,779 crores, contributing to a 9-month net profit of ₹5,005 crores, surpassing the ₹5,000 crores milestone. The bank consistently exceeded its annual guidance, with total business growing 17.24% YoY against a 15% guidance, total deposits increasing 15.3% against 14% guidance, and advances growing 20% against 17% guidance. Profitability metrics were also strong, with ROA at 1.86% (vs 1.75% guidance) and ROE at 23.79% (vs >20% guidance).
Robust Asset Quality and Stress Management
The bank demonstrated significant improvement in asset quality, with Gross NPA reducing to 1.60% from 1.72% in the previous quarter, and Net NPA improving to 0.15% from 0.18%. Both figures are well within the bank's guidance of less than 2% Gross NPA and less than 0.25% Net NPA. Overall stress stood at 3.35%, with SMA1+2 at 1.69%, an 18 bps improvement, indicating effective management of stressed assets.
Strategic Deposit and Funding Mix Optimization
CASA share was maintained above 50% this quarter, with CASA growing 16% YoY. The bank consciously allowed high-cost bulk deposits to degrow by 7% YoY, opting for alternative funding sources such as refinance transactions totaling ₹14,000-15,000 crores at a blended rate of 6-6.5%. This strategy, while contributing to an increased CD ratio of 85%, aims to improve profitability by optimizing the cost of funds. The bank's LCR for Q3 was 116.36%, with an internal guidance to maintain it around 83-84%.
Dynamic Credit Growth and Yield Management
Advances grew 20% YoY, driven by strong performance in the Retail segment, which grew 36% YoY. Key contributors included Home Loans (28% YoY growth), Vehicle Loans (54% YoY growth), and Gold Loans (56% YoY growth). The RAM to Corporate share stood at 63-37, exceeding the 60-40 +/- 2 guidance. Despite a decline in yield on advances to 8.95% (from 9.27% last December) due to regulatory rate cuts affecting 40-42% of the portfolio, the bank aims to maintain NIM at 3.75% by focusing on ancillary business and good-rated borrowers.
MSME and Gold Loan Portfolio Rebalancing
The bank is actively rebalancing its MSME portfolio, influenced by regulatory changes and a strategic focus on higher-quality, better-priced business. This includes centralizing TREDS bill discounting and implementing stricter underwriting standards (no sanctions below CMR 1-5). The total gold loan book, including co-lending, reached ₹22,000 crores, with an average yield of approximately 9%. The bank is expanding co-lending partnerships, particularly in the gold segment, to leverage technology and efficient underwriting processes.
Strategic Branch Expansion for Core Business Growth
Under 'Project 321', the bank plans to open 321 branches in 18 months, with 116 already functional. This initiative is part of a broader strategy to open 1,000 branches over the next five years, focusing on high-growth PIN codes with existing banking potential. The goal is to ensure new branches break even quickly and contribute positively to revenue, offsetting initial operational expenses, thereby sustaining high double-digit growth.
One-off Items and Controlled Cost-to-Income Ratio
The reported treasury loss of ₹180 crores was primarily due to a one-off📎 ₹290 crores hit from the amalgamation of Maharashtra Gramin Bank and Vidarbha Konkan Gramin Bank. Other expenses increased 11% YoY, partly due to a one-off📎 ₹63 crores related to PLC certificates and higher depreciation from asset revaluation and IT capex. Despite these factors, the cost-to-income ratio remained well-managed at 37.19%, staying below the 40% guidance.