Bank of Maharashtra — Q4 FY25 earnings call

Call held 25 Apr 2025

Management summary

Bank of Maharashtra delivered a strong Q4 and FY25 performance, showcasing consistent growth across business, asset quality, and profitability metrics. The bank reported a 36% YoY increase in net profit for FY25 to ₹5,520 crore, with NIM improving to 4% and ROA to 1.75%. Asset quality saw significant improvement with GNPA at 1.74% and NNPA at 0.18%. Management provided conservative guidance for FY26, focusing on maintaining asset quality and profitability despite potential NIM pressures from rate cuts.

Highlights

  • Total business grew by 15.30% YoY to ₹5,47,000 crore.

  • Total deposits increased by 13.44% to ₹3,07,000 crore, and advances grew by 17.76% to ₹2,40,000 crore.

  • Net profit for the full year increased by 36% to ₹5,520 crore.

  • Net Interest Margin (NIM) for FY25 improved by 8 bps YoY to 4%, with Q4 NIM at 4.01%.

  • Asset quality significantly improved with Gross NPA at 1.74% and Net NPA at 0.18%, while PCR was maintained at 98.3%.

  • Cost-to-income ratio improved by 22 bps YoY to 38.5%, and ROA increased by 25 bps YoY to 1.75%.

Concerns

  • The auditor's emphasis note #4 highlighted inadequacy of independent directors, leading to some regulations being invoked, though management stated it's a transition phase and not unique to the bank.

  • Potential NIM contraction in a falling interest rate scenario, acknowledged by management with a conservative guidance of 3.75% for the next year.

  • Concentration of growth in Q4 FY25, though management attributed it to typical Q4 seasonality and macro events like elections.

Key financials

2 periods

Headline

  • Total Business
    ₹5.47L Cr
    YoY +15.3%
  • Total Deposits
    ₹3.07L Cr
    YoY +13.4%
  • Advances
    ₹2.40L Cr
    YoY +17.8%
  • Net Profit (FY)
    ₹5,520 Cr
    YoY +36%
  • Operating Profit (FY)
    —
    YoY +16%
  • NIM (FY)
    4%
  • ROA (FY)
    1.8%
  • GNPA
    1.7%
  • NNPA
    0.18%
  • PCR
    98.3%
  • Cost-to-Income
    38.5%
  • CRAR
    20.5%
  • CET1
    16%
  • LCR
    127%
  • GOI Holding
    79.6%
  • Yield on Advances
    9.3%
  • Pool Buyout Outstanding (31st March)
    ₹12,998 Cr

Q4

  • Operating Profit
    ₹2,520 Cr
    YoY +14%
  • NIM
    4%

What they filed

Q1 FY27: revenue up 13.9%, net profit up 34.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue6,017 6,325 6,731 7,054 7,128 +18%7,344 +16%7,755 +15%8,035 +14%
Net profit1,333 1,412 1,502 1,504 1,669 +25%1,799 +27%2,045 +36%2,023 +35%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • RAM Corporate Ratio
    62.4% Ratio
  • Corporate Book
    15% Growth
  • Retail (within RAM)
    25% Growth
  • Home Loan
    30% Growth
  • Car Loan
    47% Growth
  • Gold Loan
    56% Growth

Capital allocation

high confidence
  • Dividend ₹1.5/share (final)
    Given this opportunity, we have also in today's Board recommended a dividend of 15% and of course, this proposal has to be approved by the AGM.
  • Liquidity Liquidity disclosed LCR stands at 127%.
    LCR stands at 127%.

Guidance & targets

Profitability

  • NIM Profitability · next year · Medium confidence 3.75%
    We are again going to keep a conservative guidance for NIM for the next year at 3.75%.

    — Nidhu Saxena

  • ROA Profitability · next year · Medium confidence 1.75%
    My guidance for ROA is 1.75%, which we would like to maintain for the next year.

    — Nidhu Saxena

Credit Growth

  • Advances Growth Credit Growth · next year · Medium confidence around 17%
    For advances, we are keeping a guidance at around 17%.

    — Nidhu Saxena

Deposit Growth

  • Deposits Growth Deposit Growth · next year · Medium confidence around 14%
    For deposits, we are keeping around 14%.

    — Nidhu Saxena

Deposit Mix

  • CASA Ratio Deposit Mix · next year · Medium confidence above 50%
    CASA will be maintained above 50%.

    — Nidhu Saxena

Asset Quality

  • GNPA Asset Quality · next year · Medium confidence below 2%
    GNPA has again seen a reduction, and has come down to 1.74%, but guidance is to maintain it below 2%.

    — Nidhu Saxena

  • Credit Cost Asset Quality · next year · Medium confidence below 1%
    and the credit cost to maintain below 1%.

    — Nidhu Saxena

Efficiency

  • Cost-to-Income Ratio Efficiency · next year · Medium confidence below 40%
    The guidance, again for cost to income is to maintain it below 40%.

    — Nidhu Saxena

Branch Expansion

  • New Branches Branch Expansion · 5 years · High confidence 1,000 branches
    Going forward, we have approval from the Board to open 1,000 branches in 5 years at the rate of 200 to 220 in the next 12 months.

    — Nidhu Saxena

Capital Raise

  • QIP Capital Raise · during the year · Medium confidence ₹7,500 crore
    Sir, on the capital raise, you have got the approval of INR7,500 crore for the QIP and INR10,000 crore for the long-term bonds. What is the plan, sir, there, as this rate of the stock, which in spite of the good result today has also not yet responded, which I feel would do? Would you be comfortable immediately coming in this quarter, this April, June quarter for the QIP or a part of it?

    — Nidhu Saxena

  • Long-term Bonds Capital Raise · during the year · Medium confidence ₹10,000 crore
    Sir, on the capital raise, you have got the approval of INR7,500 crore for the QIP and INR10,000 crore for the long-term bonds.

    — Nidhu Saxena

What to watch in Q1 FY26

NIM trajectory

next quarter
Current 4.01% (Q4 FY25), 4% (FY25)
Target Maintain around 3.75% as per guidance

Why it matters

NIM is a key profitability driver, and its sustainability in a falling interest rate environment is crucial.

We are again going to keep a conservative guidance for NIM for the next year at 3.75%.

Risks & concerns

  • Inadequacy of independent directors

    medium

    Auditor's emphasis note #4 highlighted this; management stated it's not unique to BoM and is a systemic issue for PSU banks, with an outcome awaited for two directors since December.

    Analyst downplayed

  • NIM contraction due to falling interest rates

    medium

    Management acknowledged the potential for NIM compression due to two recent rate cuts and provided a conservative guidance of 3.75% for the next year, down from current 4%.

    Analyst acknowledged

  • Concentration of business growth in Q4

    low

    Analysts questioned the sustainability of high Q4 growth; management explained it's typical for the industry and influenced by macro events like elections, but emphasized focus on core, sustainable business.

    Analyst downplayed

Q&A highlights

4 direct, 1 evasive
Source of credit growth (branches vs. DSAs) Direct
As I said, we have 500-plus branches and the new business that is coming into the bank, is mostly from my existing set of branches and these new branches, which have been identified to be opened in potential growth centres. They are contributing in a significant manner to the bank's business.

Clarifies that the bank's growth is primarily organic and branch-led, indicating a sustainable and quality-focused approach rather than relying on third-party originators.

Asked by Jai Mundhra

Sustainability of Q4 growth concentration Partial
As regards our feeling regarding the growth is happening only or majorly in the last quarter is not something very unusual in terms that you will see that Q1, Q2, Q3, Q4, in the entire industry, if you look at the data at the industry level or even at the individual bank level, you will see that the Q4 is the highest performing quarter for any bank for any matter.

Addresses concerns about the high growth in Q4 by explaining it's a typical industry trend and also influenced by macro events like elections, but emphasizes the focus on core, sustainable business.

Asked by Ashok Ajmera

Restructuring of standard advances in corporate book Direct
For two accounts it is only DCCO extension. Nothing alarming there. Only because of DCCO extension in two accounts, that number has gone out. ... Both are infra projects. Due to land issues, the DCCO got extended.

Provides specific details on the nature of restructuring, clarifying it's limited to two infra accounts due to DCCO extension, alleviating concerns about broader asset quality issues.

Asked by Ashok Ajmera

Plans for capital raise (QIP and long-term bonds) Partial
When we begin our financial year, we make our assessment of the capital requirements for the full financial year. This is a process being the beginning year of Board meeting, along with results, we have moved this paper, but there is a process which will follow after this. We have to go to shareholders, AGM and then government and get the approval.

Outlines the procedural steps for the capital raise and indicates that the timing and mode will be decided later in the year, with a key motivation being to reduce government holding below 75%.

Asked by Ashok Ajmera

NIM outlook in a falling interest rate scenario Direct
We are again going to keep a conservative guidance for NIM for the next year at 3.75%. If we see aggressive rate cuts, maybe like other banks, we may be also taking a conscious call to review the guidance. As of now, after achieving 4% and maintaining this level of 3.95% to 4% for the past four quarters, around 3.75% is the guidance I'm keeping for myself for the next year.

Management acknowledges potential NIM pressure from rate cuts but provides a conservative guidance, indicating awareness and proactive management of this key profitability metric.

Asked by Pinaki Banerjee

Impact of branch expansion and hiring on cost-to-income ratio Direct
If you see the cost to income for this financial year, it is 38.5%, which again, when we compare and look at peers and other banks in the industry, including the private banks, is the best in the industry in this parameter along with some other 20 parameters that we compare ourselves with every quarter. My cost to income has reduced by 22 bps year-on-year. Yes, with the new branch opening, this opex is bound to increase, but what I have seen that with the new incremental business revenues that we are generating we are also able to find some traction in the income contributing element of it.

Explains how the bank plans to manage rising operating expenses from expansion by leveraging incremental business revenues, aiming to maintain the cost-to-income ratio below 40%.

Asked by Darshil Jhaveri

Auditor's emphasis note on independent directors Evasive
With regards to the independent directors, this is not anything unique to us. Since the government is engaged in providing independent directors to all the PSU entities, so the entire BFSI space is impacted. Since December, we are awaiting the outcome for two of our independent directors. I would not like to comment on that part.

Highlights a potential governance concern flagged by auditors, with management acknowledging the issue but providing limited specific details, suggesting it's a systemic PSU bank issue rather than unique to BoM.

Asked by Ashok Ajmera

Utilization of COVID provision buffer for higher profit Partial
I will give you the answer to that investment AFS gain. Deliberately, we have not written about that gain, but since we are expecting that RBI will come with the cut and it has happened. We were expecting that there will be good profit, further appreciation, at the time we can encash that. You can see that though we got the benefit in capital, AFS is a gain, it will be part of capital.

Reveals management's strategic decision to hold onto the COVID provision buffer and AFS gains, anticipating future opportunities to convert them into trading profit, indicating a cautious approach to capital management.

Asked by Ashok Ajmera

2 min read 6 chapters

Detailed narrative

Robust Financial Performance in FY25

Bank of Maharashtra reported a strong financial year, with total business growing by 15.30% year-on-year to ₹5,47,000 crore. This was driven by a 13.44% increase in total deposits to ₹3,07,000 crore and a 17.76% rise in advances to ₹2,40,000 crore. The bank's net profit for the full year surged by 36% to ₹5,520 crore, while operating profit for Q4 grew by 14% to ₹2,520 crore.

Significant Improvement in Asset Quality and Profitability

Asset quality saw substantial improvement, with Gross NPA declining to 1.74% and Net NPA reducing to 0.18%. The Provision Coverage Ratio (PCR) was maintained at a healthy 98.3%. Profitability metrics also strengthened, with the Net Interest Margin (NIM) for FY25 improving by 8 basis points year-on-year to 4%, and the Return on Assets (ROA) increasing by 25 basis points to 1.75%. The cost-to-income ratio also saw a 22 basis points reduction to 38.5%.

Strategic Branch Expansion and Core Business Focus

The bank emphasized that its growth is primarily driven by its core branches, with new business largely originating from existing and newly opened branches. Over the last three years, the bank opened over 500 branches and plans to open another 1,000 branches in the next five years, at a rate of 200-220 per year. This strategy aims for sustainable growth, with a conscious effort to maintain asset quality and avoid aggressive third-party sourcing.

Capital Adequacy and Future Capital Raise Plans

Bank of Maharashtra maintains a healthy capital position with a CRAR of 20.53% and CET1 of around 16%. The bank has received approval for a Qualified Institutional Placement (QIP) of ₹7,500 crore and long-term bonds of ₹10,000 crore. The management stated that the timing and mode of this capital raise would be decided during the year, with a key motivation being to reduce the Government of India's holding from the current 79.6% to below 75% as per SEBI requirements.

Segmental Growth and Infrastructure Exposure

The bank's RAM (Retail, Agri, MSME) segment showed healthy growth, with retail growing by 25% year-on-year, home loans by 30%, car loans by 47%, and gold loans by 56%. The corporate book also grew by 15% year-on-year, maintaining a RAM corporate ratio of 62.38%. The bank's exposure to the infrastructure sector is primarily in renewables and HAM (Hybrid Annuity Model) projects, with management focusing on profitable opportunities and high-quality borrowers.

Conservative Guidance for FY26

For the next financial year, the bank provided conservative guidance, aiming to maintain NIM at 3.75%, advances growth at around 17%, and deposits growth at around 14%. The bank also targets to maintain its CASA ratio above 50%, ROA at 1.75%, GNPA below 2%, and credit cost below 1%. The cost-to-income ratio is expected to be maintained below 40%, reflecting a continued focus on efficiency and profitability.

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