MAHABANK - Bank of maharashtra Share Price

In the earnings conference call held on July 15, 2025, management provided a positive outlook for Bank of Maharashtra, highlighting a consistent performance over the past three to four years. The bank reported a total business of INR 5.46 lakh crore, registering a year-on-year growth of 15%. They guided for total business growth of 15% for FY2026, with advances expected to grow by 17% and deposits by 14%.

Key takeaways from management included:

1. Branch Expansion: The bank aims to open 1,000 branches over the next five years, with a target of opening 321 branches within the next 18 months. This initiative, termed "Project 321," is focused on potential growth centers identified through meticulous data analysis.

2. Sustainable Growth: The management emphasized the importance of sustainable and profitable growth. They reported leading the industry in 18 out of 26 performance metrics, including ROA, ROE, and capital adequacy.

3. NIM and Profitability: Despite a slight decline in Net Interest Margin (NIM) from 4% to 3.95%, the management is targeting a conservative guidance of 3.75% for FY2026. They attributed the stability in NIM to a high CASA ratio above 50% and conscious avoidance of high-cost deposits.

4. Technological Enhancements: A revamp of the mobile banking application is in progress to attract new clients and improve user experience, expected to launch within a month.

5. GIFT City Initiative: The bank received regulatory approval for opening a GIFT City International Banking Unit, anticipated to be a significant driver for new business by Q2 FY2026.

6. Asset Quality and Provisioning: Management maintains a strong provision coverage ratio (PCR) of 98.36% and targets slippage ratios below 1%. They noted higher slippages at INR 727 crore this quarter but indicated confidence in managing agricultural sector performance going forward.

Overall, management's emphasis on growth, technology, sustainability, and strategic initiatives positioned Bank of Maharashtra favorably in the industry landscape.

1. Question: "Sir, I wanted to understand the NIM movement this quarter because we have done a good job on NIMs. On the yields, what was the benefit that came from MCLR, how much was the impact from repo cut and what was the benefit of the NIM mix change?"

   Answer: Our NIM achieved in Q1 was 3.95%, with previous guidance for the year set at 3.75%. 40% of our loan book is linked to repo rates. The recent rate cuts reduced our NIM by about 18-19 bps. However, we offset this with a CASA ratio maintained above 50% and a conscious strategy to avoid high-cost deposits, which helped cushion the NIM impact. Going forward, we aim to maintain profitability alongside growth.

2. Question: "On the yields also, despite the compression from repo, we have been able to maintain almost flattish Q-on-Q yield on advances. Does the MCLR movement explain the entire thing? Or is there also a component of loan mix change?"

   Answer: The average yield on advances was 9.28%. We focused on profitability in every transaction, and our Gold Loans grew significantly, helping maintain margins. We avoided lower-rated loans, focusing on profitable relationships. This careful approach mitigated yield decline, and I believe our strategy will help us maintain competitive yields going forward.

3. Question: "Understood. I mean, while your cost of deposit has come down, I think your cost of fund has not. Is this opportunistic in nature?"

   Answer: Yes, our overall cost of funds has decreased by 4 bps, but not as sharply as deposits, which fell by 15 bps. We've strategically raised funds through infrastructure bonds to refinance high-cost assets, ensuring cost efficiency. Our aim is to keep borrowings under control and rely less on high-cost deposits while optimizing our NIM effectively.

4. Question: "Sir, you still maintain the trading guidance of 17%, despite a muted quarter. Do you think you will achieve these numbers?"

   Answer: We reported a 15% year-on-year growth in total business, reaching INR 5.46 lakh crore. We have strategic plans for new branches and markets, including the GIFT City initiative, which will significantly contribute to growth. I firmly believe we can reach our guidance of 15% total business growth and 17% in advances this fiscal year.

5. Question: "What is your normalized slippage ratio guidance for FY 2026 as well as credit cost guidance?"

   Answer: Our guidance is to maintain a slippage ratio below 1% and credit cost at around 1%. My current net non-performing assets (NNPA) stand at 0.18%, with a provision coverage ratio (PCR) at 98.36%. We're actively managing our portfolio to mitigate risks and expect to maintain these targets for the fiscal year.

6. Question: "Could you time line the QIP plans for this year?"

   Answer: We currently have a CRAR of 20.5%, above the regulator's recommended level. While we maintain a healthy CRAR, there's no immediate need for capital raise. We've approval for INR 7,500 crore for debt and equity but will consider this at an opportune time, focusing on strengthening our financial stability first.

7. Question: "What would our outstanding AFS reserves be as on 30th June?"

   Answer: Our AFS reserves, which were transferred to capital, stand at approximately INR 497 crore. We have not yet exercised the option to sell any held-to-maturity assets, and we'll evaluate this decision based on prevailing market conditions.