Analyst Concall
Bank of Maharashtra sees industry-leading NIM of 3.75% FY26
This story was originally published at 20:37 IST on 15 July 2025
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--Bank of Maharashtra: Mindful how new business is impacting bottomline
--CONTEXT: Comments by Bank of Maharashtra mgmt in post-earnings analyst call
--Bank of Maharashtra: Expect to get business in GIFT City branch from Q2
--Bk of Maharashtra: Will keep fundraising to not rely on high-cost deposits
--Bank of Maharashtra: No decision on timing of board-approved QIP
--Bank of Maharashtra: No immediate case to raise capital as buffers high
NEW DELHI/MUMBAI – Bank of Maharashtra is mindful of seeking profitable new business and will try to protect its net interest margin at industry-leading levels despite policy rate cuts, the bank's management told analysts Tuesday after its June quarter earnings. The state-owned bank posted a NIM of 3.95% in Apr-Jun and guided for a margin of 3.75% in 2025-26 (Apr-Mar).
"In fact, with 3.75%, we again lead the industry," Managing Director and Chief Executive Officer Nidhu Saxena said. "The next (bank's) number (NIM) could be, if I'm not wrong, 3.5% or 3.6%. So that's how we differentiate ourselves in this NIM metric also."
The bank's net interest margins have shrunk marginally since the March quarter after the Reserve Bank of India's Monetary Policy Committee cut the repo rate by 100 basis points between February and June. The management said that only 40% of the bank's loans are linked to external benchmarks like the repo rate, and around 55% are based on the marginal cost-of-funds-based lending rate. The loans based on MCLR will reprice only in the next two quarters, and borrowers are locked into high rates of interest agreed in 2024, the management said.
Bank of Maharashtra is also mindful of the impact on the bottom line when seeking fresh business, the management said. The bank's total business grew by 14.6% on year to INR 5.46 trillion as on Jun. 30. The bank is likely to start getting business from its branch in Gujarat International Fin-Tec City in the September quarter, after receiving regulatory approval in February, the management said. This would likely be in the form of global syndication and external commercial borrowing transactions for old corporate clients, the management said.
The bank has been aggressive in seeking current-account-savings account deposits, with the guidance for the share of low-cost deposits at over 50% in 2025-26 (Apr-Mar), similar to 50.07% as on Jun. 30. Instead of rolling over high-cost bulk deposits, the management said it prefers raising resources through borrowings to fund credit growth at a time when the cost of borrowing has become cheaper. This was also protecting the bank's margins, they said.
Earlier Tuesday, the public sector bank reported that its net profit for the June quarter rose over 23% on year and 6.7% sequentially to INR 15.93 billion. Its net interest income rose nearly 18% on year to INR 32.92 billion. The bank reported its earnings during market hours and shares ended 1.9% higher at INR 57.17 on the National Stock Exchange.
Asked about when investors can expect further dilution of the government's stake, the management said it has received board approval for the dilution, but it is yet to take a decision on when to hit the market. The board had approved raising INR 75 billion through debt and equity. Noting the bank's capital adequacy ratio was over 20% as of the June quarter, Saxena said there was no immediate need to raise capital.
The government had, in August 2024, allowed five public sector banks, including Bank of Maharashtra time till Aug. 1, 2026, to meet the public shareholding norm of 75%. The bank had conducted a qualified institutional placement in September last year, where the government's stake fell below 80%. With only a 4.6% stake sale left to meet the norms, the bank's management said that the optics have changed and it will choose the opportune time and mode for the stake sale.
Meanwhile, the bank said it had reclassified some agricultural and micro, small and medium-enterprise loans as gold loans in the June quarter, which led to the gold loan portfolio surging nearly 60% on year to INR 98.06 billion as on Jun. 30. This was due to the RBI's new norms on classifying loans against gold and silver. However, after the RBI's clarification on Friday, the management said it would reverse the reclassification in Jul-Sept, which is likely to lead to an increase in its agriculture and MSME portfolios on a sequential basis. The RBI Friday said loans against voluntary gold and silver collateral will not be considered a violation of the central bank's collateral norms for agriculture and MSME loans.
As for the high slippages, the management said most of them were from the agricultural portfolio and the bank has already upgraded about INR 2.40 billion of the slippages in the first 15 days of the September quarter. Bank of Maharashtra's slippages in the June quarter rose to INR 7.27 billion from INR 5.92 billion a year ago. End
Reported by Aaryan Khanna and Vidhushi RajPurohit
Edited by Saji George Titus
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