Fall in NIM over unless RBI cuts rates further, says Bank of Maharashtra
This story was originally published at 18:59 IST on 14 October 2025
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--Bank of Maharashtra: Most deposits repriced according to rate cuts by RBI
--CONTEXT: Bank of Maharashtra mgmt's comments in post-earnings concall
--Bank of Maharashtra: Have 5 months to reprice MCLR-linked portfolio
--Bank of Maharashtra: NIM seen stabilising in Q3, Q4 if no more rate cuts
--Bank of Maharashtra: Have to provision INR 1 bln-INR 1.25 bln for ECL norms
By Srijita Bose
MUMBAI – The contraction in net interest margin of Bank of Maharashtra due to rate cuts by the Reserve Bank of India's Monetary Policy Committee is seen to be over, provided there are no more rate cuts by the panel in rest of the current financial year, said Nidhu Saxena, the bank's managing director and chief executive officer, at a post earnings press conference Tuesday. The bank has repriced most of its deposits according to the rate cuts so far delivered by the RBI panel in the year, he said.
Bank of Maharashtra's net profit rose 23% on year and 2.5% on quarter to INR 16.33 billion in Jul-Sept. At the end of the September quarter, the net interest margin of the bank was 3.85%, against 3.95% in the previous quarter.
The bank maintained its net interest margin growth guidance of 3.75% for the financial year ending Mar. 31 with the current margins remaining well above the target. "If there are no rate cuts, I think Q3, Q4, (Oct-Mar), we should be able to maintain the NIM at the current levels because the deposits would have reprised," Saxena said.
The bank has increased its share of portfolio linked to the marginal cost of lending rate by 35 basis points over the past 10-12 months, which also helped the bank provide a cushion against the contraction in the net interest margin. Around 51% of the bank's portfolio is linked to marginal cost of lending rate, while around 40% of its portfolio is linked to the RBI's repo rate. Accordingly, the bank said it has around five more months to reprice its portfolio linked to the marginal cost of lending rate after the cuts delivered by the central bank. The RBI's rate-setting panel has so far cut the repo rate by 100 basis points from February through June.
The management further said that the bank will have to set aside INR 1 billion to INR 1.25 billion worth of funds every quarter to transition to the proposed norms for expected credit loss accouting. Seperately, for the September quarter, the bank's provisions fell to INR 7.56 billion from INR 8.22 billion a year ago, of which provisions for non-performing assets were also marginally lower on year at INR 5.83 billion.
The RBI released draft norms to transition to a forward-looking expected credit loss framework by Apr. 1, 2027, moving away from the current incurred-loss provisioning system. This will mandate banks to set aside more funds for potential bad loans on implementation. The RBI has sought public comments on the same by Nov. 30.
On Tuesday, Bank of Maharashtra's shares ended 4.3% lower at INR 55.11 on the National Stock Exchange. The shares recovered from the day's low after the earnings were released during market hours. End
Edited by Akul Nishant Akhoury
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