InvestorQ : What explains the sharp profit growth of Bank of Maharashtra in the September 2022 quarter?
Tisha Malhotra made post

What explains the sharp profit growth of Bank of Maharashtra in the September 2022 quarter?

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Aashna Tripathi answered.
1 month ago
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You are right that the Bank of Maharashtra did report fairly impressive numbers for the September 2022 quarter. Let me begin with the top line performance of the bank first. Its total revenues for the quarter ended September 2022 or Q2Fy23 quarter was up 6.89% on consolidated basis at Rs4,318 crore. Even if you look at the top line on a sequential basis, the growth was a healthy 14.4%. While the investment income was flat on a yoy basis, the interest income was sharply higher on the back of higher business volumes and improved interest yield realizations due to rate increases. Here is a quick summary.

Bank of Maharashtra

Rs in Crore

Sep-22

Sep-21

YOY

Jun-22

QOQ

Total Income (Rs cr)

₹ 4,317.71

₹ 4,039.56

6.89%

₹ 3,774.66

14.39%

Net Profit (Rs cr)

₹ 534.74

₹ 274.27

94.97%

₹ 452.95

18.06%

Diluted EPS (Rs)

₹ 0.79

₹ 0.41

₹ 0.67

Net Margins

12.38%

6.79%

12.00%

On the revenue front, the Bank of Maharashtra saw yoy growth across retail banking and corporate banking as there was a general pick up in the banking activity with corporate lending showing better traction in the last few quarters. However, treasury revenues were lower on yoy basis, which is not surprising considering the consistent spike in interest rates and its impact on the yields and bond prices. In terms of performance of verticals, treasury saw fall in profits while retail banking doubled operating profits and corporate banking turned around from losses to profits. Annualized ROA is healthy at 0.92% in Q2FY23.

Let me turn to your question on the profit growth of the Bank of Maharashtra. Net profits post tax for September 2022 quarter was up by a whopping 94.97% (nearly doubled profits) at Rs514.74 crore and even on sequential basis, the profits were up 18.06%. Provisions for doubtful assets were sharply down by 42.3% at Rs531.61 crore amidst improving asset quality. That is also evident in the Gross NPAs falling sharply from 5.56% to 3.40% and the net NPAs falling from 1.73% to 0.68%. The capital adequacy overall is quite comfortable at the level of 16.71%; well above statutory base. Net margins were 12.38% in Q2FY23 compared to 6.79% in Q2FY22, the year ago quarter. The net margins were almost comparable to 12.00% in the sequential June 2022 quarter.

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