Release Date: July 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bank of Maharashtra (BOM:532525, Financial) reported a year-over-year growth of 13.5% in total business, reaching INR4.76 lakh crores.
- Advances grew by 19% year-over-year, amounting to INR2.09 lakh crores.
- The bank's CASA (Current Account Savings Account) share stands at a healthy 50%.
- The GNPA (Gross Non-Performing Assets) and NNPA (Net Non-Performing Assets) numbers are maintained at healthy levels, with a PCR (Provision Coverage Ratio) of 98.36%.
- The bank has introduced several initiatives to retain and attract deposits, including special schemes with better interest rates and a focus on government and departmental relationships.
Negative Points
- The credit growth is outpacing deposit growth, leading to intense competition in the deposit segment.
- The yield on advances declined by 18 basis points quarter-on-quarter, partly due to regulatory changes affecting penal interest charges.
- The agriculture sector, despite showing growth, continues to have high NPA levels, although it is on a reducing trend.
- The bank's capital adequacy ratio has seen a slight decline, although it remains above regulatory requirements.
- There is a need for increased provisioning for infrastructure loans as per new RBI guidelines, which could impact profitability.
Q & A Highlights
Q: Can you explain the decline in yields on advances by 18 basis points Q-on-Q?
A: The slight decline in yields is primarily due to regulatory changes where penal interest is now categorized as charges rather than interest. This has impacted the yield marginally. (Nidhu Saxena, CEO)
Q: What is the guidance for asset growth for the current year?
A: We are targeting a total business growth of 16%, with advances growing at 18-20% and deposits at 12-15%. CASA is expected to maintain around 50%. (Nidhu Saxena, CEO)
Q: How do you plan to navigate the intense competition in the deposit segment?
A: We are focusing on deepening existing relationships and acquiring new customers through improved products and processes. Initiatives like video KYC available on Sundays and holidays, and revamping our mobile banking app are part of our strategy. (Nidhu Saxena, CEO)
Q: What is the impact of the new RBI guidelines on market risk-weighted assets?
A: The new guidelines have reduced market risk-weighted assets significantly from INR7,500 crores to INR426 crores, while increasing credit risk by INR1,600 crores. This is due to changes in the treatment of HTM and AFS securities. (Vijay Srivastava, CFO)
Q: What are your plans for the COVID-related provisions of INR1,200 crores?
A: We intend to keep these provisions as a buffer for future uncertainties. This aligns with regulatory advice to create extra provisions during good times. (Nidhu Saxena, CEO)
Q: Can you provide more details on your digital initiatives and technology investments?
A: We have a budget of approximately INR1,000 crores for technology. Key initiatives include upgrading our DC, DR, and near DR, implementing a new CRM solution, and launching a lifestyle banking app. (Asheesh Pandey, Executive Director)
Q: What is the current status of recoveries from written-off accounts?
A: We have recovered INR470 crores this quarter, including a significant recovery of INR200 crores from one large account. We aim to recover INR1,000 to INR1,500 crores annually from written-off accounts. (Nidhu Saxena, CEO)
Q: What is the impact of the new RBI circular on your investment portfolio?
A: The new guidelines prevent shifting high-yielding securities from HTM to AFS, which has protected our yields. Interest income from treasury has increased, while trading profit has decreased. (Vijay Srivastava, CFO)
Q: How are you addressing the challenges in the agriculture portfolio?
A: We are shifting focus from farm credit to investment credit in agriculture, such as cold storages and food processing units. This helps in reducing stress and improving asset quality. (Nidhu Saxena, CEO)
Q: What is your strategy for maintaining a competitive edge in the market?
A: We are continuously working on product improvisation, introducing new products, and enhancing customer experience through technology. Initiatives like video KYC, digital journeys, and robotic process automation are key differentiators. (Nidhu Saxena, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
