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CRISIL reaffirms Bank of Maharashtra's 'A1+' rating owing to improved asset quality, profitability

06-Nov-24 13:49 Hrs IST

CRISIL said that the rating continues to factor in the expectation of strong support that the bank is expected to receive from the majority owner government of India (GoI), the bank's comfortable resource profile and the sustained improvement in asset quality and profitability.

These strengths are partially offset by moderate scale and high regional concentration in operations.

Gross advances stood at Rs 217,504 crore as on 30 September 2024, compared with Rs 203,664 crore on 31 March 2024, indicating half-yearly growth of 13.6% (annualised).

Correspondingly, deposit base grew by 4.1% (annualised) over the first half of fiscal 2025 to Rs 276,289 crore as on 30 September 2024, with share of current account and savings account (CASA) in total deposits remaining healthy at 49.3%.

Moreover, the bank's asset quality continued to improve sequentially. Gross non-performing assets (GNPAs) reduced to 1.84% as on 30 September 2024, from 1.88% as on 31 March 2024, led by reduced slippages and stable recoveries. As on 30 September 2024, total restructured assets stood at Rs 1,964 crore (0.9% of gross advances).

Similarly, profitability witnessed gradual improvement, with return on assets (RoA) (annualised) of 1.7% for the first half of fiscal 2025 (1.3% in the first half of fiscal 2024).

After adjusting for extraordinary tax reversal benefits, adjusted RoA was 1.31% for the first half of fiscal 2025 vis-'-vis 1.13% in fiscal 2024.

This improvement in the earnings profile was driven by expansion in net interest margin (NIM) to 3.6% (annualised) in the first half of fiscal 2025 from 3.5% in the corresponding period of fiscal 2024 (3.4% in fiscal 2024 and 3.1% in fiscal 2023) on account of higher average yield and organic increase in scale of business.

The bank's credit cost was 1.1% (annualised) for the first half of fiscal 2025, compared with 1.3% in the first half of fiscal 2024.

Operating expenses as a percentage of assets increased marginally to 1.8% in the first half of fiscal 2025 from 1.7% in fiscal 2024, given the ongoing investments in technology and system upgradation.

Capitalisation remained adequate with tier I ratio and overall capital adequacy ratio (CAR) of 13.1% and 17.3%, respectively, on 30 September 2024. On the same date, networth stood at Rs 22,686 crore, having increased from Rs 19,674 crore ' six months ago ' led by internal accrual.

Bank of Maharashtra is a medium-sized PSB with assets of Rs 316,975 crore and a network of 2,508 branches and 2362 automated teller machines (ATMs) as on 30 September 2024.

For the first half of fiscal 2025, profit after tax (PAT) was Rs 2,620 crore on total income (net of interest expense) of Rs 7,292 crore, as against Rs 1,802 crore on Rs 6,068 crore, respectively, for the corresponding period of the previous fiscal.

The scrip rose 0.41% to currently trade at Rs 55.87 on the BSE.