← Throughline · holding view Deep analysis ↗ Q4 FY25
MAHABANK Bank of Maharashtra · Other Q4 FY25 · concall
Pattern: q4 seasonality sustainability

Q3FY26 highest-ever INR1,779cr profit at 23.79% ROE.

3 deflections · 2 weak · 9 clean — pushback across 5 of 14 Q&A turns

Focused evidence 5 of 14

Ashok Ajmera · Ajcon Globalweak

Is this kind of growth which has come only in this January-March quarter is sustainable? And is it going to be the pattern for the next year also that you are a little bit down in first and second quarter and then you pick up in the third and fourth quarter?

As regards our feeling regarding the growth is happening only or majorly in the last quarter is not something very unusual. You will see that the Q4 is the highest performing quarter for any bank for any matter. Now there have been some macro events we all have known about. Maybe if it's the Maharashtra state elections or elections in some states. With these kind of macro events beyond the control, you would have also read that wherever we have relationships, it was a news item that the state had released 500 GRs in the last 3 days of the financial year. My average advance has been growing at the rate of 18%. My average deposit in the bank has been growing at the rate of 14%.

Ashok Ajmera · Ajcon Globaldeflection

On the capital raise, you have got the approval of INR7,500 crore for the QIP and INR10,000 crore for the long-term bonds. What is the plan? Would you be comfortable immediately coming in this quarter for the QIP or a part of it?

When we begin our financial year, we make our assessment of the capital requirements for the full financial year. We have to go to shareholders, AGM and then government and get the approval. Once the approval is done, our process is complete. We will then take a call what mode will be used and at what opportune time. One of the motivation with us is that since we are currently at 79.6% of Government of India holding, the SEBI requirement of 75% is not a difficult milestone to be achieved. We will definitely be looking at the right time, right mode and taking our decision during the year.

Pinaki Banerjee · AUM Capital Private Limitedweak

Regarding your loan portfolio, the maximum exposure is towards the infrastructure sector. Can you segregate what type of companies this exposure is regarding infrastructure?

Overall, if you see my business mix and the guidance that we had kept for ourselves, it was to maintain RAM corporate share of 60-40 and plus minus 2%. The important part is wherever we are seeing the opportunities emerging, we will definitely participate and opportunities, which are profitable for the bank. Whether it is road HAM model, whether it is renewable energy, whether it is LRD. We have been bullish on these kind of areas and we have been taking our considered calls in participating in new opportunities that are coming.

Ashok Ajmera · Ajcon Globaldeflection

There is one in the auditor's emphasis note #4, it says that because of the inadequacy of the independent directors, some regulation were invoked and the results have been taken directly to the Board. Since when has this situation been there?

With regards to the independent directors, this is not anything unique to us. Since the government is engaged in providing independent directors to all the PSU entities, so the entire BFSI space is impacted. Since December, we are awaiting the outcome for two of our independent directors. I would not like to comment on that part. This again, as I said, is not unique to the bank. We have definitely not allowed any business to get hampered in any way, but this is a transition phase. There is no serious concern or any matter of discussion as well.

Ashok Ajmera · Ajcon Globaldeflection

Sir, you have continuously maintained a COVID provision of INR1,200 crore as buffer. How long do you plan to keep it? Could you not have used at least some portion of that reserve and would have given further decent profit?

I will give you the answer to that investment AFS gain. Deliberately, we have not written about that gain, but since we are expecting that RBI will come with the cut and it has happened. We were expecting that there will be good profit, further appreciation, at the time we can encash that. You can see that though we got the benefit in capital, AFS is a gain, it will be part of capital. At the opportune time, we will convert into the trading profit.

▸ Other Q&A (9)
Jai Mundhra · ICICI Securities

In the growth that you mentioned, is this 100% delivered by branches or do you have some tie up with the DSA or loan originator or is this growth entirely done by the branches itself?

We have 500-plus branches and the new business that is coming into the bank, is mostly from my existing set of branches and these new branches, which have been identified to be opened in potential growth centres. FY '25 has been the first year where there has been de-growth in pool buyer transaction by minus 7%. Despite this, the advance, the credit has grown by almost 18% in the bank. There are no aggressive DSAs and acquisition strategies. It is my own core branches where we have complete control and asset quality is of supreme importance.

Jai Mundhra · ICICI Securities

What is the outstanding of this pool buyout, which has declined just to get a sense out of your INR2.36 lakh crore loan book?

As of 31st March, pool outstanding is INR12,998 crore as against INR14,045 crore, on 31st March '24.

Jai Mundhra · ICICI Securities

On your benchmark, what would be the share of loan linked to EBLR, MCLR, fixed rate and other benchmarks?

From my loan book, 37% portfolio is linked to EBLR and 57%-odd is what is linked to MCLR. You would see a distinctive factor that there has been two rate cuts. I'm not operating out of the system. I also would be affected going forward. But if you see that NIM in our case, actually, for the last three quarters, the number was 3.97%, 3.98%, 3.99%, and we have crossed to 4.01% for Q4.

Ashok Ajmera · Ajcon Global

One question is a little observation on the restructuring of the standard advance, which has gone up by INR439 crore only in the corporate book. Can you throw some light on this?

For two accounts it is only DCCO extension. Nothing alarming there. Only because of DCCO extension in two accounts, that number has gone out. One is the PSU and another is state government accounts. Both are infra projects. Due to land issues, the DCCO got extended.

Pinaki Banerjee · AUM Capital Private Limited

Now in the falling interest rate scenario, you are expecting a fall in your NIMs, net interest margin. On a conservative basis, how much are you expecting to report like from current 4%?

If you see that my entire last year, we have been indicating our guidance for NIM. We have closed the full year with 4% and the Q4 at 4.01%. While I have outperformed my guidance, I am mindful that there have been two rate cuts. My 37% of loan book is priced to repo interest rate loans and where I have to pass on the benefit immediately. We are again going to keep a conservative guidance for NIM for the next year at 3.75%. If we see aggressive rate cuts, maybe like other banks, we may be also taking a conscious call to review the guidance.

Darshil Jhaveri · Crown Capital

Just when we talked about NIMs right now, any kind of guidance you want to give on what our advances and deposit growth would be?

For advances, we are keeping a guidance at around 17%. For deposits, we are keeping around 14%. When we talk of deposits, our focus always comes to the low-cost part of it. CASA will be maintained above 50%. That's the conservative guidance I've kept for myself, and we will try to keep performing beyond that.

Darshil Jhaveri · Crown Capital

Any sort of guidance on ROA, GNPA, credit cost, that would be really helpful?

ROA, we have achieved 1.75% for the full year. My guidance for ROA is 1.75%, which we would like to maintain for the next year. GNPA has again seen a reduction, and has come down to 1.74%, but guidance is to maintain it below 2% and the credit cost to maintain below 1%.

Darshil Jhaveri · Crown Capital

With our expansion in branches that we are planning, how do we see cost to income going forward? We said that we are hiring also a bit more talent. What do we see in the Opex side for us?

If you see the cost to income for this financial year, it is 38.5%, which again, when we compare and look at peers and other banks in the industry, including the private banks, is the best in the industry in this parameter. My cost to income has reduced by 22 bps year-on-year. Yes, with the new branch opening, this opex is bound to increase, but what I have seen that with the new incremental business revenues that we are generating we are also able to find some traction in the income contributing element of it. The guidance, again for cost to income is to maintain it below 40%.

Darshil Jhaveri · Crown Capital

On the ground, how are we seeing the demand right now? I think people are expecting a good monsoon and there has been tax cut by the government, but are the sentiment like good on ground?

I think India has a growth story despite tariff concerns coming lately, and the world markets getting impacted in a particular way. Definitely, some of the entities have changed the growth estimates for the country, but still, there is no doubt that the country remains one of the fastest-growing emerging economies. I don't see any major challenge as such. Yes, there are disruptions that are happening, but there are a lot of data points around how the GST collections have surged in the country year-on-year. It has grown 9.9%. For the month of March '25, the GST collections is INR1.96 lakh crore.

▸ Prepared remarks (3 blocks)
Good afternoon and thank you for joining this con call. I'm very happy to share that we have ended yet another financial year very successfully where we've been able to showcase and maintain consistent growth across all parameters, whether it is business growth parameters, asset quality, profitability, capital adequacy, efficiency ratios and so on. The total business has grown by <strong>15.30%</strong> year-on-year and has reached INR5,47,000 crore. Total deposits increased by 13.44% to INR3,07,000 crore. Advances increased by 17.76% to INR2,40,000 crore. NPA has declined in the bank to 1.74%. Net NPA also reduced to 0.18%. PCR is maintained at 98.3%. Our operating profit has grown by 14% to INR2,520 crore for this quarter and for the full year it is 16% year-on-year growth. Net profit has increased by 36% and has reached to INR5,520 crore for the full year. In this challenging environment where some lenders have been experiencing or at least claiming that they would be witnessing some NIM contraction immediately, we have been able to maintain our NIMs which witnessed a year-on-year improvement of 8 bps. The full year NIM stands at 4% now. For quarter-on-quarter, we have improved our NIM by 4 bps and maintain a high NIM of 4.01% for Q4 as well. The ROA stands at a healthy 1.75%, which is a 25 bps increase over the last year. The CET1 capital adequacy is healthy and is around 16%. CRAR is at healthy 20.53%, LCR stands at 127%.
Our Government of India holding has reduced during the last financial year where we have done a successful capital raise and the same has been brought down to <strong>79.6%</strong>. Within the RAM, retail grew by 25% year-on-year. Home loan also grew 30%. In our other focus products, car loan grew by 47%. Gold year-on-year grew by 56%. Corporate advances too we are present wherever we are getting good income earning opportunities. We are maintaining a RAM corporate ratio of 62.38% for March '25. Corporate book also grew year-on-year by 15%. Overall stress number of the bank witnessed a reduction of 129 bps from 4.71 to 3.42 for March '25. We have been one distinct bank who have been opening branches. Over the last 3 years, we have opened around 500 plus branches. Going forward, we have approval from the Board to open 1,000 branches in 5 years at the rate of 200 to 220 in the next 12 months. We have also been approved of a GIFT City license for opening a IBU at GIFT City, Gandhinagar and this enabler will open new opportunities for the bank. This GIFT City IBU will also ensure our global presence and this will become a reality within this financial year.
The total business has grown by <strong>15.30%</strong> year-on-year and has reached INR5,47,000 crore. Total deposits increased by 13.44% to INR3,07,000 crore. Advances increased by 17.76% to INR2,40,000 crore. NPA has declined in the bank to 1.74%. Net NPA also reduced to 0.18%. PCR is maintained at 98.3%. Our operating profit has grown by 14% to INR2,520 crore for this quarter and for the full year it is 16% year-on-year growth. Net profit has increased by 36% and has reached to INR5,520 crore for the full year. The full year NIM stands at 4% now. For quarter-on-quarter, we have improved our NIM by 4 bps and maintain a high NIM of 4.01% for Q4 as well. The ROA stands at a healthy 1.75%. CRAR is at healthy 20.53%, LCR stands at 127%. My other cost-to-income has come down again, 22 bps year -on-year and stands at 38.5%. Yield on advances has improved year-on-year by 16 basis points and stands at 9.3%.
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