Bank of Maharashtra Q3 Net profit rises 34%


Bank of Maharashtra on January 16 reported a 33.61 percent on-year rise in its October-December quarter net profit to Rs 1,036 crore, on the back of rising net interest income and better asset quality.


Operating Profit has shown a growth of 27.32 percent on-year to Rs 2,012 crore for the third quarter of the current financial year as against Rs 1,580 crore in a similar period last year. The same has improved by 4.77 percent on-quarter.


In the reporting quarter, net Interest Income (NII) grew by 24.56 percent on-year to Rs 2,466 crore, as against Rs 1,980 crore in a similar period last year, Bank of Maharashtra said in an exchange filing. The same was up by 1.39 percent on a sequential basis.


Gross non-performing assets (NPA) of the bank declined to 2.04 percent as on December 31, 2023, against 2.94 percent as on December 31, 2022. Net NPA declined to 0.22 percent as on December 31, 2023, as against 0.47 percent as on December 31, 2022.


Provision Coverage ratio of the bank improved to 98.40 percent as on December 31,2023, as against 97.18 percent as on December 31, 2022.


Bank holds cumulative Covid-19 provision as contingency provision of Rs 1,200 crore as on December 31, 2023, release said.


In the reporting quarter, total business of the bank grew by 18.89 percent on-year to Rs 4.34 lakh crore.


Total Deposits rose 17.89 percent on-year in October-December to Rs 2.46 lakh crore. Gross Advances grew by 20.20 percent on-year Rs 1.89 lakh crore. Net Advances grew by 21.01 percent on-year to Rs 1.85 lakh crore.


RAM (Retail, Agri. & MSME) Business grew by 27.25 percent on-year basis. Retail advances grew by 21.91  percent to Rs  49,144 crore on-year basis. MSME advances grew by 29.14  percent on Y-o-Y basis to Rs 39,410 crore.


Total Basel III Capital adequacy ratio stood at 16.85 percent with Common Equity Tier 1 ratio of 11.56 percent.

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Latest Bank merger news of PSU banks and PSU Insurance Company

 


A government document shared on social media has triggered speculation about possible PSU bank mergers between Union Bank and UCO Bank, and Bank of India and Bank of Maharashtra. The document, whose source couldn't be verified, said that a Parliamentary committee will hold discussions with four PSU banks in the first week of January under banking laws, which govern mergers and acquisitions, among other things.

However, the government has not yet provided official information regarding the merger. Neither of the four PSU banks mentioned have made any stock exchange filings in this regard.


The document being circulated on X (formerly Twitter) is a government PDF issued in the name of Ramesh Yadav, Under Secretary of the Government of India. The letter is issued to the Governor, Reserve Bank of India, Chairman of LIC, IRDAI, and NABARD, along with MD and CEOs of UCO Bank, Bank of Maharashtra, Bank of India, and Union Bank of India.

The PDF is also addressed to CMDs of New India Assurance Company, United India Insurance Company, Oriental Insurance Company, National Insurance Company, and MD & CEO of SBI Life Insurance Company. The subject of the alleged government PDF states 'Study Visit programme of the Committee on Subordinate Legislation, Lok Sabha to Mumbai and Goa from 2 to 6 January 2024'.

The 2-day programme includes informal discussions with the representatives of Union Bank of India and UCO Bank on January 2, and with representatives of Bank of Maharashtra and Bank of India on January 4, 2024, on rules/regulations framed under Banking Regulations Act 1949 and other relevant Acts as applicable to them and the regulatory mechanism in post-merger scenario.

The Finance Ministry has reportedly issued a clarification, saying that this is a parliamentary committee on subordinate legislation, and it has no connection whatsoever with the policies of bank mergers, according to CNBC-Awaaz. Amid the merger buzz, the ministry reportedly changed the agenda of its meeting. According to the new agenda, there is no mention of the word “Merger”, which simply means that there is no proposal for a merger between Union Bank of India and UCO Bank, Bank of India, and Bank of Maharashtra, said CNBC Awaaz in its report.

Meanwhile, No proposal to merge the public sector banks is being considered by the government and the discussions were part of a ‘routine exercise, Reuters also reported citing two sources from the Ministry of Finance.










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Bank of Maharashtra Q2 Net profit surges 72% on year

 


State-owned Bank of Maharashtra (BoM) has announced a profit of 71.8 per cent at Rs 919 crore year on year (Y-o-Y) at the end of the July-September quarter (Q2) for the financial year 2023-24 (FY24) in its consolidated results. The announcement came through a regulatory filing on BSE on Monday.


Last year, the bank recorded a profit of Rs 4,317 crore for the same period. The total income for this quarter also went up 32.8 per cent Y-o-Y at Rs 5,735 crore from Rs 4,317 crore.


Compared to the previous quarter that ended in March, profits rose by 4.2 per cent from Rs 882 crore, and income rose by 5.86 per cent from Rs 5,417 crore.


Net Interest Income (NII) went up 28.9 per cent to Rs 2,432 crore from Rs1,887 crore, Y-o-Y.


Gross non-performing assets (NPA) are down to 2.19 per cent in Q2FY24. Last year, during the same period, it was 3.40 per cent. Net NPA declined to 0.23 per cent at the end of the latest quarter compared to Q2FY23, when it stood at 0.68 per cent. In Q1FY24, gross NPA stood at 2.28 per cent and net NPA at 0.24 per cent.


Operating costs have gone up by 27 per cent compared to the same period last year at Rs 1,179 crore from Rs 927 crore. Quarter-on-quarter, it was a marginal growth of 6.67 per cent from Rs 1,105 crore.

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Bank of Maharashtra(BoM) Q1 Results: Net profit surges 95%, maintains healthy asset quality

 


Public sector lender Bank of Maharashtra on July 19 reported a 95 percent jump in net profit at Rs 882 crore for the April-June FY24 quarter, compared to Rs 451 crore in the corresponding quarter last year.


Net interest income (NII) of the bank stood at Rs 2340 crores, compared to Rs 1686 crores last year. The bank recorded steady improvement in its net interest margin (NIM). For the April-June FY24 quarter, the lender's NIM stood at 3.86 percent, compared to 3.28 percent last year.


The bank's gross non-performing asset (NPA) stood at 2.28 percent, down from 3.74 percent recorded in the same quarter last year. For the June quarter, total GNPA stood at Rs 4006 crores compared Rs 5259 crores a year ago. On the other hand, net NPA of the lender for the quarter stood at 0.24 percent, improving from 0.88 percent on a year-on-year basis. The lender's total NNPA stood at Rs 413 crores, compared to 1206 crores in the corresponding period last year.


On deposits front, the bank recorded a 25 percent growth taking the total deposits to Rs 2.44 lakh crores from Rs 1.96 lakh crores in the previous year. Current account and savings account (CASA) deposits improved to Rs 1.24 lakh crores from Rs 1.09 lakh crores with current account deposits recording 30 percent growth and savings account deposits recording 9 percent growth.


Gross advances of the bank grew by 25 percent on a year-on-year basis and stood at Rs 1.75 lakh crores compared to Rs 1.40 lakh crores in the year ago quarter.


Looking at the bank's segment wise advances growth, retail sector recorded advances of Rs 44, 952 crores compared to Rs 36,117 crores in the April-June FY23 quarter. Advances to agriculture sector stood at Rs 23,637 crores compared to Rs 19,336 crores last year. Micro small and medium enterprises recorded advances of Rs 33,740 crores for the April-June FY24 quarter compared to Rs 26,121 crores in the corresponding period last year.


The revenue for the bank's treasury operations stood at Rs 1169 crores, growing from Rs 938 crores last year.


Corporate and wholesale operations recorded a revenue of Rs 2028 crores in the April-June FY24 quarter compared to Rs 1217 crores in the same period last year.


Whereas the revenue of the lender's retail operations stood at Rs 2174 crores compared to Rs 1557 crores.


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RBI imposes Rs. 2.5 crore penalty on three banks


The Reserve Bank of India (RBI) imposed a monetary penalty on three private and public sector lenders on Friday. The central bank charged Jammu & Kashmir Bank with 
Rs.2.5 crore penalty, while the Bank of Maharashtra faced a fine of Rs.1.45 crore. Axis Bank received the least amount of penalty among them to the tune of Rs.30 lakh.


Jammu & Kashmir Bank:

RBI imposed a Rs.2.5 crore penalty on J&K Bank for non-compliance with certain directions issued by RBI on ‘Creation of a Central Repository of Large Common Exposures-Across Banks’, read with ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’, ‘Loans and Advances – Statutory and other Restrictions’ and ‘Time-bound implementation and strengthening of SWIFT-related operational controls’.

According to RBI's inspection, J&K Bank non-complied in --- (i) failed to ensure integrity and quality of data submitted to CRILC, (ii) extended term loans to a corporation (a) without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects are sufficient to take care of the debt servicing obligations and (b) failing to ensure that the repayment/servicing of said term loans were not made out of budgetary resources and (iii) created financial/non-financial messages in SWIFT without first ensuring that the underlying transactions have been duly reflected in the CBS.


Bank of Maharashtra:

This government-owned bank was imposed with Rs.1.45 crore penalty for non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’ and Advisory on ‘Man in the Middle (MiTM) Attacks in ATMs’ (the Advisory).

BoM committed non-compliance in the extent of --- (1) it sanctioned a term loan to a Corporation (i) in lieu of or to substitute budgetary resources envisaged for certain projects; (ii) without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations; and (iii) the repayment/servicing of which was made out of budgetary resources, and (2) it failed to implement required control measures for ATMs relating to end-to-end encryption of communication between the ATM terminal/PC and the ATM Switch, within the prescribed timeline.


Axis Bank:

Axis Bank, one of the leading private sector lenders, was penalised with Rs.30 lakh due to its non-compliance with certain provisions of the RBI directions on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts’.

As per RBI's inspection, Axis Bank had levied penal charges in certain accounts for late payment of credit card dues though the customers had paid the dues by the due date, through third party platforms.


Notably, before imposing the charges, RBI had sent notices to these three banks --- advising them to show cause as to why a penalty should not be imposed on them for failure to comply with the directions issued.


After considering the banks' reply to the notice, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted the imposition of monetary penalty on these banks.

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Bank of Maharashtra Q1 result: profit more than doubles


 Bank of Maharashtra's net profit more than doubled to Rs 451.90 crore in the April-June quarter compared to Rs 208.01 crore in the year-ago quarter, the lender said on Monday. Total income during April-June 2022-23 fell to Rs 3,774.32 crore from Rs 3,790.72 crore in the same quarter of 2021-22, the state-owned bank said in a regulatory filing.


The bank's asset quality improved with the gross non-performing assets falling to 3.74 per cent of the gross advances as of June 30, 2022, as against 6.35 per cent in the year-ago period.


In value terms, gross NPAs stood at Rs 5,259.62 crore by Q1FY23, down from Rs 7,021.63 crore by Q1FY22.


The net NPAs came down to 0.88 per cent (Rs 1,206.43 crore) from 2.22 per cent (Rs 2,352.75 crore).


Provisions for bad loans and contingencies for the quarter fell to Rs 548.41 crore from Rs 753.10 crore in the same quarter of FY22.


The Pune-based lender said there was an impact due to change in accounting policy, resulting in decrease in other income and net profit after tax by Rs 22.03 crore during the quarter ended June 30, 2022.


Provision coverage ratio (PCR) as of June 30, 2022 is 95.04 per cent, Bank of Maharashtra said.

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Privatisation Of Bank: Two banks to be sold in the country, centre to speed up law change process

 


The Centre speed up the process of privatising two State-owned banks. News agency PTI quoted a source from the Centre as saying on Wednesday. The Modi government at the Centre had earlier amended the 'Banking Regulation Act' to pave the way for private investment in State-owned banks. According to sources, the Centre wants to pass a bill in this regard in the upcoming monsoon session of Parliament.

Union Finance Minister Nirmala Sitharaman had said last year that the Centre wants to start the process of privatising some state-owned banks. Therefore, the Bank Nationalization Acts of 1970 and 1980 will be amended and the Bank Control Act of 1949 will be amended. According to finance ministry sources, the process has begun. The government has also started preparing the draft of the 'Banking Regulation Act'. If all goes well, the amendment will be passed in the monsoon session. Of course, there is a good chance of the opposition being hindered. However, due to the majority, the government should not have any problem in passing this law.

The amendment has been passed in parliament and there will be no bar on the privatization of State-owned banks. Only then will the process of privatization of state-owned banks begin. Initially, two state-owned banks have also been listed for disinvestment. The name of which two banks will be privatised is yet to be announced by the Centre. According to sources, the Modi government initially chose four medium-sized banks for privatisation. The four banks that were placed in the initial list for privatisation are Bank of Maharashtra (BoM), Bank of India (BoI), Indian Overseas Bank(IOB) and Central Bank of India. Later, niti aayog proposed that most of the shares of Indian Overseas Bank and Central Bank of India be sold. The Modi government can go ahead with the NITI Aayog's proposal.

This is not the end of it, the government also wants to complete the privatization process of the tate-owned company BPCL quickly. Sources claim that only 52.3 per cent stake in BPCL held by the Centre will be sold. Earlier, the Modi government had taken the initiative to sell the shares of BPCL. Initially three companies showed interest in buying bpcl shares. But in the end, only one company survives in the race, the sources claim.


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Bank of Maharashtra Q4 profit increase two fold

 



 Bank of Maharashtra on Thursday reported an over two-fold increase in its consolidated net profit at Rs 355 crore in the quarter ended March, helped by a fall in the bad loan proportions, thus requiring lesser provisioning.


The Pune-based lender had posted a net profit of Rs 165.23 crore in the year-ago period.


Total income of the bank, however, was down at Rs 3,948.48 crore in the January-March quarter of 2021-22, as against Rs 4,334.98 crore in the same quarter of 2020-21, Bank of Maharashtra said in a regulatory filing.


For the full year 2021-22, the bank's consolidated net profit doubled to Rs 1,151.64 crore, as against Rs 551.41 crore in 2020-21.

Total income was higher at Rs 15,672.17 crore during the year, from Rs 14,497.56 crore in the previous fiscal 2020-21.

Bank's provisioning for bad loans and contingencies for Q4FY22 came down to Rs 365.38 crore, from Rs 1,341.26 crore parked aside in the year-ago period.

On the asset quality, there was a significant improvement with Gross Non-Performing Assets (NPAs) falling to 3.94 per cent of the gross advances as of March 31, 2022 from 7.23 per cent by March end 2021.

Net NPAs or bad loans shrank to 0.97 per cent as against 2.48 per cent.

In value terms, the gross NPAs were worth Rs 5,327.21 crore, down from Rs 7,779.68 crore. Net NPAs were of the value of Rs 1,276.57 crore, down from Rs 2,544.32 crore.

The consolidated financial results of the bank include results of the holding company --Bank of Maharashtra, subsidiary company The Maharashtra Executor and Trustee Company Pvt Ltd and the associate company Maharashtra Gramin Bank.

Provision coverage ratio of the bank stood at 94.79 per cent as of March 31, 2022.

The lender said that with effect from assessment year 2021-22, it has opted for the new regime of tax under Income Tax Act, 1961.

"Consequently, during the current year, the bank has remeasured its deferred tax assets and deferred tax liabilities as on December 31, 2021 and reversed the amount of Rs 716.87 crore by debiting from profit and loss account," it said.

The board members of the bank also approved raising of Rs 5,000 crore capital through follow-on public offer, rights issue, qualified institutional placement, preferential issue or any other mode or combination thereof or through issue of Basel III compliant bonds or any other such securities.


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Bank of Maharashtra Q3 net doubles on robust NII


Bank of Maharashtra posted a 110.7 per cent rise in net profit at Rs 325 crore for the third quarter ended December 2021 (Q3FY22) on robust growth in net interest income.


The net profit was Rs 154 crore in Q3FY21 and Rs 263 crore in the second quarter ended September 2021 (Q2FY22).The Pune-based lender's stock was trading 2.56 per cent lower at Rs 20.95 per share on BSE.


Net Interest Income (NII) grew by 16.90 per cent to Rs 1,527 crore in Q3FY22 as against Rs 1,306 crore for Q3FY21. Sequentially, growth was flat with NII of Rs 1,500 crore in Q2FY22.Public sector lender’s net interest margin (NIM) improved to 3.11 per cent in Q3FY22 from 3.06 per cent in Q3FY21. Sequentially, NIM declined from 3.27 per cent in Q2FY22.


The non-Interest income rose by 6.35 per cent on YoY basis to Rs 611 crore in Q3FY22 from Rs 575 crore in Q3FY21. Sequentially, it declined substantially from Rs 832 crore in the quarter ended September 2021.


Its gross Advances grew by 22.98 per cent on YoY basis to Rs 1,29,006 crore in Q3FY22 as against Rs 1,04,904 crore in Q3FY21.The total Deposits up by 15.21 per cent to Rs 1,86,614 crore in Q3FY22 from Rs 1,61,971


A S Rajeev, managing director and chief executive said the credit growth is expected to be 17-20 per cent in the current financial year (FY22). The liabilities (deposits) are expected to grow by 10-12 per cent growth in FY22. The focus is on growth with stability and compliance.


Its provisions for non-performing assets were higher at Rs 587 crore in Q3FY22, up from Rs 385 crore in Q3FY21. Provisions were down from Rs 921crore in Q2 FY22.The Provision Coverage Ratio (PCR) improved to 93.77 per cent at end of December 2021 from 89.55 per cent a year ago and 92.38 per cent as of September 2021.


Its Gross NPA declined to 4.73 per cent in December 2021 from 7.69 per cent a year agoas and 5.56 per cent in September 2021. The bank wrote-off NPAs of Rs 500 crore in Q3FY22.The Net NPA reduced to 1.24 per cent in December 2021 from 2.59 per cent a year ago and 1.73 per cent in September 2021.


The current capital adequacy level is adequate for regulatory and business requirements. Yet, the bank plans to raise equity capital of Rs 500-750 crore in the current quarter for future growth considerations. It will approach institutional investors to raise fresh capital.


Bank may also look at Rs 1,000 crore through tier I bonds in the first quarter of next financial year (FY23), Rajeev said.Its Capital adequacy ratio stood at 14.85 per cent in December 2021, up from 13.65 per cent in December 2020.

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Bank of Maharashtra Q2 Net profit doubles

 



State-owned Bank of Maharashtra has doubled its net profit at Rs 264 crore in the September quarter as against Rs 130 crore in the year-ago period, riding on sharp rise in net interest income and recovery from the Dewan Housing Finance (DHFL) exposure.


Its net interest margin, a gauge for efficiency, has improved to 3.27 per cent from 2.57 per cent over the same period. Operating profit grew 40.22 per cent at Rs 1061 crore as against Rs 756 crore. Its net interest income grew 34 per cent at Rs 1500 crore.

The bank recovered Rs 258 crore following DHFL's corporate resolution exercise.

Its asset quality also improved with gross non-performing assets ratio falling to 5.6 per cent at the end of September compared with 8.8 per cent a year ago. Net NPA reduced to 1.7 per cent from 3.3 per cent. Its provision coverage ratio was at 92.4 per cent.

The Pune-based lender grew its advances by 11.44 per cent year-on-year to Rs 1.15 lakh crore. "We are envisaging credit growth of 14-15 per cent for the entire FY22," chief executive AS Rajeev said.

It raised Rs 1,000 crore in bonds Wednesday to augment capital. The fund is raised at 7.8 per cent coupon.

"We have decided to raise another Rs 1000 crore in tier 2 bonds later in the year to keep its capital adequacy ratio (CAR) at around 14.5 per cent level," the CEO said.

Its CAR now stands at 14.67 per cent, an improvement from 13.18 per cent a year back.


Rajeev said the bank may consider raising equity capital in the first quarter next fiscal which would help it bring down government’s holding from 91 per cent. It had raised Rs 403 crore of equity through share sales to institutional investors that helped pare government holding marginally from 93.33 per cent.

The bank restructured loans worth Rs 1181 crore in the quarter under review, taking the total restructuring of standard loans to Rs 6,000 crore. The micro small and medium enterprise (MSME) borrowers accounted for about Rs 2400 crore of loan restructuring while restructuring of retail loans amounted to Rs 2,077 crore and corporate loans amounted to Rs 1000 crore. The balance amount is related to the farm sector.

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Bank of Maharashtra(BoM) Q4 results: Net profit jumps nearly three times

 


State-owned Bank of Maharashtra reported nearly three times jump in net profit for the fourth quarter at Rs 165 crore owing to the rise in net interest income and recovery from written off accounts which more than offset the additional Rs 508 crore provision to cover the pandemic-related risks.Its net profit was Rs 57 crore in the year ago period.


The bank is expecting to grow its credit book by around 15% this year, as against the 13% rise seen last year, and will be looking to raise equity to support credit expansion. The size of equity raising for the full year has not been firmed up while the bank’s board has created an enabling resolution to raise up to Rs 5,000 crore. Its advances portfolio stood at Rs 1.08 lakh crore.


Bank managing director AS Rajeev attributed the sharp rise in net profit to “all round performance”. He expressed hope that the impact of the second wave might not be severe like last year, when the economic activities plummeted amid prolonged national lockdowns.


Its operating profit grew 2.6 times at Rs 1,540 crore from Rs 595 crore in the year ago period, supported by 35% rise in net interest income at Rs 1,383 crore. Net interest margin, a parameter to gauge profitability, improved to 3.1% for the quarter under review as against 2.4% in the year ago period.


The lender recovered Rs 738 crore from errant borrowers and this includes recovery from written off accounts. Recovery from written off accounts adds to the profit as these were fully provided for.


The bank’s fee based income rose 22% to Rs 315 crore while other income jumped 86% to Rs 727 crore.


Its asset quality improved with gross non-performing assets ratio falling to 7.23% at the end of March against 12.81% a year back. Net NPA was 2.48%, improved from 4.77% over the same period. It has however made 44% higher provision at Rs 1,311 crore which includes taking additional cover against the possibility of further economic stress on account of the second wave of pandemic.

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Government is considering mid-sized to small banks for its first round of privatisation.


Government has shortlisted four mid-sized state-run banks for privatization, under a new push to sell state assets and shore up government revenues, three government sources said.


Privatisation of the banking sector, which is dominated by state-run behemoths with hundreds of thousands of employees, is politically risky because it could put jobs at risk but Prime Minister Narendra Modi's administration aims to make a start with second-tier banks.


The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India, two officials told Reuters on condition of anonymity as the matter is not yet public.


Two of those banks will be selected for sale in the 2021/2022 financial year which begins in April, the officials said. The shortlist has not previously been reported.


The government is considering mid-sized to small banks for its first round of privatisation to test the waters. In the coming years it could also look at some of the country's bigger banks, the officials said.


The government, however, will continue to hold a majority stake in India's largest lender State Bank of India, which is seen as a 'strategic bank' for implementing initiatives such as expanding rural credit.


A finance ministry spokesman declined to comment on the matter.


India's deepest economic contraction on record caused by the pandemic is driving the push for bolder reforms, economists say.


Government also wants to overhaul a banking sector reeling under a heavy load of non-performing assets, which are likely to rise further once banks are allowed to categorise loans that soured during the pandemic as bad.


PM Modi's office initially wanted four banks to be put up for sale in the coming fiscal year, but officials have advised caution fearing resistance from unions representing the employees.

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Another Privatisation news- Two of these three banks are likely privatisation candidates


The market is betting on Punjab & Sind Bank, Bank of Maharashtra and Bank of India as the likely candidates for the finance minister’s ambitious bank privatisation plan. In her Budget speech, finance minister Nirmala Sitharaman said the government planned to privatise two sate-run banks, other than IDBI Bank. Analysts believe that the likely candidates will be from the pool of banks which were not part of the merger process. The government had earlier allowed merger of 13 banks into five banks.

Anil Gupta – vice-president and sector head, financial sector ratings, ICRA, said Punjab and Sind Bank and Bank of Maharashtra looked probable candidates for privitisation. Of the six banks kept out of merger, Indian Overseas Bank, Central Bank and UCO Bank are under PCA (prompt-corrective action), he explained. The Reserve Bank of India had kept the three banks in the PCA framework after a massive asset quality deterioration, losses in the books and lower capital levels. Gupta said PCA banks were unlikely to be offered for privatisation due to poor investor demand.

Leaving State Bank of India and five merged banks, there are six public sector banks in the banking system. The six banks include Bank of India, Punjab and Sind Bank, Bank of Maharashtra, Indian Overseas Bank (IoB), Central Bank of India and Uco Bank. Gupta also said the government was unlikely to consider privitisation of Bank of India due its large size. “The government may want to test the water with smaller banks first,” he added.

According to JM Financial, “While the details are awaited, we believe the most likely candidates will be from the pool of banks which were not part of consolidation. While these candidates are small and are not expected to provide any material resources to the government, we believe that this is a step in the right direction and can act as a test case for privatisation of other major public sector banks in future.”

In a note to its clients, Kotak Institutional Equities said the task of privatising two PSU banks may be difficult to achieve but could result in more privatisations, if successful. Lack of interest among potential buyers remains a key concern given the structure of these banks, Kotak said.

In an interview with CNN News 18, Niramala Sitharaman said the government wanted more public sector banks which are functionally strong, professionally managed and can meet the demands of growing aspirational India. “If I am going to be sitting around with such public sector banks which are just not in a mood or a position to stand up, is it right to pour tax-payers money into such banks? When there may be buyers who can buy and run it efficiently,” she said.

The government has proposed to introduce required legislative amendments for privatisation of two PSBs in the Budget session itself.

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Bank of Maharashtra (BoM) Q3 net profit up 14%


Bank of Maharashtra (BoM)
on Tuesday reported 13.91% year-on-year growth in net profit for the quarter ended December 2020 to Rs 154 crore. The rise in net profit was driven by 10.12% y-o-y growth in net interest income to Rs 1,306 crore coupled with net interest margin (NIM) improving to 3.06%. BoM MD & CEO AS Rajeev said it was for the first time in four years that the bank had crossed the NIM of 3%.

The bank’s gross NPAs as on December 31, 2020, were 7.69% against 16.77% on December 31, 2019, while net NPAs reduced to 2.59% in the quarter under review against 5.46% in the same period last year. The bank has made a cumulative Covid-19 provision of Rs 955 crore. According to the Supreme Court order, the bank has not classified these accounts as NPAs but had made additional provision of Rs 150 crore, of which Rs 30 crore was in the third quarter.

Its cost to income ratio had gone down slightly and this was mainly because of a one-time expenditure of Rs 230 crore on wage arrears payable to retired employees and retirement benefits contribution, which was completely absorbed in the December quarter, the MD said.

Rajeev said the bank’s CASA deposits improved by 300 basis points to 50.91%, while provision coverage ratio improved to 90%. There was 22% growth in the retail, agriculture and MSME advances during the quarter. BoM’s retail advances grew 28.89% to Rs 27,540 crore while MSME advances were up 26.31% to Rs 20,304 crore during the quarter under review. According to the MD, this was not just pent up demand or festival sales. The bank expects growth in retail loans to continue in the fourth quarter of FY21 and even improve further. Banks have benefitted from the withdrawal of NBFC from the market, Rajeev said. This has helped in retail growth, so compared to 16%-18% growth last fiscal year, they had seen 26% to 28% growth in the retail loans this year, he added. He expects the NBFCs to bounce bank once the Covid situation is over, but this window of opportunity is available to the banks for another five to six months, he said.

In addition to growth in retail demand, investment in infrastructure and new projects had started pouring in, adding to the optimism, he said. With the government’s PLI scheme, the BoM MD expects a 2-3% increase in the share of corporate loans. Corporate loans now account for 40% of the bank’s advances.

The BoM board has already approved capital raising plans with Rs 2,000 crore to be raised through bonds and Rs 1,000 crore through equity, Rajeev said. During Q4FY21, the bank would look at raising either Tier -I or Tier-II capital of Rs 500 crore through bonds to be utilised next year, he said. They will look at raising equity next year, depending on the situation.

The bank’s total business increased 13.15 % to Rs 2,66,875 crore with total deposits increasing 14.08% to Rs 1,61,971 crore and gross advances were up 11.74 % to Rs 1,04,904 crore. The bank’s net revenues in Q2FY21 grew 15% on y-o-y basis to Rs 1,572 crore.

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Eye on this PSBs to be privatise: Govt mulls corporate, foreign bank participation

 


Indian policymakers are discussing ways to open up the banking sector via easing norms for corporate and foreign bank participation in acquiring public sector banks that the central govt is looking to privatise, sources with knowledge of the matter told ET Now.

Currently, industrial houses that have less than 60% of their turn over from non-financial entities are not allowed to apply for bank licences and their equity participation is also limited to 10%, as regulators have feared that this could risk financial stability because of the propensity of the corporates to milk banks for ‘self-loans.’

ET Now learns that there’s a rethink on the existing policy between policymakers even as the discussions are at an “early stage”. Sources say the government and the central bank may move with “abundant caution” and will take into account global experience and prior experience as well. 

Greater regulatory vigilance in terms of preferring corporate players with a long term 10-year business plan, “Fit & Proper Criteria” for corporate participation for taking equity in banks, tighter norms for related party transactions could be put in to ensure no excessive concentration or risks to financial stability. 

"We need to open up the banking system but the move will be designed with “abundant caution” and will need stonewalling from misuse. Opening up banking sector will come with greater regulatory vigilance on banks, fin institutions," one of the officials told ET Now.

Policymakers are also discussing allowing foreign banks with Indian subsidiaries to participate in buying government stake when state-owned banks like Central Bank of India, Bank of India, Punjab and Sind Bank, IOB and UCO Bank are privatised. 

The banking sector has been plagued with rising bad loans leading to decline in capital adequacy ratios and in some cases failure. Recently, Yes Bank was saved through government and RBI intervention when SBI lead consortium infused more capital into the private lender to save it from bankruptcy. Last week the government and RBI had to intervene to aid the rescue of Lakshmi Vilas Bank by the Indian subsidiary of DBS Bank, a move that reflected a change in thinking of the central bank and the government. 

Besides DBS, there are only one other foreign bank that has Indian subsidiaries -- SBM Bank. SBM Bank (India) Limited (Subsidiary of SBM Group) and DBS Bank India Limited have been issued licence on December 6, 2017, and October 4, 2018, respectively for carrying on banking business in India through a wholly-owned subsidiary. 

The widening of this move to allow foreign banks to buyout public sector banks when the government decides to privatise them will not only increase competition in the sector leading to efficiency but will also make a paradigm shift in the sector. The larger aim is to make Indian banks globally competitive. 

The discussion on this is at early stage but the policy could be timed with the government's larger privatisation policy that will allow selling of some Indian public sector banks. Bank of India, Central Bank of India, Bank of Maharashtra, Punjab & Sind Bank are some of the state-run lenders that the government is looking to privatise.

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Bank of Maharashtra Q2 profit up 13% on higher interest income, lower provisioning

 


Bank of Maharashtra on Monday reported 13.44 per cent growth in standalone net profit at Rs 130 crore for September quarter, helped by lower provisioning and higher interest income. “The bank logged a profit after tax of Rs 115 crore in the second quarter of 2019-20. On a consolidated basis, its profit stood at Rs 130.44 crore, compared to Rs 115.15 crore in the year-ago period.”

“Profit increase was mainly due to the net interest income (NII), which grew by around 5 per cent. There was considerable reduction in operating expenses by around Rs 75 crore. Provisions have also come down as asset quality improved,” Managing Director and CEO A S Rajeev told reporters.

He said the bank had an interest reversal of Rs 300 crore which it kept as provisions in the second quarter for COVID-19 and for some of the accounts that were not classified as NPA. Rajeev said had the bank not kept aside the interest reversal amount as provisions, NII growth would have been 14-15 per cent in the second quarter.

Net interest margin stood at 2.62 per cent for the quarter as against 2.77 per cent in the year-ago quarter. Rajeev said, “so far the bank has restructured 800 small accounts, including MSMEs, worth Rs 40 crore, under the Reserve Bank of India’s one-time restructuring scheme for accounts affected by COVID-19 related stress.” It has restructured 25 MSME accounts worth Rs 4-5 crore. For the corporate loans, the lender received two applications, of which one is not eligible.

“The other application of amount (bank’s exposure) Rs 200 crore is pending. It is a consortium account and a decision will be taken at the consortium level,” he said. “Gross NPA reduced to 8.81 per cent from 16.86 per cent. Net NPA declined to 3.30 per cent as against 5.48 per cent. Total provisions stood at Rs 676 crore as against Rs 637 crore. Provision for NPAs was Rs 43 crore as against Rs 404 crore.” Provision Coverage ratio improved to 87.15 per cent as compared to 82.71 per cent. The bank holds cumulative COVID-19 provision including interest of Rs 925 crore (out of which Rs 500 crore provision was made in the second quarter).

“In pursuance of the Supreme court order, the bank has not declared those accounts as NPA which were not declared NPA till August 31, 2020.” As a matter of prudence, the lender made additional provision of Rs 120 crore. Capital adequacy stood at 13.18 per cent with common equity tier 1 ratio of 10.31 per cent as at end-September. The bank’s total deposits grew 12.15 per cent year-on-year to Rs 1,58,626 crore. Gross advances rose 13.13 per cent to Rs 1,03,408 crore.

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Bank of Maharashtra Q1 net profit jumps nearly 25%

Bank of Maharashtra on Thursday reported 24.6 per cent jump in net profit at Rs.101.02 crore for the first quarter of 2020-21 financial year as bad loans came down.

The Pune-headquartered lender posted a net profit of Rs.81.09 crore for the same quarter of 2019-20

Total income increased to Rs.3,264.81 crore during April-June, 2020-21 from Rs.3,191.88 crore in the year-ago same period, Bank of Maharashtra said in a regulatory filing.

The bank's provisions for bad loans or non-performing assets (NPAs) fell to Rs.408.91 crore during the reported quarter from Rs.1,037.44 crore in the year-ago period.


Total provisions including contingencies were at Rs.608.94 crore in the quarter under review as against Rs.920.72 crore in the same period of 2019-20.

The lender improved on its asset quality to a great extent by bringing down gross NPAs to 10.93 per cent of the gross advances as on June 30, 2020 from 17.90 per cent by end-June 2019.


In absolute value, gross NPAs stood at Rs.10,558.53 crore as against Rs.16,649.58 crore.


Net NPAs fell to 4.10 per cent ( Rs.3,677.39 crore) from 5.98 per cent ( Rs.4,856.27 crore).

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Privatization Of PSU Banks, Insurance Starts Soon


Privatization of the PSUs will now be resumed by the Government of India and about four unmerged banks and insurance companies will be privatized in the next part of the project.


The privatization of PSU Banks was postponed in 2020 due to the outbreak of the Coronavirus pandemic, which put the whole process on hold because of their low valuations and mounting stressed assets.

As per reports, Punjab & Sind Bank, IOB, Bank of Maharashtra might be privatized, along with state-run insurance companies, such as National Insurance Company, United India Insurance, and Oriental Insurance Company.

Prior to this, the Government had also sold their shares in the Bharat Petroleum Corp Ltd (BPCL), Shipping Corp of India (SCI), THDC India, and NEEPCO. The Govt also announced that it will also sell its 30% stake from the state run rail hauler Container Corp of India (Concor).

Recently, the Government of India had also announced economic reforms in wake of the Coronavirus pandemic, wherein it was declared that every PSU in India will be now privatized, except 4 in strategic sectors.

As per reports, a draft cabinet note has already been sent for inter-ministerial consultations to identity strategic and non-strategic sectors. 

A government official close to the development said, “A broader policy will look at sectors that have market imperfections due to the government’s presence, where the private sector can take the lead and ensure that the monopoly should not happen due to state-run companies.”

He also said that sectors like banks, insurance, space, defence will be privatized.


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Bank of Maharashtra posts net profit in Q4

State-owned Bank of Maharashtra(BoM) on Tuesday posted a 20 per cent decline in net profit at Rs 57.57 crore in the fourth quarter ended on March 31 hit by the COVID-19 crisis.

The bank had posted a net profit of Rs 72.38 crore in the corresponding quarter of the previous financial year.

The total income during the January-March quarter of 2019-20 rose to Rs 3,198.30 crore from Rs 3,160.79 crore in the year-ago quarter, the bank said in a release.

“The profit in the (March) quarter was down as we made certain additional provisions for COVID of around Rs 150 crore during the quarter as against the required provision of Rs 38 crore," the bank's managing director and CEO A S Rajeev said.

The higher provision is on account of a 20 per cent provision the bank made on its SMA (special mention account) 2 book which is at Rs 702 crore as against the regulatory requirement of 10 per cent, he further explained.

“Had this higher provision not there, our profit would have been over Rs 200 crore during the quarter," Rajeev said.

Nearly 40 per cent of the bank's borrowers have availed the moratorium on term loans announced by the RBI. In value terms, close to Rs 16,400 crore of its total term loan book is under moratorium.

Its net interest margins stood at 2.41 per cent in the quarter ended March as against 2.64 per cent in the same period last year.

On the assets front, gross bad loans or non-performing assets (NPAs) of the bank came down to 12.81 per cent of the gross advances as on March 31, 2020, from 16.40 per cent a year ago.

Net NPA came down to 4.77 per cent from 5.52 per cent a year ago.

Provision coverage ratio improved to 83.97 per cent as on March 31 as against 81.49 per cent as on March 2019, it said.

Its recovery and upgradation stood at Rs 511 crore during the quarter. Fresh slippages were at Rs 942 crore as against Rs 1,085 crore.

Capital adequacy ratio under Basel III stood at 13.52 per cent as compared to 11.86 per cent. Net advances rose 5.09 per cent to Rs 86,872 crore as against Rs 82,666 crore.

"In terms of RBI circular dated April 17, the bank has made provision of Rs 150 crore in FY20 towards COVID-19 Regulatory Package Provision as against required provision at the rate of 5 per cent that is Rs 38 crore," it said.

For the entire financial year 2019-20, Bank of Maharashtra earned net profit of Rs 389 crore as against loss of Rs 4,783 crore in the previous fiscal.

Net Interest Margin of the bank improved to 2.60 per cent in 2019-20 as compared to 2.53 per cent in 2018-19.

During the year, the business, a mix of total deposit and advances, increased to Rs 2,44,955 crore from Rs 2,34,117 crore in 2018-19.

As per the RBI direction, the bank has not announced dividend despite posting profit for 2019-20.

The past several weeks have witnessed the country battling an unprecedented crisis on account of COVID-19 pandemic, it said, adding, the Bank was quick to recognize the gravity of the situation and took various supportive measures for the welfare of  the customers and employees.

Bank waived service charges in Current and Savings account up to June 30, 2020. Besides, the bank has introduced GECL scheme under Emergency Credit Line Guarantee Scheme.

Under this scheme, the bank has been offering working capital loan up to 20 per cent of the borrowers total outstanding credit (max upto Rs 25 crore) to all business accounts with annual turnover up to Rs 100 crores for FY 2019-20.
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Bank of Maharashtra posts net profit in Q3FY20


State-run Bank of Maharashtra on Monday reported a net profit of Rs 135 crore in the quarter ended December against a net loss of Rs 3,764 crore in the year-ago period.

On quarter-on-quarter basis, the lender had reported a net profit of Rs 115 crore.

"Net profit increased to Rs 135 crore in the quarter supported by an increase in net interest income, robust recovery and control on expenses," the bank said in a statement.

Net interest income (NII) rose 36 per cent to Rs 1,186 crore.

Net interest margins (NIM) stood at 2.86 per cent compared to 2.41 per cent in the year-ago period.

Net NPAs (non-performing assets) stood at 5.46 per cent or Rs 4,507 crore as against 5.91 per cent or Rs 4,647 crore.

During the quarter, it classified Rs 72,019 crore of loans as fraud and holds a 100 per cent provisioning on these accounts.

The bank said it sees a very bleak chances of recovery from a few accounts and have adequately made provision.

In the April-December period, it made 100 per cent provision for 25 such accounts and 50 per cent provision for three accounts.

Total provision for these accounts as of December 31, 2019 stood at Rs 2,403.37 crore. It restructured 3,445 MSME accounts worth Rs 24,747 lakh in the second quarter as per the January 1 circular of the RBI.

Capital adequacy ratio increased to 11.21 per cent against 11.049 per cent and tier 1 ratio stood at 9.44 per cent as of December-end.

Total business grew by 4.55 per cent to Rs 2,35,867 crore.

Deposits was up by 4.4 per cent to Rs 1,41,986 crore while credit stood at Rs 93,882 crore as on December 31, 2019.
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