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Analyst Meet / AGM - Analyst Meet

Targets 10% loan growth for FY2017

Bank of Maharashtra

23-May-2016, 10:06

Bank of Maharashtra conducted an analyst meet on 20 May 2016 to discuss the financial results for the quarter ended March 2016 and prospects of the bank. Sushil Muhnot, CMD of the bank addressed the call:

Highlights:

* The Bank has achieved landmark business level of Rs 2,50,000 crore in FY2016. The Bank's total business increased 12% to Rs 250230 crore at end March 2016 for March 2015. Gross advances have gone up by 10% to Rs 111240 crore, while deposits moved up 14% to Rs 138990 crore at end March 2016.

* CASA Deposits increased 13% to Rs 50967 crore constituting 36.68% of total deposits at end March 2016 compared with 37% at end March 2015

* The fresh slippages of advances jumped to Rs 2712 crore in the quarter ended March 2016. The recoveries, upgradations and write-offs together were lower at Rs 686 crore. As per the bank, the fresh slippages of advances was mainly contributed by the agriculture sector.

* The fresh slippages of advances stood at Rs 5623 crore in FY2016, of which only Rs 500-600 crore of slippages were on account of the Asset Quality Review (AQR) of banking system by the RBI in FY2016.

* As regard to AQR list for FY2017, the bank has exposure to 18 accounts, of which 5 accounts have already slipped to NPA category. So, the balance 13 accounts has exposure of Rs 1000 crore.

* With the expectation of better monsoon rainfall in 2016, the bank expect the asset quality of the agricultural sector to remain stable, while expect the iron and steel portfolio to perform better. However, the bank expect your overall asset quality pain to continue in FY2017.

* The restructured advance book of the bank has declined Rs 4395 crore at end March 2016 from Rs 5715 crore at end December 2015. The decline in the restructured advance book was mainly on account of conversion of discom loan into State Development Loans (SDLs) bonds. Bank has converted Rs 2100 crores of discom loans into state bonds in Q4FY2016..

* As per the bank, it has about Rs 3000 crore of loan accounts under watch list at end March 2016. However, as per the bank the restructured advances + GNPA which stands at 13.4%, would be maintained stable in FY2017.

* Bank expects the loan growth to remain stable at 10% for FY2017. The bank is focusing strongly on housing loans sector for boosting overall loan growth. The bank has approved the scheme to appoint DSAs to boost housing loan growth in the Tier II and Tier III towns.

* Bank has made a request to the Government of India for the capital infusion of Rs 500 crore.

* The net interest margin (NIM) of the bank declined to 2.59% in FY2016 from 2.82% in FY2015, which was mainly impacted by reduction in the base rate by 30 basis points (bps) in the year ended March 2016.

* As per the bank, the impact of marginal cost of funding based lending rate on its NIMs is expected to be 5-7 bps for the year ending March 2017.

* Bank has added only 15 new branches in the year ended March 2016. Bank would continue to be slow on new branch opening in FY2017. The bank has improved the share of e-transactions to 60% in the total transactions, which is targeted to be improved further in FY2017.