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Analyst Meet / AGM - Analyst Meet

Focusing on profitable growth, expects asset quality stress to ease

Bank of Maharashtra

28-Feb-2014, 07:08
Bank of Maharashtra conducted an analyst meet on 03 February 2014 to discuss the financial results for the quarter ended December 2013 and prospects of the bank. Sushil Munot, CMD of the bank addressed the meet: Highlights:

The sharp jump in bad loans mainly impacted the performance of the bank in the nine months ended December 2013. Bank had to step up provisions for bad loans by additional Rs 225 crore in 9MFY2014 over 9MFY2013.

As per the bank, an increase in bad loans was mainly caused by strong advances growth for last few years. An incremental NPAs were mainly contributed by infrastructure and related services in the large corporate segment.

Bank has witnessed about Rs 300 crore increase in employee expenses in 9MFY2014, of which Rs 200 crore has been on account of wage revision provided at the rate of 9% and provision for pensions. Bank has opened 151 branches and installed 334 ATMs in 9MFY2014, while also recruited 1400 staff in 9MFY2014 weighing on operating expenses.

Further, the bottom-lines of the bank were also impacted on account of provision for investment deprecation at Rs 90 crore in 9MFY2014 against write back of Rs 50 crore in the corresponding period last year.

Fresh slippages of advances jumped to Rs 1393 crore in Q3FY2013, which half of the fresh slippages of Rs 2781 crore in 9MFY2014.

Fresh restructuring of advances stood at Rs 213 crore in Q3FY2014 and Rs 1308 crore in 9MFY2014.

Bank expects fresh slippages to decline more than 40% in Q4FY2014 from Q3FY2014 level, while expects

restructuring to increase to be mainly contributed by Corporate Debt Restructuring (CDR) cells proposals. Bank has already classified these CDR proposals as NPAs.

Bank has categorized bad loans into different buckets and formed different strategies for each bucket. Bank has started a one-time settlement (OTS) scheme for bad loans below Rs 5 lakh, which has received strong response.

Bank has formed various groups focusing on NPA management and recovery.

Bank has also appointed Ernest and Young as consultant for business transformations.

Bank will focus on retail and SME segment for advances growth.

Bank proposes to bring back the NIM to original level.

As per the bank, there is huge CASA potential and it is focusing on new account opening for CASA and strong advertising for improving CASA ratio.

Going forward, bank is looking for profitable growth, while expects asset quality pressure to ease.