The Hindu Business Line : Bank of Maharashtra to enter non-life insurance biz

Mumbai, Oct.24 Bank of Maharashtra plans to enter the non-life insurance segment this fiscal, in joint venture with the Chennai-based Shriram Group and South Africa-based insurance company Sanlam. The initial capital will be Rs 100 crore, said Mr Rajiv Madhok, Executive Director, Bank of Maharashtra.

“The bank’s stake in the joint venture will be 15 per cent, Shriram Group’s stake 59 per cent and that of Sanlam will be 26 per cent,” said Mr Madhok. Sanlam and Shriram Group are already in a joint venture for life insurance.

The bank has slashed the interest rates on home loans by 25-50 basis points, the floating rate of interest will range from 10 to 10.75 per cent, across various timeframes.

Q2 performance

Backed by a higher net interest income, the bank has posted 47.58 per cent growth in net profit at Rs 90.45 crore for the quarter ended September 30, against Rs 61.29 crore during the corresponding quarter of the previous year.

The net interest income rose by 16.94 per cent at Rs 292.86 crore (Rs 250.43 crore). “The substantial increase in interest income from advances and investments has contributed to the higher net interest income,” said Mr M.D. Mallya, Chairman and Managing Director.The non-interest income went up by 50.62 per cent at Rs 61.83 crore (Rs 41.05 crore), which includes recovery in written off accounts amounting to Rs 21.02 crore (Rs 11.64 crore). The net interest margin was at 2.9 per cent (3.03 per cent).

“There has been a fall in the net interest margin as our cost of funds has gone up substantially,” said Mr Mallya. The cost of funds for the half-year ended September has gone up to 5.18 per cent (4.5 per cent).

The net non-performing assets of the bank have gone down at 1.12 per cent (1.66 per cent). The capital adequacy ratio of the bank stands at 13.6 per cent (11.16 per cent).

The bank has applied for licences for 66 branches. “Once we get those licences our branch strength would go up to 1,430 by March 2008,” said Mr Mallya.

More Stories on : Diversification | Public Sector Banks | General Insurance

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