Bank of Maharashtra aims to become eighth largest PSB, says AS Rajeev, MD & CEO

In terms of total business (deposits plus advances), among 12 public sector banks (PSBs), we are ranked 11th. Our aim is to become the eighth largest PSB within two years via organic growth.

When I joined the bank (in December 2018), it had 1,800 branches. Now, we have 2,040 branches. During the current year, we will open 160 branches (last year BoM opened 120 branches) with a focus on opening specialised branches (for housing finance and mid-corporate segments). By March-end 2023, we will have 2,200 branches with a presence in 600 districts and will add 200 branches every year thereafter. We will be covering 150 districts next year. Our aim is to have at least one branch in every district. 

We already have six housing finance branches in Pune, Mumbai, Delhi, Hyderabad, Chennai and Bengaluru. These are doing very well. For example, our Pune branch has more than ₹600 crore housing loans outstanding.

As these branches are specialised, they can extend big-ticket home loans of up to ₹30 crore. The turnaround time for loan proposals at these branches is 2-3 days. Now, our average home loan ticket size is around ₹60-70 lakh. Earlier (about three years back), this was only around ₹15-20 lakh as we were concentrating on smaller home loan accounts in towns and rural areas. Now, we are concentrating on bigger accounts in Mumbai, Delhi and other major centres.

This is the reason why our home loan growth is about 20 per cent. We plan to add six more housing finance branches in the current year in Kolkata, Ahmedabad, Jaipur, Indore, Ernakulam and Vijayawada. Our aim is to have specialised housing finance branches in all tier-I and tier-II cities within two years.

At around ₹30,000 crore, our housing loan portfolio is small… In the last two-three years, our market share in the banking system’s total advances increased from 1-1.20 per cent. However, housing sector advances have not increased proportionately while our non-performing assets in our housing loan portfolio are below 1 per cent.

Our aim is to increase our market share in housing loans equal to our market share in the banking system’s total advances. For this, we need to increase our portfolio by another ₹20,000 crore in the next one-and-a-half years.

Currently, RAM sector advances account for about 60 per cent of the total advances and the balance is corporate loans.

Within the corporate loans portfolio (of about ₹56,000 crore), there is a concentration of large corporate loans (about 75 per cent). Now, the focus is on improving the share of mid-corporate loans within the corporate loans portfolio. For this, we will open 10 mid-corporate branches, which will focus on loans from ₹10-100 crore. We have 12 large corporate branches in major centres all over India. These branches sanction loans above ₹100 crore.

We plan to increase our mid-corporate loan portfolio by ₹5,000 crore in FY23 as the yield is good and the risk is less. Right now, mid-corporate loans account for about 25 per cent of the total corporate loan portfolio. Our aim is to increase this to 40 per cent.

Now, the advances growth of the banking system is around 14-15 per cent. When the advances growth of the system was 5-6 per cent, our growth rate was 20-25 per cent. We were able to grow above the industry average because of customer service and competitive interest rates. So, we expect our loan growth momentum to be sustained at 18-20 per cent in FY23.

The quality of our assets has also improved. Advances in the Special Mention Account (SMA)-1 and 2 categories (advances exhibiting signs of incipient stress) together were only at 0.40 per cent of total assets as at June end 2022.

Our bank is strong capital-wise. Our Capital Adequacy Ratio (CAR) was at 16.15 per cent as at June-end 2022. We have a Covid-related provision of ₹1,200 crore. If this is added, then CAR goes up to 18 per cent. In the last quarter, we made a net profit of ₹452 crore. If we add the quarterly net profit of ₹450-500 crore, then the yearly net profit works out to around ₹2,000 crore. If this is added to tier-I, we can grow our assets by ₹20,000 crore, giving us a 20 per cent growth.

Overall, in FY23, our bank is planning to raise about ₹2,000 crore via Additional Tier (AT)-I bonds issuance of about ₹700 crore (base issue size of ₹100 crore plus a greenshoe option of ₹600 crore), tier-II bonds issuance of ₹500 crore, and a follow-on public offer of about ₹1,000 crore (either in Q3 or Q4 of FY23). This capital will take care of our growth requirements for three years.