Bank of Maharashtra — Credit Ratings, 17-04-2025: Credit Rating

Consolidated financials detail significant improvement for Bank of Maharashtra (BOM), underscored by an upgrade in its Viability Rating (VR) to 'bb-' from 'b+'. The bank's impaired loan ratio shows a remarkable drop from 7.2% in FY21 to 1.8% in the first nine months of FY25, bolstering its profitability metrics. BOM's operating profit/risk-weighted asset (OP/RWA) ratio climbed to 3.5%, fueled by higher net interest margins and loan growth, though normalisation is anticipated by FY26.

A notable infusion of INR 3,500 crore (cr) in new equity contributed to a robust Common Equity Tier 1 (CET1) ratio of 16.1%, expected to stabilize near 15% post-dividend payments. Operational costs appear manageable, supported by effective cost-control efforts, resulting in lower credit costs.

BOM continues to demonstrate sound balance sheet management and cash flow stability, reflected in a loan/customer deposit ratio improvement to 82%. This stability enhances liquidity coverage, positioning the bank favorably against peers despite some deposit lag.

Strategically, BOM's focus on improving asset quality while maintaining a balanced growth approach presents a positive outlook. Market sentiment appears stable given the favorable economic conditions projected in India.

Investor insight leans toward a buy, as the bank's financial resilience, operational improvements, and strong state backing hint at a promising trajectory. However, potential investors should remain vigilant about market risks and operational challenges.