National Footprint Adds to BoM’s Growth

WHEN PROFESSORS V.G. Kale and D.K. Sathe founded Bank of Maharashtra (BoM) in 1935 in Pune to support local businesses, little would they have imagined that one day it would be among India’s fastest-growing banks in terms of deposits, advances and profitability. Today, BoM is present across 28 states and seven union territories, with more than 54% of its branches outside Maharashtra.

“The bank was focused at the regional level since inception, which worked well for organic growth. In alignment with the accelerating pace of the economy, it has now strategically evolved its business model. We have moved away from our previous concentrated approach to penetrate untapped regions,” says MD and CEO Nidhu Saxena, who took charge in March this year.

“The bank plans to open 200-250 branches annually and build on its national footprint beyond the current 2,500. It has improved its zonal presence from 30 to 45 for effective monitoring of branches and quick decision-making,” he adds.

The expansion has come along with rising profitability. The Pune-based bank’s net profit rose to ₹4,072 crore in FY24, from ₹2,602 crore in FY23.

Last fiscal, BoM also logged the highest growth in terms of total business and deposit mobilisation among public sector lenders. Total business grew 15.94% YoY to ₹4,74,411 crore in FY24, while total deposits increased 15.66% to ₹2,70,747 crore.

BoM has grown despite rising competition, says G. Chokkalingam, founder, Equinomics Research and Advisory. “Traditional NBFCs (non-banking financial companies) are expanding, small finance banks are a new layer in the structure and there is consolidation among public sector banks. Despite all these, BoM has shown strong growth due to good quality of management, which had a clear vision for turnaround and growth.”

“The market has also rewarded the bank in terms of re-rating the valuation multiple. The stock which used to be traded at a discount to adjusted book value has got two times price to adjusted book value and created wealth for shareholders,” he adds.

The bank has also initiated multi-pronged strategies to improve performance and profitability. “We are aware there will likely be a reversal in the interest rate cycle. This will have a direct impact on our repo-linked lending portfolio, which currently constitutes around 37% of the loan book. Additionally, deposit re-pricing typically occurs with a lag and the cost of funds is also going up.”

BoM’s strength is its current account savings accounts (CASA) deposits, says Saxena. It has maintained an average CASA of 49%, which is above the industry average of 42.31% as of March 31, 2024. “Our new branches are acting as a big facilitator in raising our CASA share by onboarding customers. Moreover, our business mix is well balanced with a major thrust on the retail, agriculture and MSME portfolio,” says Saxena.

“We are also focusing on lending to mid-sized corporates and MSMEs, which extend good margins. The bank has set up a new business & customer acquisition vertical which will be instrumental in canvasing low-cost deposits and quality advances. Onboarding clients on our digital channels and making them active digitally are our focus areas,” he adds.

BoM is using artificial intelligence (AI) for predictive customer data analysis, robotic process automation for reducing manual work, and AI-based voice and video assistant for automated calling etc. “Currently, we have on-boarded 57 fintechs, and more are in the pipeline,” says Saxena.