Bank of Maharashtra's gold loan figure collapses 46% without explanation
A strong quarter is overshadowed by an unexplained halving of the gold book, undercutting trust in management's numbers.
The numbers
- Q1 net profit ₹2,020.19 cr, up 27% YoY.
- Gross NPA narrowed to 1.45% from 1.74% a year ago.
- Bank reversed ₹250 cr from COVID provisions; still holds ₹760 cr buffer.
- Advances grew 27%, beating the 18% annual guidance carried into Q1.
Management's story
- CEO refused to lift the 18% advances growth guidance despite the beat, citing a focus on quality over volume.
- NIM came in at 3.85%, above the 3.75% target for FY26.
- Deposit growth lagged at 13%, with CASA squeezed by household rotation to mutual funds.
“We are focused on profitable growth where there is no compromise on asset quality in the medium to long term.”
— Nidhu Saxena, MD & CEO
Where they diverge
The gold loan book, reported at ₹13,000 cr in July, stood at ₹24,000 cr in April and ₹22,000 cr in January—a ~46% contraction management did not explain. Tax rate on PBT, guided at 18-20% in April, came in at 16-17%. The Maharashtra farm loan waiver eligible amount jumped from ₹2,000 cr to ₹3,500 cr. None of these shifts were addressed on the call. A clean headline number means little when the supporting data appears to move retroactively.
The full read
Bank of Maharashtra posted a strong quarter on the surface: profit up 27%, gross NPAs at 1.45%, and a ₹250 cr COVID provision reversal. Advances growth of 27% beat the 18% guidance the CEO refused to raise—a signal of deliberate discipline. But that discipline message is undercut by three unexplained data reversals. The gold loan book contracted from ₹24,000 cr in April to ₹13,000 cr in July, a 46% drop with no reason given. The effective tax rate landed below the guided range. And the eligible amount for the Maharashtra farm loan waiver jumped 75%. None of these were addressed on the call. For a bank where the CEO preaches cautious growth, such retroactive shifts erode trust in every number that cannot be independently verified. The market had priced the headline numbers; it is now pricing the credibility gap.
What we're watching
- Management's explanation for the gold loan book revision; until then, data reliability remains an open question.
- Whether the tax rate stays below the old guidance band; a revision could signal better cost control or a one-off.
- The final outflow from the debt waiver: at ₹3,500 cr eligible, provisioning needs could rise materialy.
- Deposit growth vs. credit growth in Q2; if CASA continues to shrink, NIM guidance of 3.75% is at risk.