Bank of Maharashtra's gold loan book shrinks 46%, and it hasn't explained why
After reporting the gold loan book at ₹24,000 crore in April and ₹22,000 crore in January, management now says it's ₹13,000 crore. Tax and debt waiver guidance also shifted without explanation.
What's new
- Net profit ₹2,020 crore, up 27% YoY; advances grew 27% vs 18% guidance.
- Gold loans surged 75% YoY to ₹13,000 crore, but that contradicts prior quarter's ₹24,000 crore figure.
- NIM at 3.85% (10 bps above 3.75% guidance) but compressed 10 bps sequentially.
- Treasury profit of ₹266 crore includes ₹104 crore one-time SR recovery.
Themes from the call
Gold loan book discrepancy
A 46% contraction in the gold loan book from the prior quarter, from ₹24,000 crore to ₹13,000 crore, with no explanation; undermines data reliability.
Guidance discipline
CEO refused to raise 18% advances guidance despite 27% Q1 delivery, signalling a priority for quality over volume.
Deposit competition
Deposit growth at 13% lags 14% guidance; CASA growth slowed as households shift to mutual funds, pressuring NIM.
Guidance watch
- FY26 advances growth maintained at 18% (refused upgrade despite 27% Q1)
- NIM guided at 3.75% for FY26 (Q1 at 3.85%)
- Gross NPA below 2%, Net NPA below 0.25%, credit cost below 1%
- ₹5,000 crore equity raise this fiscal year, timing discretionary
- ECL provisioning at ~₹125 crore per quarter over 4 years
Risk flags
- Gold loan book figure contradicts prior quarters by ~46%; data credibility risk
- Tax rate below guided range without revision; fiscal planning risk
- Debt waiver eligible amount revised up 75% without explanation; potential provisioning surprise
- Deposit growth trailing credit growth; funding stress
Key quotes
-
"We are focused on profitable growth where there is no compromise on asset quality in the medium to long term."
— Nidhu Saxena, MD & CEO -
"On a PBT basis, Madam, roughly it will be around 18% to 20%"
— Management, Apr 2026 call -
"on an operating profit basis, it is 12-13%, and on a PBT basis, it is 16-17%"
— Management, Jul 2026 call
The brief
Bank of Maharashtra reported a strong quarter on the surface: net profit up 27% to ₹2,020 crore, advances growth of 27% beating its 18% guidance, and NIM at 3.85% above the 3.75% target. But the numbers come with three unexplained reversals that erode confidence in the underlying data. The gold loan book, which stood at ₹24,000 crore in the April call and ₹22,000 crore in January, is now reported at ₹13,000 crore, a 46% contraction that management did not address. The PBT tax rate, guided at 18-20% in April, came in at 16-17% without a revised forecast. And the eligible amount for the Maharashtra farm loan waiver jumped 75% from ₹2,000 crore to ₹3,500 crore. These are not trivial revisions; they shift the bank's earnings trajectory and provisioning needs. On the positive side, the bank's core loan quality held up: gross NPA at 1.45%, net NPA at 0.13%, and credit cost at 0.99% all inside guidance. The CEO's refusal to lift the advances growth target despite a 27% quarter signals deliberate discipline. But a discipline message rings hollow when the same dataset used to manage that discipline appears to have retroactive adjustments. The deposit story is the other challenge: growth at 13% trailing credit, with CASA squeezed by household rotation to mutual funds. The bank's branch expansion and profitability dashboards are sensible, but they do not explain why the gold loan book lost half its value between calls in a quarter when gold prices were rising. Until management addresses these inconsistencies, the street will discount every number that cannot be independently verified.
Bank of Maharashtra's quarter looks clean, but the gold loan revision is a stain that management needs to explain. Until then, trust the numbers at your own risk.