Bank of Maharashtra plans to raise Rs 2,000cr via QIP

Mumbai: Bank of Maharashtra has decided to float a Rs 2,000-crore qualified institutional placement (QIP) of equity shares next month. The public sector lender has already received approval from its shareholders for the capital raise last year.
Speaking to TOI, A S Rajeev, MD & CEO, Bank of Maharashtra, said that the bank had capital adequacy of 14.5%. Of which, 10.9% is the tier I and capital adequacy is good.“For growth purpose, we require capital as we are envisaging a credit growth of 16-18%. This means that advances will grow by around Rs 25,000 crore for which we require Rs 1,400-1,500-crore capital,” he said.
The bank is looking at an issue of Rs 1,000 crore with a greenshoe option to retain an oversubscription of Rs 1,000 crore. “In addition to this we will be raising Rs 1,000 crore through additional tier I and tier II bonds,” said Rajeev. The bank’s stock, which was trading below Rs 11 a year ago, closed at Rs 27 on Friday. The bank has set aside Rs 750-crore Covid provisioning in March 2021 and it would not require additional provisions for stress in business due to the pandemic.
The bank used Rs 508 crore of exceptional gain from recovery due to the restructuring of Bhushan Power and Steel to make this provision. “Our provision coverage is 90% and net NPAs are 2.48%, and our operating profit is close to Rs 1,000 crore per quarter, which will provide enough cushion for provisioning,” he added.
In May 2021, the bank has seen a 98.5% collection efficiency indicating stress in 1.5% of the portfolio. “These are the loans that have been earmarked for restructuring. We are expecting Rs 1,500 crore of loans to be restructured of which Rs 400-500 crore have already been restructured,” said Rajeev.
“Last year, we had recovery of Rs 1,800 crore from bad loans. This year we are expecting a recovery of Rs 3,000 crore of which Rs 500 crore we are expecting from fully written-off accounts, which go directly to the profit,” said Rajeev.