Bank of Maharashtra's profit jump leans on recoveries it says it cannot count on

Bank of Maharashtra earned ₹2,310 crore in the September 2026 quarter, 41.5% more than a year earlier, calculated from the filed results. Its net interest margin, the gap between what it earns on loans and investments and what it pays for money, measured against its earning assets, reached 3.97%, well above the 3.75% it has guided for the year. For a holder, the useful question is how much of the quarter will recur, and on several of the supports management's own answer is: not much.

One is money coming back from loans the bank had already written off. Those recoveries reached ₹1,023 crore so far this financial year, already most of the whole previous year's total. Part of that is the Maharashtra government's farm-loan waiver, under which the state pays banks what farmers owed: of what the state had paid by the end of September, ₹422 crore came back as recovery on written-off loans, though the bank gave a slightly higher figure in another answer. Chief executive Nidhu Saxena was plain about how to treat it: "But we are not counting on this because these are not effort of our branches and verticals."

Take the waiver out and this year's write-off recoveries so far come to about ₹600 crore, by subtracting one figure the bank gave from another. At that pace for a full year, which is our extrapolation rather than the bank's, they would still fall short of the ₹1,300-1,500 crore a year the bank has set itself as a target. The rest of the state's money is a possible lift in the second half, with the end of this financial year as the date the state has indicated, but its timing belongs to the government, which is why management keeps it out of its plans.

The margin carries a smaller version of the same pattern. Two items Saxena described as non-recurring, interest on the waiver money and an income-tax refund, account for roughly half of the 12 basis point rise from the quarter before. Among the other contributors he named the bank raising rates, in the first quarter, on finely priced loans to state entities, the kind of change that does persist, and he credited branch-level pricing discipline for keeping the margin above guidance.

Against those windfalls stands a cost the bank chose to take early. The bank is preparing for expected-credit-loss accounting, which requires provisions for losses on loans that have not yet gone bad. In July the bank described a charge of ₹125 crore a quarter for this transition. Last quarter it booked ₹500 crore, four times the quarterly pace described in July. Saxena said the provisions made so far cover more than a year of the bank's estimated requirement, and that, counting those, it holds ₹1,600-1,800 crore of surplus provisions, including COVID-era and global-uncertainty buffers, which it says it can use for the transition.

Loan growth also had help that will not be there again. Advances grew 30% from a year earlier, and half of the growth in large corporate loans was booked in the bank's GIFT City unit, funded partly by a special window for foreign-currency deposits that has now closed. Without that unit, credit grew 23%, still above the 18% the bank guided for the year. Deposits are no longer getting much cheaper: cost of deposits was only 4 basis points lower than a year earlier, against a much larger fall reported in July. Overall cost of funds was still 25 basis points lower.

None of this makes the quarter weak: the bank says its surplus provisions, which include what it has booked so far, can be used for the transition. It does mean part of the quarter's income came from sources the bank says it does not count on, in the same quarter that it booked four quarters' worth of the ECL provisions it had planned to spread out.