Bank of Maharashtra Surges 35% Profit in FY26 — Best Performance Among India’s Public Sector Banks

By B Janardhanan, Markets Editor · Published June 20, 2026

Key Takeaways

• Bank of Maharashtra net profit surged 35% to ₹5,369 crore in FY26 — the highest profit growth among all PSU banks.
• Gross NPA ratio fell to 1.74% — the lowest in the bank’s history and among the lowest for any PSU bank in India.
• Loan book grew 20% year-on-year to ₹2.34 lakh crore, driven by MSME lending (up 28%) and retail (up 24%).
• Return on Assets (ROA) of 1.88% and Return on Equity (ROE) of 22.1% — both approaching private sector bank benchmarks.
• CASA ratio improved to 52.3% — providing low-cost funding that supports net interest margin (NIM) of 3.64%.

What Happened?

Bank of Maharashtra (BoM) reported its FY26 annual results in May 2026, showing net profit of ₹5,369 crore — a 35% year-on-year increase and the highest profit growth rate among all public sector banks in India for FY26. SBI (India’s largest bank) grew profit 16%; PNB grew 23%; Canara Bank grew 19%. BoM’s 35% growth significantly outpaced every PSU peer, cementing its position as the standout performer in India’s government-owned banking sector.

The profit surge was driven by two simultaneous improvements: on the income side, net interest income (NII) grew 18% to ₹9,802 crore, supported by a 20% loan book expansion and a NIM of 3.64% — the highest among comparable PSU banks. On the cost side, provisions for bad loans fell 42% year-on-year, as BoM’s aggressive NPA resolution strategy over FY24–FY26 paid off: gross NPA fell from 3.94% in FY23 to 2.16% in FY25 to a record low 1.74% in FY26. Net NPA — which represents provisions-adjusted bad loans — fell to just 0.20%, among the lowest in the Indian banking system.

BoM’s loan book growth of 20% to ₹2.34 lakh crore was driven by MSME lending (up 28%), retail loans (up 24%), and agriculture (up 15%). The bank’s strategy of focusing on the MSME segment — particularly in Maharashtra, Goa, and Gujarat — has proven highly effective: BoM’s MSME NPA ratio stands at just 2.1%, significantly below the sector average of 4.8%. The bank’s CASA (current account + savings account) ratio improved to 52.3% — one of the highest among PSU banks — providing stable, low-cost deposits that support the bank’s profitability through reduced funding costs.

Why It Matters

Bank of Maharashtra’s 35% profit surge in FY26 matters for several reasons. First, it demonstrates that public sector bank reform in India is working — the structural improvements in NPA resolution, capital efficiency, and credit underwriting that the government and RBI pushed for through FY22–FY24 are now translating into sustainable profitability improvements at the individual bank level. BoM’s ROA of 1.88% is approaching the 2%+ ROA of leading private sector banks like HDFC Bank and Kotak Mahindra Bank — a convergence that would have been inconceivable five years ago when PSU bank ROAs averaged below 0.5%.

Second, BoM’s performance validates the MSME lending model as a high-return, manageable-risk segment for Indian banking. MSMEs represent 30% of India’s GDP, 48% of exports, and employ approximately 110 million people — but have historically been underserved by formal banking. BoM’s success in building a quality MSME loan book with a sub-2.5% NPA ratio demonstrates that MSMEs can be served profitably with the right underwriting and relationship banking approach.

Expert Analysis

Is BoM’s NPA Improvement Sustainable?

The key question for Bank of Maharashtra’s continued outperformance is whether the NPA improvement trajectory is sustainable or whether the low-NPA environment of FY26 reflects a cyclical peak in credit quality that will revert. The evidence suggests sustainability: BoM’s NPA improvement has been structural — driven by write-off of legacy bad loans (₹3,200 crore written off over FY23–FY25), active resolution through IBC proceedings, and importantly, by the improvement in the credit quality of the book being built today. New loan originations are being underwritten with more rigorous credit scoring, and the MSME and retail segments that BoM is growing fastest are historically lower-NPA categories than the infrastructure and large corporate loans that drove the pre-2020 NPA cycle.

The PSU Banking Sector Transformation Story

BoM is not an isolated outlier — it is the frontrunner of a broader transformation in India’s public sector banking system. The government’s bank recapitalisation of ₹3.5 lakh crore over FY17–FY23 rebuilt PSU bank balance sheets; the IBC resolution mechanism cleared legacy NPAs; and professional management mandates (including performance-linked board compensation) improved governance. The aggregate net profit of India’s 12 PSU banks in FY26 crossed ₹1.5 lakh crore — the highest in history — with the sector’s aggregate gross NPA falling from 11.6% in FY18 to 3.4% in FY26. BoM’s 1.74% gross NPA is the leading edge of this transformation; other PSU banks are heading in the same direction.

Market Impact

BoM Stock: Outperformer in PSU Banking

Bank of Maharashtra shares gained 42% in FY26 — significantly outperforming the Nifty PSU Bank index (+19%) and the Nifty 50 (+11%). The stock trades at approximately 1.8x book value — a premium to the PSU bank sector average of 1.2x, but still a discount to private sector banks (HDFC Bank: 3.2x, Kotak Mahindra: 3.8x). Analysts at ICICI Securities and Emkay Global have a buy rating on BoM, with target prices implying 15–20% upside from current levels. The key valuation case is simple: if BoM sustains its FY26 ROA of 1.88% and ROE of 22.1%, the appropriate multiple is significantly higher than today’s 1.8x book.

Frequently Asked Questions

What is Bank of Maharashtra’s profit in FY26?

Bank of Maharashtra reported net profit of ₹5,369 crore in FY26 — a 35% year-on-year increase and the highest profit growth rate among all public sector banks in India. This compares to ₹3,977 crore in FY25. The profit growth was driven by NII growth of 18%, a 42% fall in provisions due to NPA improvement, and a 20% loan book expansion.

What is Bank of Maharashtra’s NPA ratio in FY26?

Bank of Maharashtra’s gross NPA ratio fell to a record low 1.74% in FY26, down from 2.16% in FY25 and 3.94% in FY23. Net NPA stands at 0.20% — among the lowest in the Indian banking system. The NPA improvement reflects aggressive resolution of legacy bad loans through IBC proceedings, write-offs, and improved credit underwriting in new originations.

Conclusion

Bank of Maharashtra’s 35% profit surge in FY26 is the most compelling evidence of what India’s public sector banking transformation looks like at its best. A gross NPA of 1.74%, a ROA of 1.88%, and a 20% loan book growth rate — combined with a CASA ratio of 52.3% that provides a natural funding advantage — position BoM as a fundamentally strong franchise that is closing the gap with India’s leading private sector banks. For investors willing to bet on the PSU banking sector’s continued improvement, BoM represents the benchmark case: the bank that has moved furthest, fastest, and can show others the path forward.

Sources

• Bank of Maharashtra: FY26 Annual Results, May 2026
• RBI: Banking Sector NPA Data, Q4 FY26
• ICICI Securities: Bank of Maharashtra Initiating Coverage, June 2026

This article is for informational purposes only and does not constitute financial or investment advice.