BoM's NIM healthiest among 8 key PSU banks, prefer BoB shares: YES Securities

YES Securities in its latest note on PSU banks said Bank of Maharashtra (BoM) has the healthiest net interest margin (NIM) among its comparison universe of eight lenders, driven by healthy loan mix and high CASA ratio. On valuation basis, the brokerage prefers Bank of Baroda (BoB) among PSU banks, even as it has ‘Buy’ on two other stocks namely State Bank of India and Indian Bank. The domestic brokerage did not offer any rating on BoM.    

YES Securities said BoM has the highest 3-year loan growth CAGR in its comparison universe of PSU banks.  BoM's asset quality is largely under control and provision levels are quite healthy, it said adding that BoM seems reasonably well-capitalised compared with other PSU bank peers.   

YES Securities finds BoB worth Rs 400, suggesting 33 per cent potential upside over its Tuesday’s closing price. It sees SBI at Rs 1,225 with upside potential of 26 per cent. On India Bank, YES Securities has a target of Rs 1,075, which hints at 22 per cent potential upside.  

While YES Securities does not offer any rating on BoM, it said the public lender registered a whole bank NIM of 3.9 per cent in the most recent quarter compared with 2.4-3.3 per cent for PSU bank peers. 

BoM’s yield on advances was the highest at 9.2 per cent compared with PSU bank peers at 7.8-8.3 per cent. 

“BoM’s healthy yield is under-pinned by a low share of corporate loans, which is at 38 per cent of total loan book, which is the lowest in our comparison universe, barring Indian Bank. BoM’s cost of deposits is also the lowest in our comparison universe at 4.7 per cent compared with 4.9-5.7 per cent for PSU bank peers,” YES Securities said. 

YES Securities said BoM’s low cost of deposits is aided by its healthy CASA ratio, which at 50.4 per cent is the highest in the broker’s comparison universe.

“BoM has the highest 3-year loan growth CAGR in our comparison universe of PSU banks The FY22-25 3-year loan growth CAGR for BoM is 21.6 per cent compared with 13-15.9 per cent for PSU bank peers. BoM is still tracking the highest loan growth of 17 per cent YoY as of September 2025 compared with 5.6-15.9 per cent for PSU bank peers, YES Securities said. 

BoM’s credit deposit ratio is relatively high at 80.8 per cent, which is the third highest in our comparison universe. BoM’s loan book base is small at Rs 2.5 trn compared with Rs 6.1-43.6 lakh crore for PSU bank peers.

“BoM's asset quality is largely under control and provision levels are quite healthy BoM’s annualised slippage ratio in FY25 at 1.1 per cent is largely under control with PSU bank peers also displaying good outcomes between 0.5-1.6 per cent. BoM is well provided for with specific PCR as high as 98.3 per cent, which is the highest in our comparison universe,” it said.

“BoM’s CET1 ratio at 14.1 per cent is the third highest in our comparison universe. Its Tier 1 ratio is also the third highest at 15 per cent. Its Total Capital Ratio / CRAR is the highest at 18.1 per cent in our comparison universe,” YES Securities said.