Despite tough challenges, we are on track to achieve our annual guidance numbers: MD & CEO
Srinagar: While maintaining higher provisioning requirements owing to regulatory compliance, J&K Bank posted a net profit of Rs 494.11 Cr for the July-September Quarter (Q2) of current financial year (CFY), remaining well on course to meet its annual market guidance. The Bank’s net profit for half-year (H1) witnessed an increase to Rs 978.95 Cr from Rs 966.41 Cr recorded for H1 last FY.
The Bank announced financial numbers after its Board-of-Directors reviewed and approved the quarterly and half-yearly figures during a meeting held at the Bank’s Corporate Headquarters.
Key Highlights
Moderated by the provisioning of Rs 92 Cr towards its investment in the Regional Rural Bank — Jammu and Kashmir Grameen Bank — following the amalgamation of EllaquaiDehati Bank with the erstwhile J&K Grameen Bank under Central Government’s “One State, One RRB’ direction, the Bank today recorded a net profit of Rs 494.11 Cr for the Q2 and Rs 978.95 Cr for H1 of the CFY.
Reflecting steady core operations, the Bank’s Net Interest Income (NII) for the half-year (H1) is marginally up by 3.4% Year-on-Year at Rs 2899.43 Cr, while for Q2 NII stood at Rs 1433.99 Cr. In line with its market guidance, the Bank has maintained its NIM at 3.64% for the half-year (H1). The Bank’s other income for H1 was at Rs 405.19 Cr while the Cost to Income Ratio for the half-year stood at 60.80%.
Commenting on the Bank’s Q2H1 numbers, MD & CEO Amitava Chatterjee said, “In spite of widespread disruptions during the first quarter following the Pahalgam incident and the extensive damage caused by floods in the second quarter, the overall growth we have recorded is both encouraging and reassuring.”
“Even though profitability for Q2 was moderated due to an additional impairment provision of Rs 92 Cr made during the quarter in compliance with regulatory requirements, the performance is better than what was anticipated under the challenging circumstances.”, he added. Notably, the Bank has made a total provisioning of Rs 180 Cr towards Jammu and Kashmir Grameen Bank during the first two quarters of the current financial year. Excluding the impact, the Bank’s H1 profitability would be upwards of 15% YoY.
Asset-Quality
Despite difficult situation arising out of Pahalgam attack in Q1 and floods, landslides thereafter in Q2, the Bank has gained further stability in asset quality. During the quarter, the Bank’s Gross NPA Ratio has declined 18 basis-points QoQ to 3.32% and decreased by 63 bps YoY from 3.95% recorded in September, 2024.
The Net NPA ratio has also moderated by 9 bps YoY to 0.76% from 0.85%, while declining 6 bps from 0.82% recorded for the June quarter of current financial year. Meanwhile, Provision Coverage Ratio (PCR) of the Bank continued at above 90% level, while the Return on Assets (RoA) stood at 1.17% for the half-year.
On the Bank’s asset-quality, MD & CEO expressed optimism, saying, “With GNPA around 3.30% half-way through the year, I think on asset quality front, our progress is steady. And with our robust and focused risk-management practices in place, I remain optimistic about meeting our annual guidance of below 3% GNPA by the financial year-end. Besides, our PCR is also healthy at 90.39%.”
Business Growth
During the quarter, the Bank’s deposits witnessed growth of 10.23% Year-on-Year basis reaching Rs 152030 Cr, while as the net advances increased by 9.38% YoY to Rs 105153 Cr from Rs 96139 Cr recorded last year. Up by 18 bps in sequential terms from 45.71% recorded in Q1, the Bank’s CASA stood at 45.89% for the Q2 and continues to be one of the highest in the industry.
Regarding business growth, MD & CEO said, “Marking a nearly 10% year-on-year growth in business numbers reaching Rs 2.57 Lac Cr, our Q2 performance demonstrates the Bank’s operational discipline.”
“Our deposit growth is at par with the industry average, while advances primarily driven by Agri/corporate segments have shown good credit growth both in sequential and YoY terms. Our CASA ratio also exhibited a slight uptick to 45.89% on sequential basis, underscoring our commitment to sustained, quality growth”, he added.
He further said, “Despite tough challenges, this steady performance in the first half of the financial year affirms my confidence that we are very much on track to achieve our annual guidance growth numbers.”
Capital Adequacy
The Bank’s Capital Adequacy Ratio (CAR) for the July-September quarter stood at 15.27% as against 14.99% recorded last FY. In his remarks on capital position, the MD & CEO said, “With a CRAR of over 15 %, we remain well-capitalized and positioned to support future growth opportunities while maintaining financial discipline. Significantly, the CAR is exclusive of half-yearly profit of Rs 978.95 Cr, which would otherwise result in taking the ratio to above16%.”
Building Business Momentum
Commenting upon the Bank’s growing operational focus in rest of the country, MD & CEO Amitava Chatterjee asserted, “We continue to execute our policy of expanding operations beyond J&K, strategically partnering with top-tier corporates across India. Simultaneously, through increased engagement of the Bank’s leadership with the clientele across these geographies, we are in the process of sharpening our focus on building a gainful niche in the retail landscape outside J&K, particularly in the personal banking/finance segment.”
Concluding his remarks, he said, “All these initiatives are tangible markers of the transformation currently underway at our Bank. However, the foundation of our progress rests on a firm triad: our people, our processes and our technology. And we are steadily strengthening all these pillars, ensuring that efficiency, resilience and excellence remain at the core of every facet of our operations.”
