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 Ellaquai Dehati 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 a 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 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 the 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 the 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.

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