JK Bank Q1 net up 8.6% at Rs 130 cr

Worst seems to be over: Chairman

 Srinagar: J&K Bank Wednesday posted a net profit of Rs 130.05 crore for the quarter ending June 2014. The Bank, according to its spokesman, announced its reviewed financial results for the quarter following the approval of its Board of Directors at a meeting held here at the Corporate Headquarters.

The Bank’s operating profit for Q1 is Rs 447.52 crore as against Rs 480.99 crore recorded during the corresponding period of previous year.
The deposits grew by 8.62 percent for Q1 to stand at Rs 63651.94 crore as against Rs 58601.09 crore for Q1 FY 13-14. The advances have increased by 13.11 percent to Rs 44430.73 crore from Rs 39282.20 crore as recorded during the corresponding period of the previous year.
The total business of the Bank is up by 10.42 percent when compared with the corresponding period of the previous year.
The bank’s non-interest income improved to Rs 130.99 crore in the quarter under review as against Rs 92.23 crore recorded during the corresponding quarter of the previous year, while as net interest income stood at Rs 637.69 crore as against Rs 654.89 crore.
The Gross NPA ratio of the bank stood at 4.16 percent for the quarter, while as the Net NPA ratio is 2.18 percent. The NPA Coverage ratio stood at 55.08 percent.
The Net Interest Margin (NIM) remained at 3.63 percent as against 4.20 percent recorded for the corresponding period of the previous year.
The Capital Adequacy Ratio of the bank under BASEL 11 is 13.28 percent as on June 30, 2014.
During the quarter, the bank added 18 Business Units and 25 ATMs to its expanding network across the state.
Worst seems to be over: Chairman
The J&K Bank Chairman Mushtaq Ahmad Wednesday told Greater Kashmir that the Bank sacrificed a portion of its profits in the first quarter of the current financial year to maintain a strong and clean balance sheet.
“Similar measures have been taken by other banks to beat the stress away from their assets. Since economic slowdown is not yet over completely; asset-quality pressures on banks have not abated even during the first quarter,” he said. “As such banks had to go for higher provisioning on account of fresh slippages to NPA category and additions to restructured assets.” However, Ahmad said, the J&K Bank will strictly focus on asset quality monitoring and maintenance for the next couple of quarters of the current fiscal till the economic situation in the country improves. “The bank is optimistic to continue with its growth momentum in the coming quarters and maintain profitability along with improvements in net interest margin (NIM) during the current fiscal,” he said.
Ahmad said exhibiting exemplary act of financial disclosures, the J&K Bank in a most transparent and straightforward action has disclosed its bad loans. “During the quarter the gross non-performing assets (NPA) have risen 250 basis points (Q-o-Q and Y-o-Y) to 4.16 percent and net NPA soaring around 196 basis points Q-o-Q (up 204 bps Y-o-Y) to 2.18 percent. This was necessitated because of stress on few assets. These ratios are below the industry average,” he said.
He said the bank’s gross non-performing assets ratio has remained in the narrow band of 1.6-1.7 per cent of advances over the past six quarters. “We have been improving our performance year-on-year and managing stress efficiently. We have evolved a system to effectively monitor accounts that are stressed. Also, a stressed account does not always turn into an NPA. It requires close monitoring and on most  occasions, we have been able to revive such accounts,” he said.
Anticipating smooth recovery of non-performing assets (NPAs) at the end of the FY15, Mushtaq Ahmad said, “In the medium to long term I expect our gross NPA level to stabilize around two per cent. One must remember there has been stress in the system for three or four years; we have been managing it fairly well. We are confident of managing the quality of our portfolio in the coming quarters. We have the ability and strength to brave any sudden shock in the system.”
The chairman while giving details of the future growth plan said, “Going forward as well, the bank expects loan growth in J&K state to be above 25 per cent while that outside the state to be about 15 per cent.”
He said the Bank management is conscious of the fact that people of Jammu and Kashmir have a huge emotional equity invested in J&K Bank and it values it to be the most important asset the bank has.
“We have braved so many challenges throughout our remarkable journey of 75 years and we have innate capacity to meet any future challenges midway as well. Having invested in a major way in J&K, the bank is the major contributors in the state’s total lending, which currently stands at more than 65 %.   Last year increased 100000 to 200000. Besides, the bank’s Corporate Social Responsibility is completely focused on welfare activities within the state of J&K,” Mushtaq remarked and added that the bank shall continue to expand its branch network with focus in increasing low cost deposits and scaling up the flow of credit to priority sector to boost lending to agriculture and allied activities besides retail handicrafts and SME sectors.
Meanwhile, the chairman disclosed that the bank is contemplating its maiden overseas expansion in near future. “We are exploring possibilities to establish our presence in centres like Dubai and London,” he said.
He concluded that the management of the bank is firm on maintaining asset-quality.