Srinagar, Sept 8: The J&K Bank, state’s premier financial institution, is likely to face some dip in its profits in quarter two 2010-11, experts said.

 The Bank that posted a staggering Rs 145 crore profit during first quarter of this year ended June 2010, which represented a 23 per cent growth over the same period a year ago, experts said, may not be able to grow at the same scale in Q2 ending September 2010 citing continued unrest in the Valley.  The Bank during the Q2 last year had clocked Rs 134 crore profit.

 The Bank, to recall, had posted a whopping Rs 512 crore profit by 31st March 2010, despite it being the worst year for the financial institutions across the world that faced ugly recession. The Bank had weathered the worst of the depression by posting highest ever profits in 2009-10.

 Experts said with Valley remaining on boil for over two months now, and still unendingly continuing to be so, the Bank has not been able to do its business smoothly during this time.  “Even as the bank continued to do its business uninterruptedly outside Kashmir, in the Valley it was not a smooth sail with most of its branches remaining idle for long durations at a stretch during past over two months.”

 Insiders in the Bank said the non-interest or fee based income of the Bank, which constitutes over seven per cent of its total income, has been badly hit in the Valley. “The income the bank earns on account of service charges accrued through draft issues, commission exchange, etc, has completely come under strain in the Valley,” insiders said.

 They said not only this; the recoveries in the Valley too have nosedived due to prevailing conditions.

 Of its about 550 total branch strength, the Bank has more than 60 per cent branches in the Valley. “All these branches could not conduct the business for most of the period during the last over two months because of the continued curfews, strikes, shutdowns in the Valley.”

 Insiders said while the cost of running a branch with a staff of about five persons comes to more than Rs 1 lakh, “there has been minimal income from these branches during past two months.”

 “This is simple arithmetic. When you are running a branch at some cost but getting little or no income from it, you are bound to suffer losses,” they said.
 However, a senior official of the Bank, who wished not to be named, said the growth of the past quarter would be maintained at any cost. “It is true that our offices spread across the Valley could not do good business during the past two months. But our branches outside the state as also in Jammu and Ladakh are running smoothly,” he said.

 He however admitted that no further growth could be expected this quarter while hastening to add that the previous growth would definitely be maintained.

Lastupdate on : Wed, 8 Sep 2010 21:30:00 Mecca time
Lastupdate on : Wed, 8 Sep 2010 18:30:00 GMT
Lastupdate on : Thu, 9 Sep 2010 00:00:00 IST