J&K Bank 9 month profit grows by 43% to Rs 250 cr

Envisaging business of `2.45 lakh cr with profit target of `2000 cr by 2022: Parvez

Srinagar, Publish Date: Jan 13 2019 12:25AM | Updated Date: Jan 13 2019 3:28AM
J&K Bank 9 month profit grows by 43% to Rs 250 crFile Photo

J&K Bank, the state owned premier financial institution, on Saturday announced its results for the  third quarter and nine months ended December 31, after the reviewed results were adopted by the board of directors in a meeting held at Jammu. 

The bank reported a 43 percent increase in its net profit to Rs 250.09 crore for the nine months ended December 31 as compared to 174 crore reported for the same period in previous fiscal. For the Q3 the bank posted a profit of Rs 103.75 crore as compared to 72.47 crore for the same quarter last year. The growth in J&K Credit has been reported at 22 percent over the last year and net interest income the difference between interest earned on loans and that paid on deposits grew to Rs 2452 crore as compared to Rs 2215 crore in the nine months period for last financial year.  

Expressing satisfaction on the results chairman & CEO of the bank Parvez Ahmed said: “The bank has been able to maintain consistency in its growth rate and earnings. Our focus on expansion of credit in J&K has strengthened our core income with a credit growth rate of 22 percent which is spread across all the regions of the state with traction in all the sectors especially retail and SME. We met our third quarter profit estimates despite downgrading the much publicized IL&FS exposure and making adequate provisions, though a number of the banks are still maintaining the account as standard. With this our clean up is almost complete & recognition cycle is  drawing to an end though credit costs will take some more quarters to align to the long term averages due to provisioning pressure on account of IL&FS and ageing of NPAs. Going forward we are going to consolidate further and for now we will maintain our strategy of J&K state focused growth which offers a reasonably high absorption capacity with pull across sectors in alignment with the development oriented budget and recently announced industrial policy of the state.”

“I believe this is our resilience getting visible with unflinching support from our promoters the state government, guidance from the Board, loyalty of our customers, emotional equity of our people and consistent efforts from the dedicated human capital of the bank who have done a commendable job during the turbulent times over the last two years. From now onwards, the bank will focus on the transformation exercise by aggressively implementing the Business Plan 2022 prepared in consultation with management consultants and we expect the implementation to be complete by the end of FY 20. Some of the initiatives have already been either rolled out or piloted and have shown very encouraging results. Especially in the digital space our share of digital transactions have increased to 60 percent besides the digital acquisition of personal loans through our Phone Pe Loan channel has grown exponentially. Post transformation we are envisaging a total business of 2.45 lakh crore with a targeted profit of Rs 2000 crore, NIIM ranging between 3.5-4 percent, ROA of 1.3 percent, ROE of 16 percent and credit cost below 1 percent at the end of FY 2022. So in terms of numbers our best is yet to come” added Parvez Ahmed.

The bank’s total business as on the close of December 2018 stood at Rs 1,57,279 crore comprising of deposits of Rs 86210 crore and gross advances of Rs 71069 crore  as compared to Rs 1,36,936 crore a year ago registering an increase of around 15 percent. The bank reported a stable Net Interest Margin (NIM) of 3.76 percent largely driven by the bank’s low cost of funds at 4.90 percent with a CASA contribution of 49 percent. The NPA coverage ratio though static on a YOY basis and still comparable with the best in the industry, has seen a dip on sequential basis to 65.82 percent mainly on account of downgrade of the IL&FS which reflects that the bank has been able to tide over the IL&FS shock without any major deterioration in the balance sheet parameters. The Gross and Net NPA ratios of the bank by and large remained unchanged at 9.94 percent and 4.69 percent.

J&K Bank chairman speaks on NPAs

“Right from the word go I have tried to instill transparency by recognising the stressed accounts in the balance sheet which were at that time professed at a very high level of 20 percent and the slippages of 13000 crore including that of IL&FS are from the inherited portfolio. Having done that we took initiatives for cleansing and consolidation of Balance Sheet, Recovery & Resolution of Bad Debts by making adequate provisions, Creation of a dedicated Impaired Assets Portfolio Management (IAPM) vertical to focus on recovery, settlement & resolution of NPAs which resulted in Recovery / Resolution of about Rs. 5000 crore bad debts with improved Provision Coverage &  net NPA ratios. Simultaneously we de-prioritized corporate especially low-rated & Consortium lending and enhanced our focus on retail and MSME particularly in productive sectors of J&K state.

So we have been able to recognize & manage our NPAs fairly well and the latest surprise NBFC fiasco of IL&FS leading to a major downgrade in the current quarter is also now behind us. With this we have completed the transparent asset recognition cycle which had culminated in a loss of Rs 1632 Cr for the FY 16-17 with a sharp dip in our Provision Coverage Ratio. The Bank has shown a strong resilience with a focused approach in NPA management and earnings growth by expansion of credit in J&K state. The good news all along has been that our J&K state rehabilitated portfolio has behaved very well with just 1 percent slippages over the last one year.”


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