Despite the unprecedented crisis caused by the Covid19 pandemic, J&K Bank today posted a net profit of Rs 6.50 Cr for the first quarter (Q1), of the current financial year (CFY), ended June – 2020.
The bank announced its reviewed financial results for the first quarter of CFY soon after its Board-of-Directors approved the quarterly numbers at a meeting held through video-conference here at its corporate headquarters.
The NPA coverage ratio of the bank has improved to 80.93 percent for the quarter as against 66.61 percent recorded last FY, while as the Net NPA ratio of the bank has considerably reduced to 3.05 percent as against 4.36 percent recorded for the corresponding period of the previous financial year.
The bank's gross NPA ratio is at 10.73 percent which in sequential terms has come down from 10.97 percent recorded during the March quarter of FY 2019-20. The Capital Adequacy Ratio of the bank under BASEL III is 11.23 percent as on June 30, 2020 against the mandatory requirement of 10.875 percent.
Commenting upon the bank's results, the bank's Chairman and Managing Director (CMD) R K Chhibber observed, "We have focused on strengthening our balance sheet further and I feel our (June) quarterly numbers are quite encouraging despite disruption due to the pandemic-hit scenario. Having higher Provision Coverage Ratio (PCR) above 80 percent is a strong indicator of the fact that the asset-quality issues have been suitably taken care of and adequately provided for to focus on the future business and to improve the profitability of the bank. That is why we see our Q1 profit more indicative of our envisaged trajectory than an achievement in numbers."
"We have managed a positive bottom-line even after making additional provisioning of Rs 147.50 Cr for theCovid -19 related stress", he asserted. "Although, the RBI directions to defer recovery of interest and installments from March to August, 2020, provided a much needed cushion to both banks and the borrowers in the short-term but we remain highly focused on our post-moratorium loan-book to mitigate all the attendant risks. Amid the prevailing circumstances, we have effected upgrade and recovery of over Rs 100 Cr during the quarter", he added. "While maintaining our NIM above 3.50percent in spite of considerable reduction in lending rates, we have brought down the cost of deposits substantially to 4.39 percent from the 5.04 percent recorded for the corresponding quarter of the last year", the CMD said.
The total business of the bank stood at Rs 164861 Cr registering 5 percent growth when compared with the corresponding period of the previous year. The deposits of the bank have increased by 12percent to Rs 99691.41 Cr from Rs 88963.39 Cr recorded last year while as the advances stood at Rs 65179Cr for Q1 of the financial year 2020-21. CASA component of the deposits has increased by 20 percent on YoY basis with Savings deposits growing by 22 percent. Deposit growth in J&K UT has been recorded at 14 percent while as credit has grown by 10 percent on YoY basis. The CASA Ratio of the bank has improved to 53.57 percent from 50.20 percent recorded last year.
"Adapting to the pandemic-affected situation, our lending strategies would be in line with the economic recovery as envisaged in upcoming quarters, wherein we expect credit growth of 5 to 7 percent in the bank's loan-book", he said adding that the Guaranteed Emergency Credit Line (GECL) scheme rolled out for pandemic-affected MSMEs, other businesses, under Central Government's Atmanirbhar Bharat Package has proved to be of great help to businesses.
"For maximum coverage of eligible borrowers under GECL scheme, we proactively are ensuring that majority of our customers/businesses avail the best available facilities amid these testing times. So far, 46246 borrowers have availed the loans under GECL scheme and we have disbursed Rs 1591 Cr that includes Rs 1334 Cr in J&K and Rs 257 Cr in the rest of country". The bank has also rolled out a Business Support Scheme for borrowers who do not qualify for the GECL scheme there by providing relief to such borrowers", the CMD said.
The bank has also rolled out Fund Interest Term Loan (FITL) scheme to ease out its borrowers from instant repayment of accumulated interest for deferment period since first phase of lockdown in March 2020, he said. "The bank plans to scale up the flow of credit to priority sector within the UT to boost lending to agriculture and allied activities besides handicrafts and tourism.Under KCC the bank has already sanctioned Rs 5606.80 Cr to 630100 borrowers. In the rest of country, our lending focus shall remain on specific niche segments in retail sector and top rated corporate entities, PSUs", said the CMD.
Notably, the bank is going for capital augmentation of Rs 4500 Cr to further cushion its lending capacity, fuel its future growth while maintaining compliance with all the regulatory guidelines.
Highlighting the importance of digital banking, he asserted "Covid-19 has facilitateda marked shift towards digitization with the bank's digital domains witnessing a steady increase of users during the first three months of CFY following unprecedented country-wide lockdowns. With digital transactions making up 56 percent of our overall transactions, the growth of digital users in sequential terms has increased by20 percent in UPI users and13 percent in mPay and kiosk banking users."