Day after reporting Rs 602 cr loss, J&K Bank share gains 5%
A day after Jammu and Kashmir Bank posted Rs 602 crore loss for its second quarter year on year, the bank's stock rose about 5 percent, rebounding about 12 percent from intra-day low of Rs 57.15 on Mumbai based National Stock Exchange today.
The J&K Bank share was trading at Rs 63.75 at 4 pm on Friday when the market closed for its weekly off until next Monday.
The bank on Thursday in its Board of Directors meeting gave nod to loan structuring as per the RBI guidelines and also approved its second quarter results for July to September period, which has been earlier deferred.
The second quarter has been worst for the bank in terms of losses as it reported Rs 602 crore loss mostly on account of provisioning for bad loans as against Rs 196 crore net profit during the same quarter last year.
The net NPA ratio rose to 6.81 percent from 6.19 percent from previous quarter. Chairman and CEO of J&K Bank, Parvez Ahmed warding of concerns of investors and depositors over worsening NPAs assured that efforts were on to finding innovative and contemporary solutions to effectively reduce the NPAs which shall pave way for completely focusing on quality growth during ensuing financial year.
"With the unrelenting commitment and support of the State Government, the bank will pass this challenging phase as the brand franchise of the bank is intact and the captive business base in J&K state is its core strength," Parvez had said in a statement on Thursday.
However, experts here believe that it is due to balance sheet clearance as well as loan restructuring that has prevented a major loan book in the state from turning into NPAs, which has boosted confidence of investors.
"Instead of booking profits, the bank decided to show losses in order to strengthen its balance sheet," said a financial expert, adding, in consolidation efforts bank made provisioning of about Rs 1,000 crore during the quarter ended against a gross profit of Rs 376 crore for the period, resulting in posting losses.
Justifying the move, the chairman said increased provisions are largely on account of fresh slippages, restructuring and under-provisioning of earlier periods.
Bank has earlier delayed declaration of its quarter results, as it was waiting for the RBI nod, over loan restructuring application.
The bank shares on BSE were up by 4.5 percent to Rs 63.55 at the time market closed, whereas more than 10 lakh shares were traded at the country's oldest stock exchange. The trade volume on the NSE was a whooping 93 lakh shares.