Jammu & Kashmir Bank conducted a concall on 06 May 2024 to discuss the financial results for the quarter ended March 2024 and prospects of the bank. Baldev Prakash, MD&CEO of the bank addressed the call:

Highlights:

 The bank is reasonably satisfied being able to deliver performance in line with guided level.

The deposits book has increased at double digit pace, while the loan book has expanded 14%. The loan growth is driven by housing (20% YoY), Personal Finance (15% YoY) and Credit Cards (23% YoY).

The Retail to Corporate composition of the Loan portfolio is 2:1 while the Regional Contribution is JK 66%, Ladakh 2% and Rest of India 32%. Personal Finance constitutes 36% of the total Loan book.

The various tech initiatives has helped the bank to sustain CASA at 50.51% despite industry-wide pressures on liability side.

Retail deposits constitute 88% of the total deposits of the Bank.

Cost of Deposits for Q4 has moderated in line with the guidance.

Focus of improving Asset quality continues and the result is fairly reflected in the numbers. GNPA has reduced to 4.08% and NNPA to 0.79% with Provision Coverage of 91.58%.

Bank has also implemented a robust Early Warning Signals (EWS) System to manage the SMAs & control the slippages. The slippage ratio was at 1.40%.

The bank has witnessed 27% reduction in restructured loan book during FY2024. The restructured Loan Book is performing satisfactorily with collection efficiencies of well above 90% and the bank expects further downsizing /upgrade of same during FY2025.

Ageing provision requirement for NPAs during FY 2025 is estimated at about Rs 200 crore but with the pipeline of envisaged recoveries and expected provision write-back there from, Credit Cost shall be benign for the FY2025 as well.

There has been no adverse impact on Investment portfolio & valuations subsequent to the revised RBI guidelines. The bank is maintaining over 95% provisions for non performing investments. The bank is also maintaining Investment Fluctuation Reserve (IFR) of Rs 210 crore against requirement of Rs 118 crore end March 2024.

J&K UT Government has made a provision of Rs 500 crore in Budget 2024-25 for capitalization of J&K Bank, RRBs and Cooperative Banks. The bank is confident that it shall be able to generate adequate growth & risk capital internally and do not require government capital infusion.

Despite the pricing pressures on liability side, bank delivered NIMs of 3.92% in FY2024.

Owing to recoveries in Technically Written-Off Loans getting delayed, other Income for the current year increased only 10% YoY. Some impact of the lower TWO recoveries was offset by increased income from the insurance distribution business.

ROA for the year at 1.22% and RoE of 18.01% reflect significant improvements over previous year.

There has been moderation of almost 4 percentage points in the cost-to-income ratio despite higher technology spends during FY2024

The trend in employee costs is encouraging. During FY2025, excess provisions made towards superannuation benefits amounting to Rs 263 crore were reversed. The Superannuation costs are going to moderate going forward owing to the scheduled retirements of good number of high-cost resources and savings owing to shifting to purchase of non-ROC Annuities for pension payments.

Guidance for FY25

The bank is targeting deposit growth of 12% and credit growth of 15%. The CASA ratio would be maintained above 50%.

NIM is expected to be maintained in the range of 3.75% to 3.85%

RoA is expected to be at 1.25% to 1.30% and RoE at 17% to 18%

The bank aims to reduce GNPA ratio to 3.50%.