Highlights:

The bank has done well on the deposit front in the last two quarters with the 9.67% growth end December 2024. With Q4 being best in the deposit mobilization, the bank expects to further improve its deposit base in Q4FY2025.

The term deposits increased at a faster pace of 15%, while Casa deposit rose 4.4%, but still the Casa ratio of the bank is strong at 48.2%.

The state of Jammu and Kashmir accounts for 90% of the deposit of the bank, with Casa ratio above 51%. The bank expects strong growth ahead in deposits, driven by release of government payments, realizations on horticulture crops and strong winter tourism.

The loan growth is moderate at 7% mainly driven by steady trade and corporate loan book, while the personal, SME and agriculture loan book accounting for 61% of the loan book has expanded 10% end December 2024.

The slow growth is on account of the caution observed by the bank in light of the indications by the central bank and tight economic situation.

With a healthy net interest margin at 3.93% in 9MFY25, the bank aims to focus on the corporate loan book in the last quarter and maintain the loan mix between retail and corporate 66-33.

The personal finance loan book growth outside J&K is strong at 17.8% and for J&K stands at 9%.

About 84% of the deposits are in the interest rate bucket of 7-8%.

The bank expects the cost of deposits to have peaked and it is moderating.

The bank has been reducing cost to Income ratio from above 77% in FY2021 to 57% in 9MFY25 and expects further moderation going forward. The bank aims to reduce cost income ratio below 50% in the next 2-3 years.

The bank has witnessed an increase in the GNPA ratio to 4.08% and NNPA to 0.94%. However, the bank expects improvement in the asset quality in Q4 as it has launched a one time loan settlement scheme till March 2025. The scheme covers 27600 customers and NPAs of Rs 1300 to 1400 crore.

The credit cost remains benign and it is expected to remain low for the rest of FY2025.

The bank expects to maintain a healthy PCR around 90%.

The capital adequacy ratio is at 15.08%, while the profit for 9MFY2025 would add 148 bps to capital adequacy ratio.

The bank aims to maintain NIM around 4%, despite growing the corporate loan book going forward.

The bank has written off account pool of Rs 4600 crore.

The bank has a pipeline of Rs 12000 crore loan sanctions which are yet to be disbursed and there are another Rs 5000 crore of loans in the sanction process.

The bank aims to substantially accelerate loan growth towards 15% in Q4FY25.

The bank aims to raise the CD ratio to 70% in the near term and 75% in the medium term.

The bank is targeting Rs 100 to 250 crore income from technically written off accounts in Q4FY2025, in addition to Rs 135 crore already booked in 9MFY2025. For FY2026, the income from technically written off accounts is expected at Rs 25-30 crore per quarter.

J&K state GDP is expected to double in next 5 years driven by agriculture, tourism, horticulture. J&K tourism department has declared 2024 as one of the best tourism year. There was an inflow of 2.35 crore tourists, while foreign tourist inflow has surged 300% in the last two-and-half years. Various tourism projects, rail connectivity are expected to further boost tourism in the state. Tourism is the second main industry in the state after horticulture.