J&K Bank says its Q3 net profit up by 79% to Rs 312 crore

Srinagar: J&K Bank on Monday said its net profit witnessed a 79% rise year-on-year (YoY) to Rs 311.59 crore for the December Quarter of FY 2022-23 as against Rs 173.95 crore registered for the same period last financial year.

According to the news agency—Kashmir News Observer (KNO), the bank announced the results after its Board of Directors reviewed and approved the numbers for the third quarter and nine months ended December 31, 2022, in a meeting held on Monday at Bank’s Gurugram Office in Delhi.

“On its trajectory to meet annual profitability targets, the bank’s profit for nine months is up 85% to Rs 721.05 crore from Rs 389.36 crore clocked during nine months of the last fiscal,” the bank said.

Performance Highlights

The Bank’s Net Interest Income (NII) surged by 27% YoY to Rs 1257.38 crore for the December quarter when compared to Rs 993.30 crore recorded last year, while growing 19% YoY for nine months to Rs 3495.73 crore, the J&K Bank said, adding that its Operating Profit grew by 65% YoY to Rs 544.11 crore for the December quarter, 2022.

The bank further said its NIM has also improved by 54 basis points (bps) YoY to 4.10% – the highest in the last seven years – while as the Return on Assets rose to 0.92% for the December quarter from 0.57% recorded last year. With Yield on Advances improving by 90 bps to 9.34%, the bank’s steadily moderating cost-to-income ratio has come down further to 63.71% for the third quarter, it said.

Commenting on the quarterly growth numbers, J&K Bank’s MD & CEO Baldev Prakash said, “Driven largely by an improving asset quality through better SMA management and vigorous recoveries, we have achieved a better set of numbers in our December quarter. And we remain committed to sustained improvement in our overall functioning and the operating results as communicated in our financial-year guidelines.”

Improved Asset-Quality

The Gross NPA Ratio of the bank has further come down 168 bps YoY and 42 bps QoQ to 7.25% for the quarter, while the Net NPA ratio has moderated YoY by 94 bps to 2.08%, the bank said, adding that the provision coverage ratio (PCR) of the Bank stood at 84.83% for the quarter ended December 2022.

“Through an ensured institutional focus on the asset quality, we have brought down our Net NPAs to 2.08%, which is the lowest in the last eight years,” the bank said. “While each passing quarter is witnessing an improvement in our GNPA figure, we have reduced it further to around 7%, and our Provision Coverage Ratio for the quarter is about 85%”,” the MD & CEO said, adding, “With the strict regime of early-warning systems, pro-active monitoring and review mechanisms at all levels coupled with rolling out of timely OTS schemes, we are confident of reducing our gross NPAs to around 6% by the end of fiscal.”

Business Growth

The J&K Bank’s net advances are up 14% YoY and 4% QoQ to Rs 77639 crore during the quarter reviewed while the deposits have grown 8% from Rs 109298 crore to Rs 117935 crore. However, the bank witnessed 21% YoY growth in advances in its operational geographies across Rest-of-India (RoI), it said.

The bank’s overall business increased by 10% to Rs 195574 from Rs 177664 crore recorded last year while its CASA Ratio continues to remain one of the industry’s best – at about 54%. “Both our advances and deposits have grown by 14% and 8% respectively, which are quite in line with industry averages. However, witnessing growth at 21%, the Rest-of-India share in the overall loan book has crossed a 30% mark during the December quarter in line with the financial-year guidelines,” the MD & CEO said while commenting on growth numbers.

Comfortable Capital CushionWith the tier-II capital augmentation of over Rs 1000 crore, J&K Bank’s Capital Adequacy Ratio rose up to 13.82% as against 12.38% recorded, as on December 31, 2021. “The capital augmentation through raising of tier-II bonds worth Rs 1021 crore during the December quarter has cushioned us to comfortably execute our envisaged growth plan, especially in the rest of India. Our CRAR has improved to 13.82%,” Baldev Prakash said—(KNO)

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