Jammu & Kashmir Bank has embarked on a transformation plan to scale up business and aims to grow its total business to ₹2.45 lakh crore by 2020 from ₹1.57 lakh crore now, the bank’s chairman and chief executive officer Parvez Ahmed said.
‘Transformation is key’
“Post transformation, we are envisaging a total business of ₹2.45 lakh crore with a targeted profit of ₹2,000 crore, net interest margin ranging between 3.5-4%, return on assets of 1.3%, return on equity of 16% and credit cost below 1% at the end of FY 2022. So in terms of numbers, our best is yet to come,” Mr. Ahmed said in a statement.
For the quarter ended December 31, the bank posted a 43% increase in net profit to ₹104 crore while for the nine months of the current financial year, profit grew likewise at 43% to ₹250 crore. “We met our third quarter profit estimates despite downgrading the much publicised IL&FS exposure and making adequate provisions, though a number of banks are still maintaining the account as standard.”
Mr. Ahmed said the ‘cleaning up’ of the balance sheet was almost complete and the recognition cycle was drawing to an end.
However, credit costs would take some more quarters to align to the long-term averages, due to provisioning pressure on account of IL&FS and the ageing of NPAs, he added.
The bank has a deposit base of ₹86,210 crore and a loan book of ₹71,069 crore.
“The bank reported a stable Net Interest Margin of 3.76% largely driven by the bank’s low cost of funds at 4.9% with a CASA contribution of 49%,” he said.
He added that while the provision coverage ratio remained static year-on-year and was still comparable with the best in the industry, it dipped on a sequential basis to 65.82% mainly on account of downgrade of the IL&FS account.
The gross and net NPA ratios remained unchanged at 9.94% and 4.69%. J&K Bank was a private sector lenderBut in November last, while dissolving the State assembly, J&K governor Satyapal Malik turned the bank into a public sector undertaking, making it accountable to the legislature. The State holds 59.23% stake in the bank.
