- Eight consecutive quarters of profitability after loss of Rs 1,632 Cr in 2017
- Total Business crosses Rs 1,60,000 Cr
- Balance sheet size grows beyond Rs 1,00,000 Cr
- Profit growth of 129% over the previous year
Srinagar: The state’s premier financial institution, J&K Bank, reported a 129% growth in net profit for the Financial Year 2018-19 at Rs 465 crore as compared to Rs 202 crore in the previous fiscal.
In the March 2019 quarter, the bank has reported a profit of Rs 214.80 Cr as compared to Rs 28.41 Cr in the corresponding quarter of FY 2018. Buoyed by strong retail credit growth, sale of partial stake in PNB MetLife, and resolution of some large NPLs, the total income of the bank rose to Rs 8,487 crore in the FY 2018-19 as compared to Rs 7,116 Cr a year ago.
The results for the FY 2018-19 and Q4 FY 18-19 were announced by the bank on Wednesday after its Board of Directors adopted the audited numbers of the bank in its meeting held at Corporate Headquarters Srinagar.
The growth in J&K state credit has been reported at 23% over the last year and net interest income – the difference between interest earned on loans and that paid on deposits – grew by 42% in the 4th quarter of 2018-19.
The NIIM of the bank, an indicator of profitability, was calculated at 4.05 for the 4th quarter and on full-year basis it improved to 3.84% as compared to 3.65% in the previous fiscal.
The Chairman & CEO of J&K Bank attributed the turnaround and stellar growth to the unflinching trust of the promoters and customers of the bank, especially from J&K state. He commended the management team, business heads and operative staff for robust credit growth, management of NPAs, NPA recovery, improvement in compliance culture, etc, despite a challenging environment.
“Our numbers are unfolding in line with our strategic business plan to direct the focus of our credit expansion in J&K state especially in retail & SME segments. We are continuously gaining market share in J&K besides improving the penetration of credit to hitherto credit starved geographies/segments especially in consumer and housing sectors. If you see our segmental numbers in retail, housing has grown by 79% from 3117 Cr to 5384 Cr, Consumer finance has grown exponentially from 195 Cr to 1978 Cr, Car loans have grown by 37% from 2000 Cr to 2741 Cr, resulting in aggregate retail credit growth of 33%. The corporate to retail mix of our overall advances is now 43% corporate to 57% retail, as compared 53% corporate and 47& retail a couple of years ago,” announced the chairman.
“The results also validate our medium-term growth strategy to achieve a total business of about 2.50 Lac Cr with a targeted profit of Rs 2000 Cr, NIIM ranging between 3.5-4%, ROA of 1.3%, ROE of 16%, and credit cost below 1% at the end of FY 2022. I can say confidently that once our provisioning requirements due to ageing of NPAs are over, may be in 3-4 quarters, the best in terms of bottom line is yet to come,” added Parvez Ahmed.
The bank, he said, will be targeting to extend its outreach to the vast majority of rural population of the state, which is dependent on informal channels for their financial needs. This, he said, will further strengthen the bank’s low cost CASA franchise, which at 50.7% is one of the best in the banking industry.
The bank’s total business as on the close of 31st March 2019 touched Rs 1,61,864 crore, comprising deposits of Rs 89,638 crore and gross advances of Rs 72,226 crore, as compared to total business of Rs 1,42,466 crore an year ago, an increase of around 14%.
As a percentage of total loans, the Gross and Net NPA ratios of the bank improved to 8.97% and 4.89% as compared to 9.96% and 4.90% a year ago. Notably, the bank recovered NPAs of Rs 2,750 Cr during the year, besides making provisions of over Rs 1,000 crore for bad & doubtful debts.
Focus on J&K boosts growth
Market pundits are bullish on the prospects of the J&K Bank which has a market share of 65% and growing. The bank, which was earlier focused on lending to bigger companies mainly in its rest of India portfolio, has been for the last couple of years focused on SME and Retail customers in J&K state.
The Operating Income of the Bank as per analysts will be further amplified in the current fiscal as the pressure of interest capitalisation due to JK Restructured Portfolio is over now.
Additionally, to support the robust credit growth, the Board of the bank has accorded approval for raising additional Tier I and Tier II capital to the extent of Rs 1600 Cr. Analysts are expecting substantial upside as the share of the bank is still trading at a steep discount to its Book value of Rs 119.