J&K Bank more than doubles
it profit to Rs 465 Cr
J&K Bank, the state owned premier
financial institution reported a 129 % growth in net profit for the Financial
Year 2018-19 at 465 Cr as compared to 202 Cr in the previous fiscal. In the
March quarter bank has reported a profit of 214.80 Cr as compared to 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 8487 crore in the FY 2018-19 as compared to Rs 7116 Cr a year ago.
The results for the FY 2018-19 and
Q4 FY 18-19 were announced by the Bank today after Board of Directors of the
Bank adopted the audited numbers of the Bank in its meeting held at Bank’s
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 the financial year 2018-19.The NIIM of the bank which
is 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 JK Bank
while acknowledging the support and guidance of the Board of Directors in
navigating the bank in challenging times attributed the turnaround &
stellar growth in the top and bottom line of the bank to the unflinching trust
of the promoters and customers of the Bank especially from the J&K state.
He commended the management team, business heads & 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 to 47 Retail a couple of years ago.” announced the
Chairman.
“The results also validate our
medium term growth strategy which is fanning out as envisioned 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. We will carry forward the momentum of the robust business
growth of previous fiscal to the current Financial Year and set the tone of
exponential growth for strengthening the new paradigm of sustained
profitability. 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.
Outlining his vision to take the
growth and business of the bank to the next level the Chairman informed about
the roll out of new Zonal structure at the District level w.e.f. Q2 of the
current financial year to dovetail the state governments budget/development
plan with the business plan of the bank with a vision of socio economic
development of the state. The Bank he added will be targeting to extend its
outreach for facilitating the vast majority of rural population of the state
including the bottom of the pyramid population, 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.
“As I have been saying earlier too,
we see a lot of unmet demand and potential for increased lending in sectors of SME,
Tourism Infrastructure, Agriculture & Allied, Infrastructure (Government
Spending), Home Loan, Personal Finance to Govt. Employees, Horticulture, Gold
Loans etc which is validated by exponential growth in the past few quarters. Promoting the startups & new entrepreneurs also remains our
priority area as we go deeper in the geographies in congruence with the policy
support for startups at the state and central government level and we will act as
an enabler for the bright youths of our state,” said Parvez Ahmed in the
statement issued to the press.
The bank’s total business as on the
close of 31st March 2019 touched 1,61,864 Cr comprising of deposits of Rs 89638
Cr and gross advances of Rs 72226 Cr as
compared to 1,42,466 Cr an year ago registering an increase of around 14%. The
Bank reported a stable low cost of funds at 4.90% with a CASA contribution of 50.7%.
The NPA coverage ratio has seen a minor dip on sequential basis to 64.30 %
mainly because of downgrade of the IL&FS and its group companies. 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 2750 Cr during the year besides making provisions of over
Rs. 1000 crore for bad & doubtful debts.
Bullets
in center:
Ø Eight consecutive
quarters of profitability after loss of Rs 1632 Cr in 2017
Ø Total Business Crosses
1,60,000 Cr
Ø Balance sheet size grows
beyond 100,000 Cr
Ø Profit growth of 129%
over the previous year
Share market pundits are bullish on the prospects of the JK
Bank based on its undisputed leadership in the J&K state with a market
share of 65% and growing, high CASA ratio, better yields on advances in the
state leading to a NIM of more than 5% in the J&K state business, which is
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 who are more profitable
and ring-fenced from competition due to higher entry barriers to meet the
geographical outreach of the Bank in J&K state. The Operating Income of the
Bank as per the analysts will be further amplified in the current fiscal as the
pressure of interest capitalization due to JK Restructured Portfolio is also over
now. Additionally to support the robust credit growth,
the Board of the Bank has already accorded approval for raising additional Tier
I and Tier II capital to the extent of Rs 1600 Cr. The 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.
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