J&K Bank has reported improved performance in the quarter ended December 11 with 27% increase in the Net Profit at Rs 213.19 crore over 16% increase in the NII at Rs 450.79 crore. The marginal 5% dip in the other income has been moderated by 160 bps dip in the cost to income ratio, there by leading Operating profit up15% to Rs 323.56 crore. Finally, dip in the provisions and contingencies by 41% have drived growth in the Net profit. On sequential basis NII improved 4% and Net Profit by 7% in the quarter under review.

Asset Quality

• Gross NPA inched up 8% y-o-y and 1% q-o-q to Rs 545.02 crore at end of December 11. The Net NPA has spurred 361% y-o-y and 22% q-o-q to Rs 48.93 crore in the quarter under review.

• %GNPA stood at 1.8% against 1.95% a year ago and 1.89% a quarter ago. %NNPA stood at 0.16% against 0.04% a year ago and 0.22% a quarter ago. NPA coverage ratio has stood at 94.07% against 98.42% a year ago and 92.71% at end of March 11.

• Business of the bank improved 19% y-o-y and 4% q-o-q to Rs 54788 crore for the quarter ended December 11.

• Deposits grew 19% y-o-y and 3% q-o-q to Rs 48778.94 crore at end of December 11. Term deposits grew 18% to Rs 29183.79 crore while that of CASA deposits improved 21% to Rs 19595 crore in quarter under review. CASA deposits stood improved to 40.2% against 39.6% a year ago and 38.2% a quarter ago.

• Advances grew 17% y-o-y and 5% q-o-q to Rs 29734 crore at end of December 11.

• CD ratio declined to 60.96% against 62.05% in the corresponding previous quarter.

• NIM stood at 3.63% against 3.70% a year ago and 3.69% a quarter ago.

• Yield on advances improved to 12.15% against 10.71% a year ago. Cost of deposits improved to 6.62% against 5.12% a year ago.

• Capital Adequacy ratio stood at 13.62% with Tier I ratio at 11.44% at end of December 11 against 15.49% with Tier I capital of 12.80% in the corresponding previous year.

• Investment book improved 15% to Rs 19839 crore at end of December 11. Yield on investment improved to 7.57% in quarter under review against 6.53% in the corresponding previous quarter.

• ROA was at 1.56% in the quarter under review against 1.45% a year ago. RONW stood at 21.50% against 19.73% in the corresponding previous year.

• Book value per share has improved to Rs 840.35 at end of December 11 against Rs719.32 crore in the corresponding previous quarter. Adjusted Book Value was at Rs 830.66 per share against Rs 717.13 in the corresponding previous quarter.

• Head count has improved to 9268 at end of December 11 against 7941 in the corresponding previous year.

Quarterly Performance:

For the quarter ended December 11, JK bank has reported 36% jump in the Interest earned at Rs 1266.53 crore, thanks to 35% jump in the interest on advances at Rs 880.15 crore and 34% jump in the income on investments at Rs 374.70 crore. Spike in the cost of deposits by 150 bps to 6.62% coupled with 18% increase in the term deposits has boosted interest expended on deposits up 55% to Rs 796.36 crore. Thus the interest expended jumped up 50% to Rs 815.74 crore. NII was thus curtailed by 16% to Rs 450.79 crore. NIM slipped marginally to 3.63% against 3.70% in the corresponding previous quarter and 3.69 in Q2FY12%.

While the core fee income grew 13% to Rs 38.71 crore and the insurance commission remained flat at Rs 6.11 crore, the treasury income slipped 51% to Rs 8.80 crore and led noninterest income down 5% to Rs 73.63 crore. Thus Net total income was up 12% to Rs 524.42 crore. Further marginal increase in the staff cost by 2% to Rs 130.82 crore and 19% increase in the other operating profit at Rs 70.04 crore has totaled the operating expenses up 8% to Rs 200.86 core. The cost to income ratio slipped 160 bps to 38.3% and led Operating Profit up 15% to Rs 323.56 crore.

Provisions and contingencies slipped 41% to Rs 18.16 crore with flat loan loss provisions at Rs 15 crore, on the back of stable asset quality. However, the bank has witnessed small write back of Rs 2.91 crore on provision for funded interest on term loans in quarter under review against provision of Rs 8.54 crore in the corresponding previous year. After accounting 12% increase in the provision for taxation at Rs 92.21 crore, Net Profit was up 27% to Rs 213.19 crore.

YTD performance:

For the nine months ended December 11, the bank has reported 25% jump in the Net Profit at Rs 595.13 crore over 17% increase in the NII at Rs 1322.26 crore. Dip in the other income by 14% to Rs 211.85 crore coupled with flat cost to income ratio at 37.9% has led Operating profit up 12% to Rs 952.71 crore. Finally 39% dip in the provisions and contingencies at Rs 84.97 crore has aided 25% growth in the Net Profit.

J&K Bank: Financial Performance