MOSL: J&K BANK (Neutral)-Balance sheet clean-up phase-PAT turns positive after three quarters
​J&K Bank: Balance sheet clean-up phase; PAT turns positive after three quarters
(JKBK IN, Mkt Cap USD0.5b, CMP INR91, TP INR91, 0% Upside, Neutral)
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- JKBK reported PAT of INR302m in 1QFY18 (+32% YoY on a low base), after three consecutive quarters of losses. Adjusted for excess provisions made by the bank (which it created from DTAs recognized), PAT came in at INR2.7b.
- Slippages of INR5.1b (22% decline from INR6.5b in 4Q) were partly offset by strong recoveries and upgrades of INR1.9b. Gross/net slippage ratio stood at 4.1%/2.5% v/s 5.2%/2.8% in 4QFY17. Steep provisioning helped increase PCR, leading to a 7% QoQ decline in NNPAs (4.3% v/s 4.6% of advances in 4Q), with an increase in reported PCR to 70.26% from 66.9% in 4Q. GNPA stood at 10.6%. Standard restructured loans stood at INR55.5b (11% of loans). S4A book stood at INR2.45b at the end of the quarter.
- NII grew ~13% YoY (+9% QoQ), led by sharp improvement in NIM to 3.7% (+20bp QoQ, +32bp YoY), even as loan book was flat YoY and declined 2% QoQ. NIM improved on the back of 37bp/36bp QoQ/YoY increase in spreads, as the bank's cost of funds declined 22bp/65bp QoQ/YoY.
- Total income growth of 6%/10% QoQ/YoY was partially offset by opex growth of 13% YoY (-10% QoQ on one-off high base), resulting in 33%/5% QoQ/YoY PPoP growth.
The Jammu & Kashmir Bank Limited is engaged in the banking business. The Company offers a range of products and services, such as loans, insurance, tax products/planning, savings and deposits, cards, mutual funds and non-resident banking. Its segments include Treasury Operations, Corporate/Whole sale banking, Retail Banking and Other Banking Business. It operates through over 857 branches, which include approximately 45 metro branches, over 193 urban branches, approximately 157 semi-urban branches and over 462 rural branches, which are spread over 20 states and a union territory. It operates over 1,010 automated teller machines. It provides loans, such as Educational Finance, Agriculture Finance and Automobile Finance. It provides savings and deposits, such as Salary Accounts, Current Accounts and Term Bank Deposits. The Company also provides non-resident banking services, such as Non Resident External (NRE) Rupee Deposits and Non Resident Ordinary (NRO) Rupee Deposits.
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