Explore Business Standard
Don’t miss the latest developments in business and finance.
Jammu and Kashmir Bank on Monday reported a 96 per cent jump in net profit at Rs 326 crore in the June quarter, aided by decline in bad loans. The Srinagar-based lender had posted a net profit of Rs 166 crore in the year-ago period. The Union Territory of Jammu and Kashmir holds 63.41 per cent stake in the bank. Total income in the first quarter of the current fiscal rose to Rs 2,885 crore from Rs 2,306 crore in the same period a year ago, J&K Bank said in a regulatory filing. Interest earned by the bank improved to Rs 2,657 crore as against Rs 2,103 crore in June 2022. The bank's asset quality showed an improvement as gross non-performing assets (NPAs) declined to 5.77 per cent of gross advances at the end of the June quarter, from 9.09 per cent a year ago. Similarly, net NPAs, or bad loans, declined to 1.39 per cent, as against 3.02 per cent in the year-ago period. As a result, provision for bad loans came down to Rs 56 crore, as against Rs 135 crore allocated in the same ...
Weakening growth in loans or credit, continued stress on asset quality and cuts in lending rates have impacted profitability at banks, both in the private and public sector. Public sector banks' (PSBs') problems are more structural and will resolve only when they become self-sustained, especially the mid and smaller ones. Large private banks seem to be faltering on a key strength, their hitherto healthy pre-provisioning operating profits. Growth in this metric has been coming down over the past two quarters for most of the large ones (see table). While the drop in the latest, December, quarter could be attributed partly to demonetisation and to slower economic growth, this weakness started in the June 2016 quarter, even earlier in some cases. Not a good sign for investors. Higher pre-provisioning operating profit provides a cushion to earnings, even amid stress on asset quality, as the bank can use part of these for higher provisions for bad loans. This was a key reason why most ...