J&K Bank 2nd public offer likely in July

Jammu & Kashmir Bank is planning to tap the markets sometime in June-July while exploring options of including a strategic partner.

"We are thinking of second public offer in june-july next year," chairman M Y Khan said, but declined to reveal the amount which was expected to be "much more" than Rs 100 crore.

The private bank would need more capital to meet the Basle-II norms which envisages higher provisions for operational risks apart from market and credit risks.

The bank may seek the approval of the state government to dilute its equity below 51 per cent to raise more capital from the market.

The Jammu & Kashmir government has a majority 53.15 per cent stake in the bank. Foreign institutional investors (FIIs) holding has come down to less than 25 per cent.

J&K Bank recently hiked its FII holding to 33 per cent and as a result there has been renewed interest in the bank from foreign investors.

"FII stake in the bank has already crossed 25 per cent and their interest in the bank has pushed up the share price also," Khan said.

The share price of the bank surged to its intra-day high of Rs 382 today from yesterday's close of Rs 374 on the Bombay Stock Exchange.

Khan said the bank was on the lookout for buyouts but there is nothing on the horizon now. "There are too many small private banks. Not all will exist in years to come. Everyone is on the look-out for m&as. So are we," he said.

J&K Bank is also looking for a strategic partner but it has yet to shortlist one, he added. The bank has a paid-up equity of Rs 48.25 crore and reserves of Rs 1,545 crore as on September 30, 2004.

Although the bank was one of the fastest growing among private players, its net profit fell by 47 per cent to Rs 105 crore during the first half of this fiscal from Rs 198 crore in the year-ago period.

The total income of the bank also fell by over 10 per cent to Rs 820 crore from Rs 914 crore in the year-ago period. Khan said the bank incurred loss in treasury operations in the first half of this fiscal, which it would be able to make up in the second half.

The bank is targeting a 25-30 per cent rise in loan advances and 15 per cent growth in deposits this fiscal.