J&K Bank Q3 net up 23% to Rs 109 crore

Jammu & Kashmir Bank has reported a 23.12 per cent increase in net profit for the third quarter ended December 31, 2003 to Rs 109.80 crore against Rs 89.18 crore in the corresponding period the previous year.

The net profit for the nine months ended December 31 increased by 30.53 per cent to Rs 308.30 crore against Rs 236.18 crore the previous fiscal.

The total income of the bank for the third quarter rose marginally to Rs 473.02 crore against Rs 459.95 crore.

Interest income rose by 7.76 per cent to Rs 391.18 crore (Rs 363.01 crore), while other income fell by 15.57 per cent to Rs 81.84 crore (Rs 96.94 crore).

The interest expended was at Rs 221.97 crore (Rs 222.53 crore), while operating expenses increased by 31.76 per cent to Rs 70.10 crore (Rs 53.20 crore).

The provisions and contingencies of the bank have reduced by 47.97 per cent to Rs 25.15 crore (Rs 48.34 crore).

According to chairman M Y Khan, the reduction in provisions and contingencies has happened as till last year gratuity and pensions had been done on an ad hoc basis while from this year it is being done on an actual basis.

Deposits rose by 25.4 per cent as on December 31 to Rs 15,882 crore (Rs 12,658 crore), while advances grew by 10.20 per cent to Rs 7482 crore (Rs 6789 crore ). The costs of funds, as on December 31, was at 5.15 per cent.

According to Khan, advances will rise by around 24 per cent in this financial year. "The net profit of the bank will cross Rs 400 crore. The bank had a vision of crossing the net profit mark of Rs 500 crore by March 2005. This mark will be achieved before that," he said.

The board will in its next meeting consider an interim dividend for its shareholders.

The bank had already sanctioned Rs 1,600 crore, which have to be disbursed. According to Khan, at least 80 per cent of this money will be disbursed in this quarter.

The bank had at its board meeting today disbursed Rs 300 crore to Reliance Infocomm for five years, Rs 25 crore to Birla Home Finance and Rs 100 crore to Narmada Hydro Electric Development Corporation. It has also disbursed Rs 100 crore to Tata Tele Services and Rs 50 crore to Petronet LNG.

The bank is also tying up with ICICI Bank and State Bank of India for sharing their ATM network.

Foreign institutional investors' stake in the bank has also jumped to 13.21 per cent as on December 31,2003.

The major FII participants are Arisaig Partners (Asia) Pte (2.47 per cent), Morgan Stanley (1.89 per cent), Goldman Sachs Investments (1.88 per cent), Merrill Lynch Capital Markets (1.26 per cent), India Liberalisation Fund (1.18 per cent).

The bank is looking at placing 10 per cent of its stake with investors. According to Khan, the stock is undervalued as it is trading at a PE of 4-5. The scrip closed on the Bombay Stock Exchange at Rs 372.85 yesterday.

Khan said the ongoing peace moves with Pakistan will help boost the economy of Jammu and Kashmir. It is also increasing its lending to the tourism industry which is currently at around Rs 60 crore.

"The Government of India is offering an 8 per cent subsidy for the upgradation of hotels and housboats in the state. We will disburse another Rs 60-70 crore this financial year and around Rs 200 crore next financial year to the tourism industry."