J&K Bank's Q2 net rises 53%

The JK Bank recorded a net profit of Rs 84.02 crore in the second quarter of 2006-07, an increase of 54% from Rs 54.97 crore in the corresponding quarter of 2005-06. The bank's operating profit is up by 34% at Rs 142.88 crore for Q2 as compared with Rs 106.79 crore in Q2 of 2005-06. The total business turnover increased to Rs 34,412 crore in the first two quarters 2006-07, an increase of 9.32% over the corresponding period of the previous fiscal. The total deposits stood at Rs 20392 crore up by 4% and advances at Rs 14020 crore up by 18% at the end of first two quarters compared with the corresponding period of the previous fiscal. The Net Interest Margins are up 3.50% from 2.68% in quarter ended March 2006 and 2.93% in quarter ended June 2006 owed to better liability management and compositional shifts in advances and investment portfolios.

Taking a step forward towards stabilising and strengthening of the bank's business, the provisioning levels for bad & doubtful debts in the first half of the current fiscal increased to Rs 35 crore, an increase of 75% from the corresponding period of the previous fiscal in order to increase the coverage ratio. Having Page 1 Of 2 addressed quality issues of assets, the NPA levels now stand below 1% - one of the lowest in the industry. The NPA Coverage ratio is up at 72.10%, up from 54.63% in Q2 of 2005-06, aimed at international standards of 80% over the next one year.

The Capital Adequacy Ratio stands at 13.14% comfortable above the mandatory level of 9%. The tier I CAR is 12.73% and tier II is 0.41% for the quarter ended 30th September 2006. This clearly stands at a comfortable level as per Basel II requirements and allows the Bank to meet its strategic and business growth objectives without any constraints on capital.

Appetite of foreign investors in the bank's stock continues to grow. In the light of this, the bank is awaiting RBI's approval to hike the cap of FII stake from 33% to 40%. Some major deals have taken place on the bank's stock over the bourses ranging buyers from vanilla to hedge funds. The current quarter also saw the launch of the banks new brand identity, the design of which will hit the shop floors over the next three months to give the bank a modern look, vibrancy and take its services to the new high.

The management has expressed satisfaction at the results Q2, 2006-07, calling it the translation of strategic focus within J&K into profitability. Further, if the last six quarters are taken into consideration, a significant turnaround is seen in several areas. The CASA Ratio is up at 41% from 32% in the last quarter of 2004-05, yield on advances is up from 8.48% to 9.60% for the same period. Better balance sheet and capital management leading to performance have generated value for stakeholders. The Book Value has increased from Rs 343.54/share to Rs 401.39/share; annualized EPS has almost doubled from Rs 37.84 to Rs 69.33 for the last six quarters.

About J&K Bank

The J&K Bank is a private sector bank established in 1938. Based in Srinagar, the Bank dominates the banking space in Jammu & Kashmir, and has played a vital role in the state through its history. The J&K Bank has a dominant network with the State of J&K and also has a wide network across the country. The bank is fully computerized, with branches inter-linked, allowing for easy, anywhere, anytime banking. The bank has made profits throughout its history. For the year to March 2006, the bank reported a 54 percent rise in net profit to Rs. 176.8 crore.