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Current unrest in the Valley has further complicated the financial situation, J&K Bank Chairman Parvez Ahmad said on Monday and warned that there would not be any bottomline growth in the next 18 months, resulting in "no dividend, no tax provisions and no contribution to the CSR".
The (banking) industry is passing through very tough times due to the economic slowdown as well as the prevailing political environment, and the bank expects "slippages" in the coming months, he said.
"Our September numbers shall be unveiled in a couple of weeks and we expect further slippages in our portfolio because some of our assets, which have been restructured and under the stress, are not turning around... These slippages will continue further in the coming quarters also," Ahmad told reporters at his first interaction with the media after assuming the charge of the chairman of J&K Bank.
The banking industry in India is crippled with huge stress and many have alarming non-performing assets (NPAs) of close to 20 per cent, he said, adding, "ours is also in the range of 9.3 per cent on the basis of numbers as on June 30, 2016."
Ahmad said the situation has become further complicated on account of the unrest in Jammu and Kashmir.
"So, in the given circumstances, we feel that against a profit of Rs 460 crores, which we have registered during the previous financial year, there will be no bottom-line growth during the current financial year and also this may continue in the second half of next financial year.
"There will be no dividend, no tax provisions (and) no contribution to the CSR for the next at least one-and-a-half year," he added.
He said however that the bank will focus on recovering bad loans and minimising losses in the next 18 months.
J&K Bank's NPA coverage ratio, which was considered one of the best in the industry, has diluted considerably during the last two-and-a-half years, he said.
From 94 per cent, it has come down to 50 per cent and with further losses, there are chances, he said, adding, "if we will not provide sufficient and effective balance sheet, the coverage ratio will come down."
Ahmad said the losses would have an impact on the network, which would also require the Bank to augment its capital base.
He further said: "So, our focus will remain now on consolidation and cleaning of the balance sheet for the next 4-6 quarters with a moderate growth, without compromising on the quality, in the range of 10-15 per cent."
"Once we are sure that we are done with the cleaning of the balance sheet, we will again revive the growth trajectory and also ensure that we return to the good old numbers," he informed
He said the bank has designed a strategy for NPA recovery. "The NPAs are in the range of around 10 per cent coupled with the stressed assets portfolio which is around 10 per cent more, that takes it to 20 per cent of our portfolio."
Elaborating the strategy, Ahmad said: "We will be reducing our impaired exposure in the stressed asset portfolio through legal recourse, one-time settlements and through the asset reconstruction company."
The NPAs of J&K Bank, its chairman said, are mostly from outside the state.
