J&K Bank Q1 profit slips 13% as higher provisions hit earnings
Jammu and Kashmir Bank reported a 12.6% drop in first quarter net profit at Rs 424 crore against Rs 485 crore in the year-ago period
Jammu and Kashmir Bank reported a 12.6% drop in first quarter net profit at Rs 424 crore against Rs 485 crore in the year-ago period, on account of higher provisions, prompting a near 13% plunge in share price.The fall in net profit was despite a Rs 56 crore gain due to change in accounting policy effective April 1, according to the bank's regulatory filing to stock exchanges.The net interest margin for the quarter compressed to 3.28%.
Net interest Income rose 2% at Rs 1497 crore.The share price nosedived 12.8% to Rs 154.6 on BSE, reacting to the pressure on profitability.The pre-provision operating profit for the quarter stood 4.5% higher at Rs 703 crore against Rs 673 crore earlier. The bank made a higher provision of Rs 84 crore against Rs 15 crore.Its asset quality meanwhile improved with gross non-performing assets ratio falling to 2.4% at the end of June from 3.5% a year prior.
Net non-performing asset ratio was at 0.60%.Managing director Amitava Chatterjee said that the bank chose to support business momentum with selective corporate lending at lower yields in a changing operating environment which saw a rise in bond yields shifting corporates' focus to bank borrowing."This is partly on account of a tactical response to the prevailing market opportunities and economic conditions, wherein we exhibited a conscious preference for selective lending to well-rated corporates with sound fundamentals.
That said, the strategic positioning of the bank as a retail-focused bank remains unchanged," Chatterjee said in a post-earnings analyst call.The bank's advances grew by 25% year-on-year to Rs 1.31 lakh crore at the end of June while yield on advances for the quarter under review stood lower at 8.56% against 9.35% for the corresponding period last year.Its deposits increased by 17% year-on-year to Rs 1.73 lakh crore.
The BriefWire