Kashmir Impulse Desk
Srinagar, Oct 23
Shares of Jammu and Kashmir Bank Ltd fell 16.01 percent on Friday, their steepest single-day decline since June 2024, as investors reacted to pressure on lending margins and subdued growth in core income despite higher quarterly profit.
The stock closed at 113.45 rupees, down 21.63 rupees from its previous close of 135.08 rupees. The decline followed the bank’s second-quarter results, which showed a 10.6 percent year-on-year increase in standalone net profit to 546.36 crore rupees.
Operating profit rose 26.7 percent to Rs 789.14 crore from Rs 622.62 crore a year earlier.
Net interest income (NII), the difference between interest earned and interest paid, increased 4.8 percent to Rs 1502.31 crore from Rs 1455.99 crore.
The bank’s net interest margin (NIM), a measure of lending profitability, narrowed to 3.17 percent from 3.56 percent a year earlier and 3.28 percent in the previous quarter.
The margin contraction comes as the lender expands its balance sheet.
Total business grew 19.4 percent year-on-year to Rs 3.10 lakh crore, with advances rising 23.7 percent to Rs 1.34 lakh crore and deposits increasing 16.3 percent to Rs 1.77 lakh crore.
Management attributed the pressure on margins partly to high-cost deposits and competition in lending rates.
It said the bank had reduced much of its high-cost deposit burden and expected margins to improve over the next two quarters, without providing a numerical forecast.
Other income more than doubled to Rs 314.90 crore from Rs 153.76 crore, supporting the quarterly earnings.
Asset quality also improved. Gross non-performing assets fell to 2.23 percent from 2.37 percent in the June quarter, while net non-performing assets declined to 0.51 percent from 0.60 percent.
The gross slippage ratio, which measures fresh deterioration in the loan portfolio, dropped to 0.35 percent from 0.45 percent in the previous quarter and 0.89 percent a year earlier.
The provision coverage ratio stood at 91.76 percent.
However, provisions rose to Rs 72.34 crore during the quarter, compared with a write-back of Rs 10.93 crore a year earlier.
Return on assets improved to 1.07 percent from 0.87 percent in the preceding quarter but remained below the year-earlier level of 1.16 percent.
Investors are also assessing the potential impact of the expected credit loss provisioning framework on the bank’s financial position.
The lender has outlined plans to raise Rs 1000 crore through equity and Rs 500 crore through debt, subject to approvals and market conditions.
An equity issue could dilute existing shareholders, depending on the issue price and number of shares issued.
The bank’s performance in the coming quarters is likely to be judged on its ability to stabilise margins, improve core income growth and manage provisioning requirements.
