Jammu & Kashmir Bank Ltd (J&KBANK) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Jammu and Kashmir Bank Q2 FY27 earnings conference call hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Avinash Singh from Emkay Global Financial Services Limited. Thank you, and over to you, Mr. Singh.
Avinash Singh (Emkay Global Financial Services Limited): Thank you, Siddhant. Good afternoon, everyone. I would like to welcome the management, and thank them for this opportunity. We have with us today Mr. Amitabh Chatterjee, Managing Director and CEO, and his management team. I shall now hand over the call to Mr. Amitabh Chatterjee for his opening remarks. Over to you, sir.
Amitabh Chatterjee (Jammu & Kashmir Bank Ltd): Thank you, Avinash. A very good afternoon, and a warm welcome to all the investors, analysts, and other stakeholders joining us today for the J&K Bank September 2026 earnings call. Before we discuss the results, let me introduce my fellow colleagues from the bank's senior management who are accompanying me on this call. Executive Director, Mr. Sudhir Gupta, Chief General Managers Mr. Imtiaz Ahmad Bhat, Mr. Ashutosh Sareen, and Mr. Rakesh Malla Tickoo, Deposit and Liability Management Head, Mr. Peer Masood Ahmad, RAM Banking Head, Mr. Sanjay Gupta, Corporate Banking Head, Mr. Suresh Kumar Choudhary, Impaired Assets Portfolio Management Head, Mr. Tariq Ali, Chief Risk Officer, Mr. Altaf Hussain Keera, and our Treasury Head, Mr. Ajay Kohli. The geopolitical uncertainties which persisted in the first quarter of the current financial year have continued to mar the global economy in Q2, following the re-escalation of conflict in West Asia, which has driven energy prices sharply higher, leading to inflationary concerns, and increased volatility across financial markets. However, despite these persistent geopolitical challenges, the Indian economy has posted a robust growth of 7.8% during Q1, driven by domestic consumption and investment. This resilient performance has led to a sharp upward revision of India's GDP growth forecast for 26-27 by IMF to 7% from 6.4% earlier. The resilience in the domestic economy is also reflected in the bank's business momentum with the bank's total business growing by 19.4% YoY to rupees 3. 10 lakh crores as on 30th September 2026. The YoY growth across both deposits and advances has been healthy at 16.3% and 23.7% respectively. The profitability has also improved after a subdued performance in the first quarter with the net profit for the quarter being recorded at rupees 546 crores, a sequential jump of almost 29% and a double-digit YoY growth as well. On the credit side, and alignment with the bank's strategic positioning as a retail focused bank, as emphasized during the Q1 call, the bank has recorded a sequential growth of 7.62% in agriculture advances, and 3.90% in retail advances, underscoring the tangible progress made in execution. The entire net incremental growth during the quarter has been contributed by retail, agriculture, and MSME loans, that is RAM. And this growth has been contributed by both Jammu, Kashmir, Ladakh and rest of India, in almost equal proportions to the share in the bank's outstanding RAM loans. On a YTD basis, more than 60% of the bank's net incremental credit has been contributed by RAM portfolio. Within RAM, bank has registered a YoY growth of around 17% in agriculture advances with a double digit YTD growth for the first half year.
Amitabh Chatterjee (Jammu & Kashmir Bank Ltd): doing well both in Jammu Kashmir Ladakh as well as rest of India. Housing loans in rest of India division also continue to grow at a healthy pace recording a double-digit YoY growth. On the deposit front also, the bank has already achieved a YTD growth of around 7% against our guidance of 10% for the financial year, with the growth in term deposits continuing to outpace the growth in CASA, in line with the continuing industry trend. However, the gap between the growth in term deposits and CASA deposits has narrowed down in this quarter as the bank has been able to record positive CASA inflows during the quarter, after a sharp outflow in Q1. As a result, bank has been able to broadly maintain its CASA ratio at the same level of around 42% being recorded at 41.97% as on 30th September 2026. Now coming to profitability, the bank has recorded an operating profit of 789 crores for this quarter, registering a 27% YoY growth and a 12% QoQ growth. Even on a half year basis, the bank has recorded a YoY growth of over 15% in operating profit, being recorded at Rs. 1,492 crores for the first half year of the current fiscal. While operating income for this quarter has grown by over 6% sequentially and 14.5% YoY, the increase in operating expenditure continues to be controlled at just 2% QoQ and 6.5% YoY, contributing towards improved profitability for the quarter. As a result, cost to income ratio of the bank for this quarter has also moderated substantially on both sequential and YoY basis being recorded at 56.57% for the quarter. Yield on advances has remained broadly flat on a sequential basis being recorded at 8.55% for the quarter. However, the increasing contribution of RAM segment to our incremental credit portfolio coupled with the recent repo rate hike is expected to support an improvement in the yield from the third quarter onwards. The sharp outflow of CASA deposits during Q1 continued to weigh on our liability profile, contributing to an increase in the cost of deposits in this quarter to 4.85%. However, with the surplus liquidity in the banking system, easing bulk deposit rates, combined with the positive CASA inflows in Q2 and the reduction in term deposit rates by our bank in this quarter, we expect moderation in the cost of deposits going forward. Resultantly, the NIM was has witnessed compression, being recorded at 3.22% for the half year, but with expected improvements across both yield and cost, the NIM should improve considerably. Notwithstanding the prevailing macroeconomic uncertainties, the bank has witnessed a notable moderation in slippages during the current fiscal. The annual gross slippage ratio of just 0.4% for the half year as gross slippages in terms of absolute amount have halved compared to the corresponding period last year. This reflects the resilience of our portfolio and the continued effectiveness of our underwriting and monitoring mechanisms. The asset quality metrics also continue to consistently improve, reaching decadal best numbers with GNPA and NNPA as on 30/9/26 being recorded at 2.23% and 0.51% respectively, with PCR improving from 90.53% as on 30th June '26 to 91.76% as on 30th September 2026. Capital adequacy ratio has been recorded at 16.57% as on 30th September 2026 with CET1 of 13.88%. The bank is already in the process of raising both equity and debt capital to the tune of 1,000 crores and 500 crores respectively, and will raise the capital at an opportune time to support its future growth. On the back of improved profitability, ROA has jumped by 20 bps QoQ, while ROE has jumped by more than 250 bps QoQ, and have been recorded at 1.07% and 13.68% respectively for the quarter. Based on the midterm review, we have reassessed our guidance as indicated in the last call. The revised guidance for '26-'27 would be credit growth of 14% plus
Amitabh Chatterjee (Jammu & Kashmir Bank Ltd): deposit growth of 12% plus, CASA to be 42% plus. There should be a considerable improvement in NIM, ROA to be around 1. 1.20 and GNPA to be below 2%. So, thank you all for the time today for giving me a patient hearing. We can start with the questions now.
Moderator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Yuvraj Choudhary, please from Anand Rathi. Please go ahead.
Yuvraj Choudhary (Anand Rathi): Thank you for the opportunity and congratulations on a good quarter. Sir, I have a couple of questions. So, firstly, CASA growth has lagged overall deposit growth, so a trend we are seeing across the industry. So, what are the steps are we taking to improve our CASA mix? So, that is first question.
Amitabh Chatterjee (Jammu & Kashmir Bank Ltd): Okay, you you want me to answer the first question first, right?
Yuvraj Choudhary (Anand Rathi): Yeah.
Amitabh Chatterjee (Jammu & Kashmir Bank Ltd): So, Yuvraj while there was a a flight of CASA during the first quarter, as I already mentioned, we could recover a fair bit of it in the in the second quarter in the last month of second quarter. If you ask me about this steps, there are not one or two steps, there are several steps that we have taken to restore CASA. Like for example, we are entering into MOUs with multiple organizations, companies for salary package within Jammu and Kashmir, as well as outside Jammu and Kashmir to open salary accounts, and we have been permitted by several organizations. In fact, in the last quarter itself, I guess there would be not less than 20 such occasions. Apart from that there is there is a strong flavor of UPI payments within the state, within the state of Jammu and Kashmir, where most of the merchants they have either our POS machines or QR codes. So, at a at a point of time, maybe we were not very concerned about this, but now there is a very strong monitoring of all these POS machines, as well as QR codes that have been allotted to the merchants, and we are following up with their transactions being routed through our bank. So, this is another. Apart from that, we are in the process of signing a fresh MOU with the government of Jammu and Kashmir for their salary accounts and this time around we expect the MOU to be for five years. And most likely, we are going to sign it tomorrow. So, all these things put together, I guess we are working on CASA, and apart from that, all these zones have shown a remarkable improvement in opening of CASA accounts, especially savings account accounts, including rest of India, which I think is a very positive sign. Like I said, there has been a positive contribution from rest of India as well in in in in the CASA sec- segment. So, all these things put together, I believe that we can we can improve our CASA to a fair extent. At least we will not lose the ratio. But one one thing which we need to understand, unlike other banks, if our CASA ratio has gone down, we have not lost those deposits. They have converted They have got converted into term deposits with our bank only. So, if you look at the growth in term deposits vis-a-vis whatever we have percentage terms whatever we have lost in CASA, we have been able to maintain these deposits with us. So, unlike earlier, we have now a very stable base. If you look at the average deposits and average advances compared to the quarter end deposits and advances, they are almost the same. So, that has actually stabilized the business position.
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