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Jammu and Kashmir Bank

BSE: 532209|NSE: J&KBANK|ISIN: INE168A01041|SECTOR: Banks - Private Sector
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Mar 16
Chairman's Speech (Jammu and Kashmir Bank) Year : Mar '17

Esteemed Shareholders,

It is a moment of honour for me as Chairman and CEO to present my first Annual Report for the Financial Year 2016-17.

The organizational acumen for running any business is put to test in times of crisis. The institutions which succeed in braving tough times do so only by applying that acumen through the requisite skills, adapting to the changing frameworks of functioning while drawing upon their institutional memory in the process. And that is precisely what we have been doing the entire past year.

As we all know, the year 2016-17 has been very tough. The Business horizon remained clouded with hostilities. The political and economic developments across the globe continued to cast their shadows of uncertainty on the business environment. Brexit, US

Presidential elections, war in Syria and deepening conflicts in other significant geographies impacted the global economic environment thereby extending slowdown with subdued growth numbers.

The Banking Industry which has been grappling with grim circumstances for last some years again went through a very difficult year with uncertainties still looming large for few more quarters in future. The pressure of deteriorating asset quality derailed the consolidation initiatives of many of our peers. The revised Prompt Corrective Action (PCA) protocol from the regulator has found in its ambit majority of the PSU Banks. The credit off-take reached its historical low of last sixty years. The liquidity created in the system due to demonetization further squeezed the margins. Amid fears of complete capital erosion due to mounting asset quality issues, strong body of opinions emerged in favor of Mergers and Acquisitions (M&A), which became the buzz-word in the country’s changing banking landscape. Besides, the reversing interest rate cycle put huge pressure on the margins leading to decline of Net Interest Margin (NIM) to its historical low in some segments.

Having said it all, our Bank which was just coming out of the after-effects of September 2014 deluge witnessed a dreadful summer in Kashmir Valley which further shook and choked the sustaining pulse of the state economy. In such a context, we had to shift our focus towards making conditions of our borrowers better to meet the fall-out of summer turmoil rather than betting on their capability. At this crucial juncture, the Special Restructuring Package fully backed by the Government of Jammu and Kashmir and approved by the Reserve Bank of India (RBI) came as a perfectly timed enabler to ensure streaming of cash-flows.

Upgrade of our Recovery and Resolution Methodology assumed the highest significance post recognition of asset quality woes. And creation of Impaired Assets Portfolio Management (IAPM) vertical complimented our resolve of effecting recoveries at enhanced pace which also helped to release the squeezing pressure on our capital base.

Furthermore, the Demonetization of Specified Bank Notes during third quarter fundamentally transformed the way people perceived Banking. The digital platforms across various banking channels phenomenally transformed mode and medium of financial transactions. It offered us the opportune time and platform to push for complete digitization of our service delivery models through our specialist technology vertical. It is the dividend of this technology driven transformation which shall remain our cherished memory of this most difficult year in the history of our Bank.

Loss is always the hardest, and at times the best of task-masters to make us learn. That is why, the year of Losses” as we remember it now has taught us very valuable lessons. As an organization, the pain of loss has pushed some of our hidden capacities to the fore and in the process is bringing the best out of us. We have learned our lessons well and remain poised for a new and promising beginning. Our strategy is repositioned to come out of this slump soon.

For, in the midst of such situation, we partially augmented our capital and are futuristic in capital planning programme with an open window for more tranche infusions during the current year. Also our on boarding programme to develop our Human Resource for future growth and expansion plans too remained uninterrupted.

In this regard, we have already engaged the services of globally reputed consultants M/S Delloitte Touche Tohmatsu India LLP to advise us on the swiftly changing dynamics in the already complex banking landscape besides various aspects of organizational transformation, technology intervention and business process re-engineering. We are working on changing of our Business Model to explore opportunities in geographies matching our appetite. Our spirits are not dampened. We have covered around two third of our NPAs by sufficient provisioning.

In terms of business, we are on the path of recovery. Our consolidation and subsequent clean-up process has prepared us for the rejuvenated growth path. We are confident of the turn-around in business ahead of our earlier understanding. We are very optimistic of resuming the dividend distribution soon.

Dear Shareholders,

I derive all my strength from the unrelenting support and complete trust that you have vested in us for conducting the business of this Bank. I am confident that with our perseverance and dedication, we shall meet all the challenges and emerge stronger and more resilient. So, be there besides us to see our numbers going up.

Parvez Ahmed

Chairman and CEO

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