Jammu and Kashmir Bank Chairman's Speech > Engineering - Heavy > Chairman's Speech from Jammu and Kashmir Bank - BSE: 532209, NSE: J&KBANK

Jammu and Kashmir Bank

BSE: 532209|NSE: J&KBANK|ISIN: INE168A01041|SECTOR: Banks - Private Sector
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Chairman's Speech (Jammu and Kashmir Bank) Year : Mar '16
Chairman''s Statement
 Dear Shareholders,
 It gives me immense pleasure to present the Annual Report of your Bank
 for the Financial Year 2015-16. At the outset, I would like to express
 my gratitude for your continuous trust, loyalty and unwavering support
 to the Bank.
 The Indian banking sector is passing through a difficult phase. The
 asset quality of most of the banks has been under increasing pressure
 for past few years; a direct corollary of dampened national economy
 and, in particular, the resultant severe weakness in corporate
 earnings. The problem manifested itself at its zenith during FY 2015-16
 as most of the banks faced unprecedented deterioration in asset
 quality.  Profitability of the sector also witnessed a steep decline on
 account of increased provisioning for impaired assets.
 FY 2015-16 was also a very challenging one for J&K Bank.  Throughout
 the year, the Bank was confronted with a surge in non-performing
 assets. NPA''s, however, were predominantly limited to some corporate
 accounts and the Bank''s considerable retail loan portfolio was mostly
 left unscathed. J&K State, the main contributor of retail credit for
 the Bank, had much lower NPA level than any other geographic
 constituent of the Bank.
 For FY 2015-16, the focus of the Bank remained on consolidation of the
 balance sheet to make it stronger and healthier for future. The Bank
 apportioned substantial percentage of operating profits towards
 floating provisions, so as to have a strong cushion against future
 Inspite of subdued economic environment at the national level and a
 stifled economy at J&K State level, still recovering in the aftermath
 of floods, the Bank''s credit growth for the financial year stood at
 12.58 percent which is much higher than the industry average of 9.3
 percent.  During the year, the Bank consciously avoided contracting
 high cost deposits and instead focused on low cost CASA deposits. This
 resulted in reduction in Cost of Deposits as well as improvement in Net
 Interest Margins. For FY 2015-16, the cost of deposits of the Bank
 stood at 6.34 percent compared to 6.74 percent for the previous
 financial year. Similarly, NIM stood at 3.85 percent compared to 3.81
 percent in FY 2014-15. CASA deposits, as a percentage of total
 deposits, increased from 41.79 percent in FY 2014-15 to 44.13 percent
 in FY 2015-16.
 The Bank remained well capitalized with an overall Capital Adequacy
 Ratio (CAR) of 11.81 percent as on March 2016, computed under Basel III
 norms, which is well above RBI stipulated norm of 9.625 percent. Of
 this, the Common Equity Tier I stood at 10.60 percent against the
 minimum regulatory requirement of 7.00 percent.
 Going ahead, the Bank foresees better economic prospects in the state
 of J&K for FY 2016-17. As such, the Bank has targeted a credit growth
 of 22 percent in the J&K State.  Retail credit shall continue to be a
 major focus area. Bank also plans to harness the considerable
 opportunities being provided by the rural areas. Outside J&K, the Bank
 shall focus on rebalancing the portfolio mix towards a lower risk
 profile. The Bank has revisited its corporate lending policy and has
 reformulated its tolerance limits, exposure appetite and risk
 management framework.
 The policy of branch expansion in J&K State particularly in unbanked
 and under banked areas, shall continue as priority. These branches have
 proven to be substantial contributors of low cost CASA deposits for the
 Bank.  Against the CASA deposit ratio of 44 percent for the Bank as a
 whole and 53 percent for J&K State, the CASA deposit ratio of these
 branches has remained at a very healthy 70 percent and even above.
 Accordingly, the Bank plans to establish 228 new branches in J&K State,
 out of the total 248 branches planned for the current financial year.
 Indian banking sector is experiencing a phenomenal and metamorphic rise
 of the digital banking. Major opportunities and challenges are being
 presented by the disruptions brought in by the technology.
 Understanding this, the Bank initiated steps for internal adoption of
 technology as an organizational culture and reinforced the
 technological solutions being offered to the customers. During the
 year, the Bank improved its ATM footprint and increased the card count.
 The Bank also upgraded its e-banking platform and initiated process for
 revamping its mobile platform for banking services. Bank''s Internet
 Payment Gateway has been aggressively pitched to various customer
 segments.  Recent technological interventions in banking are being
 continuously explored to provide our customers maximum ease and
 comfort. At the same time, efforts are being made to encourage clients
 to adopt modern digital banking channels.
 As a developmental institution of J&K State, the Bank continues to lay
 high emphasis on inclusive growth of all sections of the society. The
 objective of providing banking services in unbanked areas is being
 achieved through a mix of Brick & Mortar branches and Business
 Correspondents.  Under Pradhan Mantri Jan Dhan Yojna , 12.86 lakh
 accounts have been opened so far, with deposit of Rs. 349.84 crore in
 these accounts. RuPay Debit Cards have been delivered to majority of
 these account holders.  The Social Security Schemes- Atal Pension Yojna
 (APY), Pradhan Mantri Jeevan Jyoti Bima Yojna (PMJJBY) and Pradhan
 Mantri Suraksha Bima Yojna (PMSBY) are being implemented with full
 vigor and intensity.
 Dear Shareholders, 2015-16 was a difficult year for the banking
 industry as also to our Bank. However, with your support, we not only
 succeeded in overcoming the complexities but also build reasonable
 fortifications to face future uncertainties. I take this opportunity to
 express gratitude to our main promoter, the J&K State Government for
 their continued patronage and support.  I also acknowledge and express
 gratitude to RBI for their guidance. I am also thankful to the Union
 Government for their support. I also thank NABARD and other members of
 our stakeholder fraternity who have always been extending a helping
 hand in our various initiatives. Finally, I acknowledge the commitment
 and dedication of all the staff members of J&K Bank family.
 Esteemed Shareholders, the banking industry has been operating in an
 unfavorable environment for quite some time now. Stress in Corporate
 sector was inevitably transmitted to banking industry, resulting in
 deterioration in asset quality as well as profitability of most of the
 banks.  However, there are vivid signs that corporate performance is
 improving. National economy is already progressing on a high growth
 trajectory. The future appears to be full of opportunities for growth
 and profitability. With your continued support, we remain poised to
 harness the opportunities and address the challenges to take this
 institution to new heights of excellence.
                                                  With best wishes,
                                                      Mushtaq Ahmad
                                                     Chairman & CEO.
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