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May 16, 2013, 04.04 PM IST | Source: CNBC-TV18

Aiming at 22-25% credit growth ahead: J&K Bank

Jammu and Kashmir Bank declared a special dividend of 500 percent and is eyeing 20 percent growth going ahead.

Mushtaq Ahmad, Chairman & CEO, Jammu and Kashmir Bank told CNBC-TV18 that the bank is eyeing around 20 percent growth and 22-25 percent credit growth going ahead.

J&K Bank's fourth quarter net profit was up by 20 percent at Rs 250 crore versus Rs 208 crore, a year ago. Its net interest income (NII) was up 23 percent at Rs 633 crore versus Rs 516 crore, Year-on-Year.

Its gross NPA at 1.62 percent versus 1.61 percent; net NPA unchanged at 0.14 percent, on a squential basis. Its provisions was up at Rs 176.6 crore versus Rs 22.4 crore, quarter-on-quarter.

Fourth quarter net interest margins (NIM) were at 4.08 percent compared to 4.1 percent in third quarter. The provision coverage ratio for the bank stood at 94 percent. The bank declared 500 percent dividend on the event of platinum jubilee.

Also read: Asset quality main concern for PSU banks: Nirmal Bang

Below is the verbatim transcript of his interview on CNBC-TV18

Q: Let me start with your provisions and your asset quality first and then come to the growth story the growth story being largely intact. The asset quality showed a slight bit of worsening. You went up in aggregate terms to Rs 644 crore from Rs 582 crore in one quarter. How have the fresh slippages been and the fresh restructured cases if you have any?

A: We are also part of some of the consortium accounts and therefore whatever decisions leaders have taken, we have just followed those decisions.

We had two accounts, which were under stress and we have taken a call and declared those as NPAs but at the same time, we have sufficiently provided for these accounts.

As far as restructured book is concerned, we have done a lot of improvement. If you see our figure for the quarter ended December, the figure was around Rs 1,900 crore but now it has come down to Rs 1,500 crore and we are quite satisfied and it is really a sign of encouragement for the banks.

Q: Your provisions have spiked up quite significantly in this quarter. Is this is a one time provision or is it a trend that we could see for the bank - that you all are going to start increasing your provisions on a quarterly basis?

A: I have addressed all shareholders and the investor community that J&K Bank would strive and endeavour at every point of time, to keep our provision coverage ratio above 90 percent against the Reserve Bank of India’s benchmark of 70 percent. We are striving to keep the provision levels always above 90 percent and that is the commitment that we would like to repeat even today.

Q: So your provisioning coverage ratio (PCR) now is 90 percent you are saying?

A: It is 94 percent.

Q: What about the net interest margins, in the third quarter you had done 4.1 percent. What are the margins for fourth quarter?

A: Fourth quarter is 4.08 percent.

Q: Can you give us some idea of how growth is happening for you - your net interest income (NII) and profits have grown 20-22 percent. What will be the advances and credit growth for FY14?

A: The interest income growth has been around 27 percent, year-on-year (Y-o-Y) basis and non interest income has grown by around 45 percent. Since it is a platinum jubilee year and we are celebrating 75 years, we have declared a special dividend of 500 percent. We declared the special dividend because we wanted to share the benefits of the growth with our shareholders and investors.

Going forward in terms of growth, we have already chalked out our business plan. We aim to grow our business at around 20 percent. We have also envisaged that credit growth has to be between 22-25 percent. As far as liabilities or deposits are concerned, we will be growing just between 17-18 percent.

Q: To focus on the asset quality for the bank - in terms of a pipeline for the restructured book, how does it look? What does it currently stand at in terms of cumulative restructured books that you have and what is the pipeline?

A: We did not have a good third quarter because we had to add around Rs 600 crore to our restructured books but it was just technical because of some of the project implementation was delayed and we had to provide them with some relief in respect to repayments etc. These were not the accounts which were to be under the corporate debt restructuring (CDR). So there is nothing to worry, and in future we don’t have anything serious in the pipeline that could be restructured.

However as far as Q4 is concerned, we have been able to bring down the restructured book from Rs 1,900 crore to Rs 1,500 crore now. That speaks about the quality that we maintain at J&K Bank.

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