Jammu & Kashmir Bank on January 31 said its standalone net profit fell by 52 to Rs 49.64 crore in the third quarter of 2019-20 as the abrogation of Article 370 in J&K impacted business activities and cash flows. The state-owned lender had posted a net profit of Rs 103.75 crore in corresponding October-December period of the previous fiscal.
Total income on standalone basis was marginally up at Rs 2,196.02 crore in the reported quarter of 2019-20 as against Rs 2,166.22 crore in the same period of 2018-19, J&K Bank said in a regulatory filing.
There was rise in bank's gross bad loans as the non-performing assets (NPAs) rose to 11.10 per cent of the gross advances as on December 31, 2019 as against 9.94 per cent by the same period of the previous fiscal.
However, the net NPAs came down to 4.36 per cent of net advances by end of December 2019 quarter from 4.69 per cent a year ago.
In value terms, the gross NPAs were at Rs 7,711.60 crore by end of December 2019, higher than Rs 6,859.73 crore by December 2018.
Net NPAs were of the order of Rs 2,810.32 crore compared with Rs 3,049.18 crore.
On consolidated basis, net profit declined by 53 per cent to Rs 49.06 crore in the December quarter compared to Rs 102.80 crore in October-December 2018.
Income grew to Rs 2,197 crore from Rs 2,169.77 crore in year ago period.
The consolidated results include that from subsidiary firm JKB Financial Services and associate J&K Grameen Bank.
"Due to imposition of restrictions in J&K with effect from August 5, 2019 on account of re-organization of J&K state, all the business activities came to a halt thereby adversely impacting the cash flows in all sectors as a result of which a large number of accounts came under stress," the bank said.
J&K Bank said it approached the Reserve Bank with the request to continue the standard asset classification of distressed MSME accounts of J&K.
Expecting a favourable disposal of the request, the Bank deferred to run the System Level Asset Classification (SLAC) on September 30, 2019 forr MSME borrowers of J&K spread over 21,668 accounts involving Rs 1,451.44 crore.
"However, SLAC was carried out on all other accounts and the bank downgraded Rs 1,340.92 crore during the quarter ended September 30, 2019. The Bank carried SLAC across all sectors (including MSME accounts in J&K) on December 31, 2019 and downgraded MSME accounts amounting to Rs 329.01 crore which were given effect from 30 September 2019 because these were under stress at that point of time as well."
Further, it said the Risk Assessment Report (RAR) of the RBI reported divergence in assets classification Rs 195 crore and provisioning Rs 884 crore has been recorded in the financial results for the period ended September quarter of this fiscal.J&K Bank shares closed unchanged at Rs 27.35 on BSE.