J&K Bank sees net spurting 25% to Rs 1,300 cr this fiscal

The bank will also maintain its net interest margin at over 4 %, one of the highest in the industry, says CEO Mushtaq Ahmad

J&K Bank is targeting to grow its post-tax profit by 25 % to Rs 1,300 crore this fiscal despite the economic gloom and certain hit on banks' bottom-lines due to mid-July liquidity tightening measures by the Reserve Bank, a top official has said.
    
"I am sure we will achieve 25 % growth in the total business and net profit will also grow by an equal measure to Rs 1,300 crore this fiscal," its chairman and chief executive Mushtaq Ahmad told a select group of journalists recently.
    
Ahmad said the total business of the bank, which crossed the Rs 1 trillion-mark last fiscal, will touch Rs 1.25 trillion by the end of this fiscal.

     

He said the bank was sticking to its targets despite ongoing troubles, both on account of the dip in growth and due to the liquidity tightening by the RBI to prop the battered rupee on July 15, which can hit the bottom-line.
      
However, he pointed to the one-time dispensation given by RBI where it allowed banks to value SLR holdings as on July 14 to help banks avoid treasury losses and also underlined that the bank has a contingency reserve of Rs 87 crore created during better times, which can be utilised.
      
The strategy of the bank, which is owned by the state and is the only publicly-traded company from Jammu & Kashmir, is to accrue deposits in the state and lend it outside the state for better yields, Ahmad said, adding over a half of the deposits in J&K fall under the low-cost current and savings account category.

     
Ahmad said the bank will also maintain its net interest margin at over 4 %, one of the highest in the industry, for the fiscal.
     
Reacting to Finance Minister P Chidambaram's advice to expand outside its home state and also internationally, Ahmad said it will be opening up to 20 branches outside the state this fiscal in Maharashtra, Kerala, Karnataka and Delhi.
     
"Rather than exploring newer areas, the idea is to go to areas where we already have a presence," he said.
    
On the international expansion front, Ahmad said the bank plans to have full-fledged branches in Dubai and London, and will be kick-starting the process of getting the regulatory go-ahead later during the fiscal.

    
Depending on the market conditions, it may look at raising some capital next fiscal and may also re-explore the GDR route, he said, adding it does not need any capital infusion this year.
    
The state will continue being the majority share-holder of the bank, Ahmad said, adding the bank has also sounded the state for the additional funds as a result of the Basel-III framework.
    
On its subsidiaries and alliances, Ahmad said the bank was willing to completely sell-off its stake in the life insurance subsidiary MetLife if it gets a good price. The bank currently holds 5% in the company.

    
It is not pushing its credit cards offering, launched in tie-up with American Express, aggressively, he said.
    
On lending side, it will prefer hydel projects, which have a good demand in its home state, but stay away from the thermal sector plagued with a multitude of problems, Ahmad said.
    
It has not suffered due to any of chronic sectors/accounts, he said, adding the exception of Deccan Chronicle for which it has a Rs 50-crore exposure which has been fully provided for.
    
It had a Rs 100-crore exposure to the grounded Kingfisher Airlines and is one of the few lenders to have recovered a bulk of the money by selling the securities, Ahmad added.