J&K Bank’s net interest income (NII) and operating profit remain negative year-on-year (Y-o-Y) while margins and yields are also under pressure. What are the key reasons?
One has to factor in the impact of the 125 basis points (bps) repo rate cuts, which have affected the entire banking sector. Interest earnings take time to adjust due to the slow transmission of interest rates on deposits. If you look at the sequential performance, from the second quarter (Q2) to Q3, operating profit and margins have improved. The Y-o-Y numbers reflect the impact of the rate cuts. Importantly, the impact has been lower on J&K Bank compared to many other banks, including public sector banks (PSBs).
Asset quality has improved, but NPAs in the real estate segment are still high at around 20 per cent. What explains this?
The real estate NPAs are legacy accounts, largely dating back to 2014-15. There has been no fresh NPA addition in the real estate segment in recent years. The percentage appears high because the real estate loan book is relatively small. Most of these accounts are under tribunal proceedings, and we are seeing regular recoveries, which is why the NPA ratio is steadily coming down.
Tourism has been impacted due to recent incidents and low snowfall. Has this affected the bank’s business?
Tourism has been impacted, but the effect has been mitigated through a rehabilitation package approved by the Reserve Bank of India (RBI).
Jammu & Kashmir has always demonstrated strong economic resilience. The impact of such events here is often less severe than it would be elsewhere, due to the adaptability of local businesses and people.
How is the bank managing regional disruptions to sustain growth?
J&K Bank now operates in 22 states across the country. Business growth is almost evenly split — about 50 per cent from Jammu & Kashmir and 50 per cent from the rest of India. This geographical diversification allows us to maintain momentum even during challenging periods in any one region.
The credit-deposit (CD) ratio has improved to 72.85 per cent. Where do you see it heading?
The CD ratio was in the mid-60s for quite some time, and it has now improved to over 72 per cent. We still have room to grow and could move towards 76-78 per cent, depending on the overall business environment.
Current account and savings account (Casa) ratio has declined. Is this a concern?
The decline in CASA is an industry-wide trend. Our CASA ratio stands at 44.10 per cent, which is significantly higher than the industry average of around 37 per cent. While CASA may not return to earlier levels, we benefit from a strong captive customer base in Jammu & Kashmir, and focused campaigns are underway to improve it.
What is the strategy for corporate loan?
Our loan portfolio is 65 per cent retail and 35 per cent corporate, and we intend to maintain this balance. We focus only on highly rated corporates to avoid building a stressed loan book.
What is your outlook for 2026-27 (FY27)?
The bank’s fundamentals have strengthened significantly. Asset quality has improved and the business pipeline is strong. Our target is to bring gross NPAs below 2 per cent over the next two years. Moreover, recovery has been very strong. We recovered around ₹150 crore from large accounts, in addition to recoveries from smaller accounts. Our FY26 recovery target of about ₹500 crore has already been achieved within nine months, enabling provision reversals.
 "Amitava Chatterjee, Managing Director and Chief Executive Officer (MD&CEO), Jammu and Kashmir Bank")