Jammu & Kashmir Bank: Q1 Bottomline Improves 25%

Jammu & Kashmir Bank has come out with its Q1FY14 results yesterday, 1st August 2013. Growth in net interest income has helped the bank to post a net profit growth of 25%, which stood at Rs 307.92 crore as against Rs 246.09 crore in Q1FY13.

The Net Interest Income (NII) rose by 22% and stood at Rs 654.89 crore against Rs 535.62 crore in the same quarter last year. The growth in the NII can be attributed to better credit growth of the bank which went up by 18% on yearly basis to Rs 39282.2 crore during Q1FY14. The Other Income of the bank has gone marginally down by 1.22% to Rs 92.23 crore on YoY basis. On the other hand, its operating profit rose by 15% and stood at Rs 480.99 crore against Rs 415.17 crore in Q1FY13.

As with other bank, J&K Bank too saw its asset quality deteriorating marginally. On an absolute basis, the Net NPAs and Gross NPAs went up by 3.36% and 1.54% respectively on a sequential basis. As percentage of advances, the Gross NPAs has increased by 5 basis points to 1.67% against 1.62% of last quarter. The Net NPAs remained constant at 0.14% on a QoQ basis. The provision coverage ratio stands at 94.01% in Q1FY14, which is one of the best in the banking sector.

Good performance of the bank on the bottomline side has helped bank to improve its return on asset (ROA) which has crawled up by 40 basis points to stand at 1.89% during the quarter against that in 1.49% in Q1FY13. 

The stock of Jammu & Kashmir Bank is trading at Rs 1100, with an attractive Price-to-Book Value of 1.12x. Hence, one can take exposure to the counter now.