making new highs now .... crossed 1150

Conference Call      
          Jammu and Kashmir Bank
Expects some restructured accounts to qualify for shift to standard assets in Q4FY2013


J&K Bank conducted concall to discuss financial performance for the quarter ended December 2012 and prospects of the bank. Mushtaq Ahmed – Chairman and CEO along with Parvez Ahmad –Executive President addressed the call:

Highlights:
Bank is on track to touch the net profit of Rs 1000 crore for FY2013.

NIM is expected to be in the range of 3.8%-4.0%, which has crossed 4% mark for Q3FY2013.

During the quarter, bank has restructured Rs 728.32 crore of advances, pushing up the total outstanding restructured book to Rs 1977.69 crore, constituting 5.5% of the advance book at end December 2012.

The restructuring was done mainly on account of technical reasons such as change in commercial operation date, change in configuration of project etc.

One project account with the exposure of Rs 200 crore was restructured on account of change in commercial operation date. One hotel account with the exposure of Rs 125 crore was also restructured in Q3FY.

Further, one account at Rs 50 crore was restructured on account of change in configuration of the project. About Rs 91 crore of exposure was restructured, as the account was witnessing delay in payment from Government.

J&K state accounts for 30-35% of share in restructured assets book, which is spread across 2490 accounts.

Bank is evaluating its restructured accounts portfolio, and expects some accounts to qualify for shift to standard assets in Q4FY2013.

Bank shifts restructured assets to standard assets category after successful payment performance for one year across all facilities.

Restructured assets book of the bank consisted of Rs 731 crore from manufacturing, Rs 546 crore from services, Rs 500 crore from infrastructure, Rs 53 crore from agriculture, Rs 47 crore from real estate and Rs 99 crore from trade and others at end December 2012.

Bank does not have any immediate pipeline for restructuring assets, while CDR case may emerge as it is part of consortium lending.

Cost-to-income ratio is expected to increase on account of wage revision. Cost-to-income ratio is projected at 36-37% for FY2013.

Bank expect the non-interest income to be supported with working capital funding, while expect improvement in insurance business contributing to non-interest income.

During the quarter, the slippages were higher at Rs 113.42 crore (slippage ratio – 1.3%), while upgradations and reductions were lower at Rs 83.38 crore, causing 5% QoQ increase GNPA to Rs 581.68 crore at end December 2012.

Business of the bank grew 18% YoY to Rs 92732 crore at end of December 2012, driven by 20% growth advances to Rs 35657.7 crore, while deposits grew 17% to Rs 57074.6 crore at end December 2012.

CASA deposits increased 15% to Rs 22506.1 crore, while the term deposits moved up 18% to Rs 34568.4 crore at end December 2012. CASA ratio declined to 76 bps YoY, while increased 127 bps QoQ to 39.4% at end December 2012.

Bank proposes to improve the CASA share to 41% by end March 2013.

Overall sectoral exposure was: Agriculture-10%, Trade-8%, Personal-16%, SME-8%, corporate-55% and other-2% at end December 2012.

For J&K, advances growth is projected at 22%, while deposits are expected to increase 20% in FY2013.

For rest of India, advances are expected to increase 17-18%, while deposits are projected to move up 15% for FY2013.

ROA improved to 1.87% in Q3FY2013 and 1.78% in 9MFY2013.

ROA is expected to be 2% for FY2013.

Post Tax Return on Average Net-worth is expected at 26% for FY2013.

Branch network of the bank stood at 662 branches at end December 2012. Bank has added 27 branches in Q3FY2013 and 55 branches in 9MFY2013. Bank also has a network of 578 ATMs at end December 2012

Bank proposes to add 75 branches in FY2013, after opening new 135 branches in FY2012.