Amitava Chatterjee, managing director and CEO of Jammu & Kashmir Bank, speaks to Kshipra Petkar on sustaining retail-led loan growth, improving margins despite deposit pressures, and the bank’s plans to strengthen fee income and explore co-lending opportunities. Excerpts:
You have seen good growth in retail, MSME and agriculture portfolios, and now even corporate credit is picking up. What is your guidance for Q4 and beyond?
At the beginning of the year, we guided for 12% loan growth, which we revised to 12-15% after Q2. We continue to maintain that guidance. Given that the base in Q4 last year was very strong, we are not pegging it beyond 15%. Overall, the loan growth should be around 15%.
Has GST-related price rationalisation helped credit demand?
Yes, particularly in the auto segment. Both two-wheelers and four-wheelers have seen strong growth. We ran focused campaigns and modified processes to respond quickly. Auto loan growth has been in double digits and our market share in Jammu & Kashmir has increased from 50% to 60%.
Retail Expansion Strategy
What is the strategy to achieve this 15% loan growth target?
It will be more of retail-focused growth in the fourth quarter. Agriculture has been a standout, with nearly 80% year-on-year (YoY) growth. Auto loans and housing loans have also grown in double digits. In housing, rate cuts during campaign periods helped us achieve close to 30% growth in our rest-of-India branches. We will continue to see a double-digit growth in these segments going forward.
How strong is the corporate loan pipeline?
For the next 10-15 days to a month, the pipeline is around Rs 12,000 crore and is well diversified across sectors.
What is your view on rate cuts going forward? How much of it has been passed on?
At least for the next quarter, we do not expect a cut. It has been fully passed on as about 52% of our loan book is repo-linked, ensuring immediate transmission. Deposit rates adjust with a lag, which should support net interest margins (NIMs) going forward.
NIMs have improved to 3.62%. When do you see further expansion?
If there are no further rate cuts, we expect NIMs to improve to around 3.70% by the end of the year. We had guided for a 5-6 basis point improvement, which has already materialised this quarter.
Deposit Growth Target
What is the deposit growth outlook?
We had guided for a 10% deposit growth and have achieved more than that (10.8%). Given industry-wide deposit challenges, we have to maintain at least 10% growth.
CASA ratio has dipped. What explains this trend?
CASA balances have grown in absolute terms, but the ratio has moderated as household savings are shifting towards mutual funds (MFs) and term deposits. We are running a focused CASA campaign in J&K Bank and expect CASA to improve to above 45%.
How are you planning to grow non-interest income?
We are strengthening technology, especially in trade finance and forex, to regain lost customers. We are also improving treasury management and stepping up focus on third-party products like insurance and MFs.
What are your plans for credit cards?
We plan to add about 3 lakh credit card customers over the next 2-3 years, largely by leveraging our existing customer base. Asset quality remains under control as most cardholders are salaried customers.
Are you seeing any stress in the loan book?
We are not seeing stress in any particular segment. Accounts impacted by last year’s disruptions have been restructured and adequately provided for. With tourism improving, the outlook remains stable.
Any new segments the bank plans to enter?
We are expanding retail lending in rest-of-India branches and are in the process of introducing co-lending, primarily for MSME, housing and gold loans.