J&K Bank profit falls 12.5% on higher provisions

Jammu & Kashmir Bank reported a 12.5% YoY drop in Q1 net profit to ₹424 crore, hit by higher provisions, lower other income, and compressed net interest margins.

Written by FE Bureau

July 29, 2026 19:41 IST

J&K Bank Q1 Net Profit Drops 12.5% to ₹424 Crore on Higher Provisions and Margin Compression

Jammu & Kashmir Bank on Wednesday reported a 12.5% year-on-year decline in its net profit for the quarter ended June to Rs 424 crore due to higher provisions and lower other income. On a sequential basis, the bottom line declined 46.8%.

The net interest income grew by 2.2% on year to Rs 1,497 crore while the net interest margins declined by 24 basis points to 3.28%. This margin compression resulted from a conscious, strategic decision to maintain credit growth by lending to well-rated corporates at competitive rates and raising deposits at higher costs.

Other income for the quarter declined 14% on subdued treasury income and low recoveries from technically written-off accounts.

“As these recoveries are inherently timing dependent and tend to fluctuate across quarters, this is just transitory in nature, and we expect such recoveries to continue contributing substantially to other incomes in the near and medium term, considering the pool of written-off accounts,” Amitava Chatterjee, managing director and CEO, said in the post-earnings analyst call.

The gross non-performing asset (NPA) ratio improved to 2.37% from 2.50% from a quarter ago and the net NPA ratio stood at 0.6% from 0.64% as on March-end. Provisions increased sharply to Rs 84 crore from Rs 15 crore a year ago.

The total business grew 20.3% on year to Rs 3.03 lakh crore, with advances up 25% on year to Rs 1.31 lakh crore. Deposits rose 16.7% to Rs 1.73 lakh crore. The credit-deposit (CD) ratio stood at 73.91%.

In terms of advances, the share of retail, agriculture and the MSME (RAM) book inched up to 65.97% against 67.29% a quarter ago. “I expect the retail growth to be higher than corporate growth by the end of the year,” Chatterjee said. “We expect 55-60% of the advances to come from retail.”

Within deposit growth, the share of current account and savings account (CASA) declined to 42.06% from 45.65% a quarter ago. Share of term deposits increased to 57.9% as on June end. The bank has maintained its guidance for credit growth at 12% and deposit growth at 10%. The management said it would re-access the guidance after Q2 results.

On Wednesday, the shares of the bank closed 12.6% lower at Rs 155.00 on the NSE.

This article was first uploaded on July twenty-nine, twenty twenty-six, at forty-one minutes past seven in the evening.