Release Date: July 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross NPA reduced to 3.91%, below the psychological mark of 4%, and net NPA at 0.76%, indicating strong asset quality.
- CASA ratio maintained close to 50%, showcasing stability in low-cost deposits.
- Net interest income increased by 7%, operating profit by 13%, and profit after tax by 27% year-over-year.
- Credit growth of 13% year-over-year, with a significant 15.5% growth in the loan book outside Jammu and Kashmir, Ladakh.
- Provision coverage ratio maintained at 91.57%, reflecting robust risk management practices.
Negative Points
- Deposit growth of just under 10% year-over-year, which is relatively modest compared to loan growth.
- Degrowth in deposits over March figures due to cyclic nature and election-related economic activity slowdown.
- Cost of deposits moderated only by five basis points, indicating limited reduction in funding costs.
- Other income impacted by lower technical write-off recovery and booking of arrears of insurance commission.
- Increased competition from other banks in Jammu and Kashmir, potentially impacting market share.
Q & A Highlights
Q: Actually, I'm asking about CASA ratio. Is there any in future the improvement will happen?
A: Yes, sir. So, about CASA ratio traditionally, we have been above 50%. This quarter also, it is nearly 50%, 49.77% to be precise. But as today, we talk, we are already above 50%. And given the franchise of the bank, particularly in the rural areas, in our core territory, we are expecting it to be above 50% going forward also.
Q: Any future expansion planning outside the Jammu?
A: So, sir last year also, we have opened a few branches in the rest of India territory. This year also, we have a plan of opening between 15 to 20 branches in the rest of the India. And of course, Jammu and Kashmir and Ladakh need-based expansion based on the business requirement or for the purpose of financial inclusion will continue happening.
Q: Hi, sir. I just wanted to check if there is any update on the guidance that you've given in the past quarter, if there are any changes?
A: Yes. Harsh, our guidance remain the same. We have given the guidance of credit growth of around 15%, deposits growth of around 12%, CASA 50%, NIM 3.75% to 3.85%, ROA 1.25% to 1.3%, ROE 17% to 18% and gross NPA 3.5%. We will maintain this guidance.
Q: And sir, the other guidance of the employee cost that was a 5% to 6% increase. And opex, an 8% to 10% increase. Does that also remain same?
A: Yes. That also remains same. It will be single digit.
Q: So, sir, are we seeing any pockets of stress and on the personal loans like we see there are many banks who are highlighting stress in the microfinance portfolio, so we don't have any exposure, but we have a large personal loan portfolio. So are we seeing any bits of stress there?
A: So Chintan, our personal loan portfolio consists of majorly, the consumption loan and personal loan to the government employees of Jammu and Kashmir and Ladakh UTs. So their salary is being credited to our account our saving bank account and EMIs are being debited from savings to the loan account. And this product is quite old product, so there is hardly any delinquencies in this. So we don't foresee any stress in this portfolio. And the second thing is about over and above this, we have an enabling MoU with the government, which enables that in case of death or any dismissal of government employees, so the terminal benefits first right will be the bank loan and then the remaining amount will be paid to the concerned employee's family.
Q: And sir, any other pockets of stress, we anticipate? Or any pockets where you are seeing some early warning signals there and restricting our growth in that segment?
A: So as of now we don't have any concern on asset quality. In fact, there is no big account more than 10 accounts, which is a more than 10 crore account, which would be stressed So as of now, we are better off.
Q: And on the margin front, I think many banks are still not be able to curtail their cost of deposit significantly. I think for us, the cost of deposits are almost peaked out. And now we don't anticipate any rise in the cost of deposits, right? Will that be a fair assumption to make?
A: Yes. Yes, it's a fair assumption.
Q: So, Sir, my question is that do you see any growth in your revenue from the rest of India vertical in the coming quarters?
A: So rest of India vertical has been quite vibrant during the last year also. And the two areas have been continuously under focus. One is the big loans corporate book, that is all high-quality loans, high-rate loans. And the second is the home loan segment. So obviously, that book is growing at a pace over 15%. So obviously, the revenue will go up.
Q: If you can, sir, talk about the geographical -- sorry, the state situations in the last 3 months, I mean, since the last quarter? And your outlook in the -- for the UT of J&K and Ladakh? And how do you see the growth there in the J&K business, in the J&K region?
A: Yes. So there -- two, three things which I would like to tell you about this. One is that the tourist inflow is continuing, and we are expecting to make one more record this year. By the end of this year or before the end of this year, the train connectivity will be completed with the rest of India to valley. And obviously, the tourist will continue coming in the bigger number. So that will have a positive impact on the earnings of locals and the local households. And number two is about the elections, you see, the type of turnout in the elections has been unprecedented. After so many years, we have seen more than 50% turnout in the recently held Lok Sabha elections. So, these are the good signs, which are indicating better days to come. Yes, a few incidents here and there, particularly, in the Poonch-Rajouri area and in the Samba and Kathua border area. That has happened. But I think we believe very sincerely that these are only the scattered incidents and may not going to have a negative impact on the growth story of the UT. As far as Amarnath Yatra is concerned and Mata Vaishno Devi Yatra is concerned, again, the yatrees, the numbers are going up and up every year. This year, it is a record number.
Q: And your assessment of the credit growth in J&K region?
A: So if you see that the economy of the world has made is likely to grow by 7.5%. So by that estimates, we are we are quite confident it will be over 15%.
Q: And sir, what we hear is that other private banks have started accelerating their branch opening and their customer acquisition in the state of J&K in the last three, four years, which was not the case earlier. How do you see the competitive assessment now versus, let's say, two, three years back? If there any perceived -- if there is any perceptible change in the competitive scenario there in terms of the
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
