Equirus Securities J&K Bank 4QFY11 Result Final Take

8/4/2019 Equirus Securities J&K Bank 4QFY11 Result Final Take

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J&K Bank Limited Absolute LONG Relative Overweight 22% upside in 10 months

May 19, 2011 Analyst: Devam Modi [email protected] (+91-9099987467) Page 2 of 9

Key Highlights of the Con-Call/Analyst Meet:

Advances amount grew from Rs 23 Bn to 26 Bn (~14% growthYOY) including the repayment from the government for Rs

23 Bn.

Expect advance growth of 25% & deposit growth of 20% inFY12E.

Deposits increased up to Rs 445 Bn & CASA moved up to Rs180 Bn improving the CASA ratio to 40.5% from 39.5% (YOY)

The bank has provided for 100% of the pension liability &doesnt expect any hit in the coming quarters from the

same.

NIMs were maintained at 3.7% inspite of the repayment ofthe OD facilities by the State Government.

Expect to achieve 4% NIMs for FY12E. Gross NPAs down to 1.95% from 1.97%; NPA Coverage Ratio

increased to 93% (highest among the Indian Banks)

C/D Growth ratio: Bank targets to be 85000 crore (53000crore of deposits) in FY12E.

Will increase the branches from 548 to over 600. Comfortable on CAR level with Basel 1 CAR of 13.2% and

Basel 2 level of 13.30%.

Major growth was outside J&K state with 70% of theincremental disbursements of Rs 60 Bn.

Duration of 3.5 years on the overall portfolio and 1.5 yearson AFS portfolio which help maintain the NIMs in an

increasing interest rate environment.

Exhibit 1: Break-up of Provisions

Provisions and Contingencies Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11

Provision for tax 739 757 729 823 823 818

Provision for bad and doubtful assets 200 403 440 390 150 320

Provision for Depreciation onInvestments

6 -394 259 -48 2 198

Provision for Funded Interest on TermLoan

2 63 - 25 85 -61

Provision for Frauds / Embezzlements 2 -4 2 - 6 12

Contingencies 24 225 - - - 210

Provision for diminution in fair valueof Restructured / Rescheduledadvances

56 112 - 21 64 76

Provision for Contingent Liabilities 18.50 -14.30 - - - -

Total 1,046 1,147 1,429 1,212 1,130 1,574

Source: Company, Equirus Securities

Exhibit 2: Trend of Yields on Advances, Cost of Deposits, NIMs

Source: Company, Equirus Securities

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Jun09 Sep09 Dec09 Mar10 Jun10 Sep10 Dec10 Mar11

NIM(%) CostofDeposits Yieldonadvances


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J&K Bank Limited Absolute LONG Relative Overweight 22% upside in 10 months

May 19, 2011 Analyst: Devam Modi [email protected] (+91-9099987467) Page 4 of 9

Quarterly Results Table (Consolidated)

Rs Mn Q4FY11 Q4FY11E Q3FY11 Q4FY10% Change

CommentsQ4FY11E Q3FY11 Q4FY10

Interest Income 10,139 10,049 9,347 7,735 1% 8% 31%

Interest Expended 5,981 6,397 5,451 4,648 -6% 10% 29%

Net Interest Income4,157 3,653 3,895 3,087

14% 7% 35%

Operating Income 4,157 3,653 3,895 3,087 14% 7% 35%

Operating Expenses 2,388 1,644 1,863 1,664 45% 28% 43%

Operating Profit1,769 2,009 2,033 1,423

-12% -13% 24%

Provision and Write Off 756 257 306 390 194% 147% 94%

Other Non Operating Income 1,190 749 776 1,017 59% 53% 17%

Profit Before Taxes 2,203 2,347 2,502 1,957 -6% -12% 13%

Income Tax Expense (Gain) 818 775 823 757 6% -1% 8%

Net Profit 1,386 1,573 1,679 1,200 -12% -17% 15%

EPS (Rs.) 28.57 32.42 34.61 24.76 -12% -17% 15%

Net Int. Margin 3.76% 3.39% 3.76% 3.39% 11% 0% 11%

Key Drivers

Advances Growth (YoY) 13.6% 13.3% 22.0% 10.2% 30 bps -843 bps 344 bps

Deposit Growth 20.0% 14.2% 21.4% 12.8% 581 bps -145 bps 715 bps

Net NPA (%) 0.20% 0.04% 0.28% 20 bps 16 bps -8 bpsRoA 1.19% 1.39% 1.57% 1.20% -20 bps -38 bps -1 bps

CAR (Basel-II) 14.13% 14.11% 15.11% 14.99% 1 bps -99 bps -86 bps


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Documents

Equirus Securities J&K Bank 4QFY11 Result Final Take