J&K Bank Has A Unique Position, Strong Capitalization : CRISIL

KL Report


CRISIL, India’s leading ratings agency, has continued ‘A1+’ ratings on J&K Bank’s debt instruments. The ratings on the fixed deposit and certificate of deposit programmes of the bank have been re-affirmed at ‘FAA/Stable/CRISIL A 1+’.

CRISIL, in its communication to the bank said, “The ratings continue to reflect the bank’s strong capitalization, healthy resource profile, comfortable asset quality, and the systemic support that the bank is expected to receive in the event of distress, given its dominant banking role in Jammu & Kashmir (J&K) and its unique status as banker to the Government of Jammu & Kashmir (GoJK). These rating strengths are partially offset by the geographical concentration in J&K Bank’s operations, and the bank’s small scale of operations.

“Although J&K Bank is a small bank, it has a unique position. It has strong capitalization, as reflected in its consistently high Tier I capital adequacy ratio (10.9 percent as on March 31, 2013); the ratio is among the highest in the Indian banking sector. The Bank has comfortable asset quality, marked by gross NPAs of 1.6 percent as on March 31, 2013, which is significantly lower than the industry average of 3.2 percent”, CRISIL said.

Maintaining the outlook about the bank as stable, CRISIL believes that J&K Bank will maintain its strong financial risk profile on the back of healthy capitalization and healthy resource profile, over the medium term.

“The Bank will continue to play a key role in J&K‘s economy. These rating strengths will mitigate the impact of risks arising from the high geographical concentration in the bank’s operations”, CRISIL added.

Notably, the Bank’s shares gained Rs 30 to trade at Rs 1,123.80 (BSE) when markets closed on Friday, August 23.


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