SRINAGAR: The Jammu & Kashmir Bank’s results for the Q3 (ending December 2019) suggests that its net profit fell by a whopping 52 per cent to Rs 49.64 crore in comparison to the same quarter in 2018-19.
Bank’s total income on a standalone basis was marginally up at Rs 2,196.02 crore.
This is the first quarter of the financial year 2019-20 when the bank indicated that it is coming out of the mess. For the initial two quarters, it had booked losses. By the end of September 2019, the bank results showed a half-year loss of Rs 894 crore. With the Q3 recorded a profit of Rs 49 crore, the loss has gone down marginally to Rs 845.31 crore.
The Bank had recorded a profit of Rs 250 crore in the first three quarters of fiscal 2018-19. However, the losses in the half-year for the current fiscal were owing to the increase in the NPAs, mostly located outside Jammu and Kashmir.
The bank said that its gross bad loans (NPAs) rose to 11.1 per cent of the gross advances as on December 31, 2019, as against 9.94 per cent by the same period of the previous fiscal. The net NPAs, however, came down to 4.36 per cent of net advances by the end of December 2019 quarter from 4.69 per cent a year ago. Bank’s gross NPAs stood at Rs 7,711.60 crore and the net NPAs at Rs 2,810.32 crore.
The bank attributed its loss of profit and hike in bad assets to the situation. “Due to imposition of restrictions in J&K w.e.f August 5, 2019, on account of re-organization of J&K State, all the business activities came to a halt thereby adversely impacting the cash flows in all sectors as a result of which a large number of accounts came under stress,” the bank explained the situation in its results for the quarter in “notes to accounts…”
“The Bank approached Reserve Bank of India with the request to continue the standard asset classification of distressed MSME accounts of J&K. Expecting favourable disposal of the request the Bank deferred to run the
System-Level Asset Classification (SLAC) on September 30, 2019, in respect of MSME borrowers of J&K spread over 21668 accounts involving Rs.1451.44 Crores. However, System Level Asset Classification (SLAC) was carried out on all other accounts and the Bank downgraded Rs. 1340.92 cores during the Quarter ended September 30, 2019. The Bank carried System Level Asset Classification (SLAC) across all sectors (including MSME accounts in J&K) on December 31, 2019, and downgraded MSME accounts amounting to Rs.329.01 Crores which were given effect from 30.09.2019 because these were under stress at that point of time as well.”
Besides, the bank said the Risk Assessment Report (RAR) of the RBI reported divergence in assets classification Rs 195 crore and provisioning Rs 884 crore has been recorded in the financial results for the period ended September quarter of this fiscal.
“Overall, the bank has performed well in the given conditions wherein the bank had to deal with challenges both from within and without,” Jammu based Daily Excelsior quoted Bank’s CEO and MD R K Chibber saying.