J&K Bank defines itself as a bank with local origins, national presence and international standards of service. A relatively small bank as cpmpared to monoliths like SBI, PNB, ICICI bank, the J&K bank stands tall in the Indian Banking Space on various counts. A peer group analysis as on 31.03.10 reveals that the Bank has positioned itself as a leader in various aspects with regard to fundamentals, stability and efficiency of operations
CASA Ratio: CASA Ratio is the ratio of Current and Saving Bank Deposits to total Deposits of the Bank. It signifies a bank’s access to low cost deposits and is considered as one of the determinants of the efficiency of a bank. A 30% CASA ratio is considered good for a particular bank. J&K Bank’s CASA ratio has risen considerably over the last few years to 40.69% as on 31.03.10. Standing third in the ranking, the CASA ratio of JKB is surpassed by only two banks in the whole industry viz SBI and HDFC Bank
Cost to income Ratio: The cost-to-income ratio is a key financial measure, particularly important in valuing banks. It shows a bank’s costs in relation to its income. The ratio gives investors a clear view of how efficiently the bank is being run – the lower it is, the more profitable the bank will be. J&K Bank has the lowest cost to income ratio in the whole industry at 37. HDFC Bank has it at 47.3, SBI at 52.59 and PNB at 39.39. The Industry average is more than 40.
Yield on Advances: It is the Ratio of interest income on advances to average total advances and denotes the efficiency of banks in earning revenues from its lending. It is a key measure of banks lending policies and pricing of its loans and has a direct bearing on the profitability of the bank. J&K Bank has yield on advances ratio of 10.65% surpassed only by HDFC Bank ( 10.77) in the whole industry. Some of the Banks trailing behind J&K bank are Axis Bank (8.59), ICICI Bank (8.70)Canara Bank (9.81), Corporation Bank (9.90) PNB (10.37) and SBI (9.66)
Net NPAs: Non Performing Assets are the loans that have gone bad. The Ratio denotes percentage of total Bad advances to total loan portfolio of the Bank. As on 31.03.2010 J&K Bank has the lowest Net NPA Ratio in the Industry at just 0.28%, followed by HDFC Bank and Axis Bank at .31% and .36 respectively. ICICI Bank has a net NPA ratio of2.12 % while asSBI and UCO bank have 1.72% and 1.17% respectively.
NPA Coverage Ratio: In Simpler terms this ratio denotes the provisioning made by a bank against its bad loans. J&K Bank has the highest NPA coverage ratio in the industry at 90.13%. It means that the bank has provided more than Rs 90 rupees for a bad loan of Rs 100. RBI has recently asked banks to ensure 70% NPA coverage ratio by 2011. J&K bank has not only done that already but has surpassed the mandatory provisioning requirement by 20%. HDFC Bank has this ratio at 74% whileas SBI has it at only 59%