The Jammu and Kashmir Bank has reported a record profit of Rs 1767 crore for 2023-24 but the officials at the bank informed that cost to income ratio including the humongous costs on human resource remains a challenge for the bank, which they promise to address in a few years.
The bank has recommended a dividend of Rs 2.15 per share for stakeholders but accepts that retaining its “traditional market” share is a challenge as other private and public sector banks are competing aggressively in the region.
The top officials of the bank informed that with the Government of J&K’s majority shareholding of 63.41 percent in the bank as on June 30, 2023, it is now “a public sector bank for all practical purposes” but as of now may not be strictly classified as such as per the RBI guidelines.
“We have recorded Rs 1767 crore profit in FY 2023-24, which is the highest ever in the 85 year history of the bank. The board has also recommended a 215 percent dividend meaning Rs 2.15 per share for loyal shareholders and stakeholders,” said Baldev Prakash, Managing Director and Chief Executive Officer of the J&K Bank.
He further said that the bank started with the Cost to Income ratio of 76 percent two years ago and has brought it down to 62 percent now. “We will try to align this ratio with industry standards in the next one or two years,” said Prakash. Another top official of the bank, Syed Rais Maqbool, further elaborating on this issue said that Cost to income ratio of the bank remains a pain point for the bank and has had a bad impact on the balance sheet of the bank as well.
“It has not been taken well by the investors and our effort at the management level has been that we effectively manage our costs including the HR costs, which are humongous,” said Maqbool. The bank has now hired a “top consultancy firm” which is analysing the staffing patterns across the enterprise and will present a report with solutions on how to handle the problem. Even as the bank maintains that it has not lost any significant market share Maqbool, stated that market share is a game of performance and the bank faced aggressive competition from other banks, which is being tackled by the introduction of the state of art technology intervention. The J&K Bank MD and CEO stated that the bank is in safe hands now and has improved its asset quality which was a major concern and now the gross NPA has reduced to 4.08 percent from 9.67 percent. “Bank’s total deposits rose 10.44 per cent year-on-year to Rs 1,34,774.89 crore as of March 31, 2024, from Rs 1,22,037.74 crore recorded a year ago. The advances have also crossed Rs one lakh crore,” said Prakash. He informed that 70 percent credit is deployed in J&K and Ladakh territories and the remaining 30 percent is given in the rest of India. “Our CASA ratio is over 50 percent which is one of the best in the banking industry. Besides, we have also spent a handsome amount Rs 19 crore in CSR, which has benefited all sections of the society,” said Prakash.
Earlier this year, Prime Minister Narendra Modi, in a rally in Srinagar had mentioned the past government in J&K had ruined the J&K Bank and it was on the verge of bankruptcy, but his government rescued the bank and ensured that the money of the people of J&K is safe.
“Rs 1000 crore granted by the union government to J&K bank was very critical as the capital adequacy ratio of the bank has to be up to a minimum expectations as per regulatory guidelines,” said Prakash, adding, “there were some governance issues earlier but now we have made sure that there are no compliance or any such issues.” The Anti Corruption Bureau is still investigating some cases concerning the bank. “The policies of the bak are well defined and well institutionalised and with the establishment of state of art technology and best policies we will be able to handle all these issues more effectively,” said Prakash. He further stated that the bank is pro-people and has therefore brought three One Time Settlement schemes for small borrowers
