J&K Bank: Margins on a rise - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

J&K Bank: Margins on a rise

Jul 12, 2002

Jammu & Kashmir Bank (J&K) reported a strong growth in earnings at 30% and also over 20% rise in interest income from core advances in 1QFY03. J&K Bank's profit growth was also fueled by a commendable improvement in operating margins. The bank's fee based income however, declined steeply by 30%.

(Rs m)1QFY021QFY03Change
Income from operations 3,280 3,584 9.3%
Other Income 471 325 -31.1%
Interest expense 2,275 2,335 2.6%
Net interest income 1,004 1,249 24.4%
Other expenses 441 413 -6.4%
Operating Profit 563 836 48.5%
Operating Profit Margin (%)17.2%23.3% 
Provisions and contingencies 228 183-20.0%
Profit before Tax 806 97821.3%
Tax 250 2552.0%
Extraordinary items - - -
Profit after Tax/(Loss) 556 72330.0%
Net profit margin (%)17.0%20.2% 
No. of Shares (m) 48.1 48.1  
Diluted Earnings per share*46.260.1 
P/E Ratio 1.7 
*(annualised)   

During the quarter, the bank's cost to income ratio declined to 26% from 30% in the comparable previous quarter. This is despite a 31% fall in other income. J&K Bank managed to control costs on the back of 45% reduction in administrative costs (forms 21% of operating expenses).

The bank's income from investments however, witnessed a marginal growth of 2% due to a sharp fall in yield over the last one year. With incremental investments at lower rates, the bank's investment income is likely to witness slower growth in the current fiscal. Its core interest income could show strength on the back of pick up in credit demand.

Income breakup
(Rs m)1QFY021QFY03Change
Interest on advances 1,429 1,748 22.3%
Income from investments 1,641 1,678 2.2%
Interest on balance with RBI & others 209 159 -24.1%
Total 3,280 3,584 9.3%

The bank reduced its provisions for non-performing assets by 20% during the June quarter. This could be on the back of recovery seen by the bank with improvement in the industrial activity. J&K Bank's net NPA to advances ratio stood at 1.9% as on March 2002.

At the current market price of Rs 101, J&K Bank is trading at a P/E of 2x 1QFY03 annualised earnings and adjusted price to book value ratio of 0.6x. The bank's stock price has attracted strong buying interest over the last four months due to its relatively low valuations. However, concerns of its being situated in sensitive area of Jammu and Kashmir and its PSU status, is likely to trim appreciation in stock price.


Equitymaster requests your view! Post a comment on "J&K Bank: Margins on a rise". Click here!

  

More Views on News

How the YES Bank Collapse Unfolded - 10 Points (Sector Info)

Mar 9, 2020

A timeline of how YES Bank went from a stock market darling to a pariah.

Today's Stock Market Crash: 10 Points (Sector Info)

Mar 6, 2020

Top factors that dragged the markets lower today.

J&K BANK Announces Quarterly Results (1QFY20); Net Profit Down 58.4% (Quarterly Result Update)

Aug 5, 2019 | Updated on Aug 5, 2019

For the quarter ended June 2019, J&K BANK has posted a net profit of Rs 219 m (down 58.4% YoY). Sales on the other hand came in at Rs 21 bn (up 17.5% YoY). Read on for a complete analysis of J&K BANK's quarterly results.

J&K BANK Announces Quarterly Results (4QFY19); Net Profit Up 656.1% (Quarterly Result Update)

May 17, 2019 | Updated on May 17, 2019

For the quarter ended March 2019, J&K BANK has posted a net profit of Rs 2 bn (up 656.1% YoY). Sales on the other hand came in at Rs 21 bn (up 30.0% YoY). Read on for a complete analysis of J&K BANK's quarterly results.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

J&K BANK SHARE PRICE


Sep 30, 2020 03:37 PM

TRACK J&K BANK

  • Track your investment in J&K BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

J&K BANK - DCB BANK COMPARISON

COMPARE J&K BANK WITH

MARKET STATS