J&K BANK 2022-23 Annual Report Analysis

Sun, 6 Aug

J&K BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

J&K BANK Income Statement Analysis

• Interest income during the year rose 16.8% on a year-on-year (YoY) basis.
• Interest expenses were up by 12.4% YoY during the same period.
• Operating expenses increased by 1.5% YoY during the year.
• The bank's net interest income (NII) increased by 21.3% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 4.1% in FY23 as against 3.8% in FY22.
• Other income increased by 1.6% YoY during the year.
• Net profit for the year increased by 138.6% YoY.
• Net profit margins during the year increased to 12.6% in FY23 from 6.2% in FY22.

J&K BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	80,130	93,552	16.8%
Other Income	Rs m	7,535	7,652	1.6%
Interest Expense	Rs m	41,013	46,094	12.4%
Net Interest Income	Rs m	39,116	47,458	21.3%
Operating Expense	Rs m	35,987	36,509	1.5%
Pre-provision Operating Profit	Rs m	10,665	18,602	74.4%
Provisions & Contingencies	Rs m	5,620	6,616	17.7%
Profit before tax	Rs m	7,456	17,856	139.5%
Tax	Rs m	2,411	5,870	143.4%
Profit after tax	Rs m	4,949	11,805	138.6%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.8	4.1
Net profit margin	%	6.2	12.6

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J&K BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 1,220.3 bn as compared to Rs 1,147.0 bn in FY22, thereby witnessing an increase of 6.4%.
• Advances for the year stood at Rs 822.8 bn as compared to Rs 703.9 bn during FY22, a rise of 16.9%.
• Cost of deposits for J&K BANK rose 4.8% and stood at 3.6%, while yield on advances fell to 8.5%.
• The lender's investments rose to Rs 347.8 bn during the year from Rs 337.9 bn in FY22.
• Borrowing stood at Rs 28.9 bn, a growth of 22.0% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 1,459.1 bn as against Rs 1,305.8 bn during FY22, thereby witnessing a rise of 11.7%.

J&K BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	79,836	98,963	24.0%
Advances	Rs m	703,931	822,776	16.9%
Deposits	Rs m	1,147,028	1,220,272	6.4%
Yield on advances	%	8.5	8.5
Cost of Deposits	%	3.4	3.6
Investments	Rs m	337,853	347,804	2.9%
Borrowings	Rs m	23,708	28,923	22.0%
Total Assets	Rs m	1,305,760	1,459,126	11.7%

Current Valuations for J&K BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 11.4, an improvement from the EPS of Rs 5.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 67.7, stands at 3.8 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.7 times, while the price to income ratio stands at 0.5 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	85.9	90.7
Earnings per share (Unadj.)	Rs	5.3	11.4
Diluted earnings per share	Rs	4.8	11.4
Avg P/E ratio	Rs	6.7	3.8
Avg P/ABV ratio	Rs	0.4	0.7
Avg Market Cap	Rs	32,978	44,637
Dividends per share (Unadj.)	Rs	0.00	0.50

Ratio Analysis for J&K BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 67.4x during FY23, from 61.4x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 12.62x during FY23, from 14.66x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): J&K BANK's capital adequacy ratio (CAR) was at 15.4% as on 31 March 2023 as compared to 13.2% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 11.9% during FY23, from 6.2% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.81% during FY23, from 0.38% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 17.59% during FY23, from 9.82% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. J&K BANK's gross NPA ratio stood at 6.0% as of 31 March 2023 compared to 8.7% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of J&K BANK was 1.6% in financial year 2023. This compared with 2.5% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	61.4	67.4
Debt to Equity Ratio	x	14.7	12.6
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	13.2	15.4
Return on Equity	%	6.2	11.9
Return on Assets	%	0.4	0.8
Return on Capital Employed	%	9.8	17.6
% of Gross NPAs	%	8.7	6.0
% of Net NPAs	%	2.5	1.6
Yield on Advances	x	8.5	8.5
Yield on Investments	x	5.3	6.1

To see how J&K BANK has performed over the last 5 years, please visit here.

J&K BANK Share Price Performance

Over the last one year, J&K BANK share price has moved up from Rs 30.8 to Rs 67.7, registering a gain of Rs 36.9 or around 120.0%.

Meanwhile, the S&P BSE BANKEX is trading at 50,428.6 (up 0.7%). Over the last one year it has moved up from 43,550.8 to 50,428.6, registering a gain of 6,877.7 points (up 15.8%).

Overall, the S&P BSE SENSEX is up 12.6% over the year.

(To know more, you can check out historical annual results for J&K BANK here and quarterly results for J&K BANK here)