Jammu & Kashmir Bank Limited (NSE: J&KBANK) Q4 2026 Earnings Call dated May. 05, 2026
Corporate Participants:
Amitava Chatterjee — Managing Director and Chief Executive Officer
Analysts:
Anand Dama — Analyst
Yogesh Bhatia — Analyst
Gaurav Agarwal — Analyst
Unidentified Participant
Sonaal Kohli — Analyst
Darshan Jhaveri — Analyst
Mona Khetan — Analyst
Sunil Jain — Analyst
Keshav Karwa — Analyst
Sonal Minhas — Analyst
Nirav Sheth — Analyst
Presentation:
Operator
Ladies and gentlemen. Good day and welcome to Jammu and Kashmir Bank’s Q4 and FY26 conference call. Hosted by MK Global Financial Services Limited. This conference call may contain forward looking statements about the company which are based on beliefs, opinion and expectation of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant line will be in the listen only mode.
And there will be an opportunity for you to ask question after the presentation. Conclude. Should you need assistance during the conference call. Please signal an operator by pressing star then zero on your touchdown phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anandama from MK Global Financial Service Ltd. Thank you. And over to you sir.
Anand Dama — Analyst
Yeah. Thank you operator. Good evening ladies and gentlemen. I welcome you all to Jammu and Kashmir Bank’s post results conference call for fourth quarter financial year 2026. Hosted by MK Global. From the top management we have with us Sri Amitava Chatterjee, M.D. CEO and other top management. First I would request the MD sir to briefly summarize the key highlights from Q4, FY26. FY26 results. And also provide some strategic direction on growth margins and asset quality. Post which we will have the Q and A session.
Over to you MD sir.
Amitava Chatterjee — Managing Director and Chief Executive Officer
Thank you, Anandji. I’m audible I suppose?
Anand Dama — Analyst
Yes sir, you’re audible.
Amitava Chatterjee — Managing Director and Chief Executive Officer
A very good evening and a warm welcome to all the investors, analysts and other stakeholders joining us today for the Jammu and Kashmir Bank March 2026 earnings call. And as mentioned, I would definitely be brief before starting with the numbers. Let me introduce my fellow colleagues from the bank’s senior management who are accompanying me on this call. Executive Director, Mr. Sudhir Gupta. Chief General Managers, Mr. Suneet Kumar. Mr. Intyaza Madbhatt and Mr. Asutosh Sharin. Retail Banking Head, Mr.
Rakesh Maghotra. Corporate Banking Head, Mr. Suresh Kumar Chaudhary. Impaired Assets Portfolio Management Head, Mr. Irfan Anjum. Chief Financial Officer, Mr. Ketan Kumar Joshi. Chief Risk Officer, Mr. Altaf Hussain Kira. And our Treasury Head, Mr. Ajar Kohli. Financial year 2026 marks yet another milestone year for the bank as we have fulfilled our promise and delivered a fourth consecutive year of record annual profitability. Posting a net profit of rupees 2,363 crores for the financial year. What sets this achievement apart and makes it more special is the backdrop in which it has been achieved as FY2526 was laced with frequent challenges, especially in our core geography of Jammu and Kashmir.
Besides global uncertainties, the ability to sustain the trajectory in this challenging environment is a reflection of a structurally stronger and a resilient franchise that has been built over a period of time along with the adaptability of our business model. Besides ending the year with the highest ever annual net profit, we have also ended the financial year with a record quarterly performance posting a net profit of almost 800 crores, recording a 36% Q on Q growth. We are also pleased to have been able to broadly deliver on our market guidance surpassing the same comfortably on most parameters despite all the challenges faced.
The only exception has been a marginal shortfall in the NIM where we have fallen short of our guidance. This is largely on account of the cumulative rate cuts of 125bps by RBI in 2025 which has impacted yield on advances coupled with intense competition from deposits resulting in lower transmission of the reduced rates. On the liability side, the bank has registered a business growth of 13.6% during financial year 2526 with deposits and gross advances growing at 11.3% and 16.8% respectively, both comfortably exceeding our guidance for the financial year.
In accordance with our recalibrated strategy for the fiscal, the loan growth in ROI was much higher at 28.8% vis 9.5% of Jammu and Kashmir and Ladakh. This has led to a marginal shift in the regional composition of the loan book with Jammu Kashmir Ladakh contributing 63% and rest of India contributing 37% as on 31st of March 2026. In alignment with the Bank’s medium to long term vision of geographical diversification with a 5050 business split between Jammu Kashmir Ladakh and Rest of India, retail, Agriculture and MSME loans I.e.
RAM continue to constitute a dominant segment of our loan book with more than 2/3 share. During FY25 26 corporate and agriculture segments have recorded a robust growth of 38.5% and 27.6% respectively. Our personal loan segment in Rest of India has also gained traction with a growth of around 13% recorded for the year. Amongst personal loans, car loans has been the best performing segment across all divisions with a growth of 17.5% in the rest of India division, housing and education loans have also recorded a double digit growth in deposits.
Both Jammu Kashmir Ladakh and rest of India have recorded double digit growth. The growth in term deposits is 14.2% has been higher than the growth in CASA deposits at 8.1% in line with the broad industry trend. However, on a sequential basis, growth in CASA deposits has substantially outpaced the growth in term deposits resulting in a bank being able to improve its CASA ratio from 44.10% as on 31st December 25th to 45.65% as on 31st March 2026, thereby surpassing our guidance of 45%. Why? We have witnessed some moderation in NIM during the year as mentioned at the start of this call with NIM of FY2526 being recorded at 3.60% the decline has been relatively contained especially when seen against the backdrop of cumulative rate cut of 125bps by RBI in the calendar year 2025 despite pressure on net interest income owing to the contractions in niemes as well as a hit on our other income on account of impairment.
Provision of rupees 180 crores along with a sequential moderation
Operator
Hello Mr. Satish
Anand Dama — Analyst
Hello Satish.
Amitava Chatterjee — Managing Director and Chief Executive Officer
A key driver in this improved profitability has been operating leverage with operating expenditure reducing by around 4% as has been indicated previously also by the bank. The cost of reduction has been brought about by a moderation in our employee costs with tapering of pension related obligations and shift of our workforce composition towards nps. This reduction of costs has also been complemented by enhanced operating efficiency as evidenced by steady improvement in key productivity metrics with business per employee improving from 20.18 crores as on 31st March 25th to to 23.64 crores as on 31st March 26th and net profit per employee improving from 16.65 lakhs to 19.47 lakhs during the same period.
Cost to income ratio also continues to Moderate for the fourth year running being recorded at 56.18% for the financial year. With this record profitability performance we have also surpassed the guided ROA and ROE levels with ROA and ROE of 1.37% and 16.85% respectively for the financial year. The consistent improvement in asset quality alongside a healthy business growth now extending to six consecutive years continues to remain a hallmark of our performance and reflects our commitment to responsible growth.
GNPA and NNPA as on 31st March 2026 stand at 2.50% and 0.64% respectively. This demonstrates a structural strengthening of our underwriting discipline alongside a tight control over slippages with gross slippage ratio of just around 0.8.2% for the year. Improved recovery mechanisms have also played a crucial role with another year of negligible credit costs depending on Despite a relatively challenging economic environment, our provision coverage ratio also continues to stay above 90% reflecting adequate buffers.
With another year of record internal accruals, we have achieved highest ever capital adequacy of 16.55% with CET1 at 13.54%. However, considering that RBI has notified ECL implementation with FX from 1 April 2027, the bank will consider raising of capital to the tune of 1250 crores in the current year at an opportune time for which the bank has already obtained both board as well as shareholders approval. Despite a broad based exodus of FIIs from Indian markets during 2025 with outflows of around 2.4 lakh crore, our bank has witnessed an increase in FII shareholding to 8.34% as on 31st March 26th from 7.64% a year ago.
This is a recognition of our transformation journey and consistently improving performance. The ongoing geopolitical tensions in West Asia which has led to the World bank slashing India’s growth forecast for 2627 from 7.2 to 6.6% call for a degree of caution in our immediate future outlook. In light of this evolving external environment, we have taken a conservative stance in our market guidance for 2627 which is a credit growth of 12%, deposit growth of 10%, CASA at 45%, NIM around 3.5%, ROA maintained around the current levels ROE around 16% and gross NPA below 2.25%.
While it may seem like we are under promising, rest assured that we will strive to over deliver like we did this year. Thank you for your time today and for giving me a patient hearing. We can start the question answers now.
Anand Dama — Analyst
Thank you so much. Open up the floor. Yeah.
Questions and Answers:
Operator
Thank you so much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. Our first question come from the line of Yogesh Bhatia from Sequint Investment. Please go ahead.
Yogesh Bhatia
Hello. Congratulations sir on good set of numbers in challenging times. My question is regarding the employee cost which you mentioned in your opening commentary that you know we have tried to maintain it. So this quarter the employee cost has come to 509 crores versus last year same quarter was 734 crores. Similarly, on a full year basis also we’ve seen a reduction of 11%. So I wanted to know going forward for the next year what trend are we looking at in the employee cost?
Amitava Chatterjee
Thank you very much for these comments. Definitely. See, there are two basic reasons for the reduction in employee cost. One, as I mentioned that our pension obligations are being now shifted to nps. So that is coming down gradually.
Gaurav Agarwal
And second
Amitava Chatterjee
Is of course over the last couple of years we have had retirements. So the number of employees have also gone down. So the employee cost has come down. And the shortfall in the employees have been largely compensated by the use of technology that we have been able to leverage on. But that doesn’t mean that we will not be recruiting people as and when required. We will definitely be recruiting people. But going forward I believe that staff costs will further come down even in the next quarter and the quarters after that.
Yogesh Bhatia
Okay, so overall as a percentage what it used to be in the past of the earnings, it will remain. It will tend to be lower.
Amitava Chatterjee
Yes, it has been lower for the last I think couple of years.
Yogesh Bhatia
Okay. Thank you, sir.
Amitava Chatterjee
Thank you.
Operator
Thank you. Our next question comes from the line of Gaurav Agarwal from nine one Capital. Please go ahead.
Gaurav Agarwal
Hello sir. Congratulations on wonderful set of numbers and giving out your comments with such clarity. Sir, as the previous participant asked about the employee cost. Sir, is it fair to assume that the quarterly run rate for employee cost starting from Q1 onwards it is going to be 500 crore or lower. Is that a fair understanding to take?
Amitava Chatterjee
Thank you, Gauravji. And it’s a very fair estimate that you made at least for the next two quarters. I am certain that it will be around that
Gaurav Agarwal
For full year. Can it be contained below 25 index here?
Amitava Chatterjee
Why I am saying that first two quarters is I do have some intention of getting some employees into. Into the bank.
Gaurav Agarwal
Especially
Amitava Chatterjee
The specialized people to take care of various specialized positions in the bank. So. But then that will not add to the cost. Because the lowering of the cost in the last say six to seven quarters has been substantial and that will continue. So it will not add to the cost. But yes, 2500 if you are considering it is a fair estimate.
Gaurav Agarwal
Great answer. Other operating cost this time it has gone up around 10, 13, 14%. Similar kind of growth we can see for next year. We’ll try to.
Amitava Chatterjee
We will try to contain the operating costs definitely. But I think it will definitely average out.
Gaurav Agarwal
Got it. And lastly on the provisions, if you can, you know, help us, what should we, you know, expect on the provisioning as a whole without taxes,
Amitava Chatterjee
We have. I don’t know how many quarters we have delivered. A zero credit cost situation.
Gaurav Agarwal
Yeah. For us the more the merrier.
Amitava Chatterjee
So I believe we still have some amount of NPAs in pipeline which will be recovered in the coming quarters.
Unidentified Participant
So
Amitava Chatterjee
I believe that provisioning will not be something which will be alarming. I cannot predict at the moment. Even I had said last year that I cannot predict. But we maintained a zero credit cost situation.
Gaurav Agarwal
Great sir, thank you so much. And I understand that you have given a conservative growth guidance. And hopefully
Amitava Chatterjee
That is essentially because of the situation that is going around. But then I gave the same similar kind of guidance last year. And I think we overachieved by several basis points.
Gaurav Agarwal
Correct. Correct. Hopefully this time also we do the same. And congratulations and all the best for the next year.
Amitava Chatterjee
Thank you. Thank you very much.
Operator
Thank you so much. Ladies and gentlemen, in order to ensure that the management will be able to address all the question from the participant we request you to kindly limit your question to two questions per participant. If you have a follow up question, you may rejoin the queue. Our next question comes from the line of Sonal from Bowhead. Please go ahead.
Sonaal Kohli
How are you? Congratulations on good set of numbers. Thank you Sonalji. So sir, I had couple of questions. If you allow me. Can I ask three?
Amitava Chatterjee
Yes, please.
Sonaal Kohli
So sir, firstly you know your miscellaneous income has fallen substantially Y and wide. Was there any one off last year in Q4 or is there any one off this year in Q4 because of the kids fallen. That’s my first question.
Amitava Chatterjee
So I answered this question first. Other income. Other income has fallen because of the one time provision of 180 crores for Grameen Bank. That EDB amalgamation with our Grameen bank that was taken in the other income head. So that is the reason. Otherwise we are almost at par with last year.
Sonaal Kohli
So you are saying that your other income. I could not actually fully understand. Your other income has fallen. What is to do with Graming Bank? I could not follow.
Amitava Chatterjee
See, the impairment of the investment in Grameen bank because of the amalgamation of edb. As per the instructions and the guidance of Nabad we had to make a impairment of 180 crores on account of this amalgamation. And you know Grameen bank is a sponsor. We are the sponsors of jnk Grameen bank and Ilakaya Bihati. Bank EDB which was sponsored by SBI was amalgamated with us. So that bank was in a very bad state. It was in a very bad state. In fact it had eroded entire network. While we should have not been required, we had represented with all the authorities, including Finance ministry.
But then it was a policy decision that was taken for all the banks, all the regional rural banks that were amalgamated. So on account of that we had to take an impairment and that was classified in the other income head. So that is the reason it went down.
Sonaal Kohli
Answer. When you talk second question. When you talked about the, you know, the increase in employee cost, you know, what is the increase in employee cost? Because initially you said it will fall, then you said you will hire, you know, so if you could just give some idea. Is it going to increase in absolute terms compared to FY25 26? Is it going to be lower as increase? You know, would it be like what kind of percentage? Rough.
Amitava Chatterjee
It will not increase. It will not increase. When I say that I will hire the additional. See, it’s a very simple arithmetic. When you hire in a bank, you lose people on account of retirement who are high paid individuals. And when you hire, they come at a lower cost. So obviously the cost will not go up. Cost is definitely going to go down. We still have a substantial number of people retiring this year. And also as I mentioned, the cost of the pension liabilities that we have that has been shifted to nps.
So that is the reason why I said that employee cost will not go up. Employee cost will steadily come down. The rate of reduction might be slightly reduced if we hire people. And that also is not going to happen for the first two quarters of next year if we are able to hire. The impact will come only in the third and the fourth quarter.
Sonaal Kohli
Sir, just to put things in context, you had almost 2500 crores employee cost this year, 2480 and this quarter is 509 crore. There was no one off in this 509 crore, right?
Amitava Chatterjee
No, no, no, no. One of.
Sonaal Kohli
Okay,
Amitava Chatterjee
Sorry, sorry. There was a reversal of. That was on account of
Unidentified Participant
Retired discount rate change in return
Amitava Chatterjee
The discount rate change in retired retirement benefits. Because of that we had a one off reduction of 153 crores in this quarter. Right.
Sonaal Kohli
Because Q4 is typically your peak employee cost, you know.
Amitava Chatterjee
Correct, correct, correct.
Sonaal Kohli
Okay, so but you’re saying overall on a yearly basis this 2500cr number is unlikely to grow up even as your loans grow by, you know, 12% or whatever numbers, you know. Yes, yes, yes.
Amitava Chatterjee
It’s not going to grow. Right.
Sonaal Kohli
And sir, you had talked about two more. You know, you talked about the large number of changes in the bank, you know, sometime back, have they progressed well? And you know, because those changes you are actually expecting to accelerate your growth at some point of time. So where are we in the cycle? Are you in the late stages of those changes? Are you still in the early stages of those changes? And I have RO guidance. If you could just repeat that for us. Thank you
Amitava Chatterjee
Roa. We are going to remain where we are. One point, we wish to maintain it at that. You talked about the initiatives taken. I guess I have lost count on the number of initiatives that we have taken this financial year and very happy to share that all the initiatives are now in place and functioning. I mean they are not in any stage. They have started functioning. For example, we have the clusters, the change in the reporting structure of cluster heads, we have the CPCs in place, we have all those control mechanisms that we needed to apply in the bank.
So a host of all those initiatives were taken early. And also the initiatives related to technology also getting many additional softwares which will help us in generating more business. So most of them have been already put in place. For example, we have end to end digitized loan journeys now for all loans, not only retail loans, all loans. So these are certain initiatives which have already been completed and they have started showing results. The TAD in case of our corporate, mid corporate and SME loans have come down substantially in the last quarter.
So now this year we intend to consolidate instead of initiating more such initiatives, new initiatives. We intend to consolidate on the initiatives already taken, ensure that they are functioning at its best and efficient best and get the maximum out of them. The HR initiatives for example, I just, I forgot to mention for the first time in the bank we have completed the entire set of promotion exercise for the bank within March. So everybody has been placed in their new positions, start doing business from the very first month itself and it has shown result.
The first month figures that I have with me end of April, they are far better than any April of previous years. So if you ask me if they are showing results, they are definitely showing results
Sonaal Kohli
And therefore you should grow much faster than the system by longer. So let’s say the entire countries loan growth grows at 12, 13, 14%. Do you expect to grow much faster than the system loan growth or do you expect to match it or grow lower than that?
Amitava Chatterjee
See I gave these conservative figures only because of the environment around. But if the system grows at 16% I would definitely want to grow more than 16% and that is that is given, you can take it from me.
Sonaal Kohli
Understood. Thank you sir.
Operator
Thank you. Reminder to all the participants, please leave me the question to two question for participant. If you have a follow up question, you may please rejoin. The next question comes from the line of Darshan Jabiri from Crown Capital.
Darshan Jhaveri
Hello. Good evening sir. Thank you so much for taking my questions. Sir, a lot of my questions have already been answered so just like sorry to harp on, you know our guidance, the ROA Q4 also I think we were able to do around 1.7, 1.8% so just for us we can at least expect our Q4 to be maintained. Right? In terms of ros
Amitava Chatterjee
Quarter on quarter you are mention you are saying
Darshan Jhaveri
Yeah just we should not have a decline.
Amitava Chatterjee
I, I what I gave the guidance is not for the quarter for the year ahead but definitely we would like to see not, not every quarter we will have a profit improvement of 33% right. So we need to keep that in mind. But yes, our endeavor will always be I told you in the beginning only whatever guidance we have given, they are the base guidances that we are trying to give. The ultimate numbers would be much better that I can assure.
Darshan Jhaveri
Fair enough. So fair enough. Yeah, that’s it for myself. Thank you.
Amitava Chatterjee
Thank you.
Operator
Thank you. Our next question comes from the line of Mona Ketan from Club Millionaire pms. Please go ahead.
Mona Khetan
Hello. Hi sir. Good evening and congrats on the quarter. Firstly I think it was a great move to not to pay out dividend in order to conserve capital. So I have two questions in particular. Firstly when I look at your segmental growth, the financial market book has grown very fast in the last one year. Almost doubled. The mix is almost doubled. So what is driving this growth? What constitutes, what are the constituents in this book that is driving the growth?
Amitava Chatterjee
See if you look at the entire industry, this financial year has been Excellent for the NBFCs. The NBFCs have grown and NBFCs grow when they get a lot of banking support. So we have, if you compare it with previous years we have actually been able to have some good NBFCs onboarded with good returns from them. So this year we have had some very good NBFCs, all highly rated NBFCs. And that is the reason why this segment is showing a, I mean higher growth.
Mona Khetan
Does that also include the co lending book that you do? And what would be the size if at all this year versus last year the co lending book within this,
Amitava Chatterjee
The last year we started co lending very Late last year the book has, I mean it is still yet to give any substantial numbers. But this year we have a target of say around thousand crores to start with and we have a board approval of going up to 5000 crores. But then we will wait and watch how it actually pans out because the co lending activity has just started late in the fourth quarter.
Mona Khetan
Okay, so you think that the financial market book doesn’t include, I mean of the 20,000 crore of financial market book co lending is not a very material part.
Amitava Chatterjee
No, no, not yet. Not yet, not yet. Okay,
Mona Khetan
So this is mostly driven by the nbsp lending towards. Nbsp.
Amitava Chatterjee
Yes.
Mona Khetan
Secondly you mentioned about this impairment provision of 180 crore programming bank. So this is not related to Q4, right? This is mostly for the full year which is H1. You made some provisions. Is that the correct understanding?
Amitava Chatterjee
Yes, yes it is. It is for the entire year.
Mona Khetan
Okay, so this year this was not part of the other income line corre
Amitava Chatterjee
This year.
Mona Khetan
I mean this quarter, not
Amitava Chatterjee
This quarter, not this quarter. Okay,
Mona Khetan
Noted, noted. And just finally if you could throw some light on the ECl impact that may as a percentage of network what could be the impact in your case?
Amitava Chatterjee
See, before giving you any kind of a number I would like to mention that each bank will have a. Have its own model, a board approved model for calculation of ECL under the overall guidance of the circular issued by Reserve bank of India on this. So it will be, it will not be very accurate if I say what kind of provisioning this bank will have to make for the period of five years. Because on both counts with the data available for the banks and the kind of improvement that the banks can make over a period of time on many aspects especially on stage 2 and stage 3 ACL requirements.
I can say that if I take the base requirements of the circular given by RBI for a period of five years I think our bank will need to provide for around 16 to 1700 crores.
Mona Khetan
Okay. And just one final thing. I’m sorry to interrupt you
Operator
Ma’, am, please rejoin the queue, we have a lot of participants. Thank you. Our next question comes from the line of Araman from Blue sky fintech. Please go ahead.
Unidentified Participant
Yeah. First of all, congratulations for a good set of numbers. I just want to reiterate on. Could you just say again the guidance numbers which you said in the beginning?
Amitava Chatterjee
Yes, thank you. Arman, the guidance number, the conservative guidance number that we have given credit and deposit both at the same levels of Last year guidance that is 12 and 10% CASA at 45%, NIM around 3.5%. ROA to maintain around the current levels, ROE would be around 16% and gross NPA below 2.25%.
Unidentified Participant
Okay.
Amitava Chatterjee
2.25.
Unidentified Participant
2.25. Okay. And like sir, I have already previous participants have already asked because ROA for our Q4 exit is already very high and we are giving comparatively a very very very conservative guidance. So any anything more to hop upon it? That’s it. From my side
Amitava Chatterjee
I told you we had us have very good profit growth during the last quarter of this year. The last financial year it was almost a 33% jump from December profits. So I do not expect every quarter to have a 33% jump on profits. That is the reason I have given of course like you you would like to see the ROA to be at around 1.7, 1.8. I would like it to be better. But then the guidance that I give is based on some, some realistic conservative assessment. But then you can rest assured that it is not going to be worse than this.
It is going to be better than this.
Unidentified Participant
Okay. Okay, thanks. That’s it for myself. Thank you.
Amitava Chatterjee
Thank you. Thank
Operator
You. Next question comes from the line of Sunil Jain from Nirmal Bank Securities. Please go ahead.
Sunil Jain
Yeah, thanks for giving this opportunity. So my question relate to NIM guidance of 3.5%. But if you see the scenario, the rate cycle is now over. So you will be getting some benefit in the coming quarters. Or is there anything more you need to factor in before it start reversing?
Amitava Chatterjee
See your. The answer to your question is a little bit deep considering the fact that why we have given a 3.5% guidance on NIM. You are very right. It is likely to improve because the interest rates on advances have already been passed through and the deposit rates benefit is likely to accrue in the coming quarters. But the fact that this geography had a difficult time last year and the personal segment which is more or less majorly contributing to our interest income from this geography was largely affected last year.
We compensated it with different strategies which I have already mentioned earlier. But the impact of that will at least be there for some time. The low interest income that I we have been able to generate from Jammu and Kashmir which will take around one, one and a half quarters to be regenerated. So that is the reason I have given a NIM guidance of 3.5%. Otherwise I must say that it will be on a upward trend.
Sunil Jain
Okay. And sir, second question. If you can share the data about SMA1 and SMA2 data.
Amitava Chatterjee
Yeah. I’ll just give me a second. Total SMA. If you look at March to March, March 25th we had 23,087 crores. That is 22.33% of advances as SMA which has come down to 14,724 crores. That is 12.07% of the advances. That is almost 10 percentage points reduction in SMA from December to March also we have a reduction from 12.58% to 12.07%. Now SMA1 has come down from 5.54% to 4.44% MAS YOY. And SMA2 is slightly higher at 0.71% which was 0.35% last year. But from December which the SMA2 was 2.92% we have been able to reduce it to 0.71%.
Sunil Jain
Okay. Okay, sir, great. Thank you very much for your answers.
Operator
Thank you. Next question comes from the line of Keshav Karwa from White Pine Investment Management Private Limited. Please go ahead,
Keshav Karwa
Sir. Thank you for the opportunity. Just wanted to know that your yield on advances has been declining. So how are you planning to improve these yields for FY27?
Amitava Chatterjee
The yield has decreased on account of the repo rate cut that has happened in the last financial year. And also I mentioned that we because of the situation in this state we had a hit on our retail advances. So the financial year 26:27 we are concentrating on retail advances including what we did in agriculture. The retail advances have high returns. So definitely the yield is going to improve this year. Because last year largely we had to compensate the low growth in this geography by doing some corporate advances.
And you know that high rated, highly rated which are the only ones we target, the highly rated corporates, the rate of interest are very, very competitive. So slightly that has impacted the yield. But going forward the focus and the concentration is on the 2/3 part of our loan book. That is the retail and. And we are going to concentrate on that to improve our yields.
Keshav Karwa
Okay. So thank you.
Operator
Thank you. Next question come from the line of Pranay, an individual investor. Please go ahead.
Unidentified Participant
Yes. Congratulations on an excellent result strategy and it’s a testament to your leadership that our bank is doing so well despite all the uncertainties and challenges starting early last year. Sir, my first question was to understand the competitive landscape in the state of Jammu and Kashmir. If you can just give us some color of what you are seeing in terms of the competitive intensity outside of the major markets such as Jammu and Srinagar. Are there a lot of new branches opening up in Pulwama, in Budgam, in Anantanak and so on.
How are you seeing that change and how is it impacting the stickiness that we have with our customers and our efforts to attract new customers to the bank?
Amitava Chatterjee
Thank you Pranay. Thank you very much for your kind words. Yes, the competitive landscape has changed quite a bit in Jammu and Kashmir. While we still maintain a market share of 60%, the branch share is only 37% now. That 60% might sound very good as of today but it has come down substantially from last two, three years. But then last year we did a lot of improvement in our customer services and we also opened branches at strategic locations in Jammu and Kashmir. To answer a part of your question, yes, other banks are also opening branches but mostly in the urban centers of Jammu and Srinagar.
Yes, a few branches have been opened in the areas that you mentioned but these are the places where we actually still hold close to 80, 85% market share there. I don’t see much of a competition. The competition which is coming is largely coming in Srinagar and Jammu and in the last one year and I don’t have the RBI data but I believe that we have been able to restore a bit of lost market share that we have lost in the last few quarters in the last financial year. So I’ll be waiting for the numbers to come.
But we have been able to get back quite a few accounts which we had lost earlier.
Unidentified Participant
Thank you sir for that and I’m very happy with the progress that the bank is making sir, just in terms of customer services, just to sort of highlight on that. If we read like I’ve spoken to a lot of our customers and I’ve personally gone through our app, the mobile app that we have on Apple and on Google Play Store. And while there have been improvements, I think you would agree that there is still a large scope for us to further improve on the UI ux. On the ease of doing business for a retail customer, whether it is a household in Jammu and Kashmir or a horticulture farmer and so on, or a tourism business person.
If I could just request your team, your technology team to work a little harder on the mobile app and other ancillary service touchpoints at the branch level, I think we could do much better than we are doing sir.
Amitava Chatterjee
Thank you. Thank you very much for the suggestion, Pranay. I just want to mention two things on this. The first aspect, see we had a revamp of the MP Delight app that we have recently, about 12 months ago. So now we have a fairly robust app. But then the first aspect that we are currently looking at is totally having a hundred percent uptime for all the systems that we have, including the app. So that is our first aim. We have been. If you have been following the bank and the app closely, you would have noticed a marked difference in the last couple of months or three months maybe in the uptime.
So that was our first aim and we have been able to contain the downtime to quite a bit. The second part is improvement in the facilities in the app, the services. So that is second and we are working on it. We are closely watching what the other banks have in offer. And not only that, we have a few good things coming up on our own. So definitely we are working on both counts. So you must be, I mean in a couple of months time you will be having a much better experience on the app front.
Unidentified Participant
Thank you so much. I’ll come again next time. Thank you so much and best of luck for the New year, sir. Thank you. Thank
Amitava Chatterjee
You, thank you,
Operator
Thank you. Next question come from the line of Sonal from Precent Capital. Please go ahead.
Sonal Minhas
Hi sir, this is Sonal Minas. I hope I’m audible.
Operator
Yes
Sonal Minhas
Sir. Two questions from my side. I see that the gross NPA under the category of trade in your sector wise credit deployment has come down significantly quarter on quarter. Last quarter the gross NPA was 765cr and this quarter the number is 597 cross. Could you just give some subjective color on what has happened in this particular category? That’s my first question.
Amitava Chatterjee
See, I mentioned in the beginning itself we have been very, very focused on improving and recovery mechanism. So we have been very closely monitoring the accounts and focusing on recovery efforts. Like we have been able to reduce NPAs and SMAs. We have been able to contain the SMAs which have not given rise to any further slippages. The slippage ratio is also contained. So that is one aspect and a bit of it also would be a technical write off that we have done in the last quarter. A few small accounts have also been written up where the NPAs have been there for more than three to four years where recoveries have not come.
So it is a combination of both.
Sonal Minhas
Got it. So my broader question was which category amongst these is ticky? Basically when we talk about trade, real estate, talk about infrastructure and services, are we seeing some categories here in terms of sectors where the NPAs are sticky?
Amitava Chatterjee
To be very honest with you, Sonal, I have been trying to find out one category or one segment which is sticky for the last one half years that I have been here. I have not found very very honestly I’m telling you I have not found any particular category which is sticky. The very fact that even the stickiest of all categories in the country that is the agree
Gaurav Agarwal
We
Amitava Chatterjee
Have the least NPAs in agree. So I would not categorize any segment as sticky.
Sonal Minhas
Understand that sir and sir, from a color of the NBFCs you’re lending to in the financial markets could you highlight broader sector segments you are lending to in financial markets. Like are there more NFIs? Are there more like CV NBFCs? If you could just slide this a little bit that will help understand
Amitava Chatterjee
My CRO is smiling at me listening to your question. No MFIs. Zero MFIs. We have not lent to any MFI. First of all all the companies that we have lent to the NBFCs are all AAA related number one. Number two they are primarily in the housing sector some in the. In the public sector like irfc. Then there is a bit of it in gold loans also so primarily in these areas and also some general consumer related NBFCs. I would not name the NBFCs but there are a few but one thing is common all of them are triple A rated.
Operator
Thank you ladies and gentlemen Anyone who wishes to ask a question may press star and one. Reminded to all the participants if you wish to ask a question may press star and one Our next question comes from the line of Nirav Sheth from MK Global Financial Service. Please go ahead.
Nirav Sheth
So congrats Amita. This is good set of results so and I’m going to focus less on PCR and I’m not looking this as a follow up guidance but given where we are in terms of cleanup, balance sheet, you know civilizing liabilities looking at non jammu move on a three year perspective sir what is what is the kind of growth business growth that you want to target and this is more aspirational rather than saying that you’re not going to hold you to these numbers but assuming that there are no macroeconomic setbacks, you know and it’s not that you’ve got a very big book what do you think you would aspire to gun for
Amitava Chatterjee
Currently? Thank you Neeraji for the kind words. If you look at our business levels is at around 2.9 lakh crores at the moment.
Nirav Sheth
If
Amitava Chatterjee
You ask me three years time it’s not aspiration Our aim and what we have with us in the bank we aim to cross 5 lakh crores by then. So that is the first aim of course depending on the environment and market situations. So in three years time we will definitely be crossing 5 lakh crores of business.
Nirav Sheth
Excellent. And so that obviously means that you know we’re looking at somewhere between 17, 18% sort of growth rate in advances and all to get to those kind of numbers. This is obviously what you’ve been delivering. Yeah,
Amitava Chatterjee
Definitely, definitely.
Nirav Sheth
Excellent. This is, that is great to hear. Given your roes and you know where you are. I think all the best to you sir.
Amitava Chatterjee
Thank you sir. Thank you very much.
Operator
Thank you. The next question comes from the line of Sonal with prescient capital. Please go ahead.
Sonal Minhas
Hi sir. Sonal this side again I think I missed asking third question. I just wanted to understand the trade cost guidance for next year.
Amitava Chatterjee
The toughest question you have asked me. See I have been, I mean people have been asking me how long are you going to have a zero credit cost? So I always say that I would like to continue with a zero credit cost as long as possible. I guess the credit cost will be somewhere around say 0.1% or 0.2% maximum. Not more than that.
Sonal Minhas
Got it. And this is well below whatever the benchmarks are basically for the sectors you work in. So. Yeah. Which is good. All right, that’s it for my. Thank you. Thank you.
Operator
Thank you. The next question comes from the line of Pranay who is an investor. Please go ahead.
Unidentified Participant
Yes sir. Thank you once again for this opportunity. So I just wanted to again work ask about the credit cost not from an immediate 12 month perspective but given that first of all
Gaurav Agarwal
The
Unidentified Participant
Asset quality across India has
Gaurav Agarwal
Goldilocks
Unidentified Participant
Scenario where slippages are very low. Especially for a bank like ours where we don’t have exposure to MFIs or credit cards or a large any significant unsecured loan exposure. Our unsecured book is very different from that of other banks. But our slippage is still at 0.67% which is commendable. But after it from a 3, 4 year length. Sir, I think it’s safe to say that we should normalize a much higher credit cost than we’ve been achieving right now because of all the upgradations and, and reversals.
But how do we see that evolving in another three, four years? Because if our credit cost goes to our slippage ratio it’s 4.5, 0.6, 0.7% then our ROE sort of ROA ROE metrics look different. So how do we see that when we cross that over a period of time,
Amitava Chatterjee
See, if I have to do some analysis, then I’ll have to look at my historical data. And if I look at my historical data, I am unable to assess a credit cost which is more than 1% in the next three to four years. And 1% is also a very, very upwardly optimistic or pessimistic figure, if you may say. Because if I had seen some inherent weaknesses in my book, if I had loans in the book which also is say, susceptible to changing the business environment or the economic environment more or less, we are insulated on those because of the portfolio that we have currently.
And you are right on that. So I don’t see the credit cost being a factor to be discussed even in the next two to three years. I don’t believe so. And on top of it we have a very robust, I mean we have developed a very robust recovery mechanism and we had added another initiative to that. We have introduced the concept of zonal IRBs. Now zonal IRBs are specialized outfits which cater only for recovery. So the setup that we have, the way we have been able to tackle the slippages and the NPAs and the recoveries, I don’t believe, at least at the moment, I don’t believe that credit cost will be a cause of concern for us.
Operator
Thank you, sir. Our last question for the day comes from the line of Mona Ketan with Club Millionaire pms. Please go ahead.
Mona Khetan
Yeah, hi sir, thanks again for the opportunity. I just have two clarifications on the margin and on the credit cost. So while you’ve guided for three and a half percent kind of margin, again 3.6% this year. But I see that there are levers in terms of, you know, maturity of RID investments, etc. As well as some more scope in terms of deposit repricing, etc. So to that extent, don’t you think the three and a half order decline versus this year is a very conservative guidance or how do you look at it?
Amitava Chatterjee
I would be happy to give a guidance of 3.5 and end up at 4. Why I have given this guidance is based on what I have already said. The income that had been generated in this bank in the last, last financial year and before that, I mean not 25, 26, 24, 25 and 2324 essentially came from the retail loans that we have in Jammu and Kashmir now that because of last year’s difficulties in this geography, we did not have that kind of an income. And that part I believe is going to continue for some time the growth that we are going to have in the coming years.
And you are right, the RIDFs being maturing, we have the low cost investments which are going to be for us to invest further. The margins would be better, definitely better. But I am still not very sure as to when the returns from the retail advances will start to accrue. It might start accruing very soon. I have already seen green shoots. So once that starts now, then maybe next quarter I will be able to revise my guidance on nil.
Mona Khetan
Noted. That’s very clear. And secondly, on the credit cost rate you mentioned of 0.1 to 0.2% kind of credit cost, does that factor in the impact of ETL provisions as well that you’ll be making over the next five years?
Amitava Chatterjee
No, no, that doesn’t. That doesn’t factor in the impact of equal.
Mona Khetan
That’s all from my side. Thank you so much and all the best.
Amitava Chatterjee
Thank you.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Anand for closing comments.
Thank you sir for the elaborated call that we had. Thanks all participants as well. On behalf of MK and the management of Jammu and Kashmir. I thank all the participants for joining. Happy evening. Have a good day. Thank you.
Amitava Chatterjee
Thank you. Thank you. Thank you to all the participants. Thank you.
Operator
Thank you. On behalf of MK Global Financial Services limited That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you everyone.