Jammu & Kashmir Bank Limited (NSE: J&KBANK) Q3 2025 Earnings Call dated Jan. 21, 2025
Corporate Participants:
Amitava Chatterjee — Managing Director & Chief Executive Officer
Analysts:
Ashwini Agarwal — Analyst
Hardik Shah — Analyst
Deepak Poddar — Analyst
Sonaal Kohli — Analyst
Dixit — Analyst
Roshan Guleja — Analyst
Jayesh Shah — Analyst
Anand Dama — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 and Nine Months FY ’25 Earnings Conference Call of Jammu Kashmir Bank Limited. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
We have with us from the management, Mr. Amitava Chatterjee, Managing Director and Chief Executive Officer.
I now hand the conference over to Mr. Chatterjee. Thank you, and over to you, sir.
Amitava Chatterjee — Managing Director & Chief Executive Officer
Thank you very much. Good evening and very warm welcome to all the participants to the J&K Bank December 2024 earnings call. So this is my first interaction with you all-in my new role as MD and CEO of this bank since taking over on 30th of December 2024.
At the outset, I would like to briefly introduce myself. My name is Amitava Chatterjee and in my last professional capacity, I was discharging my duties as a Deputy Managing Director Commercial Group of State Bank of India. I have had a career spanning over three decades with SPI, where I joined as a provision officer in 1990 and held key leadership roles across diverse geographical locations and strategic functions, including leading SBI’s operations as CGM Circlehead in New Delhi as well as Jaipur. I have also served as the MD and CEO of SBI Capital Markets.
Accompanying me on this call are my fellow colleagues from the bank’s senior management: Executive Director, Mr. Sudhir Gupta; Corporate Credit Head, Mr. Ashutosh Sareen; Retail Credit and Liability Head, Mr. Narjay Gupta; Impaired Assets Portfolio Management Head, Mr Rajesh Malla Tikoo; Finance Head, Mr. Sushil Kumar Gupta; Chief Risk Officer, Mr. Altaf Hussein Kira; and DGM Treasury, Mr. Ajay Kohli.
While this bank has a rich legacy of over eight decades and is a household name in this part of the country, that is UTs of J&K and the bank has frequently been in news in the recent past for all the good reasons with the remarkable turnaround of the bank appreciated by one and all, including the Honorable Prime Minister. As I venture into this new role, I am fully cognizant of the responsibility on my shoulders and sustain the good work done under the leadership of my predecessor, Mr. Baldev Prakash and build upon it further to take the bank to even greater heights in the years ahead.
My foremost, an immediate focus is on fulfilling the commitments made by the bank with respect to-market guidance 2025, which we — which we maintain unchanged, though we acknowledge that achieving the set guidance on a few parameters would little be a challenging, especially given the economic slowdown being witnessed, that is credit growth of 15%, deposit growth of 12%, CASA of 50%, NIM 3.75% to 3.8% — 85%, return on assets 1.25% to 1.30, return-on-equity 17% to 18% and GNPA at 3.5%. The reassessment and consequent realignment of the bank’s strategies, if needed, will be taken-up at the beginning of the next financial year only.
From an economic outlook perspective, the global economy is projected to remain resilient as it has been in 2024, despite several headwinds with IMF retaining its stable yet underwhelming growth forecast for ’24 and ’25 unchanged at 3.2% amidst waning inflation. Domestically, there has been a slowdown in the growth momentum with growth in real GDP in-quarter two at 5.4%, which is the lowest in seven quarters. This decline in growth is mainly on account of substantial deceleration in industrial growth from 7.4% in-quarter one to 2.1% in-quarter two. Another reason for the moderation in growth is the exhaustion of the pent-up demand accumulated during the pandemic.
As a result of this slowdown, RBI has reduced its growth projection for financial year ’24, ’25 from 7.2% to 6.6%. However, high-frequency indicators in-quarter three indicate that the slowdown has bottomed-out and Indian economy is recovering from the slowdown in momentum, aided by strong festive demand and pickup in rural activities with real GDP growth for quarter three and quarter-four projected at 6.8% and 7.2% respectively. Despite this downward revision, India’s medium-term prospects remain healthy with India set to become the world’s third-largest economy by 2030-31 and forecast to grow at an annual rate of 6.7%.
Thus, Indian economy is set to maintain its position as a major driver of global growth at a time when the overall world economy is projected to remain relatively stagnant. With inflation gradually moving towards central bank targets from highs, several central banks have embarked on policy pivots. However, Monetary Policy Committee of RBI has kept the policy reported unchanged with neutral stance and focus on durable alignment of inflation with the target, while supporting growth.
During the quarter, RBI has inconsistency with the neutral policy stance reduced CRR by 50 bps in two equal trenches of 25 bps with effect from December 14 and December 28 to 2024 to 4% to ease any potential liquidity stress in coming months due to cash — sorry, due to tax outflows, increase in currency in circulation and volatility in capital flows with this step estimated to release a primary liquidity of about INR1.16 lakh crore to the banking system.
Our home territory of J&K is not behind when it comes to economic development with state GDP doubling from INR1.7 lakh crore in 2015 ’16 to INR2.45 lakh crore in ’23-’24, despite facing challenges in the form of massive floods, political unrest and COVID-19 pandemic. And the GDP is estimated to double again in the next five years with emphasis on service sector, industries, horticulture and tourism, according to the JK Economic Survey 2022-’23.
The year 2024 has been significant for J&K, marked by developments across political, economic and social spheres with important events like successful conduct of state elections with higher voter turnout of around 64%, multiple visits by the Honorable Prime Minister to the region, showcasing government’s commitment to the region’s development and laying foundation for projects worth INR41,700 crores with inauguration of institutions like AIMS in the region.
With the beginning of 2025, Kashmir’s long-waited dream of rail connectivity will finally see the light of the day. With the Srinagar New Delhi Rail Link, a monumental infrastructure project planning over two decades set to become a reality. With its scheduled inauguration this month. The new railing promises to be a game-changer for various stakeholders, including local businesses, students, tourists and non-local workers as it opens doors to enhanced connectivity and economic growth.
J&K Tourism department has declared 2024 as one of the best tourist seasons in the valley in the valley’s history as the UT and JK welcomed 2.35 crore tourists in 2024 with an extraordinary 300% increase in foreign tourist arrivals over the past 2.5 years. With inauguration of the Zmore tunnel, the popular tourist destination of Sonmerg would also open up for the winter tourism. The railway connectivity and the plans to develop four new destinations, Patri, Haddarwa and Bharadhri with world-class tourist infrastructure as a joint-venture between the World Bank, J&K Government and the center will further boost tourism in the UT, thereby contributing to the region’s continued economic transformation as tourist industry stands as the second main industry in Kashmir after horticulture.
Shifting focus to the financial performance of the bank for quarter three and nine months of financial year ’25, I’m pleased to announce that the bank has continued its recent history of consistently recording impressive profitability numbers again this quarter as in — and is in course to post lifetime record annual profits for the third year in a row, which is testimony to the remarkable turnaround of this bank and its commitment to deliver on the promises made.
Operating profit for this quarter is again almost touching INR750 crores with net profit for the quarter recorded INR532 crores, witnessing a Y-o-Y growth of 33%. The bank has done reasonably well in the last two quarters in mobilizing deposits, registering a 9.7% growth Y-o-Y despite a degrowth in-quarter one. And considering that historically deposit growth has been better in-quarter four, we expect to further improve upon this in the last quarter.
However, there are challenges on the CASA front, which are persistent across the banking industry with share of term deposits in the total deposits rising to 61.4% in September ’24 from 59.8% a year-ago as per the RBI data. The reduction in CASA ratio owing to the accretion in term deposits at a much faster pace than CASA is attributable mainly to two reasons. That is one for higher returns-driven by high inflation and people parking their funds in high-interest rate deposits before impending rate cut with 84% of our term deposits in the 7% to 8% interest-rate bucket. In our case also, term deposits have grown at 15% Y-o-Y against a growth of only 4.4% in CASA deposits. Despite this, the bank continues to maintain its position of having one of the best CASA issues in the industry, even in these challenging times at 48.17% with CASA in our home territories of Jammu, Kashmir and Ladar, which accounts for around 90% of our deposit base, still holding strong at about 51%.
Though in terms of CASA ratio, there is a reduction in on Q — Q-on-Q basis, in absolute terms, the CASA deposits have increased by 1.25% quarter-on-quarter. With the release of government payments in Q4, payment realization in horticulture sector, strong winter tourism season and the probable continuation in the slowdown in equity markets. We expect augmentation of our CASA ratio in the last quarter. Advances growth has been lagging in net advances only growing at 7% Y-o-Y, while on quarter-on-quarter basis, there has hardly been any change. This slow-growth in advances has not been broad-based though with advances to personal, SME and agriculture sectors making up around 61% of the bank’s gross advances growing at more than 10% Y-o-Y.
The sectors which have been mainly contributing to this overall lag in growth of advances are trade and corporate remaining almost stagnant or marginally below the numbers a year-ago with part of the reasons for the same being the caution exercised in certain sectors by design, owing to the cautions sounded by various regulators and a conscious decision for this time-being to focus on higher-yielding retail loans in order to compensate the pressure on margins on account of higher-cost of deposits due to change in mix which were mentioned in the previous earnings call as well.
The bank’s decision is yielding intended results with consistent improvement in NIM for the two quarters now. Though in the current quarter, the improvement in NIM has been partially aided by boost in yield on investments as well rising 7 bps quarter-on-quarter to 6.90 for quarter three. With NIM for nine months being recorded at 3.93% comfortably above our — above our guidance, we now intend to improve our focus on corporate loans in the last quarter for improving our advances growth with an aim to maintain our retail corporate split at around two is to one.
Within our biggest sector of personal finance, Y-o-Y growth in rest of India at 17.8% has outpaced the growth in Jammu and Kashmir, Ladar at 9.5% with housing loans being the best-performing segment at bank level with 13.1% Y-o-Y growth, whereas in rest of India, both housing loans and car loans have grown rapidly at 18.4% and 22.4% Y-o-Y, respectively, which again shows that the bank is successfully executing its plans for expanding in retail portfolio in the rest of India.
The income statement reflects positives throughout the net throughout with net interest income for nine months growing at 10.7% Y-o-Y and other income at 21.9% Y-o-Y, while the operating costs continue to be under control, growing marginally at 1.1% only with the biggest contributor, the employee cost declining by almost 2% Y-o-Y. Most notable within the income statement is a growth of 32% to 33% Y-o-Y in both operating profit and net profit for the nine months with operating profit for the period crossing INR2,100 crores and net profit almost reaching INR1,500 crores, recorded at INR1,498 crores exactly.
The fact that this growth has been recorded over a year in which Bank has already posted record lifetime profits adds further weight to it. In-line with the expectations outlined by us in our earnings call a year-ago, cost of deposits seem to have peaked with high accretion in term deposits, especially in the high-interest rate bucket of 7% to 8% and is moderating now, reducing by-4 bps quarter-on-quarter and recorded at 4.76% for quarter three and 4.74% for the nine months.
The annualized returns on assets and return-on-equity for nine months have been recorded at 1.28% and 16.96% and are in-line with our guidance for the fiscal for the fiscal. Cost-to-income ratio where the bank was an outlier with a cost of cost-to-income ratio of 77.18% for financial year ’21-’22 has been brought to a comparable level of below 60% being recorded at 57.80% for the nine months with further moderation expected going-forward. In terms of asset quality, though the recoveries have slowed down linked to the impact of slowdown in the domestic economy on borrowers repayment cap capacities, fresh slippages continue to remain under control with gross slippage ratio for the nine months for current financial year below 1% mark, that is 0.97% annualized. Against 1.29% for the corresponding period last year.
Gross NPA has witnessed an increase in-quarter three with GNPA ratio being recorded at 4.08% as on 31st December 2024 and consequentially net NPA also witnessing an increase and being recorded at 0.94%. However, the bank expects substantial improvement in these parameters in-quarter four as the bank has launched a special one-time settlement scheme,, which is valid till 31st of March ’25. Such a scheme was being demanded by the trade and industry bodies in our core territories and hence, the bank expects good response and recovery under the same. Despite this increase in GNPA in the current quarter, the credit cost continues to be benign and we expect to remain like this for the current fiscal in-line with our guidance.
The bank continues to maintain a healthy PCR of around 90%. On the capital front, CRAR has been recorded at 15.09% and CET won at 11.67% without reckoning the nine months net profit, which has an incremental impact of 148 bps. With continuing healthy internal accruals, the bank is well-placed with adequate capital buffers. Further increase in foreign institutional investors and FTI shareholding of the bank from 5.81% a year-ago to 7.07% as on 31st December ’24, despite the financial services sector experiencing the highest FPI outflow of INR54,500 crores in 2024 is a strong validation of the bank’s growth story and long-term potential.
The platform for another record-breaking year is set and we expect a good ending to the current financial year coinciding with a good beginning to my innings as leader of this resilient institution. I thank you all for listening patiently and look-forward to your support and trust going ahead for taking this bank forward and delivering value to our customers and other stakeholders.
I’ll be glad to have your questions now. Thank you very much.
Questions and Answers:
Operator
Thank you very much. We will now begin 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 will wait for a moment while the question queue assembles.
The first question is from the line of Ashwini Agarwal from Demeter Advisors LLP. Please go-ahead.
Ashwini Agarwal
Hi, good afternoon, sir. And congratulations on a very good show for the December quarter. The question I have is that, you know on the cost side, it’s been a very benign environment driven by some write-backs on account of pension provisions as well as way below normalized credit costs. So the question is that as we look-forward to the next two or three years, what would you think would be a sustainable cost-to-income ratio on the operating side and what would be a sustainable credit cost number? And with that in mind, I mean, what do you think would be a reasonable long-term ROA and ROE target, if I may ask.
Amitava Chatterjee
Very good afternoon, and thank you very much for the appreciation. I believe that the credit cost because of whatever the bank has done in the last six, seven quarters, I believe on both sides, reduction of NPAs as well as providing for the bad loans, the credit cost will continue to remain benign. I have no doubt in that. So the — if you are looking at the cost-to-income ratio, yes, you are right that the cost side has almost bottomed-out, if I can say, say because the employee cost, which was a major part of the — of the cost side has been now controlled. Because of what you said, the revision in the pension conditions and pension terms. I believe going-forward the aim of the bank is to increase the numerator, that is the income side.
There are several opportunities. I guess the operate — the opportunities related to the selling of third-party products will be more intensified to increase the augmentary income as well as I believe this bank in the credit side has been somewhat lacking in the non-fund based business area. So this is also one area because we have taken exposures in various companies on a top-line improvement basis only, while we have not been able to capture their other businesses, especially the non-fund-based business, which is a very important source of other income.
So this effort will continue like you said for the next two to three years beginning now. And also there are a few low-hanging fruits where we have chances of recovery in our technically written-off accounts. So all these three things put together, I believe that the cost-to-income ratio will be as close to 50% as possible. I — my personal target would be to bring it below 50%. I cannot immediately give a timeline to it, but the timeline that you said two to three years definitely within that period, we’ll be able to bring it below 50%.
Ashwini Agarwal
And so my conclusion from what you just said is that the increase in fee-based income will offset the normalization of credit costs with the ROA being possibly in the area where — what we are seeing now on a sustainable basis?
Amitava Chatterjee
Yes, yes, yes. That’s true.
Ashwini Agarwal
Okay. Thank you, sir. Thank you for your comments. And all the best. Thank you.
Amitava Chatterjee
Thank you very much.
Operator
Thank you. The next question is from the line of Hardik Shah from ICICI Securities. Please go-ahead.
Hardik Shah
Yeah. Hi, sir. Congratulations on a great set of numbers. Sir, I just wanted to understand what exactly led the yield spike in the current quarter. And you are also mentioning that you’ll be focusing on wholesale opportunities as well. So where exactly do we see our margin settle now? How do we look at your margin trajectory?
Amitava Chatterjee
Thank you, Hardik. Meeting at a different platform. Yeah, looks. Yes, sir. So, yes, the spike in the yield happened essentially because there was a MCLR upward revision last quarter, which took its effect this quarter. So it was a minor thing, but it actually happened. So we had an improvement in the yield. And yes, definitely, going-forward, we would be looking at the opportunities that are available in the rest of India, see, the ticket size of the loans within Jammu Kashmen and Ladar happens to be moderate.
So if we intend to improve the top-line, we definitely have to look for big-ticket sized loans in the rest of India areas as well as the — taking — I mean participating in the developmental projects that are going to come up within this state. These two put together, we will definitely be required to go in for corporate advances. Yes, they would be challenging because of the competitive rates. But at the same time, if you look at our CASA, one of the best CASA ratios in the industry.
So currently we can sustain being competitive for some time at least till we are in a position to again reassess ourselves going-forward. So at the moment, the bank is capable of being competitive and growing the top-line across the country.
Hardik Shah
Understood, sir. No like quantitative guidance on how much NIM compression would we expect?
Amitava Chatterjee
I intend to remain around 4%.
Hardik Shah
Okay. Understood, sir. Understood. And another question is that you mentioned in your opening remarks, there is a settlement scheme which you launched, right? So can you elaborate more on it and how will it impact our margins or asset quality?
Amitava Chatterjee
See, this one-time settlement scheme is a compromised settlement scheme which is non-discretionary scheme which has been launched. It has a wide coverage, almost the total number of borrowers that can be covered is almost 27,600 with an total amount of almost say INR1,300 crores to INR1,400 crores. So we have made this scheme quite lucrative now. There were certain requirements, adjustments to be made, we have made it. And I believe with the people working in the ground, there will be substantial recovery coming in, which will be on both counts on reduction of NPA as well as improvement of our profit through recoveries in the technically written-off accounts. So I believe — firmly believe that this scheme, which is valid up to 31st of March is going to be a very good instrument to improve our — both profitability as well as NPA position for the last quarter.
Hardik Shah
Understood, sir. And just one last datakeeping question. What is your written-off pool currently?
Amitava Chatterjee
Written-off — total written pool would be around INR4,600 crores and around INR4,600 crores which mostly the accounts are in NCLT or I mean under some settlement or some very old ones which are very difficult to recover maybe. But the total pool would be around INR4,600 crores.
Hardik Shah
Understood, sir. Understood. That’s it from my side. Thank you so much.
Amitava Chatterjee
Thank you, Hardik. Thank you.
Operator
Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go-ahead.
Deepak Poddar
Yeah, I’m audible, sir.
Amitava Chatterjee
Yes, Deepak. Please go-ahead.
Deepak Poddar
Yeah. Thank you very much, sir, for this opportunity. So just I have one query. I mean, in terms of growth, how do we — I mean how do we want to recalibrate the growth? I mean in nine months, we are at about 7%, right? And I think earlier we were looking at 15%. So what sort of — I mean this year growth we are looking at?
Amitava Chatterjee
Yeah. See, there is a reason why this bank has had a muted growth for the nine months. If you look at the — there were — there have been two elections and then the last 3rd-quarter, there was an impact of severe winters. So I don’t see — I mean, I would not read much into the muted good that has happened. It doesn’t mean that we’ll not be able to grow in the 4th-quarter.
Just to mention a small number, there is a pipeline of loans sanctioned yet to be disbursed of close to INR12,000 crores. So that another pipeline of loans under process, another INR5,000 crores. So I believe that we can actually make the fourth count quarter count. So I cannot say that 100% — the 15% benchmark of the guidance will be achieved or not currently sitting here today. But in all priority, we’ll be very close to that.
Deepak Poddar
Fair enough. Fair enough. That’s very helpful, sir. I think, yeah, that would be it from my side. Thank you so much.
Amitava Chatterjee
Thank you.
Operator
Thank you. The next question is from the line of Sonaal Kohli from Bowhead Corporation. Please go-ahead.
Sonaal Kohli
Sir, thank you for this opportunity, sir. Firstly, on the NIM side, if I underheard you correctly, you said that 4% kind of margin is sustainable. Did I hear you correctly?
Amitava Chatterjee
You heard it correctly, the confidence comes from the fact that we have the 62% market-share in the — in the areas of Jammu, Kashmir, and Ladak where we have a 50% CASA ratio, 51% impact. So that gives me the confidence going-forward, if we can maintain the CASA ratio, I do not see any reason why we cannot maintain a NIM of around 4%.
Sonaal Kohli
And sir, is it also because you know your LDR is one of the lowest perhaps in the country today and even if you go for corporate deposits, you still make more than your investments and that is also an additional rationale or you think your margins are sustainable because you’ll have a delta in your yield as your mix shifts from investment to loans, even if some part of that is corporate loans, your overall yield will increase. Are you counting on that as well?
Amitava Chatterjee
It will be a combination of all the factors.
Sonaal Kohli
So do we have any Indian target and mine is little too early for me to ask you these questions considering units one month.
Amitava Chatterjee
I think 70% reaching around 70% would be good.
Sonaal Kohli
So many other banks are, you know, between 75% to 85% and you know, in the past the past…
Amitava Chatterjee
There are banks which are more than 100%.
Sonaal Kohli
Yes. In the past the bank also was looking at reaching 75% or 80% over a period of time, obviously, not in one year, but over a two, three-year journey. Is there any reason to believe that there will be a change in strategy on that side or you’re referring to the short-term target rather than a long-term target?
Amitava Chatterjee
No, not that. If you are asking me about the target spanning around two years from now, so definitely we will be targeting a CD ratio of close to 75%. But what I said was a medium-term maybe short-term target of reaching around 70% 71%. 71%. See, the — the bank has had a history of high NPAs in the past. So the — the most important factor that we look at is quality along with growth. So we will continue the efforts of growth, but with quality. If that permits us and if the economic scenario is good enough, that permits us if we are able to take exposures in quality assets. We do not mind improving or increasing our CD ratio.
Sonaal Kohli
And sir, two more follow-up questions, two or three more. You mentioned about roughly 15% growth for the full-year is a possibility, you know. So if I take 15% number, for the full-year, it implies that 12.5% growth QonQ. Am I getting the math right? I mean, that’s a pretty big jump. I understand there’s a big corporate line and therefore, you may be referring to, but I just wanted to reconfirm that.
Amitava Chatterjee
So if I — if I have to answer this a little bit candidly, I would say my past experience tells me that it is not impossible.
Sonaal Kohli
Okay. And sir, in the previous call and we’ve been investing the bank for almost 10 years, you know, the management had alluded to a lot of gains on the income side from treasury initiatives, which will come over maybe over next two years and the treasury training etc., had started and the income from that is pretty low, we were told and lot of effort was made last year. And also there are lot of senior employees are expected over next one, two years and we were told that there would be an employee cost-savings on that account. Is that story intact you know or is there anything to expect?
Amitava Chatterjee
If we look at the numbers, the employee cost this nine months has actually decelerated, it has gone down by 2%. So that story holds. Going-forward, it is further going to come down because what you said a lot of employees are going to retire and we have not had much of a recruitment for the past few years. So that definitely is going to bring down the cost. We are more looking at increasing the efficiency of our employees going-forward, so that the reduction in the numbers because of retirement does not affect our performance. So that is one. And of course, what you mentioned is correct, that is also in my mind. The income from treasury, we would definitely want to — in the last quarter itself, it has improved. The non-SLR portfolio of the bank has earned more than the SLR portfolio, the yield has been better. So it is good — these are good signs going-forward. And of course, going-forward, my attention would be quite a bit on this front to make the treasury more profitable for the bank.
Sonaal Kohli
So last two questions. Your income from two in the first-nine months was 146, if you can share the number for Q3 and for the full-year. And secondly, your tax-rate for the nine months and Q3 is 29%. What is the likely tax-rate for ’25 and ’26?
Amitava Chatterjee
Could you repeat the income from what did you say?
Sonaal Kohli
Technically written-off accounts was INR146 crores in nine months. What was that number for Q3, if you can share and likely for FY ’25 and what is likely tax-rate for ’25 and ’26?
Amitava Chatterjee
Q3 it was moderate around INR25 crores only. Q4 I am expecting close to INR100 crores to INR150 crores and going-forward it will be I mean we are now limited to the very few low-hanging fruits. So I will not say that it has been exhausted, but around INR25 crores to INR30 crores per quarter is what I expect each quarter going-forward in the next financial year.
Sonaal Kohli
I just want to — in the tax-rate for ’25-’26, your first-nine months tax-rate is 29% and why is it higher than 26%?
Amitava Chatterjee
Sorry, I couldn’t get you.
Sonaal Kohli
Sir, your likely tax-rate for 2025 and 2026. For the first-nine months, the income tax-rate for the bank was 29%.
Amitava Chatterjee
Just hold-on. Can we share this offline with you? I’ll share this number offline with you.
Sonaal Kohli
And sir, largely your opex is, if I understood from you, is going to grow at a muted rate and much lower than your loan growth for next one, two years. Have I understood it correctly?
Amitava Chatterjee
Yes.
Sonaal Kohli
Great. Thank you so much, sir. And best of luck. We hope to meet you at some point of time. Thank you.
Amitava Chatterjee
Thank you very much. Thank you.
Operator
Thank you. Ladies and gentlemen, before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Dixit [Phonetic] from Invese PMS [Phonetic]. Please go-ahead.
Dixit
Hello.
Operator
Yes, sir, you’re audible.
Dixit
Yeah. So my question is related to the loan book of the other sectors. So we have the exposure in personal plants is around 40% and rest in other sectors, right? So as you started mentioning the loan book recur from last quarter, so 60% is in the other sectors, your trade, manufacturing, financial market, right?
Amitava Chatterjee
That’s correct.
Dixit
Yeah. So what about the loan growth in these sectors and why the GNPA is rising? From last quarter if we had the only data from last quarter.
Amitava Chatterjee
So I wouldn’t say that the GNPA has been rising on the other sectors all of a sudden. Yes, you are right in saying that other than the personal finance, agriculture and MSME most of the other sector loans are in the rest of India. So there has been a slight spike. These were the accounts which were in stress for some time but the healthy sign is for the quarter, we had an upgradation of around 60 crores, INR67 crore INR68 crores and also a concern in these sectors. And also if you — if you ask me, we will not shy away from taking exposures in the other sectors as well, while our focus will remain on the personal finance, agriculture, MSME going-forward, which is within the state. And maybe in other sectors, as I mentioned earlier, in quality advances in the other sectors in the rest of India.
Dixit
So in the rest of the India, when you are saying the other sectors exposure in the rest of the India. So can you just give the breakup of exposure of other sectors in rest of the India and Jammu and Kashmir?
Amitava Chatterjee
See, so if I have to mention manufacturing has a 7% exposure, infrastructure has 8.40% and real-estate has 1.27 and others around 1%.
Dixit
It is total exposure. I’m just saying key regionalized data in Q4.
Amitava Chatterjee
Okay. If you ask me of the total exposure in corporate advances in rest of India is around INR20,000 crores only. So that is 28% of the total advanced loan book. So it is less than 30%. The rest of India mostly is corporate finance, of course, rest of India has done well in-home loans and auto loans also, but the portfolio size is not too big at the moment.
Dixit
Okay. And GNPA?
Amitava Chatterjee
GNPA, which book are you talking about?
Dixit
If you are seeing 20% rest of the India.
Amitava Chatterjee
That is around, I think 5% odd, around 5.35%.
Dixit
Okay. So what are the steps you’re taking for the quality of this loan book? I’m just concerned about the rest of the loan book except personal finance. In, in rest of the India, what are the steps you are taking? Because these basically 60% of the portfolio and if you just average out the GNPA, it will be more than 5%, right?
Amitava Chatterjee
Yeah. Not 40%, it is 30%.
Dixit
It’s cheaper thing I’m saying. There are other sectors except business finance.
Amitava Chatterjee
Okay. So other than personal finance also, I’ll just try to give you a breakup of the scenario. Other than the corporate advances in rest of India, there are sectors in J&K where we have given loans. And in general, the NPA percentage in all these sectors is quite low. So you are right in saying that the NPA in the rest of India loan book apart from the retail loan book is slightly higher than our average NPA in percentage terms. So if you ask me the steps that are being taken, yes, we are — we are basically two steps, one, to have a very sound underwriting practices. And second, being selective on the rating of the — of the accounts that we take exposure in. We will be very, very careful in which accounts we take exposure in while going for these corporate advances in the rest of India. So both put together, I think it will work.
Dixit
Okay. So this understanding is correct? Your major portion of provision coverage is inclined toward this rest of the portfolio, rest of the sectors?
Amitava Chatterjee
Not essentially. See, our provisioning — provisioning covers the entire loan book, entire non-standard assets as well as standard assets as per regulatory norms and in non-standard assets, we have an additional 10% provision done beyond the regulatory requirement. So I believe that we have sufficient buffer while making provisions and we have continued to be around 90% in our PCR.
Dixit
Or can you just give the breakup of NNPA in personal finance and rest of the sectors? Because I think the major portion of your 60% of your portfolio.
Amitava Chatterjee
See NNPA — NNPA breakup, I think we will share it with you offline the exact numbers I don’t have at the moment. But NNPA is below 1%. So in the non-personal segment, it would be — I mean, I believe it will be equally shared between the personal segment and the non-personal segment. I don’t mean the personal segment, the retail segment. Personal, it will be very low.
Dixit
It will be because GNPA is 0.4%, so NNPA will be close to 0%. So you don’t need to save the capital for that per se. But last question regarding Jammu and Kashmir, you have more branches in Kashmir right, in Kashmir region [Foreign Speech].
Amitava Chatterjee
No, no, we are — across the entire geography of Jammu and Kashmir, I think we have around 837 branches spread across these two geographies 360 branches in Jammu and 477 branches in Kashmir.
Operator
Mr. Dixit, does that answer your question?
Dixit
Yeah. Thank you.
Operator
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Roshan Guleja [Phonetic] from Ineven [Phonetic] Capital Fund. Please go-ahead.
Roshan Guleja
Hello, sir.
Amitava Chatterjee
Hello.
Roshan Guleja
Yeah, I just wanted to know in the last August 2024, there was a INR8,000 crore budget allocated to Bank from the government. So has the money come and it’s been allotted or any update on that.
Amitava Chatterjee
If you are talking about the pension repayments that has already happened. Yes, yes. And if you look at our investment portfolio, it has almost gone up by that amount.
Roshan Guleja
Okay. Yeah, because we had return it as a provision before and that has come and it will improve the balance sheet, right?
Amitava Chatterjee
Yes, yes, yes.
Roshan Guleja
Okay. Thank you.
Amitava Chatterjee
Thank you.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. Thank you. The next follow-up question is from the line of Dixit from Invese PMS. Please go-ahead.
Dixit
Yeah, hi,. Question, on the other sector, the loan book growth, what is the loan book growth of these sectors? Because as you highlighted this from last quarter only. So just wanted to know the trend of…
Amitava Chatterjee
Okay, I’ll give you the entire breakup. Y-o-Y, we have grown 10.42% in agriculture. Trade, we have been flat. Personal segment we have grown by 10.29%. SME, we have grown by 10.36%, corporate has been flat and others has been 7.3%, so total around the 6%, 7% mark that we have mentioned.
Dixit
And for Personal Finance, if you just share the data of last five years, the concentration over the exposure in plants from last five years what it was.
Amitava Chatterjee
Can I understand the question correctly, you want the last five years, I mean growth in the personal segment?
Dixit
No, no. The exposure of personal plans. I’m just wanted to know, key, is there any concentration in personal plans loan book only because last quarter we’ve seen…
Amitava Chatterjee
I just — I just mentioned, I just mentioned that there has been a 10% growth in personal segment. There has been a 10% growth in the agriculture segment. There has been a 10% growth in the MSME segment as well. The flat ones were the corporate and the trade. These were flat. Otherwise, we had a 10% growth in each of these segments. So there is no concentration on any one of the segments. We are growing evenly almost in all the segments.
Dixit
Okay, okay. Thank you.
Operator
Thank you. The next question is from the line of Jayesh Shah from Ohm Portfolio Equi Research. Please go-ahead.
Jayesh Shah
Hi, thanks for the opportunity and sir, congratulations to you and we all are excited by your illustrious track-record and what you could do to the bank. So again, I don’t want any numbers or targets, but qualitatively, what would you focus on doing different than J&K Bank over next two years? And what do you see the major challenges again internal to achieve the objective or to get the J&K Bank to work at its own potential. Thank you.
Amitava Chatterjee
Thank you very much for the compliments. I believe the challenges being faced are no different from the challenges that are being faced in the rest of the banking industry. So as usual, we have the challenges related to deposit — deposit growth. We will continue to have the challenges related to the economic scenario. So these are common factors which are common for all the banking — all the banks in the country. If you ask me, the bank has been in a very steady and very good path for the last two years.
I mean, you just consider the NPA percentage has come down from as high as 12% to 4% now on gross NPAs. If you look at 2020 2021, the bank was in a loss of INR1,100 crores from there. We are currently at a — I mean, target of almost reaching double that amount in profits. The capital CRA are at the moment, even without considering the accrual of the profits for the nine months is more than 15%. So a lot of good things have happened. I do not see any reason to drastically change the course, the course will remain the same, while we might add certain new aspects to improving the things which are already on course for improvement.
Like I already mentioned during this call that we will be looking at newer avenues for other income. We will try to improve the cost-to-income ratio so that it is at par for the industry, these two things, including bringing the NPAs further down will be a prime focus. And of course, with whatever I have learned in my banking career so-far, I would definitely want this bank to grow considering the fact that it has been a bank since 1938, I believe that it has not reached its true potential till now. So there will be potential for possibilities and opportunities available, we will try to take them. But again, my — I will repeat that the growth will not come at a — the cost of quality. The growth will happen with quality, but I’m very, very optimistic about the bank going-forward will be a if not in the top-five, at least in the top seven private sector banks in the country.
Jayesh Shah
Thank you, sir, and best of luck. We do believe that treasury income and related areas offer low-hanging fruits, which hopefully, you know, we can see the results in the next two years, given your efforts and focus. Thank you very much.
Amitava Chatterjee
Thank you. Thank you very much.
Operator
Thank you. The next question is from the line of Anand Dama from Emkay Global. Please go-ahead.
Anand Dama
Yes, sir. Thank you for the opportunity and congratulations for appointment in event. Sir, there was this notification regarding appointment of RBI Nominee Director on the Board. So wanted to clarify, is it the new appointment or there was a nominee on the Board at and if not, then basically why there is a appointment of RBI nominee Director on the.
Amitava Chatterjee
This appointment is new, but there have been RBI nominees in the Board of the bank in the past as well. So from time-to-time, RBI does nominate the directors on the Board. So this is existing, we did not have one. But in the recent past we had, so we are now again going to have another Director nominee from RBI. It’s a normal process. It is nothing related to anything that has happened or is happening in the bank. It is a natural process.
Anand Dama
Okay. Just secondly, now that we have a new state government altogether, in the past we have seen intervention from the state government. So how are you seeing — I mean, I’m sure that you not have spent too much time in the bank, but any intervention that you see from the state government? And secondly, there was this capital inclusion which was supposed to happen from the Ladag government whether that has happened or any timeline that you see when such that.
Amitava Chatterjee
See, out-of-the 59% stake of the promoters, 4% is from Ladak. So that perhaps answers your one part of the question. The second is, if you ask me, you have partially answered the question. I have been only — I have been here only for the last 20 21 days. But the experience that I have had, I must share that there has been absolutely no interference or intervention by the promoters that the state governments at all, the bank has been functioning independently as a professional institution, committed to the stakeholders as any listed entity should be. So at the moment I can tell you only this much. Only time will tell if there is any difference, but at the moment there is absolutely no difference at all, even after elected government has taken I mean is in-place in the geography.
Anand Dama
But I think there were some talks about government possibly increasing additional capital. So wanted an update on that. Have you heard in?
Amitava Chatterjee
There has not been any additional capital from any of the governments so-far.
Anand Dama
Okay. Sure, sir. That’s very helpful. Thanks a lot.
Amitava Chatterjee
Thank you.
Operator
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Amitava Chatterjee for closing comments.
Amitava Chatterjee
Thank you, Sejal, and thank you all for the — for participating and joining in today. For any further questions or queries, you can contact our Investor Relations relations test. Thank you once again. Thank you very much.
Operator
On behalf of Jammu & Kashmir Bank Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines