Jammu & Kashmir Bank is seeking overseas expansion and will soon apply to the Reserve Bank of India (RBI) to secure a licence for the same.
According to Mushtaq Ahmad (pictured), chairman and CEO, the bank is making efforts to pull it off by the end of the next financial year. To start with, the bank is looking to open full-fledged branches in London and Dubai. This would help it cater to the local demand and tap business opportunities abroad, he said.
The decision followed finance minister P Chidambaram asking the bank to take the overseas route on a recent visit to the state. Speaking on the occasion of the bank’s platinum jubilee here, he said the lender should open branches in other states as well. Explaining the rationale, the FM said: “Not many public sector banks can compare with the quality of performance of J&K Bank, but it is still a small bank.” The bank’s presence in Jammu & Kashmir is formidable with 582 branches and runs 113 in rest of the country.
The bank raises 68% of its deposits internally, but deploys only 42% of total advances in the state. Ahmad said the bank is working on bolstering its loan portfolio within the state, but the small ticket size is a tough challenge. “These mainly come from handicrafts, agriculture, services and tourism related trade,” he added.
The bank has informed the state government of its capital requirements, going forward, though it stays comfortable on that front. Its capital adequacy ratio stood at 13.59% at the end of June 2013 quarter. Currently, the state government holds a 53% stake in the bank.
The lender aims at maintaining net interest margin around 4% and gross non-performing assets under 2% in the current financial year. Ahmad put the profit target at around 25%.
At the end of the April-June quarter, the bank’s NIM printed at 4.15%, gross NPA ratio at 1.67% and net profits were up 25.13% compared with the same quarter last financial year.
The chairman said the bank was able to recover 90% of its Rs 100 crore exposure to Kingfisher Airlines by selling the shares of United Breweries it held as security.
“We sold the shares at Rs 1,880 when the Diageo deal was coming up,” he said.
Also, the bank has entirely provided for the exposure to Deccan Chronicle. “We had provided Rs 25 crore in June, and the rest Rs 25 crore has been provided in the second quarter. I don’t foresee any recovery chances,” he noted.
The bank will soon be getting the direct cash transfer mandate from the state government.
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