Summary
Jammu and Kashmir Bank Limited - Q3 FY 2026 Earnings Call Summary Tuesday, January 20, 2026, 6:00 PM IST
Event Participants
Executives 10 Ajay Kohli, Altaf Hussain Kira, Amitava Chatterjee, Imtiyaz Ahmad Bhat, Ketan Kumar Joshi, Nishi Kant Sharma, Rajesh Malla Tikoo, Rakesh Magotra, Sudhir Gupta, Sunit Kumar
Analysts 5 Arjun, Deepak Poddar, Gaurav Agrawal, Mona Khetan, Parth Gutka, Saket, Sonaal Kohli, Sucrit D. Patil
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Deposits | ₹1.37 lakh crores* | +10.6% YoY, +2.5% QoQ; Accretion driven by term deposits over CASA. |
| CASA Ratio | 44.10% | -550 bps YoY (approx); Industry-wide shift to term deposits and mutual funds. |
| Net Advances | ₹99,800 crores* | +17.3% YoY, +7.7% QoQ; Outpacing system credit growth of ~12%. |
| Gross NPA | 3.00% | -180 bps YoY (approx); Management reached FY26 guidance one quarter early. |
| Net NPA | 0.68% | -26 bps YoY; Reflects sustained portfolio monitoring and recovery focus. |
| PCR | 90.00%+ | Maintained at high levels despite substantial recoveries. |
| Net Profit | ₹587 crores | +18.7% QoQ; Impacted by ₹180Cr RRB provision and ₹68Cr restructuring provision. |
| NIM | 3.62% | +6 bps QoQ; Sequential improvement despite 125 bps cumulative repo rate cuts in 2025. |
| Cost of Deposits | 4.69% | Sequential decline as repricing of deposits began to offset lending rate cuts. |
| Cost-to-Income | <56.00% | Maintained via strict cost discipline; operating costs grew only 2.8% YoY. |
| CRAR | 15.00% | Excludes 9M FY26 profits which would add ~145 bps to the ratio. |
*Calculated based on percentage growth and previous disclosed trends in transcript.
Geographic & Segment Commentary
- Jammu, Kashmir & Ladakh: Remains the core territory contributing 86.3% of total deposits and 56.7% of incremental YTD advance growth. CASA ratio in this region is significantly higher than the bank average at 48.51%.
- Rest of India (ROI): Accounted for 43.3% of incremental YTD credit growth, showing successful geographic diversification. Focus in ROI remains on personal loans (+14.4% YoY) and high-rated corporate lending.
- Retail Banking: Constitutes 65% of the total loan book, growing 9.4% YoY. Growth was led by Auto loans (+15.3% YoY) following a successful festive campaign, and Housing loans (+8.9% YoY).
- Agriculture & Corporate: Both segments saw double-digit YTD growth at 25.7% and 14.7% respectively. Together they represent over 40% of the bank’s total loan portfolio.
Company-Specific & Strategic Commentary
- Special Rehabilitation Package 2025: Rehabilitated over 10,600 borrowers in J&K (₹1,400 crores involved) with 5% provisioning (₹68 crores) completed this quarter. These are considered standard assets with high resilience.
- Asset Quality Discipline: SMAs reduced by ~50% from March to December 2025; Credit cost remained at zero for the 9-month period due to aggressive recoveries including a single ₹100 crore+ recovery.
- Capital Raising: Board approved raising ₹750 crores in equity (QIP) and ₹500 crores in Tier 2 bonds to support infrastructure-led credit demand in J&K.
- Operational Efficiency: Employee expenses are declining despite new recruitment, as high-cost retiring employees are replaced by lower-cost staff.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Credit Growth | 12% - 15% (FY26) | Revised from 12% due to robust pipeline, tempered by deposit constraints. |
| Deposit Growth | 10% (FY26) | Target maintained; focusing on IT initiatives (QR/POS) for CASA accretion. |
| NIM | 3.65% - 3.70% (FY26) | Expected improvement as deposit repricing catches up to earlier repo cuts. |
| GNPA | Below 3.00% (FY26) | Already achieved in Q3; focus shifts to sustaining this level through FY27. |
| ROA / ROE | 1.25% / 15% - 16% | Annualized 9M ROA stands at 1.23%; Q3 standalone was 1.35%. |
| CD Ratio | 76% - 78% (Med-term) | Plan to scale from current 72% as capital position strengthens. |
Risks & Constraints
| Risk | Context |
|---|---|
| System Liquidity | Constrained liquidity and household shift to mutual funds (13.1% of savings) are pressuring CASA ratios and deposit costs. |
| Interest Rate Volatility | Further RBI rate cuts could pressure NIMs before deposit repricing cycles complete. |
| Capital Dilution | Analysts expressed concern over raising capital below book value; management noted approval is valid for 12 months for opportunistic timing. |
Q&A Highlights
Asset Quality & Recoveries
- Question: What led to the negative provision line item this quarter? (Mona Khetan)
- Answer: A large ticket NPA account (fully provided for) saw a 100% recovery of over ₹100 crores, leading to a provision reversal (Amitava Chatterjee).
Capital Raising Strategy
- Question: Why raise capital when the bank is trading below book value and generating 15%+ ROE? (Gaurav Agrawal/Sonaal Kohli)
- Answer: Capital is needed to support foreseeable infrastructure credit growth in J&K. However, the Board approval is for 12 months; management will not rush to market and will consider price discovery (Amitava Chatterjee/Ketan Joshi).
Yield on Advances
- Question: Why have yields declined more sharply than competitors? (Parth Gutka)
- Answer: Yield compression is 100 bps vs 125 bps repo cut. The bank is lending to AAA-rated corporates to minimize capital charge, accepting lower margins for safety (Amitava Chatterjee).
Restructuring Package
- Question: What is the status of the Special Rehabilitation Package? (Sonaal Kohli)
- Answer: Completed by Dec 31, 2025. 10,600 accounts (₹1,400 crores) restructured with a 5% (₹68 crore) provision. These are standard accounts expected to remain healthy due to a tourism rebound (Amitava Chatterjee).
Key Takeaway
Jammu and Kashmir Bank delivered a robust Q3 FY2026, highlighted by a 18.7% sequential growth in net profit to ₹587 crores and achieving its year-end GNPA target of 3.0% a quarter early. The bank’s credit growth of 17.3% YoY continues to outpace the industry, supported by a healthy 72% CD ratio and strong retail performance in ROI. Despite the 125 bps cumulative repo rate cuts in 2025, NIMs improved 6 bps sequentially to 3.62% as deposit repricing began to take effect. Strategically, the bank has cleaned up its balance sheet, completing provisions for RRB amalgamations and the J&K rehabilitation package. Management remains confident in achieving a double-hat-trick of record annual profits, targeting a 1.25% ROA for the full year. The primary watch point remains the successful execution of the ₹1,250 crore capital raise and the stabilization of CASA levels amid intensifying competition for deposits.
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