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| J&K Bank to go global | | Plans to sell GDRs worth 6.2 mln shares | |
ET REPORTER
Jammu, July 24: The financial pride of the state, the Jammu and Kashmir Bank Ltd is all set to hit the international market with its depositary receipts amounting to over six millions of shares.
The Jammu and Kashmir Bank today informed the stock exchange in Mumbai that
it plans to sell global depositary receipts representing 6.2 million shares. It also said it will issue 7 million convertible warrants to the government of Jammu & Kashmir on a preferential basis. Shares in the bank ended 0.94 percent up at 686.60 rupees in a firm Mumbai market.
The Bank said that the Foreign Investment Institutions are showing overwhelming interest in working with the Jammu and Kashmir Bank., "Some of the biggest names in the world figure in the sixty plus funds that have invested in the Bank. The list is truly international, with funds from USA, Europe , Singapore, Japan , Sweden, Mexico and Spain, having investments valued at more than $300 million in the Bank", the JKB Chairman Haseeb Drabu had said recently.
The Bank reported a near doubling of its net profit to Rs 45.28 crore for the fourth quarter ended March 31, compared to Rs 22.79 crore for the corresponding period last year. The Board of Directors of the bank, which met on May 7, 2007 to record the audited financial results of 2006-07, has recommended the highest ever dividend of 115 per cent for the year 2006-07.
On annual basis, the bank, which is increasing its presence in SME, retail and micro-finance lending, posted a net profit of Rs 274.49 crore as against Rs 176.83 crore in the year ended March 31, 2006. This translates into a 55 per cent increase in its net profit, which is better than any other bank in the country this
year. In spite of rising interest rates, the cost of deposits of the bank has declined while the advances yield has increased. This has resulted in the net interest margins reaching 3 per cent. The increase in net interest margins of the bank is due to its renewed focus on J&K. The compositional shifts in deposit base also
resulted in improving the CASA ratio to 37.02% as against 34.17% of the previous fiscal. Total net worth enhanced by 210 crore to Rs.2009 crore from Rs.1799 crore, improving book value of
Bank's share to Rs.414.36 as against Rs.371.20 of the previous year. There has been enhancement to the shareholders value, as Earning per Share (EPS) improved to Rs.56.62 as against Rs.36.48 of the previous year.
While ensuring high quality of assets, the bank registered one of the lowest NPAs in the Industry. The net NPA of the Bank stood at 1.13% of the net Advances. NPA coverage ratio is at 61% at the end of the FY07.
There has been improved productivity during the year. Business per branch and per employee has increased to Rs.73.73 crore and Rs.6.17 crore respectively. Return on assets improved to 0.96% from 0.67% during the previous year. While efficiently managing the resources, cost of income ratio decreased to 40% from 43%.
The bank has been maintaining its monopoly in spite of so many private sector banks showing their presence in the State. The arrival of other private sector banks in the state has benefited the Bank itself as now the bank faces more competition thus improving customer service.
The private and commercial banks work only for commercial purposes while as J&K Bank also works for social corporate responsibilities. J&K Bank is committed to its corporate social responsibility in which the bank would be rehabilitating certain heritage places and as a first step in this direction the Badamwari (almond garden) is being developed by the bank. The performance of the bank during the year 2006-07 has been exceptionally good exceeding the expectations of banking analysts. The new business initiatives undertaken by the bank are also bearing fruit.
The key strategic shift of the bank has been to focus on J&K by increasing lending to SME's, Horticulture related activities, and Micro Finance. This combined with better liability management has ensured that the bank's balance sheet is fully leveraged with a credit deposit ratio of 67.79% as against 61.67% in FY06. Within J&K, the credit deposit ratio is above 50 per cent.
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