J&K Bank hits highest level since August 2015; stock zooms 47% in 1 month

Shares of Jammu & Kashmir (J&K) Bank surged 10 per cent to hit their highest level in over eight-years. The stock touched Rs 98.80 on the BSE in Thursday’s intra-day trade, which was its highest level since August 31, 2015.

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In the past one month, it has zoomed 47 per cent as compared to a 0.03 per cent decline in the S&P BSE Sensex.

The role of banks operating in Jammu and Kashmir (J&K) and Ladakh is of utmost importance as they play a crucial role in uplifting the region from economic backwardness and driving prosperity across all sectors of the economy.
 
Over time, the region Jammu & Kashmir including Ladakh has established a strong banking network with 2205 branches as of March 31, 2023, spread across its entire geography.

With the revival of economic activities and the recovery from the Covid-19 pandemic, there may be increased demand for credit, creating opportunities for banks to expand their loan portfolios and support economic growth, according to J&K Bank.

The Indian government’s focus on infrastructure development and investment provides opportunities for banks to participate in financing large-scale infrastructure projects, such as transportation, energy, and urban development, the bank said.

On August 23, India Ratings and Research (Ind-Ra) revised J&K Bank’s outlook to positive from stable while affirming the long-term issuer rating at ‘IND A+’.

The outlook revision reflects the improvement in JK Bank’s operating and financial metrics, asset quality and performance of standard restructured assets, and systems and processes in FY23, Ind-Ra said in a rationale.

The outlook also reflects the bank’s infusion of external talent over the past two to three years to bring about best practices and lower need to provide for legacy stressed assets, it said.

While its capital buffers are lower than most banks’, they have improved over the past two-three years and will continue the trend in view of its capital raising plans. In addition, the improving business socio-political environment in the two union territories that is aiding tourism, agriculture and small businesses adds to the bank’s business proposition, the rating agency said.

Jammu and Kashmir had seen increased number of tourists in FY23 and FY24, totalling 18.8 million in 2022 and about 18.9 million for January to July 2023 as against the yearly average of 2-3 million during the pre-covid period. The bank believes this will play an important role in improving the performance of restructured assets.

While fresh slippages, especially from the restructured and pandemic-affected pools, would weigh somewhat on the asset quality, the healthy provision on GNPA would help the bank manage slippages in FY24 and FY25, Ind-Ra said.