Jammu and Kashmir Bank crosses new 52-week high on Q2 interest income

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Mumbai – Strong investor interest continued in Jammu & Kashmir Bank sending the stock to a new 52-week high on the BSE two days after the bank announced better than expected results for the September ended quarter.

The Srinagar based bank reported a 27% year-on-year rise in net interest income during the June 2012 ended quarter – the highest in seven quarters. Net interest income, which is the difference between interest earned and interest paid, came in at Rs 552.67 crore.

The bank also reported an improvement in its net interest margin, which is the yield on advances over cost of deposits, from 3.76% in September last year to 3.94% at present.

The improvement seen came as the bank’s yield on advances increased more than its cost of deposits. Its management is confident of sustaining margins around 4% over the next few quarters as well.

Advances grew 21% to Rs 34272.09 crore while deposits increased 16% to Rs 54926.5 crore as the second quarter is generally slow for the bank which gets 41% of its total business from the state of Jammu & Kashmir. But advances are expected to improve in the second half. The management expects to end the current fiscal with 25% growth in advances.

On the deposits front, the percentage of current account and savings deposits as a percentage of total deposits, also known as CASA ratio, declined marginally from 38.18% in the same period last year to 38.16% at present. This was mainly on account of flat growth in current accounts as saving accounts witnessed healthy growth.

On asset quality as well, the bank reported an improvement. The percentage of non-performing assets to total advances (net) fell from 0.22 in September last year to 0.16 this September.

The stock of Jammu & Kashmir Bank crossed a new 52-week high of Rs 1,248.70 on the BSE today. It currently trades at a price to book value multiple of 1.3 times.

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