Jammu and Kashmir Bank (J&KBANK) Q1 25/26 earnings summary

Executive summary

• Net profit for Q1 FY26 reached ₹484.84 crore, up 16.7% year-over-year, marking a record Q1 profit despite regional disruptions and a one-time impairment provision of ₹87 crore related to RRB amalgamation.

• Excluding the one-time provision, net profit growth would have exceeded 30% year-over-year.

• Maintained robust asset quality with GNPA at 3.50% and NNPA at 0.82%, alongside a high provision coverage ratio above 90%.

• Digital transactions exceeded 94% of total, reflecting rapid digital adoption.

• Continued expansion outside J&K and Ladakh, with 141 branches across 20 states/UTs.

Financial highlights

• Net interest income increased 7% year-over-year to ₹1,465.43 crore; other income rose 29% year-over-year to ₹250.30 crore.

• Deposits grew 12.1% year-over-year to ₹1,48,542 crore, outpacing the industry average of 10.1%; net advances up 6.1% to ₹1,01,230 crore.

• Operating profit up 13.1% year-over-year to ₹672.84 crore.

• Cost-to-income ratio improved to 60.78% from 61.96% year-over-year.

• CASA ratio declined sequentially from 47.01% to 45.71% as customers shifted to term deposits; term deposits grew 21.1% year-over-year, CASA deposits grew 2.9%.

Outlook and guidance

• FY26 guidance: credit growth 12%, deposit growth 10%, CASA 48%, NIM 3.65%-3.70%, ROA around FY25 levels, ROE 16%-17%, GNPA below 3%.

• NIM guidance revised downward due to RBI's 50 bps repo rate cut in June 2025.

• Focus on improving asset quality, expanding retail, agriculture, and MSME segments, and investing in technology and digital banking.

• Credit growth expected to be split 50-50 between J&K and the rest of India in the coming years, shifting from the current 70-30 split.

• Cost-to-income ratio expected to improve as employee costs decline and IT investments yield returns.