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    J & K Bank

    J&KBANK
    Financial Services·20 Jan 2026
    Management Summary

    J & K Bank delivered a strong Q3 FY26, marked by robust advances growth of 17.3% YoY and a significant 18.7% QoQ increase in net profit to INR587 crores. Asset quality continued to improve with GNPA at 3% and NNPA at 0.68%, supported by a PCR above 90%. While NIMs showed a 6 bps QoQ improvement to 3.62%, deposit growth lagged, leading to a decline in CASA ratio and prompting a revised credit growth guidance of 12-15%. The bank has approved raising INR750 crores in equity and INR500 crores in Tier 2 capital to support future growth, despite analyst concerns about valuation.

    Highlights

    5

    • Advances recorded 17.3% Y-o-Y growth and 7.7% Q-o-Q growth, significantly higher than the estimated system credit growth of 11.7% to 12%.

    • Net profit increased by 18.7% Q-on-Q to INR587 crores for Q3 FY26, contributing to a 4.5% Y-o-Y growth in net profit for the 9 months ended December 31, 2025, reaching INR1,566 crores.

    • Asset quality showed continued improvement with Gross NPA at 3% and Net NPA at 0.68% as of December 31, 2025, coupled with a Provision Coverage Ratio above 90%.

    • Net Interest Margin (NIM) for Q3 stood at 3.62%, with a 6 basis points improvement from the previous quarter, despite RBI's 125 bps rate cuts.

    • Cost-to-Income Ratio remained disciplined, recorded below 56% for the current quarter, with operating costs showing a marginal 2.8% Y-o-Y growth for the 9-month period.

    Concerns

    3

    • Deposit growth of 10.6% Y-o-Y and 2.5% sequentially lagged advances growth, leading to stress on deposit generation and a revised credit growth guidance of 12-15% (down from a potential 20%).

    • CASA ratio declined to 44.10% as of December 31, 2025, below the 48.51% observed in the J&K and Ladakh region, driven by a shift towards higher-yielding term deposits.

    • Analyst concerns were raised regarding the timing and valuation of the proposed capital raise, suggesting it might be dilutive at current low valuations.

    Key financials

    Metrics

    16

    Periods

    5

    Headline

    9
    • Deposits Growth
      10.6%
      QoQ+2.5%
    • Advances Growth
      17.3%
      QoQ+7.7%
    • Gross NPA
      3%
    • Net NPA
      68%
    • CASA Ratio
      44.1%

    Q3 FY26

    2
    • Net Profit
      ₹587 Cr
      QoQ+18.7%
    • NIM
      3.6%

    Q3 FY26 Annualized

    1
    • RoA
      1.4%

    9M FY26

    2
    • Net Profit
      ₹1,566 Cr
      YoY+4.5%
    • NIM
      3.6%

    9M FY26 Annualized

    2
    • RoA
      1.2%
    • RoE
      15.2%

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    CRAR recorded at 15% with CET1 at 11.84%. The bank has received board approval for raising equity capital up to INR750 crores and Tier 2 capital up to INR500 crores.

    Guidance & targets

    12
    CategoryTargetPriority
    Credit Growth
    Credit Growth
    12%
    		High
    Credit Growth
    Credit Growth
    12% to 15%
    		Medium
    Deposit Growth
    Deposit Growth
    10%
    		High
    CASA Ratio
    CASA Ratio
    45%
    		High
    NIM
    NIM
    3.65% to 3.7%
    		High
    NIM
    NIM
    around 3.70%
    		Medium
    RoA
    Return on Assets
    1.2% to 1.25%
    		High
    RoE
    Return on Equity
    15% to 16%
    		High
    Gross NPA
    Gross NPA
    below 3%
    		High
    CD Ratio
    Credit-to-Deposit Ratio
    76%, 77%
    		Medium
    Employee Expenses
    Employee Expenses
    go down further
    		Medium
    Provisions
    Credit Cost / Provision Number
    near zero
    		Medium

    What to watch in Q4 FY26

    5

    Deposit Growth Trajectory

    Next quarter
    Current10.6% YoY, 2.5% QoQ
    TargetImprovement to support credit growth guidance of 12-15%

    Why it matters

    Deposit growth is crucial for funding advances and maintaining a healthy Credit-to-Deposit ratio.

    Had the deposit growth been similar to advances growth, I would have said we would be growing at 20%, but we have to maintain the balance.

    Risks & concerns

    4
    RiskSeverity

    Deposit Growth Stress

    Deposit growth lagged advances growth, leading to a revised credit growth guidance and focus on deposit generation. — Management acknowledged

    medium

    System Liquidity & Customer Preferences

    System liquidity constraints and evolving customer preferences for higher-yielding investment avenues impact CASA accretion. — Management acknowledged

    medium

    Capital Raising Valuation

    Analyst expressed concern about diluting equity at current low valuations, potentially impacting book value and shareholders. — Analyst acknowledged

    medium

    Impact of Disturbances and Natural Calamities

    Periods of disturbances and natural calamities in J&K impacted operations, but the bank remained focused and disciplined. — Management acknowledged

    low

    Q&A highlights

    8

    “The focus on NPA recovery has been very, very constant for the last 9 quarters and more. We have not only reduced the gross NPA in percentage terms, but also in absolute terms. So this is the gross NPA that I'm talking about... the idea of high potential areas has already started chipping in. So this has been the strategy of the bank for the last 1 year, and I believe we will continue to do that.”

    Addresses how the bank plans to sustain asset quality improvement while pursuing growth, especially in MSME and Retail, and outside J&K.

    asked by Sucrit D. Patil

    3 min read8 chapters

    Detailed Narrative

    01

    Q3 FY26 Performance Overview

    J & K Bank reported a strong Q3 FY26, with net profit increasing by 18.7% Q-on-Q to INR587 crores. For the nine months ended December 31, 2025, net profit grew 4.5% Y-o-Y to INR1,566 crores. The bank's annualized Return on Assets (RoA) for the quarter improved to 1.35% from 1.16% in Q2, while the annualized RoE for the nine-month period stood at 15.16%.

    02

    Deposit and Advance Growth Dynamics

    Deposits grew by 2.5% sequentially and 10.6% Y-o-Y. Advances recorded robust growth of 7.7% Q-o-Q and 17.3% Y-o-Y, significantly outpacing the estimated system credit growth of 11.7% to 12%. However, the CASA ratio declined to 44.10% as of December 31, 2025, reflecting a broader industry trend of shifts towards higher-yielding term deposits. The bank aims to increase its Credit-to-Deposit (CD) ratio from the current 72% to 76-77%.

    03

    Profitability and Margin Management

    The Net Interest Margin (NIM) for Q3 FY26 was 3.62%, with the nine-month NIM at 3.64%. Despite RBI's cumulative rate cuts of 125 bps in calendar year 2025, the bank's NIMs were affected by only 40-42 bps, demonstrating resilience. The cost of deposits for the quarter was 4.69%. Management expects NIMs to reach around 3.70% by the year-ending, assuming no further rate cuts.

    04

    Asset Quality and Provisioning

    Asset quality continued its strong improvement, with Gross NPA at 3% and Net NPA at 0.68% as of December 31, 2025, compared to 0.94% a year ago. The Provision Coverage Ratio (PCR) remained robust at above 90%. The bank incurred INR180 crores in impairment provisions due to RRBs amalgamation and INR68 crores for the Special Rehabilitation Package 2025. A negative provision of INR70 crores was recorded due to a recovery of a big-ticket NPA account that was fully provided for.

    05

    Capital Adequacy and Future Funding

    The Capital to Risk-weighted Assets Ratio (CRAR) stood at 15%, with CET1 at 11.84%. The Board has approved raising equity capital up to INR750 crores and Tier 2 capital up to INR500 crores to support future business growth. The bank is targeting to complete a Qualified Institutional Placement (QIP) by March 31st, 2026, to secure the additional capital of INR1,500 crores.

    06

    Strategic Focus Areas

    The bank is focusing on generating deposits, particularly retail CASA from its home territory (J&K and Ladakh, which accounts for 86.3% of total deposits) and through IT initiatives like QR codes and POS machines. Credit growth is balanced across geographies (56.7% from J&K/Ladakh, 43.3% from Rest of India) and segments (53.4% retail, 46.6% corporate). Retail advances, constituting 65% of the portfolio, grew 9.4% Y-o-Y, with car loans up 15.3% and housing loans up 8.9%.

    07

    Employee Cost Efficiency

    Employee expenses showed a Y-o-Y decline on a nine-month basis. Management indicated that employee costs are expected to go down further due to the retirement of high-cost employees and the recruitment of new staff at lower costs. This strategy contributes to maintaining the Cost-to-Income Ratio below 56% for the quarter, despite business growth and inflationary pressures.

    08

    Outlook and Guidance

    For FY26, the bank maintains its guidance for credit growth at 12-15%, deposit growth at 10%, and CASA ratio at 45%. NIM is projected to be between 3.65% and 3.7%, with RoA between 1.2% and 1.25%, and RoE between 15% and 16%. Gross NPA is targeted to remain below 3%. The bank expects its CD ratio to increase to 76-77% in the medium term.

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