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JKBK reported a 12.5% yoy decline in PAT to Rs4.2bn (ROA: 0.87%), primarily due to NIM compression from increased funding costs, lower recoveries from two accounts, and normalized employee expenses. Loan growth remained robust at 26.6% yoy, driven by the ROI (Rest of India) portfolio (+63% yoy), as JKBK continued to diversify beyond its core J&K market. To sustain growth momentum, it leveraged corporate lending opportunities in ROI, supported by higher-cost bulk deposits, which weighed on margins (NIM: 3.28%, -24bps qoq). However, the management reiterated its retail-focused strategy and expects retail growth to outpace corporate growth by FY27-end, improving the portfolio mix. Thus, it expects NIM to recover to ~3.5% in FY27, supported by a shift toward higher-yielding retail assets and the gradual run-down of highercost bulk deposits. While FY27 credit growth guidance remains at ~12%, the management sees potential to outperform at 18–20%, driven by ~12–13% growth in J&K and ~25% growth in ROI. On asset quality front, GNPA continued to improve, led by lower slippages, with GNPA guided to remain below 2.25%. Further, the bank remains comfortable on ECL implementation and is evaluating to upsize its planned Rs12.5bn capital raise (subject to approvals) to strengthen its capital base. The management also targets ROA of ~1.25%, supported by sustained business growth, margin recovery, and lower opex and credit costs. JKBK’s shares are currently trading at Jun-26 PBV of ~1x

Strong loan growth; higher-cost deposits drag NIM; guides for ~3.5% margin

JKBK reported strong credit growth of 26.6% yoy/4.5% qoq, driven by the ROI portfolio, which grew 63% yoy/2% qoq, as the bank continued to diversify from its core J&K market (share: 62%). Amid subdued business conditions in J&K, JKBK capitalized on opportunities in well-rated corporates, selectively expanding the corporate book at competitive pricing to sustain growth momentum. However, the bank reiterated its retailfocused strategy and expects retail growth to outpace corporate growth by FY27-end, with retail contributing 55–60% to incremental loan growth, thus improving portfolio mix. To support this, JKBK mobilized higher-cost bulk deposits, which weighed on margins, resulting in a 24bps qoq decline in NIM to 3.28%. JKBK expects NIM to recover to ~3.5% by FY27, driven by a shift to higher-yielding retail assets and planned run-down of highercost bulk deposits. Further, it expects growth of ~12% with potential to outperform to 18-20%, led by ~12–13% growth in J&K and ~25% growth in the ROI business

GNPA continues to improve and expected to stay below 2.25%

Gross slippages declined to Rs1.3bn/0.5% of loans; this, coupled with better recoveries and write-offs, led to 13bps decline in GNPA at 2.4%. NNPA moderated to 0.60%; specific PCR rose to 75.1%. Credit costs remain benign at 0.1%; JKBK does not expect this to be a material concern in the near term. The management stated that it will have better visibility on the ECL impact once the final framework is implemented. However, it believes it is well-positioned to absorb the impact and is evaluating a capital raise during FY27 to strengthen its capital base. JKBK has guided for GNPA to remain below 2.25%.

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