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JKBK reported a strong PAT of Rs5.4bn (~+10.6%/29% yoy/qoq; ROA: 1.07%), primarily due to a sharp rise in other income, controlled opex, and lower provisions. Loan growth was healthy at 24.8% yoy, with RAM contributing over 60% to YTD incremental credit growth as the bank continued to diversify beyond its core J&K market. NIM declined by 9bps qoq to 3.17%, reflecting muted yields and higher cost of funds following mobilization of highcost bulk deposits. However, management expects a meaningful NIM recovery from 3QFY27, supported by a shift toward higher-yielding retail assets, repo rate transmission, and the gradual run-down of higher-cost bulk deposits. FY27 credit growth guidance has been revised to 14% from 12% earlier, with potential to outperform at 18% driven by retail momentum. On asset quality front, GNPA continued to improve, led by lower slippages, with management also revising its GNPA guidance to remain below 2% from 2.25% earlier. The bank expects the ECL transition impact to be below the industry average, and plans to raise Rs10bn in equity and Rs5bn in debt, with the debt issuance expected in 3QFY27 and the equity raise subject to favorable market conditions. Management also targets ROA of 1.2%, supported by sustained business growth, margin recovery, and lower opex and credit costs. JKBK’s shares are currently trading at Sep-26 PBV of 0.9x.

Healthy loan growth; loan guidance revised; margin recovery from 3QFY27

JKBK reported healthy credit growth of 24.8% yoy/2.4% qoq, with 60% incremental growth driven by RAM. The bank continued to diversify from its core J&K market (share: 63%). It remains focused on growing the higher-yielding RAM portfolio to improve portfolio yields, with management expecting retail growth to outpace corporate growth. Accordingly, FY27 credit growth guidance was raised to 14% from 12% earlier, with potential to reach 18% if retail momentum sustains; deposit guidance at 12%. NIM declined by 9bps qoq to 3.17% due to high-cost bulk deposits, leading to higher cost of funds and flattish yields. Management expects a meaningful NIM recovery from 3QFY27, supported by repo-rate transmission, a favorable shift in loan mix and the run-down of high-cost bulk deposits.

GNPA declines; ECL impact to be below industry average

Gross slippages declined to ~Rs1bn/0.4% of loans. This, coupled with better recoveries and write-offs, led to a 4bps decline in GNPA at 2.2%. NNPA moderated to 0.5%, with specific PCR increasing to ~77.7%. Management indicated that provisions are expected to remain at around Rs700-850mn per quarter, with credit costs contained and revised its FY27 GNPA target to below 2% from 2.25% earlier. The ECL transition impact is expected to be below the industry average, supported by a prudential buffer of ~Rs3bn. The bank also plans to raise Rs10bn in equity and Rs5bn in debt with the debt issuance expected in 3QFY27 and the equity raise subject to favorable market conditions.

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