Views on Jammu and Kashmir Bank - Angel Broking

Views of Mr. Vaibhav Agrawal (VP Research – Banking, Angel Broking) on Jammu and Kashmir Bank 4QFY2014 results:

"Jammu and Kashmir Bank reported in line operating performance, while asset quality witnessed stability. On the operating front, Net Interest Income for the bank increased by 10.7% yoy, while non-interest income de-grew by 46.8% yoy, leading to a 3.6% yoy de-growth in operating income which was in-line with our estimates. Operating expenses grew 8.7% yoy, leading to in-line pre-provisioning profit de-growth of 10.5%. Asset quality remained largely stable with absolute Gross and Net NPA increase of 8.0% and 5.3% respectively sequentially. Thus gross and Net NPA remained flat at 1.7% and 0.2% respectively qoq. Provision expenses for bank came in lower at Rs. 61cr (on back of higher base in 4QFY2013) enabling PBT level growth of 17.1% yoy. But bank reported flat earnings yoy due to higher tax expense of Rs170cr in 4QFY2014. At the CMP, the stock is trading at 1.2x FY2016E ABV which factors in superior asset quality for bank. We recommend Neutral rating on the stock."

Source : Equity Bulls

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