Ladies and gentlemen, good day and welcome to Jammu & Kashmir Bank's Q4 and FY 2026 Conference Call hosted by Emkay Global Financial Services Limited. This conference call may contain forward-looking statement about the company, which are based on beliefs, opinion, and expectation of the company as on date of this call. These statement are not the guarantee of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant line will be in the listen-only mode, and there will be an opportunity for you to ask question after the presentation conclude.
Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Dama from Emkay Global Financial Services Limited. Thank you, and over to you, sir.
Yeah. Thank you, operator. Good evening, ladies and gentlemen. I welcome you all to Jammu & Kashmir Bank's post-results conference call for fourth quarter of financial year 2026, hosted by Emkay Global. From the top management, we have with us [audio distortion] Amitava Chatterjee, MD and CEO, and other top management. First, I would request the MD, sir, to briefly summarize the key highlights from Q4 FY 2026 results and also provide some strategic direction on growth, margins, and asset quality, post which we will have the Q&A session. Over to you, MD, sir.
Thank you, Anand Ji. I'm audible, I suppose?
Yes, sir. You're audible.
A very good evening and a warm welcome to all the investors, analysts, and other stakeholders joining us today for the Jammu & Kashmir Bank March 2026 Earnings Call. As mentioned, I would definitely be brief. Before starting with the numbers, let me introduce my fellow colleagues from the bank's senior management who are accompanying me on this call. Executive Director, Mr. Sudhir Gupta. Chief General Managers, Mr. Sunit Kumar, Mr. Imtiyaz Ahmad Bhat, and Mr. Ashutosh Sareen. Retail Banking Head, Mr. Rakesh Magotra. Corporate Banking Head, Mr. Suresh Kumar Chowdhary. Impaired Assets Portfolio Management Head, Mr. Irfan Anjum. Chief Financial Officer, Mr. Ketan Kumar Joshi. Chief Risk Officer, Mr. Altaf Hussain Kira, and our Treasury Head, Mr. Ajay Kohli.
Financial year 2026 marks yet another milestone year for the bank, as we have fulfilled our promise and delivered a fourth consecutive year of record annual profitability, posting a net profit of INR 2,363 crore for the financial year. What sets this achievement apart and makes it more special is the backdrop in which it has been achieved, as FY 2025/ 2026 was laced with frequent challenges, especially in our core geography of Jammu & Kashmir, besides global uncertainties. The ability to sustain the trajectory in this challenging environment is a reflection of a structurally stronger and a resilient franchise that has been built over a period of time, along with the adaptability of our business model.
Besides ending the year with the highest ever annual net profit, we have also ended the financial year with a record quarterly performance posting a net profit of almost INR 800 crore, recording a 36% Q-o-Q growth. We are also pleased to have been able to broadly deliver on our market guidance, surpassing the same comfortably on most parameters, despite all the challenges faced. The only exception has been a marginal shortfall in the NIM, where we have fallen short of our guidance. This is largely on account of the cumulative rate cuts of 125 basis points by RBI in 2025, which has impacted yield on advances, coupled with intense competition from deposits, resulting in lower transmission of the reduced rates on the liability side.
The bank has registered a business growth of 13.6% during financial year 2025/ 2026, with deposits and gross advances growing at 11.3% and 16.8% respectively, both comfortably exceeding our guidance for the financial year. In accordance with our recalibrated strategy for the fiscal, the loan growth in RoI was much higher at 28.8%, vis-à-vis 9.5% of Jammu & Kashmir and Ladakh. This has led to a marginal shift in the regional composition of the loan book, with Jammu & Kashmir, Ladakh contributing 63% and rest of India contributing 37% as on 31st of March 2026. In alignment with the bank's medium to long-term vision of geographical diversification with a 50/50 business split between Jammu & Kashmir, Ladakh, and rest of India.
Retail, Agriculture, and MSME loans, that is RAAM, continue to constitute a dominant segment of our loan book with more than 2/3 share. During FY 2025/ 2026, corporate and agriculture segments have recorded a robust growth of 38.5% and 27.6% respectively. Our personal loan segment in rest of India has also gained traction with a growth of around 13% recorded for the year. Amongst personal loans, car loans has been the best performing segment across all divisions, with a growth of 17.5%. In the rest of India division, housing and education loans have also recorded a double-digit growth. In deposits, both Jammu & Kashmir, Ladakh, and rest of India have recorded double-digit growth.
The growth in term deposits is 14.2%, has been higher than the growth in CASA deposits at 8.1%, in line with the broad industry trend. On a sequential basis, growth in CASA deposits has substantially outpaced the growth in term deposits, resulting in a bank being able to improve its CASA ratio from 44.10% as on 31st December 2025 to 45.65% as on 31st March 2026, thereby surpassing our guidance of 45%.
While we have witnessed some moderation in NIM during the year, as mentioned at the start of this call, with NIM of FY 2025/ 2026 being recorded at 3.60%, the decline has been relatively contained, especially when seen against the backdrop of cumulative rate cut of 125 basis points by RBI in the calendar year 2025. Despite pressure on net interest income owing to the contractions in NIMs, as well as a hit on our other income on account of impairment provision of INR 180 crore, along with a sequential moderation in our trading income triggered by an uptick in bond yields owing to the geopolitical developments, we have still been able to record a 13.5% growth in our annual profit.
A key driver in this improved profitability has been operating leverage, with operating expenditure reducing by around 4%. As has been indicated previously also by the bank, the cost of reduction has been brought about by a moderation in our employee costs, with tapering of pension-related obligations and shift of our workforce compo-composition towards NPS. This reduction of costs has also been complemented by enhanced operating efficiency, as evidenced by steady improvement in key productivity metrics, with business per employee improving from INR 20.18 crore as on 31st March 2025 to INR 23.64 crore as on 31st March 2026, and net profit per employee improving from INR 16.65 lakhs to INR 19.47 lakhs during the same period. Cost-to-income ratio also continues to moderate for the fourth year running, being recorded at 56.18% for the financial year.
With this record profitability performance, we have also surpassed the guided ROA and ROE levels with ROA and ROE of 1.37% and 16.85% respectively for the financial year. The consistent improvement in asset quality, alongside a healthy business growth now extending to six consecutive years, continues to remain a hallmark of our performance and reflects our commitment to responsible growth. GNPA and NNPA as on 31st March 2026 stand at 2.50% and 0.64% respectively. This demonstrates a structural strengthening of our underwriting discipline alongside a tight control over slippages with gross slippage ratio of just around 0.82% for the year. Improved recovery mechanisms have also played a crucial role with another year of negligible credit costs despite a relatively challenging economic environment.
Our provision coverage ratio also continues to stay above 90%, reflecting adequate buffers. With another year of record internal accruals, we have achieved highest ever capital adequacy of 16.55% with CET 1 at 13.54%. However, considering that RBI has notified ECL implementation with effects from 1st April , 2027, the bank will consider raising of capital to the tune of INR 1,250 crore in the current year at an opportune time, for which the bank has already obtained both board as well as shareholders' approval. Despite a broad-based exodus of FIIs from Indian markets during 2025 with outflows of around INR 2.4 lakh crore, our bank has witnessed an increase in FII shareholding to 8.34% as on 31st March , 2026 from 7.64% a year ago.
This is a recognition of our transformation journey and consistently improving performance. The ongoing geopolitical tensions in West Asia, which has led to the World Bank slashing India's growth forecast for 2026/ 2027 from 7.2% to 6.6%, call for a degree of caution in our immediate future outlook. In light of this evolving external environment, we have taken a conservative stance in our market guidance for 2026/ 2027, which is a credit growth of 12%, deposit growth of 10%, CASA at 45%, NIM around 3.5%, ROA maintained around the current levels, ROE around 16%, and gross NPA below 2.25%. While it may seem like we are underpromising, rest assured that we will strive to overdeliver like we did this year. Thank you for your time today and for giving me a patient hearing.
We can start the question answers now.
Yeah, operator, please open up the floor. Yeah.
Thank you so much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Yogesh Bhatia from Sequent Investments. Please go ahead.
Hello. Congratulations, sir, on good set of numbers in challenging times. My question is regarding the employee cost, which you mentioned in your opening commentary that, you know, we have tried to maintain it. This quarter, the employee cost has come to INR 509 crore, versus last year same quarter it was INR 734 crore. Similarly, on a full- year basis also, we've seen a reduction of 11%. I wanted to know, going forward for the next year, what trend are we looking at in the employee cost?
Thank you very much for the comments. Definitely. There are two basic reasons for the reduction in employee cost. One, as I mentioned, that our pension obligations are being now shifted to NPS, so that is coming down gradually. Second is, of course, over the last couple of years, we have had retirements, so the number of employees have also gone down. The employee cost has come down, and the shortfall in the employees have been largely compensated by the use of technology that we have been able to leverage on. That doesn't mean that we will not be recruiting people. As and when required, we will definitely be recruiting people. Going forward, I believe that staff costs will further come down even in the next quarter and the quarters after that.
Okay. Overall, as a %, what it used to be in the past of the earnings, it will remain, it will trend to be lower.
Yes. It has been lower for the last, I think, couple of years.
Okay. Okay. Thank you, sir.
Thank you.
Thank you. Our next question comes from the line of Gaurav Agarwal from Nine One Capital. Please go ahead.
Hello, sir. Congratulations on wonderful set of numbers and giving out your comments with such clarity. Sir, as the previous participant asked about the employee cost, sir, is it fair to assume that the quarterly run rate for employee cost starting from Q1 onwards, it is going to be INR 500 crore or lower? Is that a fair understanding to take?
Thank you, Gaurav ji, and it's a very fair estimate that you made. At least for the next two quarters, I am certain that it will be around that.
Sir, for full -year, can it be contained below INR 2,500 crore?
Why I am saying that first two quarters is I do have some intention of getting some employees into the bank.
Right.
Especially the specialized people, to take care of various specialized positions in the bank. That will not add to the cost because the lowering of the cost in the last, say six to seven quarters has been substantial and that will continue. It will not add to the cost, but yes, INR 2,500 crore, if you are considering, it is a fair estimate.
Great, sir. Sir, other operating costs, this time it has gone up around 13%, 14%. Similar kind of growth we can see for next year?
We will try to contain the operating costs, definitely. I think, it will definitely average out.
Got it. Lastly, on the provisions, if you can, you know, help us, what should we, you know, expect on the provisioning as a whole without taxes?
We have, I don't know how many quarters we have, delivered a zero credit cost situation.
Yeah, sir. For us, the more the merrier, you know.
I believe we still have some amount of NPAs in pipeline, which will be recovered in the coming quarters.
Right.
I believe that provisioning will not be something which will be alarming. I cannot predict at the moment. Even I had said last year that I cannot predict, but we maintained a zero credit cost situation.
Great, sir. Thank you so much. I understand that you have given a conservative growth guidance.
No, that is essentially because of the situation that is going around.
Great.
I gave the same similar kind of guidance last year, and I think we overachieved by several basis points.
Correct, sir. Correct. Hopefully this time also we do the same, and congratulations and all the best for the next year.
Thank you. Thank you very much.
Thank you so much. Ladies and gentlemen, in order to ensure that the management will be able to address all the question from the participant, we request you to kindly limit your question to two question per participant. If you have a follow-up question, you may rejoin the queue. Our next question comes from the line of Sonal from [audio distortion]. Please go ahead.
How are you? Congratulations on good set of numbers.
Thank you, Sonal Ji.
sir, I had couple of questions, if you allow me. Can I ask three?
Yes, please.
Good. Sir, firstly, you know, your miscellaneous income has fallen substantially. Why and why? Was there any one-off last year in Q4 or is there any one-off this year in Q4 because of it had fallen? That's my first question.
I answer this question first?
Please.
Other income, other income has fallen because of the one-time provision of INR 180 crore for Grameen Bank. That EDB amalgamation with our Grameen Bank, that was taken in the other income head. That is the reason. Otherwise we are almost at par with last year.
You're saying that your other income, I could not actually fully understand. Your other income has fallen. What is to do with Grameen Bank? I could not follow.
The impairment of the investment in Grameen Bank because of the amalgamation of EDB as per the instructions and the guidance of NABARD. We had to make an impairment of INR 180 crore on account of this amalgamation. You know Grameen Bank is a sponsor. We are the sponsors of J&K Grameen Bank. Ellaquai Dehati Bank, EDB, which was sponsored by SBI, was amalgamated with us. That bank was in a very bad state. It was in a very bad state. In fact, it had eroded entire net worth. While we should have not been required, we had represented with all the authorities, including Finance Ministry.
It was a policy decision that was taken for all the banks, all the regional rural banks that were amalgamated. On account of that, we had to take an impairment, and that was classified in the other income head. That is the reason it went down.
Sir, when you talked, second question, when you talked about the, you know, the increase in employee cost, you know, what is the increase in employee cost? Initially you said it will fall, then you said you will hire, you know. If you could just give some idea, is it going to increase in absolute terms compared to FY 2025/ 2026? Is it going to be lower or if increased, you know, what is the like, what kind of percentage, rough?
It will not increase. It will not increase.
Okay.
When I say that, I will hire the additional see, it's a very simple arithmetic when you hire in a bank. You lose people on account of retirement who are high paid, individuals. When you hire, they come at a lower cost. Obviously the cost will not go up. Cost is definitely going to go down. We still have, a substantial number of people retiring this year. Also the, as I mentioned, the cost of, the pension, liabilities that we have, that has been shifted to NPS. That is the reason why I said that employee cost will not go up. Employee cost will steadily come down.
The rate of reduction might be slightly reduced if we hire people, and that also is not going to happen for the first two quarters of next year. If we are able to hire, the impact will come only in the third and the fourth quarter.
Sir, just to put things in context, you had almost a INR 2,500 crore employee cost this year, INR 2,480 crore, and this quarter is INR 509 crore. There was no one-off in this INR 509 crore, right?
No, no, no. No one-off.
Okay.
Oh, sorry, sorry.
Typically-
Sorry, there was a reversal of.
INR 153 crore in Q4.
That was on account of?
Retired, discount rate change in retirement.
The discount rate change in retired retirement benefits. Because of that, we had a one-off reduction of INR 153 crore in this quarter. Right.
Q4 is typically your peak employee cost, you know.
Correct. Correct. Correct.
You're saying overall on a yearly basis, this INR 2,500 crore number is unlikely to grow even as your loans grow by, you know, 12% or whatever number?
Yes. Yes.
-is possible.
Yes. Yes. It's not going to grow. Right.
Sir, you had talked about two more. You know, you had talked about the large number of changes in the bank, you know, some time back. Some things progressed well, and, you know, because those changes, you are actually expecting to accelerate your growth at some point of time. So where are we in the cycle? Are we in the late stages of those changes? Are you still in the early stages of those changes? I missed your ROA guidance. If you could just repeat that for us. Thank you.
ROA, we are going to remain where we are, 1.37%. We wish to maintain it at that. You talked about the initiatives taken. I guess, I have lost count on the number of initiatives that we have taken this financial year, and very happy to share that all the initiatives are now in place and functioning. I mean, they are not in any stage. They have started functioning. For example, we have the clusters, the change in the reporting structure of cluster heads. We have the CPCs in place. We have all those control mechanisms that we needed to apply in the bank. A host of all those initiatives were taken early and also, the initiatives related to technology also, getting many additional softwares which will help us in generating more business.
Most of them have been already put in place. For example, we have a end-to-end digitized loan journeys now for all loans, not only retail loans, all loans. These are certain initiatives which have already been completed, and they have started showing results. The TAT in case of our corporate, mid-corporate and SME loans have come down substantially in the last quarter. Now this year we intend to consolidate. Instead of initiating more such initiatives, new initiatives, we intend to consolidate on the initiatives already taken, ensure that they are functioning at its best and efficient best, and get the maximum out of them. The HR initiatives, for example, I forgot to mention.
For the first time in the bank, we have completed the entire set of promotion exercise for the bank within March. Everybody has been placed in their new positions, start doing business from the very first month itself, and it has shown result. The first month figures that I have with me, end of April, they are far better than any April of previous years. If you ask me if they are showing results, they are definitely showing results.
Therefore, sir, you should grow much faster than the system-wide loan growth. Let's say the India, entire country's loan growth grows at 12%, 13%, 14%. Do you expect to grow much faster than the system loan growth, or you expect to match it or grow lower than that?
See, I gave these conservative figures only because of the environment around. If the system grows at 16%, I would definitely want to grow more than 16%. That is given. You can take it from me.
Understood. Thank you, sir.
Thank you. Reminder to all the participants, please limit the question to two question per participant. If you have a follow-up question, you may please rejoin the queue. Our next question comes from the line of Darshan Jhaveri from Crown Capital. Please go ahead.
Hello. Good evening, sir. Thank you so much for taking my questions, sir. Lot of my questions have already been answered. Just like, sorry to harp on, you know, our guidance. Sir, ROE in Q4 also I think we were able to do around 1.7%, 1.8%. I understand you want to be conservative, but just for us, we can at least expect our Q4 to be maintained, right, in terms of ROE, sir?
Quarter -on -quarter you are saying?
Yeah. Just, we should not have a decline, sir.
What I gave the guidance is not for the quarter, for the year ahead. Definitely, we would like to see, not every quarter we will have a profit improvement of 33%, right? We need to keep that in mind. Yes, our endeavor will always be, I told you in the beginning only, whatever guidance we have given, they are the base guidances that we are trying to give. The ultimate numbers would be much better, that I can assure.
Oh, okay. Okay. Fair. Fair enough, sir. Fair enough. Yeah, that's it from my side, sir. Thank you.
Thank you.
Thank you. Our next question comes from the line of Mona Khetan from Club Millionaire PMS. Please go ahead.
Hello. Hi, [Amit].
Yes, please, Mona.
Hi, sir. Good evening and congrats on the quarter.
Thank you.
Firstly, I think it was a great move to not to pay out dividend in order to conserve capital. I have two questions in particular. Firstly, when I look at your segmental growth, the financial market book has grown very fast in the last one year, almost doubled. The mix has almost doubled. What is driving this growth? What constitutes, what are the constituents in this book that is driving the growth?
If you look at the entire industry, this financial year has been excellent for the NBFCs. The NBFCs have grown, NBFCs grow when they get a lot of banking support. We have, if you compare it with previous years, we have actually been able to have some good NBFCs onboarded with good returns from them. This year we have had some very good NBFCs on highly rated NBFCs, that is the reason why this segment is showing a, I mean, higher growth.
Does that also include the co-lending book that you do and, what could be the size, if at all, this year versus last year of the co-lending book within this?
See, last year we started co-lending very late. Last year the book has I mean, it is still yet to give any substantial numbers. This year, we have a target of, say around INR 1,000 crore to start with, and we have a board approval of going up to INR 5,000 crore. Then, we will wait and watch how it actually pans out because the co-lending activity has just started late in the fourth quarter.
Okay. You think that, I mean, of the INR 20,000 crore of financial market book co-lending is not a very material part?
No, no. Not yet. Not yet. Not yet.
Okay. This is mostly driven by the NBFC, lending towards NBFCs.
Yes, yes.
Okay. Secondly, you mentioned about this impairment provision of INR 180 crore for Grameen Bank. This is not related to Q4, right? This is mostly for the full -year, which is H1 you made some provisions. Is that a correct understanding?
Yes, yes. It is for the entire year.
Okay. This year it's this is not part of the other income line, correct?
This year-
This quarter. I mean this quarter, sorry.
No, no. Not this quarter. Not this quarter.
Okay. Noted. Noted. Then finally, if you could throw some light on the ECL impact that may, as a percentage of net worth, what could be the impact in your case?
See, I'll before giving you any kind of a number, I would like to mention that each bank will have its own model, a board-approved model for calculation of ECL under the overall guidance of the circular issued by Reserve Bank of India on this. It will be, it will not be very accurate if I say what kind of provisioning this bank will have to make for the period of five years because on both counts with the data available for the banks and the kind of improvement that the banks can make over a period of time on many aspects, especially on stage two and stage three ECL requirements.
I can say that, if I take the base requirements of the circular given by RBI, for a period of five years, I think, our bank will need to provide for around INR 1,600 crore-INR 1,700 crore.
Okay. Just one final thing. Could you.
I'm sorry to interrupt you, ma'am.
Sure.
could you please rejoin the queue. We have a lot of participants. Thank you. Our next question comes from the line of Arman from Bluesky Fintech. Please go ahead.
Yeah. First of all, congratulations for good set of numbers. I just want to reiterate on could you just say again the guidance numbers which you said in the beginning?
Yes. Thank you, Arman. The guidance number, the conservative guidance number that we have given credit and deposit both, at the same levels of last year guidance, that is 12% and 10%. CASA at 45%. NIM around 3.5%. ROA to maintain around the current levels. ROE would be around 16%. Gross NPA below 2.25%.
Below 2.5%. Okay.
2.25%.
Yeah.
2.25%.
Okay. Like, sir, I have already previous participant have already asked because ROA for our Q4 exit is already very high and we are giving comparatively a very conservative guidance. So any anything more to harp upon it? That's it from my side.
See, I told you we had a very good profit growth during the last quarter of this year, the last financial year. It was almost a 33% jump from December profits.
Yes.
I do not expect every quarter to have a 33% jump on profits. That is the reason I have given. Of course, like you would like to see the ROA to be at around 1.7%, 1.8%. I would like it to be better. The guidance that I give is based on some realistic, conservative assessment. You can rest assured that it is not going to be worse than this. It is going to be better than this.
Okay. Okay. Thanks. That's it from my side. Thank you.
Thank you.
Thank you. Our next question comes from the line of Sunil Jain from Nirmal Bang Securities. Please go ahead.
Yeah, thanks for giving this opportunity. My question relate to NIM guidance of 3.5%. If you see the scenario, the rate cycle is now over, so you will be getting some benefit in the coming quarters. Is there anything more you need to factor in before it start reversing?
See, the answer to your question is a little bit deep considering the fact that why we have given a 3.5% guidance on NIM. You are very right, it is likely to improve because the interest rates on advances have already been passed to, and the deposit rates benefit is likely to accrue in the coming quarters. The fact that this geography had a difficult time last year and the personal segment, which is more or less majorly contributing to our interest income from this geography was largely affected last year. We compensated it with different strategies, which I've already mentioned earlier. The impact of that will at least be there for some time.
The low interest income that we have been able to generate from Jammu & Kashmir, which will take around one and a half quarters to be regenerated. That is the reason I have given a NIM guidance of 3.5%. Otherwise, I must say that it will be on a upward trend.
Okay. Sir, second question, if you can share the data about SMA-1 and SMA-2 data?
Yeah. I'll just Give me a second. Total SMA, if you look at March to March. March 25, we had INR 23,087 crore. That is 22.33% of advances as SMA, which has come down to INR 14,724 crore. That is 12.07% of the advances. That is almost 10 percentage points reduction in SMA. From December to March also, we have a reduction from 12.58% to 12.07%. Now, SMA-1 has come down from 5.54% to 4.44% March Y-o-Y. SMA-2 is slightly higher at 0.71%, which was 0.35% last year.
From December, which, the SMA-2 was 2.92%, we have been able to reduce it to 0.71%.
Okay. Okay. Okay, sir. Great. Thank you very much for your answers.
Thank you. Next question come from the line of Keshav Karwa from White Pine Investment Management Private Limited. Please go ahead.
Sir, thank you for the opportunity. Just wanted to know that your yield on advances has been declining, so how are you planning to improve these yields for FY 2027?
The yield has decreased on account of the repo rate cut that has happened in the last financial year. Also I mentioned that, we, because of the situation in this state, we had a hit on our retail advances. The financial year 2026/ 2027, we are concentrating on retail advances, including what we did in agriculture. The retail advances have high returns, so definitely the yield is going to improve this year.
Last year, largely, we had to compensate the low growth in this geography by doing some corporate advances. You know that, high rated, highly rated, which are the only ones we target. The highly rated corporates, the rate of interests are very, very competitive. Slightly, that has impacted the yield. Going forward, the focus and the concentration is on the 2/3 part of our loan book, that is the retail. We are going to concentrate on that to improve our yields.
Okay, sir. Thank you.
Thank you. Next question comes from the line of Pranay, an individual investor. Please go ahead.
Congratulations on an excellent result, Mr. Chatterjee, and it's a testament to your leadership that our bank is doing so well despite all the uncertainties and challenges starting early in last year. Sir, my first question was to understand the competitive landscape in the state of Jammu & Kashmir. If you can just give us some color of what you are seeing in terms of the competitive intensity outside of the major markets such as Jammu and Srinagar. Are there a lot of new branches opening up in Pulwama, in Budgam, in Anantnag, and so on? How are you seeing that change, and how is it impacting the stickiness that we have with our customers and our efforts to attract new customers to the bank?
Thank you, Pranay. Pranay, thank you very much for your kind words. Yes, the competitive landscape has changed quite a bit in Jammu & Kashmir. While we still maintain a market share of 60%, the branch share is only 37%. Now, that 60% might sound very good as of today, but it has come down substantially from last two, three years. Last year, we did a lot of improvement in our customer services, and we also opened branches at strategic locations in Jammu & Kashmir. To answer a part of your question, yes, other banks are also opening branches, but mostly in the urban centers of Jammu and Srinagar.
Yes, a few branches have been opened in the areas which you mentioned, but these are the places where we actually still hold close to 80%-85% market share. There, I don't see much of a competition. The competition which is coming is largely coming in Srinagar and Jammu. In the last one year, I don't have the RBI data, but I believe that we have been able to restore a bit of lost market share that we have lost in the last few quarters in the last financial year. I'll be waiting for the numbers to come, but we have been able to get back quite a few accounts which we had lost earlier.
Thank you, sir, for that. I'm very happy with the progress that the bank is making. Sir, just in terms of customer services, just to sort of highlight on that, like, I've spoken to a lot of our customers, and I've personally gone through our app, the mobile app that we have on Apple and on Google Play Store. While there have been improvements, sir, I think you would agree that there is still a large scope for us to further improve on the UI/UX, on the ease of doing business, for a retail customer, whether it is a household in Jammu & Kashmir or a horticulture farmer and so on, or a tourism business person.
If I could just request your team, your technology team to work a little harder on the mobile app and other ancillary service touch points at the branch level, I think we could do much better than we are doing, sir.
Thank you. Thank you very much for the suggestion, Pranay. Just want to mention two things on this. See, we had had a revamp of the mPay Delight+ app that we have recently, about 12 months ago. Now we have a fairly robust app, the first aspect that we are currently looking at is totally having a 100% uptime for all the systems that we have, including the app. That is our first aim. If you have been following the bank and the app closely, you would have noticed a marked difference in the last couple of months or three months maybe in the uptime.
That was our first aim, and we have been able to contain the downtime to quite a bit. The second part is improvement in the facilities, in the app, the services. That is second, and we are working on it. We are closely watching what the other banks have in offer. Not only that, we have a few good things coming up on our own. Definitely, we are working on both counts. You must be, I mean, in a couple of months time, you will be having a much better experience on the app front.
Yes. Thank you so much, sir. I'll come again next time. Thank you so much, and best of luck for the new year, sir. Thank you.
Thank you. Thank you.
Thank you. Our next question comes from the line of Sonal from Prescient Capital . Please go ahead.
Hi, sir. This is Sonal Minhal. I hope I'm audible.
Yes, Sonal.
Yes, you are.
Sir, two questions from my side. I see that the gross NPA under the category of trade in your sector-wise trade deployment has come down significantly quarter-on-quarter. Last quarter, the gross NPA was INR 765 crore, and this quarter the number is INR 597 crore. Could you just give some color on what is happening in this particular category? That's my first question. Yeah.
See, I mentioned in the beginning itself, we have been very focused on improving and recovery mechanisms. We have been very closely monitoring the accounts and focusing on recovery efforts. Like we have been able to reduce NPAs and SMAs. We have been able to contain the SMAs which have not given rise to any further slippages. The slippage ratio is also contained. That is one aspect. A bit of it also would be a technical write-off that we have done in the last quarter. A few small accounts have also been written off, where the NPAs have been there for more than three to four years, where recoveries have not come. It is a combination of both.
Got it. My broader question was which category amongst these is sticky? Basically, when we talk about trade, real estate, talk about infrastructure, and services. Are we seeing some categories here in terms of sectors where the NPAs are sticky?
To be very honest with you, Sonal, I have been trying to find out one category or one segment which is sticky for the last one and a half years that I have been here. I have not found it. Very, very honestly, I'm telling you, I have not found any particular category which is sticky. The very fact that even the stickiest of all categories in the country, that is the Agri, we have the least NPAs in Agri.
Yes, sir. That's right.
I would not categorize any segment as sticky.
Understand that, sir. Sir, from a color of the NBFCs you're lending to in the financial markets, could you highlight broader sector segments you are lending to in financial markets? Like are there more MFIs? Are there more, like, CV NBFCs? If you could just enlighten us a little bit, that will help understand.
My CRO is smiling at me listening to your question.
Okay.
No MFIs, zero MFIs. We have not lent to any MFI. First of all the companies that we have lent to, the NBFCs are all triple rated. Number one. Number two, they are primarily in the housing sector.
Railway. IRFC.
In the public sector, like IRFC. Then, there is a bit of it in gold loans also. Primarily in these areas.
Also some general consumer related NBFCs. I would not name the NBFCs, but there are a few. One thing is common, all of them are triple rated.
Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Reminder to all the participants, if you wish to ask a question, you may press star and one. Our next question comes from the line of Nirav Sheth from Emkay Global Financial Services. Please go ahead.
Congrats, Amit. This is good set of results. I'm going to focus less on this year. I'm not looking at this as a sort of guidance, but given where we are in terms of our cleaned up balance sheet, you know, stabilizing liabilities, looking at non-Jammu book. On a three-year perspective, sir, what is the kind of growth, business growth that you want to target? This is more aspirational rather than saying that you're not going to hold it to these numbers. Assuming that there are no macroeconomic setbacks, you know, and it's not that you've got a very big book. What do you think you would aspire to gun for?
Currently, thank you, Nirav, for the kind words. If you look at our business levels, is at around INR 2.9 lakh crore at the moment.m If you ask me three years time, it's not aspiration. Our aim and what we have with us in the bank, we aim to cross INR 5 lakh crore by then. That is the first aim, of course, depending on the environment and market situations. In three years time, we will definitely be crossing INR 5 lakh crore of business.
Excellent. That obviously means that, you know, we're looking at somewhere between 17%-18% sort of growth rate in advances and all to get to those kind of numbers.
Definitely.
Which is obviously what you've been delivering. Yeah.
Definitely.
Excellent. That is great to hear, given your ROEs and, you know where you are. I think, all the best to you, sir.
Thank you, sir. Thank you very much.
Thank you. The next question comes from the line of Sonal with Prescient Capital. Please go ahead.
Hi, sir. Sonal this side again. I think, I missed asking third question. I just wanted to understand the credit cost guidance for next year.
The toughest question you have asked me. See, I mean, people have been asking me how long are you going to have a zero credit cost. So-
Yes.
I always say that I would like to continue with a zero credit cost as long as possible. I guess the credit cost will be somewhere around, say, 0.1% or 0.2% maximum, not more than that.
Got it, sir. This is well below whatever the benchmarks are basically for the sectors you work in.
Yeah.
Yeah, which is good. All right, sir. That's it from my side, sir.
Thanks.
Thank you.
Thank you. Thank you.
Thank you. The next question comes from the line of Pranay, who's an investor. Please go ahead.
Yes, sir. Thank you once again for this opportunity. Sir, I just wanted to again ask what the credit cost, not from an immediate 12-month perspective, but given that first of all the bank, the asset quality across India has, w e're sort of in this Goldilocks scenario where slippages are very low, especially for a bank like ours, where we don't have exposure to MFIs or credit cards or any significant unsecured loan exposure. Our unsecured book is very different from that of other banks. Our slippage is still at 0.6%-0.7%, which is commendable.
After it, from a three, four-year lens, sir, I think it's safe to say that we should normalize a much higher credit cost than we've been achieving right now because of all the upgradations and reversals. How do we see that evolving in another three, four years? Because if our credit cost goes to our slippage ratio is what 0.5%, 0.6%, 0.7%, then our ROE sort of ROA, ROE metrics look different. How do we see that when we cross that over a period of time?
See, if I have to do some analysis, then I'll have to look at my historical data. If I look at my historical data, I am unable to assess a credit cost which is more than 1% in the next three to four years. 1% is also a very, very upwardly optimistic or pessimistic figure, if you may say. If I had seen some inherent weaknesses in my book, if I had loans in the book, which also is, say, susceptible to the changing business environment or the economic environment, more or less we are insulated on those, because of the portfolio that we have currently, and you are right on that.
I don't see the credit cost being a factor to be discussed even in the next two to three years. I don't believe so. On top of it, we have a very robust I mean, we have developed a very robust recovery mechanism, and we had added another initiative to that. We have introduced the concept of zonal IRBs. Now, zonal IRBs are specialized outfits which cater only for recovery. The setup that we have, the way we have been able to tackle the slippages and the NPAs and the recoveries, I don't believe, at least at the moment, I don't believe that credit cost will be a cause of concern for us.
Thank you, sir. Our last question for the day comes from the line of Mona Khetan with Club Millionaire PMS. Please go ahead.
Yeah, hi, sir. Thanks again for the opportunity. I just have two clarifications on the margin and on the credit cost. While you've guided for 3.5% kind of margin against 3.6% this year. I see that there are levers in terms of, you know, maturity of RIDF investments, et cetera, as well as some more scope in terms of deposit repricing, et cetera. To that extent, don't you think the 3.5% or a decline versus this year is a very conservative guidance, or how do you look at it?
Mona, I would be happy to give a guidance of 3.5% and end up at 4%.
Okay.
Right. Why I have given this guidance is based on what I have already said. The income that had been generated in this bank in the last financial year and before that. I mean, not 2025/ 2026. 2024/ 2025 and 2023/ 2024 essentially came from the retail loans that we have in Jammu & Kashmir. Now that because of last year's difficulties in this geography, we did not have that kind of a income. That part, I believe, is going to continue for some time. The growth that we are going to have in the coming years, and you are right, the RIDFs being maturing. We have the low cost investments which are going to be for us to invest further. The margins would be better, definitely better.
I am still not very sure as to when the returns from the retail advances will start to accrue. It might start accruing very soon. I have already seen green shoots. Once that starts, maybe next quarter I will be able to revise my guidance on them.
Noted. That's very clear. Secondly, on the credit cost bit, you mentioned a 0.1%-0.2% kind of credit cost. Does that factor in the impact of ECL provisions as well that you'll be making over the next five years?
No, no. That doesn't-
Okay.
Factor in the impact of ECL.
Got it. That's all from my side. Thank you so much and all the best.
Thank you.
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Anand for closing comments.
Thank you, sir, for the elaborated call that we had, and thanks to all participants as well. On behalf of MK and the management of Jammu & Kashmir, I thank all the participants for joining. Happy evening and have a good day. Thank you.
Thank you.
Thank-
Thank you, Anand. Thank you to all the participants. Thank you.
Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you, everyone.