Jammu & Kashmir Bank Ltd. · NSE:J&KBANK
Jammu & Kashmir Bank — 16th CLSA India Forum 2013
66 slides from Jammu & Kashmir Bank's conference presentation, Nov 20, 2013
Slide 1: J&K Bank - 16th CLSA India Forum
&K Bank Celebrating 75 years of Service ~ 16TH CLSA INDIA FORUM NOVEMBER 20, 2013 GURGAON Oo ° oO Eg 6 . Qa © g oO ae © a@ ; * Oo * . P ow ° OOo ‘Be eno he ce; Pain. © Oy °
Slide 2: Slide 2
Slide 3: An Overview
An Overview
Slide 4: Basic Facts
Basic Facts Incorporated in 1938 Listed on NSE & BSE Rated “P1+” by S&P: highest degree of safety Four decades of uninterrupted profitability and dividends Adjudged “Best Bank” in the “Old Private Sector Bank” category by Financial Express for FY ended Mar, 2011 Adjudged “Best Bank” in the “Old Priv
Slide 5: One of a Kind
One of a Kind * Private sector bank, despite government’s majority holding = Only private sector bank designated as RBI’s agent for banking business * Conducts banking business of the Central Government: — Direct Tax collection — Indirect Tax collection — Utility payment collection Notes
Slide 6: Facets and Roles
Facets and Roles * Commercial Bank * Development Financing Institution » Financial Services Provider
Slide 7: Regional Goliath
Regional Goliath * Dominates a region — 639 branches in the state — 656 ATMs * Controls a geography — Branches in every block of J&K * Serving a community — 8.6 million Adult population — 7.5 million Account holders of J&K Bank * Business leadership in J&K Notes
Slide 8: Shareholding Pattern (%)
Shareholding Pattern (%) (08.11.2013) & Government of J&K 3.29 0.57 3.67 @ Foreign Inst. Investors 10 7 ~~ “™ Resident Individuals @ Bodies Corporates/ Insurance Cos/Clearing Mem. /Banks 28.53 & Indian Mutual Funds 53.17 @ Non-Resident Indians
Slide 9: Best of both Worlds
Best of both Worlds * Private Bank in terms of earnings, and * PSU Bank in terms of cost structure = Public ownership - Stability - Safety = Private functioning - Efficiency - Growth Notes
Slide 10: Subsidiaries and Investments
Subsidiaries and Investments « J&K Bank Financial Services Ltd — Providing Depository Services — Offering Stock Broking Services = Insurance JV with MetLife International « Distributor of — Life Insurance products; partner: MetLife — General Insurance; partner: Bajaj Allianz =» Shareholder in J&K Gr
Slide 11: Consistent Growth & Stability
Consistent . Growth & 5K Bank Stability
Slide 12: Decade of Development - I
Decade of Development - | (in Rupees Billion) Year Particulars ended Mar, 04 Net Worth 15.94 16.65 17.99 20.09 22.81 Deposits 186.61 216.45 234.85 251.94 285.93 Advances 92.85 115.17 144.83 170.80 188.83 Investments 84.51 90.89 89.94 73.92 87.58 Total Income 18.23 16.32 18.17 20.60 26.79 Net Profit
Slide 13: Decade of Development - I
Decade of Development - | (in Rupees Billion) Particulars Net Worth 26.23 30.10 34.79 40.93 48.65 Deposits 330.04 372.37 446.76 533.47 642.21 Advances 209.30 230.57 261.94 330.77 392.00 Investments 107.36 139.56 196.96 216.24 257.41 Total Income 32.33 34.73 40.78 51.70 66.21 Net Profit 4.10 5.12 6.1
Slide 14: Decade of Development - II
Decade of Development - |! (%) Net Interest Margins 3.58 2.90 2.83 2.98 2.94 Interest Spread 3.26 2.61 2.61 2.79 2.64 Yield on Advances 9.50 8.42 8.48 8.58 10.44 Yield on Investments 8.75 7.38 6.23 6.20 6.70 Cost of Deposits 5.26 4.61 4.55 4.50 5.85 Return on Assets 1.92 0.47 0.67 0.96 1.10 Return o
Slide 15: Decade of Development - II
Decade of Development - |! Net Interest Margins 3.10 3.04 3.69 3.84 3.97 interest Spread 2.84 2.79 3.46 3.57 3.74 Yield on Advances 11.53 10.65 10.86 12.12 12.59 Yield on Investments 6.79 5.71 6.34 7.29 7.56 Cost of Deposits 6.22 5.24 5.36 6.48 6.87 Return on Assets 1.09 1.20 1.38 1.56 1.70 Return o
Slide 16: Decade of Development - III
Decade of Development - III Cost to Income Ratio (%) 31.81 | 47.59 | 43.32 | 40.13 | 38.24 CD Ratio (%) 49.75 | 53.21 | 61.67 | 67.79 | 66.04 CASA Ratio (%) 30.26 | 32.00 | 34.17 | 37.02 | 39.16 Business per Employee (in Rupees billion) 0.04 0.05 0.06 0.06 0.06 Net Profit per Employee (in Rupees mil
Slide 17: Decade of Development - III
Decade of Development - II! Cost to Income Ratio (%) 37.81 | 37.60 | 39.77 | 36.92 | 35.33 CD Ratio (%) 63.42 | 61.92 | 58.63 | 62.00 | 61.09 CASA Ratio (%) 38.11 40.69 | 40.48 | 40.71 39.23 Business per Employee (in Rupees billion) 0.07 0.08 0.09 0.09 0.11 Net Profit per Employee (in Rupees million
Slide 18: Decade of Development - IV
Decade of Development - IV (%) Operating Expenses to AWF 1.54 1.41 1.36 1.35 1,31 Operating Expenses to Total Income 16.08 19,62 19.00 18.08 15.06 Operating expenses to Other Income 97.17 336.00 | 259.00 232.47 | 164.73 Staff Cost to Total Income 9.24 10.87 10.46 10.69 8.43 Interest Earned to AWF 8.
Slide 19: Decade of Development - IV
Decade of Development - IV (%) Year Year ended ended Mar, 11 Mar, 13 Operating Expenses to AWF 1.34 1.44 1.70 1.56 1.60 Operating Expenses to Total Income 14.56 16.62 18.61 15.52 14.94 Operating expenses to Other Income 192.15 | 138.71 208.06 | 240.08 | 204.46 Staff Cost to Total Income 8.62 10.55 1
Slide 20: Decade of Development - V
Decade of Development - V Earning per Share (in Rupees) 83.78 23.74 36.48 56.62 74.26 Net Asset Value / Book Value (in Rupees) 328.61 | 343.54 | 371.20 | 414.36 | 476.28 Adjusted Book Value (in Rupees) 300.16 309.93 | 343.58 374.43 434.30 Price to Book Value Ratio 1.50 1.06 1.21 1.73 1.35 Price to A
Slide 21: Decade of Development - V
Decade of Development - V Earning per Share (in Rupees) 84.54 105.69 126.90 165.69 217.64 Net Asset Value / Book Value (in Rupees) 541.04 621.00 | 717.58 | 844.34 1003.49 Adjusted Book Value (in Rupees) 481.74 | 607.73 706.60 | 834.16 | 992.09 Price to Book Value Ratio 0.91 1.22 1.13 1.00 1.33 Price
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Slide 23: Financial Results H Sep, 2013
Financial Results H 1 Sep, 2013
Slide 24: Financial Results - Sep, 2013
Financial Results - Sep, 2013 (in Rupees Billion) Interest Earned 16.50 | 15.01 | 9.94% 16.50 16.24 1.57% Interest Expended 9.68 9.48 2.11% 9.68 9.69 -0.15% Net Interest Income 6.82 5.53 | 23.37% 6.82 6.55 4.11% Other Income 0.99 0.91 9.41% 0.99 0.92 7.86% Operating Income 7.81 6.44 | 21.40% 7.81 7.
Slide 25: Financial Results - Sep, 2013
Financial Results - Sep, 2013 (in Rupees Billion) Interest Earned 32.74 | 29.77 | 9.99% | 61.37 Interest Expended 19.37| 18.88 | 2.58% | _ 38.21 Net Interest Income 13.37 | 10.88 | 22.83% | 23.16 Other Income 1.92 | 1.84 | 4.03% | 4.84 Operating Income 15.28 | 12.73 | 20.10% | 28.00 Operating Expens
Slide 26: Ratio Analysis - I
Ratio Analysis - | —- FARE Net Interest Margins 1.10 2.14 Annualized| 4.33 3.94 4.15 4.25 3.88 3.97 Interest Spread 1.05 0.93 1.00 2.05 1.84 Annualized 4.18 3.71 4.02 4.10 3.68 3.74 Yield on Advances 3.09 3.18 3.04 6.13 6.32 Annualized | 12.35 | 12.71 | 12.16 | 12.26 | 12.63 | 12.59 Yield on Investm
Slide 27: Ratio Analysis - II
Ratio Analysis - |! Return on Assets 0.46 0.45 0.47 0.94 0.87 Annualized | 1.86 1.79 1.89 1.87 1.73 1.70 Return on period end Net Worth | 5.53 5.85 5.95 11.15 | 11.19 Annualized | 22.11 | 23.39 | 23.81 | 22.30 | 22.38 | 21.69 Return on Average Net Worth 5.68 6.02 6.14 11.81 11.85 Annualized | 22.74
Slide 28: Ratio Analysis - III
Ratio Analysis - |!! Cost to Income Ratio (%) 36.45 | 34.32 | 35.62 | 36.05 | 34.16 | 35,33 CD Ratio (%) 67.22 | 62.40 | 67.03 | 67.22 | 62.40 | 61.09 CASA Ratio (%) 38.50 | 38.16 | 40.24 | 38.50 | 38.16 | 39.23 Business per Employee (in Rs. billion) | 0.11 0.10 0.10 0.11 0.10 0.11 Net Profit per Em
Slide 29: Ratio Analysis - IV
Ratio Analysis - !\V Operating Expenses to AWF (Ann.) 1.63 Operating Expenses to Total Income 16.28 | 13.88 | 15.50 | 15.90 | 13.75 | 14.94 ati nses to Other Income 286.33 | 242.95 | 288.53 | 287.39 | 235.89 | 204.46 Staff Cost to Total Income 10,10 8.98 10.23 | 10.17 8.89 9.85 Interest Earned to AW
Slide 30: Ratio Analysis - V
Ratio Analysis - V Earnings per Share (in Rs) 62.43 55.60 63.52 125.95 106.36 Annualized 249.73 | 222.41 | 254.07 | 251.90 | 212.72 | 217.65 Net Asset Value (in Rupees) 1129.44 | 950.71 | 1067.01 | 1129.44 950.70 | 1003.49 Adjusted Book Value (in Rupees) 1113.44 | 939.29 1055.43 | 1113.44 | 939.29 |
Slide 31: Deposits Compositional Break-up (Sep 13)
Bank as Whole (%) Deposits - mCurrent Compositional a saving Break-up = Term (Sep 13) In Rest of India (%) = Current = Saving «Term Within J&K State (%) 10% = Current m Saving 47% 43% = Term - ~ J&K Bank 2° Notes
Slide 32: Advances Sector-wise (Sep 13)
Bank as Whole (%) = Agriculture Advances- atade Sector-wise = Personal = SME (Sep L 3) = Corporate 35% = Others In Rest of India (%) = Agriculture = Trade = Personal mSME = Corporate 82% = Others Within J&K State (%) = Agriculture 2% 18% = Trade = Personal m= SME = Corporate = Others
Slide 33: Restructuring (Sep 13) - I
Restructuring (Sep 13) - | (in Rupees billion) 1 Balance at the start of the period 14.90 13.66 Additions during the period 2.87 10.61 oo Reductions/ Reclassification during the 2.82 9.36 Balance at the close of the period 14.95 14.90 2 NPA’s from Outstanding Restructured Advances 1.44 1.75 3 Provis
Slide 34: Restructuring (Sep 13) - II
Restructuring (Sep 13) - I! = Outstanding Restructured portfolio well distributed among nine sectors * Total Outstanding NPA’s from Outstanding Restructured Portfolio Rs 1.44 billion (10.31 %), for which provision of Rs 1.19 billion available Classification of Outstanding Restructured Portfolio = St
Slide 35: Investments (Sep 13) - I
Investments, (Sep 13) -! (in Rs billion) ™Heldto Maturity 71% "Held for Trading 0.01 % G Available for Sale 29 % Duration 10 3.57 1.7% 3.19 5 PP aa» ap 0 ; HTM AFS Total Notes
Slide 36: Investments (Sep 13) - II
Investments, (Sep 13) - |! (in Rs. billion) m@SLR Securities 67 % ®™ Non-SLR Securities 33 % Yield (on daily average balances) 7.71 7.73 7.72 10 +; 5 SLR Securities Non-SLR Total Portfolio Securities 34 Usk Bank Notes
Slide 37: Industry Review
Industry Review
Slide 38: Return on Assets (%)
Return on Assets (%) For HY ended Sep, 2013 2.0 1,87 1.5 0.66 0.69 0.69 0.71 9.74 0.0 > es Nd 2 “os ¥ et IS & So, - os & é a © we ‘ &
Slide 39: Return on Equity (%)
Return on Equity (%) For HY ended Sep, 2013 * | 23.62 20 13.2 ° 10.76 11.18 11.47 11.77 12.23 12.43 10 ~ 8.06 5 0 4 > FF OS HF ie oe e r & Usk Bank 37 Notes
Slide 40: Cost to Income (%)
Cost to Income (%) For HY ended Sep, 2013
Slide 41: CASA Ratio (%)
CASA Ratio (%) As on Sep, 2013 50 a3 43.3 4358 45° ” 38.50 38.55 31.35 31.83 32.51 30 asg 26.77 7825 a0 | 18:76 0 cad Cath Catt Cah on Cah Ct Bt of So As av? o Vy Ye A wv ro oF pF HM yO wh VF wr rie VF w ve - Se / ~ J&K Bank 39 Notes
Slide 42: Net Impaired Loans (%)
Net Impaired Loans (%) As on Sep, 2013 3.83 4.0
Slide 43: Coverage Ratio (%): Among Highest in India
Coverage Ratio (%): Among Highest in India As on Sep, 2013 * g9.14 92-06 90 80 70 57.77 58.62 60.16 60.43 60 51.54 54-36 55.27 50 | 45:99 40 30 20 ' HH cad adh Gne® adh dt BD ah ch dt tt tt a ow o* g os oro oe ‘ore OP. oo we HOOT PHP oi? wre -. v7 ~ J&K Bank 4: Notes
Slide 44: Tier I Capital (%) (Basel III)
Tier | Capital (%) (Basel |!!) As on Sep, 2013 15 14,33 11.68 10.64 11.33 11.42 10 - 7.06 7.11 7.85 5 0 “a oe oo oo oe Y eS oo CS a oe oe of Fo a KO ge" oP gh? ne se yh va ss w we e oi sey w
Slide 45: Earnings per Share (Rs.)
Earnings per Share (Rs.) For HY ended Sep, 2013 150 + 126.0 100 — 50 f 40.1 25.7 12.1 129 13.8 14.0 16.0 20-6 0 gt ss rene Fe “, oe eo a ve om Se ae ae * ie re Notes
Slide 46: Book Value (Rs.)
Book Value (Rs.) As on Sep, 2013 1,663 1500 1000
Slide 47: Price to Book Value
Price to Book Value As on Sep, 2013 4.0 - 3.20 Notes
Slide 48: PE Ratio
PE Ratio As on Sep, 2013 25 ' 18.53 5.07 5 | 239 2.41 2.76 3-46 4.26 4.58 4.73
Slide 49: Dividend Yield (%)
Dividend Yield (%) For FY ended Mar, 2013 6 4.97 5 4.75 3.75 3.75 3.76 4} 338 2° 3 . > 1.79 1.91 2.00 0.88 0.99 1 0 v » & Aer s, a o ¥ ae oe oy ov S oe ww Fh eo oo as oe w Na aK Bank 47 Notes
Slide 50: Slide 50
Slide 51: J&K State - Potential for Growth
J&K State - Potential for
Slide 52: J&K State's Economy
J&K State’s Economy - Particulars J&K State All India / National Average Total Population (in billions) Area (in Sq Kms) Density (persons / Sq Km) Per capita Income (in Rupees) Population BPL (%) Literacy Unemployment Rate usK Bank 0.01 222236 124 30889 21.63 % 68.74% 4.9% 1.21 3287240 382 39143 27.
Slide 53: J&K State Economy
J&K State Economy - Amount in Rs billion Particulars 2009-10 2010-11 2012-13 Size of GDP 363.29 383.84 407.71 436.28 Contribution by Primary Sector 77.96 (22%) 80.61 (21%) 81.54 (20%) 89.70 (21%) Contribution by Secondary Sector 98.71 (27%) 99.80 (26%) 106.00 (26%) | 107.11 (24%) Contribution by Ter
Slide 54: J&K State Economy - Economic Reconstruction and its Impact
J&K State Economy - Economic Reconstruction and its Impact = GDP / economy in J&K State accelerating and is poised for further growth in future. Government spending and Private Investment on the rise = Record tourist inflow during last two years, more expected this year. Increased investment in tour
Slide 55: J&K State - Credit Gap
J&K State - Credit Gap « J&K accounts for 0.6% of India’s GDP, and yet absorbs only 0.30% of total national credit * J&K accounts for 1% of India’s population and yet accounts for only 0.2% of India’s personal credit * Credit in J&K needs to increase five-fold and Personal Credit in J&K has to tripl
Slide 56: J&K State - Potential for Horticultural Lending - I
J&K State - Potential for Horticultural Lending - | * Agriculture involves about 70 % of the population and contributes 23 % to the GDP, yet only 18 % of J&K Bank’s lending is to this sector. Horticultural production contributes about 45 % to Agricultural production and involves 3 million people = A
Slide 57: J&K State - Potential for Horticultural Lending - II
J&K State - Potential for Horticultural Lending - Il * Out of a total of around 300,000 apple growers in the State, Bank’s finance has been extended to about 84,000 growers so far. Tapping the remaining growers will generate credit of about Rs 50 to 60 billion more * Majority of the Apple growers ge
Slide 58: J&K State - Impact of Horticultural Lending on Profitability
J&K State - Impact of Horticultural Lending on Profitability * Current shortfall in Agriculture Sector Lending is Rs. 26.29 billion, which has to be invested in RIDF (Rural Infrastructure Development Fund)/MSME (Micro Small & Medium Enterprises) Bonds/RHF (Rural Housing Fund) @ 3 to 5 % for 3-7 year
Slide 59: Road Ahead
USK Bank Road Ahead
Slide 60: J&K Bank - Ground work done for growth
J&K Bank - Ground work done for growth = Capital Adequacy at 13.18 % (Basel Ill), Tier | 11.42 % & Tier l1 1.76 %. No constraints for raising Additional Tier | capital. Headroom of about Rs 45 billion more available to raise Tier Il capital = Made liabilities the driver * Insulated earnings from ext
Slide 61: J&K State - Business Strategy
J&K State - Business Strategy = Increasing lending in J&K, which is high margin, low volume * Leveraging our core competence of domain and geographical expertise. * Bridging Credit Gap in J&K with focus on potential and under-serviced sectors ~~ J&K Bank Notes
Slide 62: Outside State - Business Strategy
Outside State - Business Strategy Nationally focus on * Rebuilding Corporate Loan Book * Improving WC to TL Ratio = Impetus on SME / Retail sector lending in smaller cities
Slide 63: Business Targets - March 2014
Business Targets - March 2014 Targets = CASA around 40 % = NIMs around 4 % * ROA around 1.75 % * ROE around 24 % = Advances 22 % - 25 % growth * Deposits 17 % - 18 % growth * Cost/Income 36 % - 38 % = Loan/Deposit 65 % - 67 % = PCR Above 90% ~~ J&K Bank Notes
Slide 64: Notes
Notes
Slide 65: Slide 65
Slide 66: www.jkbank.com
www. jkban