Jammu and Kashmir Bank's interest margin falls to 3.17% despite profit growth
Key Facts
Jammu and Kashmir Bank's net interest margin fell to 3.17% in the second quarter of fiscal 2026-27 from 3.56% a year earlier, according to the bank's investor presentation. The margin contraction coincided with a 10.6% rise in quarterly net profit to 546.36 crore rupees, according to Press Trust of India's reporting on results for the quarter ended September. Net interest income stood at 1,502.31 crore rupees, compared with 1,433.99 crore rupees in the corresponding period of the previous fiscal year. That represented year-on-year growth of 4.8%, according to the official presentation. On a quarterly basis, the increase was limited to 0.3%, compared with net interest income of 1,497.12 crore rupees in the previous quarter.
Interest expenses rose to 2,224.78 crore rupees in the quarter ended September, according to the investor presentation. These expenses stood at 1,857.83 crore rupees a year earlier, putting the annual increase at 19.8%. On the lending side, the yield on loans fell to 8.55% from 9.20% in the corresponding quarter of the previous year. The yield remained close to its level in the quarter ended June, when it stood at 8.56%. Management attributed the continued pressure on the funding mix to current and savings account deposit outflows during the previous quarter. It said in the September investor brief: "The sharp outflow of current and savings account deposits during the first quarter continued to weigh on our liability mix."
Other income, meanwhile, rose to 314.90 crore rupees in the second quarter, according to figures in the bank's presentation. This income stood at 153.76 crore rupees in the corresponding period a year earlier. Operating profit for the quarter ended September also grew 26.7% year on year, according to Investing.com's coverage of the results presentation. Growth from the previous quarter was 12.2%, outpacing the quarterly increase in net interest income. On operating efficiency, the cost-to-income ratio fell to 56.57% from 60.79% a year earlier, according to NDTV Profit.
The bank said quarterly profit growth was supported by improved revenue and asset quality, according to Press Trust of India. The net non-performing loan ratio fell to 0.51% at the end of September, according to Investing.com's coverage of the results. The ratio stood at 0.76% at the end of September the previous year. Provision coverage improved to 91.76% at the end of September, according to NDTV Profit. That compared with coverage of 90.53% at the end of June, a quarterly improvement that accompanied the year-on-year decline in the net non-performing loan ratio.
For the first half of fiscal 2026-27, the bank's net profit stood at 970.54 crore rupees, according to its investor presentation. That was 0.9% below profit of 978.95 crore rupees in the first half of the previous fiscal year. Net interest margin had already fallen to 3.28% in the quarter ended June, according to Investing.com's coverage of results for that period. In July 2026, the same coverage documented a 12.69% drop in the bank's shares. That move followed the results update for the quarter ended June, in the context of results preceding the end of the September quarter.
For fiscal 2026-27, management's revised guidance includes credit growth of 14% or more, according to the September investor brief. Management also targets deposit growth of 12% or more during the same fiscal year. It expects net interest margin to improve as yields and funding costs improve, according to the brief. On provisions, management expects them to remain within a range of 70–85 crore rupees per quarter. That forecast appeared in Investing.com's coverage of the September 2026 results presentation.