# 1. Financial Performance ## A. Key Figures * Deposits: 2.4% QoQ · 10.2% YoY (vs. sector: 9.5% YoY) * Advances: 3.9% QoQ · 9.4% YoY (vs. sector: 10.3% YoY) * **Net Profit (Q):** **₹494 Cr** (+9% QoQ, -YoY) * H1 Net Profit Growth: 1.3% YoY (core: ~20% ex-impairment) * Operating Costs: +2.2% YoY * NIM: 3.56% (356 bps) (-34 bps YoY) * Yield on Advances: 9.20% (-37 bps YoY) * Cost of Deposits: 4.86% (+69 bps YoY) * CRAR: 15.27% · CET1: 12.11% ## B. Revenue & Profit * **Resilient Core Earnings:** Net profit growth remained positive YoY despite a **₹180 Cr one-time impairment**, with underlying pre-tax profit showing strong double-digit momentum. * **Exceptional Item Impact:** The **₹180 Cr investment impairment**—linked to the EDB-JKGB amalgamation—distorted RoA/RoE; management affirms core profitability remains on track. * **Cost Discipline Maintained:** Operating expenses rose minimally YoY, aided by lower staff costs, underscoring effective cost control amid sectoral pressures. ## C. Net Interest Margin * **NIM Pressure from Rate Cuts:** Margin contraction driven by rapid lending rate pass-through and **CASA-to-term deposit migration**, with deposit costs slow to adjust. * **Forward-Looking Stability:** Deposit costs expected to stabilize after peaking, supporting NIM recovery; confidence in exceeding **6% annual NIM guidance** remains intact due to best-in-class CASA and asset quality. ## D. Asset Quality * **Improving NPA Trend:** Credit quality strengthened with NPAs declining both in absolute value and ratio, reinforcing conservative underwriting; target set to bring NPA below **3% by year-end**. ## E. Balance Sheet Strength * **Robust Capitalization:** CRAR of **27%** and CET1 of **11%** provide substantial buffer, with capital ratios set to improve further from H1 earnings retention. --- # 2. Loan Book & Growth ## A. Key Figures * Loan Growth: 11.7% YoY in Corporate · 27.4% YoY in Agriculture * Personal Finance Growth: 6.9% YoY (~38% of loan book) · 6.2% YoY for JKL * **ROI Growth:** **Double-digit** YoY in housing and car loans (half of personal portfolio) ## B. Retail Credit Strategy * **Strategic Pivot:** Active focus on retail credit expansion as a lever for margin improvement and enhanced asset quality. * **Outperformance vs. Peer:** Personal Finance growth significantly outpaced JKL, highlighting competitive gains in retail penetration. ## C. Sector Performance * **Corporate & Agri Strength:** Corporate and Agriculture—collectively ~40% of the portfolio—delivered positive momentum on both YoY and sequential bases. * **Housing & Auto Momentum:** Core drivers within Personal Finance showed double-digit ROI growth, underpinning segment-level volume expansion. --- # 3. Deposit & Funding Mix ## A. Key Figures * CASA Ratio: 45.89% (30-Sep-25) from 45.71% (30-Jun-25) · CASA Growth: +2.8% QoQ · Term Deposit Growth: +2% QoQ ## B. CASA Ratio Shift * **Significant Funding Inflection:** Marked the first sequential CASA ratio improvement in **nine quarters**, reversing a prolonged downtrend amid industry-wide pressures. * **Low-Cost Deposit Momentum:** Strong sequential CASA growth outpaced term deposits, signaling renewed success in customer deposit mobilization and funding cost optimization. --- # 4. Geography & Market Mix ## A. Key Figures * Loan Book Growth: 16.1% YoY in Rest of India · 5.9% YoY in Jammu and Kashmir and Ladakh * **Quarterly Loan Growth:** **6%** in Rest of India · **8%** in Jammu and Kashmir and Ladakh * **Loan Book Mix:** **~30%** contribution from Rest of India ## B. Rest of India Expansion * **Strategic Rebalancing:** Rest of India loan book shows accelerating momentum, though still below JKL growth, as bank advances toward 50-50 geographic split target. * **Retail Credit Traction:** Retail lending strategies in Rest of India gaining traction with improved quarterly growth, signaling progress in market penetration. * **Growth Divergence:** JKL continues to grow at a faster pace both quarterly and annually, maintaining its dominant share of the loan book. --- # 5. Branch & Distribution ## A. Key Figures * **New Branch Openings:** **14** total planned (11 new + 3 carryover) ## B. New Branch Plan * **Expansion Momentum:** Network growth on track with **~14** branches set to open this fiscal, reflecting continued geographic reach and market penetration strategy. --- # 6. Regulatory & Credit Risks ## A. Key Figures * GNPA: 3.32% (↓ from prior) · Annualized Gross Slippage Ratio: <0.90% * **NNPA:** 76% (↓ from prior) · **PCR:** >90% (healthy coverage) ## B. GST Notice Status * **Favorable Regulatory Outlook:** The ₹16,000 Cr GST demand notice remains inactive as the GST Council has not pursued the case within stipulated timelines, with a court stay in place and resolution expected in the Bank’s favor. ## C. NPA Rehabilitation * **Sustained Asset Quality Improvement:** GNPA and NNPA both declined in percentage and absolute terms, supported by low credit costs and effective management of slippages despite regional disruptions. * **Proactive Borrower Relief:** Special rehabilitation package deployed for borrowers affected by the Pahalgam incident, including **repayment extensions, interest funding, moratoriums, and incremental working capital**, in line with UT-level bankers’ committee guidelines. * **Risk Mitigation in Crisis:** Natural calamities (floods, landslides) and regional disturbances are being counteracted through structured programs to prevent NPA conversion and maintain portfolio resilience. --- # 7. Guidance & Outlook ## A. Key Figures * GDP Growth: 7.8% India Q1 FY25–26 (5-quarter high) · 6.6% IMF India forecast FY25 (+20 bps) * **Credit Growth Guidance:** **12%** FY25–26 · **Deposit Growth:** **10%** * **CASA Ratio:** **48%** target · **NIM Range:** **65–70 bps** * **RoA Guidance:** **20–25 bps** · **RoE Guidance:** **15–16%** · **GNPA Target:** **<3%** ## B. Credit & Deposit Targets * **Resilient Macro Backdrop:** Strong domestic demand amid global headwinds supports confident lending and deposit growth targets. * **Profit Trajectory:** Management affirms profits will surpass last year’s record high despite absence of formal guidance. ## C. NIM & Profit Trajectory * **NIM Stabilization:** NIM and deposit costs expected to have bottomed out, with further pressure contingent on repo rate cuts. * **Asset Quality Resilience:** Normalized credit costs seen **below 1%**, supported by controlled slippages and active resolution pipeline.