J&K Bank reworks wholesale lending strategy

Jammu & Kashmir Bank has revamped its wholesale banking strategy to increase its emphasis on working capital finance as against term loans.

Keeping in mind the slowdown and challenges in the economic and business environment, the bank will be selective in extending project finance assistance.

While the earlier focus was on term loans, it will now be on working capital and fee-based income. But, this did not mean that the bank would stop long-term funding. It would continue to look for opportunities in project and term-lending space, said Mushtaq Ahmad, its chairman and chief executive officer.

The present mix of term-loan and working capital is 60 per cent and 40 per cent, respectively. The Srinagar-based bank will work to improve share of working capital to 50 per cent. Its advances rose 26.28 per cent to Rs 33,077 crore in March 2012.

While the economic and credit growth in 2012-13 will remain subdued, the bank expects to reach business (deposits plus advances) volume of Rs 1,00,000 crore by 2013. The bank has targeted to grow business to Rs 1,50,000 crore by March 2015. The total business expanded to touch Rs 86,418 crore mark in March 2012 from Rs 70,863 crore in March 2011.

Earlier, it had set an target to garner a business of Rs 1,00,000 crore by March 2012 with a net profit figure of Rs 1,000 crore. However, bank decided to defer target by one year due to uncongenial socio-economic conditions in Jammu and Kashmir and a diffident national economy, said Ahmad.

Its income from fee, insurance commissions and treasury shrunk 8.40 per cent in FY12 to Rs 334.12 crore from Rs 364.76 crore a year ago. It will also push for fee-based income by reviving its subsidiary J&K financial services.

To support business growth plans, the bank would open 300-400 branches till 2015-16. During 2011-12, the bank opened 55 business units, increasing network to 603.

It set up 147 ATMs, taking their number to 508. It will also increase headcount by 300-400 each year till FY16 to manage expanding branch network and various functions.

Source: Business Standard