Jammu and Kashmir Bank Q2 FY27 Earnings Call: Raises FY27 Loan Growth Guidance to 14%+, Asset Quality at Decadal Best (J&KBANK)

Jammu and Kashmir Bank Ltd held its Q2 FY27 earnings call on October 22, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Profit Rebounds Sharply; Guidance Raised at Midterm Review

• Net profit of Rs.546 crore — up almost 29% QoQ with double-digit YoY growth, recovering from a subdued Q1 FY 2026-2027.
• Operating profit of Rs.789 crore — +27% YoY and +12% QoQ; H1 FY 2026-2027 operating profit of Rs.1,492 crore (+15%+ YoY); operating income grew 14.5% YoY while opex was contained at 6.5% YoY, bringing the cost-to-income ratio to 56.57%.
• Total business grew 19.4% YoY to Rs.3.10 lakh crore — as of 30 September 2026, with deposits up 16.3% YoY and advances up 23.7% YoY.
• ROA of 1.07% (+20 bps QoQ) and ROE of 13.68% (+250 bps+ QoQ) — in Q2 FY 2026-2027; H1 FY 2026-2027 ROA is already above 1%.
• Asset quality at decadal best — GNPA 2.23% and NNPA 0.51% as of 30 September 2026; PCR improved to 91.76% from 90.53% at 30 June 2026.
• Capital adequacy of 16.57% (CET1 13.88%) — as of 30 September 2026, ahead of the planned capital raise.
• Macro headwinds flagged — management cited re-escalation of the West Asia conflict driving energy prices sharply higher, fueling inflation concerns and market volatility; the IMF revised its India GDP growth forecast for FY 2026-2027 up to 7% from 6.4%.

Retail-Led Credit Growth; Loan Growth Guidance Raised

• FY 2026-2027 loan growth guidance revised higher to "14% plus" — with the CEO aiming for around 18% in FY 2026-2027 provided retail growth continues; guidance is below the ~24-25% advances growth reported in Q2 FY 2026-2027 because Q3-Q4 FY 2025-2026 saw much stronger credit growth against which management does not expect a repeat of 25%-level growth.
• FY 2026-2027 growth mix guided at 60% retail and 40% corporate — 60% of total loan growth in FY 2026-2027 year-to-date has been retail-led.
• RAM drove the entire net incremental credit in Q2 FY 2026-2027 — and over 60% of YTD FY 2026-2027 incremental credit; agri advances grew 7.62% QoQ / ~17% YoY, retail 3.90% QoQ, auto loans 25%+ YoY, and rest-of-India housing loans grew double-digit YoY.
• Portfolio yields as of Q2 FY 2026-2027 — retail at 10%, agriculture at 9.5%, J&K MSME at around 9% (J&K advances are largely MSME with hardly any large-size corporate book in the state), and rest-of-India corporate at 7.2%.
• MOU personal consumption loans at Rs.13,400 crores — in Q2 FY 2026-2027 (both variants combined >Rs.16,000 crores); the book dipped in FY 2025-2026 due to product revamping, correction of employee NMI/EMI ratios and high SMA-0 levels, and H1 FY 2026-2027 lending has already surpassed full-year FY 2025-2026 disbursements.
• Retail remains the growth focus at least through Q3 FY 2026-2027 — given its yield advantage, even though retail grows more slowly than the corporate book.

NIM Compressed in H1; Recovery Expected from Q3

• NIM compressed to 3.22% for H1 FY 2026-2027 — Q2 yield on advances was 8.55% (broadly flat QoQ) while cost of deposits rose to 4.85% on the Q1 CASA outflow.
• Management expects NIM to rise significantly in Q3-Q4 FY 2026-2027 — the CEO is 100% sure it will go up substantially but declined to give a number, noting past NIM guidance "has not been taken very pleasantly."
• 25 bps repo improvement already passed on — 65% of the loan portfolio is repo-linked (31% MCLR-linked) with the change passed on the same day, no next-day lag; management noted an expectation that repo may go slightly higher in the near future.
• High-cost bulk deposits largely shed — CDs at ~8% raised in Q1 FY 2026-2027 against pre-existing loan commitments have largely been shed; outstanding bulk deposits are below Rs.3,000 crores (analyst noted Rs.20,000 crores contracted in Q2 FY 2026-2027), with the funding-cost benefit expected in Q3 and Q4 FY 2026-2027.
• CASA ratio at 41.97% at 30 September 2026 — positive CASA inflows in Q2 reversed the sharp Q1 outflow; management clarified deposits converted into term deposits within the bank itself, and a fair bit was recovered in Q2 (last month of the quarter).
• CASA restoration steps — not less than 20 salary-package MOUs signed in Q2 FY 2026-2027; a fresh salary-account MOU with the Government of Jammu & Kashmir, expected to be for a 5-year term, is most likely to be signed on 2026-10-23.
• Deposit growth lagging guidance — ~7% YTD FY 2026-2027 versus the earlier 10% FY 2026-2027 guidance; revised FY 2026-2027 guidance now stands at deposit growth 12%+, CASA 42%+.

Treasury, Recoveries and Cross-Sell Drive Non-Fund Income

• Q2 FY 2026-2027 treasury income of Rs.92 crores — a combination of bond portfolio gains and net revaluation gains on unlisted stocks; the equity stake sale transaction completed after 30 September 2026 and is excluded from Q2 results — it will add ~Rs.100 crores to profit in Q3 FY 2026-2027.
• ~Rs.150 crores of other miscellaneous income in Q2 FY 2026-2027 — card business Rs.41 crores, loan processing charges Rs.18-19 crores, payroll charges Rs.12.89 crores, SMS charges Rs.6.42 crores, CGTMAC fee Rs.4.79 crores, cheque return charges Rs.4.57 crores; recovery from TWO accounts was only Rs.25 crores.
• Non-fund-based business improved 30-40% QoQ in Q2 FY 2026-2027 — management is targeting substantial other income improvement in FY 2026-2027 and expects a fair bit over Q3-Q4 FY 2026-2027.
• Two additional life insurance partners added — SBI Life and HDFC Life — to scale up third-party product selling, which management expects to lift other income; management expects insurance distribution volumes to go up substantially (period unspecified).
• IRDA commission reduction expected to be offset — management expects the commission cut from the new IRDA guidelines to be compensated by higher distribution volumes (impact timeline unspecified); this is an expectation, not a commitment.
• Jammu & Kashmir remains highly underinsured — management highlighted low life and general insurance penetration in the state, describing the untapped potential as very high and largely unrealized so far.

Slippages Halved; ECL Model Nears Board Approval

• Slippages halved YoY: Rs.234 crores in H1 FY 2026-2027 vs Rs.550 crores in H1 FY 2025-2026 — H1 annualized gross slippage ratio of just 0.4%, with Q2 FY 2026-2027 seeing negligible credit cost and negative net slippages.
• No incremental credit cost expected for the remainder of FY 2026-2027 — management attributed current credit costs entirely to aging provisions; with PCR at 91-92% and quarterly provisioning of Rs.70-85 crore in Q1-Q2 FY 2026-2027, SMAs are in control and declining sequentially.
• ECL model almost ready — goes to the board by the December 2026 board meeting, with the exact transitional hit to be disclosed in December 2026 (base assessment withheld); management guided its ECL hit will be less than the industry average (period unspecified).
• Analyst flagged SMA 1+2 at ~5% of loans — double-digit including SMA 0, among the highest in the industry; the analyst cited industry average ECL impact of ~50-60 bps (PSU banks <100 bps of capital); the bank carries ~Rs.300 crores of prudential buffer.
• Newly approved special OTS scheme for old NPAs and written-off accounts — alongside a substantial "hot" pipeline of recoveries, both described by the CEO as "almost certain" to contribute profit in H2 FY 2026-2027 via written-off recoveries and reversal of NPA provisions.

Revised FY27 Targets; Rs.1,500 Cr Capital Raise Planned

• Revised FY 2026-2027 guidance — credit growth 14%+, deposit growth 12%+, CASA 42%+, considerable NIM improvement, ROA ~1.20%, and GNPA below 2%.
• FY 2026-2027 ROA guidance of 1.20%+ is deliberately conservative — MD & CEO Amitabh Chatterjee said it is a recalibration on the basis of Q1 FY 2026-2027 performance to ensure delivery, not a downgrade from the earlier 1.25-1.3% range, citing unpredictable timing of written-off account recoveries; the implied ~1.4% H2 ROA is "very much visible" and the CEO is "optimistic" of exceeding it.
• Recovery pipeline sufficient for two years — FY 2026-2027 and FY 2027-2028 — management rejected the framing that TWO recoveries are a one-off, reiterating guidance given at the beginning of the year; management will wait two quarters before responding on FY 2027-2028 ROA.
• Capital raise of Rs.1,000 crore equity and Rs.500 crore debt — per MD & CEO Amitabh Chatterjee for the remainder of FY 2026-2027; the debt raise is targeted within Q3 FY 2026-2027, while equity timing is not committed — the bank will wait for a window "most conducive"; approval is in place and preparedness essentially complete. The CEO cited "multiple factors" but declined to elaborate on rationale.
• Employee cost flat to slightly lower in Q3-Q4 FY 2026-2027 — driven by ongoing retirements, with a slight sequential dip already recorded from Q1 to Q2 FY 2026-2027; new hires by end of Q3 or beginning of Q4 FY 2026-2027 will not impact FY 2026-2027 costs, and FY 2027-2028 employee cost is expected at roughly current levels.