The Jammu & Kashmir Bank

Bottom line: The numbers reconcile, and the post's main call is right: profit growth came from other income, not lending. The math makes that point even stronger than the post does.

1. Operating profit growth was almost entirely other income (₹ cr)

Q2 FY26 Q2 FY27 Change

NII 1,434 1,502 +67

Other income 154 315 +161

Opex (derived) 965 1,028 +62 (+6.5%)

Operating profit 623 789 +166

Core profit (NII − opex) 469 474 +1%

Other income explains about 97% of the operating-profit increase (161 of 166). Core pre-provision profit was flat despite 24% loan growth. The derived cost-to-income ratios (56.6% vs 60.8%) match the reported ones, so these numbers hold.

2. Points the post should tighten

Claim in post Issue

"Opex +1.5% in H1" Q2 opex rose about 6.5% YoY. The H1 figure only works if Q1 opex fell.

QoQ jump "off a weak Q1" that included a ₹56 cr PSLC boost The boost made Q1 stronger, so it makes the QoQ comparison harder, not easier. The cleaner point is that H1 PAT was flat: 970 vs ~979, −0.9%.

Funding costs "barely moved" Loan yield fell 65 bps but NIM fell only 39 bps, so roughly 26 bps was offset somewhere

CD ratio 74.2% Last year's 69.2% grown at the reported rates (× 1.237 ÷ 1.163) gives 73.6%. The small gap may be gross vs net advances.

3. Provisions and guidance (my estimates)

• Assuming about a 25% tax rate, Q2 provisions come to roughly ₹60 cr. That would put Q2 FY26 at about a net write-back of ~₹35 cr, which is why PAT grew only 10.6% while operating profit grew 26.7%.
• Credit guidance of 14–18% against a 23.7% running rate implies either conservative guidance or a sharp slowdown in H2.
• NII growth of 4.7% against NIM down 39 bps implies earning assets grew about 17.6% (1.047 ÷ 0.890). That's consistent with deposit growth of 16%: deposits, not loans, are setting the pace.
• Vision 2030 (₹5 lakh cr from ₹3.10 lakh cr) needs about 14.6% CAGR over 3.5 years. That's achievable only if deposits keep up, and CASA has slipped about 3.7 pp since June 2025.

My read: Asset quality is the real strength, with GNPA at 2.23% and PCR at 92%. Earnings quality is the weakness. Q3 rests on two things: the promised NIM recovery, and whether other income near ₹300 cr repeats. If either misses, PAT growth goes to roughly zero. This is analysis, not a recommendation.

J&K Bank (J&KBANK): Q2 FY27 results analysis

(Quarter ended 30 Sep 2026)

All figures standalone, ₹ crore unless stated. Results approved on 22 Oct 2026 [1]. YoY/QoQ % and the CD ratio check are my calculations from reported numbers.

Sources: [1][2][3][4]. Q2 FY26 NII derived from the reported growth.

Source note: PTI/CNBC-TV18 show PAT growth as 10.5–11% [5][6]; the bank's release says 10.6% [1]. Consolidated PAT is ₹547 cr [7].

Quality of earnings

The profit growth did not come from lending income.

• NII rose only ~5% despite ~24% loan growth [1]. NIM fell 39 bps YoY to 3.17% as yield on advances dropped to 8.55% from 9.20% while funding costs barely moved [2].
• Other income doubled to ₹315 cr [1]. The release doesn't split it into treasury, recoveries or fees. Without that split, I treat part of it as less reliable (my view).
• Costs: opex was well controlled (+1.5% in H1); cost-to-income improved to 56.6% from 60.8% [1].
• Provisions: H1 PAT was flat YoY because higher provisions offset operating gains [2].

Base note: the +28.8% QoQ jump is off a weak Q1. Q1 profit fell 12.5% YoY, and even that included a ₹56 cr boost from a change in PSLC accounting [8][9].

Margins and asset quality (Chart 3)

• NIM: 3.56% → 3.62% → 3.52% → 3.28% → 3.17% [2][10][11][3]. Down two quarters straight, after the repo-linked loan repricing and faster loan growth than deposits (interpretation).
• GNPA: 3.32% → 3.00% → 2.50% → 2.37% → 2.23%, the best in a decade. Annualised slippage was just 0.4% in H1 [1].

Guidance: what changed

• Credit growth: FY27 guidance raised to 14–18% [2], from 12% at the start of the year [9]. Deposit growth: now 12%+, from 10% [2][9].
• Asset quality: GNPA below 2%; no incremental credit cost for the rest of FY27, with provisions of ~₹70–85 cr a quarter [2][12].
• NIM: management expects "substantial improvement" over the next two quarters [2].
• CASA: target of 42% or better [2]. It was 45.7% in June 2025 [13].
• Vision 2030: total business of ₹5 lakh cr, vs ₹3.10 lakh cr now [1].

Positives

• Decade-best GNPA/NNPA and PCR [1]
• Strong loan growth; guidance raised [1][2]
• CRAR up to 16.57% [1]

Concerns

• NIM down 39 bps YoY [2]
• Profit leaning on other income [1]
• CASA ratio slipping; CD ratio rising [1][2]
• Loans growing faster than deposits; funding cost risk (my view)

Things to track in Q3 FY27

1. NIM recovery as promised
2. Other income composition
3. Credit cost staying within ₹70–85 cr a quarter
4. Deposit growth and CASA vs the 42% target

Not a buy/sell recommendation. Facts are sourced; opinions are labelled.

Sources [1] Kashmir Monitor – bank press release, 22 Oct · [2] Investing.com – Q2 slides · [3] J&K Bank – Q1 FY27 release · [4] Indian Opinion · [5] Daily Excelsior/PTI · [6] Whalesbook · [7] Free Press Journal – consolidated · [8] MarketsMojo – Q1 FY27 / PSU Connect · [9] CompoundingAI – Q1 FY27 · [10] Greater Kashmir – Q3 FY26 · [11] Muthoot/Capital Market – Q4 FY26 · [12] Investing.com – call transcript · [13] Business Standard – Q1 FY26 · [14] J&K Bank – FY25 deck · [15] J&K Bank – FY23 release

Charts:

(1) last 5 quarters NII & PAT [1][3][10][11];

(2) FY23–FY26 NII & PAT [11][14][15] (FY26 NII summed from quarters);

(3) NIM, GNPA & NNPA [1][2][3][10][11].