Jammu and Kashmir Bank Ltd

I am privileged to present the 86^th Annual Report of our Bank for FY 2023-24 - a year that marks a historic chapter in our rich legacy. This report provides comprehensive details of the Bank's initiatives and achievements during this period. It has been more than two years since I assumed the responsibility of Managing Director and CEO of this esteemed institution, and it is with great pride that I share our progress and success. First and foremost, I extend my heartfelt gratitude to our shareholders for their unwavering support and trust. Your confidence in our vision and strategy has been instrumental in our journey towards excellence. We remain committed to delivering value and sustainable returns on your investments.

Economy Overview

The lingering war between Russia and Ukraine and the ongoing conflict in the Middle East have exacerbated the geopolitical tensions inducing unprecedented levels of uncertainty in the global economy. According to the World Economic Report, this conflict could lead to higher food prices and potentially cause millions of people to go hungry. Despite these challenges, the Indian economy has remained comparatively stable, especially the banking sector. The Reserve Bank of India (RBI) has affirmed that India's banking sector is sufficiently capitalized and well regulated. Innovative reforms such as digital payments, neo-banking, and fintech have significantly enhanced financial inclusion and fuelled credit growth in the country.

During FY 2023-24, India's GDP grew at a rate of 8.2%, backed by buoyant domestic demand and strong investment activity. Looking ahead, the RBI projects real GDP growth for India in FY 2024-25 at 7.2%. The prospects of fixed investment remain bright with business optimism, healthy corporate and bank balance sheets, robust government capital expenditure and signs of an upturn in the private capex cycle. Equity markets are rallying while sovereign bond yields and the US dollar exhibit bidirectional movements.

Over the past year, our Bank has successfully navigated a rapidly evolving financial landscape. Despite uncertainties and disruptions, we have achieved significant growth by adopting various initiatives and keeping pace with industry standards clubbed with investments improving steadily which would economise Cost / Income ratio and shall further improve health of our balance sheet. Our deposits grew by 10.44% to 1.35 lakh crore with a CASA ratio of 50.51% while Gross Advances increased by 12.57% to 0.97 Lakh Crore during past financial year. As a result of tremendous efforts put in by our Bank and improved operational efficiency, the Bank delivered an unprecedented profit of 1767.27 crore for FY 2023-24, the highest in the history of our Bank.

Our asset quality has improved significantly during FY 2023-24 registering its best asset quality figures with Gross Non-Performing Assets (GNPA) has improved significantly from 6.04% in FY 2022-23 to 4.08% in last financial year while Net NPA witnessed a sharp decline to 0.79%. Net Interest Income (NII) grew by 10% to 5203.69 crore. The Operating profit stood at 2276.88 crore, registering a growth of 23% over the previous year. The Cost-to-Income ratio has been brought down by 398 bps to 62.24%. Return on Asset (RoA) and Return on Equity (RoE) also improved significantly, standing at 1.22% and 18.01%, respectively.

In light of this remarkable performance, the Board has recommended a dividend of 2.15 per equity share for the financial year ended March 31, 2024. This decision reflects our commitment to delivering sustainable growth reciprocating share holder confidence and maximizing shareholder value. We believe that our sustained efforts and strategic initiatives have contributed to achievement of business milestones. Besides, our focus on risk management and compliance has ensured that we maintain a robust framework to safeguard our stakeholders' interests. Our Bank has consistently adhered to stringent regulatory standards, establishing itself as a trusted and responsible financial institution.

Digital & IT landscape is the new battlefield in banking industry for driving sales through online as well as offline modes. During FY 2023-24, we undertook various initiatives to keep pace with industry advancements and deliver superior services to our customers to meet emerging changes in the economic, political and regulatory environment. Some of the major key initiatives of previous financial year included:

- Launch of QIP, raising CET1 capital of Rs 750 crore which positioned us strongly to fund our ambitious growth plans.

- Online account opening platform for instant customer onboarding and delightful experience.

- Upgraded our mobile and e-banking platforms with enhanced and industry best features.

- Automation of charges for various services to prevent revenue leakage.

- Introduction of Virtual ATM Facility for card-less cash withdrawals.

- New Bancassurance partner to enhance insurance solutions.

- Launch of premium debit cards with enhanced limits and offers.

- Online customer grievance resolution mechanism.

- Adoption of new technology platform for Kiosk Banking, to augment FI initiatives through BCs.

On the technology front, we are committed to provide efficient, secure, and convenient banking services to our valued customers. During the year, our core IT infrastructure has been strengthened with high availability, capacity additions, automation processes, hybrid cloud architecture and enhanced security features for leveraging digital adoption to enhance customer experience. Bank is full committed to achieve excellence in operational efficiency through digital and IT interventions, business process reengineering and process automation, etc. Under 5 Year Business Plan milestones for all major business indicators viz- GNPA, NIM, CD ratio, Business per employee, PCR, Cost to income, Non-interest income, Capital adequacy (CRAR), Return on assets, etc. have also been set for vigorous monitoring. The upgraded platform of "J&K Bank mPay Delight+" offers a unique "Bank in the Pocket" experience. Our online account opening platform provides ease of service for prospective customers 24x7 at their convenience and comfort.

With a dedicated workforce of 12,415 employees and a branch network of 1,004 branches along with 1,569 ATMs/CRMs across the country as of March 2024, we are committed to provide the best and most convenient services to our customers. And to take care of any grievances or concerns on service front, our Customer Service Request Tracking System (CSRTS) ensures secure and centralized platform for handling complaints, facilitating easy search and retrieval of data.

As we celebrate the historical results of FY 2023-24, let us join hands and hearts to reinforce the culture of trust, empathy, and mutual care within our family. We are committed to achieve our strategic objectives that includes expanding our market presence, enhancing our digital capabilities and deepening customer relationships. Besides, we will continue to invest in our employees, empowering them with necessary tools and knowledge.

I would like to take this opportunity to express my appreciation for the hard work, dedication, and unwavering commitment of our employees, which has been instrumental in reaching this milestone in our journey of transformation. With focused perseverance in business growth and governance, we are well poised to achieve even greater success in the coming years. Lastly, I reiterate my gratitude to our shareholders and customers, whose trust and support have been the main contributors to our success.