J&K Bank Q1 profit slips ~12% YoY to ₹425 Cr on provision jump, margin squeeze

J&K Bank reported consolidated Q1 FY27 (quarter ended 30 June 2026) net profit of ₹425 Cr, down 12.5% from ₹486 Cr a year ago, even as total income rose 6.9% YoY to ₹3,765 Cr and interest earned climbed 8.5% to ₹3,547 Cr. The decline is deeper than it looks: a change in PSLC accounting policy (Note 18) added ₹56.29 Cr to this quarter's PAT, so on an adjusted basis underlying profit is nearer ₹369 Cr, roughly a 24% YoY fall. The 46.8% QoQ drop from ₹799 Cr is not the story — Q4 FY26 was flattered by an abnormally low ~7% effective tax charge; this quarter's tax normalised to ~31.5%.

The profit drag sits below the operating line. Pre-provision operating profit actually grew ~4.5% YoY to ₹705 Cr, but provisions (other than tax) leapt to ₹84 Cr from just ₹15 Cr a year ago, and the higher tax outgo compounded it. Net profit margin compressed to ~11.3% from 13.8% a year ago. This came despite strong balance-sheet momentum: advances grew 26.6% YoY to ₹1,28,183 Cr and deposits 16.7% to ₹1,73,420 Cr, pushing total business past the ₹3 lakh crore milestone — comfortably ahead of management's conservative FY27 guidance of 12% credit / 10% deposit growth. Asset quality also improved, with Gross NPA down to 2.37% (from 3.50% YoY) and Net NPA to 0.60% (from 0.82%), and provision coverage at 90.53%.

The stock went into the print at ₹167.22, up 8.1% over the past month of trading.

For context: PAT has now risen for 3 consecutive quarters; revenue is at a 6-quarter high.

The tension for the print is profitability versus the guidance management set on the May concall. Annualised RoA fell to 0.87% (from 1.17% YoY and 1.78% in the tax-boosted Q4), running well below the ~1.37% FY27 RoA and ~16% RoE targets leadership said it intended to 'over-deliver' on; implied RoE this quarter is ~11%. So the bank is beating its growth guidance handsomely while trailing its return guidance early in the year — the coming quarters must show whether the provision spike was a one-quarter event and whether NIM holds near the ~3.5% guided level as the loan book scales. No brokerage consensus estimate was on record for the quarter (results and board meeting fell on the same day, 29 July). Standalone PAT of ₹424 Cr tracks the consolidated number within 0.3%, so the two tell the same story. Corporate actions in the quarter — the ₹120 Cr sale of a 0.50% PNB MetLife stake and new SBI Life/HDFC Life bancassurance tie-ups — are strategic and did not move this quarter's P&L.