J&K Bank dreams big, likely to set up foreign branches

Kolkata: Jammu and Kashmir (J&K) Bank is exploring opportunities to expand its presence outside India. The lender is likely to set up branches in Dubai and London to strengthen its relationships with existing customers who have business interests in West Asia and Europe.

“We are exploring possibilities to establish our presence in one or two overseas centres like Dubai and London. While no final decision has been taken, we will probably set up branches in these two geographies. We have a number of business relationships in these countries and it makes sense for us to have a presence there,” Mushtaq Ahmad, chairman and chief executive officer of J&K Bank, told Business Standard.

He, however, clarified that the plan was still in its early days and the bank was yet to seek approval from the regulators. At present, J&K Bank does not have any overseas branch. The lender closed the October-December quarter with 762 domestic branches. A majority of these branches are in Jammu and Kashmir. “We will probably end the current financial year with 800 branches. New branches will be opened both in Jammu and Kashmir as well as in other parts of the country,” Ahmad said.

While new-age private sector lenders have started expanding their presence in Jammu and Kashmir, J&K Bank continues to have the majority share of the credit and deposit market in the state. In 2013, ICICI Bank more than doubled the number of its branches in Jammu and Kashmir to 25. HDFC Bank has 64 branches in the state, most among new-age private banks.

Of these, 45 branches have been opened in the last five quarters. Since April 2013, Axis Bank's branch count in the state has increased from six to 26.

But increased competition does not appear to dent J&K Bank's performance, at least for now.

“We hosted the management of J&K Bank recently. The stable advances and deposit market share for the bank indicates limited impact from expansion by private banks for now...The bank's share of Jammu and Kashmir state's deposits has been stable at 68-70 per cent over the last two to three years,” Adarsh Parasrampuria and Pritesh Bumb, analysts with Prabhudas Lilladher, said in a note to clients.

Ahmad said the bank had opened 225 branches in Jammu and Kashmir in the past two-three years, of which 145 branches have already achieved break-even. “We continue to see good growth in our business,” he said.

J&K Bank's gross advances increased by 21 per cent from a year earlier to Rs 44,282 crore at the end of December, 2013. But the growth in the bank's advances in Jammu and Kashmir was 25 per cent during this period. Similarly, while the year-on-year growth in the bank's total deposits at the end of the third quarter was 11 per cent, in Jammu and Kashmir it reported 12 per cent growth in deposits.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.