J&K Bank FY26 results: record profit of Rs 2,363 crore as bad loans fall to 2.5%
Jammu and Kashmir Bank is an everyday bank for savings accounts, fixed deposits, home and car loans and small business credit, with a strong base in Jammu and Kashmir and Ladakh where it also handles government banking. On May 5, 2026, it filed audited results for the quarter and year ended March 31, 2026, reporting standalone net profit of Rs 2,363.48 crore for FY26 , deposits of Rs 1,65,354.00 crore and gross bad loans down to 2.50% of advances from 3.37% a year earlier . The takeaway is a record profit built on cleaner loans and tight costs, even as lending yields fell faster than deposit costs and fee income stayed soft.
Profit jumped in Q4 to close a record year
Standalone performance strengthened through FY26, with the March quarter providing the biggest lift.
| Quarter ended | Net profit in Rs crore | Total income in Rs crore |
|---|---|---|
| Mar 31, 2024-25 | 584.54 | 3,616.16 |
| Jun 30, 2025 | 484.84 | 3,518.57 |
| Sep 30, 2025 | 494.11 | 3,446.71 |
| Dec 31, 2025 | 586.73 | 3,592.90 |
| Mar 31, 2026 | 797.80 | 3,531.06 |
For the full year, net profit rose 13.5% to Rs 2,363.47 crore and Q4 profit rose 36.5% to Rs 797.81 crore . Operating profit before provisions and contingencies, which shows earnings before setting aside money for bad loans, was Rs 910.79 crore in Q4 FY26 , up from Rs 780.25 crore in Q3 FY26 and Rs 800.02 crore in Q4 FY25 .
Capital stayed comfortable, with capital adequacy of 16.55% and CET1 ratio of 13.54% as of March 31, 2026 . Auditors drew attention to four items without changing their opinion, including investment of Rs 345.92 crore in associate Jammu and Kashmir Grameen Bank with impairment provision of Rs 228.65 crore, a Rs 23.94 crore transfer from General Reserve to Statutory Reserve linked to prior years, Rs 46.08 crore recoverable from the government under the Ladli Beti Scheme, and recognition of deferred tax asset on excess bad-debt provisions .
Balance sheet: deposits funded an 18% jump in loans
Net advances stood at Rs 1,22,641 crore as of March 31, 2026, up 18% from Rs 1,04,199 crore a year earlier . Gross advances reached Rs 1,24,981 crore, up 16.8% from Rs 1,06,985 crore .
Growth outside the home market was faster. Advances in Jammu and Kashmir grew 9.3% to Rs 76,159 crore, while Rest of India including Ladakh surged 30.9% to Rs 48,822 crore . The credit to deposit ratio improved to 74.17% from 70.13% , meaning more of each rupee of deposit was deployed as loans.
Asset quality is the core story: from near 20% to 2.5%
Gross bad loans, or loans where repayment is overdue for long and tagged as non-performing, fell to Rs 3,124.84 crore or 2.50% of gross advances , from Rs 3,604.84 crore or 3.37% a year earlier . Net bad loans after provisions fell to Rs 785.13 crore or 0.64% , from Rs 818.07 crore or 0.79% . Provision coverage, the cushion already set aside against bad loans, edged up to 90.33% from 90.28% .
| As of | Gross NPA in percent | Net NPA in percent |
|---|---|---|
| Mar 31, 2025 | 3.37 | 0.79 |
| Jun 30, 2025 | 3.50 | 0.82 |
| Sep 30, 2025 | 3.32 | 0.76 |
| Dec 31, 2025 | 3.00 | 0.68 |
| Mar 31, 2026 | 2.50 | 0.64 |
| Jun 30, 2026 | 2.37 | 0.60 |
The FY26 movement shows additions of Rs 877.81 crore for the full year and Rs 202.02 crore in Q4 FY26, offset by upgrades, write-offs and recoveries . Restructured loans stood at Rs 2,259.61 crore, of which Rs 544.99 crore were classified as bad loans with provisions of Rs 505.66 crore . Personal finance, the largest book at 34.71% of gross advances or Rs 43,384.84 crore , had low stress at 0.81% , while real estate at 21.66%, services at 7.33% and manufacturing at 6.99% had higher ratios .
Management links this to disciplined underwriting and focus on quality over quantity, with gross slippages below 0.5% for the June 2026 quarter and provision coverage above 90.5% . The May 2026 roadshow frames the longer repair from 19.97% gross bad loans in March 2020 to 2.50% in March 2026 and net bad loans from 3.48% to 0.64% . Under Vision 2030, management targets gross bad loans of 1% or below , and for FY27 it guides gross bad loans below 2.25% .
Where growth came from: retail anchor, corporate spike
Retail, agriculture and small business loans are around two-thirds of the loan book . Within retail, agriculture grew 18% year on year, personal loans in Rest of India grew over 12%, car loans grew over 20% at bank level and over 30% in Rest of India, with double-digit growth in housing and education loans there as well .
Corporate credit grew faster than retail in the June 2026 quarter, which management called a tactical response with a conscious preference for selective lending to well-rated corporates . About 71.8% of rated corporate exposure is rated AAA . Management stressed the strategic positioning as a retail-focused bank remains unchanged and expects almost 55% to 60% of this year advance growth to come from retail itself . Recent corporate enablers cited include a corporate loan origination system, co-lending arrangements, corporate business correspondents, first corporate branch at Worli Mumbai, re-inclusion in the food credit consortium after 8 years and authorisation under Capital Gains Account Scheme .
Margins squeezed as yields fell faster than deposit costs
Net interest margin, the difference between interest earned on loans and interest paid on deposits scaled to assets, was 3.60% for FY26, down from 3.92% . For Q4 FY26 it was 3.52% versus 3.88% a year ago . Yield on advances fell to 8.98% for the year from 9.56% and to 8.51% in Q4 from 9.44%, while cost of deposits eased only to 4.70% for the year from 4.75% and to 4.47% in Q4 from 4.80% .
By June 2026, margin compressed further to 3.28%, with yield on advances at 8.56% versus 9.35% a year ago and cost of deposits at 4.74%, down only 9 basis points . Management called the quarter an aberration driven by opportunistic low-yield corporate lending and a net increase of Rs 6,700 crore in higher-cost bulk deposits , adding correction has already been initiated by shedding such loans and deposits and shifting to higher-yield retail . Full-year guidance for margin around 3.5% was kept unchanged .
Fee-type other income was soft. It totalled Rs 939.85 crore for FY26, down 16.9%, and Rs 259.38 crore in Q4, down 35.4% . Commission and exchange was Rs 159.55 crore for the year and Rs 38.95 crore in Q4, insurance commission Rs 102.31 crore and Rs 30.11 crore, while treasury income was a loss of Rs 30.50 crore for the year versus a gain of Rs 66.82 crore prior . Management said lower recoveries from technically written-off accounts are timing dependent and transitory, expecting almost Rs 250 crore of such recoveries for the year, possibly around Rs 300 crore .
Costs stayed tight and digital did more work
Cost to income ratio, operating expenses divided by total income, narrowed to 47.86% in Q4 FY26 from 57.48% and to 56.18% for FY26 from 57.69% . Operating expenses fell 22.7% in Q4 and 4.1% for the year, led by employee cost down 30.7% in the quarter to Rs 509.15 crore and down 11.1% for the year to Rs 2,479.12 crore . Depreciation on property also fell sharply .
The May roadshow puts this in a longer drop from 64.14% in FY20 to 56.18% in FY26 , citing centralised credit processing, performance management, J and K Bank 2.0 sales and service model, control framework, CRM and ERP solutions and automated fraud management . Digital share helps: around 94% of transactions are now digital , at 94.26% as of June 2026 . On the July 2026 call, management said operating expenditure continues to remain well contained and at worst will be flat, continuing a 6 to 7 quarter improving trend, with Q1 employee cost including about Rs 150 crore of pension, gratuity and leave provisioning forming the base .
What management guides for profits and returns
For FY26 the bank reported return on assets of 1.37% and return on equity of 16.85% , with highest ever profit of Rs 2,363 crore . For FY27, guidance kept unchanged is credit growth of 12% though actual expected at 18% to 20%, deposit growth 10%, CASA ratio of deposits in current and savings accounts at 45%, margin around 3.5%, return on assets at 1.25% plus around last year levels and return on equity around 16% . CASA stood at 42.06% in June 2026 after savings shifted to term deposits, with salary account tie-ups and a dedicated vertical planned to lift it . Vision 2030 aims for total business of Rs 5 lakh crore and annual profit of Rs 5,000 crore by FY2030 .
---