J&K Bank Q2 FY27 Profit Rises 10.6% to ₹546 Crore

Jammu and Kashmir Bank reported a stronger second quarter for FY27, with net profit rising 10.6% year-on-year to ₹546.36 crore. The bank said profit increased by nearly 29% sequentially after a subdued first quarter. Operating profit grew 27% year-on-year to ₹789 crore, while total business rose 19.4% year-on-year to ₹3.10 lakh crore. Management used its October 22 earnings call to revise its operational guidance for the full financial year. The results reflected growth in advances, a recovery in CASA inflows and further improvement in asset quality.

Profitability Recovers From the First Quarter

The second-quarter profit marked a sequential recovery for J&K Bank. Management said the ₹546 crore quarterly profit represented double-digit year-on-year growth and a nearly 29% increase from the preceding quarter. Operating profit of ₹789 crore was 27% higher than a year earlier. The bank’s return on assets, or ROA, improved by 20 basis points quarter-on-quarter to 1.07%. Return on equity, or ROE, rose by more than 250 basis points sequentially to 13.68%. These measures indicate an improvement in profitability during the September quarter.

Interest Income and Operating Income Increase

Interest earned during Q2 FY27 stood at ₹3,727.09 crore, up 13.2% year-on-year, according to the investor presentation. Operating income rose 14.5% year-on-year to ₹1,817.21 crore. Yield on advances remained broadly unchanged sequentially at 8.55%. Management said the growing contribution of retail, agriculture and MSME lending, together with the recent repo-rate increase, is expected to support advance yields from the third quarter. The bank did not provide a quantified forecast for the net interest margin, or NIM. It said there should be a considerable improvement in NIM during the second half of FY27.

Retail and Agriculture Advances Lead Growth

The bank continued to position itself as a retail-focused lender. Agriculture advances increased 7.62% sequentially during the quarter, while retail advances grew 3.90% sequentially. Management described these gains as progress in executing its retail-focused strategy. A call summary also cited retail yields of around 10%, agriculture yields near 9.5%, and MSME yields near 9%. Corporate lending in the rest of India was cited at about 7.2%. The differing yields show why the loan-mix shift is relevant to the bank’s margin outlook.

Deposit Mix Stabilises After Q1 CASA Outflow

J&K Bank reported positive CASA inflows in the September quarter after a sharp outflow in Q1. CASA refers to low-cost current-account and savings-account deposits. The bank maintained its CASA ratio at 41.97% as of September 30, 2026, broadly in line with the 42% level cited by management. However, the first-quarter outflow continued to affect the funding profile. Cost of deposits increased to 4.85% in Q2. Management said the gap between term-deposit growth and CASA-deposit growth narrowed during the quarter.

Asset Quality Reaches Decadal Best Levels

Asset-quality indicators improved further in the quarter. Gross non-performing assets, or GNPA, stood at 2.23% as of September 30, 2026. Net non-performing assets, or NNPA, were 0.51%. The bank described these as decadal best levels. Its provision coverage ratio, or PCR, improved to 91.76% from 90.53% on June 30, 2026. A higher PCR indicates that a larger share of bad loans is covered by provisions.

Key Q2 FY27 Financial Metrics

FY27 Guidance Is Revised After Midterm Review

Following its midterm review, the bank revised its FY27 guidance. It now expects credit growth of more than 14% and deposit growth of more than 12%. Management also guided for a CASA ratio above 42%, ROA of around 1.20%, and GNPA below 2% by the end of FY27. In the earnings call, management indicated that it was aiming for credit growth closer to 18%, while retaining the stated guidance floor of 14% plus. It characterised the ROA target as a conservative approach rather than a downgrade. The bank said the expected improvement in NIM and profitability would be relevant in the second half.

What the Results Mean for Investors

The quarter combined stronger profit growth with improving loan quality and business expansion. The rise in the cost of deposits remains an important factor because it can affect margins when deposit pricing stays elevated. The stable CASA ratio and return of positive CASA inflows are therefore significant for the bank’s liability mix. Growth in retail and agriculture advances may support yields, based on the segment-level yields cited by management. At the same time, management said the impact of expected credit loss, or ECL, requirements was still being assessed. The next set of disclosures will help indicate whether the projected second-half margin and ROA improvement is being achieved.

Outlook for the Second Half of FY27

J&K Bank enters the second half with revised targets for advances, deposits, CASA, profitability and asset quality. The bank has stated its intention to improve NIM while keeping GNPA below 2%. Its performance will depend on the pace of credit growth, deposit mobilisation, the mix of new lending and funding costs. The September-quarter results establish the starting point for those targets, with net profit at ₹546.36 crore and GNPA at 2.23%. Management’s next financial update is expected to provide further details on margins, ECL assessment and progress against FY27 guidance.