Fitch Ratings has affirmed Jammu and Kashmir Bank’s (J&K Bank) national long-term rating at 'AA (ind)' with a stable outlook on the back of government of India’s support for the lender. The 'AA' national rating denotes expectation of very low default risk relative to other issuers, or obligations, in the same country.
J&K Bank’s ratings reflect Fitch’s expectation of moderate support from the government of India through the J&K government, if ever required, considering the bank’s central role in sustaining the economy of the politically important state of J&K.
The bank dominates the banking business in Jammu & Kashmir, with a 75% market share in lending and a 68% share of deposits.
J&K Bank’s asset quality has remained stable, with a gross NPA ratio of 1.95% in the financial year ended March, 2011, and 1.89% in the first half of FY12. The bank has demonstrated a track record of managing its asset quality during the past two decades of socio-political disturbance in the state.
