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JS Bank’s 3Q CY13 results are a typical example of the fruits reaped by playing safe-–banking more on investments, and shying away from lending. Not that JS Bank is the only one adopting this strategy-–it is only following in the footsteps of its larger peers. On sequential basis, the bank managed a flat top line growth, yet was able to muster a stupendous growth in pre-tax profits, which more than doubled during the quarter.
JS Bank has carried a high IDR and low ADR for some time, and in the absence of detailed balance sheet numbers for 3Q CY13, it is safe to assume that the trend has not changed much. The NII improved drastically in relation to the previous quarter, speaking volumes of low cost of funds and improved deposit mix for 3Q CY13.
What created a greater difference was a massive jump in JSBL’s non-core income, mainly on the heels of gain on sale of securities, offering able support to the bottom line. On year-on-year basis, non-core income made the biggest difference to the bottom line as the provisioning charges for 3Q CY12 were negligible.
There appears very little reason why JSBL should change its strategy of playing safe anytime soon and venture aggressively into advances. The bank’s investment arm is contributing significantly to the bottom line, giving it room enough to go for low-interest yielding assets, while slowly moving the deposits up.


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JS Bank Limited (Consolidated P&L)
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Rs (mn) 3QCY13 QoQ chg YoY chg
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Markup Earned 1,725 0% 11%
Markup Expenses (1,022) -10% 7%
Net Markup Income 703 21% 19%
Provisioning/(Reversal) (144) 16% -
Net Markup Income after provisions 558 22% -6%
Non Mark-up/Interest Income 1,071 39% 35%
Operating Revenues 1,629 32% 18%
Non Mark-up/Interest Expenses (998) 4% 28%
Profit Before Taxation 631 133% 4%
Taxation (55) -30% -24%
Profit After Taxation 576 199% 8%
EPS (Rs) 0.29
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Source: Company notice
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