Jammu & Kashmir Bank rose to a lifetime high following the keenness shown by both India and Pakistan to resume dialogue and decrease tension between the two countries.

The bank has already been riding the crest of popularity of late what with expectations of strong Q4 results and rumours that a decent bonus issue is in the offing. The company is slated to announce Q4 and FY 2002-03 results on 5 May 2003.

All these factors sent the scrip of J&K Bank spiraling up 6.2% to Rs 157.10 on BSE in mid-afternoon trades. The scrip hit a high of Rs 161, an all-time high. But volatility marked the J&K Bank counter today as it came off the higher levels later. It witnessed a fresh surge in afternoon trades. Around 140,000 J&K Bank shares were traded so far on BSE.

J&K Bank operates in the volatile state of Jammu & Kashmir. Business in this region has been crippled over decades of separatist insurgency and terrorist activity. J&K Bank is able to mobilise substantial deposits in the state at low cost, due to the lack competition. It lends outside the state at competitive rates.

India has decided to appoint a high commissioner to Pakistan and restore civil aviation links on a reciprocal basis. The Prime Minister, Atal Behari Vaypayee, made this announcement in Parliament on Friday. Commenting on the talk he had with his Pakistani counterpart this week, Vajpayee said he had emphasised [to Jamali] the importance of economic cooperation, cultural exchanges, people-to-people contacts and civil aviation links. "We are committed to improvement of relations with Pakistan and we are willing to grasp every opportunity towards that," the Prime Minister said.

J&K Bank is a banker to the J & K state government and has also been appointed by the Reserve Bank of India as its agency in J&K, responsible for carrying general banking business of the Central government and collection of taxes pertaining to the Central Board of Direct Taxes.

J&K Bank is looking at improving its income stream by enhancing fee-based business with increased focus on fee-generating activities like depository services, cash management, guarantees and trusteeship. The bank created history of sorts when it took over the Srinagar branch of Standard Chartered Grindlays Bank along with its assets and liabilities.

J&K Bank's net non-performing assets stand at 1.9% of net advances, which is among the lowest in the banking industry.

J&K Bank has a track record of strong growth in revenues and earnings. For FY 2002-03, analysts expect the bank to post a 36% growth in net profit to Rs 353 crore (Rs 3.53 billion) on a 7% growth in gross interest income to Rs 1,450crore (Rs 14.5 billion).

Also, the market is rife with rumours that the private sector bank may propose an issue of bonus shares. The market expects the bonus to be in the ratio of 1:1.

The bank, though classified as private, is 53% owned by the J&K government.