A Comparative Analysis of Commercial Banks

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1
3rd Quarterly Financial High-
lights of 2070/71 fscal year
A Comparative Analysis of Commercial Banks
Net Proft:
The central banks provision to
bring the spread rate to 5 percent
has adversely affected the proft
making capacity of all commer-
cial bank in the third quarter of
the fscal year 2070/71. Due to
such pressure, much too inves-
tors disappointment, the commer-
cial banks could reap only 13.52
percent proft in the third quarter
compared to 42 percent duing the
same quarter of the previous fscal
year. Despite positive economic
and political conditions, fnancial
institutions have not been able to
post high proft.
With the decreasing net interest
income, due to the compressed
spread rate, the banking sectors
proft shrank in this quarter, and
is set to affect the growth in the
fourth quarter as well. But banks
have become aggressive in terms
of lending since last year owing
to continuous increase in liquidity,
which has led to healthy growth in
both deposit as well as in loans and
advances.
The total Net Proft of the overall
banking sector stood at NPR 14.51
billion by the end of the third quar-
ter compared to NPR 12.78 billion
of the corresponding quarter of the
last fscal year. During the review
period, Nabil Bank Limited had
the highest net proft among the
commercial banks .
2
(Figure in 000)
Banks Net Proft
(Rs.)
Market
Share
(In %)
Rank
NABIL 1,646,716 11.35 1
NIBL 1,391,624 9.59 2
RBB 1,255,654 8.65 3
EBL 1,080,947 7.45 4
SCB 999,453 6.89 5
Figure: Net Proft of Top Five Com-
mercial Banks
(Figure in 000)
Banks Net Proft
(Rs.)
Market
Share
(In %)
Rank
NABIL 1,646,716 11.35 1
NIBL 1,391,624 9.59 2
EBL 1,080,947 7.45 3
SCB 999,453 6.89 4
HBL 792,852 5.46 5
Figure: Net Proft of Top Five Com-
mercial Banks excluding Government
Banks
Nabil Bank Limited has topped
the table with a mammoth proft
of NPR 1.64 billion this quarter
whereas Kist Bank Limited shows
a dismal performance, it is the only
commercial bank to suffer loss in
this quarter, too. The market share
of the top fve commercial banks
is 56.08 percent which is more that
of the second quarter i.e. 48.02
percent which show that old and
established commercial banks are
continuously dominating market.
(In %)
Banks Change in
Net Proft
(Increase)
Banks Change In
Net Proft
(Decrease)
MBL 223.41 BOK -17.03
CEN-
TURY
161.47 NCC -27.96
GBIME 101.48 GRAND -44.73
MEGA 98.22 JBNL -63.24
NICA 56.61 KIST -288.37
Figure: Change in Net Proft of Top
Five Commercial Banks
3rd Quarterly Financial High-
lights of 2070/71 fscal year
A Comparative Analysis of Commercial Banks
During the review period, Mach-
hapuchchhre Bank Limited was
able to increase its net proft by
223.41 percent whereas Kist Bank
Limited in this category, too, was
the worst performer as its proft
dropped by 288.37 percent. In the
table above we can see that, the
top net proft earning banks do not
fgure, which suggests that these
banks capacity of earning proft
is at a saturation point and their
growth rate is more or less static.
Operating Proft Before
Provision:
The real strength of any fnancial in-
stitutions is shown by its proft fg-
ure before any provision and write
back. So any fnancial institutions
revenue making effciency is mea-
sured by its operating proft before
provision.This proft shows the real
revenue generating capacity of the
banks through its core business.
During the review period, total
operating proft before provision
of the commercial banks grew by
8.92 percent to NPR 25.23 billion
as compared to the corresponding
third quarter of previous fnancial
year, which is not a satisfactory
growth. It is obvious that growth
in operating proft leads to growth
in net proft too, but the gap be-
tween net proft and operating
proft before provision during this
quarter is lesser compared to the
corresponding quarter. The reason
behind it is the income from recov-
ery of bad loan , provision amount
and other non-operating activities.
NABIL Bank Limited has the
highest operating proft before pro-
vision among all the banks during
the review period i.e. NPR 2.84 bil-
lion, which is 15.74 percent of the
total operating proft before provi-
sion. In terms of growth, Century
Commercial Bank Limited had the
highest growth rate of 76.09 per-
cent, which shows that this bank
is slowly recovering from the
trouble it had in the past. On the
other hand, troublesome Kist Bank
Limited posted the lowest growth
in operating proft before provision
of minus 40.78 percent.
(Figure in 000)
Banks Operatng
Proft Be-
fore Provi-
sion (Rs.)
Market
Share
Rank
NABIL 2,846,533 15.74% 1
NIBL 2,312,627 12.79% 2
EBL 1,768,033 9.78% 3
ADBL 1,623,813 8.98% 4
SCB 1,549,120 8.57% 5
Figure: Operating Proft Before Provi-
sion of Top Five Commercial Banks
(In %)
Banks Change in
Oerating
Proft (In-
crease)
Banks Change
in Oerat-
ing Proft
(De-
crease)
CEN-
TURY
76.09 LBL -10.13
NICA
63.49 BOK -10.16
NBB 47.58 NCC -23.19
SANI-
MA
46.89 JBNL -32.89
RBB 42.66 KIST -40.78
Figure: Change in Operating Proft
Before Provision of Top Five Commer-
cial Banks
Deposits:
Deposit is one of the main sources
of fund available for commercial
banks to mobilize for different pur-
poses to make proft. Higher the
deposit utilization higher the proft
making chances. So every bank has
their own strategy to attract deposit
from government, public and pri-
vate institutions as well as general
public. The deposit of commercial
banks as of the third quarter of the
current fscal year has increased
by 23.68 percent compared to the
corresponding third quarter of the
previous fscal year.
3
3rd Quarterly Financial High-
lights of 2070/71 fscal year
A Comparative Analysis of Commercial Banks
This signals that there is excess
liquidity in the market which has
helped to increase the overall de-
posit of all commercial banks by
good margin. Due to excess liquid-
ity all the banks have lowered their
interest rate on deposit and loans.
As in the pervious quarter, this
time too the banks are focusing on
increasing the lending.
The overall deposit of the banking
sector is NPR 1131.83 billion at
the end of the third quarter.
This quarter also Rastriya Bani-
jaya Bank had the largest amount
of deposits among all the com-
mercial banks. A larger portion of
government deposit are attracted
by this bank whereas Nabil Bank
Limited lead the race, excluding
state-run banks. Century Commer-
ical Bank and NICA Bank Lim-
ited top the list in terms of growth
percentage i.e 78.57 percnet and
73.66 percent respectively. Kist
Bank Limited was again the poor-
est performer as its deposit fgure
dropped by 6.38 percent.
Figure in 000)
Banks Total De-
posits (Rs.)
Market
Share
Rank
RBB 99,548,115 8.80% 1
NABIL 73,842,291 6.52% 2
NIBL 71,321,546 6.30% 3
ADBL 66,347,811 5.86% 4
NBL 65,901,540 5.82% 5
Figure: Total Deposits of Top Five
Commercial Banks
((In %)
Banks Change in
Deposit
(Increase)
Banks Change
in
Deposit
(De-
crease)
CETURY
78.57
GRAND
15.32
NICA 73.66 KBL 14.63
GBIME
62.85 SCB 12.27
NBB 59.94 SBI -4.16
CBL 59.77 KIST -6.38
Figure: Change in Deposits of Top Five
Commercial Banks
Loans and Advances:
One of the main sources for rev-
enue of commercial banks is to
mobilize their funds(deposit) in
loans and advances and make in-
vestment. So they make differ-
ent strategies to increase their
loan portfolio. In this quarter due
to excess liquidity in the banking
sector, they are maily focused on
increasing their loan and advances
rather than focusing on increasing
their deposit. In this context, they
have increased their loans and ad-
vances by 20.86 percent which is
less than the increment in deposit.
This fgure signals that banks are
fnding very much diffcult to in-
crease theirs loans and advances.
Banks have managed to increase
their loan and advance amount to
NPR 850.89 billion in this quarter.
Agricultural Development Bank
has the highest fgure of loan and
advances among all banks i.e. Rs.
54.50 billion. While, NICA and
Century Commercial banks, in
terms of loan and advance growth
too, had better fgures than the re-
maining banks. The growth rate of
these two banks were 76.91 per-
cent and 75 percent respectively.
(Figure in 000)
Banks Total Loan
& Advanc-
es (Rs.)
Market
Share
Rank
ADBL 54,504,754 6.41% 1
NIBL 53,567,230 6.30% 2
NABIL 53,512,561 6.29% 3
RBB 53,495,112 6.29% 4
EBL 50,643,091 5.95% 5
Figure: Total Loans & Advances of Top
Five Commercial Banks
4
3rd Quarterly Financial High-
lights of 2070/71 fscal year
A Comparative Analysis of Commercial Banks
(In %)
Banks Change in
Loan and
Advances
(Increase)
Banks Change In
Loan and
Advances
(Decrease)
NICA 76.91 KBL 13.00
CEN-
TURY
75.00
GRAND
10.00
GBIME
65.76 NBL 9.66
CBL 47.49 NCC 7.79
NBB 37.39 KIST -15.24
Figure: Change in Loan and Advances
of Top Five Commercial Banks
Investment:
Rastriya Banijaya Bank Lim-
ited had the highest investment
i.e. NPR 42.09 billion. Basically
these investments were made on
risk-free assets like treasury bills,
governmentt bonds, foreign bonds,
and equity share.
( In Rs )
Banks Investmemt (Rs.)
RBB 42,091,264
NABIL 22,967,001
NBL 19,764,002
ADBL 18,681,399
HBL 17,971,768
Figure: Total Investment of Top Five
Commercial Bank.
As per the Nepal Rastra Bank di-
rectives, out of the 30 commer-
cial banks in the country, none of
them have maintained higher real
estate loan exposure i.e. above 25
percent. But among the existing
commercial banks, Grand Bank
still has the highest percentage of
loan exposure in the real estate i.e.
18.46 percent whereas as in the
previous quarter Agriculture De-
velopment Bank had the lowest
i.e. 0.96 percent. This shows that
all banks have maintained as per
directives of NRB. Compared to
previous quarters, banks have re-
ally decreased their portion on real
estate loan which has decreased
the risk on real estate sector.
5
With the real estate sector in the
downhill, the commercial banks
have diminished their exposure in
the realty sector as average expo-
sure has decreased to 7.06 percent
compared to 8.95 percent in the
corresponding quarter. But there
have been 27.18 percent growth in
long-term loans during the review
period which signals that more of
such loans were given to hydro-
power, industrial and other manu-
facturing projects and service sec-
tors. However, it is too be noted
that the banking industrys expo-
sure in long-term loan despite sigi-
nifant growth still ranges between
14 - 15 percent, which is similar to
the corresponding quarter.
(In %)
Banks Change
in Real
Estate
Loan
(High)
Banks Net
interest
Spread
(Low)
GRAND
18.46 SBI 4.26
PCBL 15.46 BOK 3.70
SBL 13.15 CEN-
TURY
3.59
CZBIL 11.91 MEGA 2.40
LUBL 11.71 ADBL 0.96
Figure: Investment in Real Estate
Loan/Total Provision of Top and Least
Five Commercial Banks
Cost of Fund, Net Interest
Spread and Net Interest In-
come:
With the ease of liquidity situa-
tion in the banking sector since last
year, the banks have lowered their
interest rate in deposits because of
which the cost of fund dropped by
11.39 percent this quarter. The av-
erage cost of fund fgure tallied to
only 5.33 percent this quarter com-
pared to the corresponding quar-
ters fgure of 6.02 percent.
The slash in loan interest by com-
mercial banks to meet the NRBs
requirement is attributed to the
decline in net interest spread. The
average net interest spread of the
3rd Quarterly Financial High-
lights of 2070/71 fscal year
A Comparative Analysis of Commercial Banks
(In %)
Banks Net
interest
Spread
(High)
Banks Net
interest
Spread
(Low)
ADBL 7.85 LUBL 4.34
SCB 7.38 CEN-
TURY
4.25
NABIL 7.15 SBL 4.17
SRBL 6.81 CBL 4.10
EBL 6.54 NCC 3.21
Figure: Net Interest Spread of Top
Five Commercial Banks
During the review period, Agricul-
tural Development Bank had the
highest net interest spread of 7.85
percent whereas NCC Bank had
the lowest i.e. 3.21 percent. Simi-
larly, NICA had the highest change
in net interest income with 71.72
percent whereas Kists net interest
income declined by 24.08 percent.
(In %)
Banks Change
in Net
Interest
(Increase)
Banks Change
in Net
Interest
(Decrease)
NICA 71.72 NIBL -4.47
NBB 29.66 NCC
-10.09
CEN-
TURY
28.32 LBL -15.01
SANI-
MA
24.41 KBL -15.35
GBIME 23.45 KIST
-24.08
Figure: Change in Net Interest Income
of Top and Least Five Commercial
Banks
Loan Loss Provision, Write
Back and Net Write Back:
As per the central bank directives,
1 percent provision of each and
every loan disburse by all com-
mericial banks is mandatory and
further increment in the provision
percent depends upon the state of
the loan. The overall provision for
possible losses stood at NPR. 7.15
billion which has increased by
3.16 percent compared to the pre-
vious third quarter. Growth rate of
provison as compared to the pre-
vious quarter is negligible but still
6
banking industry in this quarter de-
creased to 5.55 percent.
Contrary to the previous scenario
,where banks had decreased depos-
it rate but maintained higher loan
rate, the banks have decreased
interes rate in loan also which has
decreased the net interest spread
signifcantly compared to the cost
of fund. This outcome has limited
the interest income growth in this
quarter.
During the review period, Net In-
terest Income of the banking indus-
try made a modest growth of only
7.72 percent compared to 41.36
percent fgure of third quarter of
2069/70. Overall Net Interest In-
come stood at NPR 32.76 billion.
(In %)
Banks Cost of
Fund
(Low)
Banks Cost of
Fund
(High)
CBL 7.87 SBI 4.09
GRAND 7.24 EBL 3.59
SANIMA 6.57
NABIL
3.45
JBNL 6.50 RBB 3.04
CEN-
TURY
6.49 SCB 1.78
Figure: Cost of Fund of Top and Least
Five Commercial Banks
The old banks of Nepal, which
were less affected by the liquidity
crunch in the previous fscal year,
still maintained high positions in
operating with less cost of funds.
Standard Chartered Bank had the
lowest cost of funds among all the
commercial banks i.e. 1.78 per-
cent, and Civil Bank had the high-
est cost of fund with 7.87 percent.
This suggests that newer banks
have higher cost of fund whereas
the old ones have lower cost of
fund due to their strong position in
the market since long time.
3rd Quarterly Financial High-
lights of 2070/71 fscal year
A Comparative Analysis of Commercial Banks
the the provision amount is huge.
(Figure in 000)
Banks Total
Provision
(Rs.) (In-
crease)
Banks Total
Provision
(Rs.) (De-
crease)
ADBL 950,761 NMB 84,219
KIST 662,994 EBL 80,660
NABIL 563,665 SBI 73,882
RBB 410,161 MEGA 62,896
NIBL 393,243 SANI-
MA
36,613
Figure: Total Provision of Top Five Com-
mercial Banks
This quarter the write-back
amount stood at NPR 3.38 billion
which increased by 16.43 percent
compared to the third quarter of
the last fscal year. The write back
from possible losses fgure is sat-
isfactory which suggest that banks
are able to recover bad loans. The
total fgure of write back is higher
than that of total provision which
is good sign for coming days.
During this quarter, Agricultural
Development Bank provisioned
Rs.950.76 million which is the
highest among all commercial
banks. Similarly, ADBL was able
to write back Rs.451 million dur-
ing review period.
( Figure in 000 )
Banks Write back (Rs.)
ADBL 451,009
RBB 433,957
GBIME 341,234
NABIL 280,458
NIBL 259,267
Figure: Total Write Back from Possible
Losses of Top Five Commercial Banks
The net write back of overall bank-
ing industry in the review period is
negative NPR 3.77 billion which is
6.40 percent more that of previous
year. This negative fgure suggests
that write back amount is less than
that of loan loss provision during
this review period which means
that NPR 2.57 billion on net basis
was provisioned for possible losses
after deducting write back amount
of overall banking industry.
Non Performing Loan (NPA):
During the review period, the av-
erage non-performing loan of the
commercial banks was higher than
the corresponding quarter. Average
non-performing loan increased by
20.21 percent to 3.13 percent this
quarter from 2.60 percent of the
last third quarter. This is really a
worrying sign for the banking in-
dustry. The fgure suggests that the
riskiness of overall loan portfolio
of banks is increasing which will
automatically deteriorate the envi-
ronment for the banking industry .
Out of 30 commercial banks, only
three banks NPA remained above
5 percent which is regarded risky,
according to the NRB directives.
Only two government banks, Ne-
pal Bank and ADBL, have more
than 5 percent, which suggests that
these banks loan portfolio is still
in a risky state. For the frst time
RBBs NPA is below 5 percent.
Kist has the highest NPA among
all commercial banks, with worst
performance this quarter.
(In %)
Banks NPA
(Most)
Banks NPA
(Least)
KIST 23.72 CEN-
TURY
0.67
ADBL 6.43 EBL 0.62
NBL 5.33 SCB 0.52
RBB 4.77 SBI 0.35
GRAND
4.55 SANI-
MA
0.05
Figure: NPA of Top Five Commercial
Banks
Credit Deposit (CD) Ratio:
The commercial banks are sup-
posed to maintain up to 80 percent
CD ratio as per the NRB direc-
tives. All the commercial banks
CD ratio is below 80 percent. This
is mainly due to increasing liquid-
ity in the banking system, which
results in higher deposit. Subse-
quently they are unable to increase
7
3rd Quarterly Financial High-
lights of 2070/71 fscal year
A Comparative Analysis of Commercial Banks
loan as per the increment in de-
posit which result lower CD ratio
compared to last quarter.
Compared to the last fscal year,
this quarter the CD ratio of com-
mercial banks has decreased which
suggests that they are unavailable
to utilize the full capacity as per the
NRB directives because of lack of
stable investment opportunity. The
average credit deposit ratio of the
commercial banks stood at 71.68
percent during the review period
which is lower than the last fscal
year i.e. 76.04 percent.
(In %)
Banks CD
Ratio
(Most)
Banks CD
Ratio
(Least)
CBL 79.09 HBL 70.56
SANI-
MA
78.96 KIST 70.07
MEGA 78.87 NBB 67.42
EBL 78.84 NBL 58.36
CZBIL 77.63 RBB 52.60
Figure: CD Ratio of Top Five Commer-
cial Banks
Earnings per Share (EPS)
and Return on Equity
(ROE):
Earning per Share and Return on
Equity generally show the per-
formance of company as per the
investment made by investors or
shareholders. It generally show
the fnancial performance from
a birds-eye view. The higher the
EPS and ROE the better will be the
performance of any company. In-
vestors can expect higher dividend
from these companies, which in
turn will result in higher demand
for the scrips of these companies
in the secondary market.
Earnings per share allow us to
compare different companies
power to make proft per share.
During the review period, the an-
nualized average EPS of commer-
cial banks is NPR 24.57, which is
8.01 percent higher than the cor-
responding quarter . But only ten
out of 30 commercial banks were
able to earn above the industry av-
erage. During the review period,
Everest Bank had the highest EPS
i .e. NPR 80.02 whereas Kist Bank
Limited had the lowest of negative
NPR 10.68.
(In Rs)
Banks EPS
(Rs.)
(Most)
Banks EPS
(Rs.)
(Least)
EBL 80.02 GRAND 5.97
NABIL 72.72 CBL 5.06
SCB 65.27 CEN-
TURY
4.18
NIBL 44.75 JBNL 2.99
HBL 36.48 KIST -10.68
Figure: EPS of Top Five Commercial
Banks
The annualized average return on
equity is 17.09 percent compared
to 14.33 percent of the last fscal
years third quarter. This fgure
shows that banks are able to in-
crease return on investors capital.
Nepal Bank has the highest ROE
i.e. 99.49 percent but this fgure is
misleading investors since its net-
worth is close to negative whereas
Kist Banks annualized ROE is
negative i.e. 17.44 percent.
(In %)
Banks ROE
(Most)
Banks ROE
(Least)
NBL 99.49
GRAND
5.26
EBL 30.61 CBL 4.78
RBB 29.24 CEN-
TURY
3.91
NABIL 28.28 JBNL 2.86
SCB 23.78 KIST -17.44
Figure: ROE of Top Five Commercial
Banks
8
A Comparative Analysis of Commercial Banks
add a minimum premium on the
base rate depending on the qual-
ity of collateral, and the risk of the
loan and the borrower. Banks may
not add any premium if a borrower
has safe collateral like government
bonds and if it is for priority sec-
tors identifed by the government.
Price to Earnings Ratio,
Price to Book Ratio and Net
worth:
P/E ratio signals the investors will-
ingness to pay for the companys
earnings. The higher the P/E the
more the market is willing to pay
for the companys earnings. The
investors take the P/E ratio as a
tool for the valuation of compa-
nys stock price. As per the indus-
try, P/E ratio can varies and inves-
tors exactly cant say how much
P/E ratio is ideal. If the P/E ratio
stands around 10-15 then it is re-
garded as correctly values as per
international standard; above it, it
is taken as overpriced and under it,
it is taken as underpriced. The P/E
ratio also indicates the market has
high hopes for this stocks future
and has bid up the price. The over-
all average P/E ratio of the banking
industry was 22.99 times compared
to 17.46 times of the correspond-
ing quarter. Compared to the corre-
sponding quarter, investor are now
very much hopeful about the stock
market and they are paying high
price for the same companies. Out
of the 30 commercial banks, 14
companies P/E ratios were above
the average level and most of the
commercial banks P/E ratio is on
a higher range. With the high hope
of political stability and positive
economic indicator as well as in-
crease in the proft of banks in this
quarter has motivated investors to
pay higher price for the scrips of
the commercials banks.
Base Rate:
(In %)
Banks Base
Rate
(Low)
Banks Base
Rate
(High)
ADBL 12.16 NIBL 6.89
CBL 10.14 EBL 6.39
CEN-
TURY
9.88 RBB 5.95
GRAND 9.83 NABIL 5.80
KIST 9.80 SCB 5.24
Figure: : Base Rate of Least Five and
Top Five Commercial Banks
Looking at the base rate of the
banks, Standard Chartered Bank
Nepal shall be the bank to get the
cheapest loan from as its base rate
is the lowest among all commercial
banks whereas Agricultural Devel-
opment Bank may be the most ex-
pensive one, according to the base
rate data of all commercial banks
of Nepal.
SCBs base rate stood at 5.24 per-
cent, followed by NABIL with
5.80 percent, whereas Agricultural
Development Bank base rate stood
at 12.16 percent. Eight banks have
a base rate lower than 8 percent,
whereas fourteen banks are in be-
tween 8 to 9 per cent, six banks be-
tween 9 to 10 per cent, and the rest
above 10 per cent.
The base rate came into effect
from mid-January, 2013. The base
rate alone may not be enough for a
bank to provide cheap loans. But
the base rate gives an idea of the
minimum interest rate that bank
could charge on lending. Banks
cannot extend loans to borrow-
ers below the base rate now, as it
is expected to make credit pricing
more transparent. The central bank
has now made it mandatory for all
the commercial banks to fx lend-
ing rates based on the base rate that
will set the foor for credit rates
and give borrowers a basic idea
on how cheap they can get credit
from banks. However, banks can
(Note: the stock price of 13th April
2014 was taken to calculate the
P/E ratio of commercial banks ).
Price-to-book ratio is another tool
which is used for the valuation of
securities. It is just a ratio of the
market price of a companys shares
over its book value of stock. Nepal
Bank had the highest P/B ratio of
24.58 times whereas Agricultural
Development Bank had the low-
est P/B ratio of 1.87 times. This
suggests that ADBL stock price is
highly underpriced.
Networth is the sum of sharehold-
ers capital plus reserve and suplus
divided by number of outstanding
share of any companies. Higher
the networth higher is the fnan-
cial soundness of company. Ever-
est Bank has the highest networth
among all commercial banks i.e.
Rs.321.38. followed by Stan-
dard Chartered Bank Limited i.e.
Rs.274.50.
(In Times)
Banks PE
Ratio
(Most)
Banks PE Ratio
(Least)
JBNL 94.31 NICA 20.32
GRAND
45.73 NMB 19.81
SBI 29.16 NIBL 19.24
SCB 27.85 GBIME 18.25
MBL 27.78 KIST -19.38
Figure: P/E ratio of Top Five Commer-
cial Banks
(In Times)
Banks P/B ratio
(Most)
Banks P/B
Ratio
(Least)
NBL 24.58 NCC 2.53
NABIL 7.28
GRAND
2.41
EBL 6.88 KBL 2.36
SCB 6.62 LUBL 2.09
SBI 5.88 ADBL 1.87
Figure: P/B ratio of Top Five Commer-
cial Banks
9
A Comparative Analysis of Commercial Banks
( In Rs )
Banks NET WORTH
EBL 321.38
SCB 274.50
NABIL 274.17
ADBL 259.28
NICA 216.97
Figure: Net worth of Top Five Com-
mercial Banks
Conclusion:
As the fscal year draws to an end,
the commercial banks are slashing
their interest rate so as to meet the
central banks requirement. The
impact of this action is clearly vis-
ible in this quarters fnancial state-
ment as the banking industry has
posted only growth of 13.52 per-
cent.
It is to be noted that the Bankers
Association has raised objection
over the central banks require-
ment. Regarding this issue the
NRB has time and again stated that
it will not roll back the decision but
has hinted of making this require-
ment fexible as per banking needs.
So, if NRB becomes fexible in this
regard, we can again expect better
growth and resource utilization in
this sector.
Futher, it also should be noted that
the presences of fnancial institu-
tions are high in numbers which
has triggered a very stiff competi-
tion among the BFIs . Despite this
unfavorable and crowded scenario,
the posted proft by banking indus-
try still is a healthy growth.
Having said that, the large pool
of BFIs in the market is creating
unhealthy practices and increas-
ing defaulters in banks which are a
troubling sign for the proftability
of banks in the long run.
However in the current scenario,
the banks have more funds to in-
vest in sectors that yield higher
10
returns. The lack of political har-
mony has kept the business com-
munities in wait and watch mood
for business expansion, which
has been the main obstacles in
loan foatation for banks.
Further, as the country is in the
process of drafting a new consti-
tution, the business fraternities
are closely watching how the fed-
eralism system will evolve. This
is surely going to have direct im-
pact on the expansion strategies
of the business houses, which
again will affect the loan expan-
sion strategy of the banking sec-
tor.

Other worrying factors for the
banking industry are the sluggish
economic condition, widening
trade defcit, high infation rate,
unfavorable business environ-
ment, lack of implementation and
smooth transition in big projects,
delay in the decision making pro-
cess that are not only creating ob-
stacles in businesses expansion
but also narrowing the invest-
ment opportunity.
In spite of all these, the central
bank has been very helpful to
guide the banking sector of Nepal
to cope with heightening compe-
tition among the existing banking
institutions in the small market
place like Nepal. NRB has pro-
moted merger of BFIs with an
aim to create a positive impact
in the long term for the banking
industry. And now the NRB has
also come up with acquisition
policy to further facilitate the
banking sector.
Following the successful merger
of banking and fnancial institu-
tions one after another, a positive
outlook in the banking environ-
ment has been created which has
energize more banks to merge
and become strong entities rather
than being a fsh in a pond. In addi-
tion, the start of acuquistion prac-
tice will help make the banking
sector more strong and productive
in upcoming days.
A Comparative Analysis of Commercial Banks
Annex
3rd Quarterly Financial Highlights of 2070/71 fscal year
(Figure in 000)
Particulars 3rd Quarter
2070/71
3rd Quarter
2069/70
Difference (In
fgure)
%
Change
Total Net Proft (In Rs.) 14,514,807.57 12,785,818.35 1,728,989.22 13.52%
Total Operating Proft Before Provision (In Rs.) 25,237,577.84 23,170,962.83 2,066,615.01 8.92%
Total Net Interest Income (In Rs.) 32,768,627.36 30,420,943.48 2,347,683.88 7.72%
Total Deposits (In Rs.) 1,131,832,450.11 915,104,897.06 216,727,553.05 23.68%
Total Loans and Advances (In Rs.) 850,895,558.16 704,061,531.11 146,834,027.05 20.86%
Total Investment (In Rs.) 233,706,116.15 192,861,832.81 40,844,283.34 21.18%
Total Provision (In Rs.) 7,152,287.35 6,933,102.45 219,184.90 3.16%
Write back from possible losses (In Rs.) 3,380,745.69 2,903,656.58 477,089.11 16.43%
Net Write back (In Rs.) -3,771,541.66 -4,029,445.87 257,904.21 -6.40%
Average CD ratio 71.68% 76.04% -4.36% -5.73%
Average Non Performing Loan 3.13% 2.60% 0.53% 20.21%
Average Cost of Fund 5.33% 6.02% -0.69% -11.39%
Average Net Interest Spread 5.55% - - -
Annualized Average Earning Per Share (EPS) (In Rs.) 24.57 22.75 1.82 8.01%
Annualized Average Return on Equity (ROE) 17.09% 14.33% 2.76% 19.23%
Annualized Average Return on Asset (ROA) 1.32% 1.42% -0.10% -7.07%
Annualized Average Price-to-Earning (P/E ratio in
Times)
22.99 17.46 5.53 31.65%
Average Price to Book Ratio (P/B ratio in Times) 3.98 2.54 1.43 56.37%
Average Net worth (In Rs.) 158.80 147.78 11.02 7.45%
11
A Comparative Analysis of Commercial Banks
Annexure
Paid up capital
(Figure in Rs 000)
ADBL 9,636,800
RBB 8,588,972
NIBL 4,146,708
GBIME 4,106,858
NBL 3,965,524
NABIL 3,047,168
HBL 2,898,000
SBI 2,650,206
PCBL 2,638,700
MBL 2,478,795
MEGA 2,330,000
NICA 2,311,552
SANIMA 2,217,600
NBB 2,210,335
CZBIL 2,101,840
JBNL 2,060,000
SCB 2,041,672
SRBL 2,015,000
CBL 2,000,000
CENTURY 2,000,000
GRAND 2,000,000
KIST 2,000,000
NMB 2,000,000
EBL 1,921,239
BOK 1,920,212
SBL 1,813,554
LUBL 1,729,728
LBL 1,694,081
KBL 1,603,800
NCC 1,470,000
Reserve
(Figure in Rs 000)
ADBL 5,386,625
NABIL 5,307,300
NIBL 4,268,298
EBL 3,987,554
SCB 3,562,775
HBL 3,194,561
NICA 2,703,935
GBIME 1,938,936
SBI 1,823,465
NBB 1,764,837
BOK 1,739,430
LBL 1,260,170
KBL 1,258,353
SBL 1,049,024
NCC 981,708
PCBL 874,895
NMB 745,552
SRBL 708,882
MBL 639,284
LUBL 591,977
CZBIL 581,941
SANIMA 527,254
MEGA 380,096
GRAND 268,638
CENTURY 201,343
CBL 114,010
JBNL 108,472
KIST -774,704
NBL -3,450,834
RBB -6,060,829
Deposit
(Figure in Rs 000)
RBB 99,548,115
NABIL 73,842,291
NIBL 71,321,546
ADBL 66,347,811
NBL 65,901,540
HBL 62,917,185
EBL 62,764,384
SBI 51,436,871
GBIME 49,399,403
SCB 42,950,161
NICA 40,569,953
MBL 33,810,995
SBL 32,470,784
PCBL 30,154,468
BOK 29,679,750
LBL 29,558,872
KBL 27,424,123
SRBL 26,093,309
CZBIL 25,044,217
NMB 23,954,389
NBB 23,524,437
NCC 22,067,445
SANIMA 20,360,891
KIST 19,679,761
GRAND 19,007,355
CBL 18,432,113
MEGA 17,050,084
CENTURY 16,706,091
JBNL 16,412,917
LUBL 13,401,189
Loan and Advances
(Figure in Rs 000)
ADBL 54,504,754
NIBL 53,567,230
NABIL 53,512,561
RBB 53,495,112
EBL 50,643,091
HBL 45,715,752
GBIME 41,284,747
NBL 38,607,723
SBI 33,592,705
NICA 33,292,199
MBL 27,535,063
SCB 27,016,222
BOK 26,105,304
PCBL 25,388,069
SBL 25,318,985
LBL 22,982,129
KBL 22,331,274
CZBIL 21,770,482
SRBL 20,132,179
NMB 19,603,617
SANIMA 18,251,411
NBB 17,605,929
NCC 17,155,403
CBL 15,539,244
GRAND 15,439,198
MEGA 15,259,938
KIST 14,519,935
CENTURY 14,375,293
JBNL 14,345,079
LUBL 12,004,930
12
A Comparative Analysis of Commercial Banks
Net Write Back
(Figure in Rs 000)
NBL 67,625
GBIME 577,56
RBB 23,796
SBI -7,678
NMB -20,090
SCB -34,938
SANIMA -35,394
MBL -40,547
LUBL -44,280
NBB -55,249
MEGA -58,832
PCBL -61,044
BOK -72,566
EBL -74,784
CENTURY -94,904
JBNL -103,809
NCC -118,192
LBL -119,245
CBL -127,738
NICA -130,183
NIBL -133,976
SRBL -137,216
GRAND -138,989
KBL -204,331
SBL -237,667
CZBIL -238,153
NABIL -283,207
HBL -298,924
ADBL -499,752
KIST -549,030
Net Proft
(Figure in Rs 000)
NABIL 1,646,716
NIBL 1,391,624
RBB 1,255,654
EBL 1,080,947
SCB 999,453
ADBL 800,512
HBL 792,852
GBIME 727,373
SBI 674,714
NICA 627,312
PCBL 423,708
NBB 401,756
NBL 384,039
SBL 363,075
BOK 355,000
SANIMA 320,823
MBL 317,932
NMB 312,468
CZBIL 304,056
SRBL 272,736
MEGA 257,992
LBL 233,565
KBL 192,390
NCC 172,092
LUBL 145,405
GRAND 89,476
CBL 75,850
CENTURY 62,667
JBNL 46,261
KIST -213,640
Net Worth
(Figure in Rs )
EBL 321.38
SCB 274.50
NABIL 274.17
ADBL 259.28
NICA 216.97
HBL 210.23
NIBL 202.93
BOK 190.59
NBB 179.84
KBL 178.46
LBL 174.39
SBI 168.32
NCC 166.78
SBL 158.03
GBIME 147.16
NMB 136.24
SRBL 134.96
LUBL 134.22
PCBL 133.16
CZBIL 127.69
MBL 125.79
SANIMA 123.78
MEGA 116.31
GRAND 113.43
CENTURY 110.07
CBL 105.70
JBNL 105.27
RBB 100.00
KIST 61.26
NBL 12.98
CD Ratio
(Figure in %)
CBL 79.09
SANIMA 78.96
MEGA 78.87
EBL 78.84
CZBIL 77.63
PCBL 77.43
BOK 77.36
KBL 77.10
LUBL 76.94
NICA 76.72
JBNL 76.71
GBIME 76.53
CENTURY 76.49
SBI 76.40
LBL 75.59
SRBL 75.51
NMB 75.43
SBL 75.28
NABIL 75.22
MBL 74.75
NIBL 74.62
SCB 74.10
GRAND 73.53
NCC 71.94
ADBL 70.69
HBL 70.56
KIST 70.07
NBB 67.42
NBL 58.36
RBB 52.60
13
A Comparative Analysis of Commercial Banks
ROE
(Figure in %)
NBL 99.49
EBL 30.61
RBB 29.24
NABIL 28.28
SCB 23.78
SBI 22.64
NIBL 22.23
MBL 20.29
HBL 18.57
PCBL 17.48
SBL 16.92
NICA 16.68
SANIMA 15.68
NMB 15.36
CZBIL 15.11
MEGA 14.12
GBIME 13.79
BOK 13.47
NBB 13.44
SRBL 13.37
KBL 11.57
LUBL 11.21
NCC 10.96
LBL 10.71
ADBL 8.21
GRAND 5.26
CBL 4.78
CENTURY 3.91
JBNL 2.86
KIST -17.44
P/E Ratio
(Figure in Times)
JBNL 94.31
GRAND 45.73
SBI 29.16
SCB 27.85
MBL 27.78
EBL 27.62
NABIL 27.43
MEGA 27.19
LBL 25.30
NBB 25.04
LUBL 24.98
NBL 24.71
SANIMA 24.06
NCC 23.11
ADBL 22.78
HBL 22.72
SRBL 22.60
CZBIL 22.50
BOK 22.31
PCBL 21.63
KBL 21.30
SBL 21.20
NICA 20.32
NMB 19.81
NIBL 19.24
GBIME 18.25
KIST -19.38
CENTURY -
RBB -
CBL -
ROA
(Figure in %)
NABIL 2.76
SCB 2.67
NIBL 2.21
RBB 2.11
EBL 2.08
NBB 1.86
MEGA 1.81
NICA 1.80
SANIMA 1.73
PCBL 1.69
GBIME 1.65
HBL 1.55
NMB 1.53
SBI 1.46
CZBIL 1.36
BOK 1.35
SBL 1.28
SRBL 1.23
LUBL 1.17
MBL 1.10
KBL 1.04
NCC 1.01
LBL 0.94
ADBL 0.73
NBL 0.64
GRAND 0.50
CBL 0.49
CENTURY 0.43
JBNL 0.32
KIST -0.91
14
Disclaimer:
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distribution of this document by any other person is prohibited. Copying any part of these
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herein. The information and opinions in these materials have been complied or arrivedat based upon
information obtained from sources believed to be reliable and in good faith. Share Sansar accepts no
liability for any damages or any loss or damages of any kind arising from any use of the information herein.
BASE RATE
(Figure in %)
SCB 5.24
NABIL 5.80
RBB 5.95
EBL 6.39
NIBL 6.89
MEGA 7.34
NBL 7.39
HBL 7.78
SBI 8.02
NICA 8.03
BOK 8.17
GBIME 8.21
CZBIL 8.22
NMB 8.33
SANIMA 8.40
NBB 8.50
KBL 8.50
MBL 8.57
LUBL 8.71
SRBL 8.72
JBNL 8.79
SBL 9.00
PCBL 9.05
LBL 9.41
NCC 9.69
KIST 9.80
GRAND 9.83
CENTURY 9.88
CBL 10.14
ADBL 12.16