CENTURY COMMERCIAL BANK LTD.

CENTURY COMMERCIAL BANK LTD.

Note: IPO applied for more than 50 units should be divisible by 10 and when applied for more than or equal to Rs 50,000 the payment should be made through account payee check.

Issue Manager:  

•    Citizen Investment Trust
•    Nabil Investment Banking Limited
•    Civil Capital Limited
•    Growmore Merchant Banker Ltd.
•    NCM Merchant Banking Limited



Introduction of Century Commercial Bank Limited


Century Commercial Bank Limited was established in 2067/01/10 under the Company Act, 2063 and has been carrying out its activities as per Nepal Rastra Bank Act 2058, and Bank and Financial Institution Act, 2063. It commenced its operation as one of the financial institutions of Nepal from 2067/11/26 after receiving a license from Nepal Rastra Bank as on 2067/10/09. The bank is established with a mission of "saral banking ... sabaiko lagi" (easy banking ... for all).

The shareholding of the bank has been diversified across 568 individuals representing prominent sections of the society. The promoters represented in the Board of Directors, comprises accomplished personalities from the field of business sector, including a former deputy governor.

The Bank has been registered with an authorized capital of NPR 5,000 million and currently holds an issued capital of NPR 2,000 million and a paid-up capital of NPR 1,080 million. As per the stated mission of the bank, it is committed to simplify banking services by taking advantage of innovations in information and communication technology and to extend their reach to the “unbanked population” of the country.

The bank’s registered office is situated at Kathmandu Metropolitan-31, which is also the Head Office of the bank. Currently, the company is providing its services to customers through its 31 branch network in which 8 reside inside the Kathmandu Valley. The bank has also been providing it services through 12 ATMs.

Apart from it, recognizing that the banking activity has been limited to the urban and semi-urban areas of Nepal, the bank, with the aim of providing banking services in the rural areas, has also engaged in branchless banking. Till date, it has come to expand its banking services through 3 branchless centers.


Major shareholders of Century Commercial Bank Limited as per the Offer Letter 

        

Board of Directors of Century Commercial Bank Limited

1.    Dr. Prafulla Kumar Kafle, Chairman
Qualification: Ph. D. Degree in Economics.
Work Experience: Dr. Kafle is a seasoned banking professional who served Nepal Rastra Bank, the central bank of Nepal for 35 years and reached to the coveted post of Deputy Governor. Dr. Kafle has also contributed as the Director of Nepal Rastra Bank for 5 years, Director of Nepal Bank Limited for 4 years, Chairman of Credit Guarantee Corporation for 1 ½ years, Executive Chairman of Insurance Board (Beema Samiti), and Chairman of Eastern Rural Development Bank for 5 years. Beside these, he assumed the post of Special Advisor to the Executive Director of International Monetary Fund (IMF), Washington D.C. for 2 ½ years and Visiting Professor at University of California, USA for 3 years.

Dr. Kafle is involved with Century Commercial Bank from its inception as the Steering Committee Chairman and is guiding the Bank in many ways. He was the founding Director of the Bank since the formation of Board of the Bank.

2.    Mr. Ravi K.C, Director
Qualification: Bachelor of Commerce from Tribhuvan University
Work Experience: He works for Surya Nepal in the capacity of International Vice-president. A seasoned marketing professional for a long period, Mr. K.C served as the founding director of the Bank.

3.    Mr. Laxman Kumar Shrestha, Director
Qualification: Bachelor of Commerce.
Work Experience: He is involved with the Bank from the beginning and served as a founding Director.

4.    Mr. Bishan Shakya, Director
Qualification: Bachelor of Commerce from Tribhuvan University
Work Experience: He is a businessman from Dharan. Mr. Shakya has served as Director of Alpic Everest Finance Company Limited and Grommore Merchant and Banking Limited. Mr. Shakya has been involved with the Bank from the beginning.

5.     Mr. Kushan Pradhan,  Director
Qualification: MBA from the Philippines; Christian University, Manila, the Philippines.
Work Experience: He is a businessman with sound business knowledge and experience both at home and abroad. He is the Executive Director of Technos Corporation (Nepal). Mr. Pradhan has been with the Bank since the inception.

       
Board of Directors (BOD) shareholding in the bank as per the Offer Letter

Management Team of Century Commercial Bank Ltd.

Mr.  Ganesh Kumar Shrestha (Chief Executive Officer)
Qualification:  Master of Arts (MA)
Work Experience: Mr. Shrestha served Nepal Rastra bank for a period of 29 years. He has been working as CEO of the bank from past three years.

Mr. Anuj Mani Timilsina (Deputy Chief Executive Officer)
Qualification: Master of Business Administration (MBA)
Work Experience: Mr. Timilsina has been working as Deputy Chief Executive Officer of Century Commercial Bank from 21st November. Prior to it, he served in Nepal Investment Bank for a service period of 10 years and in Himalayan Bank Ltd for a service period of 7 years.

Mr. Jeevan Bhattarai ( Deputy General Manager )
Qualification: Master of Business Administration (MBA), Master of Arts in Economics (MA), Master of Public Administration (MPA)
Work Experience: Mr. Bhattarai has been working as Deputy General Manager of Century Commercial Bank from 16th December, 2012. Earlier he served as Assistant General Manager of the bank from 21st March, 2010 to 15th December, 2012. His prior work experience includes 10 years service period in Siddhartha Bank Ltd. and 5 years service period in Himalayan Bank Ltd.


Capital Structure

Authorized Capital                      NPR 5,000.00 Million
Issued Capital                              NPR 2,000.00 Million
Paid up Capital (Promoters)    NPR 1,080.00 Million

                   
FINANCIAL HIGHLIGHT OF THE BANK

Figure in Rs “000”

Looking at the bank’s history, it is newly formed and in its initial FY 2066/67, it hasn’t carried out much of banking transactions. So, in this financial highlight we haven’t considered the performance of the initial year.

Following the increment of paid-up capital from Rs 879.78 million to Rs 1,080 million in the FY 2067/68, the paid-up capital of the bank has not been altered till date and currently it stands at 54% of the issued capital. With the initial public offering (IPO), the company plans to par the capital structure with that of the issued capital. Similarly, observing reserve and surplus of the company, it has not sustained a remarkable growth compared to its contemporary competitors.

The double digit growth in the reserve and surplus suggest that the bank has been expanding its banking services aggressively; the bank, however, seems to be lacking in getting optimum benefit like that of its competitors. In the current scenario, if we look at the first quarters data, the bank has made reasonably healthy surge in its reserve size compared to the corresponding quarter.  

It is obvious for new banks to maintain lower CD ratio in the initial year which is the case of Century bank in FY 2067/68. However, in the following fiscal year the company has come to increase its CD ratio. In the current scenario, the bank CD ratio is behind the optimum level set by NRB at 80%; its signifies that the bank has  not been fully able to utilize its deposits which may attribute to a high cost of fund.

From the table, we see that the bank has been making increment in both deposit and Loan but coming to first quarter of this fiscal year, its growth is way below compared to the previous first quarter of FY 2069/70. Apparently, as the company’s base is getting bigger (Deposit stands at Rs 12.92 billion and Loan stands at Rs 9.92 billion) the growth of company seems to be saturating.

As stated in the ICRA rating report, the bank’s credit portfolio comprised corporate loan (ticket size > NR 10 mn for one corporate client: 49%), retail loan (20%), gold/silver loan (16%), SME loan (11%) and deprived sector & others loan (4%) as on mid-Jul-13.

Looking at the loan portfolio of the company, the bank has lowered its exposure to real estate loan to 3.78% from that of 6.26% of first quarter of FY 2069/70. Whereas, it has increased its exposure in Home/Housing Loan to 9.61% from 6.81% and in others type of loan from 18.95% to 23.83%. While, it has slightly lowered its coverage in Overdraft Loan/TR Loan/ WC Loan, Margin Type loan and Term Loan.

The decline in the loan exposure mainly in real estate loan and Overdraft Loan/TR Loan/ WC Loan, along with it the unattractiveness of depositors towards current interest rate seems to dampen the company’s growth.

In the past FY 2069/70, the company maintained a hefty growth in operating profit before provision than that of FY 2068/69. With the aggressive increase in the loan and advance by the company in the FY 2069/70, the interest income surged by 139.17%, helping to boost the operating profit before provision.

Similarly, the decrease in the interest expenses from 69.11 % to 65.65% in the FY 2069/70 also helped to propel the operating profit before provision.

However, coming to the first quarter data of this fiscal, the interest income has shrunk to only 52.42 % growth down from the corresponding quarter figure of 156.99%. While, its interest expenses propelled to 76.90% from 69.37% in the first quarter of FY 2070/71.

Now if we look at the net write back, the figure is all in negative suggesting the bank has not been able to eliminate its bad debt. However, looking at the first quarter data of FY 2070/71, we can observe that the bank has greatly minimized its bad loan from the figure of 0.34 % to 0.17% which suggests that the bank having some success in recovering from its bad loans.

Despite its recovery, the increase in the non performing loan of the bank from zero to 0.63% in first quarter of FY 2070/71 outlines a contrasting view of the bank.

In spite of the increase in the bad loan, the company has still come to make an astounding growth in a net profit in the current first quarter which is attributed by other revenue sources also. The bank in this first quarter has generated income from other sources like Fees, Commission and Discount, foreign exchange and other operating, the income from these sources has drastically increased by 326.25% this first quarter, which have helped the company to cut back its loss from provision and maintain a healthy growth.

If we look at the Net Worth of the company, its figure is not one of the best among its competitors. Now, looking at the EPS, ROA and ROE till the first quarter of the FY 2070/71,  we can see that, the increment has not been one of the smoothest. However, in recent days the company performance has been making a gradual progress.

Despite the increase in the provision and bad loan of the bank, the increasing revenue from other operating activities has helped to counter the growing risk from bad loan, which has also helped the company to sustain and maintain growth in the above four indicators.

Looking at the overall financial highlights, the bank’s loan portfolio seems to be degrading and it also seems that the bank, to tackle these growing bad loans, is currently not aggressively expanding its services like it used to. However, the company’s income generation from other business activities like Fees, Commission and Discount, foreign exchange and other activities seems to be in better gear and helping to counter the financial loss from bad loans.

Despite of its average performance, the IPO of this bank is still one of the attractive as it is the last commercial bank to float its primary shares. Along with it, looking at the market condition, where even the share price of bank operating in loss is trading at price above Rs 200, the sentiment of the investors may uplift the value of this IPO rather than company’s performance.

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