Care Ratings Nepal provides A Plus ratings to Rs 250 crore debenture issue of Rastriya Banijya Bank Limited

CARE  Ratings  Nepal  Limited  (CRNL)  has assigned the  issuer rating of“CARE-NP A+ (Is)” to Rastriya Banijya  Bank  Limited  (RBB).  Issuers  with  this  rating  are  considered  to  offer  adequate  degree  of  safety regarding  timely  servicing  of  financial  obligations,  in  Nepal.  Such  issuers  carry  low  credit  risk.  CRNL  has also assigned rating  of „CARE-NPA+‟  to  the proposed Subordinated  Debentures  issue of RBB.  The instruments  with  this  rating  are  considered  to  have  adequate  degree  of  safety  regarding  timely  servicing  of financial obligations, in Nepal. Such instruments carry low credit risk. 

Key Rating Strength

• Long track record, ownership and expected support by Government of Nepal and experienced management team
• Adequate capitalization
• Diversified and geographical coverage through branches
• Diversified loan portfolio, concentration towards Retail and SME portfolio
• Strong CASA ratio with lowest cost of funds in the industry
• Considerable growth in total income and net profit over the period
• Comfortable Moderate deposits concentration and low advances concentration liquidity profile

Key Rating Weaknesses

• Weak Asset quality with high GNPL Level
• Intense competition
• Exposure to regulatory risk related to industry

About the Bank

Rastiya  Banijya Bank  Limited  was  incorporated  by  Government  of  Nepal  (GoN)  on  January  23,  1966  as Rastriya Banijya Bank under the provisions of Rastriya Banijya Bank Act 1965. Later, pursuant to Companies Act  2063, the  entity was  converted  to  public  limited  company  and  was  renamed  as  Rastriya  Banijya  Bank Limited (RBB). RBB is “A” Class Licensed Institutions from Nepal Rastriya Bank (NRB) and comes under the purview of Banks & Financial Institutions Act (BAFIA) with 99.97% share held by various ministries of Government of Nepal. The bank reported PAT of Rs. 5,047 Mn on an asset size of Rs. 226 Bn as on July 16, 2019.  Further, RBB reported  PAT  of  Rs. 3,066 Mn  during 9MFY20. The  Bank has  one  wholly  owned subsidiary  RBB  Merchant Banking  Limited  which  was  incorporated  in January  29,  2016  and is  licensed  by the Securities Board of Nepal (SEBON) to undertake Merchant Banking and Investment Banking services.

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