See which Commercial Banks are superior than Industry Average; NMB Bank leads on major Indicators
Wed, Nov 23, 2016 12:09 PM on Latest, Exclusive, Financial Analysis, Featured, Company Analysis,
All 28 commercial banks have published their 1st quarter financial reports of the fiscal year 2073/74. On the basis of these reports, ShareSansar has analyzed their performance by comparing them on these major fundamental parameters:
In the review period, the banks increased their deposit base by an average of just under 25%. The deposit growth of 14 banks was found to be above the industry average. While Century Commercial Bank barely made it over the industry average with a 25.21% increase, NMB Bank reported the highest increase in deposit with almost 75% growth (increment of Rs. 27 Arba since Q1 of 2072/73). On the contrary, the deposit of Standard Chartered Bank shrunk by 1.61% (decrement of Rs. 9.41 Crores).
Loans and Advances
Increase in deposits only does not show improvement if the bank cannot justify the growth by increasing its lending in productive sectors. Loan is the earning unit of a bank and its growth is vital for the bank to survive.
11 commercial banks were above the industry average growth of 34.6%. NMB Bank has been able to fully capitalize on its deposit growth, and has been able to increase its lending by over 105%. Civil Bank reported the lowest growth in loans at 12%.
Net Interest Income
Net Interest Income is the income generated by a bank from its core banking activities. Banks provide loan at an interest rate higher than on deposits, which provides the bank with their core income. Increase in net interest income signifies that the bank has been able to properly utilize its funds by lending in productive sectors.
NMB Bank has again shown remarkable increase with a growth of 172.78%. The net interest income of the commercial banking industry grew by 36.21% on average. Altogether, 18 commercial banks were above the industry. Janata Bank’s net interest income fell massively by 69.04% (decrease of Rs. 41 Crores).
Operating Profit
Operating Profit is the profit a bank earns from its operation related activities. It is a common and an important indicator for measuring a bank’s growth since it gives a sense of how much the bank can cover its expenses.
In this review period, the commercial banks were able to increase their operating profit by an average of 40.23% as compared to the first quarter of FY 2072/73. 13 commercial banks were found to be above the industry average with Nepal Bank reporting the highest growth of 251%. Civil Bank is at an operating loss of Rs. 13 Crore, and has performed poorly along with Prime Commercial Bank and Rastriya Banijya Bank, which have negative growth in operating income.
Janata Bank’s operating profit has improved only by 1.16% (Rs. 11 Lakhs).
Net Profit
Net Profit is the residual income the company has made after accounting for all its revenues, expenses and losses. It is one of the most significant indicators since investors gain profit only when the company reports positive net profit. During this review period of Q1 for FY 2072/73 and FY 2073/74, the combined net profit of the commercial banking industry grew to Rs. 9.6 Arba, an average industry increase of 43.63%.
Kumari Bank reported the highest net profit growth of 182% with Nepal Bank following it at 162.42%. NMB Bank was a close third with a 162% increase. 13 out of the total 28 commercial banks were above the industry average. Net Profit of Rastriya Banijya Bank, Janata Bank and Civil Bank declined in this period. Century Commercial Bank reported a meager profit increase of 0.07% (Rs. 50 Thousand) only.
- Deposits
- Loans and Advances
- Net Interest Income
- Operating Profit
- Net Profit
In the review period, the banks increased their deposit base by an average of just under 25%. The deposit growth of 14 banks was found to be above the industry average. While Century Commercial Bank barely made it over the industry average with a 25.21% increase, NMB Bank reported the highest increase in deposit with almost 75% growth (increment of Rs. 27 Arba since Q1 of 2072/73). On the contrary, the deposit of Standard Chartered Bank shrunk by 1.61% (decrement of Rs. 9.41 Crores).
Loans and Advances
Increase in deposits only does not show improvement if the bank cannot justify the growth by increasing its lending in productive sectors. Loan is the earning unit of a bank and its growth is vital for the bank to survive.
11 commercial banks were above the industry average growth of 34.6%. NMB Bank has been able to fully capitalize on its deposit growth, and has been able to increase its lending by over 105%. Civil Bank reported the lowest growth in loans at 12%.
Net Interest Income
Net Interest Income is the income generated by a bank from its core banking activities. Banks provide loan at an interest rate higher than on deposits, which provides the bank with their core income. Increase in net interest income signifies that the bank has been able to properly utilize its funds by lending in productive sectors.
NMB Bank has again shown remarkable increase with a growth of 172.78%. The net interest income of the commercial banking industry grew by 36.21% on average. Altogether, 18 commercial banks were above the industry. Janata Bank’s net interest income fell massively by 69.04% (decrease of Rs. 41 Crores).
Operating Profit
Operating Profit is the profit a bank earns from its operation related activities. It is a common and an important indicator for measuring a bank’s growth since it gives a sense of how much the bank can cover its expenses.
In this review period, the commercial banks were able to increase their operating profit by an average of 40.23% as compared to the first quarter of FY 2072/73. 13 commercial banks were found to be above the industry average with Nepal Bank reporting the highest growth of 251%. Civil Bank is at an operating loss of Rs. 13 Crore, and has performed poorly along with Prime Commercial Bank and Rastriya Banijya Bank, which have negative growth in operating income.
Janata Bank’s operating profit has improved only by 1.16% (Rs. 11 Lakhs).
Net Profit
Net Profit is the residual income the company has made after accounting for all its revenues, expenses and losses. It is one of the most significant indicators since investors gain profit only when the company reports positive net profit. During this review period of Q1 for FY 2072/73 and FY 2073/74, the combined net profit of the commercial banking industry grew to Rs. 9.6 Arba, an average industry increase of 43.63%.
Kumari Bank reported the highest net profit growth of 182% with Nepal Bank following it at 162.42%. NMB Bank was a close third with a 162% increase. 13 out of the total 28 commercial banks were above the industry average. Net Profit of Rastriya Banijya Bank, Janata Bank and Civil Bank declined in this period. Century Commercial Bank reported a meager profit increase of 0.07% (Rs. 50 Thousand) only.
