Grand Bank urges clients, shareholders not to panic

ShareSansar, August 18:

Grand Bank Nepal Limited has urged its clients and shareholders not to panic, stating that the bank’s financial health is not as bad as it is generally perceived.

Publishing the unaudited financial report for the fourth quarter, the commercial bank had reported almost 15 times net profit drop in the last fiscal year 2070/71.

“This is not that serious problem as some have perceived,” Grand’s Chief Executive Officer Parshuram Kunwar Chhetri told ShareSansar.  “The provision is about the loan deferred by some of our clients. They are all in contact, and we are confident about recovering the loan soon.”

When asked to identify at least the big defaulters, Chhetri declined to name them, saying it was against the bank’s ethics.

“It’s not that difficult to identify who they are. You can find it out by going through the 60-day notices we have issued over the recent days,” added Chhetri, who took over as the CEO of the bank only in May following Sudheer Khatri’s resignation.

He further said that some of the defaulters have also been urging the bank to reschedule the loan repayment period.

Those who have been keeping a close tab on Grand Bank say that Chhetri, is a good manager, whom even the central bank listed as an banking expert.

Chhetri has long career in banking sector with top positions of management. He had worked for Nepal Bank, Citizens Bank and Bank of Asia. He was CEO of Bank of Asia before its merger with NIC Bank.

On the other hand clients and shareholders of Grand are feeling somewhat nervous following the unaudited financial report for the fourth quarter, as per which it posted a net loss of Rs 1.6 arba by the end of the last fiscal year, down from net profit of Rs 11.73 crore at the end of the previous fiscal year 2069/70.

Grand Bank’s profit growth was largely stunted by Rs 1.93 arba it had to provision for possible loss — probably due to its heavy focus on the still-sluggish realty sector.

On the other hand, it managed to write back just Rs 5.27crore of the loan it had provisioned for possible loss.
Even its core business has suffered as its net interest income has dropped to Rs 38.51 crore, down from Rs 51.86 crore in the corresponding quarter. This is due to higher interest expenses in the last fiscal year as compared to the previous fiscal year.

It, however, mobilized Rs 21.20 arba in deposit and Rs 15.14 arba in loan as compared to Rs 19.32 arba in deposit and Rs 14.52 arba in loan in the fourth quarter of the previous fiscal year.

Another worrisome aspect of the quarterly report is that Grand Bank’s non-performing loan has drastically surged to 19.09 percent of the total loan, up from just 3.52 in the corresponding quarter.

Its EPS (annualized) stands at -80.33, P/E ratio -3.97 and net worth per share at Rs 28.82.