How have commercial banks performed over the past 5 years? See their growth in major indicators

Sun, Jun 16, 2019 5:25 PM on Exclusive, Latest,

-ShareSansar

A company is only as strong as its fundamentals and the strength of those fundamentals is reflected through their numbers.

Commercial banks, being one of the successful industry in the Nepali market, are persistently sought after by investors. They are also under close scrutiny of Nepal Rastra Bank, which again fosters the trust of investors.

Therefore in this article we will be looking at the major indicators of commercial banks over the period of 5 years from FY 2070/71 to FY 2075/76. All the data taken are from the third quarter reports of respective fiscal years.

DEPOSITS

The industry average deposits of commercial banks stood at Rs 38 arba as of Q3 of FY 2070/71. Five years down the line, this figure has reached Rs 94.9 arba reporting a rise of 149.7%. Thus, in terms of compounded annual growth, the deposits collection of commercial banks has risen by 20.08%.

Similarly, if we look at individual banks, Mega Bank has reported the highest CAGR of 35.2% followed closely by Janata Bank at 35.07%.

Likewise in the lower end lies Nepal Bank with CAGR of 9.96% only, preceded by Standard Chartered Bank and Agricultural Development Bank at 10.67% and 11.25% respectively.

*Data taken from SSpro.

LOANS AND ADVANCES

The average loans and advances of commercial bank as of Q3 FY 2075/76 stands at Rs 84 arba, which stood at Rs 29 arba in Q3 of FY 2070/71. This reports a rise of 190.99% in a period of 5 years and a compounded annual growth rate of 23.82%, which slightly above the CAGR of deposits.

In a close up, we can see that NMB bank and Janata Bank have the highest CAGR in loans and advances of 35.76%. Likewise, Mega bank stands at third position with 35.61%.

On the other end, Agricultural Development Bank has reported the lowest CAGR of 15.16% only. Nepal Bank, who had the lowest growth in deposists, has shown some resilience in loans and advances ranking at 21st position with CAGR of 18.79%.

In the Q3 of FY 2070/71, ADBL was the highest lenders whereas 5 years later it has been surpassed by NIC Asia Bank, Nabil bank and Nepal Investment Bank.

*Data taken from SSpro.

RESERVES AND SURPLUS

The commercial banking industry's average reserves and surplus has grown by 275.7% from Q3 of FY 2070/71 to Q3 of FY 2075/76.

Janata Bank reports the highest growth of 85.4% against the lowest of 11.66% of Standard Chartered Bank. Likewise Nepal Bank doesn't fit in the list as it still has accumulated losses to cover for.

*Data taken from SSpro.

NET INTEREST INCOME

The average net interest income of commercial banks of Nepal has grown by 183.93% in the period of 5 years. The amount has grown from Rs 1.12 arba to Rs 3.18 arba as of Q3 FY 2075/76 with a CAGR of 23.21%.

Century commercial bank has reported the highest growth in this period, followed shortly by Janata Bank. Similalry, the lowest growth has been reported by Agricultural Development Bank at just 10.35%.

*Data taken from SSpro.

OPERATING PROFIT

The average operating profit of commercial banks for Q3 of FY 2070/71 stood at Rs 67.9 crore. The figure has rose by 224% in five years standing at Rs 2.2 arba in Q3 of this fiscal year.

Janata Bank has topped the list with CAGR of 83.51%, followed far behind by Century commercial bank at 65.96%. Overall, out of 25 banks 19 lie above industry average and only 6 below the indutry average.

Similarly, Standard Chartered Bank is last on the line with a CAGR of 11.55% only.

*Data taken from SSpro.

NET PROFIT

Unlike in operating profit, there appears a balance in net profit with 14 banks above industry average and 11 banks below industry average. The average net profit of commercial banks has risen from Rs 57.4 crore to Rs 1.56 arba with a CAGR of 28.43% in five years.

Janata Bank yet again tops the list with a CAGR of 66% followed by Nepal bank at 57%. On the lower end stands Nepal Investment Bank with CAGR of 13.77%.