How have Finance companies performed till the second quarter of FY 76/77? Make informed investment decisions

Mon, Feb 17, 2020 5:06 PM on Exclusive, Financial Analysis, Latest,

The outreach of banking and financial services in Nepal is still lagging behind. Majority of the population is still restrained from the access of these services. Finance companies are therefore licensed by the central bank with an objective to provide different banking and financial services to the general public. Frequent merger among finance companies or acquisition by commercial and development banks have brought fluctuation in the number of these companies.

As a result, NEPSE currently has 21 listed finance companies so far. Out of the listed companies, Crystal Finance Limited (CFL) and Capital Merchant Banking and Finance Limited (CMB) have been declared problematic by NEPSE and Multipurpose Finance Limited (MPFL) has not published second quarter reports. Janaki Finance Limited (JFL), Srijana Finance Limited (SFFIL) and MPFL are regional level finance companies while the remaining are national level finance companies.

Accordingly, the major financial indicators have been compared on the basis of the second quarterly report for FY 76/77.

Deposits and Loans

ICFC Finance Limited (ICFC) stood ahead with deposits worth Rs.11.59 Arba and loans worth Rs.8.68 Arba by the end of the second quarter. The lowest amount of deposits accumulated was Rs.4.22 Crore by Nepal Finance Limited (NFS) and lowest amount of loans dispersed was Rs.6.02 Lakhs by Samriddhi Finance Limited (SFCL).

Net Interest Income

ICFC also posted the highest net interest income in the industry at Rs.22.21 Crore. Eight companies posted net interest income below Rs.10 Crore with Samriddhi Finance Company Limited (SFCL) having the lowest net interest income of Rs.17.53 Lakhs.

Net Profit

In terms of net profits, Manjushree Finance Limited (MFIL) stood ahead with profit of Rs.19.83 Crore by the end of the second quarter, followed by ICFC with profit of Rs.8.19 Crore. The lowest profit was reported by NFS at Rs.2.27 Crore. Three companies had reported loss till the end of second quarter, they were City Express Finance Limited (Rs.5.32 Lakhs), Samriddhi Finance Company Limited (87.86 Lakhs) and Progressive Finance Limited (Rs.2.09 Crore).

EPS, Net Worth per Share and PE Ratio

MFIL leads the industry in terms of earnings per share with annualized EPS of Rs.35.05 followed by Lalitpur Finance Limited (LFC) with annualized EPS of Rs.33.83. The three companies that have reported loss till the end of second quarter published negative annualized EPS.

In terms of net worth per share, Gurkhas Finance Limited (GUFL) stood ahead. The company’s net worth per share stood at Rs.167.64 followed by Goodwill Finance Limited (GFCL) with net worth per share of Rs.162.39. Samriddhi Finance Limited (SFCL) stands at the bottom of the list with net worth per share of Rs.49.63.

The PE Ratio of the industry varies between 3.72 times (Lalitpur Finance Limited) and 25.35 times (Srijana Finance Limited).