ICRA Nepal reaffirms issuer rating of [ICRANP-IR] A-and [ICRANP] LA-to subordinated debentures programme of NMB Bank

Wed, May 6, 2020 3:15 PM on Bonds & Debentures, Latest,

ICRA  Nepal  has  assigned a  rating  of [ICRANP-IR]  A-(pronounced  ICRA  NP  issuer  rating  Aminus)  to NMB Bank  Limited (NMB),  indicating adequate  degree  of  safety  regarding  the  timely  servicing  of  financial  obligations.  Such  issuers  carry low  credit  risk.  This  rating  is  only  an  opinion  on  the  general  creditworthiness  of  the  rated  entity  and  is  not  specific  to any debt instrument.

ICRA  Nepal  has also assigned a rating  of[ICRANP] LA-(pronounced  ICRA  NP long-term debt rating Aminus)to NMB’s existing subordinated debenture programme worth ~NPR 2,184 million. Instruments with this rating are considered to have an adequate degree of safety regarding the timely servicing of the financial obligations. Such instruments carry a low credit risk.


Credit strengths

  • Long track record, adequate scale and diversified geographical presence
  • Good ownership profile including institutional shareholding and experienced management team 
  • Strong capitalisation profile
  • Good profitability profile and diversified earnings

Credit challenges

  • Recent moderation in asset quality
  • Moderate funding profile with high concentration risk and low CASA
  • Changing regulatory landscape and externalities could affect growth and economies of scale.

Bank profile

NMB Bank Ltd started its operation from December 26,1996 as a Class C Finance Company. Ithas been operating as a commercial bank following its upgradation from Class C to Class A in May 2008. It is a joint venture company with foreign promoters FMO (Netherlands) holding ~17% & M/s Young Leon Realty, Malaysia holding ~5% stake.As on mid-Jan 2020, the promoter-public shareholding of NMB stood at ~51:49. The current major promoter group of the bank includes FMO Netherlands, the Employees’ Provident Fund, Young Leon Realty SDNBHD, Malaysia and other individual shareholders from business houses of Nepal. The bank is headquartered in Babar Mahal, Kathmandu.

Mr Sunil KC is the CEO of the bank. As on mid-January 2020, NMB has market share of about 4.13% in terms of deposit base and 4.38% of total advances of commercial banks as on mid-January 2020 (3.55% and 3.79% share respectively in the banking industry). With its 163 branches, NMB has presence throughout the country as of mid-October 2019. The bank reported a profit after tax of NPR 2,257 million during FY2019 over an asset base of NPR 135,470 million as at mid-July 2019 against profit after tax of NPR 1,854 million during FY2018 over an asset base of NPR 112,391 million as of mid-July 2018. Till mid-Jan 2020 (Q2FY2020), NMB has reported a net profit of NPR 1,636 million over an asset base of NPR 174,190 million. As of mid-January 2020, NMB’s CRAR was 16.05% (tierI CRAR 13.79%) and gross NPLs were 1.96%.

Source: www.icranepal.com

Read the full report here