Look at comparison of major indicators of development banks based on fourth quarter report; Muktinath Bikas Bank maintains lead on majority of indicators

Mon, Aug 24, 2020 11:53 AM on Exclusive, Company Analysis,

There are 18 Developments banks listed in NEPSE currently. However, not all of the banks fall under the same category. The development banks can be categorized into three subcategories. National Level banks, development banks operating in 4 to 10 districts and development banks operating in 1 to 3 districts. A wise investor would create a portfolio of development banks comparing their performance with the banks falling in the respective categories.

This will article will focus on the performance of all three subcategories. The analysis is based on the NFRS standards.

 

 * Karnali Development Bank didn't publish Q4 report

Net Profit:

As per the fourth-quarter report of FY 2076/2077, Muktinath Bikash Bank Limited (MNBBL) has the highest Net Profit of Rs. 65.03 crores followed by Garima Bikas Bank Limited (GBBL) and Shine Resunga Development Bank Limited (SHINE) with Rs. 53.93 crores and Rs. 47.45 crores respectively.

 

Net Interest Income:

As of fourth-quarter, Muktinath Bikas Bank Limited (MNBBL) earned Rs. 2.22 Arba in Net interest income. Garima Bikas Bank Limited (GBBL) and Mahalaxmi Bikas Bank Limited (MLBL) earned Rs. 1.62 Arba and Rs. 1.54 Arba of net interest income till the fourth quarter.

 

 

Paid-Up Capital:

The central bank of the country has directed development “B” categorized banks to meet the paid-up capital requirement. NRB has directed development banks of the national level to meet the paid-up capital of at least Rs. 2.50 Arba, development banks operating in 4 to 10 districts to meet the paid-up capital of at least Rs. 1.2 Arba and development banks operating in 1 to 3 districts a paid-up capital of Rs. 50 crores.

Following the requirement, Muktinath Bikas Bank Limited (MNBBL) has the highest paid-up capital of Rs. 4.32 Arba. Similarly, Jyoti Bikas bank (JBBL) has the 2nd highest paid-up capital of Rs. 3.49 Arba followed by Garima Bikas Bank (GBBL) of Rs. 3.23 Arba.

 

Reserve and Surplus:

In terms of Reserve and surplus, Mahalaxmi Bikas Bank Limited (MLBL) has the highest reserve of Rs. 1.74 Arba followed by Lumbini Bikas Bank Limited (LBBL) and Muktinath Bikas Bank Limited (MNBBL) of Rs. 1.50 Arba and Rs. 1.46 Arba respectively.

(Note: Reserve and Surplus amount includes Share Premium, Retained Earning and Reserve)

 

Deposit from Customers:

As of fourth-quarter of FY 2076/2077, Muktinath Bikas Bank Limited (MNBBL) stood highest in terms of deposit collection with Rs. 57.29 Arba followed by Garima Bikas Bank Limited (GBBL) and Mahalaxmi Bikas Bank Limited (MLBL) with Rs. 42.43 Arba and Rs. 36.97 Arba respectively.

 

Loans and Advances to Customers:

In terms of loans and advances to customers, Muktinath Bikas Bank Limited (MNBBL) has disbursed the highest loans of Rs. 47.69 Arba. Similarly, Garima Bikas Bank Limited (GBBL) and Jyoti Bikas Bank Limited (JBBL) with Rs. 34.94 Arba and Rs. 29.57 Arba respectively.

 

Non-Performing Loan:

Non-performing loan increases when the company is not able to collect the loans provided to its customers. This indicator tells investors a lot about management ability to allocate their money.

As of the fourth quarter of FY 2076/2077, the highest non-performing loan was reported by Corporate Development Bank Limited (CORBL) with 4.94% followed by Excel Development Bank limited (EDBL) and Sahara Bikas Bank Limited (SHBL) with 4.63% and 4.57% respectively.

 

Earnings per share:

Earnings per share (EPS) is presumed to be one of the key factors while undertaking an investment decision. With that said, Miteri Development Bank Limited (MDB) reported the highest EPS from the sector of Rs. 24.14 followed by Garima Bikas Bank Limited (GBBL) and Shine Resunga Development Bank Limited (SHINE) of Rs. 16.65 and Rs. 15.73 respectively.

 

Net Worth per share:

As of fourth-quarter of FY 2076/2077, Mahalaxmi Bikas Bank Limited (MLBL) has the highest Net worth per share with Rs. 156.78 followed by Lumbini Bikas Bank Limited (LBBL) and Sahara Bikas Bank Limited (SHBL) with Rs. 155.53 and Rs. 151.52 respectively.

 

Price to Earnings ratio:

Price to earnings ratio has been one of the widely used multiple whiles picking stocks. This indicator clarifies the investors about how much they are paying for a stock relative to its earnings. The lower the P/E multiple, the better the deal.

As of the fourth quarter of FY 2076/2077, Kamana Sewa Bikas Bank Limited (KSBBL) reported the highest P/E ratio of 67.17 times. Similarly, Excel Development Bank Limited (EDBL) reported a P/E of 62.95 times and Sahara Bikas Bank Limited (SHBL) reported a P/E of 59.70 times.

 

In a nutshell