MEGA BANK NEPAL LIMITED

MEGA BANK NEPAL LIMITED

Note: IPO applied for more than 50 units should be divisible by 10 and when applied for more than Rs 50,000 the payment should be made through account payee check.

Issue Manager:  

• Nabil Investment Banking Limited
• Citizen Investment Trust
• NIBL Capital Markets Limited
• NMB Capital Limited 

Introduction of Mega Bank Nepal Limited

Mega Bank Nepal Limited (MBNL) was established in 2067/01/05 under the Company Act, 2063 and has been carrying out its activities as per the Nepal Rastra Bank Act 2058, and Bank and Financial Institution Act, 2063. It commenced its operation as one of the financial institutions of Nepal from 2067/04/07 after receiving a license from Nepal Rastra Bank as on 2067/04/04. The bank was established by a group of individuals with a vision to establish a national level financial institution that would provide the highest levels of professional banking service with a personal touch, throughout the nation, to all Nepalese.

The bank is founded by 1,219 promoters spread across 63 of Nepal's 75 districts, the representation of the promoters are divided into 6 clusters, with each cluster being represented by one seat on the Bank’s Board. The promoters are represented in the Board of Directors, comprising of accomplished personalities from the field of tourism, development, academics, economics and business.

The Bank isregistered with an authorized capital of NPR 4,000 million and currently holds issued capital of NPR 2,330 million and paid up capital of NPR 1,631 million. With the mission of becoming the Banker of every Nepali from Plough to Power – Halo to Hydro, the company is forging ahead. The bank trusts in the deliverance of excellent service and working towards providing Quality Banking to all their stakeholders by creating, building and strengthening relationships for mutual benefit.  

The bank's registered office is situated in Kathmandu-1,  Kantipath which is also the Corporate office of the Bank. Currently, the company is providing its services to customers through a branch network of 28 in which 10 reside in the Kathmandu valley and 18 outside of the valley. The bank has also been providing the services of ATM by collaborating with Smart Choice Technologies (SCT), currently, it posses 29 ATM machines, dispersed in various locations of countries.

Apart from it, recognizing that banking activity has been limited to the urban and semi-urban areas of Nepal the bank with the aim of providing banking services in the rural areas has emphasized in branchless banking. Till date, it has came to expand its banking services through 16 branchless centers where there is an absence of branch network and has targeted to establish additional 29 centers to increase its reach.

Major shareholders of Mega Bank Nepal Limited as per the Annual Report of 2068/69 (Holding more than 0.5%)

Board of Directors of Mega Bank Nepal Limited

Prof. Dr. Madan Kumar Dahal, Chairman

Qualification: PH. D. Degree in Economics from University of Bombay, India in 1983.
Work Experience: He taught Government Finance at Tribhuvan University (TU), Kirtipur for over thirty-eight years until his retirement in June 2009. Apart from it, Prof. Dahal served a number of organizations at various capacities.

The major assignments comprise: Chairman, High Level Tax System Review Task Force, (MOF/GON) (1995); Executive Director, APROSC/GON (1995); Visiting Professor, University of Colorado at Boulder, USA (1996); Head, Central Department of Economics at Tribhuvan University (TU) (2002-2006); Member, Academic Council, TU (2003-2005); Member, Board of Directors, Employees Provident Fund (EPF/GON) (2004-2007); Member, Board of Directors, NCC Bank (2007-2009); Board Member, Institute of Foreign Affairs (IFA), Ministry of Foreign Affairs, GON (2007-2009).

In recent years Dr. Dahal is actively engaged in and attached to a number of academic and professional organizations, which include: Member, National Development Council at National Planning Commission (NPC/GON); Member, Revenue Advisory Board, Ministry of Finance (MOF/GON); Chairman, Mega Bank Nepal Ltd. (MBNL); and President, Nepal Economic Association (NEA).

Dr. Duman Singh Thapa Chhetri, Director

Qualification: Doctorate in Development Sociology from U.S.A; Masters Degree in Agriculture Extension & Rural Development from Reading University, London; Post Graduate in Management from Harvard University, Kennedy School of Government, U.S.A.
Work Experience: Experienced in community based Development project and economic development. He has provided his services as Director in Nepal Resource Management Project, USAID. At present Dr. Thapa is the National Advisor and Head of Conflict Resolution Program. The Carter Center, Advisor of Parliament Support Program, Board of Director of Poverty Alleviation Fund, Nepal Government , President of MRMG ( Mountain Resource Management Group) , Chairman - ASPECT ( Asian Study Center for Peace and Conflict Transformation, Chairman - NSSN ( Nepal Security Sector Network), Member, National Development Council, Nepal Government.

Prof. Dr Govinda Nepal, Director

Qualification: Doctorate Degree in Economics from Moscow Institute of National Economy, Russia.
Work Experience:, Dr Govinda Nepal is affiliated and associated with major financial and development organization such as- National Planning Commission, Institute for Policy Research and Development, Nepal Economic Association, National Integrated College. At present he is the Professor of Economics in Patan Multiple Campus and also supervises PhD Thesis in Monetary Policy.

Mr. Bhoj Bahadur Shah, Director

Qualification: Graduate
Work Experience: An academician at large being, Mr Bhoj Bahdur Shah is past President of PABSON and Vice President of All Nepal School's Sports Association. He brings along a great experience of being the Founder / Principal of Ananda Bhumi High School, Founder / Executive Member Secretary of National Integrated College.

Mr. Gopal Khanal,  Director

Qualification: Graduate
Work Experience: A Successful Businessman and a well known Publisher, Educational Entrepreneur, Mr. Gopal Khanal is the Chief Executive Director of Nepal Mega College and President of Asia Publication, Universal printing Press and Pariskrit Carpet Industry. He is a member of the Bank, Finance and Insurance Committee under the Federation of Nepalese Chambers of Commerce & Industry. Mr. Khanal is also a Council member of Sopan Multiple Company Limited.

Mr. Madan Kumar Acharya,  Director

Qualification: Intermediate
Work Experience: Mr. Madan Kumar Acharya is a well-known social worker and a successful businessman with a rich 2 decade experience and contribution in the tourism sector of Nepal. He is the Managing Director of one of Nepal's leading travel company viz. Loyal Travels and Tours Pvt. Ltd.. He is also a Central Member of the Canoeing & Rafting Association under Nepal National Sports Council and a member of the Airlines Program Joint Council (APJC) of Nepal.

Mr. Shambhu  Bikram Thapa,  Director

Qualification: Graduate
Work Experience: A famous and successful businessman , Mr Shamhu Bikram Thapa the Chairperson of Rolpa Carpet Industry. He is one of the dignified exporter of carpet in America, Europe and Asia since 1987 A.D.

Mr. Ishwar Bahadur Gurung,  Director

Qualification: Post Graduate
Work Experience: Mr. Ishwar Bahadur Gurung is an academician with two and a half decade experience in school and college education sectors. He is the Founder Principal of Moonlight Higher Secondary School, the treasurer of central PABSON, and the chief advisor of Lalitpur PABSAON. He is also the president of Srijana International Publications, the Vice President of Nesfield International College management committee, the advisor of Sopal Gurung Samaj, Kathmandu and a member of All Nepal School's sports Association.

Mr. Sushil Ram Mathema,  Director

Qualification: Mr. Sushil Ram Mathema holds a Masters Degree in Economics from Thammasat University, Bangkok, Thailand in 1986. He also holds a Bachelor Degree in Agricultural Science from University of Udaipur, Rajasthan, India in 1973.
Work Experience: As an agriculturist he served the government of Nepal in Department of Agriculture in the capacity of District Agricultural Development Officer, Agricultural Extension Officer and Entomologist for around 3 years. He has had the experience of serving in one of the oldest public banks- Nepal Bank Limited as a loan officer for 3 and half years. He joined Nepal Rastra Bank in 1980 and served the bank in various capacities for 30 years till his retirement from the post of Executive Director in September 2010. He was deputed by the Nepal Rastra Bank to work as Senior Economist at Southeast Asian Central Banks Research and Training Centre, Kuala Lumpur, Malaysia for 2 1/4 years. He was also associated with a number of multilateral and bilateral organizations such as the World Bank, Asian Development Bank, Canadian Cooperation Office as a local consultant economist.

He also worked in International Monetary Fund, Washington D.C. on deputation by Nepal Rastra Bank as Senior Advisor to the Executive Director, South-East Asia Voting Group (SEAVG) Constituency in 2008 for 8 months.

Board of Directors (BOD) shareholding in the bank as per Annual Report 2068/69

Management Team of Mega Bank Nepal Limited.

Mr.  Anil Keshary Shah (Chief Executive Officer)
Qualification:  Master of Business Administration (MBA)
Work Experience: Mr. Shah has been working as CEO of Mega Bank Nepal Limited since 2009 A.D., before that he worked as CEO in Nabil Bank Limited from 2004 A.D. to 2009 A.D. Apart from it, he has worked in Standard Chartered Bank where he worked up his level from the position of assistant to senior manager within the time frame of 1991 A.D. to 2004 A.D. During the period of 1987 A.D. to 1989 A.D., he worked as financial specialist in International Centre for Integrated Mountain Development (ICIMOD).

Mrs. Anupama Khunjeli (Chief Operating Officer)
Qualification: Executive MBA
Work Experience: Mrs. Khunjeli has been working as Chief Operating Officer of Mega Bank Limited since 2010 A.D. before that she worked in Nabil Bank Limited as senior manager from 2004 A.D. to 2010 A.D. She is also the former employee of Standard Chartered Bank Limited where she worked up her way from the post of assistant to senior officer within the time frame of 1991 A.D.  to 2004 A.D.

Mrs. Raveena Desraj Shrestha  ( Chief Consumer Banking and Corporate Affairs )
Qualification: Graduate
Work Experience: Mrs. Shrestha has been working as head of chief consumer banking and corporate affairs of Mega Bank Limited since 2010 A.D., before that she worked as senior manager and manager in Nabil Bank Limited from 2003 A.D. to 2010 A.D. She worked up her way from the position of assistant to assistant manager in Standard Chartered Bank Limited within the time frame of 1991 A.D. to 2003 A.D.

Mr. Tulsi Ram Pokharel  (Company Secretary )
Qualification:  Master of Business Administration (MBA)
Work Experience: Mr. Pokharel has been working as the company secretary of the Mega Bank Limited since 2010 A.D., before that Mr. Pokharel was the CEO of the Mega Bank Limited from 2008 A.D. to 2010 A.D. Apart from it, he worked as company secretary in Alpic Everest  Finance Limited from 2006 A.D. to 2007 A.D. He has also worked as senior manager in Prudential Merchant Banking and Finance Limited from 2005 A.D. to 2006 A.D. During the period of 1997 to 2005, he worked as chief senior manager and assistant manager in Nava Durga Finance Company Limited. He has also worked as a supervisor in Nepal Living Standard Survey Project carried out by Central Bureau of Statistics/ National Planning Commission in 1995-96 A.D.

Capital Structure

FINANCIAL HIGHLIGHT OF THE BANK

                                                                                                                                                                Figure in Rs “000”

Looking at the bank’s history, it is newly formed and in its initial FY 2066/67, it hasn’t carried out much of the banking transactions. So, in this financial highlight we haven’t considered the performance of the initial year.

Till date the paid up capital of the bank has not been altered as it currently stands at 70% of the issued capital. With the initial public offering (IPO), the company plans to par the capital structure with that of issuing capital. Similarly, observing reserve and surplus of the company, it has sustained a remarkable growth.

The double digit growth in the reserve and surplus suggest that the bank has been expanding its banking services aggressively and it’s paying off well. Though the aggressive approach comes with the risk, it seems that the bank has kept the risk to a minimum always.  In the current scenario also, if we look at the third quarterly data, the bank has maintained the similar growth which suggests a stable flow of income of the bank.  And compared to its contemporary competitors, the bank has the highest reserve and surplus maintained.

It is obvious for new banks to maintain a lower CD ratio in the initial year, which was the case of the Mega bank in FY 2067/68. However, in the following fiscal year the company has been successful to increase its CD ratio. In the current scenario, the bank CD ratio is near to the optimum level set by NRB of 80%; it intends that the bank fully employed its deposits and kept its cost of idle fund low.

Looking at the loan portfolio of the company, the bank has lowered its exposure to real estate loan to 1.88% from that about 3.91% in the third quarter of FY 2068/69. Whereas, it has increased its exposure in Home / Housing Loans, Term Loan and  Overdraft Loan/TR Loan/ WC Loan.

From the table given above, we see that the bank has been making incremental in both deposit and loan figures but coming into the third quarter of this fiscal year, its growth is way below compared to previous third quarter of FY 2068/69. Apparently, as the company’s base is getting bigger (Deposit stands at Rs 12.84 billion and Loan stands at Rs 11.61 billion) the growth of the company seems to be at saturating level.

Apart from it, the decline in the loan exposure in Others type of loan and real estate loan along with unattractiveness of depositors towards current interest rate seems to have dampened the company’s growth. Despite its low growth, the bank still leads among its contemporary competitors with the highest figure in both headings.

In the past FY 2068/69, the company has maintained a hefty growth in the operating profit before provision than that of FY 2067/68. With the aggressive increase in the loan and advance by the company in the FY 2068/69, the interest income surge of 109.54% helped to boost the operating profit before provision of the company.

Similarly, the decrease in the interest expenses from the date of establishment has helped to propel the operating profit before provision which has continued till the third quarter of this fiscal year 2069/70. Currently, the interest expense of the company stands at 49.21% of the interest income which in the corresponding third quarter stood at 68.60%.

Now, if we look at the net write back figures, the bank negative figures suggest that the company has not been able to minimize its bad debt lately. Though, the bank was able to lower its provision in the previous FY 2068/69, as the net write back figure stood below 1% then, again its third quarter 1.22% figure indicates the increasing bad loan of the bank. Likewise, the bank NPL figure has also increased over 1% level of 1.84% in the current third quarter.

In spite of the increase in the bad loan, the company still comes to make a triple digit growth in the net profit in the current third quarter. As the income from other revenue sources like Fees, Commission and Discount, foreign exchange and other operating income sources has increased drastically (i.e. Operating income other than interest come in total, increased by 84%  in this quarter)  which have helped to cut back its loss from provision and maintain an overall healthy growth of the company.

If we look at the Net Worth of the company, it has made steady climb from the date of establishment. Now, looking at the EPS, ROA and ROE till the third quarter of the FY 2069/70, the company performance has made gradual progress.

Despite the increase in the provision and bad loan from the bank, the increasing revenue from other operating activities has helped to counter the growing risk from bad loan which has also helped the company to sustain and maintain growth in above four mentioned indicators

Looking at the overall financial highlights of the bank, its descending loan portfolio and its increasing bad loans seem to be the major concern of the bank. However, the company’s income generated from other business activities like Fees, Commission and Discount, foreign exchange and other activities seems to be in a better gear, which is helping to counter the financial loss from bad loans.  In spite of all, the bank still leads among its contemporary competitors in all facets of the banking activities. Overall, this is one of the best and looked after the IPO to invest for the long term point of view.  The company has a good prospect to give good returns from the profit of this fiscal year in very short time.  No matter what this would come out to be a truly  MEGA IPO.

COMPANY’S WEBSITE: http://www.megabanknepal.com

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