Mission Development Bank 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: Growmore Merchant Banker Limited

Introduction of Mission Development Bank Limited

Mission Development Bank Limited, a three district operational financial institution of ‘B’ category licensed by Nepal Rastra Bank, was established on 2066/07/05 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 2067/03/01 after receiving a license from Nepal Rastra Bank as on 2067/02/02. It is founded by promoters with long years of managerial expertise and having a strong background in financial and banking profession, agriculture sector, trading sector, education sector and in other various business sectors.

The Bank has been registered with authorized capital of NPR 200 million and currently holds issued capital of NPR 100 million and paid up capital of NPR 70 million. The bank is dedicated in performing its banking activities and services for the prosperity of the people in the region and ultimately the nation.

The bank registered office is situated at Butwal 8, Durga Mandhir Line, Rupandehi ; which is also the Central office of the Bank.  Currently, the bank is carrying out its activities only in two districts, i.e. in Rupandehi and Nawalparasi, through 5 branches. However, after the IPO, the bank plans to expand its banking services in Kalpilvastu district and cover all its operational areas.
 

Major shareholders of Mission Development Bank Limited as per the Annual Report of 2068/69 (Holding more than 1%)
 

Board of Directors of Mission Development  Bank Limited

Mr. Basudev Ghimire,  Chairman

Qualification: Bachelor of Commerce (B. Com)

Work Experience: Two years work experience as field coordinator in FINNIDA project; He has worked in various cooperative as Director. Chairman in Modern Little Flower Academy and New Light Higher Secondary School.

Mr.  Lokendra Neupane, Director

Qualification: Master of Arts (MA)

Work Experience:  He is involved in various education organizations related to government. He has also been working as a counselor for Axis College, Butwal. He is also involved in the project called “Paribartan ko lagi chunauti” as a program officer. Likewise, he is Director in various cooperatives.

Mr. Dharma Raj Paudel,  Director

Qualification: Master of Education (M.Ed)

Work Experience: He is the principal of Atom Model Boarding School. He is also the founder and vice principal of Oxford Higher Secondary School. He is also working as a professor in Butwal Multiple Campus and Oxford College.

Mr. Yam Bahadur Khatri, Director

Qualification: Literate

Work Experience: Former chairman of Ananda cooperative, and Multipurpose cooperative; Director of Rammani Multiple College and Shree Saraswati Sanskrit Campus.

Mr. Rishiram Pandey,  Director

Qualification: Bachelor of Laws (LLB)

Work Experience: He has been engaged in the stationery business for more than 20 years. Director of Cannon Higher Secondary School and Modern Little Flower Academy.

Mr. Lil Bahadur K.C.,  Director

Qualification: Master of Education (M.Ed)

Work Experience: Assistant Professor in Butwal Multiple Campus; Promoter and Chairman of Himali Pustakalaya Jumla, Executive Director  and Vice Chairman of Namuna E-Boarding School.

Mr. Hari Prasad Ghimire, Managing Director

Qualification: Master of Philosophy (M. Phil)

Work Experience: Six years of experience as project manager of Mahila Sahakari Santha Ltd. and Gramin Mahila Laghu Rin Karyakarm. And he was also involved in the banking sector for nine years. He has also been involved in the teaching profession for past 10 years. Promoter of  Modern Little Flower Academy.

Board of Directors (BOD) shareholding in the bank as per Prospectus.

Management Team of Mission Development Bank Limited

Mr. Hari Prasad Ghimire, (Chief Executive Officer/ Managing Director)

Qualification: Master of Philosophy (M. Phil)

Work Experience: Six years of experience as project manager of Mahila Sahakari Santha Ltd. and Gramin Mahila Laghu Rin Karyakarm. And he was also involved in the banking sector for nine years. He has also been involved in the teaching profession for past 10 years. Promoter of  Modern Little Flower Academy.

Mr. Bishnu Prasad Pokharel, (Head- Corporate Department)

Qualification: Master of Business Studies (MBS)

Work Experience: 5 years of working experience in Lumbini Finance and Leasing Company Limited

Mr. Tamlal Gyawali (Head- Recovery & Relationship Department)

Qualification: Bachelor of Law (BL)

Work Experience: 2 years of working experience in Paschimanchal Development Bank Ltd.

Mr. Bishnu Prasad Gautam (Head-Credit Department)

Qualification: Master of Business Studies (MBS)

Work Experience: Six years of working experience in Jankalyan Bachhat tatha Rin Sahakari Sanstha Ltd.; 2 years of working experience in Smart Trust Bachhat tatha Rin Sahakari Sanstha Ltd.

Capital Structure

FINANCIAL HIGHLIGHT OF THE BANK

                                                                                                                                                                Figure in Rs “000”

The company hasn’t altered its capital from the date of establishment as it meets the NRB provision for three district operating development banks. Currently, the bank paid up 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 and expand its services in Kapilvastu district.

Observing reserve and surplus of the company, the bank had maintained the negative  surplus till the FY 2067/68.However, by the end of  FY 2068/69, the bank was able to  maintain NPR 1,215 thousand in reserve. And till the third quarter of this FY 20697/70, its reserve has come to stand at Rs 9,116 thousand. Though the reserve position of the bank in the initial two years suggests not a healthy operation, the company’s increasing reserve and surplus amount for FY 2068/69 indicates that the company is overcoming from its bad operation and is on track of progress and improvement

As the bank is only in its fourth year running, it is in expanding phase. The bank from the date of establishment has been increasing its utilization of resources as in the past FY its CD ratio has increased to 70.69% from 61.59%. In the current date also it has done so, as it CD ratio in the third quarter have increased to 73.50% from 66% of corresponding quarter. Despite maintaining near to parallel growth in both deposit and loan, the bank lacks behind in utilizing the resources fully as the CD ratio is below the 80 % benchmark, as per set of the NRB directives.

From the table, we see that the bank has made incremental in both Deposit and Loan but the growth in Loans has been higher than deposit till date. Despite the higher growth in loans, the company still lacks behind in utilizing its resources fully as the company has been decreasing its exposure in real estate loan and Housing loans.

Looking at the third quarterly report of this FY 2069/70, the bank loan portfolio is diversified into  Real Estate with 0.86%, Home/ Housing loan (above 10 million) with 4.43%, Term loan with  19.41%, Overdraft loan/TR loan/WC loan with 43.48% and other loans with 31.82%.

The bank’s high growth in loan has helped the company to earn higher interest income and tackle higher interest expenses, which have assisted the company in making continuous growth in the operating profit before provision. With the aggressive increase in the loan and advance by the company from the FY 2067/68, the interest income has surged by 3448.63% and 164.23% in the last two fiscal years respectively.

However, in the current third quarter, the growth in interest expenses has narrowed to 44.59% while interest income growth stood at Rs 50.41%; this scenario has also helped the bank to make a hefty growth of 236.35% in profit before provision in the third quarter. Similarly, the low growth in staff expenses and other operating expenses have also contributed to higher growth in operating profit before provision.

Looking at the Net write, the bank has not been able to make positive write back but has been able to lower its provision amount as the net write back amount by the third quarter of this fiscal year stood at Rs 1,926 thousand. However, if we look the New write bank and Net write back / Loan figure, we can find that the percentage figure has been decreasing more sharply than figure amount; this suggests that the bank has not been able to make improvement in its old bad debt loans.

In spite of no improvement in old bad loans, the overall loan portfolio in current scenario seems to be in much healthier condition than that of the preceding fiscal years as it Net writes back/ Loan figure stands below 1% i.e. at 0.29%.

Though the company suffered a loss in the FY 2067/68, the improvement in operating profit before provision and net write back helped the company in sustaining a healthy profit by the end of last year FY 2068/69. In the current scenario also, the bank seems to be in the constructive path for posting a healthy net profit amount by the end of this FY 2069/70 as till third quarter it has posted a net profit of Rs 7,901 thousand with a growth rate of 190.69%.

If we look at the Net Worth of the company, it has made steady climb but only in this third quarter of last FY 2068/69 it came above par value of Rs 100. Now, looking at the EPS, ROA and ROE, in the initial two fiscal years the company’s all figures were in negative. However with the progress of banking activities, the company has come to maintain positive and gradual growth in all the indicators.

Looking at the overall financial highlights, the bank’s financial health has just come out of the weak phase where it needs to build a strong foundation in order to make a better progress in future. As the company is currently operating only in two districts, among the authorized three districts, the possibility of service expansion is high. Having said that, the current portfolio of the bank consists of old bad debt which need to be sterilized so that the company overall performance is not impacted and smooth progress is possible.

COMPANY’S WEBSITE: http://www.missionbanknepal.com.np/

FOR INFORMATION ON FORM SUBMISSION COUNTERS: CLICK HERE