Development Banks are class ‘B’ BFI’s approved by the NRB to carry out banking business around the country. These development banks are classified into national level, operating in 4-10 districts and regional level based in 1-3 districts, it is currently functioning in. As per the regulation of the NRB minimum paid up capital requirement for national level development banks is Rs.2.50 Arba while that of regional level is Rs.50 Crore. Similarly, minimum threshold for development banks operating in 4-10 districts is Rs.1.20 Arba.
As banks have been on a spree to merge and reduce the number of BFIs in the country, some commercial banks have acquired development banks while two or more development banks have merged as well. NMB Bank and Prime Commercial Bank successfully merged with Om Development Bank and Kankai Bikas Bank Limited as well as Kailash Bank Limited respectively. Similarly, Purnima Bikas Bank and Bhargava Bikas Bank merged with Shine Resunga Development Bank to upgrade to National Level Development Bank and Nepal Community Development Bank has started joint transaction after merger with Tinau Mission Bikas Bank. Gandaki Bikas Bank is on the verge to be acquired by Mega Bank Limited. Whereas, Deva Bikas Bank Limited has also signed a MoU to be acquired by Kumari Bank Limited. NMB Bank Limited is in process to acquire Kanchan Development Bank Limited. Similarly, Citizens Bank International, soon will finish acquiring Sahayogi Bikas Bank Limited.
The remaining development banks have been compared on the basis of major indicators from the third quarter report. The development banks have been segregated into two categories, national level and regional level
Note: Karnali Development Bank is yet to publish their Q3 report, hence, it is not incorporated in the analysis.
Deposits and Loans
In terms of both loans and deposits, Muktinath Bikas Bank leads the industry with both loans and deposits above Rs.45 Arba. The deposits till the end of third quarter stood at Rs.50.94 Arba while the loan worth Rs.47.57 Arba was provided. Among regional banks, Tinau Mission Development Bank stood ahead with deposits of Rs.14.81 Arba and loans of Rs.12.25 Arba.
Net Interest Income
The net interest income is the main source of income for the banks. It is calculated by deducting interest paid on deposits from interest received on borrowings. MLBL has posted the highest net interest income of Rs.1.19 Arba by the end of the third quarter. TMDBL stood ahead in among regional level development banks with Rs.48.17 Crore as net interest income. Corporate Development Bank posted the lowest net interest income in the industry at Rs.2.47 Crore.
MNBBL also posted the highest profit in the industry at Rs.67.60 Crore till the third quarter of FY 76/77. TMDBL has a profit of Rs 16.79 crores. The lowest profit in the industry was posted by Sahara Bikas Bank at Rs.1.30 Crore each.
EPS, Net Worth per Share and PE Ratio
The earnings per share has been annualized and PE ratio derived on the basis of annualized EPS. Among national development banks, highest EPS was posted by SHINE at Rs.22.20 followed by Lumbini Bikas Bank at Rs.21.48. Among regional banks, Sahayogi Bikas Bank has an EPS of Rs 24.14 followed by Miteri Development Bank worth Rs 23.23.
Sahayogi Vikas Bank posted the highest net worth per share at Rs.167.53 followed by Excel Development Bank at Rs.163.92. The lowest net worth per share stood at Rs.107.58 posted by Green Development Bank.
The lowest PE ratio in the industry stood at 8.16 times posted by Sahayogi Vikas Bank while the highest stood at 26.50 times posted by Sindhu Bikas Bank, both regional level development banks. The PE ratio of national level development bank varied between 8.29 times (LBBL) and 15.72 times (DBBL) by the end of the third quarter.
In a nutshell: