NEPAL BANGLADESH BANK LIMITED
Fri, Feb 22, 2013 12:00 AM on Company Analysis,
NEPAL BANGLADESH BANK LIMITED
Share Registrar: Elite Capital Limited
Introduction of Nepal Bangladesh Bank Limited
Nepal Bangladesh Bank Ltd. was established in June 1994 with an authorized capital of Rs. 240 million and Paid up capital of Rs. 60 million as a Joint Venture Bank with IFIC Bank Ltd. and Bank Asia Ltd. of Bangladesh. Its Head Office is situated at New Baneshwor, Bizuli Bazzar, Kathmandu.
With the objective of providing hospitality service to the customers, the bank has reached out its services to the general public through a network of 20 branches. Further to make its services more effective and efficient the bank has installed 25 ATMs successfully in the various parts of the country and holiday banking for convenience. Apart from it, the bank has also launched Branchless Banking service, Second pilot project was launched from Kushadevi , Kavre ; Nearly 35 KM from our Head Office (Bizuli Bazzar).
Till date the bank has gone through various ups and downs. The bank that was once recognized as one the finest Joint Venture Banks in Nepal went through a rough time since November, 2006 as per the news of deterioration in its financial health. With the issue of bad corporate governance and weak regulation of NRB at that time, some of the members of the BOD (mainly the members of NB Group) manipulated the system resulting in huge bad loans.
With escalating problem with the bank, NRB took over the management of the bank under the NRB Act 2063, Sec 54 (1), (2) & (3) on Sunday, November 12, 2006 from the daily transactions. The 4-member committee under the co-ordination of Mr. Maha Prasad Adhikari took the charge of the management of the bank. Immediately, NRB sacked the chairman, Mr. Jeet Bahadur Shrestha, other board members, Mr. Narendra Bhattarai, MD & some employees. After around two years of management by the NRB, the bank's management was again handed over to its stakeholders.
In the current situation, the blacklisting of NB group members in CIB (Central Information Bureau) after the appeal from Nabil Bank Ltd, the group members have come under heavy scrutiny from NRB. This action from the NRB has prompted the NB Group to sell its stake in Nepal Bangladesh Bank to International Finance Investment & Commerce Bank Ltd. (IFIC) of Bangladesh to repay its loan in Nepal Bangladesh Bank and Nabil Bank Ltd.
As per the Due Diligence Audit (DDA), the IFIC has agreed to buy the 3,846,600 units of promoter shares at Rs 260 from the NB Group and its members. Along with it, the IFIC has also agreed to buy 2,767,500 units of promoter shares from Bank Asia Ltd at the same price. These deals will increase the IFIC current holding of 9.18% to around 42%, making the company highest stakeholder in NBB.
From the deal, the NB group has obtained Rs 988,892,840 which will be used to pay the outstanding debt of Rs 600 million in NBB taken by the NB group under the various individual names and companies. Similarly, the rest of the amount will also be used to pay the outstanding debt in Nabil Bank worth Rs 200 million.
With this deal, it is assured that the dominance of the NB group in the NBB will come to non existence. However, the group has not totally exited from the company as the group still holds near to 2 million shares in the company. Due to the sale restricting provision of the promoter shares for one year after resigning from the post of BOD (Board of Directors), the group still holds the stake which according to news will be sold after one year to the IFIC Bank of Bangladesh which will make their overall holding in the bank of 51% stake.
Major shareholders of Nepal Bangladesh Bank as per the Annual Report of 2068/69 (Holding more than 0.5%)
Note: With the current deal of IFIC with the other stakedholders of the Bank, it is bound to change the above shareholder’s holding in the company.
As per the information obtained from the Nepal Bangladesh Bank website, its current Board of Directors is as follows:
1. Mr. Mohammad Lutfar Rahaman, Chairman
(IFIC Bank Ltd. Dhaka, Bangladesh)
2. Mr. Erfanuddin Ahmed, Member, Director (Group A)
(Bank Asia Ltd. Dhaka, Bangladesh)
3. Mr. Durga Man Shrestha, Director (Group B)
4. Madhav Pd. Upadhayay Neupane, Professional Director
5. Mr. Indra Bahadur Thapa, Director (Group C)
6. Mr. Mukunda Nath Dhungel, Director (Group C)
Management Team of Nepal Bank Ltd.
1. (Chief Executive Officer)
Mr. Gyanendra Prasad Dhungana
2. ( Dy. General Manager )
Mr. Surendra Bhusan Shrestha
3. ( Chief Operation officer )
Mr. Rameshwor Sharma Aryal
Capital Structure
Authorized Capital: NPR 3,000,000,000
Issued Capital: NPR 2,009,395,600
Paid up Capital: NPR 2,009,395,600
FINANCIAL HIGHLIGHTS OF THE BANK
Figure in Rs “000”
In the three years’ time, Nepal Bangladesh Bank Ltd. in financial terms has come a long way. In the corresponding second quarter of FY 2010/11, the bank reserve and surplus was in negative but the improvement in its loan recovery helped the bank to sustain heavy growth and maintain a positive reserve and surplus in its balance sheet. However, following the merger with Nepal Shree Lanka Merchant Bank Ltd. (NSLMB), its reserve and surplus came down drastically as the presence of bad debt of the NB group in NSLMB came to impact the overall reserve of NB Bank. But, with the gradual improvement in its recovery of bad debt loans, the company in the current fiscal year has been able to sustain a heavy growth in its reserve and surplus.
The CD ratio of the company from the above table can be seen, it has been decreasing. With the company’s Non-performing loan standing above 3%, the bank in recent years has tightened its credit exposure because of which its CD ratio has been on decreasing trend. Apart from it, there is also the country’s economic condition which is on the sluggish side due to the political instability, the environment for an overall business is unfavorable; these have limited the banking sector as a whole to grow its credit exposure.
After the issue of bad corporate governance came into light in the news, the company at a time faced a heavy drop in its deposit. However, in the recent years the company has maintained a healthy growth in its deposit with the constant introduction of new deposit schemes which helped the bank current deposit holding of more than Rs 15 billion. Looking, at the growth of deposits and, loan and advances of this fiscal year, the company has been able to sustain equal growth in both headings, indicating a decrease in idle fund in the bank as compared to a corresponding second quarter.
The Operating Profit before provision of the company has increased in this quarter compared to the corresponding quarter. Despite the growth, the company has not been able to come par with that of FY 2010/11 second quarter operating profit indicating there is still room for an improvement.
As the company has drastically improved its NPL from the 18.58% to 3.57%; despite this magnificent achievement, the provision exposure to the bad debt is still high for the company due to which the net writes back in two subsequent fiscal years is in negative which have brought down the net profit in comparison to the second quarter of FY 2010/11.
However, with the current deal of IFIC with the NB group and its member, the chances of NPL coming down on the NB Bank is very high; As the NB group current bad loan of Rs 600 million in the bank is in the process to be written off through the amount obtained from the deal of promoter shares of the NB group. As a result, lowering down of Non Performing Loan (NPL) would directly impact in the figures of the Net profit of the company in the upcoming financial to be published.
As we can see in the above table, the company’s Net worth in the second quarter of this fiscal year, despite its exposure to the higher NPL has improved by a very good number. Similarly, the annualized EPS also has improved in the comparison to the corresponding quarter ; however both fall behind the second quarter of FY 2010/11.
Likewise, the ROA and ROE also in this quarter is higher than that of the corresponding quarter but is lower than FY 2010/11 second quarter. Mainly because there is a huge positive net write back of Rs 23.91 million obtained in the FY 2010/11 second quarter whereas in the following corresponding quarters the net writes back is in negative and have impacted the Net profit of the company which subsequently have effected all the above mentioned indicators.
Looking over all the news and financial highlights, we shall conclude by stating that the bank is in improving phase and with the current development of deal between IFIC bank of Bangladesh and NB Group, surely the issue of bad corporate governance practiced by the NB group will come to an end which will ultimately send a good message to the general public as well as the financial investors in the market.
Key Stock Statistics
WEBSITE OF BANK: http://WWW.NBBL.COM.NP
| Shareholder’s Name |
Units |
% |
| Bank Asia Limited, Bangladesh | 2767500 |
13.77 |
| IFIC Bank Limited, Bangladesh | 1845000 |
9.18 |
| Capital Investment and Securities Pvt. Ltd. | 1463792 |
7.28 |
| Manasulu Investment Pvt. Ltd. | 1452220 |
7.23 |
| KSD Investment Pvt. Ltd. | 542000 |
2.70 |
| Jeet Bahadur Shrestha | 525181 |
2.61 |
| Purna Bahadur Shrestha | 423062 |
2.11 |
| Elson Shrestha | 368980 |
1.84 |
| Bipul Developers Pvt. Ltd. | 250000 |
1.24 |
| Willson Shrestha | 234421 |
1.17 |
| Nabin Shrestha | 220620 |
1.10 |
| Shankar Kumar Shrestha | 200000 |
1.00 |
| Rama Gyawali | 187500 |
0.93 |
| Laxmi Bahadur Shrestha | 184125 |
0.92 |
| NB International Pvt. Ltd. | 172650 |
0.86 |
| Anar Shrestha | 145440 |
0.72 |
| Jash Shrestha | 139487 |
0.69 |
| Jane Shrestha | 139487 |
0.69 |
| Binu Shrestha | 134945 |
0.67 |
| Dhaulagiri Holdis Pvt Ltd. | 125120 |
0.62 |
| Babu Kaji Shrestha | 109000 |
0.54 |
| NB Group Nepal Pvt. Ltd. | 108000 |
0.54 |
| Years |
FY 2010/11 Second Quarter |
FY 2011/12 Second Quarter |
FY 2012/13 Second Quarter |
| Paid up Capital |
1,860,315 |
2,009,396 |
2,009,396 |
| Reserve and Surplus |
558,429 |
344,598 |
1,116,277 |
| Years | FY 2010/11 Second quarter | FY 2011/12 Second quarter | FY 2012/13 Second quarter |
| CD Ratio |
86.89% |
74.50% |
73.12% |
| Growth in Deposits (%) |
7.99% |
26.98% |
16.79% |
| Growth in Loan and Advances (%) |
1.79% |
4.70% |
15.34% |
| Years | FY 2010/11 Second quarter | FY 2011/12 Second quarter | FY 2012/13 Second quarter |
| Operating Profit before provision (In Rs ‘000’) |
285,895 |
184,360 |
210,113 |
| Growth in Operating Profit Before Provision (%) |
-6.77% |
-35.51% |
13.97% |
| Net write back (In Rs ‘000’) |
23915 |
-93390 |
-15950 |
| Net write back/loan (%) |
0.23% |
-0.87% |
-0.13% |
| Non Performing Loan (%) |
14.96% |
18.58% |
3.57% |
| Net profit (In Rs ‘000’) |
285,143 |
102,818 |
171,706 |
| Growth in Net Profit (%) |
-57.11% |
-63.94% |
67.00% |
| Years | FY 2010/11 Second quarter | FY 2011/12 Second quarter | FY 2012/13 Second quarter |
| Net Worth (Rs.) |
130.02 |
117.15 |
155.55 |
| Annualized EPS (Rs.) |
30.66 |
10.23 |
17.09 |
| ROA |
3.76% |
1.17% |
1.79% |
| ROE |
23.58% |
8.74% |
10.99% |
| Date | 6/02/2013 (High) | 3/04/2012 (Low) | 21/02/2013 (Closing) |
| 52 week Range (In NPR) |
319 |
101 |
313 |
| Market Capitalization (NPR in Billion) |
Rs 6.289 |
| 180 days Average Closing price |
Rs 184.56 |
| 180 days Average Daily Volume |
18,415 units |
| 180 days Average Turnover |
Rs 4,096,105 |
| P/B.V. |
2.01 |
