NEPAL CREDIT AND COMMERCE BANK LIMITED
Fri, Apr 5, 2013 12:00 AM on Company Analysis,
NEPAL CREDIT AND COMMERCE BANK LIMITED
Share Registrar: NCM Merchant Banking Limited
INTRODUCTION
NCC bank Ltd. was established on 14th October 1996 as Nepal Bank of Ceylon Ltd. (NBOC), a joint venture commercial bank between Bank of Ceylon, Sri Lanka, the pioneer bank in Sri Lanka and Nepalese promoters, NB group (Nepal) Pvt. Ltd. And Nepal Insurance Company Ltd.
It enjoys the reputation of the first private bank with largest authorized capital of NPR 1 billion. It also ventured to establish its head office outside the capital of the country at Siddhartha Nagar, Rupandhi, for the first time in the Nepalese context, while its Corporate Office is placed at Bagbazar, Kathmandu.
NBOC started its operation from Siddhartha Nagar on October 14th 1996. Within nine months of its operation NBOC expanded its business through four branches. Siddhartha Nagar and Lumbini in Rupandehi, Bagbazar in Kathmandu and Barahbise in Sindhupalchowk.
On 10th September of 2002, name of the bank was changed to Nepal Credit and Commerce Bank Ltd. (NCC Bank). The change in name came with the transfer of shares and management of Sri Lankan co-venture to Nepalese promoters. At present NCCB provides its financial facilities and services to rural and urban areas through its 22 branches.
Apart from the bank’s expansion in domestic reach, it has also made a strategic alliance with ICICI Bank to facilitate the customers to remit their money. This association provides their customer to send money to more than 670 locations of India through ICICI Bank branches and their correspondent Banks in India. The Bank has also developed a corresponding agency relationship with more than 150 International Banks having worldwide network.
In the current situation, the blacklisting of NB group members, who are also one of the major stakeholders of NCC bank, 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.
The same action also prompted in the resignation of Mr. Jeet Bahadur Shrestha and Mr. Basudev Giri from the BOD of the NCC Bank as both are the members of NB group. In the recent scenario, Mr Prithvi Raj Ligal, who is the Chairman of the company, resigned his position as a BOD representative from NB Investment Pvt. Ltd. but has been working as a representative from Chartered Investment Pvt. Ltd. in the BOD of the company.
It is assumed that the amounts obtained from the deal between the IFIC and NB group will firstly be used to pay the liabilities of NB group worth Rs 200 and Rs 600 million in Nabil Bank Limited and Nepal Bangladesh Bank Limited respectively. Later, the remaining amount will be used to pay the NB groups’ financial obligation in other financial institutions. Likewise, under this provision, in the near future NCC Bank also seek the higher chance of recovering the bad debt amount from the NB group; as the NCC bank is also one the financial institution holding the bad debt of NB group. All in all, with the action taken against the NB group by the NRB, it will be easy for the NCC Bank to recover its bad loans from the NB group which will surely help to lower its Non performing loans in the days ahead.
Major shareholders of Nepal Credit and Commerce Bank Limited as per the Annual Report of 2068/69 (Holding more than 0.5%)
As per the information obtained from the Nepal Credit and Commerce Bank Limited Annual Report 2068/69, its current Board of Directors is as follows:
1. Mr. Prithvi Raj Ligal, Chairman
2. Mr. Basu Dev Giri, Director
3. Mr. Vedman Singh Malla, Director (Representative from Public shareholder)
4. Mr. Narayan Raj Tiwari, Director
5. Mr. Tirtha Pradhan, Director
6. Mr. Badri Narayan Manandhar, Director
7. Mr. Govinda Prasad Parajuli, Director (Representative from Public shareholder)
Note: To the end of the fiscal year 2068/69, the tenure of four years for the BOD representatives from the general public came to an end. So, the company in the coming up AGM has called up election for these two vacant seats and for one more which had been in halt from past 3 years. In total, there will be election for 3 BOD seats in upcoming AGM.
Management Team of Nepal Credit and Commerce Bank Limited.
(Chief Executive Officer)
Mr. Amrit Charan Shrestha
(Chief Business Officer)
Mr. Krishna Gopal Manandhar
(Deputy General Manager/Chief Operating Officer )
Mr. Ramesh Raj Aryal
( Assistant General Manager/ Chief Marketing Officer )
Mrs. Bandana Pathak
CAPITAL STRUCTURE
FINANCIAL HIGHLIGHTS OF THE BANK
Figure in Rs “000”
As a company having a banking history of more than a decade long, the track record of the company’s performance has not been one of the best. Before the FY 2010/11, the company had a negative reserve for most of it operating years but in these past three years, if we look the data above, we find the company has come to maintain a positive reserve and continued to make a steady growth indicating that the bank has been improved in its recovery of bad debt loans.
With the Commercial Banks needing to maintain a paid up capital to NPR 2 billion, the bank’s BOD has currently proposed to distribute 5% bonus share to its shareholder and also plans to increment its capital through the process of merger with other Banking and Financial Institutions.
The CD ratio of the company in the second quarter of this fiscal year has come up than the corresponding quarter. However, the bank falls behind the benchmark set by the Nepal Rastra Bank of 80% CD ratio. Like most of the Banking and Financial Institutions in Nepal, the NCC bank also hasn’t been able to utilize its resources fully because of the country’s economic and political condition which has impacted the overall business environment of Nepal.
Similarly, lowering loan exposure in real estate loan mainly in Land Purchase and Plotting, which has dropped by 4.86%, 9.84% and 2.95% respectively in the past three years, has also limited in coming par with the set benchmark by NRB. In the second quarter of FY 2010/11, the loan exposure in the real estate was 25.38% whereas in current quarter it stands at 9.77%.
In terms of deposit, the bank has been able to maintain a good growth in the past three years which can be seen in the above table. The bank has been aggressive in collecting deposits by introducing a various deposit schemes to their customers which helped the bank to sustain a deposit worth NPR 18.58 billion which in terms of market share stand 2.05%.
Likewise, in Loans and advance portion also, the bank in the past three years has maintained a sound growth. In comparing to corresponding second quarter, the bank has increased its exposure in Residential Real Estate Loan by 298.86%, in Term loan by 142.20% and in Overdraft Loan/TR Loan/ WC Loan by 66.27%. However, only the value of Term loan and Overdraft Loan/TR Loan/ WC Loan in the bank’s loan portfolio has increased whereas the value of real estate loan, despite the increase in Residential Real Estate, was lower than the corresponding second quarter; this indicates that the bank is decreasing its overall real estate exposure as mentioned above.
The disparity between the growth figure of deposit and loan suggest that the bank in the current quarter has decreased its idle fund than corresponding quarter and have used it in more productive sector by dispersing the amount through means of loans which have helped to sustain a heavy growth in the operating income.
The data from the above table indicates that the company’s operating profit in this second quarter is by far the most impressive one among the past three years. With the company enjoying the high spread and the growth in the loan being higher than the deposit growth, the company in this quarter has able to sustain huge surge of 149.50% in operating profit.
However, the worrying sign for the bank is its Net write back which is in negative. Though the company made a positive net write back in the second quarter of previous two years, this quarter because of its huge provision, totaling NPR 183 million, it failed to do so. This clearly indicates that despite the decrease in the company’s NPL, the standing NPL of a company near to 3% still has a tremendous impact upon the provision amount.
Even though the bank maintained a hefty negative net write back, the huge ascend in the operating profit made it possible for the overall net profit of the company to sustain a strong growth of 108.99% in the second quarter of the current fiscal year; this clearly shows that the company needs to maintain a strong operating revenue to make its overall net profit in the steady growth.
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 high NPL has improved by a very good number. Similarly, the annualized EPS also has improved in the comparison to the corresponding quarter.
Likewise, the ROA and ROE also in this quarter is higher than that of the corresponding quarter. With the company’s NPL in the lower side compare to the previous two years, the company’s financial indicator has improved by a very good number. However, it should be kept in mind that the bank’s NPL is still near to 3% which is not a very good sign for any Banking and Financial Institutions.
In the conclusion, being one of the mature banks with the history of more than 15 years in Nepal; the bank has never symbolized itself as one of the soundest financial institution in the past history. But looking at the last three years performance data, the bank is on track of building itself into a sound institution. And with the current proposal of 5% bonus share, for the first time ever; the shareholders are bound to expect much more from this organization in the years ahead. However, the most worrying sign in this company is its high non performing loan, which the management needs to tackle quickly before it degrades the overall financial health of the company.
KEY STOCK STATISTICS
SHARE PRICE MOVEMENT OF THE BANK: CLICK HERE
WEBSITE OF BANK: http://WWW.NCCBANK.COM.NP
| Shareholder’s Name |
Units |
% |
| Nepal Securities and Investment Pvt. Ltd |
1,188,500 |
8.49 |
| Sangrila Investment Pvt. Ltd |
906,277 |
6.47 |
| NB Group Nepal Pvt. Ltd. |
879,880 |
6.28 |
| NB Investment Pvt. Ltd. |
689,782 |
4.93 |
| Nepal Insurance Company Ltd. |
587,400 |
4.20 |
| Zenith Investment and Securities Pvt. Ltd |
551,941 |
3.94 |
| Mrs. Binu Shrestha |
539,500 |
3.85 |
| Mr. Nirmal Pradhan |
538,408 |
3.85 |
| Mr. Hari Bhakta Sharma |
335,000 |
2.39 |
| Chartered Investment Pvt.Ltd. |
319,270 |
2.28 |
| Rajdhani Investment Fund Ltd. |
229,860 |
1.64 |
| Mr. Jash Shrestha |
139,500 |
0.99 |
| Mr. Jen Shrestha |
139,500 |
0.99 |
| Mr. Binson Shrestha |
139,500 |
0.99 |
| Mr. Elson Shrestha |
139,500 |
0.99 |
| Mr. Jebesh Shrestha |
139,500 |
0.99 |
| Mrs. Anar Shrestha |
139,500 |
0.99 |
| Mr. Laxmi Bahadur Shrestha |
139,000 |
0.99 |
| Mr. Shashi Kant Agrawal |
102,190 |
0.73 |
| Nepal Bangladesh Bank Limited |
97,000 |
0.69 |
| Shuvalaxmi Investment Pvt. Ltd. |
94,710 |
0.68 |
| Authorized Capital |
NPR 2000.00 Million |
| Issued Capital |
NPR 2000.00 Million |
| Paid up Capital |
NPR 1400.00 Million |
| Years |
FY 2010/11 Second Quarter |
FY 2011/12 Second Quarter |
FY 2012/13 Second Quarter |
| Paid up Capital |
1,399,672 |
1,400,000 |
1,400,000 |
| Reserve and Surplus |
215,640 |
418,645 |
682,030 |
|
Years |
FY 2010/11 Second quarter | FY 2011/12 Second quarter | FY 2012/13 Second quarter |
| CD Ratio (As per NRB Directives) |
75.84% |
68.11% |
76.49% |
| Deposits (In Rs '000') |
10,592,597 |
13,017,264 |
18,585,832 |
| Growth in Deposits (%) |
9.03% |
22.89% |
42.78% |
| Loan (In Rs '000') |
9,044,935 |
9,821,228 |
15,621,776 |
| Growth in Loan and Advances (%) |
4.69% |
8.58% |
59.06% |
| Years | FY 2010/11 Second quarter | FY 2011/12 Second quarter | FY 2012/13 Second quarter |
| Operating Profit before provision (In Rs ‘000’) |
141,665 |
135,685 |
338,539 |
| Growth in Operating Profit Before Provision (%) |
-15.78% |
-4.22% |
149.50% |
| Net write back (In Rs ‘000’) |
10,504 |
39,890 |
-119,013 |
| Net write back/loan (%) |
0.12% |
0.41% |
-0.76% |
| Non Performing Loan (%) |
3.69% |
4.39% |
2.98% |
| Net profit (In Rs ‘000’) |
92,368 |
74,404 |
155,500 |
| Growth in Net Profit (%) |
-68.65% |
-19.45% |
108.99% |
| Years | FY 2010/11 Second quarter | FY 2011/12 Second quarter | FY 2012/13 Second quarter |
| Net Worth (Rs.) |
115.41 |
129.90 |
148.72 |
| Annualized EPS (Rs.) |
13.20 |
10.63 |
22.21 |
| ROA |
1.38% |
0.94% |
1.43% |
| ROE |
11.44% |
8.18% |
14.94% |
| Date | 04/03/2013 (High) | 04/04/2012 (Low) | 03/04/2013 (Closing) |
| 52 week Range (In NPR) |
252 |
100 |
228 |
| Market Capitalization (in Billion) |
Rs 3.192 |
| 180 days Average Closing price |
Rs 163.54 |
| 180 days Average Daily Volume |
5,719 units |
| 180 days Average Turnover |
Rs 1,064,580.39 |
| P/B.V. |
1.53 |
