CRNL has assigned “CARE-NP A” rating to the new proposed Subordinated Debenture “NIC ASIA Debenture 2083/84” issue of NIC Asia Bank Limited (NIC Asia) worth Rs.4400 Million. The instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations, in Nepal. Such instruments carry low credit risk.
The rating assigned to NIC Asia derives strength from the long track record of operations, experienced promoters and management team, adequate capitalization, moderation in asset quality during 9MFY19, although overall GNPL% is at low level, geographical diversification through branches, diversified loan portfolio with focus on retail and SME segments and improving CASA ratio.
The ratings also factor in consistent growth in loans & advances and deposits, considerable growth in total income over the period; however, decline in net profit during FY18 (refers to the 12 month period ended mid-July 2018), improved overall financial performance & profitability during 9MFY19 (refers to the 9 month period ended mid-April 2019), comfortable liquidity profile and moderate although declining deposits concentration.
The rating, however, is constrained on account of increasing operating expenses, intense competition and exposure to regulatory risk related to industry. Ability of the bank to continue its growth momentum without compromising on asset quality and maintaining capital adequacy and ability to manage the impact of any regulatory changes by Nepal Rastra Bank (NRB) would be the key rating sensitivities.
Source: Care Ratings Nepal