There are 30 development level banks. However, not all of these fall in the same category. The development banks can be categorized within three sub categories: National level development banks, development banks operating in 4 to 10 districts and development banks operating in 1 to 3 districts. A wise investor would create a portfolio of development banks comparing their performance with the other banks falling in the respective categories.
Deva Bikas Bank Limited is in the process of acquisition of Western Development Bank Limited. Shine Resunga Development Bank has recently signed a MoU to acquire Purnima Bikas Bank Limited and Bhargav Bikas Bank Limited. Also, Tinau Bikas Bank Limited and Mission Development Bank are in the merger process since 18thMarch, 2019. Whereas, Saptakoshi BIkas Bank Limited and Kabeli Bikas Bank Limited are in the merger process too since 17th January, 2019. Once all the mentioned mergers and acquisition happens easily, then as per current scenario there will be 11 National Level Development Bank including Shine Resunga Development Bank Limited and 12 Regional Level Development Bank in the operation. However, many more merger and acquisition may happen anytime in the future, which may again decrease the total number of B class financial institutions.
This article will deal with the banks operating in 1 to 3 districts and compare the banks within their respective category.
As per the net profit of third quarter of 2075/76, Excel Development Bank Limited (EDBL) is in the lead with a profit of Rs 11.44 crores. Similarly, Corporate Development Bank Limited (CORBL) has the second highest net profit of Rs 8.28 crores in the same quarter. The bank with the least net profit is Karnali Bikas Bank (KRBL) whose net profit amounts to Rs 67 lakhs.
The industry average calculated among regional level development banks in terms of net profit is Rs 5.22 crores.
Paid up capital:
The central bank of the country has directed these development “B” categorized banks to meet the paid up capital requirement. NRB has directed development banks of national level to meet the paid up capital of at least 2.50 arba, development banks operating in 4 to 10 districts to meet the paid up capital of at least 1.2 arba and development banks operating in 1 to 3 districts a paid up capital of 50 crores.
Banks such as Corporate Development Bank Limited (CORBL) and Kabeli Bikas Bank Limited (KEBL) are yet to meet the paid up capital of Rs 50 crores. Kabeli Bikas Bank Limited (KEBL) is in the process of merger with Saptakoshi Bikas Bank Limited (SKDBL). In addition to this, Corporate Development Bank Limited (CORBL) was released from crisis ridden status by NRB last year.
Excel Development Bank Limited (EDBL) has the highest paid up capital of Rs 69.27 crores followed by Mission Development Bank Limited (MIDBL) with Rs 57.64 crores. These regional level banks operating in 3 to 10 districts are also required to choose there are of operation within a single province as per the directive of NRB.
Reserve and surplus:
Excel Development Bank (EDBL) has maintained its lead even in reserve and surplus of Rs 25.99 crore. Sahayogi Vikas Bank Limited (SBBLJ) has maintained second position with Rs 19.84 crore reserve and surplus fund. Investors are requested to note down the bank with negative reserve and surplus is Corporate Development Bank Limited (CORBL) having a negative reserve of Rs 1.70 crores.
The industry average of reserve and surplus within this category is Rs 10.30 crores. Only eight of the banks have been able to maintain a reserve above industry average.
Excel Development Bank (EDBL) has established itself in the top list in deposit collection as well. It has a deposit worth Rs 6.46 arba. Similarly, the bank is followed by Tinau Bikas Bank Limited (TNBL) and Kanchan Development Bank Limited (KADBL) with the collected deposit of Rs 5.31 arba and Rs 5.08 arba respectively. Corporate Development Bank Limited (CORBL) has the lowest deposit collection of Rs.19.41 crore only.
The average deposit collected by development banks operating in 1 to 3 districts is Rs 3.19 arba.
Loans and advances:
As shown in the figures, the top positions in loans and advances are consistent with top position in deposit. The top three positions are occupied by Excel Development bank (EDBL), Tinau Development Bank (TNBL) and Kanchan Development Bank Limited (KADBL) with credit disbursement worth Rs 5.98 arba, 4.57 arba and 4.50 arba.
Net interest income:
The top three positions are occupied by Excel Development bank (EDBL), Kanchan Development Bank (KADBL) and Miteri Development Bank Limited (MDB) with net interest income of Rs 27.19 crores, Rs 17.09 crores and Rs 16.06 crores respectively.
Earnings per share (Annualized):
The top positions are occupied by Corporate Development Bank Limited (CORBL), which has an unmet paid up capital requirement and a negative reserve, with EPS of Rs 30.49. Excel Development Bank (EDBL) with an annualized EPS of Rs 22.03 per share.
Net worth per share:
The highest net worth per share among these development banks is Rs 138.93 of Sahayogi Bikas Bank Limited (SBBLJ). Excel Development Bank Limited (EDBL) has the second highest net worth per share as of Q3 of FY 2075/76 i.e. Rs 137.52. The industry average net worth per share in this category is Rs 119.04.
The development bank (operating in 1 to 3 districts) with the lowest P/E ratio as of is Corporate Development Bank Limited (CORBL) i.e. 3.31 times followed by Mission Development Bank Limited (MIDBL) with P/E ratio of 10.83 times.
A full picture:
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