Retiring staff account for big chunk of Staff expense in ADBL

The staff expense is in the Agricultural Development Bank Limited (ADBL) is one of the highest in accordance with the industry standard. Recently our team met with the officials from ADBL to discuss with various issues pertaining to the bank. Officials from ADBL acknowledged that ADBL offers the highest benefit package to its staff. The officials also pointed that the 304 employees retired last fiscal year. Some of the officials choose severance package while the other chose the pension plans. When an employee chooses the severance package option, then the bank would have to cough up huge sum of amount to pay that outgoing employee. This payment under severance package is one of the main culprits to run up the bill for staff expenses. The severance package and pensions amounted to Rs 1.56 arab in the fiscal year 2070/71. This figure is 47 % of the total staff expense done by ADBL in the fiscal year 2070/71. The data for 2071/72 will be published in near future. Likewise, approximately 300 staffs are lined up for retirement this fiscal year. The outgoing staff with severance package will definitely dent the balance sheet of ADBL under the heading of staff expenses. The other fundamentals of ADBL are strongest in the industry. According to unaudited 4th quarter report of 2071/72, the EPS stand at Rs 43.52, P/E ratio is 9.93 times, and Net worth per share Rs 233.99. The low P/E ratios show that the scrip of ADBL is highly undervalued in the secondary market. The LTP of ADBL is at Rs 451 as of October 04, 2015.