See which commercial banks have performed better than the industry in second quarter; Mega and Prabhu Bank lead on major indicators
Sun, Feb 19, 2017 12:17 PM on Latest, Exclusive, Financial Analysis, Featured, Stock Market,
All 28 commercial banks have published the 2nd quarterly report for the fiscal year 2073/74. In the analysis, ShareSansar has compared the 2nd quarterly report of the commercial banks with the same of last FY. They were then ranked in terms of the growth in the major parameters:
- Deposits
- Loans and Advances
- Net Interest Income
- Operating Profit
- Net Profit
- Earnings per share
(* Includes the data of the company before their respective mergers and acquisitions)
In the given period, the deposit of the companies grew by 22.43% on average. At the time when banks are short of investable funds, 14 commercial banks were successful to grow their deposits above the industrial growth. Mega Bank made it to the top of the list. Its merger with Paschimanchal Development Bank has shown an amazing synergy. It was then followed by Century Commercial Bank and NIC Asia Bank. Sanima Bank grew its deposit just more than the industrial growth. However, top banks such as Everest Bank, Nepal Investment Bank, Nabil Bank, Standard Chartered were below the average. The state-owned banks were in the bottom of the list. By the end of 2nd quarter, banks have a total deposit of Rs 19.09 kharba. Loans and Advances Increase in deposits solely does not show improvement if the bank cannot justify the growth by increasing its lending in productive sectors. Loan is the earning unit of a bank and its growth is vital for the bank to survive.
( * Includes the data of the company before their respective mergers and acquisitions)
The industrial average growth in case of loan disbursement was 32.93%, where 15 banks performed better than the industry. Mega Bank made it to the top again by increasing its loan by 49.24%. NIC Asia, Nepal SBI, Laxmi Bank were also among the top companies. Standard Chartered however made it above the industrial average with a growth of 34.50%. NCC Bank and Civil Bank stood at the bottom with a growth of 20.34% & 20.49% resp. By the end of 2nd quarter, banks have disbursed a loan of Rs 15.83 kharba. Net Interest Income Net Interest Income is the income generated by a bank from its core banking activities. Banks provide loan at an interest rate higher than on deposits, which provides the bank with their core income. Increase in net interest income signifies that the bank has been able to properly utilize its funds by lending in productive sectors.
( * Includes the data of the company before their respective mergers and acquisitions)
The industrial growth for the net interest income was 33.71%. 12 commercial banks successfully grew it more than the industry average. Prabhu Bank has shown a huge growth in the net interest income and made it to the top. NMB Bank, Agriculture Development Bank and Mega Bank were also among the top growing companies. Their growth was much more than the industry. Although all of them have shown growth, 16 of them are still below the industrial average. NCC Bank stands at the bottom of the list with a growth of just 4.64% in its net interest income. Operating Profit Operating Profit is the profit a bank earns from its operation related activities. It is a common and an important indicator for measuring a bank’s growth since it gives a sense of how much the bank can cover its expenses. In this review period, the commercial banks were able to increase their operating profit by an average of 48.83%. 10 commercial banks were found to be above the industry average with Prabhu Bank reporting the massive growth of 388%. Agricultural Development Bank and Nepal Bank also showed a massive rise. Operating income of Civil Bank declined by 91.67%, and the decline was even seen in NCC Bank and Janata Bank. Sanima Bank and Sunrise Bank were just above the industry.
( * Includes the data of the company before their respective mergers and acquisitions)
Net Profit Net Profit is the residual income the company has made after accounting for all its operating & non-operating revenues and expenses. It is one of the most significant indicators since investors gain profit only when the company reports positive net profit. During this review period of Q2 for FY 2073/74 and FY 2072/73, the average net profit of the commercial banking industry grew to Rs. 75 crore, up from Rs 54.89 crore. It shows an average industry increase of 36.44%.
( * Includes the data of the company before their respective mergers and acquisitions )
Agricultural Development Bank reported the highest net profit growth of 133.97% with Prabhu Bank following it at 100.50%. Nepal Bank was on the third with 80.80% increase. 13 out of the total 28 commercial banks were above the industry average. Net Profit of Civil Bank and NCC Bank declined in this period. Sunrise Bank was however close to the industrial growth, with an increase of 34.44% Earnings Per Share (EPS) Earnings Per share (EPS) is the portion of the company’s profit allocated to each outstanding shares of common stock. Earnings per Share (EPS). It serves as an indicator of company’s profitability. It is out of which the investors can estimate their dividend.
( * Includes the data of the company before their respective mergers and acquisitions)
It was seen that the Earning Per Share of the industry was Rs 27.76 in the 2nd quarter of this FY. It is a growth of 8.61%, up from Rs 26.50 in same period of last year. 12 companies have reported an EPS more than the industry. Nepal Bank Limited has the highest EPS of Rs 58.31, followed by Nabil and Everest Bank with an EPS of Rs 56.73 & Rs 42.18 respectively. NMB Bank has an EPS of Rs 27.30, just close to the industry EPS. In terms of growth, Nepal Bank has shown a huge growth of 79.84%. The EPS of NCC Bank has shrunk by a hefty 81.66%, which has pushed it to the bottom of the list.
