SINDHU BIKASH BANK LIMITED

SINDHU BIKASH BANK LIMITED

Note: IPO applied for more than 50 units should be divisible by 10 and when applied for more than or equal to Rs 50,000 the payment should be made through account payee check.

Issue Manager: Growmore Merchant Banker Limited

Introduction of Sindhu Bikash Bank Limited

Sindhu Bikash Bank Limited  was established in 2066/10/10 under the Company Act, 2063 and has been carrying out its activities as per the Nepal Rastra Bank Act 2058, and Bank and Financial Institution Act, 2063. It commenced its operation as one of the financial institutions of Nepal from 2067/05/21 after receiving a license from Nepal Rastra Bank as on 2067/05/24. It is founded by promoters with long years of managerial expertise and having a strong background in financial and banking profession, health sector, tourism sector, overseas employment sector, education sector  and in other various business sectors.

The bank was established with the initiation from the Sindhupalchowk Chamber of Commerce & Industry in Nepal. It is the first development bank opened in Sindhupalchowk district of Nepal. The bank has been operating as a three district development bank. Currently, it is operating in Sindhupalchowk and Kavre district only.

The Bank has been registered with authorized capital of NPR 200 million and currently holds issued capital of NPR 100 million and paid up capital of NPR  510 million. The Bank is firmly motivated to excel  in banking by maintaining highest standards of services to their customers, backed by innovative products and services.

The bank registered office is situated in Barabishe-8, Sidhnupalchowk which is also the Head office of the Bank. Currently, the company providing its services to some 15,000 numbers of customers (as of May 2012) from its network of 3 branches spread over Sindhupalchowk and Kavre district.

Major shareholders of Sindhu Bikash Bank Limited as per the Prospects

Board of Directors of Sindhu Bikash Bank Limited

Mr. Rajendra Kumar Shrestha, Chairman

Qualification: School Leaving Certificate (SLC)

Work Experience: More than 15 years of experience in the import business of electronics and hardware products. Chairman of St. Paul International School situated in New Baneshwor  and President of Sindhupalchowk Chamber of Commerce and Industry. Managing Director of Sindhu International Business  Pvt. Ltd. Director of Aadharsa Nagar Housing situated in Khichapokhari, Kathmandu. Member of Nepal Trans Himalayan Border Association and Nepal China Chamber of Commerce and Industry.

Mr.  Bishnu Bahadur Khatri, Director

Qualification: School Leaving Certificate (SLC)

Work Experience: Has been a central member of the Federation  of Nepalese Chambers of Commerce and Industry  for past 5 years. Involvement in the Hydro power business since past 4 years. Managing Director of Chaku Hydropower Company Limited and Bibek Enterprises, Kathmandu. Also, member of Nepal Trans Himalayan Border Commerce Association.

Mr. Dhurba Lal Shrestha, Director

Qualification: School Leaving Certificate (SLC)

Work Experience: He has been involved in Sindhupalchowk Chamber of Commerce for more than 5 years as vice president. Managing Director of Sindhu Marketing Suppliers. Director of Sindhu Oil Store.

Mr. Hari Bahadur Rayamajhi, Director

Qualification: Master of Administration (MBA)

Work Experience: More than 13 years of experience in the field of accounting. Managing Director of Banking Training Institute Pvt. Ltd., New Baneshwor. Chairman of Easy Investment and Development Pvt. Ltd., Baneshwor. Director of Oxford Management Support Academic Pvt. Ltd., New baneshwor. Registered accountant of Rayamajhi and Company, Baneshwor.

Miss. Niva Dangol Shrestha,  Director

Qualification: Graduate

Work Experience: Involvement in the Japanese language teaching profession from past five years. Director of Galaxy Business Pvt. Ltd.

Board of Directors (BOD) shareholding in the bank as per Prospectus.

Management Team of Sindhu Bikash Bank Limited.

Mr.  Sanjeev Pradhan, (Chief Executive Officer)

Qualification:  Bachelor of Commerce (B. Com)

Work Experience: More than 15 years of experience in Banking sector.

Mr. Rajesh Dhakal, (Officer)

Qualification: Master of Business Studies (MBS)

Work Experience: More than 5 years of experience in Banking sector.

Mr. Subin Shrestha, (Officer)

Qualification: Bachelor of Computer Information System (BCIS)

Work Experience: More than 5 years of experience in Banking sector.

Mr. Sandeep Singh Thakuri

Qualification:  Bachelor of Business Studies (BBS)

Work Experience: More than 5 years of experience in Banking sector.

Capital Structure

FINANCIAL HIGHLIGHT OF THE BANK

                                                                                                                                                                                         Figure in Rs “000”

Looking at the bank’s history, it is newly formed and in its initial FY 2066/67, it hasn’t carried out much of banking transactions. So, in this financial highlight we haven’t considered the performance of the initial year.

Till date the paid up capital of the bank has not been altered as it currently stands at 51% of the issued capital. With the initial public offering (IPO), the company plans to par the capital structure with that of issuing capital. Similarly, observing reserve and surplus of the company, it had maintained a negative figure  till the last FY 2068/69.

However, coming to this FY 2069/70 second quarter report, the bank has come to maintain NPR 820 thousand in reserve. If we closely observe and compare the data of second quarters of the company, there we see volatility in the reserve and surplus amount of the bank which indicates there is no  sound stability in its income pattern.

Being a new bank it is obvious that the CD ratio will be low in the initial year. However, the bank in the last FY 2068/69 has made a hefty jump from 37.03% to 71.04%. In spite of the jump, the bank lacks behind in utilizing the resources fully as the level is below 80% as per set by NRB directives. In comparison to other new banks, the exposure of CD ratio is also low.

Looking at the loan portfolio of the company, they haven’t made too much exposure in the real estate loan and nil in the housing loan but  they have aggressively increased their loan exposure in term loan, overdraft and other types of loan.

From the table, we see that the bank has made incremental in both deposit and Loan but the growth in loan and advance is much higher than that of deposit in the last fiscal year. In the last FY 2068/69, the bank has increased its loan exposure in overdraft loan from 26.34% to 30.11% and in Other types of loan from 9.63% to 10.69%. Similarly, the bank started to give margin type loan also, which stood at 1.38% in FY 2068/69.Likewise, the bank made growth of 54.61% in real estate but the exposure of loan  in this sector was lower in comparison to FY 2067/68 as it came down to 6.44% from 7.03%.

However, looking at the second quarter report of this FY 2069/70, the bank position is in reverse form, the growth in deposit outweighed the loan and advance. This indicates that the bank idle fund has increased in this second quarter. Despite the growth in the loan and advance, the exposure of Term loan, Overdraft loan in the overall loan portfolio of the bank decreased in the second quarter of FY 2069/70 limiting its high growth in loans.

In the past FY 2068/69, the company has maintained a hefty growth in operating profit before provision than that of FY 2067/68. With the aggressive increase in the loan and advance by the company in the FY 2068/69, the  interest income surge by 156.55% helping to boost the operating profit before provision.

Similarly, the decrease in the interest expenses from the date of establishment also has helped to propel the operating profit before provision which has continued till the second quarter of this fiscal year also. Currently, the interest expenses of the company stands at 66.77% of the interest income.

Now if we look at the net write back, the bank has not been able to make a positive write back in its short history. But, looking at the net write back/loan of the past two fiscal years, the bank has lowered its exposure from one percent to lower level. In addition to that, even with the increasing loan base of the company its net writes back/ loan figure is currently under one percent which suggest the loan portfolio of the company is in a sound position. Apart from it, to current date the company has not observed the problem of NPL.

With the increase in operating profit before provision and improvement in the net write back, the company’s net profit has made a tremendous improvement in current scenario. Though, the company has maintained a triple digit growth in the last FY 2068/69 and in the current year second quarter by a hefty 328.78%, the decrease in its provision ,i.e.net writes back figure, amount of thousands  to hundred figures need to be noticed.

If we look at the Net Worth of the company, it has made steady climb but only in this second quarter it came above par value of Rs 100. Now, looking at the EPS, ROA and ROE till the second quarter of the FY 2068/69, the company performance was not so great.

However, with the decrease in its net writes back amount, the company was able to sustain in the positive side in the FY 2068/69 and currently in the second quarter also, the improvement in its operating activities and the decrease of net write back amount from Rs 3,223 thousand  to Rs 751 thousand has helped to improve all four indicators.

Looking at the overall financial highlights, the bank has come in par value only in the second quarter of the current fiscal year 2069/70. In the previous fiscal years, despite the increase in interest income, the bank couldn’t succeed to sustain in a positive direction because of high net write back amount. So, with the drastic improvement in the provision amount, the bank looks like heading towards building a sound foundation for the coming year.

COMPANY’S WEBSITE: http://www.sindhubikashbank.com.np

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