The share market cannot sink any lower

KATHMANDU, APR 12 -

Janata Bank Nepal recently completed its second year of operation. The Kathmandu Post caught up with CEO Bijay Pant to discuss the bank’s journey and contemporary issues related to the country’s financial sector.

Janata Bank started when there was an acute liquidity crunch, and now you have an excess liquidity situation. How have the two years been for the bank?

We had a mixed experience during the first two years of our operation. In the first year, we operated under a situation of an acute liquidity crunch while in the second year there was excess liquidity. It is difficult to operate under both these extremes. Nevertheless, we were able to give satisfactory results. We were able to generate an operating profit within the first three months of establishment. Likewise, we expanded pretty fast with 22 branches till date; and by the end of the current fiscal year, we will add two more branches.    

How would you characterize the country’s present financial situation? Things do not look rosy with banks struggling to issue loans.

When the country’s entire economy is struggling to move forward, the financial sector alone cannot perform well. Our job is to make investments; but for that, areas to invest in must open up. We are even ready to go into the agricultural sector as directed by the regulators, but we are not going there to burn our investment. It is the depositors’ money that we lend, and we should be assured that it is safe. Infrastructure like insurance, irrigation and market connectivity, among others, must be in place for the banks to invest. Likewise, the lending stuck in the realty sector is also posing a threat to banks and financial institutions. All the stakeholders must come up with a concrete plan and strategy to address the issue.

Under such circumstances, where do you think is the industry heading?

Currently, I am not in a position to predict what will happen one year down the line, and I think nobody is in that position. If we predict something beyond one year, we are likely to be wrong. Being a profit-making institution, if you cannot give returns to your shareholders, your ability will be questioned. But under the current situation, it is very tough to generate profits.

What are your future plans?

We grew to become a sizable bank within a span of two years. Our way forward is consolidation and correction. We will focus on minimizing risk rather than increasing the volume of business. In the past two years, we hired a large number of staff, and most of them are not very experienced. Our focus will be to train our employees.

You will be making the largest initial public offering (IPO) worth Rs 600 million. With the capital market in a bearish mood, how do you think the people will respond?

I am confident that our shares will be fully subscribed. When you look at the capital market, those who invested in IPOs haven’t lost. Furthermore, the market index cannot go below the current figure. Theoretically, when a market sinks to its lowest level, it revives and goes up again. In my opinion, this is a good time to invest in shares, and the public will respond in that way. 

Source: Kantipur