4 Wholesale Microfinance In Nepal: A Comparative Study
August 12, 2022 | Investopaper
Microfinance companies are the Class ‘D’ financial institutions that provide financial support to the unemployed or low-income groups who have no access to financial services. In Nepal, Microfinance companies are divided into wholesale or retail microfinance. Wholesale microfinance provides loans to the institutions that provide individual loans to the people deprived of financial support. Retail microfinance takes funds from banks or wholesale microfinance and provides loans to low-income people.
In the case of Nepal, there are only 4 wholesale microfinance companies which include:
1. First Microfinance Laghubitta Bittiya Sanstha Limited
2. RMDC Laghubitta Bittiya Sanstha Limited
3. RSDC Laghubitta Bittiya Sanstha Limited
4. Sana Kisan Bikas Laghubitta Bittiya Sanstha Limited
[Click on the link of the respective company to view the reports].
As per the regulator (Nepal Rastra Bank), wholesale microfinance is required to meet the minimum paid-up capital of Rs. 60 crores. All 4 microfinance have met the requirements set by the Central Bank.
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The comparative study of these 4 microfinance companies is done based on the unaudited fourth-quarterly report of the current fiscal year 2078/79. The financial comparison will be based on the following indicators:
Paid-up Capital
All 4 microfinance have paid-up capital above Rs. 60 crores. Sana Kisan Laghubitta has the highest capital with Rs. 156.44 crores. RMDC Laghubitta is second in capital size with Rs. 124.1 crores. First Microfinance Laghubitta and RSDC Laghubitta have Rs. 96.44 crores and Rs. 80.51 crores respectively.
The paid-up capital of the four wholesale microfinance of Nepal is shown in the table below:
| Wholesale Microfinance Companies | Paid-up capital (Rs. ‘crores’) |
| Sanakisan Laghubitta | 156.44 |
| RMDC Laghubitta | 124.1 |
| First Microfinance | 96.44 |
| RSDC Laghubitta | 80.51 |
Source: Unaudited Q4 Report, FY 2078/79
In FY 2077/78
| Wholesale Microfinance | Paid-up capital (Rs. ‘crores’) |
| First Microfinance | 87.68 |
| RMDC Laghubitta | 103.42 |
| RSDC Laghubitta | 73.19 |
| Sanakisan Bikas Laghubitta | 125.15 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
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Reserves and Surplus
Sana Kisan Bikas Laghubitta leads in reserves and surplus with Rs 259.79 crores. RMDC also has a total reserve of Rs. 208.71 crores. First Microfinance Laghubitta and RSDC Laghubitta have Rs. 44.06 crores and Rs. 21.03 crores in reserves and surplus.
The table below shows the total reserve and surplus of the four wholesale microfinance:
| Wholesale Microfinance Companies | Reserve and Surplus (Rs. ‘crores’) |
| Sanakisan Laghubitta | 259.79 |
| RMDC Laghubitta | 208.71 |
| First Microfinance | 44.06 |
| RSDC Laghubitta | 21.03 |
Source: Unaudited Q4 Report, FY 2078/79
In FY 2077/78
| Wholesale Microfinance | Reserve and Surplus (Rs. ‘crores’) |
| First Microfinance | 28.01 |
| RMDC Laghubitta | 174.81 |
| RSDC Laghubitta | 15.34 |
| Sanakisan Bikas Laghubitta | 232.62 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
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Borrowings
Until the Ashad’s end 2079 BS, Sana Kisan Bikas Laghubitta has a total borrowing of Rs. 16.3 Arba. First Laghubitta is second with Rs. 9.45 Arba borrowed amount. RMDC and RSDC Laghubitta have borrowings of Rs. 8.5 Arba and Rs. 4.64 Arba respectively.
The borrowings by the four wholesale microfinance is presented in the table below:
| Wholesale Microfinance Companies | Borrowings (Rs. ‘Arba’) |
| Sanakisan Laghubitta | 16.3 |
| First Microfinance | 9.45 |
| RMDC Laghubitta | 8.5 |
| RSDC Laghubitta | 4.64 |
Source: Unaudited Q4 Report, FY 2078/79
In FY 2077/78
| Wholesale Microfinance | Borrowings (Rs. ‘Arba’) |
| First Microfinance | 8.6 |
| RMDC Laghubitta | 9.37 |
| RSDC Laghubitta | 3.07 |
| Sanakisan Bikas Laghubitta | 20.31 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
Loans and Advances
The main objective of microfinance is to float the loans to the deprived sector. Sana Kisan Laghubitta has floated total loans and advances of Rs. 29.31 Arba. RMDC and First Microfinance have provided total loans of Rs. 11.68 Arba and Rs. 10.4 Arba respectively. RSDC Laghubitta has loans and advances of Rs. 5.45 Arba only.
The table below shows the total loans and advances of the four wholesale microfinance:
| Wholesale Microfinance Companies | Loans & Advances (Rs. ‘Arba’) |
| Sanakisan Laghubitta | 29.31 |
| RMDC Laghubitta | 11.68 |
| First Microfinance | 10.4 |
| RSDC Laghubitta | 5.45 |
Source: Unaudited Q4 Report, FY 2078/79
In FY 2077/78
| Wholesale Microfinance | Loans & Advances (Rs. ‘Arba’) |
| First Microfinance | 8.2 |
| RMDC Laghubitta | 11.81 |
| RSDC Laghubitta | 3.49 |
| Sanakisan Bikas Laghubitta | 24.53 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
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Net Interest Income
With the disbursement of loans, Sana Kisan Laghubitta has the highest net interest income of Rs. 134.73 crores in the fiscal year 2078/79. It is followed by RMDC Laghubitta with Rs. 60.53 crores. First and RSDC Laghubitta have earned Rs. 42.72 crores and Rs. 23.82 crores as net interest income during this period.
The net interest income earned by the four wholesale microfinance is presented in the table below:
| Wholesale Microfinance Companies | Net Interest Income (Rs. ‘crores’) |
| Sanakisan Laghubitta | 134.73 |
| RMDC Laghubitta | 60.53 |
| First Microfinance | 42.72 |
| RSDC Laghubitta | 23.82 |
Source: Unaudited Q4 Report, FY 2078/79
In FY 2077/78
| Wholesale Microfinance | Net Interest Income (Rs. ‘crores’) |
| First Microfinance | 26.47 |
| RMDC Laghubitta | 40.39 |
| RSDC Laghubitta | 16.4 |
| Sanakisan Bikas Laghubitta | 121.69 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
Operating Profit, Net Profit & Distributable Profit
In the fiscal year 2078/79, Sana Kisan Bikas Laghubitta has earned an operating profit of Rs. 100.97 crores, followed by Rs. 51.41 crores of RMDC Laghubitta. First Laghubitta and RSDC have generated an operating profit of Rs. 38.84 crores and Rs. 19.31 crores respectively.
Similarly, Sana Kisan Bikas Laghubitta and RMDC Laghubitta are ahead in net profit with Rs 70.83 crores and Rs 35.49 crores. Likewise, First and RSDC Laghubitta have posted a net profit of Rs 26.88 crores and Rs 13.52 crores respectively.
Likewise, RMDC Laghubitta has the highest distributable profit of Rs. 44.55 crores while RSDC Laghubitta has the lowest distributable profit of Rs. 10.58.
The table below presents the operating and net profit earned by the four wholesale microfinance:
| Wholesale Microfinance Companies | Operating Profit (Rs. ‘crores’) | Net Profit (Rs. ‘crores’) | Distributable Profit (Rs. ‘crores’) |
| Sanakisan Laghubitta | 100.97 | 70.83 | 43.88 |
| RMDC Laghubitta | 51.41 | 35.49 | 44.55 |
| First Microfinance | 38.84 | 26.88 | 20.95 |
| RSDC Laghubitta | 19.31 | 13.52 | 10.58 |
Source: Unaudited Q4 Report, FY 2078/79
In FY 2077/78
| Wholesale Microfinance | Operating Profit (Rs. ‘crores’) | Net Profit (Rs. ‘crores’) |
| First Microfinance | 22.51 | 14.15 |
| RMDC Laghubitta | 31.92 | 23.25 |
| RSDC Laghubitta | 12.45 | 9.1 |
| Sanakisan Bikas Laghubitta | 77.4 | 61.49 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
Non-Performing Loans (NPL) & Base Rate
First Microfinance has the lowest NPL of zero percent. RMDC Laghubitta has a non-performing loan of 0.05 percent. Likewise, RSDC and Sana Kisan Laghubitta’s NPL stand at 0.49 percent and 0.68 percent respectively.
Similarly, Sana Kisan Laghubitta has the lowest base rate at 4.56 percent. RMDC has a 10.67 percent cost of funds. Likewise, First and RSDC have base rate of 12.99 percent and 12.61 percent respectively.
The NPL and base rate of the four wholesale microfinance are presented in the table below:
| Wholesale Microfinance Companies | Non Performing Loans, NPL (%) | Base Rate (%) |
| First Microfinance | 0 | 12.99 |
| RMDC Laghubitta | 0.05 | 10.67 *** |
| RSDC Laghubitta | 0.49 | 12.61 |
| Sanakisan Laghubitta | 0.68 | 4.56 |
Source: Unaudited Q4 Report, FY 2078/79
*** Since base rate is not presented in the quarterly report, we have included cost of funds for RMDC Laghubitta. Hence, it may not be comparable.
In FY 2077/78
| Wholesale Microfinance | Non Performing Loans, NPL (%) | Cost of Funds (%) |
| First Microfinance | 0 | 5.36 |
| RMDC Laghubitta | 0.05 | 5.51 |
| RSDC Laghubitta | 0.99 | 6.43 |
| Sanakisan Bikas Laghubitta | 0.69 | 3.08 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
Earnings Per Share (EPS) & Net-worth Per Share
In terms of Earnings Per Share (EPS), Sana Kisan Bikas Laghubitta excels over others with Rs. 45.28 followed by RMDC Laghubitta with Rs. 28.6. Similarly, First Microfinance and RSDC Laghubitta have an EPS of Rs. 27.88 and Rs. 16.79 respectively.
Likewise, Sana Kisan Laghubitta and RMDC Laghubitta have a per-share net worth of Rs. 266.08 and Rs. 268.18 respectively. First and RSDC have a lower per-share net-worth of Rs. 145.69 and Rs. 126 respectively.
The table below shows the EPS and net-worth per share of the four wholesale microfinance:
| Wholesale Microfinance Companies | Earnings Per Share, EPS (Rs.) | Networth Per Share ( Rs.) |
| Sanakisan Laghubitta | 45.28 | 266.08 |
| RMDC Laghubitta | 28.6 | 268.18 |
| First Microfinance | 27.88 | 145.69 |
| RSDC Laghubitta | 16.79 | 126 |
Source: Unaudited Q4 Report, FY 2078/79
In FY 2077/78
| Wholesale Microfinance | Earnings Per Share, EPS (Rs.) | Networth Per Share ( Rs.) |
| First Microfinance | 16.14 | 131.95 |
| RMDC Laghubitta | 22.49 | 269.03 |
| RSDC Laghubitta | 12.44 | 120.96 |
| Sanakisan Bikas Laghubitta | 49.14 | 285.87 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
Market Price Per Share And P/E Ratio
As of Ashad’s end 2079 BS, Sana Kisan Laghubitta has the highest share price of Rs. 1065 with a P/E ratio of 23.52. Likewise, RMDC Laghubitta is trading at Rs. 838 with the P/E ratio of 29.30.
Similarly, First Microfinance and RSDC Laghubitta have a share price of Rs. 665 and Rs. 554.8 with the P/E ratio of 23.85 and 33.04 respectively.
The market price and the respective P/E ratio of the four microfinance are presented in the table below:
| Wholesale Microfinance Companies | Market Price Per Share (Rs.) [Ashad end, 2079 BS] | P/E Ratio |
| Sanakisan Laghubitta | 1065 | 23.52 |
| RMDC Laghubitta | 838 | 29.30 |
| First Microfinance | 665 | 23.85 |
| RSDC Laghubitta | 554.8 | 33.04 |
Source: Unaudited Q4 Report, FY 2078/79
In FY 2077/78
| Wholesale Microfinance | Market Price Per Share (Rs.) [Ashad end, 2078 BS] | P/E Ratio |
| First Microfinance | 823 | 50.99 |
| RMDC Laghubitta | 1373 | 61.05 |
| RSDC Laghubitta | 805 | 64.71 |
| Sanakisan Bikas Laghubitta | 1640 | 33.37 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
Comparative Performance: Wholesale Microfinance in Nepal
The summarized version of the study is presented in the table below:
| Financial Indicators | RSDC Laghubitta | RMDC Laghubitta | Sanakisan Laghubitta | First Microfinance |
| Paid-up capital (Rs. ‘crores’) | 80.51 | 124.1 | 156.44 | 96.44 |
| Reserve and Surplus (Rs. ‘crores’) | 21.03 | 208.71 | 259.79 | 44.06 |
| Borrowings (Rs. ‘Arba’) | 4.64 | 8.5 | 16.3 | 9.45 |
| Loans & Advances (Rs. ‘Arba’) | 5.45 | 11.68 | 29.31 | 10.4 |
| Net Interest Income (Rs. ‘crores’) | 23.82 | 60.53 | 134.73 | 42.72 |
| Operating Profit (Rs. ‘crores’) | 19.31 | 51.41 | 100.97 | 38.84 |
| Net Profit (Rs. ‘crores’) | 13.52 | 35.49 | 70.83 | 26.88 |
| Distributable Profit (Rs. ‘crores’) | 10.58 | 44.55 | 43.88 | 20.95 |
| Non Performing Loans, NPL (%) | 0.49 | 0.05 | 0.68 | 0 |
| Base Rate (%) | 12.61 | 10.67 *** | 4.56 | 12.99 |
| Earnings Per Share, EPS (Rs.) | 16.79 | 28.6 | 45.28 | 27.88 |
| Networth Per Share ( Rs.) | 126 | 268.18 | 266.08 | 145.69 |
| Market Price Per Share (Rs.) [Ashad end, 2079 BS] | 554.8 | 838 | 1065 | 665 |
| P/E Ratio | 33.04 | 29.30 | 23.52 | 23.85 |
Source: Unaudited Q4 Report, FY 2078/79
*** Since base rate is not presented in the quarterly report, we have included cost of funds for RMDC Laghubitta. Hence, it may not be comparable.
In FY 2077/78
| Financial Indicators | First Microfinance | RMDC Laghubitta | RSDC Laghubitta | Sanakisan Bikas Laghubitta |
| Paid-up capital (Rs. ‘crores’) | 87.68 | 103.42 | 73.19 | 125.15 |
| Reserve and Surplus (Rs. ‘crores’) | 28.01 | 174.81 | 15.34 | 232.62 |
| Borrowings (Rs. ‘Arba’) | 8.6 | 9.37 | 3.07 | 20.31 |
| Loans & Advances (Rs. ‘Arba’) | 8.2 | 11.81 | 3.49 | 24.53 |
| Net Interest Income (Rs. ‘crores’) | 26.47 | 40.39 | 16.4 | 121.69 |
| Operating Profit (Rs. ‘crores’) | 22.51 | 31.92 | 12.45 | 77.4 |
| Net Profit (Rs. ‘crores’) | 14.15 | 23.25 | 9.1 | 61.49 |
| Non Performing Loans, NPL (%) | 0 | 0.05 | 0.99 | 0.69 |
| Cost of Funds (%) | 5.36 | 5.51 | 6.43 | 3.08 |
| Earnings Per Share, EPS (Rs.) | 16.14 | 22.49 | 12.44 | 49.14 |
| Networth Per Share ( Rs.) | 131.95 | 269.03 | 120.96 | 285.87 |
| Market Price Per Share (Rs.) [Ashad end, 2078 BS] | 823 | 1373 | 805 | 1640 |
| P/E Ratio | 50.99 | 61.05 | 64.71 | 33.37 |
Source: Unaudited Fourth Quarterly Report, FY 2077/78
Note: The share price, as well as the P/E ratio, is based on the data of Ashad’s end, 2079 BS. At current, the numbers may vary.
The study is based on the unaudited quarterly report of FY 2078/79 published by the respective company. Investors are advised to take other things into consideration along with this report while making investment decisions. The numbers may vary after the final audit.
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