4 Wholesale Microfinance In Nepal: A Comparative Study

August 10, 2021 | 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.


You May Also Like:

Top 5 Microfinance Companies In Nepal

List of ‘D’ Class Microfinance Companies In Nepal


The comparative study of these 4 microfinance companies is done based on the unaudited fourth-quarterly report of the fiscal year 2077/78.  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. 125.02 crores. RMDC Laghubitta is second in capital size with Rs. 103.42 crores. First Microfinance Laghubitta and RSDC Laghubitta have Rs. 87.68 crores and Rs. 73.19 crores respectively.

The paid-up capital of the four wholesale microfinance of Nepal is shown in the table below:

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


Also Read: Merger/Acquisition Of Microfinance Companies In Nepal


Reserves and Surplus

Sana Kisan Bikas Laghubitta leads in reserves and surplus with Rs 32.62 crores. RMDC also has a total reserve of Rs. 174.81 crores. First Microfinance Laghubitta and RSDC Laghubitta have Rs. 28.01 crores and Rs. 15.34 crores in reserves and surplus.

The table below shows the total reserve and surplus of the four wholesale microfinance:

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


You May Also Like: Top 5 Life Insurance In Nepal


Borrowings

Until the Ashad’s end 2078 BS, Sana Kisan Bikas Laghubitta has a total borrowing of Rs. 20.31 Arba. RMDC Laghubitta is second with Rs. 9.37 Arba borrowed amount. First and RSDC Laghubitta have borrowings of Rs. 8.60 Arba and Rs. 3.07 Arba respectively.

The borrowings by the four wholesale microfinance is presented in the table below:

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. 24.53 Arba. RMDC and First Microfinance have provided total loans of Rs. 11.81 Arba and Rs. 8.20 Arba respectively. RSDC Laghubitta has loans and advances of Rs. 3.49 Arba only.

The table below shows the total loans and advances of the four wholesale microfinance:

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


Recommended: Top 5 Non-Life Insurance in Nepal


Net Interest Income

With the disbursement of loans, Sana Kisan Laghubitta has the highest net interest income of Rs. 121.69 crores in the fiscal year 2077/78. It is followed by RMDC Laghubitta with Rs. 40.39 crores. First and RSDC Laghubitta have earned Rs. 26.47 crores and Rs. 16.40 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 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

In the fiscal year 2077/78, Sana Kisan Bikas Laghubitta has earned an operating profit of Rs. 77.40 crores, followed by Rs. 31.92 crores of RMDC Laghubitta. First Laghubitta and RSDC have made an operating profit of Rs. 22.51 crores and Rs. 12.45 crores respectively.

Similarly, Sana Kisan Bikas Laghubitta and RMDC Laghubitta are ahead in net profit with Rs 61.49 crores and Rs 23.25 crores. Likewise, First and RSDC Laghubitta have posted a net profit of Rs 14.15 crores and Rs 9.1 crores respectively.

The table below presents the operating and net profit earned by the four wholesale microfinance:

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) & Cost of Funds

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 0.99 percent and 0.69 percent respectively.

Similarly, Sana Kisan Laghubitta has the lowest cost of funds at 3.08 percent. RMDC has a 5.51 percent cost of funds. Likewise, First and RSDC have a cost of funds of 5.36 percent and 6.43 percent respectively.

The NPL and cost of funds of the four wholesale microfinance are presented in the table below:

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. 49.14 followed by RMDC Laghubitta with Rs. 22.49. Similarly, First Microfinance and RSDC Laghubitta have an EPS of Rs. 16.14 and Rs. 12.44 respectively.

Likewise, Sana Kisan Laghubitta and RMDC Laghubitta have a per-share net worth of Rs. 285.87 and Rs. 269.03 respectively. First and RSDC have a lower per-share net-worth of Rs. 131.95 and Rs. 120.96

The table below shows the EPS and net-worth per share of the four wholesale microfinance:

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 2078 BS, Sana Kisan Laghubitta has the highest share price of Rs. 1640 with a P/E ratio of 33.37. Likewise, RMDC Laghubitta is trading at Rs. 1373 with the P/E ratio of 61.05.

Similarly, First Microfinance and RSDC Laghubitta have a share price of Rs. 823 and Rs. 805 with the P/E ratio of 50.99 and 64.71 respectively.

The market price and the respective P/E ratio of the four microfinance are presented in the table below:

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

Note: The share price is based on the end of Ashad’s end, 2078 BS. At current, the prices may vary along with the P/E ratio. 


Comparative Performance: Wholesale Microfinance in Nepal

The summarized version of the study is presented in the table below:

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, 2078. At current, the numbers may vary.

The study is based on the unaudited fourth-quarterly report of FY 2077/78 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.


Related Contents:

15 Best Blue-Chip Shares To Buy In Nepal

10 Highest Dividend Paying Stocks In Nepal

Investopaper

Investopaper is a financial website which provides news, articles, data, and reports related to business, finance and economics.

2 thoughts on “4 Wholesale Microfinance In Nepal: A Comparative Study

  • October 30, 2020 at 12:41 pm
    Permalink

    how to calculate P/E ratio

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!