3 Government Banks Of Nepal: Comparative Analysis

May 15, 2020 | Investopaper

There are 3 government owned banks, namely:

Agricultural Development Bank (ADBL)

Nepal Bank (NBL)

Rastriya Banijya Bank (RBB)

(Click on the links above for the third quarter performance report of the respective banks)

The three government banks have emerged as the competitive commercial banks from a weak financial position few years ago. Over the years, these banks have impressively reformed themselves. At present context, the banks have positioned themselves as the top banks in terms of profitability as well as the business portfolio. Here, we will try to make a financial comparison of these 3 banks.

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Note: This comparative study will be based on the un-audited third quarter report of the fiscal year 2076/77 published by the respective banks.

The financial indicators on which the comparison will be made are as follows:

Paid-Up Capital

Agricultural Development Bank has the highest paid-up capital among the three with Rs. 14.99 Arba. Nepal Bank and Rastriya Banijya Bank have a capital of Rs. 9.81 Arba and Rs. 9 Arba respectively.

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Note: The capital of Agricultural Development Bank includes the preference share of Rs. 5.44 Arba.

Banks Paid up capital(Rs.’Arba’)
Agricultural Development Bank 14.99
Nepal Bank 9.81
Rastriya Banijya Bank 9

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Reserve & Surplus

Nepal Bank has the reserve and surplus of Rs. 19.29 Arba followed by Rastriya Banijya Bank and Agricultural Development Bank with Rs. 14.72 Arba and Rs. 12.87 Arba respectively.

Banks Reserve and Surplus(Rs.’Arba’)
Agricultural Development Bank 12.87
Nepal Bank 19.29
Rastriya Banijya Bank 14.72

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Rastriya Banijya Bank has the largest deposit from customers of Rs. 200.46 Arba. Agricultural Development Bank and Nepal Bank are way behind in deposit collection with Rs. 130.52 Arba and Rs. 122.70 Arba respectively.

Banks Deposits From Customers (Rs.’Arba’)
Agricultural Development Bank 130.52
Nepal Bank 122.7
Rastriya Banijya Bank 200.46

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Loans & Advances

Rastriya Banijya Bank has floated more loans and advances to customers than other two with Rs. 148.63 Arba until the Chaitra end, 2076. Likewise, Agricultural Development Bank has provided loans of Rs. 121.40 Arba while the loans by Nepal Bank stand at Rs. 101.68 Arba.

Banks Loans & Advances To Customers (Rs.’Arba’)
Agricultural Development Bank 121.4
Nepal Bank 101.68
Rastriya Banijya Bank 148.63

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Net Interest Income

Rastriya Banijya Bank has earned the highest net interest income in the nine months of the fiscal year 2076/77. RBB has a net interest income of Rs. 6.97 Arba followed by ADBL with Rs. 4.36 Arba and NBL with Rs. 4.22 Arba.

Banks Net Interest Income(Rs.’Arba’)
Agricultural Development Bank 4.36
Nepal Bank 4.22
Rastriya Banijya Bank 6.97

Operating Profit

Rastriya Banijya Bank has generated over 1.50 times more operating profit than the other two banks. In the nine months, RBB’s operating profit stood at Rs. 4.17 Arba. Likewise, Agricultural Development Bank and Nepal Bank have an operating profit of Rs. 2.70 Arba and Rs. 2.65 Arba respectively.

Banks Operating Profit (Rs.’Arba’)
Agricultural Development Bank 2.7
Nepal Bank 2.65
Rastriya Banijya Bank 4.17

Net Profit

Rastriya Banijya Bank has earned a net profit of Rs. 3.04 Arba. This is one Arba more than the profit of ADBL and NBL. Agricultural Development Bank has posted a profit of Rs. 2.04 Arba. Similarly, the net profit of Nepal Bank is Rs. 1.99 Arba.

Banks Net Profit (Rs.’Arba’)
Agricultural Development Bank 2.04
Nepal Bank 1.99
Rastriya Banijya Bank 3.04

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Distributable Profit

Agricultural Development Bank has a highest distributable profit among the three with Rs. 1.26 Arba. Rastriya Banijya Bank is close second with Rs. 1.16 Arba. Nepal Bank has a distributable profit of negative Rs. 6 crores.

Banks Distributable Profit (Rs. ‘ Arba’)
Agricultural Development Bank 1.26
Nepal Bank -0.06
Rastriya Banijya Bank 1.16

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Non Performing Loans (NPL)

Nepal Bank has the lowest Non Performing Loans of 2.64 percent. Agricultural Development is second with the NPL of 3.65 percent. RBB has the higher NPL of 4.64 percent.

Banks Non Performing Loans, NPL(%)
Agricultural Development Bank 3.65
Nepal Bank 2.64
Rastriya Banijya Bank 4.64

Base Rate

Rastriya Banijya Bank has a lower base rate of 6.72 percent followed by Nepal Bank with 7.49 percent. Agricultural Development Bank has the higher base rate among the three with 9.97 percent.

Banks Base rate(%)
Agricultural Development Bank 9.97
Nepal Bank 7.49
Rastriya Banijya Bank 6.72

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Earnings Per Share (EPS)

Rastriya Banijya Bank is ahead in terms of Earnings Per Share with Rs. 44.96. Nepal Bank and Agricultural Development Bank have an EPS of Rs. 27.13 and Rs. 26.55 respectively.

Banks Earnings Per Share, EPS(Rs.)
Agricultural Development Bank 26.55
Nepal Bank 27.13
Rastriya Banijya Bank 44.96

Net-worth Per Share

Nepal Bank has a greater per-share net-worth of Rs. 296.63. Rastriya Banijya Bank the net-worth per share of Rs. 263.56 while ADBL has per-share networth of Rs. 232.11.

Banks Networth Per Share ( Rs.)
Agricultural Development Bank 232.11
Nepal Bank 296.63
Rastriya Banijya Bank 263.56

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Comparative Analysis of 3 Government Banks Of Nepal

The comparative analysis of 3 government banks of Nepal is summarized in the table below:

Headings Nepal Bank Agricultural Development Bank Rastriya Banijya Bank
Paid up capital(Rs.’Arba’) 9.81 14.99 9
Reserve and Surplus(Rs.’Arba’) 19.29 12.87 14.72
Deposits From Customers (Rs.’Arba’) 122.7 130.52 200.46
Loans & Advances To Customers (Rs.’Arba’) 101.68 121.4 148.63
Net Interest Income(Rs.’Arba’) 4.22 4.36 6.97
Operating Profit (Rs.’Arba’) 2.65 2.7 4.17
Net Profit (Rs.’Arba’) 1.99 2.04 3.04
Distributable Profit (Rs. ‘ Arba’) -6.2 1.26 1.16
Non Performing Loans, NPL(%) 2.64 3.65 4.64
Base rate(%) 7.49 9.97 6.72
Earnings Per Share, EPS(Rs.) 27.13 26.55 44.96
Networth Per Share ( Rs.) 296.63 232.11 263.56

The above figures are based on the un-audited quarterly report published by the respective banks. 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.

Read Related Contents:

Financial Analysis of Commercial Banks of Nepal


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