January 27, 2020 | Investopaper
Kamana Sewa Bikas Bank (KSBBL) has delivered strong growth in performance in the second quarter of the fiscal year 2076/77. The national-level development bank has expanded its deposits and loans to customers by 28 percent and 24 percent in the first 6 months. This translates into 56 percent annual growth in deposits and 48 percent annual growth in loans.
Until the second quarter of this fiscal year, Kamana Sewa Bikas Bank has collected Rs. 27.44 Arba as deposits from customers. Such deposits stood at Rs. 21.38 Arba in the fourth quarter of the previous year. Likewise, the bank has floated total loans of Rs. 23.48 Arba to customers, up from Rs. 18.91 Arba in the last fiscal year.
Kamana Sewa Bikas Bank has a current capital of Rs. 2.54 Arba with total reserve and surplus of Rs. 68.60 crores.
With the aggressive expansion of loans, the net interest income has grown by 51 percent to Rs. 57.42 crores. In the second quarter of the previous fiscal year, the bank had earned Rs. 37.98 crores as the net interest income. However, despite the huge growth in net interest income, the net profit of banks has increased by a mere 7.45 percent to Rs. 14.85 crores. This is mainly due to huge personnel and other operating expense.
Kamana Sewa Bikas Bank is currently in the rapid expansion mode. The bank has mainly focused on technological improvements and expanding branch networks. Due to this, the bank has made heavy expenses on human resources and operating expenses which amounted to Rs. 37.32 crores. In the first 6 months of the previous fiscal year, such expenses stood at Rs. 19.26 crores.
The development bank has been able to reduce the Non-Performing Loans (NPL) by 18% to 1.37 percent. On the other hand, the base rate has slightly increased to 11.86 percent. The per-share earnings (EPS) and per share net worth stood at Rs. 11.69 and Rs. 127.
The shares of Kamana Sewa Bikas Bank traded at Rs. 144 at the end of Poush. At this price, the P/E ratio is 12.32 which indicates the share of KSBBL is reasonably priced. Looking at the growth, this stock might be worth investing at the current low level. Merger/Acquisition with ‘A’ class commercial bank is also the probability in which case the current shareholders might receive a handsome return.
The second-quarter report of Kamana Sewa Bikas Bank is summarized in the table below:
Kamana Sewa Bikas Bank Second Quarter Report, FY 2076/77
|HEADINGS||2nd QTR, 2076/77||4th QTR, 2075/76||PERCENT CHANGE|
|PAID-UP CAPITAL (Rs. In crores)||254.02||254.02||0.00|
|RESERVE & SURPLUS(Rs. In crores)||68.6||70.51||-2.71|
|DEPOSITS To Customers (Rs. In Arba)||27.44||21.38||28.34|
|LOANS To Customers (Rs. In Arba)||23.48||18.91||24.17|
|HEADINGS||2nd QTR, 2076/77||2nd QTR, 2075/76||PERCENT CHANGE|
|NET INTEREST INCOME (Rs. In crores)||57.42||37.98||51.18|
|PROFIT (Rs. In crores)||14.85||13.82||7.45|
|DISTRIBUTABLE PROFIT (Rs. In crores)||6.56||–||–|
|NON PERFORMING LOANS, NPL (%)||1.37||1.67||-17.96|
|EARNINGS PER SHARE, EPS (Rs.)||11.69|
|NETWORTH PER SHARE (Rs.)||127|
|MARKET PRICE PER SHARE (Rs.) [Poush end, 2076]||144|
The above figures are based on the unaudited second-quarter report published by Kamana Sewa Bikas Bank. 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.