Financial Analysis of NIC Asia Bank

April 8, 2019 | Investopaper

The brief financial analysis of NIC Asia Bank as performed by Investopaper team is as follows:

Introduction

NIC Bank was established on 21^st July 1998. The Bank was renamed as NIC ASIA Bank after the merger of NIC Bank with Bank of Asia Nepal on 30^th June 2013. The merger was the first of its kind merger between two successful commercial banks in the country.

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NIC Asia Bank is now, one of the largest private-sector commercial banks in the country in terms of capital base, balance-sheet size, number of branches, ATM network and customer base. The Bank has 270 branches, 37 extension counters, 22 branchless banking, and 289 ATMs across Nepal with a network covering all major financial centers of the country.

NIC Asia was recognized as”Bank of the Year-Nepal” by The Banker, Financial Times, the UK in 2007 & 2013.

Board of directors and the Management team of NIC Asia Bank

The board of directors includes:

S.N.	Board of Directors	Post
1	Mr. Tulsi Ram Agrawal	Chairman
2	Mr. Jagdish Prashad Agrawal	Director
3	Mr. Ram Chandra Sanghai	Director
4	Mr. Rajendra Aryal	Director
5	Mr. Binod Kumar Pyakurel	Director
6	Mr. Ganesh Man Shrestha	Director
7	Mr. Trilok Chand Agrawal	Director

The management team is lead by Roshan K. Neupane since December 2018. The management team of NIC Asia Bank includes:

S.N.	Management Team	Functional Title
1	Mr. Roshan K. Neupane	Chief Executive Officer
2	Mr. Sudhir Nath Pandey	Deputy Chief Executive Officer
3	Mr. Santosh Kumar Rathi	Chief Marketing Officer
4	Mr. Rajesh Rawal	Chief Of Provincial Office
5	Mr. Jayendra Rawal	Chief Of Provincial Office
6	Mr. Kapil Dhakal	Chief Human Resource And Chief Development Officer
7	Mr. Sudeep Khanal	Chief Corporate And Priority Loans Officer
8	Mr. Arjun Raj Khaniya	Chief of Public Relationship Officer
9	Mr. Bishal Sigdel	Chief Financial Officer
10	Mr. Dinesh Bhari	Head Legal
11	Mr. Dipendra Bahadur Rajbhandari	Chief Risk Officer
12	Mr. Prakash Baral	Chief Credit Officer
13	Mr. Raju Prasad Adhikari	Head Internal Audit
14	Mr. Deepen Karki	Company Secretary

Financial Highlights of NIC Asia Bank: Last 5 Years

The performance of NIC Asia Bank based on different financial indicators in the last five years is shown as:

Deposits,loans & total assets:

In the last five years, NIC Asia has shown satisfactory growth in deposits, loans, and Total Assets. The deposits have grown from Rs. 44.98 billion to Rs. 139.59 billion in a period of 5 years. The loans and advances have risen to Rs. 115.80 billion from 36.33 billion. Likewise, the bank has increased the size of its assets to Rs. 170.94 billion from 51.50 billion in 2070/71.

Fiscal Year	Deposits(in billion ‘Rs.’)	Loans & Advances(in billion ‘Rs.’)	Total Assets(in billion ‘Rs.’)
2070/71	44.98	36.33	51.50
2071/72	53.48	42.14	60.52
2072/73	69.49	58.45	80.46
2073/74	86.70	71.58	99.27
2074/75	139.59	115.80	170.94

Paid-up Capital, Net Profit & Market Capitalization:

In order to meet the paid up capital requirement of Nepal Rastra Bank, NIC Asia has gradually increased its paid-up capital to Rs. 8.03 billion from Rs. 2.31 billion in Rs. 2070/71. However, with the rise in the capital, the bank has not been able to grow its profit. The profit has risen from Rs. 0.83 billion to Rs. 1.33 billion. Due to this, the market capitalization has not increased in the last 5 years. The market value has increased by only Rs. 2.96 billion during this period. The market cap at the end of F.Y. 2074/75 stood at Rs. 25.37 billion.

Fiscal Year	Paid-Up Capital(in billion ‘Rs.’)	Net Profit(in billion ‘Rs.’)	Market Capitalization(in billion ‘Rs.’)
2070/71	2.31	0.83	22.41
2071/72	2.66	0.68	16.41
2072/73	4.57	1.07	36.55
2073/74	6.69	1.47	29.77
2074/75	8.03	1.33	25.37

Also Read: Net Profit of Commercial Banks in Nepal [With Ranking]

EPS, MPS, BPS & P/E ratio:

The earnings per share of the bank has declined from Rs.35.98 to Rs.16.62 at the end of the F.Y 2074/75. This is due to the high increment of capital during this period. The net profit has not grown as impressively as the growth in the capital. The rise in the capital has reduced the book value per share from 211 in 2070/71 to Rs. 145.32 in 2074/75. The market price has also declined due to the adjustment of bonus and right shares.

Fiscal Year	EPS(Rs.)	Networth per share (Rs.)	MPS(Rs.)	P/E ratio
2070/71	35.98	211.00	970	26.96
2071/72	25.59	207.00	617	24.11
2072/73	28.31	161.00	798	28.19
2073/74	23.06	151.00	445	19.30
2074/75	16.62	145.32	316	19.01

Dividend History:

The bank has provided a decent dividend to the shareholders in the last five years. In the fiscal year 2074/75, the bank provided 10 percent bonus shares to the shareholders. In previous years, the dividend is mainly in the form of bonus shares ranging from 20 to 40 percent per annum.

Fiscal Year	Bonus(%)	Cash(%)	Total dividend(%)
2070/71	15.00	15.00	30.00
2071/72	39.00	2.05	41.05
2072/73	26.00	1.37	27.37
2073/74	20.00	1.05	21.05
2074/75	10.00	0.53	10.53

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Return On Equity(ROE) & Return On Assets(ROA):

The ROE and ROA stand at 12.09 percent and 0.97 percent at the end of 2074/75. They have declined from a high of 16.84 percent and 1.71 percent respectively.

Fiscal Year	ROE(%)	ROA(%)
2070/71	15.93	1.71
2071/72	13.05	1.21
2072/73	16.5	1.51
2073/74	16.84	1.64
2074/75	12.09	0.97

Financial Highlights of NIC Asia Bank: Second Qtr 2075/76

NIC Asia bank has made outstanding growth in the second quarter of F.Y. 2075/76. In a period of 2 years, the bank has positioned itself into one of the leading banks in the banking industry. The size of deposits, loans and assets are among the highest among the private sector banks.

Headings	Second Quarter, 2075/76	Second Quarter, 2074/75	% Change
Paid-up Capital(in billion ‘Rs.’)	8.83	8.03	9.96
Reserve & Surplus(in billion ‘Rs.’)	4.41	2.65	66.42
Deposits (in billion ‘Rs.’)	175.76	120.47	45.9
Loans & Advances(in billion ‘Rs.’)	149.3	100.95	47.89
Net Interest Income(in billion ‘Rs.’)	3.61	1.55	132.9
Net Profit(in billion ‘Rs.’)	1.51	0.57	164.91
Free Profit (in billion ‘Rs.’)	1.26	0.57	121.05
Earnings Per Share, EPS (Rs.)	34.31	14.24	140.94
Non Performing Loans, NPL (%)	0.3	0.26	15.38
Base rate (%)	9.33	10.55	-11.56

In the second quarter of F.Y. 2075/76, NIC Asia bank made a net profit of Rs. 1.51 Arab which is 164% from the corresponding quarter of the previous year. In 2074/75, the bank made a profit of Rs. 0.57 billion in the 2nd quarter. Likewise, paid-up capital stands at Rs. 8.83 billion, reserve & surplus at Rs. 4.41 billion. NIC Asia has deposit collection and loans of Rs. of Rs. 175.76 billion and 149.30 billion respectively which are 45.9 percent and 47.9 percent higher than the second quarter of 2074/75. The net interest income has also risen sharply by 132.90 percent to Rs. 3.61 billion from Rs. 1.55 billion. The free profit after regulatory adjustment stands at Rs. 1.26 billion. The non-performing loans stand at 0.30%. Also, the EPS and Networth per share are 34.31 and 149.93 respectively, as of 2nd quarter 2075/76.

This indicates strong growth seen in NIC Asia in this recent one year period. At the time of the credit crisis in the banking industry, NIC Asia pulled a miracle out of the hat by expanding its deposits, loans, and profit at such an exponential rate. This is encouraging for the investors, especially oriented towards growth factor.

NOTE: Figures of FY 2074/75 are as per NFRS and the figures of the earlier year are as per previous GAAP. Hence, they may not be comparable.

(Investments are subject to market risks and investors are advised to do personal homework before making any investment decision. This material is just a guideline for the investors to do further investigations)

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