P/E Ratio Of 27 Commercial Banks Of Nepal

June 8, 2022 | Investopaper

The Price-to-earnings ratio or P/E ratio is one of the most commonly used tools for determining relative valuation of stocks. It helps to calculate whether the stock of a company is undervalued or overvalued.

P/E ratio basically helps to value a company in relation to its earnings. Lower P/E ratio suggests that the company is available at a cheaper rate compared to its earnings while a high P/E may be associated with strong goodwill and image of the company. Lower P/E ratio doesn’t always mean that the stock is undervalued. It may also reflect the poor future performance of the company or the distrust of the investors towards the company’s operation.

In order to calculate P/E ratio, we must divide the current stock price by the earnings per share (EPS). Thus the formula for P/E ratio is.

P/E Ratio= Market Price per share/ Earnings per share

So, we need to know the Earnings Per Share (EPS) and current market price of the stock for the calculation of Price-Earnings Ratio. We can compute the Earnings Per Share (EPS) by dividing the net profit by the total number of shares.


Also Read: 

Net Profit of Commercial Banks in Nepal [With Ranking]

Base Rate Of Commercial Banks Of Nepal


P/E Ratio Of 27 Commercial Banks

The table below presents the P/E ratio of 27 Commercial Banks Of Nepal:

Rank Commercial Banks Market Price Per Share (Rs.)  Earnings Per Share (EPS) P/E Ratio
1 NCC Bank 203 17.81 11.40
2 Machhapuchchhre Bank 246.2 20.17 12.21
3 Kumari Bank 201.5 16.34 12.33
4 Global IME Bank 259.2 20.88 12.41
5 Sunrise Bank 210.1 16.83 12.48
6 Prabhu Bank 233 18.39 12.67
7 NMB Bank 258.1 19.35 13.34
8 Mega Bank 225 16.77 13.42
9 Prime Commercial Bank 265 19.45 13.62
10 Century Commercial Bank 196.9 14.17 13.90
11 Nepal Bank 287.6 20.3 14.17
12 Citizens Bank 217 14.93 14.53
13 Sanima Bank 280.5 18.87 14.86
14 Siddhartha Bank 335.5 22.38 14.99
15 Civil Bank 200 13.28 15.06
16 Nepal Investment Bank 274.1 18.04 15.19
17 Nepal SBI Bank 293.7 17.64 16.65
18 NIC Asia Bank 708.9 41.94 16.90
19 Standard Chartered Bank 401 23.03 17.41
20 Agricultural Development Bank 328.9 16.79 19.59
21 Bank Of Kathmandu 215.5 10.93 19.72
22 Everest Bank 451 21.45 21.03
23 Laxmi Bank 211.8 9.91 21.37
24 Himalayan Bank 323.1 14.31 22.58
25 Nepal Bangladesh Bank * 399 14.69 27.16
26 Nabil Bank 831.5 24.39 34.09
27 Rastriya Banijya Bank 25.03 0.00

Note:

The Earnings Per Share (EPS) is based on the unaudited third quarterly report of the fiscal year 2078/79. After the audit, the numbers may vary.

The Share price of the banks is of Jestha 24, 2079 BS [June 7, 2022]. At current, the share prices of the respective banks may vary.

* Nepal Bangladesh Bank is in acquisition agreement with Nabil Bank. Hence, the shares of NBB are not traded currently. The above share price is before the agreement. 


Conclusion

As shown in the table, NIC Asia Bank (NICA) has the highest EPS of Rs. 49.44. Similarly, Rastriya Banijya Bank (RBB) has an EPS of Rs. 25.03. However, it is not listed in Nepal Stock Exchange (NEPSE). So, we cannot calculate the P/E ratio of RBB.

NCC Bank has the lowest P/E ratio of 11.40 while Nabil Bank has the highest P/E ratio of 34.09.

The average P/E ratio of the commercial banks (as of Jestha 24, 2079 BS) stood at 16.04

See the P/E ratio of the banks and decide which bank stock would you like to include in the portfolio. Feel free to share your views in the comment section.


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Merger/Acquisition By Commercial Banks In Nepal

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5 thoughts on “P/E Ratio Of 27 Commercial Banks Of Nepal

  • October 24, 2019 at 8:20 pm
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    Can anybody tell me what is the highest PE ratio in stock of Nepal??

    Reply
    • October 15, 2021 at 8:27 am
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      Tell me what is the low PE ratio in stock of Nepal?

      Reply
  • January 21, 2020 at 3:14 pm
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    P/E ratio is not applicable for making investing decision all the time. You should consider the growth factor of the company too.So, PEG ratio should also be taken into consideration.

    Reply
  • August 14, 2020 at 10:12 am
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    VERY GOOD ANALYSIS ABOUT PRICE OF SHARE.I WANT TO KNOW ABOUT OTHER FACTORS THAT SHOULD BE CONSIDERED TO INVEST IN SHARE MARKET

    Reply
  • October 15, 2021 at 8:27 am
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    Tell me what is the low PE ratio in stock of Nepal?

    Reply

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