Top 6 Microfinance In Nepal: Comparative Study [Updated]
August 16, 2022 | Investopaper
In this study, we will take 6 top retail microfinance of Nepal based on their performance in the fiscal year 2078/79. We have selected the microfinance companies on the basis of the volume of business they have generated. Here, we have chosen only those microfinance listed in Nepal Stock Exchange. The microfinance companies include (alphabetically):
3. Forward Community Laghubitta
Note: Click on the links above to see the individual performance of the microfinance companies in the FY 2078/79
Here, we will try to make the financial comparison of these microfinance companies based on the following indicators.
Paid Up Capital
Paid-Up Capital is the amount of money which the shareholders have put in the company. Higher capital signifies strong financial condition as it can be useful for shock absorption during any unexpected setbacks and downturn.
Among these microfinance, Chhimek Laghubitta and Nirdhan Utthan Laghubitta have a paid-up capital of Rs 232.41 crores and Rs 219.5 crores. Likewise, Deprosc Laghubitta’s capital stood at Rs 138.74 crores. Forward Laghubitta has a lower capital of Rs 84.44 crores respectively.
The paid-up capital of the microfinance are shown in the table below:
| Microfinance Companies | Paid up capital (Rs.’crores’) |
| Chhimek Laghubitta | 232.41 |
| Nirdhan Utthan Laghubitta | 219.5 |
| Deprosc Laghubitta | 138.74 |
| Swabalamban Laghubitta | 112.21 |
| Jeevan Bikas Laghubitta | 103.42 |
| Forward Laghubitta | 84.44 |
Source: Unaudited Q4 Report, FY 2078/79
Paid-Up Capital In Previous 3 Years
Paid up capital (Rs.’crores’)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Chhimek Laghubitta | 183 | 150 | 118 |
| Nirdhan Utthan Laghubitta | 169.55 | 150 | 120 |
| Deprosc Laghubitta | 115.62 | 100.54 | 77.34 |
| Swabalamban Laghubitta | 94.3 | 79.24 | 62.89 |
| Forward Laghubitta | 62.55 | 50.04 | 50.04 |
| Jeevan Bikas Laghubitta | 60.84 | 0 | 0 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77
Related: Top 5 Non-Life Insurance in Nepal
Reserve & Surplus
Reserve and Surplus is the amount accumulated from the profit of the company since its inception. It includes reserve kept for specific purposes and the retained earnings not distributed to the shareholders. Higher reserve and surplus indicates greater financial strength of the company.
Chhimek Laghubitta has the highest reserve and surplus of Rs 358.2 crores followed by Nirdhan Utthan Laghubitta with Rs 263.11 crores. On the other hand, Jeevan Bikas Laghubitta has the lowest reserve among these microfinance with Rs 154.2 crores.
The table below presents the reserve and surplus of these microfinance companies:
| Microfinance Companies | Reserve and Surplus (Rs.’crores’) |
| Chhimek Laghubitta | 358.2 |
| Nirdhan Utthan Laghubitta | 263.11 |
| Swabalamban Laghubitta | 225.4 |
| Forward Laghubitta | 184.79 |
| Deprosc Laghubitta | 170.19 |
| Jeevan Bikas Laghubitta | 154.2 |
Source: Unaudited Q4 Report, FY 2078/79
Reserve and Surplus In Previous 3 Years
Reserve and Surplus (Rs.’crores’)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Chhimek Laghubitta | 312.15 | 169.45 | 163.91 |
| Nirdhan Utthan Laghubitta | 280.1 | 185.02 | 162.21 |
| Swabalamban Laghubitta | 174.88 | 136.25 | 112.5 |
| Jeevan Bikas Laghubitta | 130.94 | – | – |
| Deprosc Laghubitta | 129.45 | 83.31 | 78.28 |
| Forward Laghubitta | 126.67 | 92.43 | 76.46 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77.
Related: Comparative Study of 4 Wholesale Microfinance in Nepal
Borrowings
Microfinance companies generally borrow funds from commercial/development banks and provide them to the economically deprived people. Until Ashad’s end 2079 BS, Jeevan Bikas Laghubitta has the borrowing of Rs 10.08 Arba followed by Forward Laghubitta with Rs 10.08 Arba. Chhimek Laghubitta has the lowest borrowing of Rs 4.77 Arba.
The borrowings by the microfinance companies is shown in the table below:
| Microfinance Companies | Borrowings (Rs.’Arba’) |
| Jeevan Bikas Laghubitta | 10.08 |
| Forward Laghubitta | 10.08 |
| Deprosc Laghubitta | 7.96 |
| Nirdhan Utthan Laghubitta | 6.28 |
| Swabalamban Laghubitta | 5.44 |
| Chhimek Laghubitta | 4.77 |
Source: Unaudited Q4 Report, FY 2078/79
Borrowings In Previous 3 Years
Borrowings (Rs.’Arba’)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Jeevan Bikas Laghubitta | 9.92 | – | – |
| Forward Laghubitta | 8.63 | 5.95 | 5 |
| Deprosc Laghubitta | 7.78 | 6.51 | 6.78 |
| Nirdhan Utthan Laghubitta | 6.32 | 6.95 | 7.69 |
| Chhimek Laghubitta | 6.21 | 4.07 | 4.48 |
| Swabalamban Laghubitta | 4.61 | 4.76 | 5.8 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77.
Related: Merger/Acquisition Of Microfinance Companies In Nepal
Deposits
Retail Microfinance also collect deposits from its members similar to other BFIs. Until end of Ashad 2079 BS, Chhimek Laghubitta has collected such deposits of Rs 27.01 Arba. Nirdhan Utthan Laghubitta is second with Rs 18.18 Arba deposit collection. On the other hand, Forward Laghubitta has the lowest deposits of Rs 7.95 Arba.
The table below shows the deposits by the microfinance companies.
| Microfinance Companies | Deposits (Rs.’Arba’) |
| Chhimek Laghubitta | 27.01 |
| Nirdhan Utthan Laghubitta | 18.18 |
| Swabalamban Laghubitta | 11.99 |
| Jeevan Bikas Laghubitta | 9.54 |
| Deprosc Laghubitta | 7.97 |
| Forward Laghubitta | 7.95 |
Source: Unaudited Q4 Report, FY 2078/79
Deposits In Previous 3 Years
Deposits (Rs.’Arba’)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Chhimek Laghubitta | 22.43 | 18.67 | 15.39 |
| Nirdhan Utthan Laghubitta | 15.81 | 13.34 | 11.05 |
| Swabalamban Laghubitta | 10.62 | 9.29 | 7.49 |
| Jeevan Bikas Laghubitta | 8.09 | – | – |
| Forward Laghubitta | 6.65 | 5.61 | 4.62 |
| Deprosc Laghubitta | 6.54 | 4.94 | 3.82 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77.
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Loans & Advances
The major objective of the microfinance companies is to provide funds to the low income people. With or without collateral, these companies float loans to those people deprived of financial support. Based on the total loans and advances, Chhimek Laghubitta is ahead of others with Rs 32.88 Arba. Similarly, Nirdhan Utthan Laghubitta has floated total loans of Rs 27.43 Arba. Deprosc Laghubitta, on the other hand, has the lowest loans of Rs 18.34 crores.
The loans and advances provided by these microfinance is presented in the table below:
| Microfinance Companies | Loans & Advances (Rs.’Arba’) |
| Chhimek Laghubitta | 32.88 |
| Nirdhan Utthan Laghubitta | 27.43 |
| Jeevan Bikas Laghubitta | 23.77 |
| Forward Laghubitta | 19.81 |
| Swabalamban Laghubitta | 19.21 |
| Deprosc Laghubitta | 18.34 |
Source: Unaudited Q4 Report, FY 2078/79
Loans & Advances In Previous 3 Years
Loans & Advances (Rs.’Arba’)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Chhimek Laghubitta | 25.1 | 19.37 | 19.76 |
| Nirdhan Utthan Laghubitta | 24.07 | 20.15 | 19.64 |
| Jeevan Bikas Laghubitta | 20.45 | – | – |
| Swabalamban Laghubitta | 17.33 | 15.21 | 14.4 |
| Forward Laghubitta | 15.56 | 11.68 | 10.07 |
| Deprosc Laghubitta | 15.23 | 11.55 | 11.97 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77.
Also Read: Deposits And Loans Of Commercial Banks In Nepal
Net Interest Income
The major source of income for the microfinance companies is the net interest income. It is the difference between the interest income from loans and interest expenses on deposits and borrowings. In the fiscal year 2078/79, Chhimek Laghubitta generated highest net interest income of Rs 249.05 crores followed by Nirdhan Utthan Laghubitta with Rs 209.74 crores. Forward Laghubitta has earned a net interest income of Rs 136.11 crores.
The table below shows the net interest income earned by the microfinance companies.
| Microfinance Companies | Net Interest Income (Rs.’crores’) |
| Chhimek Laghubitta | 249.05 |
| Nirdhan Utthan Laghubitta | 209.74 |
| Swabalamban Laghubitta | 166.75 |
| Jeevan Bikas Laghubitta | 159.38 |
| Deprosc Laghubitta | 138.53 |
| Forward Laghubitta | 136.11 |
Source: Unaudited Q4 Report, FY 2078/79
Net Interest Income In Previous 3 Years
Net Interest Income (Rs.’crores’)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Nirdhan Utthan Laghubitta | 214.33 | 149.32 | 157.93 |
| Chhimek Laghubitta | 206.51 | 175.38 | 172.35 |
| Swabalamban Laghubitta | 145.13 | 125.48 | 106.57 |
| Jeevan Bikas Laghubitta | 141.67 | – | – |
| Deprosc Laghubitta | 137.03 | 95.97 | 91.61 |
| Forward Laghubitta | 127.41 | 73.52 | 75.07 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77.
Operating Profit
Operating Profit is the profit from the business operation before the deduction of interest, writeback, bonus and taxes. In the fiscal year 2078/79, Chhimek Laghubitta earned an operating profit of Rs 160.78 crores followed by Rs 147.06 crores for Nirdhan Utthan Laghubitta. Jeevan Bikas Laghubitta generated an operating profit of Rs 81.72 crores.
The operating profit earned by these microfinance is also presented in the table below:
| Microfinance Companies | Operating Profit (Rs.’crores’) |
| Chhimek Laghubitta | 160.78 |
| Nirdhan Utthan Laghubitta | 147.06 |
| Forward Laghubitta | 120 |
| Swabalamban Laghubitta | 96.48 |
| Deprosc Laghubitta | 81.99 |
| Jeevan Bikas Laghubitta | 81.72 |
Source: Unaudited Q4 Report, FY 2078/79
Operating Profit In Previous 3 Years
Operating Profit (Rs.’crores’)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Chhimek Laghubitta | 132.2 | 87.07 | 142.79 |
| Forward Laghubitta | 90.29 | 39.45 | 47.69 |
| Swabalamban Laghubitta | 84.17 | 56.54 | 66.29 |
| Deprosc Laghubitta | 76.81 | -72.14 | 53.79 |
| Jeevan Bikas Laghubitta | 38.37 | – | – |
| Nirdhan Utthan Laghubitta | -280.38 | 44.71 | 114.62 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77.
Net Profit
Net Profit is the bottom-line that any investors looks upon. How much did the company earn this year? Higher net profit translates into higher dividend to the investors.
Among these microfinance companies, Chhimek Laghubitta earned Rs 103.22 crores in net profit which is the highest profit among the microfinance companies. Nirdhan Utthan Laghubitta is second in terms of net profit earning Rs 102.82 crores. Deprosc Laghubitta reported a lowest profit of Rs 57.4 crores.
The table below presents the net profit earned by these microfinance.
| Microfinance Companies | Net Profit (Rs.’crores’) |
| Chhimek Laghubitta | 103.22 |
| Nirdhan Utthan Laghubitta | 102.82 |
| Forward Laghubitta | 84.53 |
| Jeevan Bikas Laghubitta | 78.19 |
| Swabalamban Laghubitta | 70.06 |
| Deprosc Laghubitta | 57.4 |
Source: Unaudited Q4 Report, FY 2078/79
Net Profit In Previous 3 Years
Net Profit (Rs.’crores’)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Chhimek Laghubitta | 121.56 | 64.92 | 92.07 |
| Nirdhan Utthan Laghubitta | 91.91 | 28.43 | 73.95 |
| Deprosc Laghubitta | 71.37 | 27.5 | 43.02 |
| Jeevan Bikas Laghubitta | 68.95 | – | – |
| Swabalamban Laghubitta | 61.94 | 35.62 | 42.25 |
| Forward Laghubitta | 57.46 | 25.11 | 30.14 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77.
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Non-Performing Loans (NPL)
Non-Performing Loans (NPL) refers to those loans in which the borrowers has not paid the scheduled payments of principal and interest. Lower NPL reflects the higher quality of lending. On the other hand, higher NPL is not favorable to the banking institution.
Among these microfinance companies (MFIs), Chhimek Laghubitta has the lowest NPL of 0.83 percent followed by Jeevan Bikas Laghubitta with 0.91 percent. Nirdhan Utthan Laghubitta has the highest NPL of 3.13 percent.
The non-performing loans (NPL) of these microfinance is shown in the table below:
| Microfinance Companies | Non Performing Loans, NPL (%) |
| Chhimek Laghubitta | 0.83 |
| Jeevan Bikas Laghubitta | 0.91 |
| Deprosc Laghubitta | 1.03 |
| Forward Laghubitta | 1.83 |
| Swabalamban Laghubitta | 2.9 |
| Nirdhan Utthan Laghubitta | 3.13 |
Source: Unaudited Q4 Report, FY 2078/79
Non-Performing Loans (NPL) In Previous 3 Years
Non Performing Loans, NPL (%)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Jeevan Bikas Laghubitta | 0.61 | – | – |
| Chhimek Laghubitta | 0.63 | 0.45 | 0.28 |
| Deprosc Laghubitta | 0.92 | 2.47 | 0.84 |
| Forward Laghubitta | 3.67 | 4.67 | 0.47 |
| Nirdhan Utthan Laghubitta | 4.11 | 1.83 | 1.17 |
| Swabalamban Laghubitta | 4.38 | 1.99 | 0.77 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77.
Cost Of Funds
Cost of Funds is the interest rate that the BFIs pay for the use of funds from the depositors or lenders. Lower cost of funds is favorable as it increases the margin. BFIs with lower cost of funds can also float the loans at lower rate thereby securing loyal and trustworthy borrowers.
Swabalamban Laghubitta has the lowest cost of funds of 7.59 percent followed by Nirdhan Utthan Laghubitta with 7.89 percent. Jeevan Bikas Laghubitta has the highest cost of funds of 10.24 percent.
The cost of funds of these microfinance companies is shown in the table below:
| Microfinance Companies | Cost of Funds (%) |
| Swabalamban Laghubitta | 7.59 |
| Nirdhan Utthan Laghubitta | 7.89 |
| Forward Laghubitta | 9.65 |
| Chhimek Laghubitta | 9.78 |
| Jeevan Bikas Laghubitta | 10.24 |
| Deprosc Laghubitta | – |
Source: Unaudited Q4 Report, FY 2078/79
Cost Of Funds In Previous 3 Years
Cost of Funds (%)
| Microfinance Companies | FY 2077/78 | FY 2076/77 | FY 2075/76 |
| Deprosc Laghubitta | 6.27 | 9.93 | 10.08 |
| Nirdhan Utthan Laghubitta | 6.74 | 8.55 | 8.7 |
| Chhimek Laghubitta | 6.91 | 9.71 | 9.76 |
| Forward Laghubitta | 7.06 | 10.01 | 9.83 |
| Jeevan Bikas Laghubitta | 7.24 | – | – |
| Swabalamban Laghubitta | 7.26 | 9.47 | 9.44 |
Note: The above figures are based on the unaudited fourth quarter report of the fiscal year 2077/78, FY 2076/77.
Earnings Per Share (EPS) & Net-Worth Per Share
Earnings Per Share (EPS) and per share net-worth are the important indicators for any investors. As higher EPS will result in higher dividend to the shareholders, investors tend to value companies more with greater EPS.
Among these microfinance companies, Forward Laghubitta has an EPS of Rs 100.11. Likewise, Jeevan Bikas Laghubitta is second with Rs 75.60 EPS. Deprosc Laghubitta has the lowest EPS of Rs 41.37.
Similarly, Forward Laghubitta also leads in per share networth with Rs 308.8 followed by Jeevan Bikas Laghubitta with Rs 269.51.
The Earnings Per Share (EPS) and networth per share is presented in the table below:
| Microfinance Companies | Earnings Per Share, EPS (Rs.) | Networth Per Share ( Rs.) |
| Forward Laghubitta | 100.11 | 308.8 |
| Jeevan Bikas Laghubitta | 75.60 | 269.51 |
| Swabalamban Laghubitta | 62.43 | 300.80 |
| Nirdhan Utthan Laghubitta | 46.85 | 219.86 |
| Chhimek Laghubitta | 44.42 | 254.20 |
| Deprosc Laghubitta | 41.37 | 222.67 |
Source: Unaudited Q4 Report, FY 2078/79
Also Read: Earnings Per Share (EPS) Of Commercial Banks In Nepal
Share Price & P/E Ratio
At Ashad’s end 2079 BS, Jeevan Bikas Laghubitta has the highest share price of Rs 2699. On the other hand, Swabalamban Laghubitta has the lowest P/E ratio of Rs 18.72. The table below shows the share price along with the P/E ratio of these companies.
| Microfinance Companies | Market Price Per Share (Rs.) [Ashad end, 2079 BS] | P/E Ratio |
| Jeevan Bikas Laghubitta | 2,699.00 | 35.70 |
| Forward Laghubitta | 2,385.00 | 23.85 |
| Swabalamban Laghubitta | 1,169.00 | 18.72 |
| Chhimek Laghubitta | 1,100.00 | 24.76 |
| Nirdhan Utthan Laghubitta | 1,099.00 | 23.46 |
| Deprosc Laghubitta | 940 | 22.72 |
Source: Unaudited Q4 Report, FY 2078/79
The share price, as well as the P/E ratio, is based on the data of Ashad end, 2079 BS. At current, the numbers may vary.
Related: P/E Ratio Of Commercial Banks Of Nepal
Top Microfinance Companies In Nepal: Comparative Study
The comparative study is also summarized in the table below:
| Financial Indicators | Chhimek | Deprosc Laghubitta | Forward Laghubitta | Jeevan Bikas Laghubitta | Nirdhan Utthan Laghubitta | Swabalamban Laghubitta |
| Paid up capital (Rs.’crores’) | 232.41 | 115.62 | 84.44 | 103.42 | 219.5 | 112.21 |
| Reserve and Surplus (Rs.’crores’) | 358.2 | 193.31 | 184.79 | 154.2 | 263.11 | 225.4 |
| Borrowings (Rs.’Arba’) | 4.77 | 7.96 | 8.63 | 10.08 | 6.28 | 5.44 |
| Deposits (Rs.’Arba’) | 27.01 | 7.97 | 7.95 | 9.54 | 18.18 | 11.99 |
| Loans & Advances (Rs.’Arba’) | 32.88 | 18.34 | 19.81 | 23.77 | 27.43 | 19.21 |
| Net Interest Income (Rs.’crores’) | 249.05 | 138.53 | 136.11 | 159.38 | 209.74 | 166.75 |
| Operating Profit (Rs.’crores’) | 160.78 | 81.99 | 120 | 81.72 | 147.06 | 96.48 |
| Net Profit (Rs.’crores’) | 103.22 | 57.4 | 84.53 | 78.19 | 102.82 | 70.06 |
| Non Performing Loans, NPL (%) | 0.83 | 1.03 | 1.83 | 0.91 | 3.13 | 2.9 |
| Cost of Funds (%) | 9.78 | 13.21 | 9.65 | 10.24 | 7.89 | 7.59 |
| Earnings Per Share, EPS (Rs.) | 44.42 | 49.65 | 100.11 | 75.6 | 46.85 | 62.43 |
| Networth Per Share ( Rs.) | 254.2 | 267.19 | 308.8 | 269.51 | 219.86 | 300.8 |
| Market Price Per Share (Rs.) [Ashad end, 2079 BS] | 1,100.00 | 940 | 2,385.00 | 2,699.00 | 1,099.00 | 1,169.00 |
| P/E Ratio | 24.76 | 18.93 | 23.85 | 35.70 | 23.46 | 18.72 |
Source: Unaudited Q4 Report, FY 2078/79
Note:
The above figures are based on the un-audited quarterly report 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.
Depending on the several indicators which microfinance among the five do you prefer? Feel free to share your views in the comment section.
Related Contents:
The 5 MFIs are grouped as top MFIs on the basis of their institutional profitability and capital. How about their program impact on their clients? Should we evaluate an MFI just based on its profitability?
The information are highly useful to public at large. However, the contents neither can be stores nor printed. It is worthless without the retrieval system. It is suggested to make an arrangement for the both facilities.
I agree with ML shrestha it need to be upgrade by ML mention section as well as upgrade from latest data too