Commercial banks post massive profits

KATHMANDU, Aug 19 - The last fiscal year has been a good year for Nepali commercial banks with their profits surging by 33.2 percent.
The net profit of 26 commercial banks reached Rs. 14.16 billion in the fiscal year 2008/09 from Rs. 10.63 billion in the previous fiscal year.
The government-owned and some other private banks, who are suffering from bad loans, succeeded in recovering substantial amount, pushing the overall profits of the commercial banks up.
The unedited fourth quarterly reports of most of the banks show they have made substantial profits in the year 2008/09. It was initially feared that the profitability of the commercial banks might be affected due to the global economic crisis.
The handsome profit the banks have posted in the fourth quarterly report shows that the global economic crisis has not made a serious impact on Nepal's banking sector. "It was a good fiscal year for commercial banks," said Sujit Mundal, CEO of Standard Chartered Bank.
The top names in the Nepali banking sector like Standard Chartered Bank, Nabil Bank, Nepal Investment Bank, Himalayan Bank, Everest
Bank, Nepal Industrial and Commercial (NIC) Bank and others have witnessed a notable growth in profits in the last fiscal year.
Twenty-three out of 26 commercial banks have registered more profits this time around compared to that of previous year. Only three banks have reported a negative growth. "The net profit has gone up as some of the ailing banks have recovered their bad loans," said Sashin Joshi, CEO of NIC Bank.
There are five commercial banks who have posted over Rs. 1 billion as net profit in the last fiscal year. Nepal Bangladesh Bank (NBB) had the highest profit of Rs. 2.47 billion up to the last quarter, followed by Rastriya Banijya Bank (RBB) and Agricultural Development Bank (ADBN) which made profits of Rs. 2.03 billion and Rs. 1.23 billion up to the last quarter, respectively. The profits of NBB, RBB and ADBN increased substantially due to write back of their non-performing loans. NB Bank has recovered Rs. 1.3 billion loan from the NB Group, the promoters of the bank over the last fiscal year.
The other two banks who have crossed the billion mark are Nabil Bank and Standard Chartered Bank with a net profit of Rs. 1.03 billion and Rs. 1.02 billion respectively. Nabil Bank has for the first time overtaken Standard Chartered Bank in terms of net profit.
Compared to the period up to the fourth quarter of last year, the profit of Nabil Bank went up by 38.12 percent while Standard Chartered Bank posted an increase of 25.17 percent. Likewise, Nepal Investment Bank, Nepal Industrial and Commercial (NIC) Bank and the Bank of Kathmandu saw their profits go up by 31.26 percent, 30.27 percent and 27.66 percent, respectively.
In terms of percentage growth, Bank of Asia and Prime Bank saw
the biggest growth but these being new banks had a much smaller base to start with.
However, bankers believe that the profitability of the commercial banks might decline from next year onwards. Sashin Joshi has a word of caution: "With increasing competition and decreasing margins, the profitability of the banks on their equity will decline in the coming days." Profit in the last fiscal year
Banks In Rs. millions
Nepal Bangladesh Bank 2472.189
Rastriya Banijya Bank 2032.229
Agriculture Development Bank 1237.990
Nabil Bank 1031.053
Standard Chatered Bank 1025.115
Nepal Investment Bank 914.575
Nepal Bank Limited 794.400
Himalayan Bank 742.425
Everest Bank 624.000
Bank of Kathmandu 461.507
NCC Bank 410.621
Nepal SBI Bank 334.350
Lumbini Bank 332.207
NIC Bank 316.646
Kumari Bank 258.462
Siddhartha Bank 215.602
Laxmi Bank 186.169
Prime Bank 141.776
DCBL Bank 103.055
Sunrise Bank 102.50
Citizens Bank 95.810
Machhapuchchhre Bank 92.935
KIST Bank 88.376
Bank of Asia 61.510
NMB Bank 61.339
Global Bank 30.488
Kantipur Report

Banks flock to Kavre

PANAUTI (KAVRE), Aug 18 - Kavrepalanchok is fast turning into a district of banks with 36 banks having their offices here. After Kathmandu, Kavre has the highest number of banks and financial institutions.
The district hosts the central offices of eight development banks. Among them are Annapurna Development Bank, Pashupati Development Bank, Infrastructure Development Bank, Diyalo Bikas Bank and Country Development Bank.
Likewise, 10 commercial banks maintain branches in Kavre with around a dozen more commercial and development banks planning to do so.
Nepal Rastra Bank regulations require prospective national-level development banks to have a paid-up capital of Rs. 640 million. However, development banks with limited capital can be established outside Kathmandu, reason for eight development banks already being established in Kavre.
Similarly, banks and financial institutions have to open one branch outside Kathmandu for every branch they open in the capital as per the central bank's regulations. And Kavre has become an ideal location for commercial banks.
According to Kumar Thapa, Kavre branch chief of Nepal Investment Bank, proximity to Kathmandu and the planned opening of the BP Highway in the near future are the reasons for the mushrooming of banks in Kavre.
The proliferation of banks and financial institutions has made banking services easier and affordable for consumers. Stiff competition among the banks has increased the interest rates on deposits. "Earlier, one had to go to the banks to get loans, now they are coming to us," said Kanchan Bade, a petrol pump owner. With Kavre as a base, banks can do business in Sindhupalchok, Ramechhap, Dolkha, Sindhuli and Bhaktapur districts.
"One can open a development bank with limited capital and can cover 10 districts," said Ram Sharan Neupane, managing director of Diyalo Bikas Bank. "That is why we've opened the bank."
According to Neupane, the banks in Kavre do daily transaction worth Rs. 150 to Rs. 200 million.

Nabil Bank posts Rs 1.63 billion profit

KATHMANDU: Nabil Bank has posted a provisional profit before bonus and tax of Rs 1.63 billion and a profit after tax of Rs 1.03 billion. Nabil Bank chairman Satyendra Pyara Shrestha said the unprecedented result that Nabil Bank has delivered in the fiscal year 2008-09 has been due to the core philosophy the bank has had over its 25 years of operation centred in the belief that success comes from ensuring its personal and professional success. - Himalayan News Service

Citizens Bank profits 184.5 million

KATHMANDU: Citizens Bank International is starting ‘Gold loan scheme’ from its Biratnagar, New Road and Bouddha branches from August 17. It is also is planning to start door-to-door banking service from the same day. The service will mobilise 2,500 students in 13 branches. The bank posted Rs 184.5 million operation profit in the last fiscal year. According to a press note, it collected deposit of Rs 11.52 billion and invested Rs 8.21 billion during the period. The bank provides banking services to 45,000 customers through 13 branches. — HNS

BoK in Gulariya

KATHMANDU: Bank of Kathmandu (BoK) opened its 30th branch in Gulariya — district headquarters of Bardiya — on Friday.
Gulariya is a fast growing town in western Nepal and the bank aims to provide modern banking services like deposit, lending, LC and remittance, a BoK press statement read. The bank provides services through 30 branches and six counters across the country. — HNS

DCBL Bank Ltd profits Rs 103 million

KATHAMNDU: DCBL Bank Ltd gained net profit of Rs 103 million in the last fiscal year. It is an 88 per cent growth compared to
the preceding year, the bank said. DCBL Bank collected deposit Rs 6.61 billion and invested Rs 6.34 billion in the period.
The bank raised its paid up capital from Rs 1.10 billion to Rs 1.65 billion last fiscal year by issuing 2:1 right shares. —
HNS

ADB signs trade finance deal with Nepali banks

KATHMANDU, Aug 12 - The Asian Development Bank (ADB) and eight commercial banks signed a trade financing agreement on Tuesday. The agreement is aimed at promoting international trade in Nepal and helping Nepali banks forge alliances with banks overseas.The banks that have signed the agreement with the ADB are the Bank of Kathmandu, Everest Bank, Himalayan Bank, Kumari Bank, Nabil Bank, Nepal SBI Bank, Nepal Industrial and Commercial (NIC) Bank and Nepal Investment Bank.
The agreements are part of the ADB's Trade Finance Facilitation Programme (TFFP). The programme provides guarantees and loans of up to three years to support trade transactions in its developing member countries.
The agreement with the ADB means letters of credit (LC) opened by these eight banks in international banks will be guaranteed by the ADB. It also means LCs of these banks will be easily accepted by international banks now onwards. If Nepali banks default, the ADB will pay the international banks.
"Without this guarantee, it used to be costly for Nepali banks to confirm their LC in the international market," said Sashin Joshi, chief executive officer of NIC Bank. "Now, the costs will also be reduced," he added.
"Boosting trade is critical to help Nepal overcome the current global crisis that has hurt both exports and may slow the growth in remittances this year and in 2010," said Barry Hitchcock, the ADB's country director for Nepal. "In the longer run, increased trade should also lead to crucial job creation and reduced poverty."
Under this programme, the ADB has introduced two products in Nepal, Risk Participation Agreement (RPA) and Credit Guarantee Agreement. So far, the bank has done 12 transaction in Nepal totalling US$ 6 million under the RPA. "The third product revolving credit facility will also be introduced in Nepal in the future," said Steve Beck, head of the TFFP, ADB.
This is first time that this kind of arrangement has been done by Nepali commercial banks with the ADB. The ADB has set a limit of US$ 1 million to 1.5 million for these banks under the programme. "The limit is determined through due diligence and risk analysis by the ADB's Risk Management Department," said Beck.
However, three Nepali banks have already made the same kind of agreement with the International Finance Corporation (IFC), the private sector arm of the World Bank. The banks that have joined the IFC global trade finance programme (GTFP) are NIC Bank, Himalayan Bank and the Bank of Kathmandu.
"The tie-up with the IFC has helped banks in the post-global financial crisis situation while opening LCs in the international market," said Joshi. The IFC has provided US$ 2 million to these banks under the GTFP. - Kantipur Report

NCC Bank’s profit Rs 570 million

KATHMANDU: NCC Bank has posted a net profit Rs 570.4 million (before tax and bonus) in the fiscal year 2008-09, according to unaudited accounts of the bank. It also collected Rs 9.13 billion deposit and invested Rs 7.18 billion during the period. The bank reduced its Non Performing Assets (NPA) to 2.74 per cent from last fiscal year’s 16.42 per cent. — HNS

NCC Bank starts e-remittance with Doha Bank

KATHMANDU: Nepal Credit and Commerce Bank (NCC Bank) is starting e-remittance service in collaboration with Doha Bank of Qatar. NCC Bank chief executive officer Ratna Raj Bajracharya and his Doha Bank counterpart R Sitaraman last week signed an agreement for the service.
Qatar is one of the major destination countries for Nepali migrant workers since 15 years. Over 3,00,000 Nepalis are working in construction, manufacturing and other sectors in this Gulf country. “The bank will expand its service to other Gulf countries also,” said Bajracharya.
According to the agreement, Nepali workers can open accounts in any of the 40 branches of Doha Bank without any introductory cost. This account can be used to send money to Nepal 24 hours a day through online network. “The families of migrant workers can collect the remittance through 17 branches of NCC Bank in Nepal,” he added.Likewise, the Doha Bank account can also be used to deposit salaries of migrant workers. Both banks have started motivation campaign targeting labourers and employers in this regard.
The banks will exchange employees’ accounts to simplify transactions. “We have requested the employing companies to open account in any of the 40 branches of Doha Bank and deposit the salary directly in the account,” Bajracharya said adding that Doha Bank will also provide Nepalis, who have opened accounts, with financial assistance up to 200 Riyals. “It will help workers manage their life before joining the company,” he added. “Nepali migrant workers can get this facility after showing employment letter at any branch of Doha Bank.” - HImalayan News Service

Banks to keep track of customers

KATHMANDU: The central bank has asked banks and financial institutions to have records of their clients under Know Your Customer.
The directives issued for the first time by the financial information unit (FIU) under Nepal Rastra Bank (NRB) also asked banks and financial institutions to inform the unit of suspicious transactions.The central bank, the regulator of the financial market, has directed customers to provide detailed information to their banks and financial institutions. “Banks and financial institutions also have to notify about transactions that are over the limit,” NRB said in a bid to check the money laundering that poses a serious threat to the country’s financial stability.
NRB brought Anti Money Laundering Regulation-2066 on August 17, 2008. “Banks and financial institutions should maintain records of their customers with clear details,” said FIU-NRB.
Licenced banks and financial institutions should implement the directive by preparing internal regulations, it said. - Himalayan News Service

Everest Bank Ltd profits Rs 624million

KATHMANDU: Everest Bank Ltd (EBL) gained Rs 624 million net profit in fiscal year 2008-09. It is 38 per cent more than last year, the bank’s statement read. EBL had net profit of Rs 451.2 million the preceding year. The bank got operating profit of Rs 1.06 billion in the period. The NPA of the bank has reduced from 0.68 per cent to 0.48 per cent, according to the statement by the bank. — HNS

Nepal SBI’s new ATM

KATHANDU: Nepal SBI Bank Ltd started its ATM service at Tansen, Palpa on Monday. The bank now has a total of 26 ATM counters and is planning to start ATM services at eleven more places including Gulmi, Hetauda, Kalanki, Ilam. — HNS

Defaulters think Govt Banks sitting ducks: FM

KATHMANDU: Government banks are regarded as agencies whose loans need not be repaid, said Finance Minister Surendra Pandey here today.
“These institutions are easy targets for defaulters as they think that they can use their political connections to default on loans,” he said while talking to newly-elected memebers of the Society of Economic Journalists Nepal (Sejon) at his office in Singha Durbar.
Pandey also blamed the private sector for the failure of Nepal Bank Ltd (NBL) and Rastriya Banijya Bank (RBB). These two banks are making progress under the financial sector reform programme, though they still have negative networth.“The government cannot inject capital into NBL. There is a 40 per cent government stake in it. RBB, a completely government bank, has to be provided options to bring its negative capital to positive. Both have to be made strong, professional banks,” Pandey said, remaining cautious on the issue of privatisation of these two big banks.According to Pandey, there are some options: Inject capital — which the government is not willing to do, or divest the equities of NBL and government-owned RBB to private parties through a competitive bidding process, albeit gradually or by issuing bonds, according to him. “The committee to look after the continuation of financial sector reform process is looking into it seriously and soon there will be some solution,” he asured.
The committee has the finance minister, Nepal Rastra Bank governor, vice-chairmanof the National Planning Commission (NPC) and finance secretary.
Pandey said the revenue target though described as ambitious is achievable. “Collection till date is satisfactory and we can meet the target,” he added. The government aims to collect Rs 176 billion revenue.
Pandey also assured that development activities would go ahead smoothly. “Unlike last fiscal year, the government will spend on development activities,” he said adding that the targetted big projects like Upper Seti, Sikta project and Fast Track road will start soon.
He has earmarked Rs 106 billion for development expenses. “If the ministries cannot spend their budget, they wil be allocated less budget next year,” he said expressing his commitment to allocate the budget to ministries on the basis of progress and end the culture of releasing and transferring budget at the end of the fiscal year. - Himalayan News Service

New ADBL CEO

KATHMANDU: Agriculture Development Bank Ltd (ADBL) management committee on Saturday appointed Shyamsingh Pandey as chief executive officer of ADBL. Pandey has assured of making the bank more effective and competitive along with quality service to its customers. He will stay as the CEO for four years. — HNS

Banks rush to set up shop in Janakpur

JANAKPURDHAM, - Despite a decline in the financial transactions, commercial banks have been opening offices at a greater pace in Janakpur.
KIST Bank was the latest bank to open its branch in Janakpur. On Monday, its 27th branch was opened. Siddhartha Bank , Jyoti Bikash Bank and Sunrise Bank are also preparing to open their branches here.
Among the banks which already have their branches in Janakpur include Everest Bank, Nepal SBI Bank, Nepal Investment Bank, Bank of Kathmandu, Laxmi Bank, NIC Bank and Nepal Bangladesh Bank.
The opening of new bank branches in Janakpur has increased investment opportunities for local residents. These banks have also made it easier for the locals to borrow as well deposit money at much reliable financial institutions.
Chairman of the Nepal Chamber of Commerce Dhanusha, Shyam Prasad Shah, said that another reason behind
the establishment of so many banks is
the fierce competition among them.
He added that the banks have been
providing reasonable interest rates to the locals here.
Dharmendra Yadav, branch chief of KIST Bank in Janakpur said, "The banks had been apprehensive about opening branches in the Tarai, but improving living standards and stabilized condition convinced them to open branches here in Janakpur." However, few banks have also fled the area in search of safer places due to the increasing insecurity.
Entrepreneurs have been motivated to invest due to the increasing number of bank branches, and they say that the opportunities for investment have also increased. Since large number of people from this area have gone for foreign employment, Janakpur is a good location for the banks to do remittance business. - Kantipur Report

ADB join hands with eight banks for credit guarantee

KATHMANDU, Aug 12: The Asian Development Bank (ADB) has agreed to provide 100 percent risk cover to international financial institutions that accept instruments like Letter of Credit (LC) issued by selected banks in Nepal.
Agreements to this regard were signed between Barry Hitchcock, ADB´s country director for Nepal, and high ranking officials of Bank of Kathmandu, Everest Bank, Himalayan Bank, Kumari Bank, Nabil Bank, Nepal SBI Bank, Nepal Industrial and Commercial Bank, and Nepal Investment Bank in Kathmandu on Tuesday. This is the first time such agreements were signed between the ADB and Nepali banks. These agreements are a part of ADB´s $1billion Trade Finance Facilitation Program.
Under these agreements, the ADB will compensate international banks if selected Nepali banks default on payments of trading instruments like Letter of Credit (LC).
LC is a promise made by a bank, on behalf of the importer, to pay the exporter a specified sum for the goods delivered. While issuing these instruments, Nepali banks have to tie up with a foreign financial institution from where the buyer imports goods. However, amidst the financial crisis which has triggered capital shortage, this process has become arduous as many international banks are hesitating to accept LCs issued by banks from emerging markets like Nepal.
The ADB´s credit guarantee is expected to help international banks to strike deals with banks here without even knowing much about these financial institutions or the country, Steve Beck, head of ADB´s Trade Finance Facilitation Program, said.
"This will ultimately improve credit rating of the country," Sashin Joshi, president of Nepal Bankers´ Association, told myrepublica.com.
On top of that, such guarantee will also deepen relationships of Nepali banks with financial institutions abroad, thereby enhancing their partnerships, Hitchcock said. "Eventually, these measures aimed at facilitating trade will revitalize Nepal´s economy and ultimately reduce poverty in the country." - REPUBLICA

Everest Bank (EBL) opens Maitidevi branch

KATHMANDU, Aug 10: Everest Bank Limited (EBL) has opened its 34th branch in Maitidevi in its endeavor to provide banking facilities to large and wider sections of the society.
According to a press release, Nagesh Pydah, executive director of Punjab National Bank, India, inaugurated the branch. The bank also installed its 30th ATM in the new branch.
As a part of its expansion strategies, EBL has informed that it also plans to open branches at Thamel in the near future. It also has unveiled a plan to expand “Everest - Ghar Dailo Banking Sewa”, a branchless banking system, to all Tarai branches. The bank believes that the expansion to these locations would serve the middle and lower section of the society.
EBL is presently operating with 34 branches, 5 revenue collection counters and 20 authorized representatives in VDCs through Everest Ghar-Dailo Banking Sewa.

SBI installs ATM in Palpa

KATHMANDU, Aug 10: Nepal SBI Bank Limited has installed an automated teller machine (ATM) in Palpa.
The ATM kiosk was inaugurated by Palpa CDO Shambhu Ghimire, states the bank´s press statement issued on Monday.A total of 26 ATMs of the bank are currently in operation. It is also planning to install 11 more ATMs in Gulmi, Hetauda, Kalanki and Ilam among others.
"The bank has been expanding its ATM network to offer 24 hour banking service to customers," the release stated.

Kist opens 27th branch

KATHMANDU, Aug 10: Kist Bank Limited opened its 27th branch in Janakpur, Dhanusha, on Monday. Kamal Gyawali, managing director of the bank, inaugurated the branch amid a function. The bank now operates with eight branches within the Kathmandu Valley and 19 outside the Valley.Issuing a press release, the bank said it would soon add 15 more branches to its network. Of them, eight branches will be inside the Valley."Going by the latest expansion decision of the bank´s board meeting, the bank aims to increase its branch network to 50 by the end of the current fiscal year," the release quoted Gyawali as saying. - Republica

BoK´s new branch in Tikapur

KATHMANDU, Aug 10: Bank of Kathmandu (BoK) has opened a new branch in Tikapur of Kailali district. This is the bank´s 29th branch.
"This branch will provide all modern banking services, including deposits, lending, letter of credit and remittance, among others, to its customers," says a press release issued by the bank on Monday.The bank currently offers services through 35 points, including 29 branch offices and six counters.