Number of blacklisted loan defaulters on rises

The number of blacklisted bank loan defaulters has begun to rise again after a three-year declining trend. The number started to rise from the second half of the last fiscal year after a new Nepal Rastra Bank (NRB) directive allowed Banks and Financial Institutions (BFIs) to include defaulters in the blacklist irrespective of loan amount, provided that they meet the basic inclusion criteria. Although this is an alternative provision, defaults of loans worth more than Rs 2.5 million should be compulsorily blacklisted.

How the number of blacklisted firms and individuals is peaking is evident from the fact that a total of 156 names were blacklisted as of Jan. 26 of the current fiscal year compared to 171 in the entire last fiscal year, according to the Credit Information Bureau (CIB) which keeps records of those blacklisted by BFIs. Since fiscal year 2006-07, the number of blacklisted firms and individuals had been falling until fiscal year 2008-09. "After the new NRB provision, the number of blacklisted firms and individuals started to go up," said Anil Chandra Adhikari, chief executive officer of CIB.

Among the major firms blacklisted over the last six months are Cosmic Air, Avco International, Memento Apparels, Mount Everest Brewery and Triveni Cement. No BFI can lend to a blacklisted firm or an individual. Not even the remaining installments of loan, says the NRB directive. The government can also cancel passports of blacklisted individuals as per the recommendation of BFIs. According to the NRB directive, banks may blacklist individuals or firms in the event of cheque bouncing and write-offs. "These kinds of additional provisions have resulted in increase in the number of blacklisted defaulters in FY 2009-10," states CIB's annual report.

BFIs should blacklist any firms or individuals if their cheques bounced for three consecutive times. The NRB directive has also provisioned that BFIs should blacklist those involved in fraud¿use of counterfeit cheques, drafts, debit and credit cards and bills. Those not repaying credit card debts should also be blacklisted. However Adhikari of CIB said the NRB provision that BFIs could blacklist defaulters of loans worth below Rs 2.5 million only after blacklisting defaulters of loans worth more than the amount has created confusion. As of FY 2009-10, there were a total of 2,152 blacklisted defaulters with total outstanding amount of Rs 29.81 billion.

Sudhir Khatri, chief executive officer of DCBL Bank, said it was natural to see rise in the number of blacklisted defaulters given the increased number of BFIs. "Current political and economic situation of the country also resulted in increased loan defaults," he added. During the first quarter of the current fiscal year non-performing loans of commercial banks went up by Rs 2.93 billion. The NPL level rose by 0.61 percent to 3.15 percent. "The default rate will further go up with stagnation in the real estate sector, and industrial sector facing acute power outrage and higher interest rate," said Khatri. Bankers say that that there has not been 100 percent payment of interest too in recent days. Not only the number of blacklisted defaulters, number of new borrowers also increased by more than 25% in FY 2009-10 compared to the previous year, as per the record of CIB.

Source:
ekantipur

DCBL Bank Ltd bonus shares

DCBL Bank Ltd has decided to distribute 10 per cent bonus shares and 0.53 per cent cash dividend to its shareholders. The decision has to be endorsed by Nepal Rastra Bank and AGM of the bank. The bank earned a net profit of Rs 158.3 million in 2009-10. It has 12 branches and plans to have 20 more branches, said the bank.
Source:
tht

DCBL Bank branches in Sanepa & Teku

DCBL Bank has brought its eleventh and twelfth branches into operation from Sunday. The branches situated in Sanepa and Teku will conduct all the banking operation as permitted by Nepal Rastra Bank, the bank said in a press statement. After the inauguration of Sanepa branches, the bank in collaboration with Rotary Club of Bagamati handed over a check for Rs 100,000 for ´Quit Smoking Program´ as per the bank´s Corporate Social Responsibility initiative. With the inauguration of Teku branch, the bank organized a blood donation program which was attended by more than 35 employees and volunteers from Rotary Club of Bagmati. The bank is also planning to install eight ATM terminals across the country. The bank mobilized deposits worth Rs 7.6 billion and has invested Rs 7.43 billion by the end of third quarter of the current fiscal year. It earned profits of Rs 116.8 million during the period, which was 57 percent more than what the bank earned in the same period last year.

Source: myrepublica

Market hits lowest point since May 2007

The NEPSE index(-5.09%) witnessed a sharp decline throughout the week with the benchmark index closing at 534.32 points, the lowest index level since May 27, 2007. The index was pulled down primarily by readjustments in the share prices of various companies post book closures for rights and bonus shares and cash dividends. In addition, the IPOs of Kasthamandap Development Bank and Pathibara Development Bank lured investors away from the secondary market. 

The Commercial Banking sub-index (-7.16%) was unable to sustain its ascent from the previous week, mainly due to readjustment in the share prices of Himalayan Bank (-Rs 457) and the book closure of DCBL Bank (+Rs 1) for its 5% bonus shares. The Finance sector (-5.80%) also took a big dip as Reliable Finance (-Rs 55) closed its books for 20% bonus shares and 10% cash dividends, and International Leasing and Finance (-Rs 291) did the same for 1:2.1 rights shares. Despite significant gains posted by Narayani Development Bank (-Rs 24) and Excel Development Bank (+Rs 2), the Development Bank sector (-5.43%) failed to impress as the stocks of a majority of the companies slid. Depreciation in the stock value of Chilime Hydropower (-Rs 25) hit the Hydropower sector. Similarly, the Insurance sector (-2.38%) also declined because of the price of Nepal Life Insurance (-Rs 84). Similarly, a fall in the share price of Nepal Telecom Company (-Rs 3) ruled out an uptrend in the Others sub-index (-0.58%).

To boost investor confidence, NRB announced it is injecting an additional Rs 3 billion into the market to ease the liquidity crunch. The central bank has also extended the timeframe to mid-April 2011 for commercial banks to raise their paid- up capital to Rs 2 billion. Prabhu Finance (-Rs 10) and Premier Finance (+Rs 6) are distributing 10.53% cash dividends and 1:1 rights shares respectively. NMB Bank (-Rs 17) which listed 53,586 rights shares confirmed that 19% of its promoter shares will be converted into ordinary shares. Nepal Investment Bank (-Rs 60) became the first bank in Nepal to receive an ´A´ rating from the Indian Credit Rating Agency (ICRA). Arun Valley Hydropower, Excel Development Bank and Crystal Finance Limited were listed on the stock exchange this week. Guheshwori Merchant and Finance (-Rs 16) announced 2% cash dividends along with 10% bonus shares. With IPOs and book closures of several companies lined up along with the divestment of promoter shares into ordinary by several major companies, no sign of an imminent reversal is apparent.

REPUBLICA 

Nepse returns to former bearish mode

KATHMANDU: The capital market took a bearish turn this week after a week of bullish trend. The Nepal Stock Exchange (Nepse) index was in a bearish trend since September except between October 30 and November 5. The index had reached 587.21 points after gaining 17.57 points last week. 

Between Novemvber 6 and 12, Nepse experienced downward trend -- losing 21.35 points. The trading floor opened at 587.21 points on Sunday which gradually fall to 565.86 points on Thursday. The biggest losers this week are the commercial banks. Their indices dropped by 30.29 points from 570.39 points to 540.10 points.

Shares of banks, finance companies and development banks fell this week. Nepse index of finance companies fell by 10.42 points close on the heels of development banks. The development banks’ index fell by 11.69 points to stop at 626.42 points. Hydropower sector index also went down by 13.99 points. Fall in major sectors reduced the float index size by 2.05 points.

Shares equal to Rs 311.16 million were traded this week in 5,408 transactions of 6,02,600 units. The trading amount was 4.66 per cent lower than the Rs 326.88 million of the previous week. Class ‘A’ companies trading occupied 54.90 per cent of trading, with Rs 171 million.

Prime Commercial Bank ranked top in amount.

Nepse floor trading status
Major five companies Trading in millions  
Prime Commercial Bank 27.01
Nepal SBI Bank 26.84
Standard Chartered 24.23
Vibor Development Bank 18.88
DCBL Bank 18.67

Himalayan News Service

Banks drop in Non-Performing Loan

Kantipur Report
KATHMANDU, Sept 7 - The commercial banks are doing fine by and large in terms of reduction in their Non-Performing Loan (NPL) in the previous fiscal year, according to the central bank.
While 16 of the 25 banks witnessed a drop in their NPL, three saw it rising, states a recent report of Nepal Rastra Bank (NRB).
Financial institutions with NPL hovering below five percent are considered sound.
The NPL of Nabil, Machhapuchhre and Development Credit Bank Limited went up slightly but it is still manageable with Nabil having 0.8 percent at the lowest and Machhapuchhre with 2.8 percent at the highest.
The rise and fall of the NPL in case of Global Bank, Citizens Bank, Prime Bank, Sunrise Bank and Bank of Asia could not be assessed as they have not reported their their NPL status to the
central bank either in the last fiscal year or the previous year or both years.
NIC bank's NPL remained constant at 0.9 percent in both years.
NCC bank has been able to reduce its NPL significantly last year from 16.36 percent to 2.7 percent during the 12-month period.
Chief Executive Officer of NCC Bank Ratna Raj Bajracharya said recovery of loans from some major groups - including the N.B. group, which is also the promoter of the NCC bank - was the principal reason behind sharp decline in the NPL of NCC.
"The Harisiddhi Brick Factory owned by N.B Group itself had owed the bank five percent NPL," he said. "We acquired its lands as a part of recovery." The bank was to recover loans of Rs. 330 million from Harisiddhi.
The bank also acquired
the lands owned by Tribeni Distillery to recover around Rs. 60 million loans last year, Bajracharya said.
"We will reduce the NPL to one percent within the next six months," he said.
There are still five banks whose NPL level is higher than five percent: Nepal Bank Limited, Rastriya Banijya Bank, Nepal Bangladesh Bank, Lumbini Bank and Agriculture Development Bank.
RBB CEO Janardan Acharya said they would reduce the NBL below five percent within
the next two years. The government owned bank has still 15.7 percent NPL which represents
Rs. 4.9 billion.
"We have plans to recover around Rs. 2.5 billion this year and recovery of the remaining amount in the next year," he said. The bank recovered Rs. 2.4 billion in the last fiscal year.NPL Change in TOp 20 Banks
2007/08 2008/09
Bank NPL (%) NPL (%)
NBL 8.05 5.9
RBB 21.63 15.7
Nabil 0.79 0.8
NIBL 1.12 0.8
StanChart 0.92 0.7
HBL 2.36 2.2
NSBI 3.65 2.0
NBBL 31.11 19.3
Everest 0.64 0.5
BoK 1.76 1.3
NCC 16.36 2.7
NIC 0.90 0.9
Lumbini 14.87 9.1
MBL 1.04 2.8
Kumari 1.35 0.4
Laxmi 0.13 0.1
Siddhartha 0.60 0.5
ADBL 10.40 8.8
DCBL 1.26 1.6
NMB 1.52 0.5

NEPSE continues falling

Kantipur Report
KATHMANDU, Sept 6 - The bearish trend in the capital market continued last week with the Nepal Stock Exchange (NEPSE) index coming down by 10.75 points.
The NEPSE index was 671.15 points in the first day of trading on Sunday which came down to 660.40 points in the final day of trading on Wednesday. The shares were not traded on Thursday since it was a public holiday.
Indices of most of the groups saw a decline last week with the hydropower group leading the downfall by 16.02 points. After that the group comprising commercial banks saw a decline of 12.97 points followed by the group comprising finance companies with 9.31.
The group comprising development banks witnessed a fall of 9.17 points and the group categorised as others saw a decline of 8.23 points. The index of insurance group also went down by 4.62 points followed by manufacturing sector with 0.95 points. The indices of hotel and trading groups remained same the entire week.
The shares of 90 companies were traded last week. A total of 466,300 units of shares worth Rs. 345.43 million were traded in 4374 transactions.
There turnover declined by 32.63 percent against the figure of the previous week. A total of 688,700 units of shares worth Rs. 512.72 million had been traded in 5820 transactions the previous week. The sensitive index that measures the performance of 'A' class companies witnessed a decline of 3.35 points.
'A' class companies' shares worth Rs. 234 million, a share of 67.75 percent of the total transactions, were traded. The Bank of Kathmandu topped in terms of turnover.
The National Hydropower Company continued to top for several week in terms of number of shares traded and Bank of Asia topped in terms of number of transactions.
Meanwhile, 5.53 million rights shares of Development Credit Bank Limited and 1.56 million rights shares of Nepal Development and Employment Promotion Bank were listed in the stock exchange last week.
Likewise, 1.24 million bonus shares of Siddharth Bank and 80,784 bonus shares of Premier Finance was also listed last week.