Major indicators of National Level Development Banks in one page; Muktinath Bikas Bank leading in 5 indicators
Sun, May 6, 2018 11:07 AM on Company Analysis, Exclusive, Stock Market,
Among the 37 listed development banks (B-categorized), there are 11 National level development banks in the country. Two banks, Tourism Development Bank Limited merged with MEGA Bank Limited and NIDC Development Bank Limited merged with Rastriya Banijaya Bank Limited. All these banks have published their third quarter financial reports and thus, the article provides an analysis on their financial status.
The listed national level development banks are:
The further analysis has discarded NIDC and Tourism Development Bank for the convenience of the readers. NIDC has successfully merged with Rastriya Banijya Bank (RBB) and their joint transaction started from Baisakh 19th, 2075. Similarly, the joint transaction of Tourism Development Bank (TDBL) with Mega Bank will start from 30th Baisakh, 2075.
Net profit:
As per the net profit of third quarter of 2074/75, Muktinath Bikas Bank Limited (MNBBL) is in the lead with a profit of Rs 42.76 crore. Similarly, Kailash Bikas Bank (KBBL) has the second highest net profit of Rs 39.09 crore in the same quarter. The bank with the least net profit is Lumbini Bikas Bank (LBBL) whose net profit amounts to Rs 18.44 crore.
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Paid up capital:
The central bank of the country has directed these national level “B” categorized banks to meet the paid up capital requirement of at least 2.50 arba. Six of the banks namely, Mahalaxmi Development Bank Limited (MLBL), Jyoti Bikas Bank Limited (JBBL), Om Development Bank Limited (ODBL), Muktinath Bikas Bank Limited (MNBBL), Garima Bikas Bank Limited (GBBL) and Kailash Bikas Bank Limited (KBBL) have already met the paid up capital requirement. Mahalaxmi Bikas Bank Limited has the highest paid up capital of Rs 2.63 arba. Similarly banks such as Kamana Sewa Bikas Bank Limited (KSBBL), Lumbini Bikas Bank Limited (LBBL), Gandaki Bikas Bank Limited (GDBL), Deva Bikas Bank Limited (DBBL) and ShangriLa Development Bank Limited (SADBL) are yet to meet the paid up capital requirement. Among these banks, Dev Bikas Bank (DBBL) has the least paid up capital worth Rs 1.63 arba.
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However, these are the figures are the amount represented on the balance sheet of National Level Developments mentioned above in their Q3 report. There are other activities going on outside the report through which we can see that they have or have not met the requirement. Each of them is discussed separately below:
GDBL: As per the figure above, its paid-up capital stands at Rs 2.30 arba. However, it has announced 19.3% Bonus shares after the adjustment of which, its paid-up capital will reach Rs. 2.74 arba. Thus, after bonus distribution it will have the highest paid-up capital among all national level development banks.
DBBL: The paid-up capital of DBBL stands at Rs. 1.63 arba in the books. They have issued 40% right shares after with the paid-up capital will reach Rs 2.28 arba. Similarly, they have announced 17.1% bonus shares but the issue is still subject to approval form AGM and SEBON. Another important issue related to DBBL is its ongoing merger with Sahara Bikas Bank. Before the merger was announced, Sahara Bikas Bank had announced 250% right shares, which the SEBON is making sure will be issued and distributed. Thus post-merger DBBL will easily meet the requirement even if the swap is done at even 75%.
SADBL: The previous paid-up capital of SADBL was Rs. 1.35 arba and after the 80% right shares the current figure in book states Rs. 2.35 arba, which actually should have been Rs 2.44 arba. So we can see that the entire right issue hasn’t been capitalized. In addition, SADBL has also announces 2.5% bonus shares and 9.3% cash dividend. So post the adjustment from remaining right issue and bonus distribution, the requirement will be met.
LBBL: As per the books, its paid-up capital stands at Rs 2.15 arba. However they still have to capitalize the 10% right shares that has already been issued. Even after the adjustment, LBBL won’t be reaching the requirement so approx. 20% bonus can be expected to cover up short Rs 30 crore capital to meet Rs 2.5 arba.
KSBBL: As per the figure above, its paid-up capital stands at Rs 2.06 arba. It has issued 15% right shares, which wasn’t fully subscribed. The auction is soon to be finalized. Nonetheless, post adjustment its paid-up capital will reach Rs. 2.37 arba. So even after the auction, KSBBL will need to distribute approx. 6% bonus shares to meet the requirement.
Reserve and surplus:
With the changes in paid up capital, the reserves and surplus of the banks are likely to be affected. In terms of reserves and surplus, Gandaki Bikas bank (GDBL) is maintaining its lead with a reserve and surplus of Rs 129.84 crore. Mahalaxmi Bikas Bank Limited (MLBL) has maintained second position with Rs 119.15 crore reserve and surplus fund. The bank with least reserve and surplus is Jyoti Bikas Bank Limited (JBBL) having a reserve of Rs 42.39 crores.
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Deposit collection:
The national level development banks are going through a severe competition with each other. The banks have been trying their best to attract the deposit clients. As of the third quarter of FY 2074/75, Mahalaxmi Bikas Bank stands on top with total deposits worth Rs 25.10 arba. Similarly, the bank is followed by Muktinath Bikas Bank Limited (MNBBL) and Gandaki Bikas Bank Limited (GDBL) with the collected deposit of Rs 24.55 arba and Rs 20.43 arba respectively. Deve Bikas Bank (DBBL) has the lowest deposit collection of Rs. 13.95 arba only.
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Loans and advances:
As shown by the figures, the top position in loans and advances is occupied by Muktinath Bikas Bank (MNBBL) with credit disbursement worth Rs 21.99 arba. Keeping a close pace, Mahalaxmi Bikas Bank has a loan and advances portfolio of Rs. 21.65 arba. Similarly on the other end of the rope, stands Deva Bikas Bank (DBBL) with the lowest loan and advances portfolio of Rs. 12.62 arba.
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Major indicators:
Earning per share (Annualized):
With the increment in the paid-up capital requirement, the EPS were expected to fall. However, some banks have managed to maintain their EPS better than others. The top position, yet again is occupied by Muktinath Bikas Bank (MNBBL) with an annualized EPS of Rs 22 per share. Similarly, among the banks who haven’t met the capital requirement, Lumbini Bikas Bank (LBBL) stays at the bottom with an earning of Rs. 11.44 per share.
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P/E Ratio:
The bank with the lowest P/E ratio as of 12th April, 2018 is Deva Bikas Bank (DBBL) with the ratio of 8.66 times. Similarly, bank with the highest P/E ratio is Muktinath Bikas Bank limited (MNBBL) i.e. 18 times.
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Net worth per share:
The highest net worth per share among these development banks is Rs 156.33 of Gandaki Bikas Bank Limited (GDBL). Kamana Sewa Bikas Bank (KSBBL) has the second highest net worth per share as of Q3 of FY 2074/75 i.e. Rs 151.38. Jyoti Bikas Bank Limited has the least net worth of Rs 116.35 per share.
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Market price:
As of the Last Traded Price (LTP) on 12th April, 2018, Muktinath Bikas Bank limited has the highest LTP of Rs 396. It is further followed by Gandaki Bikas Bank (GDBL) with a market price of Rs 235. Jyoti Bikas Bank Limited (JBBL) and Deva Bikas Bank Limited (DBBL) has the least market price of Rs 143.
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A full picture:
Finally the table below provides a full picture with major indicators of the 11 national development banks as of the third quarter of FY 2074/75:
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From the table above, we can see that Muktinath Bikas Bank (MNBBL) has been able to occupy the top space for 5 indicators out of 9. However, this doesn’t capture the entire picture as there are numerous exogenous factors that must be kept on mind before making any investment decision.
The other issue that needs to come into the light is the fact that Development banks’ paid up capital has been hiked to Rs 2.5 arba, but on the same picture their area of operation is still restricted. They aren’t still eligible for bringing in the foreign funds like the commercial banks are allowed to, they can’t open Letter of Credit (LC) and so on. Do you think this scenario needs rectification, or do you believe the current area of operations should be enough for the national level development bank? Please feel free to drop a comment.
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