Both subordinate debenture issue of NIC Asia Bank receive ‘A’ Grade from Care Ratings indicating adequate degree of safety

Care Ratings Nepal (CRNL) has assigned “CARE-NP A” rating to the proposed Subordinated Debenture “10% NIC Asia Debenture 2085/86” issue worth Rs.4,000 Million of NIC Asia Bank Limited (NICA). CRNL has also reaffirmed Issuer rating of “CARE-NP A (Is)” and the rating of “CARE-NP A” assigned to the Subordinated Debenture “11% NIC Asia Debenture 2082/83” worth Rs.1,830 Million of NIC Asia. The instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations, in Nepal. Such instruments carry low credit risk.

The rating assigned to NIC Asia derives strength from the long track record of operations, experienced promoters and management team, adequate capitalization, geographical diversification through branches, diversified loan portfolio with concentration towards retail and SME segments and improving CASA ratio. The ratings also factor in consistent growth in loans & advances and deposits, considerable growth in total income over the period; however decline in net profit during FY18 (refers to the 12 month period ended mid-July 2018), improved overall financial performance & profitability during Q1FY19 (refers to the 3 month period ended mid-October 2018), comfortable liquidity profile and moderate although declining deposits concentration.

The rating, however, is constrained on account of moderation in asset quality during Q1FY19, however over GNPL% is at low level, increasing operating expenses, intense competition and exposure to regulatory risk related to industry.

Ability of the Bank to continue its growth momentum without compromising on asset quality and maintaining capital adequacy and ability to manage the impact of any regulatory changes by Nepal Rastra Bank (NRB) would be the key rating sensitivities.