Care Rating Nepal assigns CARE-NP A to proposed 11% NIC Asia Bank Bond 2082/83 signaling adequate degree of safety

Care Rating Nepal Ltd has assigned rating of CARE-NP A (Single A)‟ to the proposed Subordinated Bond “11% NIC Asia Bank Bond 2082/83” of NIC Asia Bank Limited (NIC Asia). 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 of operations, experienced promoters and management team, adequate capitalization level, geographical diversification through branches, consistent growth in loans & advances and deposits, considerable growth in total income and net profit over the period, good assets quality with declining GNPL ratio, diversified loan portfolio with focus on retail and SME segments, improving CASA ratio, comfortable liquidity profile and declining deposits concentration & moderate advances concentration.

The rating, however, is constrained by decreasing return on total assets (RoTA); albeit improved during 9MFY18, increasing operating expenses, intense competition and exposure to regulatory risk related to industry.

Ability of the company 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.