Comparative Analysis- Commercial banks have come out with their first quarter report of the new fiscal year! Are you planning to change your investment decision?

A fresh start of a new fiscal year began few months ago. The outcome of this quarter from this fiscal year has come out in the reports of commercial banks. Let us compare each of these commercial banks on the basis of first quarter reports of FY 2076/77.

The following are the key elements necessary in analyzing the first quarter performance of commercial banks:

• Profit for the period:

As per the net profit of first quarter of 2076/77, Rastriya Banijya Bank (RBB) is in the lead with a profit of Rs 1.1275 arba. Similarly, NABIL Bank Limited (NABIL) has the second highest net profit of Rs 1.1236 arba in the same quarter. In the third position, NIC Asia Bank Limited (NICA) has the net profit of Rs 1.00 arba. The bank with the least net profit is Civil Bank Limited (CBL) whose net profit amounts to Rs 15.90 crore.

The industry average net profit of the 28 commercial banks is Rs 57.77 crores. 14 commercial banks have net profit above the industry average. Remaining all banks has net profit below the industry average.

• Paid up capital:

Paid up capital refers to the amount of money that commercial banks have received from their shareholders through the exchange of shares in the primary market.

The bank with highest paid up capital are Nepal Investment Bank (NIB) with Rs 12.87 arba capital, NMB Bank Limited (NMB) with Rs 11.53 arba and Global IME Bank Limited (GBIME) with Rs 10.44 arba paid up capital.

• Reserve and surplus:

With an industry average of Rs 6.9 arba, nine banks stand above the average benchmark of Rs 46.99 arba in their reserve fund.

In terms of reserves and surplus, Nepal Bank Limited (NBL) has maintained its lead with a reserve and surplus of Rs 19.60 arba. Rastriya Banijya Bank (RBB) has maintained second position with Rs 15.82 arba reserve and surplus fund. Nabil Bank Limited (NABIL)  is in the third position with reserve and surplus of Rs 15.34 arba. 

• Deposits:

In an average, commercial banks have collected Rs 1.02 arba as deposit. Only 12 banks are above the average deposit collection.

As of the first quarter of FY 2076/77, Rastriya Banijya Bank (RBB) stands on top with total deposits worth Rs 1.87 kharba. NIC Asia Bank Limited (NICA) is aggressively involved in collecting deposits from existing and prospective clients with deposits of Rs 1.79 kharba. Similarly, the bank is followed by NABIL Bank Limited (NABIL) with the collected deposit of Rs 1.72 kharba respectively. Civil Bank Limited (CBL) has the lowest deposit collection of Rs. 42.92 arba only.

• Loans and advances:

In today’s context, the concern of investor simply does not rest upon which bank has more loans. The nature of loan portfolio equally matters. As shown in the figure, the top position in loans and advances is occupied by NICA Bank Limited (NICA) with credit disbursement worth Rs 1.54 kharba. Rastriya Banijya Bank (RBB) has a loan and advances portfolio of Rs. 1.43 kharba. Nabil Bank Limited (NABIL) has the loan portfolio of Rs 1.35 kharba. Similarly on the other end of the rope, stands Civil Bank Limited (CBL) with the lowest loan and advances portfolio of Rs. 44.19 arba.

The industry average loan disbursed is Rs 90.07 arba. 13 commercial banks have the loan portfolio above Rs 90.07 arba.

• Net interest income:

Net interest income is the net earnings of commercial banks through their core business of collecting deposits and lending loans. The bank with highest net interest income is Rastriya Banijya Bank (RBB) with income of Rs 2.27 arba followed by Nabil Bank Limited (NABIL) with income of Rs 1.92 arba and NICA Bank Limited (NICA) with income of Rs 1.84 arba.

The industry average net interest income stands at Rs 1.20 arba. 12 out of 28 commercial banks are above the industry average in terms of net interest income.

•  Distributable profit:

Rastriya Banijya Bank (RBB) has the highest distributable profit worth Rs 1.30 arba followed by Nabil Bank limited (NABIL) with distributable profit worth Rs 74.23 crores and NMB Bank limited (NMB) worth Rs 53.62 crores.

• Total comprehensive income:

Nabil Bank Limited (NABIL) has also highest comprehensive income of Rs 1.16 arba.  Rastriya Banijya Bank (RBB) has the second highest comprehensive income of Rs 1.12 arba. NIC Asia Bank Limited (NICA) has the third highest comprehensive income of Rs 97.82 crores.

Major indicators:

• Earnings per share (Annualized):

Rastra Banijya Bank (RBB) becomes the bank to serve investors with highest annualized EPS of Rs 50.09 per share. Nabil Bank Limited (NABIL) has the second highest EPS of Rs 49.87 per share. NIC Asia Bank limited (NICA) in the third position with annualized EPS of Rs 41.56 per share. Civil Bank Limited (CBL) stays at the bottom with an earning of Rs. 7.94 per share.

The average EPS of 28 commercial banks stands at Rs 25.80. 11 commercial banks still provide EPS higher than that of the industry average.

• Net worth per share:

The highest net worth per share among these commercial banks is Rs 299.81 which belongs to Nepal Bank Limited (NBL). Rastriya Banijya Bank (RBB) is in the second position with Rs 275.78. Nabil Bank Limited (NABIL) has the third highest net worth per share as of Q1 of FY 2076/77 i.e. Rs 270.20. Century Commercial Bank Limited (CCBL) has the least net worth of Rs 121.29 per share.

The industry average net worth stands around Rs 176.16 per share. 9 companies have net worth more than the industry average.

• P/E ratio:

Century Commercial Bank Limited (CCBL) has the least PE ratio of 8.74 times. It is followed by NIC Asia Bank Limited (NICA) with PE ratio of 9.29 times and finally Prabhu Bank Limited (PRVU) has third least PE ratio of 9.37 times. 17 commercial banks have a P/E ratio lower than the industry average of 12.97 times. The PE ratios are not the recent ratios rather the ratios for quarter end.

In a nutshell:

Finally the table below provides a full picture with major indicators of the 28 commercial banks as of the first quarter of FY 2076/77:

Note: Rastriya Banijya Bank Limited has been excluded while labeling yellow color for the best ranking because Rastriya Banijya Bank has not been listed in NEPSE.

Dear investors, please feel free to share your investment decision after the performance evaluation of key indicators of these commercial banks.