Find out how development banks performed this quarter!

There are 27 development level banks. However, not all of these fall in the same category. The development banks can be categorized within three sub categories: National level development banks, development banks operating in 4 to 10 districts and development banks operating in 1 to 3 districts. A wise investor would create a portfolio of development banks comparing their performance with the other banks falling in the respective categories.

This article will deal with two of the categories: national level and banks operating in 1 to 3 districts and compare the banks within their respective category. The analysis is based on the old format of quarterly reports instead of NFRS standard.

Currently, among national level development banks, Kailash Bikas Bank is in acquisition process by Prime Commercial Bank Limited (PCBL) and Om Development Bank Limited (ODBL) by NMB Bank Limited (NMB). Post the acquisition, the number of national level development banks will decrease from 11 to 9. In case of regional level development banks, Sahayogi Vikas is in acquisition by Citizens International bank Limited, Purnima and Bhargav by Shine Resunga Development Bank, Kankai by Prime Commercial bank, Tinau Mission and NCDB are in merger and Sahara Bikas Bank by Deva Bikas Bank Limited. Post all these, besides Shine Resunga, which has been operating in 4 to 10 districts, there will be only 9 regional level development banks. Those 9 are EDBL, MDB, KRBL, Tinnau Mission, GRDBL, CORBL, SINDU, Saptakoshi and Kanchan Development Bank.

Net profit:

National level:

As per the net profit of fourth quarter of 2075/76, Muktinath Bikas Bank Limited (MNBBL) is in the lead with a profit of Rs 80.70 crores. Similarly, Mahalaxmi Bikas Bank Limited (MLBL) has the second highest net profit of Rs 66.37 crores in the same quarter. In the third position, Kailash Bikas Bank Limited (KBBL) has the net profit of Rs 61.64 crores.

Development banks operating in 1 to 3 districts:

As per the net profit of fourth quarter of 2075/76, Tinau Mission Development Bank (TMDBL) is in the lead with a profit of Rs 17.21 crore. Similarly, Excel Development Bank Limited (EDBL) has the second highest net profit of Rs 16.43 crore in the same quarter..

Paid up capital:

The central bank of the country has directed these development “B” categorized banks to meet the paid up capital requirement. NRB has directed development banks of national level to meet the paid up capital of at least 2.50 arba, development banks operating in 4 to 10 districts to meet the paid up capital of at least 1.2 arba and development banks operating in 1 to 3 districts a paid up capital of 50 crores. 

National level:

Among the eleven national level banks, Lumbini Bikas Bank Limited (LBBL) is yet to meet the paid up capital requirement. LBBL has recently endorsed 17.07% bonus share from its FY 2074/75 profit, after which its paid up capital has increased to Rs 258.69 crore but it was not included in the Q4 report published of the bank. The bank with highest paid up capital are Deva Bikas Bank Limited (DBBL) with 3.17 arba, Jyoti Bikas Bank Limited (JBBL)with Rs 3.10 arba capital and Muktinath Bikas Bank Limited (MNBBL) with Rs 3.06 arba.

Development banks operating in 1 to 3 districts:

Tinau Mission Development Bank (TMDBL) has the highest paid up capital of Rs 114.42 crores followed by Excel Development Bank Limited (EDBL) with Rs 69.27 crores. 

Reserve and surplus:

National level:

In terms of reserves and surplus, Lumbini Bikas Bank Limited (LBBL) has maintained its lead with a reserve and surplus of Rs 1.63 arba. Mahalaxmi Bikas Bank Limited (MLBL) has maintained second position with Rs 1.42 arba reserve and surplus fund. Om Development Bank Limited (ODBL) has a reserve of Rs 1.33 arba.

Development banks operating in 1 to 3 districts:

Excel Development Bank (EDBL) has maintained its lead even in reserve and surplus of Rs 31.02 crore. Tinau Mission Development Bank (TMDBL) has maintained second position with Rs 30.70 crore reserve and surplus fund. Investors are requested to note down the bank with negative reserve and surplus is Corporate Development Bank Limited (CORBL) having a negative reserve of Rs 0.28 crores.

Deposit collection:

National Level:

As of the fourth quarter of FY 2075/76, Muktinath Bikas Bank Limited (MNBBL) stands on top with total deposits worth Rs 46.12 arba. Similarly, the bank is followed Garima Bikas Bank Limited (GBBL) and Mahalaxmi Bikas Bank Limited (MLBL) with the collected deposit of Rs 33.13 arba and Rs 32.55 arba respectively.

Development banks operating in 1 to 3 districts:

Tinau Mission Development Bank (TMDBL) has established itself in the top list in deposit collection as well. It has a deposit worth Rs 10.60 arba. Similarly, the bank is followed by Excel Development Bank (EDBL) and Kanchan Development Bank Limited (KADBL) with the collected deposit of Rs 7.43 arba and Rs 5.92 arba respectively. Corporate Development Bank Limited (CORBL) has the lowest deposit collection of Rs.18.86 crore only.

Loans and advances:

National Level:

As shown in the figure, the top position in loans and advances is occupied by Muktinath Bikas Bank (MNBBL) with credit disbursement worth Rs 37.71 arba. Garima Bikas Bank (GBBL) has a loan and advances portfolio of Rs. 28.59 arba. Kailash Bikas Bank Limited (KBBL) has the loan portfolio of Rs 27.78 arba.

Development banks operating in 1 to 3 districts:

As shown in the figures, the top positions in loans and advances are consistent with top position in deposit. The top three positions are occupied by Tinau Mission Development Bank (TMDBL), Excel Development bank (EDBL) and Kanchan Development Bank Limited (KADBL) with credit disbursement worth Rs 8.91 arba, 6.40 arba and 4.79 arba.

Net interest income:

National level:

One of the major sources of revenue for banks is its interest income. Muktinath Bikas Bank Limited (MNBBL) has the highest net interest income of Rs 1.81 arba. It is followed by Mahalaxmi Bikas Bank Limited (MLBL) and Kailash Bikas Bank Limited (KBBL) with net interest income of Rs 1.42 arba and Rs 1.40 arba respectively.

Development banks operating in 1 to 3 districts:

The top three positions are occupied by Tinau Mission Development Bank (TMDBL), Excel Development bank (EDBL) and Miteri Development Bank Limited (MDB) with net interest income of Rs 44.38 crores, Rs 38.11 crores and Rs  27.85 crores respectively.

Major indicators:

Earnings per share:

National level:

Earnings per share is presumed to be one of the key factors while undertaking investment decision. Lumbini Bikas Bank Limited (LBBL) with an unmet paid up capital becomes the bank to serve investors with highest EPS of Rs 26.69 per share. Muktinath Bikas Bank (MNBBL) has an EPS of Rs 26.33 and Kailash Bikas Bank Limited (KBBL) has an EPS of Rs 24.46 per share. 

Development banks operating in 1 to 3 districts:

The top positions are occupied by Miteri Development Bank Limited (MDB) and  Sahayogi Vikas Bank (SBBLJ) have an EPS of Rs 25.12. 

Net worth per share:

The highest net worth per share among these development banks is Rs 174.06 of Lumbini Bikas Bank Limited (LBBL) which has an unmet paid up capital. Om Development Bank (ODBL) has the second highest net worth per share as of Q4 of FY 2075/76 i.e. Rs 153.09. Kailash Bikas Bank Limited (KBBL) has the third highest net worth of Rs 150.74 per share.

Development banks operating in 1 to 3 districts:

The highest net worth per share among these development banks is Rs 150.38 of Sahayogi Bikas Bank Limited (SBBLJ). Excel Development Bank Limited (EDBL) has the second highest net worth per share as of Q4 of FY 2075/76 i.e. Rs 144.79.

P/E Ratio:

National level:

Given that Lumbini Bikas Bank Limited (LBBL) has not met the paid up capital, it has lowest P/E ratio i.e. 6.63 times. Among the banks whose paid up capital is met, Mahalaxmi Bikas Bank Limited (MLBL) has least P/E ratio which stands at 8.91 times. Similarly, bank with the next least P/E ratio is Om Development Bank Limited (ODBL) i.e. 9.00 times. Since, the general rule of thumb in finance suggest, a P/E ratio below 15 is an adequate price, the national level development banks with P/E ratio below 15 are being traded in the market at a cheaper price than expected.

Development banks operating in 1 to 3 districts:

The development bank (operating in 1 to 3 districts) with the lowest P/E ratio as of is Corporate Development Bank Limited (CORBL) i.e. 4.60 times followed by Sahayogi Vikas Bank Limited (SBBLJ) with P/E ratio of 7.84 times.

A full picture:

How would you like these banks to perform in the upcoming fiscal year? Which is your choice of investment? Please feel free to drop a comment.