Himalayan Bank Limited looking to raise debt worth Rs.3 Arba through issue of “10% Himalayan Bank Limited Bond 2083”; Care Ratings assign ‘CARE-NP A’ to the issue

CRNL has assigned the issuer rating of “CARE-NP A (Is)” to Himalayan Bank Limited (HBL). Issuers with this rating are considered to offer adequate degree of safety regarding timely servicing of financial obligations, in Nepal. Such issuers carry low credit risk.

CRNL has also assigned “CARE-NP A” rating to the proposed Subordinated Debenture “10% Himalayan Bank Limited Bond 2083” issue of HBL worth Rs.3 Arba. 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 HBL derives strength from the long track record of the bank backed by institutional promoters, experienced directors and management team, adequate capitalization level, diversified and geographical coverage through branches. The ratings also factor in consistent growth in deposits and advances, considerable growth in total income over the last 3 years, diversified loan portfolio with regulatory compliance, comfortable Current Account and Savings Account (CASA) ratio though declining over the period and comfortable liquidity profile. The ratings also factor in decline in net profit and RoTA during FY18 (refers to 12 months period ended Mid-July 2018); followed by improved during H1FY19 (refers to 6 months period ended mid-January 2019).

The rating, is constrained on account of moderate asset quality; however, better than industry average (Class “A” Commercial Banks), concentration incorporate portfolio, moderate deposits concentration and increasing advances concentration on top 20 individual borrower accounts, intense competition and exposure to regulatory risk related to industry.

Ability of the bank to continue its growth momentum while maintaining asset quality and capital adequacy and ability to manage the impact of any regulatory changes by Nepal Rastra Bank (NRB) would be the key rating sensitivities.

(Source: CARE Ratings Nepal)