How Have Microfinance Companies Performed in the First Quarter? A Comprehensive Study of Major Financial Indicators

Microfinance companies are 'D' class financial institutions issued by NRB. There are altogether 50 listed microfinance companies to date. Among them, 4 companies are segregated into wholesale companies, 36 companies in National Level, 1 in 19 district level, 1 in 10 district level, 6 in 4-10 district level, 1 in Province-1, and 1 in Province-3.

Since all the companies have reported their quarterly reports, investors might be eager as to which companies they should invest in. However, investors have to go through different listed companies and access each report which might be time-consuming. So, ShareSansar, picked some of the most important metrics to help investors analyze the companies and compare each company with their peers. So, in this article, we will be focusing on the comparison of the most important metrics which will give you as an investor an overview as to which companies are investment-worthy. So, let's take a deep look into it.

• Net Profit:

In terms of Net Profit, RMDC Laghubitta Bittiya Sanstha Limited (RMDC) reported the highest net profit of Rs. 26.24 crores. RMDC is followed by Chhimek Laghubitta Bittiya Sanstha Limited (CBBL) with a net profit of Rs. 21.41 crores.

On the flip side, only 1 company; Nepal Seva Laghubitta Bittiya Sanstha (NSEWA) Limited reported negative net profit in this quarter. 

The average Net profit stood at Rs. 5.51 crores.

• Net Interest Income:

In the first quarter of the fiscal year 2078-2079, Chhimek Laghubitta Bittiya Sanstha Limited (CBBL) reported a net interest income of 53.38 crores making it the highest in the industry. CBBL is followed by Nirdhan Utthan Laghubitta Bittiya Sanstha Limited (NUBL) with a net interest income of Rs. 51.44 crores.

In terms of Net Interest Income, 16 companies reported an above-average figure.

• Capital:

The minimum required capital for wholesale level, national, regional, and district-level microfinance are Rs 600 million, Rs 100 million, Rs 60 million, and Rs 10 million respectively. Chhimek Laghubitta Bittiya Sanstha Limited (CBBL) has the highest capital of Rs. 1.83 Arba. 

• Reserve:

The microfinance company with the highest reserve is Nirdhan Utthan Laghubitta Bittiya Sanstha Limited (NUBL) with a total of Rs. 3.61 Arba. NUBL is followed by Chhimek Laghubitta Bittiya Sanstha Limited (CBBL) with a total reserve of Rs. 3.28 Arba. 

• Borrowings:

Borrowings is one of the major sources of fund for microfinance companies. Some of the companies rely highly on borrowings themselves. 

Sana Kisan Laghubitta Bittiya Sanstha Limited (SKBBL) reported the highest borrowings in its book amounting to Rs. 21.40 Arba. SKBBL is followed by NIC Asia Laghubitta Bittiya Sanstha Limited (NICLBSL) with a total borrowing of Rs. 20.61 Arba.

• Deposit:

In terms of deposit, Chhimek Laghubitta Bittiya Sanstha Limited (CBBL) has the highest deposit amount in its book with a total of Rs. 23.57 Arba.

• Loans:

In the first quarter of the fiscal year 2077-2078, Chhimek Laghubitta Bittiya Sanstha Limited (CBBL) tops the list with a total of Rs. 26.16 Arba worth of Loans. 

The industry average stood at Rs. 7.41 Arba.

Financial Ratios:

• Annualized Earnings per share:

Earnings per Share is one of the key indicators investors need to be updated about as it gives an idea about what the investor might get in return as a dividend. In terms of this ratio, Jeevan Bikas Laghubitta Bittiya Sanstha Limited (JBLB) has the highest annualized EPS of Rs. 116.11. 

On the other hand, Nepal Seva Laghubitta Bittiya Sanstha Limited (NSEWA) reported negative EPS.

• Net Worth per share:

Jeevan Bikas Laghubitta Bittiya Sanstha Limited (JBLB) reported the highest net worth per share of Rs. 346.08. 

• Non-Performing Loan:

The non-Performing loan gives investors a picture of the quality of disbursement of loans from the management. the higher the ratio the lower the loan quality.

So, in this quarter, First Microfinance Laghubitta Bittiya Sanstha Limited (FMDBL) reported 0.00% NPL. 

• Price to Earnings Ratio:

Price to earnings ratio is one of the important indicators used by value investors to find out possible investment opportunities. The benchmark for PE ratio varies across sectors. 

(NOTE: Since the figure calculated below has factored in the market price of quarter-end, Investors are requested to factor in the current market price while calculating the P/E ratio to get the latest figure)

• Capital Adequacy Ratio:

In a nutshell:

Conclusion:

Observing the profitability figures of microfinance companies, the sector has seen massive growth in the bottom line. It is clear that the lower interest environment has affected the top line but the companies have been able to maintain their bottom line which is reflected by the growth compared to the corresponding quarter of the previous year.