ICRA Nepal reaffirms AA- issuer rating to Nabil Bank

ICRA Nepal Limited has reaffirmed the rating of [ICRANP-IR] AA- (pronounced ICRA NP Issuer Rating Double A minus) to Nabil Bank Limited (NABIL), indicating that the rated entity carries low credit risk. This particular rating factors in NABIL’s ability to maintain its competitive positioning in the commercial banking industry, adequate presence across the country, seasoned management team and an established track record. Even in recent times of deposit crunch in the banking industry, NABIL’s deposit mix and cost of funds remained mostly resilient. However, the rating is hampered by relatively high deposit and credit concentration. Top 20 customers of NABIL account for 32% and 25% of its deposit and loans portfolio respectively. Relatively high 0+ days credit delinquency levels also remain a significant concern, although partly mitigated by the bank’s ability to contain its non-performing loans in the recent times. Nabil Bank has market share of 5.99% in terms of deposit base and 5.46% of total advances. It posted a net profit of Rs 3.62 arba in FY 2073/74 over an asset base of Rs 1.40 kharba. As per ICRA Nepal, entities with [ICRANP-IR] AA- rating are considered as high-credit-quality rating. However, the rating is only an opinion on general creditworthiness and not specific to any particular debt instrument.