Lumbini Bikas Bank receives ICRA Grade 4 for upcoming 10% right issue

ICRA Nepal has assigned an “[ICRANP] IPO Grade 4”, indicating below average fundamentals to the proposed rights issue amounting Rs 20.08 crore to Lumbini Bikas Bank Limited (LBBL). The process to issue 10% right share of LBBL is on review in Securities Board of Nepal (SEBON) pipeline. LBBL proposes to come up with 10% rights issue of 2,008,878.47 numbers of equity shares, each with face value of NPR 100, to be issued to existing shareholders at par. As per ICRA Nepal, the grading factors in LBBL’s ability to achieve moderate portfolio growth (~17% compounded growth over last four years on a consolidated basis vs. ~18% for banking industry). Comfortable reported capitalization, experienced management team and diversified franchise (56 branches across 21 districts) remain positive for incremental growth prospect of LBBL. The grading remains constrained by the weak track record of the pre-merger entities1 in terms of assets quality and profitability profile, which despite improvement in recent years, continues to result in inferior overall profile of LBBL vs. peers and the industry average. Prabhu Capital Limited has been assigned as the issue manager for the right issue. Lumbini Bikas Bank has earned net profit of Rs 1.61 crore in the first quarter of the current fiscal year 2074/75.  Its paid up capital stand at Rs 2.008 and after issuance of 10% right share, its paid up capital will increase to Rs 2.20 arba.