Nic Asia Bank 3 Subordinated Debenture issue of worth Rs 6178.69 million graded by Care Ratings Nepal

CARE Ratings Nepal Limited (CRNL) has reaffirmed the issuer rating of“CARE-NP A (Is)” assigned to NIC Asia  Bank  Limited  (NIC  Asia).  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 reaffirmed rating  of „CARE- NPA‟ to the Subordinated Debentures of NIC  Asia. 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  ratings assigned  to  NIC  Asia  derive  strength  from  the long  track  record  of  operations,  experienced promoters  and management  team,  adequate  capitalization, good  asset  quality;  however  increasing  GNPLs during FY19 (refers to the 12 month period ended mid-July 2019)& H1FY20 (refers to the 6 month period ended  mid-Jan  2020), diversifiedand  geographical  coverage  through  branches in  Nepal, diversified  loan portfolio with concentration  towards retail  and  SME  portfolio and  improving  Current  Account  Savings Account (CASA) ratio.

The rating also factors in consistent growth in advances and deposits and considerable growth  in  total income  and  net  profit  over  the  period  and  improved return  on  total  assets  (RoTA)  during FY19, moderate  liquidity  profile, moderate  deposits  concentration  and  low  advances  concentration and diversified  investment  portfolio. 

The  rating,  however,  is  constrained  on  account  of  intense  competition  and exposure to regulatory risk related to industry. Ability of the bank to continue its growth momentum without compromising  on  asset  quality,  maintaining  capital  adequacy  and  ability  to  manage  the  impact  of  any regulatory changes by Nepal Rastra Bank (NRB) would be the key rating sensitivities.

About the Bank

NIC ASIA Bank Limited (NIC Asia) is “A” Class Licensed Institutions from Nepal Rastra Bank (NRB)and is one of the top 3 “A” Class (Commercial) banks of Nepal in terms of Interest Income, Net Interest Income, Deposits and Advances as on January14, 2020.The 93.97% of the total shareholding of the Bank is held by individual  and 6.03%by  corporate  entities (other  than  GoN  and Licensed  Institutions)  as  on July  16,  2019; among which 51% belongs to promoter group shares and 49% belongs to general public.

The bank reported PAT of Rs. 3,023 Mn on an asset size of Rs. 218 Bn as on July 16, 2019. Further, NIC Asia reported PAT of Rs.2,016  Mn  during  H1FY20. The  Bank  has  two  wholly  owned  subsidiary  companies  operating  within the territory of Nepal. One of them is  NIC ASIA Capital Limited (incorporated to undertake  Merchant Banking activities)and NIC ASIA Laghubitta Bittiya Sanstha Limited (Microfinance).

Source: careratingsnepal.com