The change in portfolio mix may have positive impact in profitability in Q4 or even in next year.
Mon, Jun 15, 2015 12:00 AM on Interview,
ShareSansar, June 14:
NIC Asia Bank Limited was formed in 2013 after a merger between NIC Bank and Bank of Asia. Unlike many other banks and financial institutions that have had rocky merger deals, NIC Asia has not only managed to pull off a smooth merger but also has succeeded in earning profits every quarter since starting operations as a new entity.
The bank has 66 branches at present covering almost all major financial centers of the country.
In an interview with ShareSansar, Mr Sunil Pokharel, the head of retail banking at NIC Asia Bank Limited, told our financial reporters Priyanka Jha and Jashma Sainju that the bank aspire to be the most preferred banks in Retail Banking and the most aggressive bank in the Retail Segment.
The country suffered from a massive earthquake recently. What do you think is the impact it will make in Banking Industry and its profitability?
This was definitely an unprecedented incident that traumatized Nepalese countrymen and the loss is incomparable. Undoubtedly, it would have negative impact on banks profitability but not to the extent it was initially considered. We may not see much growth or slightly negative growth in the performance in Q4 primarily due to the impact of earthquake. There has been slow demand in credit as compared to deposits; there has been significant growth in deposits i.e. NPR 100 Billion + after earthquake.
How NIC ASIA is placed now (i.e. post-earthquake scenario)? What can shareholders expect in the 4thquarter?
We poised to start Q4 in strong position considering Q3 performance where our Risk Assets and deposits grew by 25% and 22% on year-on-year basis respectively.The best part of the growth (up to Q3) is we have been pretty successful in growing savings account portfolio in deposits and retail loan portfolio in lending. The change in portfolio mix may have positive impact in profitability in Q4 or even in next year.
Where does NIC ASIA bank stand in Retail Banking now?
Based on the published data, we stand at no. 1 position in Retail Lending portfolio. This has been a big leap for the bank – we were at No 4 position one and half year back, now we are at the top. We are also now among top 3 banks in terms of opening new savings accounts with sound growth in savings account portfolio. We aspire to be one of the most preferred banks in Retail Banking and the most aggressive bank in the Retail Segment.
How was it possible while you have competitors like Standard Chartered, NABIL, Everest Bank?
It was not an easy task as competition was fierce not only from these 3 banks but also from other banks operating in the country. We not only have a well-articulated strategy to grow retail portfolio but we also have very committed, strong and aggressive sales and support team – which of course is key to success.
Your margin lending portfolio is in excess of NPR 3 Billion, has there been any adverse impact on your portfolio because NEPSE movements after earthquake?
Our Loan against Shares is well-diverse portfolio having customers more than 1500 ranging from small investors to medium size investors. Despite being at the top (i.e. the largest portfolio), we did not have much impact on our portfolio due to NEPSE movement. It was expected that the market would go down not because of any strong fundamental reasons but change in behavioral aspect of the investors. This somehow has been corrected and I still feel that the market is below than what it should have been.
Some banks are moving ahead aggressively either by floating loans or merging or acquiring other BFIs. How do you plan to stay ahead in the race among commercial banks to expand and get bigger?
NIC ASIA was formed after merger between two commercial banks operating successfully on 30th June 2013. It is going to be 2 years very soon. We have now witnessed synergy effect of the merger and the bank has now established itself as one of the most strong and aggressive bank in the country. In next couple of years, we will be capitalizing on our strength not only to achieve aggressive growth but also beat the growth rate of market.
The merger between NIC and Bank of Asia that gave birth to NIC ASIA is considered one of the most successful merger deals in commercial banking sector of Nepal. Was it as smooth as it seems from outside? If yes why? If no, what were the challenges you faced and overcome?
Any merger comes with a lot of challenges primarily due to changes that it brings in. A successful merger solely depends on managing change from people to process. The challenges that any organization faces during Merger & Acquisition are cultural management, HR restructuring, resistance to change, talent drainage, low motivation, redundancies etc. We cannot be an exception – we also faced many of these challenges. The merger between NIC and Bank of Asia was very smooth because of a) a detailed integration plan that was put in place before the merger where all senior level staff of both organization were involved, b) put across clear vision of merger to staff of both the banks, c) customer being key to success for any M&A, a well communication plan was executed focusing on customer needs, and d) well executed HR Restructuring plan.
Tell us about the new product “Share SubhidaBachatKhata” related with DP account?
It’s a slightly different product. The most amazing feature is that customer opening SSBK account can get DMAT account for free. The minimum balance is just Rs 500 and the interest at 4.5%.
We are the first bank to let our customers view the status of their DMAT securities with the help of internet banking.
Apart from the interest and internet banking, the most lucrative feature is we are going to collect dividends on behalf of shareholders and deposit into their account without any charges. We do not want our customers to stand in long queues to collect dividends we will be doing it on their behalf.
Do you have plan to bring new products in the market?
Yes, we will be bringing innovative products both in loans and deposits.
Has the bank set any target as regards to dividend for the year 2071/72?
Not yet. However, the bank has always been committed to provide good returns to its shareholders.
On behalf of NIC ASIA Bank what message do you want to give to the stakeholders?
NIC ASIA is very professionally managed company and we are really proud of it. All the stakeholders consider us a professionally managed bank. We would like to maintain that reputation.
The country suffered from a massive earthquake recently. What do you think is the impact it will make in Banking Industry and its profitability?
This was definitely an unprecedented incident that traumatized Nepalese countrymen and the loss is incomparable. Undoubtedly, it would have negative impact on banks profitability but not to the extent it was initially considered. We may not see much growth or slightly negative growth in the performance in Q4 primarily due to the impact of earthquake. There has been slow demand in credit as compared to deposits; there has been significant growth in deposits i.e. NPR 100 Billion + after earthquake.
How NIC ASIA is placed now (i.e. post-earthquake scenario)? What can shareholders expect in the 4thquarter?
We poised to start Q4 in strong position considering Q3 performance where our Risk Assets and deposits grew by 25% and 22% on year-on-year basis respectively.The best part of the growth (up to Q3) is we have been pretty successful in growing savings account portfolio in deposits and retail loan portfolio in lending. The change in portfolio mix may have positive impact in profitability in Q4 or even in next year.
Where does NIC ASIA bank stand in Retail Banking now?
Based on the published data, we stand at no. 1 position in Retail Lending portfolio. This has been a big leap for the bank – we were at No 4 position one and half year back, now we are at the top. We are also now among top 3 banks in terms of opening new savings accounts with sound growth in savings account portfolio. We aspire to be one of the most preferred banks in Retail Banking and the most aggressive bank in the Retail Segment.
How was it possible while you have competitors like Standard Chartered, NABIL, Everest Bank?
It was not an easy task as competition was fierce not only from these 3 banks but also from other banks operating in the country. We not only have a well-articulated strategy to grow retail portfolio but we also have very committed, strong and aggressive sales and support team – which of course is key to success.
Your margin lending portfolio is in excess of NPR 3 Billion, has there been any adverse impact on your portfolio because NEPSE movements after earthquake?
Our Loan against Shares is well-diverse portfolio having customers more than 1500 ranging from small investors to medium size investors. Despite being at the top (i.e. the largest portfolio), we did not have much impact on our portfolio due to NEPSE movement. It was expected that the market would go down not because of any strong fundamental reasons but change in behavioral aspect of the investors. This somehow has been corrected and I still feel that the market is below than what it should have been.
Some banks are moving ahead aggressively either by floating loans or merging or acquiring other BFIs. How do you plan to stay ahead in the race among commercial banks to expand and get bigger?
NIC ASIA was formed after merger between two commercial banks operating successfully on 30th June 2013. It is going to be 2 years very soon. We have now witnessed synergy effect of the merger and the bank has now established itself as one of the most strong and aggressive bank in the country. In next couple of years, we will be capitalizing on our strength not only to achieve aggressive growth but also beat the growth rate of market.
The merger between NIC and Bank of Asia that gave birth to NIC ASIA is considered one of the most successful merger deals in commercial banking sector of Nepal. Was it as smooth as it seems from outside? If yes why? If no, what were the challenges you faced and overcome?
Any merger comes with a lot of challenges primarily due to changes that it brings in. A successful merger solely depends on managing change from people to process. The challenges that any organization faces during Merger & Acquisition are cultural management, HR restructuring, resistance to change, talent drainage, low motivation, redundancies etc. We cannot be an exception – we also faced many of these challenges. The merger between NIC and Bank of Asia was very smooth because of a) a detailed integration plan that was put in place before the merger where all senior level staff of both organization were involved, b) put across clear vision of merger to staff of both the banks, c) customer being key to success for any M&A, a well communication plan was executed focusing on customer needs, and d) well executed HR Restructuring plan.
Tell us about the new product “Share SubhidaBachatKhata” related with DP account?
It’s a slightly different product. The most amazing feature is that customer opening SSBK account can get DMAT account for free. The minimum balance is just Rs 500 and the interest at 4.5%.
We are the first bank to let our customers view the status of their DMAT securities with the help of internet banking.
Apart from the interest and internet banking, the most lucrative feature is we are going to collect dividends on behalf of shareholders and deposit into their account without any charges. We do not want our customers to stand in long queues to collect dividends we will be doing it on their behalf.
Do you have plan to bring new products in the market?
Yes, we will be bringing innovative products both in loans and deposits.
Has the bank set any target as regards to dividend for the year 2071/72?
Not yet. However, the bank has always been committed to provide good returns to its shareholders.
On behalf of NIC ASIA Bank what message do you want to give to the stakeholders?
NIC ASIA is very professionally managed company and we are really proud of it. All the stakeholders consider us a professionally managed bank. We would like to maintain that reputation.
