Wednesday, November 9, 2011

Private banks continue to increase assets size

Can you guess which the largest bank in Nepal is?
Not surprising, Rastriya Banijya Bank (RBB) is the largest bank in Nepal based on its total assets size of the balance sheet.
It holds almost 10 per cent of the total assets of the commercial banks followed by Agriculture Development Bank Nepal (ADBN) and Nepal Investment Bank, according to the unaudited report of the fiscal year 2009-10 of the 31 commercial banks.
The government-owned Rastriya Banijya Bank has Rs 81.22 billion worth assets which is 9.75 per cent of the total assets of the 31 commercial banks that stands at Rs 832.74 billion.
Agriculture Development Bank Nepal is ahead of Nepal Investment Bank marginally. The ADBN has Rs 59.37 billion worth assets that is 7.13 per cent, whereas Nepal Investment Bank has Rs 59.10 billion worth assets, which is 7.10 per cent of the total assets of the banks.
The private sector bank Nepal Investment Bank is fast closing the gap to become the second largest bank in Nepal meaning government-run banks are losing their grip.
The size of the assets of banks can give a range of competition and comparable institutions. "It is one of the tools to measure banks based on total assets of balance sheet but it does not reflect the performance of banks, it includes only market share,” according to share analyst and chairman of the Securities Research Centre and Services (SRCS) Rabindra Bhattarai.
From the assets size, the banks can be divided into four groups; largest (with above Rs 60 billion worth assets), large (Rs 40 billion-Rs 60 billion), middle (Rs 20 billion-Rs 40 billion), and small (with below Rs 20 billion worth assets).
Only one commercial bank features in the largest bank category, whereas eight banks feature in the large banks category. The middle banks category has seven banks and the small banks category has 15 banks among the 31 commercial banks.
The huge gap in the size of the banks calls for the necessity of merger immediately. The size of the banks can give some indications on which banks should be merged and how can a strong bank be formed.
The merger could be successful, if many banks of equal size be merged and made a competitive one. The data also revealed that the government banks have been dominating currently but the private banks are coming to give them tough competition.

Top five (Based on Assets)
1. Rastriya Banijya Bank — Rs 81.22 billion
2. Agriculture Development Bank — Rs 59.37 billion
3. Nepal Investment Bank — Rs 59.10 billion
4. Nabil Bank — Rs 58.94 billion
5. Nepal Bank Ltd — Rs 52.60 billion

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