Tuesday, August 14, 2012

Annual reports of banks discourage market

The stock market today reacted unfavourably to the unaudited annual reports of banks — the key players of the domestic secondary market — that has revealed a slowdown in the profit growth rate, and closed 2.6 points down to 397.18 from the morning's opening of 399.78 points.
Investors, who were expecting higher dividends as in the previous years, were discouraged by the slowing growth rate in profits of the banks, and pulled the banking index down by 5.72 points to 356.88 points that has dragged Nepse down, despite five sub-groups — development banks, hydropower, hotels, insurance and others — gaining in the day's trading.
Of the total 32 commercial banks, 17 banks have published their unaudited annual reports. However, only 26 banks have listed — among the 32 banks — 495,411,739 units of their shares at a face value of Rs 100 per unit at the secondary market.
The unaudited reports of the 17 banks also revealed that there are only three banks — Nabil Bank, Nepal Investment Bank and Standard Chartered Bank — in the billionaire's club with their profits shooting up over a billion.
"Though profit is not the only benchmark to gauge the performance of a sound financial institution, it will definitely have a psychological effect on the investors as they expect higher dividends," said market analyst Rabindra Bhattarai.
The banks' capacity to distribute higher dividends depends primarily on their profits, he said, adding that the banks cannot provide huge dividends in the current economic condition. "The economy has to support the growth of banks and financial institutions, otherwise they cannot sustain in the long run."
Similarly, bankers also opined that investors should not lose hope and wait, as the country is passing through a transition and lengthening uncertainty, hurting the economy. "Shareholders should be patient in the coming couple of years," said Kist Bank chief executive Kamal Gnawali. "Stronger institutions will give them good returns in the long run," he said, adding that investors should let banks grow stronger first instead of expecting returns in the short term.
Another banker said that banks have surplus liquidity but the lack of borrowers has squeezed their profits. "Entrepreneurs do not have any confidence in the government making them reluctant to borrow and that has hit profit growth apart from the ailing real estate that has tightened the profit growth rates of the banks," he added.
Annual net profit
Bank – Fiscal Year 2011-12 – Fiscal year 2010-11
Nabil Bank Rs 1.71 billionRs 1.33 billion
Nepal Investment BankRs 1.31 billionRs 1.17 billion
Standard Chartered BankRs 1.16 billionRs 1.11 billion
NB BankRs 702.90 million(loss Rs 138.15 million)
Bank of KathmanduRs 607.66 millionRs 605.15 million
Nepal SBI BankRs 475.62 millionRs 464.56 million
Global IME BankRs 353.05 millionRs 224.97 million
Kumari Bank Rs 275.62 millionRs 251.23 million
Citizens Bank Int'lRs 222.97 millionRs 198.35 million
Bank of Asia Nepal Rs 220.89 millionRs 209.88 million
Lumbini BankRs 193.44 millionRs 389.69 million
Grand BankRs 183.66 millionRs 89.07 million
Sunrise Bank Rs 146.61 millionRs 44.23 million
Sanima BankRs 120.98 millionRs 155.22 million
Kist BankRs 100.23 millionRs 54.07 million
NMB BankRs 59.45 millionRs 221.50 million
Machhapuchchhre BankRs 10.81 millionRs 8.92 million

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