Asiamoney best bank awards 2019: Nepal
Best Domestic Bank: Nabil Bank
Nabil Bank is considered a trailblazer in Nepal. By local standards, it is quite old; it was set up in 1984, during the first wave of economic liberalization, when it was granted a coveted licence to become what was then the only privately run, onshore lender.
|Anil Shah, Nabil Bank|
Ask any foreign bank, or many local ones, to identify the best financial institution in Nepal and more often than not they point to Nabil.
By almost any measure, it is either the star pupil or close to being top of the class. Success in some markets can be relative, based on strong performance in a few financial services or metrics, but not in this case.
Nabil Bank is more profitable than any of its peers in the public or private sector. It reported net profit of NRs3.98 billion ($36 million) in the financial year ending in mid July 2018, up 7.6% on an annualized basis, with operating profit up 7.5%, to NRs5.65 billion.
Customer deposits rose 14.4% in the same period, with local currency deposits up 22.7% to NRs124.4 billion, an increase that was well above the industry average of 19.5%.
Perhaps the bank’s most notable achievement was its success in raising its level of paid-up capital to NRs8 billion. It remains the only lender in the private sector to meet the central bank’s reserve requirement – and did so without buying a commercial rival or issuing additional shares.
No local rival comes anywhere close to competing with its range of services in the digital realm.
Chief executive Anil Shah tells Asiamoney that the bank is always on the lookout for new services and sectors to maintain its lead.
He says: “To continue to be number one, we always look to do things differently, from rolling out new digital services, to shifting our focus to small and medium-sized enterprises and mid-sized corporates, to getting a bigger footprint across Nepal.”
Best International Bank: Standard Chartered Bank
By any measure, Standard Chartered Bank is one of the best commercial lenders in Nepal and the clear leader among the foreign banks. It has been in Nepal since 1987, when it registered as a joint venture. It has since listed on the Nepal Stock Exchange. With 12 branches dotted around the country, including four in Kathmandu, it plays an important role in the domestic financial system. In an overbanked market, its name suggests stability, safety and respectability, while its low cost of funding gives it a competitive edge.
|Anirvan Ghosh Dastidar, Standard Chartered|
StanChart “banks all the large multinationals and multilaterals doing business in Nepal,” says Anirvan Ghosh Dastidar, chief executive in Nepal, and it acts as the first point of contact for money flowing into or out of the country; that includes Chinese capital destined for a host of big infrastructure projects in Nepal, ranging from highways to airports. The strength of Standard Chartered’s name here is such that in good times and bad – and Nepal has enjoyed and endured both – governments have turned to the bank for advice on matters ranging from how to tackle money laundering to the development of its onshore capital markets.
StanChart is a leading provider of retail banking services, as well as the largest onshore handler of foreign exchange; for years, it has set an example in corporate social responsibility, helping to fund initiatives such as financial literacy campaigns and disaster relief projects.
The bank reported net profit of $20 million in Nepal in the financial year ending in mid July 2018, up 41% from the previous year; assets and outstanding loans rose 7.3% and 16.7% respectively over the same period. The bank’s return on equity jumped 56% in the year to mid July 2018, while return on assets improved by nearly a third to 2.61%.
Best Bank for CSR: Rastriya Banijya Bank
Strong and sound, government-owned Rastriya Banijya Bank (RBB) has provided quality financial services to customers in the public and private sectors ever since it first opened its doors in 1966, and its 218 branches, which serve more than three million customers, can be found in even the most remote corners of the country.
|Kiran Kumar Shrestha, Rastriya Banijya Bank|
RBB chief executive Kiran Kumar Shrestha tells Asiamoney the lender always “prioritizes serving marginalized people and SMEs, living and operating in remote areas” and has a focus on financial inclusion.
Corporate social responsibility is not an afterthought at RBB but at the heart of everything it does. Wherever you look at the bank, you see goodwill at work, whether it’s the money used to help homeless and orphaned children, or the free computers handed out to schools in the eastern district of Bhojpur, or the bank’s long-standing financial literacy campaign in the Gorkha region that straddles the Budhi Gandaki river.
Rastriya Banijya Bank has helped to clean up after floods and to rebuild devastated communities after earthquakes, while for several years it has co-funded a scholarship programme that enables students from poorer backgrounds in rural areas to attend college.
Most financial institutions these days have a CSR agenda of some size and type. But a few lenders take it more seriously than others because it is in their DNA to want to help those around them to do better. Rastriya Banijya Bank sits very firmly in that last category.
Best Corporate and Investment Bank: Nepal Investment Bank
Nepal’s financial economy is a work in progress: the country has too many banks, and way too many bad banks. There are too few big companies, so the investment banking divisions of commercial lenders tend to be an afterthought. But there are some exceptions, and Nepal Investment Bank is the best of these.
|Jyoti Pandey, Nepal Investment Bank|
A regular award-winner with Euromoney, Nepal Investment Bank is one of the country’s largest lenders, in terms of profit, customer deposits, market capitalization, loans and assets.
Formed in 1996 as a joint venture between local partners and Crédit Agricole Indosuez – the latter has long since left the scene – the bank continues to outperform most of its peers. In the first half of the 2018/2019 financial year (in Nepal, a financial year runs from the middle of July), it reported a pre-tax profit of NRs2.84 billion ($25.2 million), up 8.8% from the same period a year earlier, and recorded a non-performing loan ratio of 2%, which was below the industry average.
But Nepal Investment Bank, under the leadership of chief executive Jyoti Pandey, is making strides elsewhere too, pushing into digital banking and, most pertinently in this case, investment banking.
In February 2018, its merchant banking division acquired Ace Capital – a subsidiary of another local lender, Ace Development Bank – and renamed itself NIBL Ace Capital. A fully owned part of Nepal Investment Bank, the new unit has seven branches and paid-up capital of NRs270 million. In the 2017/2018 financial year, it pulled off public issues for 22 local companies, including rights issues and IPOs.
Even in its nascent state, NIB reported a profit of NRs44.6 million through the first six months of the more recent financial year and is bringing the first open-ended mutual fund to the local market.
Best Bank for Microfinance: Mega Bank
Launched in 2010 with paid-up capital of $14.8 million, Mega Bank has cleared every obstacle placed in its way. Size is no longer an issue, thanks to five judiciously timed and priced acquisitions and mergers, and its local initial public offering, in 2013, was 22 times oversubscribed.
|Anupama Khunjeli, Mega Bank|
Under the leadership of chief executive Anupama Khunjeli, Mega Bank is now one of the best-capitalized lenders in the country – and one of the largest, with 102 branches. From the outset, Mega Bank focused its attention on micro-finance, bringing micro-credit and micro-deposit services to people’s doorsteps, along with mobile banking, debit cards and a fast-growing remittance services business.
In the 12 months to the middle of July 2018 (a period that tracks the country’s financial calendar), total outstanding loans at its micro-credit unit jumped to $42.6 million, up 125% from a year earlier, while the total number of customers rose roughly 50% to 4,412.
About 7% of all lending is micro in nature, against an industry standard of 5%. Everything is simplified, which is essential in a country with a high illiteracy rate and where financial inclusion remains a work in progress.
So, micro-credit, commonly known in Nepal as Saral karja or easy credit, uses simple forms and formats wherever it exists, and the bank leans heavily on technology to cut costs, accelerate the loan approval process and crunch the numbers.
Mega Bank’s micro-finance team tours the country, meeting new and existing clients, keeping customers educated and up-to-date on services and terms, and ensuring they don’t fall behind on repayments or struggle to access credit.
Best Bank for SMEs: Mega Bank
Nepal is the classic market for small and medium-sized enterprises. It is fair to say that for decades, SMEs have formed the backbone of the economy. Nepal had very few big companies and a large number of people who lacked access to a formal bank account.
In between were millions of SMEs, many of them little more than one-person operations that all too often struggled to obtain credit or financial guidance from the banks. But that has changed. As Nepal’s economy expands and matures, lenders of all sizes and shapes are eager to serve aspiring SMEs in sectors ranging from construction to tourism and consumer goods to financial technology.
Mega Bank sees these smaller firms as crucial for the health of the economy, responsible for driving up incomes and for boosting social development.
Over the last year, Mega Bank has revisited the division, rolling out an SME loan unit. New features include working capital financing and trade facilities such as letters of credit and bank guarantees. Competitively priced loans ranging in size from about $9,000 to nearly $64,000 offer flexible tenures, and are disbursed in as little as 24 hours.
Total outstanding loans to SMEs reached $113.8 million as of the middle of July 2018, up 77% from a year earlier, with hundreds of smaller firms signing up as customers in the wake of the division’s relaunch.
Best Digital Bank: Nabil Bank
Digital mobile banking is about to take off in a big way in Nepal. The landlocked state boasts a young and tech-savvy population, a cellphone penetration rate of roughly 130% according to state operator Nepal Telecom, and a banking system that has finally recognized the pressing need to embrace the digital age.
No conversation with a Kathmandu-based lender is complete without a rundown of the products they plan to roll out. Most of these lenders have overlooked digital for too long and are now desperate to catch up.
But one lender, Nabil Bank, is busy bolting on new services as fast as it can, and stands above the fray.
Nabil Bank has become an expert at spotting gaps in the market that others have overlooked or ignored.
It can take courage to be a first mover, and this bank has that quality in spades.
Take its Korea Remit service: this was set up with Korea Exchange Bank with the aim of making the process of remitting money from Seoul to Kathmandu quick, reliable and as cheap as possible.
Remittances make up about a quarter of economic output, and while most Nepali families have at least one person working abroad, in many cases in south or southeast Asia, a painful share of those salaries is lost in transmission.
Nabil Bank’s genius is to strip digital banking down to the basics. Its Youtube tutorials in Nepali walk customers through the process of getting online and staying there, while services are tailored to people who have never owned a computer – and may never do so.
It takes a panoramic view of the digital realm, having joined forces with UnionPay to bring QR-code payments to thousands of merchants in a country that has become a popular destination for Chinese tourists.