Corporate Focus

One year after coming into the hands of all Nepali management and changing its name, Nepal Investment Bank Ltd. (formerly Nepal Indosuez Bank Ltd.) jumped to fifth position from the seventh among the Nepali banks in terms of deposits collection. Similarly, it jumped to the fifth position from the eighth during the same period in terms of total credits.

Though this did not help the bank to change its relative position in terms of the volume of operation profits, it registered a whopping 54% increase in operating profit in the year 2002-03 as compared to the figure of the previous year. The increase in net profits was still higher, i.e. 103%. More importantly it has been able to reduce the non-performing assets - one of the major problems faced by Nepali commercial banks - to 2% of the total assets as compared to 4.8% last year.

The bank has reported a massive 127% increase in its operating profit during the first quarter of current fiscal year as compared to the same period last year. The bank has more than doubled its deposit collection (8981 million from 4405 million) and nearly doubled total credit (6588 million from 3549 million) between the two periods resulting in a massive increase in interest income (from Rs. 80 million to Rs. 160 million).

"Quite impressive", would be your comment looking at those information and comparing NIBL's performances with other banks in terms of different parameters (see the tables). All these are recognized internationally now after the bank received the prestigious Bank of the Year award for 2003 from The Banker, a magazine from London based Financial Times Group.

Therefore, equally upbeat are the senior executives in the bank. "NIBL is arguably the best tier-one all-Nepali-managed bank in Nepal", notes one NIBL senior executive on condition of anonymity. As the table indicates, all the other big banks are both joint ventures with foreign banks and managed by foreign professionals.

New Products

But how is the bank going to achieve that target? Perhaps by introducing new products and by expanding the access as it seems from its ongoing activities. Last year the bank introduced a new saving scheme called "Ezee Saving Scheme" in which the deposits have now crossed over Rs. 1. 5 million, as the bank officers inform.

Just recently, in October, the bank launched Visa Electron Debit Card - for the first time in Nepal - and is planning to launch Visa credit card in the near future. Among the other new products launched by the new management include the Safe Deposit Lockers and loan against the security of gold and silver, for house purchase or construction and for buying vehicles.

In its expansion drive, the bank also went on a branch-opening spree. Since January 2003, the bank has opened new branches in New Road (Kathmandu), Biratnagar, Butwal and Pokhara. Another branch in Putalisadak will open in the very near future where the Bank's Card Center is currently located.

Capital Increment

In another step, NIBL increased its capital to Rs. 295 million by issuing bonus shares out of the profits of fiscal year 2001-02. Now it has issued debentures of Rs. 300 million (Rs. 100 million for the general public and Rs. 200 million privately placed) to further increase the capital adequacy. With coupon interest rate 7.5%, the debentures are expected to be picked up immediately as the rate of interest offered by banks while accepting deposits is much lower than what NIBL is offering on its debentures.