Performance of Development Banks as of Q2-FY65/66

Sunday - 22nd February, 2009 | ResCon

Research @ ResCon:

The Accumulated Net Profit summary of the Development Bank Group is given below.

Up to Q2 of 2064/65:                              Rs 470.40 million
Average Net Profit at Q2 2064/65:          Rs 16.80 million

Up to Q2 of 2065/66:                              Rs 1050.85 million
Average Net Profit at Q2 2065/66:          Rs 37.53 million

Please note that the table below comprises of the figures for all the development banks, both listed and not listed.

The unaudited Net Profit figures of Development Bank group shows that development banks, in general, performed well in Q2 of FY 65/66 as compared to the corresponding quarter of previous year. On an average, development banks’ profit advanced by 190.64% this quarter. The group accumulated Rs 1050.85 million in net profit this quarter compared to Rs 470.40 million net profit in the corresponding previous year quarter. Please check the table below for unaudited net profit/loss figures of the development banks up to 2nd quarter.

Amount in Rs/million

#

Company FY 2065/66
(Up to 2nd Qtr)
FY 2064/65
(Up to 2nd Qtr)
Change
1 Corporate Development Bank  0.168 6.555 3802%
2 Pashupati Development Bank  0.248 9.271 3638%
3 Clean Energy Development Bank  1.106 7.440 573%
4 Kasthamandap Development Bank  1.205 7.404 514%
5 Narayani Development Bank  1.365 6.658 388%
6 Infrastructure Development Bank  4.694 19.133 308%
7 Gandaki Development Bank  3.408 12.287 261%
8 Muktinath Development Bank  2.037 7.122 250%
9 Ace Development Bank  5.912 20.633 249%
10 Business Development Bank  8.327 26.262 215%
11 Annapurna Bikash Bank  5.106 13.972 174%
12 Gorkha Development Bank  8.888 23.715 167%
13 Miteri Development Bank  0.353 0.846 140%
14 Biratlaxmi Development Bank  1.920 4.369 128%
15 Himchuli Bikash Bank  4.794 10.761 124%
16 Agriculture Development Bank  395.452 773.740 96%
17 Siddhartha Development Bank  11.475 20.469 78%
18 Sanima Vikash Bank  12.039 21.278 77%
19 Sahayogi Vikas Bank  3.512 5.557 58%
20 Nirdhan Utthan Bank  9.632 11.910 24%
21 Paschimanchal Bikash Bank 7.786 8.295 7%
22 Professional Development Bank  -0.306 0.213 -170%
23 Nepal Development Bank  -13.782 14.010 -202%
24 Shangrila Development Bank  -2.349 4.200 -279%
25 Diyalo Development Bank  -0.702 2.001 -385%
26 Kamana Development Bank  -0.866 2.643 -405%
27 City Development Bank  -0.897 5.555 -719%
28 Country Development Bank  -0.124 4.552 -3771%
29 Bishwa Bikash Bank  N/A N/A N/A
30 Public  Development Bank  N/A N/A N/A
31 Vibor Devllopment Bank  N/A N/A N/A
32 Jyoti Bikash Bank  N/A N/A N/A
33 Bageshowori Development Bank  N/A 5.719 N/A
34 Triveni Development Bank   N/A N/A N/A
Total 470.40 1050.85 123.39%
Average 16.80 37.53 190.64%

The table above shows that most of the development banks performed well. Altogether 19 banks, out of 34, have their net profit figures increment well over 50%. Last week we had performed a research on the profit figures of commercial banks and it also showed the similar story. Hence, it will be fair to say that Nepalese service sector is performing well even during thes difficult times. Boom in realty sector, good inflow of remittance, increased exposure to hydropower sector, quality of loans (those not deemed "BAD") in portfolio, focus on SMEs are some of the key factors that have played vital roles in improving the profit figures of these banks.

ResCon Tip-Off:

We know that there exists a strong positive correlation between Earnings and Market Share Price figures. That is, if earnings’ figure of a company increases, the share price of the company increases too. But in case of the Nepalese development banks, such a phenomenon is not being witnessed. In spite of better performance, the share prices of most of the development banks are down.

To summarize, if you are someone who follows Warren Buffett, you will certainly know that the market price of a company must always address its fundamentals. In our case, there are some good development banks which are currently undervalued. These banks’ share prices will definitely go up in the future. All you need to do is put on your thinking cap and choose the correct bank to invest in.

Well if you think you need some professional help, let us know.