Performance of Finance Companies as of Q2-FY65/66

Sunday - 1st March, 2009 | ResCon

Research @ ResCon:

The Accumulated Net Profit summary of the Finance Company Group is given below.

Up to Q2 of 2064/65:                              Rs 359.54 million
Average Net Profit in Q2 2064/65:          Rs 6.66 million

Up to Q2 of 2065/66:                              Rs 984.36 million
Average Net Profit in Q2 2065/66:          Rs 18.23 million

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

The unaudited Net Profit figures of Finance Company Group shows that finance companies, in general, performed well in Q2 of FY 65/66 as compared to the corresponding quarter of previous year. On an average, finance companies’ profit advanced by 174% this quarter. The group accumulated Rs 984.85 million in net profit this quarter compared to Rs 359.54 million net profit in the corresponding previous year quarter. Please check the table below for unaudited net profit/loss figures of the finance companies 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 Nepal Shree Lanka Merchant Bank 395.716 0.563 70187%
2 Peoples Finance  13.94 -0.319 4470%
3 Kaski Finance  7.206 -0.613 1276%
4 Paschimanchal Finance Co.  10.264 0.96 969%
5 Butwal Finance  16.525 2.466 570%
6 Swastik Merchant Finance Co.  4.039 -1.177 443%
7 Shikhar Finance Co.   -4.384 -0.861 409%
8 Zenith Finance  7.026 1.416 396%
9 Kathmandu Finance  9.856 2.003 392%
10 Nepal Dev. & Emp. Pro Bank   12.86 3.07 319%
11 Lord Buddha Finance Co.  6.957 2.226 213%
12 Kuber Merchant Bittiya Sanstha   5.391 -5.915 191%
13 Civil Merchant Finance  9.089 3.138 190%
14 Everest Finance  3.404 1.194 185%
15 Alpic Everest Finance Co.  6.684 2.728 145%
16 IME Financial Institution  43.04 18 139%
17 National Finance  5.286 2.236 136%
18 NIDC Capital Markets  39.184 17.306 126%
19 Maha Laxmi Finance  11.12 5.053 120%
20 Samjhana Finance Co.  1.175 -11.25 110%
21 Valley Finance  3.825 1.96 95%
22 Birgunj Finance  10.882 5.775 88%
23 Union Finance    9.285 4.951 88%
24 Gorkha Finance  7.556 4.126 83%
25 General Finance  -0.556 -2.087 73%
26 International Leasing & Finance Co. 30.024 17.483 72%
27 Capital Merchant Banking & Finance  38.099 24.608 55%
28 Nepal Finance  18.188 12.113 50%
29 Merchant Finance Co.  2.996 2.055 46%
30 Royal Mer. Bank.& Finance  10.164 7.182 42%
31 World Merchant Banking & Finance  14.813 10.82 37%
32 Guheyshwori Mer Banking & Finance.  14.39 10.666 35%
33 Narayani Finance  10.662 7.986 34%
34 Fewa Finance Co.  14 10.562 33%
35 Goodwill Finance Co.  10.268 8.044 28%
36 Om Finance  8.071 6.539 23%
37 Universal Finance  10.012 8.198 22%
38 Nepal Express Finance  -0.234 -0.197 19%
39 Shree Investment & Finance Co.  12.59 10.883 16%
40 Lumbini Finance & Leasing Co.  20.2 17.614 15%
41 Annapurna Finance Co.  20.19 18.448 9%
42 Sagarmatha Mer. Banking & Finance  8.116 7.714 5%
43 Central Finance Co.  14.307 13.727 4%
44 Lalitpur Finance  28.892 28.362 2%
45 KIST Merchant Bank. & Finance  16.85 16.587 2%
46 Nava Durga Finance Co.  4.089 4.725 -13%
47 Siddhartha Finance  10.349 12.021 -14%
48 Imperial Financeial  3.272 3.964 -17%
49 Nepal Housing & Merchant Finance  11.048 13.874 -20%
50 Yeti  Finance  1.904 2.652 -28%
51 Reliable Investment Finance Co.  9.076 13.052 -30%
52 Prudential Finance Co.  3.683 6.823 -46%
53 Bhajuratna Finance & Saving Co.  1.72 3.278 -48%
54 Standard Finance  1.254 2.805 -55%
Total 984.36 359.54 174%
Average 18.23 6.66 1513%


The table above shows that Nepal Shree Lanka Merchant Bank performed exceptionally well and managed to record an impressive growth of 70187%. We can safely assume that Nepal Shree Lanka's growth in profit has played a biased role in pushing the overall change in net profit figure. Having said that, we can also see that most of the finance companies performed well. Altogether 28, out of 54 finance companies, have their net profit figures increment well over 50%. Thus from the analysis of profit figures of commercial banks, development banks and finance companies, it is evident 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 finance companies, such a phenomenon is not being witnessed. In spite of better performance, the share prices of most of the finance companies 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 finance companies 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.