Insight Analysis of Himalayan Bank Limited

1.Introduction: Name: Himalayan Bank Limited Business: Banking Date of operation: 18.01.1993 C.E.O: Mr. Ashoke SJB Rana Chairman: Mr. Manoj B. Shrestha Branches(Including H.O): 38 ATMs: 66 Corporate Office: Kamaladi, Kathmandu, Nepal Stock code (Nepse): HBL 2.Ownership Pattern: Domestic Ownership: 80% Other entities: 65% Individuals: 15% Foreign Ownership: 20% NOTE: The pattern of ownership is based upon latest published annual report. 3.List of Prominent Shareholders: Shareholders Shareholding in % Habib Bank Limited 20 Karmachari Sanchaya Kosh 14 N. Trading Co. Pvt. Ltd. 12.71 Mutual Trading Co. Pvt. Ltd. 12.62 Ava International Pvt. Ltd. 11.38 Chhaya International Pvt. Ltd. 8.89 Sumit Kumar Agrawal 2.65 Syakar Co. Ltd. 0.99 Sharma & Co. Pvt. Ltd. 0.66 4.Equity Analysis: 52 Week High Price: 655 52 Week Low Price: 380 Last Trading Price(12.04.2012): 488 Paid-up Capital: 240 Cr Market Capitalization: 1171.20 Cr EPS(annualized)*: 28.33 P/E Ratio*: 17.22 Net Worth per Share*: 180.65 P/B.V Ratio*: 2.70 Total trading days*: 52 Total number of transaction*: 331 *Based on unaudited second Quarter 2068/69. 5.Performance Highlights: Particulars F/Y 2063/64 F/Y 2064/65 F/Y 2065/66 F/Y 2066/67 F/Y 2067/68 Total Assets 34,314,868 36,857,624 40,046,686 43,860,251 48,137,497 YOY Increase in total Assets (%) - 7.41 8.65 9.52 9.75 Total Deposit 30,048,418 31,842,789 34,681,345 37,611,202 40,920,627 YOY Increase in total deposit (%) - 5.97 8.91 8.45 8.80 Total loan Advance and Bill purchased 17,793,724 20,179,613 25,519,519 29,123,755 32,968,270 YOY Increase in total Lending (%) - 13.41 26.46 14.12 13.20 Investment 11,822,985 13,340,177 8,710,691 8,444,910 8,769,939 Net profit 491,823 635,869 752,835 508,798 893,115 Non performing Credit/Total Credit (%) 3.61 2.36 2.16 3.52 4.22 Weighted average interest rate spread (%) 3.57 3.66 3.66 4.21 3.96 No. of shares(No. in '000) 8108.1 10,135 12,162 16,000 20,000 No. of employees(No.) 584 591 591 577 647 6.Key Findings: 1. Based on FY 2067/68 comparison among 25 Commercial banks listed in Nepal Stock Exchange, HBL ranks as follows: Head Rank By M-Cap 5th By Operation date (as commercial bank) 5th By Deposit 6th By Total Asset 4th By Per share total assets value 6th 2. Ratio of total assets value to market capitalization for this bank comes around 4.59. The value of P/E ratio for this stock comes around 17.22 and the ratio of price to book value is around 2.70. Considering these ratios, the stock looks moderately priced. 3. The latest published financial statement (as of second quarter 2068/69) reveals the following facts: • Around 76.55% of total deposit is used to provide loan and advances. • Around 25.62% of the total deposit is utilized for the Investment purpose. • Around 8.71% of total deposit is foreign currency deposit. • The ratio of its non-interest income to total operating income comes around 36.09%. • The lending portfolio of the bank with sector wise exposure is presented below: Head Exposure (%) Real Estate Loan 10.45% Personal Home Loan (Up to Rs. 100 lacs or less) 4.19% Margin Type Loan 2.62% O.D/ TR Loan/ WC Loan 50.91% Term Loan 14.89% Other Lending 16.93% 4. The performance of the bank in 2nd Quarter 2068/69 as compared to same period in the previous year shows mixed result. There is healthy growth in size of balance sheet contributed by growth in deposit and total lending plus increase in size of shareholders’ equity as well. However profit has fallen down by some good percentage point because of increase in cost of fund and other operating expenses with just a nominal increase in average yield of the company. The performance highlight during this period is shown below: Growth in Deposit 19% Increase in Total Lending 8.64% Increase in provision for possible loss 40.53% Decrease in Net Profit 21.87% 5. HBL, established in 1993 is a joint venture with Habib Bank limited, Pakistan. Habib Bank is the largest and oldest bank in Pakistan with over 1700 domestic and 65 overseas branches covering all continents and over 1800 correspondents worldwide. This has enabled HBL to have access to worldwide correspondent network of Habib Bank for fund transfer, letter of credit or any banking business anywhere in the world. 6. Structure of paid-up Capital of the bank Over Years: Financial Year Cumulative Paid Up Capital Rs. Remarks Initial Capital 60,000,000 F.Y.1994-95(BS2051-52) 120,000,000 Issue of 100% bonus share F.Y.1997-98(BS2054-55) 192,000,000 Issue of 60% bonus share F.Y.1998-99(BS2055-56) 240,000,000 Issue of 25% bonus share F.Y.1999-00(BS2056-57) 300,000,000 Issue of 25% bonus share F.Y.2000-01(BS2057-58) 390,000,000 Issue of 30% bonus share F.Y.2001-02(BS2058-59) 429,000,000 Issue of 10% bonus share F.Y.2002-03(BS2059-60) 536,250,000 Issue of 25% bonus share F.Y.2003-04(BS2060-61) 643,500,000 Issue of 20% bonus share F.Y.2004-05(BS2061-62) 772,200,000 Issue of 20% bonus share F.Y.2005-06(BS2062-63) 810,810,000 Issue of 5% bonus share F.Y.2006-07(BS2063-64) 1,013,512,500 Issue of 25% bonus share F.Y.2007-08(BS2064-65) 1,216,215,000 Issue of 20% bonus share F.Y.2008-09(BS2065-66) 1,600,000,000 Issue of 31.56% bonus share F.Y.2009-10(BS2066-67) 2,000,000,000 Issue of 25% bonus share F.Y.2010-11(BS2067-68) 2,400,000,000 Issue of 20% bonus share 7. The bank has been able to pay uninterrupted annual dividends (including Bonus share) to its shareholders for last fourteen years starting year 1997/98. The pattern of payment for last five years is shown in table below: Particulars F/Y 2063/64 F/Y 2064/65 F/Y 2065/66 F/Y 2066/67 F/Y 2067/68 Cash Dividend on Share Capital (%) 15 25 12 11.84 16.84 Bonus Share on Share Capital (%) 25 20 31.56 25 20 Total Return on Share Capital(%) 40 45 43.56 36.84 36.84