ICRA rates first debt instrument in Nepal

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) November 26, 2009 -- ICRA Assigns First International Rating



Kolkata, November 24th: In the first ever rating exercise overseas by an Indian credit rating agency, ICRA has assigned an issuer rating of ‘[Nepal] A’ (pronounced Nepal A) to Nepal Investment Bank Limited (NIBL).

‘[Nepal] A’ is the adequate-credit-quality rating relative to other domestic issuers. The rating for issuers in Nepal is assigned on an eight-point scale developed specifically for that country, and ranges from ‘[Nepal] AAA’ to ‘[Nepal] D’. This rating scale ranks the relative default risk associated with issuers in Nepal.

“ICRA’s venturing into Nepal and its increasing footprint beyond the Indian borders underscore the growing international acceptance of an agency that is already a leading provider of credit rating and investment information services in India”, said Mr P K Choudhury, Vice Chairman and Group CEO of ICRA Ltd.. Significantly, ICRA has also helped in establishing rating agencies in several other countries, like CRAB in Bangladesh, CRC in Kuwait, and BCRA in Bulgaria. The rating assigned to NIBL is ICRA’s first-ever rating in the overseas market.

The rating assigned to NIBL factors in the bank’s good market position in Nepal, its track record of having been able to grow its balance sheet while maintaining a stable earning profile, and the experienced management team that it has.

NIBL’s capitalisation levels are adequate, but could need strengthening if its asset quality were to deteriorate or if the pace of its expansion were to increase significantly, ICRA has said.

NIBL is currently facing, the extent of overcrowding in Nepal’s financial market, and other systemic issues that make projections on the liquidity position and asset quality of banks in Nepal a difficult exercise, ICRA added.

Bank Profile

Nepal Investment Bank Limited, formerly Nepal Indosuez Bank Limited, was established in 1986 as a joint venture (JV) between Nepalese and French partners. In April 2002, the French partner, Credit Agricole Indosuez, which had a 50% shareholding in the JV, sold off its entire stake in the bank to a group consisting of bankers, professionals, industrialists and businessman, all based in Nepal.

NIBL, the largest private sector bank in Nepal, has a countrywide presence via 32 branches and 60 ATMs; the number of ATMs would be 150 if the teller machines of consortium members were also included. As of mid-July 2009, NIBL has a market share of about 8% in terms of deposit base, and 10% of total advances. The bank reported a net profit of Nepalese Rs. (NPR) 0.9 billion in fiscal 2008-09 over an asset base of NPR 53.0 billion as of mid-July 2009, as against a net profit of NPR Rs. 0.7 billion in fiscal 2007-08 over an asset base of NPR 38.9 billion as of mid-July 2008.
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