Nepse’s Rating: Four Key Banks in Group ‘Z’

Even esteemed commercial banks, known for their financial transparency and stringent adherence to regulatory guidelines, find themselves among the list of worst performers in Nepal’s financial landscape. The Nepal Stock Exchange (Nepse) has classified four commercial banks – Agricultural Development Bank Ltd, Nepal Investment Mega Bank Ltd, Kumari Bank Ltd, and Prabhu Bank Ltd – in Group ‘Z’, indicating concerning financial standing, performance, and governance.

Out of the 20 commercial banks operating in the country, only eight have managed to secure a spot in Group ‘A’ by Nepse, highlighting the severity of the situation. Nepse’s classification extends beyond commercial banks, encompassing various sectors listed on the bourse.

A total of 31 companies have secured a place in Group ‘A’, which comprises eight commercial banks, seven development banks, one finance company, six microfinance institutions, and three hydropower companies. Notable entities such as Nepal Reinsurance Company Ltd, Himalayan Distillery, and Nepal Telecom stand alongside banking institutions in this distinguished category.

Among the successful development banks are Garima, Lumbini, and Mahalaxmi, while microfinance institutions like Chhimek and NIC Asia shine in Group ‘A’. The inclusion of hydropower giants like Butwal Power and Chilime Hydropower adds further depth to this elite list.

Nepse’s classification extends beyond Group ‘A’, with 35 companies listed in Class ‘B’, 70 in Class ‘G’, and 135 in Class ‘Z’. However, Nepse assures companies that they can request a review of their classification within 35 days by providing substantiated evidence.

The criteria for classification, as outlined by Nepse, emphasizes factors such as paid-up capital, profitability over fiscal years, credit ratings, dividend distribution, and adherence to annual general meeting schedules.