Kathmandu. The national level leading ‘B’ class Muktinath Bikas Bank has signed a preliminary memorandum of understanding (MoU) to acquire Sindhu Bikas Bank (Bagmati Province) and Janaki Finance Company (Madhes Province).
FY 2082. According to the fourth quarter of FY83, both the institutions are under financial pressure. In particular, Janaki Finance’s non-performing loans are very high and the net worth per share is negative, while Sindhu Bikas Bank is also in a negative position in distributable profit.
Looking at the capital and reserve fund position, Janaki Finance has Rs 69.04 crore and Sindhu Bikas Bank has Rs 55.74 crore. Janaki has reserves of Rs 43.09 crore and Sindhu has Rs 21.92 crore in reserve funds. However, due to past losses, the accumulated profit and distributable profit of both the institutions are negative by a large number. Janaki Finance has a negative net loss of Rs 1.12 billion while Sindhu Bikas Bank has a negative net loss of Rs 23.66 crore. Due to the high accumulated loss, the net worth per share of Janaki Finance has also come down to Rs 0.89. Meanwhile, the net worth per share of Sindhu Bikas Bank remains at Rs 96.87.
In terms of business expansion and income, Sindhu Bikas Bank collected deposits of Rs 5.41 billion and extended loans of Rs 3.32 billion in the fourth quarter. During the period, the bank earned a net profit of Rs 10 lakh with a net interest income of Rs 14.35 crore.
On the other hand, Janaki Finance collected deposits of Rs 2.26 billion and extended loans of Rs 2.11 billion with net interest income of Rs 17.15 crore and net profit of Rs 93 lakh. On the same basis, Sindhu’s earnings per share stood at Rs 18 crore and Janaki’s was Rs 1.35 crore.
The most worrisome aspect of this financial statement is the level of bad loans. Janaki Finance’s non-performing loans have reached a very risky level of 61.55 percent, while Sindhu Bikas Bank has 5.92 percent. Even if Muktinath Bikas Bank expands its network by acquiring two institutions, recovery of bad loans will remain the main challenge.
