Laxmi Capital News
Citizens Bank is an income stock company

Citizens Bank International Ltd wasestablished in the year 2007 as the 20th commercial bank of Nepal. The bank'sownership structure indicates 51.29 percent promoters and 48.71 percent publicshareholding.  Citizens Bank is also in line to issue a Further PublicOffering (FPO) of 463,826 shares which is subject to approval from SecuritiesBoard of Nepal (Sebon) to limit its promoter shareholding to 51 percent. Theexecutive team of Citizens Bank is led by Mr. Rajan Singh Bhandari as ChiefExecutive Officer (CEO) and Ganesh Raj Pokharel as Deputy CEO. 

According to the third quarterly reportpublished by the bank, the paid-up capital has reached Rs. 8 billion markmeeting the minimum capital requirement stated by Nepal Rastra Bank. Also, amarginal growth in the bank's reserve is seen as compared to the past year. Interms of its core business, the deposits collected have increased by 8.45percent amounting to Rs. 60.25 billion. Loans/ advances given out by the bankshows a healthier growth of 16.78 percent as the amount has increased to Rs. 55billion from last year's Rs. 47 billion. 

As the growth in loans is comparativelyhigher, the Credit to Deposit (CD) ratio has tightened to 78.41 percent. As itis approaching the limit of 80 percent as imposed by Nepal Rastra bank (NRB),the bank has a lower margin to give out more loans in the near future unless itis able to grow its deposit in the current quarter. 

The provision for possible losses hasincreased slightly by 5.72 percent to Rs. 245 million. However, the bank hasalso been able to write back provisions amounting to Rs. 403 million until thethird quarter, which indicates a better performance in terms of improvingcredit quality. Further, Non-Performing Loan (NPL) is at 1.46 percent whichindicates the bank has controlled exposure to risky assets.

On a more positive note, net interestincome, as per the third quarterly report, has increased to Rs. 1.46 billionwhich is a 16.89 percent increment compared to the previous year. Net profithas also increased by 14.39 percent and is just over Rs. 1 billion. Followingthe recent increase in the banks paid up capital, Earning per Share (EPS) isRs. 16.76. With the recent downtrend seen in the market as a whole, the Priceto Earning (PE) ratio is at 14.91 which is lower than the industry average of18. This indicates that the stock is a better value for purchasing in thesecondary market as compared to most of its counterparts. 

The bank has also been giving outdividends regularly in terms of bonus shares or cash for the last 5 years, thelatest being about 17 percent dividend in the fiscal year 16/17. Hence, thestock can be categorized as income stock and is suitable for investors seekingregular returns. Last traded price of the bank stands at Rs. 250. 

Source:MyRepublica, 6th June 2018                                

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