Q2 2082/83 Banking Sector Snapshot
Nepal's commercial banking sector reports a sector average composite score of 66.18 — solidly in the Moderate (B) zone. The gap between the top-rated bank (NABIL at 75.95) and the bottom-rated (NBL at 59.95) is 16 points, revealing significant quality dispersion within the industry. Only 3 out of 10 banks score above 71 (B+ or higher), while 4 banks sit below the 62-point threshold.
Master Scorecard — All 10 Commercial Banks
The composite score integrates three dimensions: quality (fundamental health including profitability, asset quality, efficiency), growth (earnings momentum, balance sheet expansion), and value (valuation attractiveness relative to intrinsic worth). Here is the complete ranking for Q2 2082/83.
| Rank | Bank | Score | Grade | Growth | Value | EPS | NPL% |
|---|---|---|---|---|---|---|---|
| 1 | NABIL | 75.95 | A | 85.02 (A+) | 64.35 (B+) | 29.69 | 0.88 |
| 2 | EBL | 74.95 | B+ | 87.99 (A+) | 62.94 (B+) | 30.86 | 0.68 |
| 3 | SCB | 71.45 | B+ | 78.79 (A) | 56.78 (B) | 27.35 | 1.88 |
| 4 | SANIMA | 69.75 | B+ | 66.06 (B+) | 57.50 (B) | 20.48 | 1.33 |
| 5 | SBL | 63.00 | B | 71.88 (B+) | 57.77 (B) | 17.93 | 3.45 |
| 6 | SBI | 62.75 | B | — | — | 18.93 | 2.64 |
| 7 | KBL | 61.95 | B | — | 55.94 (B) | 20.74 | 6.92 |
| 8 | MBL | 61.70 | B | — | — | 16.73 | 4.25 |
| 9 | GBIME | 60.35 | B | — | — | 17.06 | 4.91 |
| 10 | NBL | 59.95 | B | — | 61.08 (B+) | 17.76 | 5.34 |
Tier 1: The Safe Zone (Score 71+)
NABIL Bank — Score 75.95 (A)
NABIL commands the top position with exceptional balance across all metrics. Its EPS of Rs 29.69 ranks second-highest while its ROE of 14.86% is the strongest among all 10 banks. The NPL of just 0.88% demonstrates outstanding asset quality, and its growth score of 85.02 (A+) confirms strong earnings momentum. The P/E of 18.4 is reasonable for a bank of this caliber. NABIL's strength lies in its consistency — no single metric is weak, making it the most reliable holding in Nepal's banking sector.
Strengths: Highest composite score, best ROE (14.86%), excellent growth (A+), very low NPL (0.88%), strong dividend yield (2.36%).
Weaknesses: Book value of Rs 214.49 is mid-range; P/B of 4.55 suggests moderate premium pricing.
Everest Bank Limited (EBL) — Score 74.95 (B+)
EBL nearly matches NABIL with the sector's highest EPS of Rs 30.86 and the lowest NPL of just 0.68%. Its growth score of 87.99 (A+) is the best in the entire sector, driven by consistent earnings expansion and strong balance sheet growth. The CD ratio of 80.19% shows aggressive but controlled lending. At Rs 670 per share, EBL is the most expensive stock by LTP but justified by its premium fundamentals.
Strengths: Highest EPS (30.86), lowest NPL (0.68%), best growth score (87.99, A+), highest book value among top 3 (235.04).
Weaknesses: Highest P/B ratio (5.62), lowest dividend yield among top 3 (2.02%), CD ratio near NRB regulatory limit.
Standard Chartered Bank Nepal (SCB) — Score 71.45 (B+)
SCB rounds out the safe zone with distinctive strengths in profitability efficiency. Its ROA of 1.70% is the highest in the sector, demonstrating superior asset utilization. The NIM of 4.72% is also sector-leading, reflecting strong pricing power. Its conservative CD ratio of 59.77% means SCB has significant room to expand lending. The dividend yield of 2.93% is attractive for income investors. The main concern is a relatively higher P/E of 22.95.
Strengths: Highest ROA (1.70%), highest NIM (4.72%), best dividend yield among top 3 (2.93%), conservative CD ratio with room to grow.
Weaknesses: Most expensive P/E (22.95), NPL of 1.88% is higher than NABIL and EBL, overly conservative lending limits growth potential.
Tier 2: The Moderate Zone (Score 62–70)
SANIMA Bank — Score 69.75 (B+)
SANIMA sits just below the safe zone threshold with solid fundamentals. EPS of Rs 20.48 is respectable, NPL of 1.33% is well-controlled, and a P/E of 16.18 makes it one of the more affordable quality options. The growth score of 66.06 (B+) indicates steady but not exceptional momentum. SANIMA represents the best risk-reward proposition for investors seeking quality at a reasonable price.
Strengths: Lowest P/E among quality banks (16.18), controlled NPL (1.33%), strong CD ratio (79.42%).
Weaknesses: Lower ROA (1.06%), moderate EPS compared to top 3, book value of 172.39 is smallest among mid-tier banks.
Siddhartha Bank (SBL) — Score 63.00 (B)
SBL delivers a moderate performance with EPS of Rs 17.93 and a reasonable P/E of 13.44. However, the NPL of 3.45% is a concern, more than triple NABIL's level. The growth score of 71.88 (B+) shows improving momentum. The CD ratio of 79.05% indicates aggressive lending which, combined with elevated NPL, suggests some loan quality risk. SBL is a hold rather than a buy at current levels.
Nepal SBI Bank (SBI) — Score 62.75 (B)
SBI, backed by State Bank of India, carries the security of strong parentage but reports middling fundamentals. EPS of Rs 18.93 is decent but the P/E of 22.55 makes it expensive for what it delivers. NPL of 2.64% is manageable but trending upward. The low dividend yield of 1.14% is the weakest in the sector for income-seeking investors.
Tier 3: The Caution Zone (Score Below 62)
| Bank | Score | EPS | NPL% | P/E | ROE% | Key Concern |
|---|---|---|---|---|---|---|
| KBL | 61.95 | 20.74 | 6.92 | 10.59 | 14.56 | Extreme NPL — highest in sector |
| MBL | 61.70 | 16.73 | 4.25 | 12.23 | 10.78 | Above-average NPL, low ROA |
| GBIME | 60.35 | 17.06 | 4.91 | 13.44 | 9.88 | High NPL, weak ROE |
| NBL | 59.95 | 17.76 | 5.34 | 7.67 | 6.76 | Lowest ROE, high NPL, poor efficiency |
KBL presents a paradox: it has the second-highest ROE (14.56%) and strong NIM (4.84%) but the worst NPL at 6.92%. This suggests aggressive lending generates returns but at the cost of deteriorating loan quality. The low P/E of 10.59 reflects the market's discount for credit risk. KBL's dividend yield of 6.54% is exceptional but may not be sustainable if NPL provisions increase.
NBL scores lowest at 59.95 with the weakest ROE of just 6.76% despite having the highest book value (Rs 262.43). This mismatch between capital base and returns indicates severe efficiency problems. The P/E of 7.67 is the cheapest in the sector — a potential deep value play but only for investors with high risk tolerance and a long time horizon.
Overall Sector Health Assessment
Sector Verdict: Cautiously Positive
Nepal's commercial banking sector shows a healthy top tier (NABIL, EBL, SCB) with composite scores above 71 and NPLs below 2%. The mid-tier (SANIMA, SBL, SBI) is stable but lacks exceptional catalysts. The bottom tier (KBL, MBL, GBIME, NBL) faces structural asset quality challenges with NPLs ranging from 4.25% to 6.92%. The sector average composite score of 66.18 places Nepal's banking industry firmly in the Moderate zone with scope for improvement as the economy grows.
The sector's average EPS of Rs 21.75 and average ROE of 11.33% indicate decent profitability overall, but the widening NPL gap between top and bottom banks signals a potential credit bifurcation that investors must monitor closely in coming quarters.
Disclaimer: This analysis uses Q2 2082/83 financial data. Scores and metrics may change with subsequent quarters. This is educational content and does not constitute investment advice. Consult a licensed financial advisor before making investment decisions.