Fundamental Analysis of Top 10 Banks Nepal Q2 2082/83

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.

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)

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

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.