September 20: ICRA Nepal, the first credit rating agency in Nepal, has assigned an issuer rating of ICRA NP issuer rating triple A to Standard Chartered Bank Nepal Limited. The bank said in a statement that the rating is considered to have the highest degree of safety regarding timely servicing of financial obligations.
According to the bank, such issuers carry the lowest credit risk. The issuer rating is only an opinion on the general creditworthiness of the rated entity and not specific to a particular debt instrument, the statement further said.
“The rating assignment factors in the bank’s strong parentage (70 percent subsidiary of Standard Chartered Group1 ) along with the existence of a technical services agreement (TSA) with SCB-UK. This ensures strong parental support, the Group’s oversight and deployment of best practices in SCB Nepal’s operations,” the statement said.
The rating is further supported by the bank’s healthy deposit profile with high share of low-cost current and savings accounts (CASA, at 55 percent in mid-July 2019 compared to 43 percent for the industry).
This, according to the bank, reflects the lowest cost of funds among private sector players (4.17 percent for FY2019, 6.48 percent for the industry) and hence remains its key competitive strength.
The bank said ICRA Nepal also takes comfort from the bank’s strong risk management practices and underwriting controls, resulting in superior asset quality indicators with low nonperforming loans (NPLs) of 0.15 percent as of mid-July 2019 .
The bank’s established track record (since 1987) and healthy capitalisation profile (capital to risk weighted assets ratio - CRAR of 20% as of mid-July 2019) also support the rating action.