Civil Bank has well established itself in the past 10 years and has stepped into another decade of growth and expansion.
--BY MANISHA BALAMI
The past decade has been a momentous period for Civil Bank Limited. Going through several ups and downs, the commercial bank, which was established in 2010, has emerged as a stable banking entity as reflected by several indicators of its balance sheets. According to Govinda Gurung, CEO of Civil Bank, micro, small and medium enterprises (MSMEs), retail, agriculture, tourism and other productive sectors are the areas of current focus for extending credit for the bank.
The bank has been able to meet the new paid-up capital requirement set by the central bank in 2015 without much problems. For this, Civil Bank went into merger and acquisitions (M&As) with five financial institutions, namely, Axis Development Bank, Civil Merchant Finance, International Leasing and Finance Company, Unique Finance and Hama Finance over the past five years. The new paid-up capital requirement of Rs 8 billion was ultimately met in mid-2018 with the bank issuing bonus and rights shares to its shareholders. According to Gurung, the M&As have been instrumental for Civil Bank in terms of expanding its presence, increasing capital base, strengthening human resources to developing synergy in providing modern banking services to its customers.
Currently, the bank has deposits totaling Rs 78.28 billion while its credit portfolio stands at Rs 72.24 billion (as of February 17, 2020). The bank which has a customer base of over 550,000 has been providing services through its countrywide network of 114 branches, six extension counters and 89 ATM outlets and digital/online delivery channels. Similarly, the bank has been providing remittances throughout the country via its branches and a remit outsourcing network comprising of more than 12,000 agents. “We have also developed correspondence relationships with international banks which makes it easier for us to carry out international transactions,” says Gurung.
Meanwhile, the bank has successfully tamed the non-performing assets (NPA) over the last few years. In FY2015/16, the bank’s NPA was 4.49 percent which has been reduced to 1.9 percent in mid-July 2020.The NPA of the bank has further dropped to 1.7 percent by the end of the first half of the current fiscal year. “In the last four years, our focus has been on upgrading the quality of loans and recovery of bad debts,” says Gurung, adding, “We are working in a way so that our NPA will come down to one percent by the end of the current fiscal year.”
Gurung considers the top-line growth as one of the major achievements of the bank during the first half of the current fiscal year. In the last 3-4 years, the volume of growth was slow as the bank primarily focused more on improvement of quality of loans and investments and recovery of debts while also facing the problems created by the recurring shortage of investible liquidity in the market which had made it more difficult and challenging for many banks to achieve top line-growth. Similarly, limited number of branch network and delivery channels were also among the reasons for slower volume growth and business expansion in the past few years. “As we have opened a number of branches across the country in the last couple of years expanding presence in 42 districts along with the addition of digital service delivery channels and also the liquidity situation of the country has vastly improved, our business volume has grown in leaps and bounds which is a significant achievement for us this year,” he says.
In the last seven months of the current fiscal year, Civil Bank’s growth in terms of percentile figure has been significant. The bank’s deposit and loan growth has been above the banking industry average growth. The growth of deposits in the commercial banking sector since mid-July averaged 8.49 percent while Gurung claims that Civil Bank’s deposit has grown by 30.17 percent in the same period. “Similarly, the growth of loans in the sector averages 14.19 percent and our growth is at 32.47 percent,” he says. He considers constant improvement in work culture, processes, policies, manuals and guidelines as the major factors that have helped the bank to achieve the business growth.
A Focus on Digitalisation
While the Nepali financial sector is becoming more digitised with each passing day, Civil Bank has also given high priority to digitalisation of its work processes and services. “The improvement in office automation and digitalisation has vastly improved the internal processing thereby enhancing the efficiency and quality of our products and services delivery,” says Gurung, adding, “For instance, adoption of the electronic document management system has helped us to massively improve the loan processes and documentations offering the customers a hassle-free credit services.”
Digitalisation has played an important role to bring changes at Civil Bank. According to Gurung, the bank had deployed 1,019 staff to handle 350,000 clients with around Rs 44 billion in loans and Rs 47 billion in deposits just a year and half ago. Today, only 953 staff are able to efficiently and effectively handle 550,000 clients with Rs 72 billion in loans and Rs 78 billion in deposits. “This shows that we have effectively managed the growing number of clients with fewer human resources even though the customer volume and transaction have increased. Our operating cost has also reduced, productivity has improved and this is primarily because of the efficiency brought by digitalisation,” he expresses.
In this digital transformation process, the bank has been organising campaigns for cashless/digital payment solution to make the lives of customers easier. It has recently launched a cashless transaction campaign to promote digital payment systems in Nepal with payment of tempo (auto rickshaw) fare through QR Code from Kamalamai Municipality, Sindhuli which was inaugurated by NRB Governor Maha Prasad Adhikari. Under this, the bank provides a QR code to tempo drivers and customers can pay their fares using their smartphones. Not only in Kathmandu and other large cities, Civil Bank has introduced such digital payment system to rural areas from east to west such as Hilihang, Yangbarak, Rabi, Phidim of Panchthar district to Musikot of Rukum to places of inner Terai such as Pakahamainpur and Sunabarshi. Through the campaigns, the bank is also making people aware about the digital payment and its ease, efficiency and safety.
Facing the Covid-19 Crisis
Like other banks and financial institutions, Civil Bank has also faced the challenges posed by the Covid-19 pandemic. The four-month long countrywide lockdown and prohibitory orders hampered the bank to operate smoothly and the pandemic-induced economic slowdown impacted its business. But with the gradual economic recovery after the lifting of restrictions by the government, the bank is seeing growth again.
According to Gurung, during the initial days of the lockdown, there were difficulties in closely communicating with customers of various sectors affected by the pandemic to help them revive. So Civil Bank prioritised the use of digital means while also strictly following health safety guidelines. The bank introduced the queue management system enabling customers to book their queue for banking services via SMS. Taking its digital banking services a step further, the bank commenced its online account opening facility during the lockdown.
The pandemic erected a mountain of challenges to maintain business growth and profitability. “Our growth and profitability are directly proportional to the economic activities in the country and purchasing capacity of the general public. The economic slowdown has indeed affected all the trade, industry and service sectors consequently impacting our banking businesses too,” mentions Gurung. He says that the bank has been contributing to the economic recovery by supporting its customers by reducing lending rates, extending loans and deferring the loan repayment deadline as per the directives of the central bank.
In the meantime, the bank’s long-term network expansion plans have also been affected by the pandemic which it plans to restart soon.
In the last one year, the bank has also given attention to the safety and wellbeing of its staff. “As long as staff are physically and mentally fit, we can operate smoothly. During the lockdown, we communicated with them through digital platforms and tried to help them immediately if they faced any difficulty,” informs Gurung. Being optimistic and having a positive mindset towards customer service, understanding the customer need/difficulties and trying to resolve them the best possible way were the emphasis of the bank’s top management while facing the crisis.
Products and Services
Civil Bank has a wide range of deposit and credit products to cater to the different types of banking needs of its clients. In the deposit side, the bank has schemes including Premium Savings, Surakshya Bachat Khata, Hamro Bachat Khata, Civil Samman Bachat Khata, Civil Annuity Deposit Scheme, Nepali Bachat Khata, Mero Bachat Khata, Remit Saving Account, Amma Buwa Bachat Khata, Kishor Bachat Khata, Platinum Savings Account, Gold Savings Account, Silver Savings Account, Nari Bachat Khata, Laganikartako Khata, Naya Bachat Khata, Sansthapak Bachat Khata, Chandra Surya Bachat Khata and Civil Bank Salary Plus Account. The bank has been offering 2.51 percent to 4.51 percent interest rates on savings. Likewise, depositors can get interest rates ranging from 5.50 percent to 7.51 percent on fixed deposits.
Meanwhile, the bank has credit products for SMEs, corporate, retail and micro lending. Civil Bank is one of the banking institutions in Nepal involved in micro banking directly; it has a separate micro enterprise banking division to provide concessional and collateral-free micro/deprived sector loans.
Open for Merger
Past M&As have helped Civil Bank to mostly strengthen its capital base. “Now, we are looking for the partners to bring business synergy. If the merger is beneficial for all the stakeholders of the bank, and can help minimise the systemic risks and contributes to the stability of the overall financial system, then Civil Bank is open for merger,” states Gurung. He says that the bank is currently in talks with possible partners for a merger, which could be with commercial banks or development banks (class ‘B’ institutions).
In-line with its mission to become a responsible corporate citizen, the bank has been giving high priority to corporate social responsibility (CSR) since its inception; it spends one percent of its profit in CSR every year as mandated by the central bank. While engaging in such activities, the bank gives importance to areas including environment and education. Plantations of 300 trees in the Pashupati area two years ago to restore the clean green environment and supporting three orphan children of Bal Mandir at Paanchkhal to provide them free education bearing their all living expenses from class one until Secondary Education Examination (SEE) are some of the notable CSR undertakings of the bank. From last year, the bank has also prioritised the health sector for CSR activities.