Most Banks Maintain CCAR Above 9%

Banking Khabar/ Most commercial banks in Nepal have maintained a CCAR of above 9%. According to the recently published Financial Indicators Report by Nepal Rastra Bank (NRB), 18 commercial banks operating in the country by the end of the last fiscal year have the capacity to distribute dividends.

However, two commercial banks have a capital adequacy ratio (CCAR) below 9%, disqualifying them from distributing dividends. As per NRB regulations, if a bank fails to maintain the required CCAR in any given month, it is prohibited from distributing dividends.

The NRB, in its Integrated Directive 2080 (amended on Ashoj 30, 2080), has mandated that by the end of the fiscal year 2080/81, all commercial banks must increase their capital adequacy framework by 0.5% i.e. banks must maintain CCAR of 9%.

NRB calculates the CCAR by analysing and reviewing all types of bank capital. The capital is categorised into primary capital (CCAR) and supplementary capital (CAR).

According to the NRB’s Capital Adequacy Framework 2015, commercial banks must maintain a CCAR of 9%, which includes an additional 0.5% buffer on top of the previous 8.5%. Furthermore, a 2.5% capital conservation buffer (supplementary capital or CAR) must be maintained, bringing the total capital requirement to 11%. Among which the primary capital is mandatory.

As of the end of the last fiscal year, the average CCAR of the 20 commercial banks operating in Nepal was 10.10%, while the average CAR stood at 12.84%. The banks have successfully maintained the supplementary capital (CAR).

The average spread rate was 3.98%, and the credit-deposit (CD) ratio was 78.65%. This indicates that banks are in a strong position to expand credit, though those with lower CCAR may need to exercise caution in doing so. The Agricultural Development Bank has the highest CCAR.

The bank maintained a strong position with a CCAR of 11.78% and a CAR of 13.44% by the end of the last fiscal year.

Nepal Bank’s CCAR stood at 10.95%, with a CAR of 13.62%, while Rastriya Banijya Bank reported a CCAR of 10.95% and a CAR of 13.42%.

Among private sector banks, Nabil Bank’s CCAR was 9.64%, with a CAR of 12.41%, and Nepal Investment Mega Bank’s CCAR was 10.84%, with a CAR of 13.67%.

NMB Bank reported a CCAR of 9.70% and a CAR of 12.82%, Prabhu Bank’s CCAR was 9.89% with a CAR of 13.55%, and Sanima Bank maintained a CCAR of 10.22% with a CAR of 13.66%.

Standard Chartered Bank had the highest figures, with a CCAR of 14.36% and a CAR of 17.16%. Himalayan Bank’s CCAR and CAR were 9.04% and 12.04%, respectively. Nepal SBI Bank’s CCAR was 10.10%, with a CAR of 13.28%.

Everest Bank reported a CCAR of 10.87% and a CAR of 12.61%, while NIC Asia Bank’s CCAR was 8.44%, with a CAR of 11.18%.

Siddhartha Bank’s CCAR was 9.65%, with a CAR of 12.15%, and Global IME Bank reported a CCAR of 10.44%, with a CAR of 12.53%.

Citizens Bank maintained a CCAR of 9.27% and a CAR of 13.13%, while Prime Commercial Bank’s CCAR was 10.77%, with a CAR of 11.90%.

Machhapuchchhre Bank’s CCAR stood at 9.35%, with a CAR of 13.83%. Kumari Bank reported a CCAR of 8.56% and a CAR of 12.26%, while Laxmi Sunrise Bank’s CCAR was 10.27%, with a CAR of 13.11%.