Anil Gyawali is the chief executive officer of Nabil Bank Limited. He started his banking career 27 years ago with Nabil, where he served for 12 years before joining the Citi Group. He worked with Citi Group for 12 years, including six years in its New Dehli-based office. He rejoined Nabil a few months ago after working as CEO of Global Bank for three years. Gyawali talked to The Kathmandu Post on the current situation of the Nepali banking sector and Nabil’s financial performance. Exerpts

How was Nabil’s performance in the first quarter (Q1) of the current fiscal year?
Our operating profit before provisioning has grown by 22.6 percent which can be considered good given the current environment. We faced some stress in some loans which pushed our provisioning up. That’s why our net profit declined compared to same period last year. However, we have been able to recover about Rs 70 million as interest of loans whose quality had deteriorated. Therefore, we expect a good second quarter result. Our Q1 result does not incorporate recoveries made in the fourth month. Had the fourth month recoveries been adjusted in our Q1 balance-sheet, our profit would have gone up.

You mentioned that provisioning has surged. Can you tell us what types of loans were provisioned?
The entire economy is under stress and we are also one of its victims. Real estate loans are more vulnerable to defaults, so are other loans.

Despite a surplus liquidity situation, the Nepal Rastra Bank has not issued reversed repo as demanded by bankers. Do you think reverse repo has become a necessity?
It would be good if the central bank issues reverse repo to absorb surplus liquidity from the market. As result of surplus liquidity, banks have now started slashing their interest rates. NRB’s failure to issue repo on time last year resulted in such an acute liquidity crunch.

Banks’ lending growth seems to have slowed in Q1. Why is it so?
There are very little opportunities in the market currently. Therefore, lending has not grown despite a surplus liquidity situation. Low demand for loans is the main reason behind the slowdown in lending.

Where has Nabil’s mutual fund company plans reached?
We have applied to the Securities Board of Nepal (Sebon) for approval. I hope Sebon will endorse our proposal soon.

How is Nabil’s gold business doing?
The market is okay for gold. We import 50 kg gold at a time as per the central bank directive. We have been importing gold for ourselves and for other banks that have received demands from customers. We are also planning to import silver.

source: The Kathmandu Post,23 Nov 2011