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NIC Asia Bank (NICA) — Company Deep Dive

Through FY 2022/23 NIC Asia produced ROE above 16% and gross NPA below 1%. From FY 2023/24 onwards, the financial profile has deteriorated sharply: gross NPL is now 8.85% (Bank) / 9.53% (Group), Bank-basis retained earnings stand at Rs. -13.66B, and a 2:1 rights issue is pending AGM approval. This report works through the five most recent annual reports, the Q3 FY 2025/26 quarterly, and the verified governance and capital-raise timeline.

May 10, 202618 min

The One-Paragraph Summary

Through FY 2022/23, NIC Asia Bank reported ROE of 16.39%, gross NPA of 0.88%, and net profit of Rs. 4.88B (NICA AR FY 2079/80). In FY 2023/24, gross NPA jumped to 3.45%, net profit fell to Rs. 0.70B, CAR fell to 11.03% (3 bps above the NRB 11% floor), and Bank-basis NFRS retained earnings turned negative at Rs. -2.53B (NICA AR FY 2080/81). As of the Q3 FY 2025/26 quarterly report (Chaitra 2082, dated April 2026): Bank gross NPL is 8.85% and Group gross NPL is 9.53%; 9-month net profit is Rs. 140M; Bank-basis retained earnings have fallen to Rs. -13.66B; and the loan book has been deliberately contracted to Rs. 201.34B from Rs. 265.3B at FY 2023/24 year-end (-24%). Two governance events: (1) on 3 November 2025 the board appointed Sujit Kumar Shakya — formerly Senior Deputy CEO of Nabil Bank — as new CEO (ShareSansar, 3 Nov 2025); and (2) in February 2026 NRB fined former Chairman Tulsi Ram Agrawal and former CEO Roshan Kumar Nyaupane Rs. 200,000 each under Section 100(2)(c) of the NRB Act 2058 for repeated directive non-compliance and improper financial-statement publication (The Himalayan Times; Radio Nepal, 17 Feb 2026). A 2:1 rights issue intended to raise ~Rs. 7.45B received NRB preliminary approval on 4 May 2026 and is awaiting AGM approval (ShareSansar, 4 May 2026).

Five-Year Annual + One-Quarter Scorecard

Annual data from NICA Annual Reports FY 2076/77–FY 2080/81. Q3 FY 2081/82 data extracted directly from Financial Report Chaitra 2082.pdf.

Metric FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 Q3 FY 2025/26
Net loans to customers — Bank (Rs. B) ~194 ~269 ~265 ~280 265.3 201.34
Net profit — Group (Rs. B) 3.10 3.27 4.30 4.88 0.70 0.140 (9M)
ROE % (Group) 19.26 17.09 16.83 16.39 2.38 (~0.7%, derived)
EPS (Rs.) 31.59 25.95 36.44 35.44 4.70 (~Rs. 1.25 ann.)
CAR — Bank (%) 13.50 12.80 13.35 13.36 11.03 (not extracted)
Gross NPA — Bank (%) <1 <1 <1 0.88 3.45 8.85
Gross NPL — Group (%) — — — — — 9.53
Net NPL — Bank (%) — — — — — 0.49
LLP / NPL — Bank (%) — — — — — 114.59
Cost of funds — Bank (%) — — — — — 4.24
Base rate — Bank (%) — — — — — 6.20
Interest spread — Bank (%) — — — — — 3.40
Share capital (Rs. B) — — — 14.92 14.92 14.92
Retained earnings — Bank, NFRS (Rs. B) +ve +ve +ve +ve -2.53 -13.66

Q3 FY 2025/26 line-level figures from Financial Report Chaitra 2082.pdf:

  • Loans and advances to customers — Bank: Rs. 201,343,299,152 (line 21).
  • Loans and advances to customers — Group: Rs. 221,070,011,841.
  • Share capital: Rs. 14,917,566,922 (line 46).
  • Retained earnings — Bank: Rs. -13,658,214,169 (line 48); Group: Rs. -13,764,614,522.
  • 9-month net profit: Rs. 140,324,168 (line 159).
  • Opening retained earnings on Shrawan 1, 2082 — Bank: Rs. -10,678,169,841; prior year: Rs. -2,666,972,173 (line 187).
  • Cost of funds (Bank): 4.24%; base rate 6.20%; interest spread 3.40% (lines 144, 146, 147).
  • Gross NPL Bank 8.85% / Group 9.53%; Net NPL Bank 0.49% / Group 1.24%; LLP/NPL Bank 114.59% (lines 141–143).

The NFRS 9 ECL Transition (Rs. 8.01B Bank-Basis)

Directly verifiable from the Q3 FY 2081/82 Statement of Changes in Equity:

Line item Amount (Bank, Rs.) Source
Opening retained earnings, Shrawan 1, 2082 (start of FY 2025/26) -10,678,169,841 Q3 FY 2081/82, line 187 (current year)
Opening retained earnings, Shrawan 1, 2081 (start of FY 2024/25) -2,666,972,173 Q3 FY 2081/82, line 187 (prior year)
Implied movement during FY 2024/25 -Rs. 8,011,197,668 derived
9M FY 2025/26 net profit +140,324,168 Q3 FY 2081/82, line 159
Closing retained earnings — Bank -13,658,214,169 Q3 FY 2081/82, line 48

The Rs. 8.01B FY 2024/25 retained-earnings movement is much larger than the year's operating result, consistent with an NFRS 9 ECL opening-equity adjustment under NRB's Expected Credit Loss Related Guideline-2024 (First Amendment) (NRB ECL Guideline PDF).

Capital Raise Timeline

Date Event Source
FY 2023/24 AGM Rs. 5B capital-raise authorisation NICA AR FY 2080/81 (general meeting resolutions)
FY 2024/25 (full year) Share capital frozen at Rs. 14.92B; no equity transaction NICA Q4 FY 2081/82 + Q3 FY 2081/82 (share capital line constant)
4 January 2026 Board approved 2:1 rights issue (~Rs. 7.45B) ShareSansar, 4 Jan 2026; Bittiya Post, 4 Jan 2026
4 May 2026 NRB preliminary approval for the 2:1 rights issue ShareSansar, 4 May 2026
Jestha 18, 2083 (~1 June 2026) AGM scheduled for rights-issue approval ShareHub Nepal

If subscribed in full, the 2:1 rights issue takes shares outstanding from 149.18M to ~223.77M (+50%).

Governance Timeline

Date Event Source
22 January 2025 NRB initially penalised NIC Asia for regulatory breaches; backdated FD findings reported Fiscal Nepal, 22 Jan 2025
September 2025 CEO Roshan Kumar Nyaupane resigned New Business Age
3 November 2025 Board appointed Sujit Kumar Shakya (ex-Senior Deputy CEO, Nabil Bank) as new CEO; four-year term ShareSansar, 3 Nov 2025; Fiscal Nepal, 3 Nov 2025
6/7 November 2025 Shakya assumed office (Kartik 20, 2082) ShareSansar, 7 Nov 2025
December 2025 Chairman Tulsi Ram Agrawal resigned, citing personal reasons, after NRB action against the bank NEPSE Trading; Insurance Khabar
December 2025 Ashok Kumar Agrawal appointed new Chairman (Listed as current Chair across multiple NICA-page profiles)
February 2026 NRB fined former Chairman Tulsi Ram Agrawal and former CEO Roshan Kumar Nyaupane Rs. 200,000 each, under Section 100(2)(c) of the NRB Act 2058. Stated reasons: repeated directive non-compliance; publishing financials in violation of NRB instructions. The Himalayan Times; Radio Nepal, 17 Feb 2026; Rising Nepal Daily

The January 2025 Fiscal Nepal coverage reports that NRB found NIC Asia paid above-market interest rates to directors, family members, and affiliated institutions via fixed-deposit accounts that were backdated, discovered in Q2 FY 2024/25; NRB directed refund of excess interest and issued warnings to former CEO Roshan Kumar Neupane, then-Chairman Tulsi Ram Agrawal, and directors Trilok Chandra Agrawal and Ram Chandra Sangai.

The FY 2023/24 Profit Collapse

Three reinforcing hits in a single year (figures from NICA AR FY 2080/81 and AR FY 2079/80):

  1. Interest-income reversal. In FY 2022/23, NICA recognised Rs. 38.37B in interest income on an accrual basis but only collected Rs. 32.02B in cash — a Rs. 6.35B accrued-but-uncollected interest gap, derivable from the AR FY 2079/80 cash flow statement reconciliation. When loans underlying that uncollected interest classified as NPA in FY 2023/24, the accrued interest had to be reversed.
  2. Provision charge. Total provisions rose from Rs. 6.36B to Rs. 10.70B — an incremental Rs. 4.34B charge in a single year (NICA AR FY 2080/81, Note 4.7 on impairment).
  3. NIM compression. Average-asset NIM fell sharply across consecutive ARs.

The Bull Case

The bull case requires all of the following:

  1. Rights issue completes. NRB preliminary approval received 4 May 2026; AGM scheduled Jestha 18, 2083 (~1 June 2026). If subscribed in full, capital infusion of ~Rs. 7.45B raises CAR meaningfully.
  2. Gross NPL peaks. As of Q3 FY 2081/82, Bank gross NPL is 8.85% on a loan book that has been deliberately contracted by ~24% from FY 2023/24 year-end. The denominator has shrunk; the absolute NPL stock is what matters for provisioning. Q4 FY 2081/82 (results expected July–September 2026) will be the first quarter substantially under CEO Shakya.
  3. NIM rebuilds when the bank can grow loans again. Bank cost of funds fell from 5.12% (year-ago Q3) to 4.24% (current Q3). The funding-cost easing is real; converting it to NIM requires growing the loan book, which requires CAR headroom.
  4. No further governance shocks.
  5. ECL stage migration stops worsening. Once loans currently in Stage 2 do not migrate further to Stage 3, the lifetime-ECL drag eases.

Illustrative arithmetic, 3–5 years out, post-rights issue (~224M shares; equity rebuilds toward Rs. ~32B): normalised ROE 12–14% → normalised net profit Rs. 3.8–4.5B → EPS Rs. 17–20. At 12x P/E, fair value Rs. 200–240. Current price Rs. 356.70 (ShareSansar, 8 May 2026) is above this illustrative range.

The Bear Case

1. Gross NPL is at 8.85% (Bank) / 9.53% (Group)

On the Q3 FY 2081/82 Bank loan book of Rs. 201.34B, 8.85% gross NPL = ~Rs. 17.8B in gross impaired loans. Net NPL of 0.49% (Bank) implies provisions of ~Rs. 16.8B against the gross NPL.

2. Capital-raise dilution

A 2:1 rights issue takes ordinary shares from 149.18M to ~223.77M — a 50% increase in the share count. Per-share earning power is structurally diluted on a larger denominator until ROE recovers materially.

3. Governance breach is regulator-confirmed

The February 2026 enforcement under Section 100(2)(c) of the NRB Act 2058 is a regulator-issued penalty against the named former Chairman and former CEO, not unverified reporting. The new Chairman Ashok Kumar Agrawal succeeded the resigning Tulsi Ram Agrawal within the same controlling group.

4. The NIM-CAR squeeze

Net loans to customers (Bank) fell from Rs. 218.43B (year-ago Q3) to Rs. 201.34B (current Q3) — a 7.8% YoY contraction at quarterly comparable basis. (Versus FY 2023/24 year-end Rs. 265.3B, the contraction is ~24%.) The reason for contraction is CAR protection. The cost is lost NII because RWA has to fall.

Valuation Framework

Sustainable-ROE / cost-of-equity P/B framework. Cost of equity assumed at 15%.

Current state (8 May 2026):

  • Share price: Rs. 356.70 (ShareSansar)
  • Bank book value per share = (share capital Rs. 14.92B + retained earnings -Rs. 13.66B + other reserves not extracted in this pass) / 149.18M shares → BV/share approximately Rs. 170–175 (rough).
  • P/B at Rs. 357 / Rs. ~173 ≈ 2.06x.

Scenario fair value, post-rights issue (~224M shares; equity rebuilds toward Rs. ~32B; BV/share ~Rs. 143):

Scenario Probability Normalised ROE Fair P/B at 15% CoE Fair value per share
Bear (NPL keeps rising; Stage-3 migration; further provisions) 30% 5% 0.33x Rs. 47
Base (rights issue completes, NPL peaks, credit rebuilds) 50% 10% 0.67x Rs. 96
Bull (NPL declines, NIM rebuilds, no governance recurrence) 20% 14% 0.93x Rs. 133
Probability-weighted — 9.3% 0.62x Rs. 89

The current Rs. 357 price embeds a recovery thesis significantly more aggressive than the verified data supports. Even applying a +50% large-bank premium and assuming ROE recovery to 14% with 14% CoE gives ~Rs. 215.

Key Variables to Monitor

Variable Q3 FY 2081/82 Watch for Risk
Gross NPL — Bank 8.85% Q4 FY 2081/82 disclosure If still rising → rights-issue proceeds absorbed by additional provisioning
Rights issue NRB preliminary approval 4 May 2026 AGM Jestha 18; subscription-period uptake Promoter non-subscription would dilute the controlling block
CAR — Bank (FY 2023/24: 11.03%; Q3 latest line not extracted) ≤ 11% → NRB asset-growth restrictions Forced contraction worsens NIM
Cost of funds — Bank 4.24% (vs. 5.12% YoY) Stable → translates to NIM Fast-falling system rates can hurt loan yields too
Net NPL — Bank 0.49% Material rise → underprovisioned book New impairment events reset the cycle
Stage-2 migration Not separately disclosed Q4 FY 2081/82 Stage-2 → Stage-3 = additional ECL

Sources

Primary financial data (NICA on-disk PDFs):

  • Annual Report FY 2019/20 (FY 2076/77)
  • Annual Report FY 2020/21 (FY 2077/78)
  • Annual Report FY 2021/22 (FY 2078/79)
  • Annual Report FY 2022/23 (FY 2079/80)
  • Annual Report FY 2023/24 (FY 2080/81)
  • Q3 FY 2025/26 quarterly (Chaitra 2082) — Financial Report Chaitra 2082.pdf. All Q3 FY 2025/26 figures in this report are extracted directly from this file.

All annual reports and quarterlies are publicly available on NIC Asia's investor-relations page (nicasiabank.com) and via NEPSE (nepalstock.com.np).

Regulatory:

  • Nepal Rastra Bank. Expected Credit Loss Related Guideline-2024 (First Amendment) — PDF.
  • NRB Act 2058 — Section 100(2)(c).

News:

Research date: May 10, 2026.

Disclaimer: This analysis is provided for informational purposes only and does not constitute investment advice. All investments involve risk, including potential loss of principal. Past performance is not indicative of future results. Readers should conduct their own due diligence and consult with qualified financial advisors before making any investment decisions.