--By Gaurav Aryal

 

Bank of Kathmandu Limited (BOK) is geared up to increase its customer base to 500,000 in next three to four years and one million in the next 10 years. Presently the bank has created a customer base of 300,000 customers during its two decades of operation. Ajay Shrestha, CEO of BOK says that every single person is a potential client for the bank as the bank has been offering products targeting young to old customers.

 

He expects that increasing the customer base would prove a successful strategy to gain edge over competition. Shrestha shares that  just 30 per cent of the population has been availing deposits services, 70 per cent still has to be brought under the service bracket. 

 

He says that the banking industry is growing at an annual growth rate of around 14 per cent, with 13 per cent in loan and 10 per cent in deposit. The year-on-year growth has brought up the need for market expansion for each of the banks.  This makes the market highly competitive. However, he says that the competition as of now has not turned unhealthy.

 

Two Decades of Operation

BOK has successfully completed its two decades of operation in Nepal. During this period the bank has established itself as a private sector bank with the highest public shareholding. Shrestha, says that the bank has a unique structure as public holds 58 per cent of the ownership while the promoters own the remaining 42 per cent stakes.

 

It has been providing services to its client through its 50 branches, including those in Kathmandu valley, 58 ATM terminals and nine extension counters across the nation. “We aim to serve the larger size of the population,” says Shrestha while adding that the bank has its presence in remote areas such as Jumla, Khandbari, Dadeldhura and Dailekh. “BOK is predominantly active in the western Nepal. Our first branch outside the capital city was established in Nepalgunj. We were the only commercial bank there at that time. So, we had advantage to sustain and establish our presence.” The bank has 12 branches in the western part of the country.

 

At the end of the fiscal year 2012/13 BOK earned a net profit of Rs 617.1 million and its total deposits summed to Rs 27.70 billion and loans and advances Rs 23.05 billion.

 

Exploring the Market

BOK sees prospects of market growth in the national economic development. Shrestha says that the Nepali economy is still immature and growing with lot of sectors yet unexplored. He believes that the growth can bring a lot of benefits to the banking industry. He sees prospects of investing in commercial agriculture, education, health, hydroelectricity and tourism sectors.

 

Along with the focus on new areas of investment, BOK also has strategies to localise its products and services. The bank has products and services that suit customers belonging to every walk of life. “Though such strategies may take time for market development, it creates long term benefit to the company. We believe it is a sustainable approach to service delivery,” says Shrestha.

 

Merger for BOK

When the entire banking industry is gripped by the merger mania, BOK also thinks it is an appropriate option for making a strong presence in the market. Shrestha believes that merger opens up possibilities for capital expansion. He further adds that BOK has not remained indifferent to the merger; however, he did not disclose information about the plan in detail.

 

Amid the ever-increasing competition Shrestha says that the need for the capital base increment is being felt. Rather than a bank increasing capital base alone, merger could be the best way to raise the capital, he says.

 

Mobile Banking

BOK is one of the partners of Hello Paisa mobile banking services. This service is mainly used for bill payment and transfer of money while its usages can be further increased. The bank has 10,000 mobile banking customers, which is 5 per cent of the total customer base of mobile banking in Nepal. Shrestha says that due to higher technology acceptance, there is huge possibility of mobile banking in Nepal. He also feels the need to increase the mobile phone and financial literacy along with the range of products and services that can be used through mobile banking.

 

CSR Activities

As a part of corporate social responsibilities (CSR), BOK used to earlier focus on activities related to environment, education and health sector. Analysing the real impact of those activities, the bank has recently decided to involve in the banking sector. Since 2010, the bank has invested heavily in financial literacy programmes as a part of CSR. The bank has carried out numerous training programmes about banking services to school children in collaboration with Save the Children. Similarly, the bank has been undertaking various literacy programmes related to farmer banking, foreign employment loan, etc.