Last month, ICRA Nepal reaffirmed the issuer rating of AAA to Standard Chartered Bank Nepal Ltd (SCBNL).

The rating is considered to have the highest degree of safety regarding the timely servicing of financial obligations. Such issuers carry the lowest credit risk. This is the third year in a row that the bank has received the coveted rating. Vidya Kumar, the chief financial officer of SCBNL, shared with The Himalayan Times her insights on the significance of the rating, challenges and opportunities, and the way ahead.

Excerpts:

You (SCBNL) are the only AAA rated bank in Nepal reaffirmed for the third year in a row. Please elaborate on its significance.

Being ICRANP-IR AAA rated for the third time in a row is a significant milestone for the bank. It establishes the emphasis that the bank continues to place on maintaining a sustained strong financial risk profile in terms of robust capitalisation, strong liquidity and healthy asset performance over time. The rating this year has added importance, considering the challenges and headwinds posed by the wide-reaching COVID 19 pandemic.

It reaffirms SCBNL as the bank with highest degree of financial safety regarding timely servicing of financial obligations and with lowest credit risk.

SCBNL is the only international bank in Nepal. Is the AAA rating because of your international status or your local operations?

The rating is highly reflective of the sound financial risk profile of the local franchise and operations.

As a player in the Nepal market, SCBNL like all Class A banks must adhere to all local regulations including those related to capital, liquidity and provisioning norms.

SCBNL's healthy deposit profile along with adequate profitability indicators give comfort to the issued rating. On the other hand, the ownership profile helps the bank with parental support in terms of Standard Chartered Group's oversight, management support and best practices in operations of the bank.

This is the third year in a row that the bank has received the coveted rating. To what do you attribute the consistency?

The consistency in rating is reflective of the bank's internal policies and governance standards in terms of liquidity and capital management, established underwriting norms, strong risk management practices and experienced management team. The strong capital position reflected in capital adequacy ratios, robust liquidity and funding quality and the healthy asset book have all supported the consistency in rating. These have additionally allowed the bank to mount a good response to the challenges of the pandemic.

How challenging it is for the CFO of an international bank to operate in a market like Nepal. What are the upsides?

For a CFO of an international bank, the major priorities are to track and ensure performance of the bank is based on strategy and commitments made to the board and shareholders all the while ensuring adherence and compliance with local regulatory framework and internal policies and standards given Nepal market distinctions. In other markets, a AAA rating suggests ample access to cheaper funding options in the local market and such other advantages, however given the depth and readiness of the Nepal market, certain aspects like interest rate management and risk-based pricing pose a challenge in competitiveness.

Albeit given the internal governance standards, SCBNL is well positioned to face the inevitable reforms and changes that the market can expect in the future as liquidity and capital norms develop more towards international standards.

With the AAA rating, what are the future plans of SCBNL in Nepal?

SCBNL continues to focus on its commitment to our clients and the country at large in execution of strategic priorities for safe and sustainable returns, in building a strong balance sheet, optimising use of our capital and maximising returns to shareholders.

With digitisation and agile theme, how is Standard Chartered Bank Nepal planning to lead the market?

We are excited with the developments in the space in Nepal which has seen exponential increase in volumes of digital transactions in some areas. The bank has made significant progress on the digital offerings to the corporate clients in 2021. While this continues in 2022, we are in the process of complete integration in the offerings to our retail customers as well.

A version of this article appears in the print on February 18, 2022, of The Himalayan Times.