Banking - Nepal

Nepal

In 2024, the projected Net Interest Income in the Banking market of Nepal is expected to reach US$2,503.00m.
The market is currently dominated by Traditional Banks, with a projected market volume of US$2,355.00m in the same year.
Looking ahead, the Net Interest Income is anticipated to exhibit an annual growth rate (CAGR 2024-2029) of 5.35%, resulting in a market volume of US$3,248.00m by 2029.
When compared globally, it is noteworthy that China is expected to generate the highest Net Interest Income, amounting to US$4,332.0bn in 2024.
Nepal's banking market is experiencing a growing demand for digital banking services as customers seek convenience and accessibility.

Key regions: United States, China, Japan, Brazil, United Kingdom

Definition:

The Banking market refers to the financial services sector providing financial products and services to individuals and businesses. Retail banking focuses on offering financial services to individual consumers, such as personal loans, savings and checking accounts, credit cards, and mortgages. Commercial banking, on the other hand, provides financial services to small and large businesses, including loans, lines of credit, and other financial products designed specifically for businesses.

Structure:

The market consists of two segments:
- The Traditional Banking market refers to the financial services sector that provides a range of financial products and services to individuals and businesses through store-based branches and other traditional channels.
- The Digital Banking market refers to the emerging market for digital-only banks that offer financial services through online and mobile platforms.

The market data comprises Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the Retail & Commercial banking market, creating opportunities for new entrants, and forcing existing players to adapt.
Key players in this market are companies such as the Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

Amidst the picturesque Himalayan mountains lies Nepal, a country with a unique and evolving banking market.

Customer preferences: Customers in Nepal are increasingly gravitating towards digital banking solutions, driven by the convenience and accessibility they offer. Mobile banking and online transactions are becoming more popular among the tech-savvy population, leading to a shift in traditional banking practices.

Trends in the market: One notable trend in the Nepalese banking market is the growing presence of fintech companies offering innovative financial services. These fintech firms are challenging traditional banks by providing tailored solutions to meet the evolving needs of customers. Additionally, the market is witnessing an expansion of microfinance institutions, catering to the financial requirements of underserved communities.

Local special circumstances: Nepal's banking sector is influenced by its unique geographical landscape, with many remote and mountainous regions posing challenges for traditional brick-and-mortar banks to establish a physical presence. As a result, digital banking solutions are gaining traction as they enable financial institutions to reach a wider customer base efficiently.

Underlying macroeconomic factors: The economic growth and increasing urbanization in Nepal are contributing to the development of the banking sector. As more people move to urban areas and seek modern financial services, banks are compelled to adapt and innovate to meet the changing demands of the population. Additionally, regulatory reforms and government initiatives aimed at promoting financial inclusion are shaping the landscape of the banking market in Nepal.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.