Traditional Banks - Nepal

Nepal

In 2024, the projected Net Interest Income in the Traditional Banks market market in Nepal is expected to reach US$2.36bn.
Traditional Retail Banking dominates this market segment, with a projected market volume of US$1.27bn in the same year.
Looking ahead, the Net Interest Income is forecasted to exhibit an annual growth rate (CAGR 2024-2029) of 4.99%, resulting in a market volume of US$3.01bn by 2029.
In a global comparison, China is expected to generate the highest amount of Net Interest Income, reaching US$3,869.0bn in 2024.
Nepal's traditional banking market is experiencing a shift towards digital banking solutions to cater to the growing demand for convenient and accessible financial services.

Key regions: Germany, United Kingdom, France, Japan, China

Definition:

The Traditional Retail and Commercial Banks 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. 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.
The traditional banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. These banks have a long history of serving customers and have established relationships and a deep understanding of the financial needs of their communities. They offer a wide range of services and are able to provide personalized advice and support to their customers.
In this market, banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. However, they also face challenges, such as increased competition and changing customer preferences, which are driving the need for continuous improvement and adaptation.
Overall, the traditional retail and commercial banking market provides a wide range of financial services to both individuals and businesses through established, trusted channels and continues to play a vital role in the financial landscape.

Structure:

The market consists of two segments:
- The Traditional Retail Banks market refers to financial services provided to individual consumers (e.g., personal loans, savings and checking accounts, credit cards, mortgages).
- The Traditional Commercial Banks market refers to financial services provided to businesses, including small and large enterprises (loans, lines of credit, other financial products specifically designed for businesses).

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, 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 and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

Amidst the picturesque landscapes and rich cultural heritage of Nepal, the Traditional Banks market is experiencing significant developments.

Customer preferences: Customers in Nepal tend to prioritize personalized services and strong relationships with their banks, leading to a preference for traditional banking institutions over digital alternatives. The trust and reliability associated with brick-and-mortar banks play a crucial role in shaping customer preferences in the country.

Trends in the market: One notable trend in the Traditional Banks market in Nepal is the gradual adoption of technology to enhance operational efficiency and customer service. While traditional banking methods remain prevalent, banks are increasingly integrating digital solutions to cater to evolving customer needs and improve overall service delivery. This hybrid approach is reflective of the market's attempt to strike a balance between tradition and innovation.

Local special circumstances: Nepal's unique geographical landscape, characterized by mountainous terrain and remote areas, presents challenges for the banking sector in terms of accessibility and outreach. Traditional banks play a vital role in extending financial services to rural communities, where digital banking infrastructure may be limited. This local circumstance underscores the continued relevance and importance of traditional banks in Nepal's financial ecosystem.

Underlying macroeconomic factors: The stability of Nepal's economy and the steady growth of key sectors such as tourism and remittances contribute to a favorable environment for the Traditional Banks market. As the economy expands, traditional banks are well-positioned to support the financial needs of businesses and individuals, further driving the market's growth. Additionally, regulatory frameworks that promote the soundness and transparency of traditional banks enhance trust among customers and investors, fostering a positive outlook for the market.

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.