Commercial Banks' Profits Rise 11.51% in Mid-Fiscal Year Despite Economic Headwinds

Kathmandu. The profits of commercial banks have increased by 11.51 percent. This improvement in profit was observed according to the financial statements of the banks up to the second quarter of the current fiscal year 2082/83.   

During this period of the current fiscal year, banks earned a profit amounting to NPR 30.5939 billion. In the same period last fiscal year, i.e., 2081/82, the banks had earned a total profit of NPR 27.4369 billion.  

Despite the sluggishness in the economy, rising non-performing loans (NPLs), and contraction in credit flow, banks have succeeded in maintaining double-digit growth in their profits. According to the details, out of 20 commercial banks, 11 banks saw an increase in profit, while eight banks experienced a decline, and one bank remained in loss.  

Nabil Bank Leads in Profitability
Nabil Bank appeared in the leading position based on profit during this period. The bank earned a net profit of NPR 4.7596 billion by the end of Poush. This profit for Nabil is 46.71 percent higher compared to last year.  

The bank showed encouraging performance in its first report following the appointment of new leadership a short time ago. Nirvana Chaudhary was appointed as the Chairman of the bank from the bank's 41st Annual General Meeting, while former CEO Anil Keshari Shah joined as a director.  

Global IME Bank is in second place. Global IME earned a profit of NPR 3.2521 billion during this period. This is 6.50 percent higher than the profit earned in the same period last fiscal year. Managing the larger structure post-merger and maintaining profit stability appears to be the main achievement for this bank.  

Kumari Bank's Miraculous Improvement

Kumari Bank showed the highest percentage improvement in profit during this period. The bank, which earned only NPR 275.7 million in profit by the end of Poush last year, reached NPR 2.72 billion this time, marking an 886.50 percent growth.  

The improvement in profit is seen as a result of the halt in the growth of non-performing loans, leading to a reduction in the amount set aside for impairment charges. With this, Kumari has climbed to the third position in the list of highest profit earners.  

Two State-Owned Banks Increase Influence

State-owned banks also performed very well during this period. Nepal Bank increased its profit by 183.04 percent, and Rastriya Banijya Bank by 132.04 percent.  

It appears that the successful recovery of old bad loans and cost-cutting measures implemented by these banks positively impacted their profits.  

Besides these, Siddhartha Bank improved its profit by 150 percent to reach NPR 1.32 billion. Machhapuchhre Bank increased profit by 25.25 percent, Sanima Bank by 16.67, Nepal SBI Bank by 14.56 percent, Prime Commercial Bank by 9.27 percent, and Everest Bank by 2.04 percent.  

Profit Decreased for Eight Banks, One Bank in Loss

Out of 20 commercial banks, 8 banks saw a decline in net profit. Citizens Bank International saw a contraction of 45.78 percent, Nepal Investment Mega Bank by 43.05 percent, and Prabhu Bank by 24.08 percent. It appears that the profit of these banks decreased due to the need for additional provisioning during this period.  

Similarly, Agriculture Development Bank lost 26.12 percent, NMB Bank 17.17 percent, Standard Chartered Bank 16.29 percent, Himalayan Bank 14.89 percent, and NIC Asia Bank lost 13.54 percent.   

During this period, Laxmi Sunrise Bank is in loss. The bank, which was in a profit of NPR 1.16 billion in the same period last year, went into a loss of NPR 273.6 million in the six months of the current fiscal year. The bank reached a loss position because it had to set aside NPR 4.47 billion for impairment charges.  

These details indicate that banks are still facing challenges from non-performing loans, a decrease in credit demand, and the interest rate spread. Due to the economic slowdown, borrowers are unable to repay principal and interest on time, leading to an increase in banks' non-performing assets. Consequently, banks are having to spend a large portion of their profits on provisioning.  

Although liquidity in the market is sufficient, credit flow remains slow as new investment areas are not opening up. The tightening policy of the central bank has put pressure on the main source of bank income as the spread rate continues to narrow.  

Net Profit Details of Commercial Banks