Only half of the number had their profits increased as others faced intense problems in loan recovery; distributable profit declined to Rs 18.58 billion

KATHMANDU, Aug 5: The net profit earnings of commercial banks reportedly increased by 13.39 percent in the last fiscal year.

The unaudited financial reports unveiled by 20 commercial banks show that they were able to increase their annual profits by Rs 7.57 billion in FY 2023/24 compared to the amount that they earned in the previous FY.  Releasing the fourth quarterly report of the last fiscal year, the commercial banks reported a combined net profit of Rs 64.16 billion, up from Rs 56.58 billion in the previous FY.

In terms of the amount, Nabil Bank earned a net profit of Rs 7.06 billion and topped the list, marking a 10.23 percent growth in its financial portfolio. Global IME Bank was second in the list, earning profits of Rs 6.01 billion, while Nepal Investment Mega Bank secured third place with profits of Rs 5.19 billion. Machhapuchhre Bank recorded the lowest profit at Rs 1.25 billion for the fiscal year.

According to the financial reports, 10 commercial banks were successful in increasing their profits while the remaining 10 banks faced a decline in their profits. Prabhu Bank was the topmost gainer as its profits increased 16 fold. The bank’s profits jumped to Rs 4.48 billion from Rs 280.21 million.

Himalayan Bank, Laxmi Sunrise Bank, Kumari Bank, Everest Bank, Prime Commercial Bank and Nepal SBI Bank were also among the ones increasing their profit amount in the review period.

On the other hand, Sanima Bank, NMB Bank, NIC Asia Bank, Nepal Bank Limited, Standard Chartered Bank, Citizens Bank International, Global IME Bank, Siddhartha Bank, Machhapuchchhre Bank and Rastriya Banijya Bank witnessed their profits decline. These banks are reported to have suffered largely the loan recovery problems due to the ongoing economic slowdown.

In the last FY, many banks underwent the problems of having excess loanable funds, insufficient capital adequacy and increased non-performing loans along with a surge in bad debts.  

Despite posting a notable amount of net profits, their distributable profit declined in the review period. The average distributable profit of 20 commercial banks is only Rs 18.58 billion. In the last FY, Himalayan Bank, Kumari Bank and NIC Asia Bank faced negative distributable profits. These three banks including Nepal Investment Mega Bank had cumulative loss in their balance sheet and they are unable to provide dividend to their shareholders.   

 
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