Private commercial banks in the country earned Rs 11.01 billion as profit in 2009/10. This is the rise of just Rs 960 million as compared to the earning figures reported by the banks in 2008/09. But there may be a slight change in the profit in 2009/10 as some of the banks are yet to publicize their financial details. [break]
“Profit earned by banks have been affected as the flow of loans couldn´t increase,” said Surendra Bhandari, chief executive officer of Siddhartha Bank Limited. He further added that profit of the banks didn´t go down remarkably as the flow of loan was satisfactory in the first half of 2009/10.
Last year, 23 commercial banks had disbursed loans worth Rs 395 billion, Rs 393 billion of which was disbursed before October-November last year.
“There has been no significant improvement in profit this year because of limited loans,” Bhandari said.
Commercial banks in the country had disbursed Rs 324 billion on loans in 2008/09.
The profit of commercial banks increased by only Rs 964.5 in 2009/10 from Rs 10.04 that the banks had earned in 2008/09.
Nepal Investment Bank Ltd earned a profit of Rs 1.2 billion in 2009/10, according to sources. This is the rise of 31 percent from what the bank had earned a year earlier. Similarly, Nabil Bank saw its profit go up by 11 percent to Rs 1.15 billion in 2009/10.
Standard Chartered Bank Nepal earned Rs 1.1 billion as profit in 2009/10, a rise of 7 percent compared to figures of previous fiscal year. Likewise, Nepal Bangladesh Bank saw its profit rise by 59 percent to Rs 1.02 billion.
Bankers say profit of commercial banks was affected in 2009/10 due to rise in interest rates and decline in loan disbursement because of liquidity shortage.
“The expenses of banks increased because we jacked up interest rates on deposits about two months before we increased our lending rates,” said Suman Joshi, chief executive officer of Laxmi Bank Limited.
Laxmi Bank earned Rs 330 million as profit in the last fiscal year.
Bhandari, however, said squeeze in spread rate wasn´t the reason behind decline in banks´ profit in the last fiscal year. He said profit of banks was affected because of the banks´ failure in increasing their lending due to cash-deposit ratio limit.
“There hasn´t been much change in spread rates as claimed by many. It´s the slowdown in lending that has to be blamed,” he added.
The average spread rate of banks is four percent at present. As of last fiscal year, state-owned banks and 27 commercial banks disbursed Rs 465 billion on loans, up from Rs 384 billion that the banks had lent a year earlier.
Related story
NRB to provide daily liquidity facility to BFIs amid ongoing li...
