Unaudited financial results of 30 commercial banks in the first quarter, compiled by Sanima Bank, shows the average net profit of commercial banks jumped by 48.16 percent in the first quarter that ended on mid-September. The accumulated net profit of 29 commercial banks, except NMB Bank Ltd, climbed up to Rs 6.43 billion, up from Rs 4.34 billion in the corresponding period of the last fiscal year 2014/15.
Most of the banks reported growth in their net profit in the review period.
Nabil Bank Ltd, Rastriya Banijya Bank Ltd, Nepal Bank Ltd, Nepal Investment Bank Ltd (NIBL) and Everest Bank Ltd (EBL) were the top five profit earners in the first quarter. They made net profit of Rs 653.51 million, Rs 603.96 million, Rs 444.37 million, Rs 423.83 million and Rs 363.7 million, respectively. Similarly, Standard Chartered Bank Nepal Ltd (Rs 345.25 million), Himalayan Bank Ltd (Rs 345.25 million), Global IME Bank Nepal Ltd (Rs 313.57 million), Nepal SBI Bank (Rs 302.07 million) and Agricultural Development Bank Ltd (Rs 288.68 million) are the other banks in the Top Ten list.
However, five banks saw their net profit fall in the first quarter of the current fiscal year compared to the net profit of the corresponding period of the last fiscal year. Net profit of RBBL, Standard Chartered, Everest Bank, Nepal Investment Bank Ltd and Machhapuchhre Bank Nepal Ltd fell by Rs 4.53 million, Rs 27.44 million, Rs 67.48 million, Rs 17.23 million and Rs 69.86 million, respectively, to Rs 345.25 million, Rs 363.7 million, Rs 423.83 million, Rs 173.12 million and Rs 603.96 million.
Banks, who were on the red zone in the previous fiscal year, have also posted net profit in the review quarter. Prabhu Bank Ltd and Grand Bank Nepal Ltd posted net profit of Rs 261.7 million and Rs 16.66 million, respectively, in the review period. They had reported net loss in the corresponding period of previous fiscal year.
However, many bankers say that the net profit alone does not reflect the actual performance of financial institutions. "The net profit has gone up significantly. However, we should look the operating profit before provisioning (OPBP) to get the real picture. The OPBP indicator shows how much businesses a bank has generated in a given period while the net profit also includes the provisioning or write back amount that a bank makes in the review period," Bhuvan Dahal, CEO of Sanima Bank Ltd, said. "If we look at average OPBP of the first quarter, we can conclude that the banks have made just a modest growth in the review period," he added.
The jump in profit of most of the banks can be attributed to the write back of the amount that they had provisioned in the previous quarters.
Financial results of 29 commercial banks shows their operating profit before provisioning increased by 16 percent to Rs 9.66 billion in the first quarter.
Bankers, however, are worried about deterioration of the performance of banks in the next quarter amid ongoing political tensions in Tarai districts and subsequent Indian blockade. "The unrest was just starting at the end of the first quarter so there was not much impact in the financial statements of the banks. The current volatile situation, however, is likely to make impact on balance sheet of banks in the coming quarter. Deterioration in performance due to the current voltaic situation can crimp profits," added Dahal.
Related story
Lending slows as banks focus on recovery of loans at fiscal yea...
