KATHMANDU, August 29: The net profit of 23 commercial banks has crossed the billion-mark in the last Fiscal Year 2016/17. Six commercial banks are the new members to the club of commercial banks with net profit of over Rs 1 billion.
In the previous fiscal year, only 17 commercial banks had earned more than a billion rupees in net profit.
Although the banking industry is suffering from lendable fund crunch amid mismatch between deposit and loan growths, almost all commercial banks have registered impressive growth in their net profit. The banking industry has raked in billions in net profit despite shortage of lendable fund for many commercial banks.
The huge surge in net profit despite shortage of lendable fund is attributed to the relaxation on calculation of prudential lending limit ratio, i.e. 80 percent of credit to core capital-cum-deposit (CCD) ratio, by the Nepal Rastra Bank (NRB) during the review of its monetary policy. The policy relaxation that allowed banks to deduct 50 percent of their productive sector loans in the CCD ratio calculation made it possible for lendable-fund-starved banks to float loans without adding up fresh deposits.
Banks are now told to bring back their CCD ratio to 80 percent by mid-October.
The total lending of 28 commercial banks rose by 24.69 percent to Rs 1,723 billion in the last fiscal year while their deposit grew only by 18.61 percent to Rs 2,093 billion. Interest income is a major source of earning for the banks.
According to the compiled annual financial results, the net profit of 28 commercial banks jumped by 30.53 percent in the last fiscal year. The cumulative net profit of 28 commercial banks jumped to Rs 45.26 billion in the last fiscal year, up from Rs 35.76 billion in the previous Fiscal Year 2015/16.
Nepal Credit and Commerce Bank Ltd, Machhapuchchhre Bank Ltd, Sanima Bank Ltd, Bank of Kathmandu Lumbini Ltd and Sunrise Bank Ltd are the commercial banks who have made annual net profit of over Rs 1 billion for the first time.
Similarly, Laxmi Bank Ltd has also registered net profit of Rs 1 billion in the last fiscal year, joining the 'billion-rupees-profit club' for the first time.
Nabil Bank Ltd, like in previous Fiscal Year 2015/16, earned the highest net profit in the last Fiscal Year 2016/17. The bank registered net profit of Rs 3.62 billion.
Nabil, along with Nepal Investment Bank Ltd and two state-owned commercial banks -- Nepal Bank Ltd and Rastriya Banijya Bank Ltd -- are the banks whose annual net profit exceeded Rs 3 billion. This is the first occasion that any commercial bank in Nepal earned net profit of over Rs 3 billion.
Agricultural Development Bank Ltd, Himalayan Bank Ltd, and Global IME Bank Ltd are the banks who registered annual net profit of more than Rs 2 billion in the last fiscal year.
Everest Bank Ltd fell short of Rs 20 million to make the net profit of Rs 2 billion.
The net profit of Prabhu Bank Ltd, Nepal SBI Bank Ltd, NMB Bank Ltd and Prime Commercial Bank Ltd also jumped over Rs 1 billion. NIC Asia Bank Ltd, Siddhartha Bank Ltd and Standard Chartered Bank Nepal Ltd are other commercial banks who made impressive net profit above Rs 1 billion.
Nepal Bangladesh Bank Ltd and Citizens Bank International Ltd are two other banks who have retained their positions in the billion-rupees-profit club in the last fiscal year too.
While the net profit of Mega Bank Ltd, Janata Bank Ltd, Century Bank Ltd, and Civil Bank Ltd went up in the last fiscal year compared to the previous year, Kumari Bank Ltd observed a decline in its net profit.
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