Agricultural Development Bank's NPLs exceed regulatory limit, reports loss of Rs 880 million

Published On: November 3, 2023 06:00 PM NPT By: Republica | @RepublicaNepal

KATHMANDU, Nov 3: The Agricultural Development Bank has surpassed the prescribed limit of non-performing loans (NPLs) of 5 percent. As per the financial statement for the first quarter of the current fiscal year released by the bank, the NPLs have reached 5.33 percent of the total loans.

Nepal Rastra Bank has set a maximum limit of 5 percent of MPLs for commercial banks. The increase in NPLs can be attributed to the bank's challenges in collecting loan principal and interest from borrowers in a timely manner. In the first quarter of the previous year, the bank's NPLs stood at 2.38 percent.

Along with the NPLs of the bank, the loan loss provision (impairment charge) has increased rapidly. In the first quarter of the last fiscal year, this amount was Rs 784.8 million, but in the first quarter of this year, it has reached Rs 2.16 billion. After having to make a large amount of loan loss provision, the bank has gone into financial losses.

During the first quarter of the current fiscal year (up to mid-October), the Agricultural Development Bank has incurred a loss of Rs 880 million. In contrast, during the first quarter of the previous fiscal year, the bank had reported a profit of Rs 220 million. The bank's net interest income has generally increased.

In the first quarter of the last fiscal year, the net interest income was Rs 1.83 billion, but in the first quarter of this year, it has reached Rs 2.6 billion. Other financial indicators of the bank have also declined. The bank's earnings per share have turned negative to Rs 28, whereas in the first quarter of the last year, it was positive at Rs 2.

Similarly, the net worth per share of the bank has fallen to Rs 206.17. Bank base rate is 10.38 percent. In the first quarter of the last financial year, this rate reached 9.83 percent. An increase in base rate means an increase in bank interest for borrowers. The average deposit and loan interest rate difference (spread rate) of the bank is 3.82 percent.