Banks’ profits continue to surge despite shortage of lendable funds

Published On: May 11, 2019 09:04 AM NPT

KATHMANDU, May 11: Commercial banks have posted an impressive profit growth in the third quarter of the current fiscal year – FY2018/19 even when they have been grappling with shortage of lendable funds. 

According to unaudited financial results of 22 commercial banks who have published their consolidated statements of financial position for the third quarter, majority of them have registered growth in their profit after tax in the review period compared to the corresponding period of the last fiscal year – FY2017/18. 

Each of these commercial banks has made a net profit of above a billion rupees. Nabil Bank Ltd continues to maintain its top position in the list of commercial banks with highest profit earners among non-government owned institutions. The bank’s profit over the third quarter rose to Rs 3.19 billion from Rs 3.09 billion a year ago. 

Rastriya Banijya Bank Ltd, the state-owned bank which is the biggest profit earner, is yet to release its financial result for the third quarter of the current fiscal year. 

Despite a fall in the net profit, Nepal Bank Ltd is the second highest profit earner among those who have released their financial results. The government-owned bank reaped a net profit of Rs 2.25 billion, down from Rs 2.57 billion. Everest Bank Ltd (net profit of Rs 2.21 billion), Agricultural Development Bank Ltd (Rs 2.21 billion), Global IME Bank Ltd (Rs 1.87 billion) and Standard Chartered Bank Ltd (Rs 1.73 billion) are other commercial banks who have registered growths in their net profit in the review period.

Similarly, there was a rise in the net profits of NMB Bank Ltd (Rs 1.65 billion), Nepal SBI Bank Ltd (Rs1.6 billion), Siddhartha Bank ltd (Rs 1.59 billion), Prime Commercial Bank Ltd (1.55 billion), Citizens Bank International Ltd (Rs 1.07 billion), and Sanima Bank Ltd (Rs 1.58 billion). 

Those commercial banks whose net profit crossed a billion rupees for the first time by the third quarter are Prabhu Bank Ltd, Machhapuchchhre Bank Ltd, Sunrise Bank Ltd, Mega Bank Ltd, Bank of Kathmandu Ltd, Nepal Credit and Commercial Bank Ltd, Nepal Bangladesh Bank Ltd, Laxmi Bank Ltd and Kumari Bank Ltd.

While many raise concerns over rising profit of banking institutions even when the lendable fund is so tight and when interest rates are high, bankers say that their earnings are in line with the growth in the volume of their businesses. 

“I am not surprised by the financial results published so far. Banks’ capitals have increased by four times, their networks have increased with the branch expansion drive and their volumes of business, particularly deposits and loans, have also grown exponentially in recent time,” said Anil Keshary Shah, former president of Nepal Bankers’ Association. 

“The dimension of game has changed. When the profit has surged from the same volume, it would have been surprising. But, it’s not unusual for the banking sector’s profit to rise when their businesses and operations have grown,” he added.

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