KATHMANDU, July 29: The state-owned Rastriya Banijya Bank (RBB) Ltd earned over Rs 4.5 billion in net profit in the last fiscal year 2018/19. The government-owned bank's annual net profit surged to over Rs 4.5 billion in the last fiscal year, up from Rs 4.33 billion in the previous fiscal year 2017/18. The bank is yet to make public its fourth quarterly financial results.
Kiran Kumar Shrestha, the CEO of RBB, told Republica that the surge in the net profit of the bank was driven largely by the growth in its overall business.
The bank, which was rescued by the government from its deathbed some fifteen years ago, has been making a steady progress in recent years. With a net profit of over Rs 4.5 billion, the government-owned bank is likely to maintain its top profit-earner status in the Nepali banking sector.
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“Our Business growth has remained robust. There has been a continuous growth in our loans which has propelled the net profit to over Rs 4.5 billion,” said RBB CEO Shrestha.
He said that the write-back of the loans as well as earnings from treasury business has also helped to drive the profit.
While other banks are struggling to meet the shortage of lendable fund, RBB has been increasing its lending due to its comfortable liquidity position. As the government-owned bank mobilizes a large chunk of government deposits, the bank has not yet faced any shortage of funds to disburse as loans.
While most commercial banks' credit to core capital deposit (CCD) ratio hit the regulatory limit of 80 percent, the state-owned bank's low CCD ratio enabled it to expand its business when its other peers have to slow down investments in the lack of lendable fund.
“As many borrowers were turned back by other banks in the lack of lendable fund, they came to get the loans from the government-owned bank which is not only in comfortable liquidity position, but also offers probably the lowest interest rate,” added Shrestha.
