Distributable profits dip amidst rising impairment charges for commercial banks

KATHMANDU: The commercial banks have recently released their unaudited financial statements for the fiscal year 2022-23. According to the details, the total earnings of commercial banks reached 70 billion rupees during the last year. While the net profit of most banks has shown an increase compared to the previous year, the distributable profit has declined due to higher impairment charges, bad loans, and regulatory reserves.

One particular bank stands out with the highest net profit, having achieved a remarkable 76.70 percent growth compared to the previous financial year, Nabil Bank resulting in a net profit of 7.52 billion rupees. The distributable profit for this bank was 3.96 billion rupees in the preceding year.

This bank generated interest income of 46.38 billion rupees, incurred interest expenses of 28.39 billion rupees, and earned a net interest income of 17.98 billion rupees. The improvement charge for the bank rose from 1.11 billion rupees in the previous fiscal year to 3.888 billion rupees in the last one. Additionally, the bank recorded an operating profit of 11.1 billion rupees and paid 3.25 billion rupees in taxes to the government.

Despite the increase in net profit, the bank’s bad loans have risen almost 100 percent compared to the previous year, with bad debt reaching 3.20 percent at the end of the last financial year. The bank also faces pressure to provide loans in the upcoming financial year due to a high loan-to-deposit ratio of 87.68 percent. Moreover, the bank has kept its spread rate at 4.99 percent, exceeding the Nepal Rastra Bank’s limit of 4 percent by utilizing the merger and acquisition facility.

The second-ranked Global IME Bank reported a net profit of 7.25 billion rupees, reflecting a growth of 46.26 percent from the previous fiscal year.

Similarly, the government-owned Rastriya Banijya Bank secured the third position with a net profit of 4.91 billion rupees, compared to 4 billion 29 crores in the previous year. However, the bad loans for this bank increased by 0.86 percentage points to reach 2.95 percent.

NIC Asia Bank achieved a net profit of 4.21 billion rupees, indicating a growth of 10.35 percent from the previous year.

Nepal Investment Mega Bank, ranking fifth, recorded a profit of 4.29 billion rupees, with a distributable profit of 2.6 billion. However, the bank’s bad debt reached 4.35 percent.

Standard Chartered Bank’s net profit for the last fiscal year was 3.52 billion rupees, representing a 56.27 percent increase compared to the previous year.

Similarly, NMB Bank reported a net profit of 3.41 billion rupees and a distributable profit of 1.55 billion rupees, with bad loans at 2.72 percent.

Nepal Bank Limited’s net profit rose by 16.70 percent compared to the previous financial year, reaching 3.41 billion rupees.

Himalayan Bank Limited, after acquiring Civil Bank, achieved a net profit of 3.26 billion rupees, a 37.96 percent increase from the previous year.

Everest Bank showed attractive indicators with a net profit of 3.39 billion rupees, up by 36.85 percent from the preceding financial year.

Machhapuchhre Bank improved its performance, achieving a net profit of 1.85 billion rupees, a 10 percent increase from the previous year.

Laxmi Sunrise Bank Limited, following an integrated business model, reported a net profit of 2.26 billion rupees, a 49.45 percent rise compared to the corresponding period of the previous year.

On the other hand, Prime Commercial Bank’s net profit decreased to 2.26 billion rupees from 2.78 billion rupees in the previous fiscal year, while Kumari Bank Limited also experienced a decline in net profit by 24.14 percent.

Overall, despite various challenges faced by the banks, some have managed to show remarkable growth and improved financial performance in the fiscal year 2022-23.