Bank employees’ salaries surge by 7.39pc in Nepal, Nabil Bank leads in bonus allocation

KATHMANDU: Salaries and benefits of employees working in Nepal’s commercial banks surged by 7.39 percent in the fiscal year 2024/25 (2081/82 BS), reflecting both rising operational costs in the banking sector and continued profitability across financial institutions. According to the latest data published by Nepal Rastra Bank (NRB), commercial banks collectively spent NPR 60.03 billion on staff salaries and allowances, compared to NPR 55.89 billion in the previous fiscal year.

The increment of NPR 4.13 billion in total compensation marks one of the sharpest annual increases in recent years, even as some banks have cut costs amid merger adjustments, digitalization, and competitive pressures.

Salary Trends: 16 Banks Raised Staff Costs, 4 Cut Expenditure

Out of the 20 commercial banks currently operating in Nepal, 16 reported an increase in employee expenditure, while four banks reduced salary payouts during the review period.

Leading Increases: Laxmi Sunrise Bank Tops the List

Among them, Laxmi Sunrise Bank registered the sharpest rise in staff costs, with employee expenses growing by 27.10 percent, reaching NPR 4.80 billion compared to NPR 3.78 billion in the previous year.

Other banks with notable increases included:

Himalayan Bank — 24% rise to NPR 3.40 billion

Agricultural Development Bank — 21.75% rise to NPR 4.26 billion

Machhapuchchhre Bank — 13.76% rise to NPR 2.16 billion

Prime Bank — 13.14% rise to NPR 1.70 billion

NMB Bank — 12.22% rise to NPR 2.57 billion

Meanwhile, the country’s largest private sector lender, Nabil Bank, increased staff expenses by 10.94 percent to NPR 4.07 billion. Siddhartha Bank posted a 9.62 percent rise to NPR 2.68 billion, while Citizens Bank lifted spending by 7.34 percent to NPR 1.77 billion.

In the state-owned segment, Rastriya Banijya Bank (RBB) raised salary costs by 2.02 percent to NPR 4.50 billion, while Nepal Bank Ltd. increased by 2.29 percent to NPR 3.67 billion.

Salary Cuts: NIC Asia Leads Reductions

Contrastingly, four banks reduced their staff expenditure:

NIC Asia Bank — the sharpest cut at 9.72 percent, lowering payouts to NPR 3.52 billion

Kumari Bank — down 2.73 percent to NPR 3.86 billion

Prabhu Bank — down 1.63 percent to NPR 3.92 billion

Standard Chartered Bank Nepal — down 1.22 percent to NPR 1.04 billion

These reductions are linked to factors such as digital banking adoption, post-merger streamlining, and efforts to control rising operational costs.

Bonus Allocations: Over NPR 10.61 Billion Reserved for Employees

In addition to higher salaries, Nepal’s commercial banks collectively earmarked NPR 10.61 billion in employee bonuses for the fiscal year, up 9.72 percent from NPR 9.67 billion a year earlier.

Under the Bonus Act of Nepal, companies must allocate 10 percent of their net profits as staff bonuses. With banks remaining profitable despite sluggish credit demand and rising non-performing loans (NPLs), employee bonuses also saw significant growth.

Nabil Bank Leads in Bonus Payouts

Nabil Bank emerged as the top bonus allocator, distributing NPR 1.14 billion — a 5.61 percent increase from the NPR 1.08 billion allocated in the previous fiscal year.

Meanwhile, Nepal Bank registered the highest percentage growth, with its bonus pool jumping 87.54 percent to NPR 284 million from NPR 152 million a year earlier.

Other banks with notable increases:

Machhapuchchhre Bank — up 49.65% to NPR 327 million

Kumari Bank — up 47.15% to NPR 642 million

NMB Bank — up 40.44% to NPR 521 million

Laxmi Sunrise Bank — up 35.08% to NPR 640 million

Everest Bank — up 32.98% to NPR 827 million

NIMB (Nepal Investment Mega Bank) — up 30.90% to NPR 1.06 billion

Siddhartha Bank — up 15.52% to NPR 559 million

Agricultural Development Bank — up 10.46% to NPR 307 million

Government-owned Rastriya Banijya Bank also raised its bonus allocation by 2.91 percent to NPR 286 million.

Declines in Bonus Payouts: NIC Asia Again at Bottom

However, six banks reduced bonus allocations last fiscal year. NIC Asia Bank saw the steepest decline, cutting its employee bonus pool by a staggering 88.77 percent to just NPR 24 million.

Other declines included:

Himalayan Bank — down 48.43% to NPR 231 million

Citizens Bank — down 11.90% to NPR 204 million

Prabhu Bank — down 10.62% to NPR 700 million

Nepal SBI Bank — down 5.86% to NPR 301 million

Standard Chartered Bank Nepal — down 3.65% to NPR 506 million

Industry Insights: What Do These Trends Indicate?

The data paints a divergent picture in Nepal’s banking sector. While most banks increased employee benefits, some institutions — particularly those undergoing post-merger consolidations and profitability challenges — opted to reduce both salary expenditure and bonus allocations.

Rising Salary Pressure: With double-digit increments in some banks, total staff expenses are becoming a major component of operational costs. Analysts warn this could squeeze profitability, especially as loan growth slows.

Bonuses Reflect Profit Margins: Banks such as Nabil, Everest, and NIMB allocated substantial bonuses, underscoring strong profitability. In contrast, NIC Asia’s sharp reduction highlights declining earnings or tighter cost-control strategies.

Government Banks vs. Private Banks: While private sector banks showed aggressive growth in both salaries and bonuses, state-owned banks adopted a more conservative approach, raising costs marginally but still rewarding employees with higher incentives.

Investor Perspective: For foreign investors, salary increments of 7–27 percent and bonus growth near 10 percent reflect the sector’s profitability. However, such costs may raise concerns about long-term efficiency and productivity.

Broader Economic Context

The banking sector remains a pillar of Nepal’s economy, accounting for over 65 percent of financial intermediation. However, the sector is under pressure due to:

-Sluggish credit demand amid economic slowdown

-Rising non-performing loans (NPLs)

-Liquidity fluctuations

-Pressure from digital transformation and fintech competition

Despite these challenges, sustained salary increments and bonus payouts indicate resilience, with banks balancing employee retention and productivity against cost efficiency.

Globally, banks in India, Singapore, and South Korea are also increasing salary incentives to retain skilled talent amid fintech disruption. Nepal’s trend aligns with this global shift, though analysts argue productivity-linked pay structures must be introduced to ensure sustainability.

Key Takeaways

-Total staff salaries rose 7.39% to NPR 60.03 billion in FY 2024/25.

–Laxmi Sunrise Bank recorded the sharpest salary growth (+27.10%).

–NIC Asia Bank posted the steepest decline in both salaries (-9.72%) and bonuses (-88.77%).

–Nabil Bank emerged as the largest bonus allocator (NPR 1.14 billion).

–Nepal Bank recorded the sharpest bonus growth (+87.54%).

-Total staff bonuses across banks rose 9.72% to NPR 10.61 billion.

The numbers highlight contrasting strategies among Nepal’s commercial banks — some rewarding staff amid profitability, while others tighten expenditure to brace for economic uncertainties.