Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal Bank Limited (NBL) reported a sharp rise in net profit in the second quarter of the current fiscal year, primarily driven by a steep decline in loan loss provisioning, even as core income indicators weakened and distributable profit remained in the red.
By the end of the second quarter (mid-January), the bank’s net profit surged 183.04% year-on-year to Rs 1.3048 billion, up from Rs 461 million recorded in the same period last fiscal year.
The key driver behind the profit jump was a significant reduction in provisions. Loan loss provisioning dropped from Rs 2.5274 billion in the comparable period last year to Rs 479.9 million this year, directly boosting bottom-line performance.
However, the bank’s core earnings showed pressure. Net interest income declined 3.97%, while net fee and commission income fell 17.16%. As a result, total operating income decreased 1.59% during the review period. Despite this, operating profit soared 394.64%, largely due to the reduced provisioning burden.
Despite the improved net profit figure, the bank’s distributable profit remains negative, standing at Rs 914.9 million in deficit as of mid-January. Consequently, distributable earnings per share (EPS) is negative at Rs 12.45.
On the performance side, earnings per share (EPS) rose sharply by Rs 11.49 to reach Rs 17.76, while net worth per share stands at Rs 262.43. The bank’s price-earnings (P/E) ratio is reported at 13.57 times.
Nepal Bank, with a paid-up capital of Rs 14.694 billion, recorded a 4.12% increase in reserves over the past six months. During the same period, deposits grew 9.87%, while loans and advances expanded 4.44%, indicating moderate credit growth compared to deposit mobilization.
The latest financials show that while headline profitability has improved significantly due to accounting adjustments in provisioning, underlying income streams remain under strain, and the negative distributable profit position continues to weigh on dividend prospects.
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