Development banks earn Rs 3.43 billion in net profit in H1; Three institutions still in loss

KATHMANDU: Nepal’s development banking sector reported a strong earnings rebound in the first half of the current fiscal year, with total net profit crossing Rs 3.43 billion, although three institutions remain in the red.

According to second-quarter financial statements for FY 2025/26 (2082/83 BS), a total of 16 development banks collectively earned Rs 3.43 billion in net profit by mid-January. This marks a 34.43 percent year-on-year increase, equivalent to a rise of Rs 879.7 million, compared to Rs 2.55 billion in net earnings recorded in the same period last fiscal year.

The growth indicates improving credit performance, better interest income, and gradual recovery in regional banking operations despite ongoing liquidity and asset-quality pressures in the broader financial system.

Miteri Development Bank Records Highest Growth Rate

Miteri Development Bank posted the highest percentage growth in profitability. Its net profit surged 120.25 percent to Rs 57.0 million, up from Rs 25.9 million in the corresponding period last year.

Muktinath Development Bank Leads in Total Profit

In absolute earnings terms, Muktinath Development Bank emerged as the most profitable development bank. Its net profit increased 33.57 percent to reach Rs 672.0 million, the highest among peers. During the same period last year, the bank had posted Rs 503.1 million in profit.

Development Banks’ Net Profit (In Rs. 10,000s)

Other Major Profit Gainers

Several other development banks also recorded significant earnings expansion:

Lumbini Development Bank: Up 93.32% to Rs 285.4 million

Shangrila Development Bank: Up 53.94% to Rs 302.6 million

Green Development Bank: Up 26.03% to Rs 11.0 million

Jyoti Development Bank: Up 24.44% to Rs 311.3 million

Kamana Sewa Development Bank: Up 22.34% to Rs 394.6 million

Shine Resunga Development Bank: Up 22.19% to Rs 404.3 million

Corporate Development Bank: Up 20.51% to Rs 12.9 million

Garima Development Bank: Up 15.63% to Rs 635.1 million

Mahalaxmi Development Bank: Up 6.41% to Rs 305.9 million

Banks Returning to Profit

Two banks that were previously in loss returned to profitability during the review period:

Excel Development Bank posted a profit of Rs 88.5 million, compared to a loss of Rs 90.5 million last year.

Saptakoshi Development Bank recorded Rs 26.8 million in profit, reversing a previous loss of Rs 29.9 million.

Three Banks Still in Loss

Despite overall sector improvement, three development banks remained loss-making by mid-January:

Sindhu Development Bank: Loss of Rs 15.5 million

Salpa Development Bank: Loss of Rs 10.4 million

Narayani Development Bank: Loss of Rs 47.3 million

The sector’s earnings growth reflects improving operational performance and stabilization in regional banking activity. However, continued losses in smaller institutions underline persistent stress from limited capital base, weaker loan portfolios, and higher credit risk exposure.

Development banks play a key role in financing SMEs, agriculture, and local businesses across Nepal, making their financial health critical for inclusive economic growth and regional financial stability.