KATHMANDU, April 9: Commercial banks posted a nominal 0.89 percent increase in profit during the first eight months of the current fiscal year, as slow business activity offset the impact of sharply lower interest rates, according to central bank data.
Records from Nepal Rastra Bank (NRB) show that 20 commercial banks earned a cumulative profit of Rs 43.88 billion during the review period this year, compared to Rs 43.49 billion in the same period of the previous fiscal year.
Despite the central bank providing schemes for loan restructuring and rescheduling to address recovery problems, banks struggled to achieve notable returns. With an excess of loanable funds piling up, the 'A' class financial institutions have maintained an average base interest rate of 5.20 percent for this month. Rastriya Banijya Bank recorded the lowest rate among them at 4.30 percent.
Lending slows as banks focus on recovery of loans at fiscal yea...
Out of the 20 commercial banks, only nine were able to increase their net profit. Nabil Bank emerged as the top earner with a net profit of Rs 6.07 billion, up from Rs 4.78 billion in the review period last year.
Global IME Bank ranked second with a net profit of Rs 4.62 billion, though its earnings declined slightly from Rs 4.72 billion.
Profit declined at 11 commercial banks. Laxmi Sunrise Bank recorded the steepest fall, with its net profit dropping by 67.36 percent. Among state-owned banks, Nepal Bank Limited saw its net profit decline by 60.28 percent.
Meanwhile, banks and financial institutions (BFIs) had issued loans totaling Rs 5.813 trillion as of mid-March this year. Compared to the loan amount of Rs 5.592 trillion in the same month last year, the growth rate stood at four percent.
Loan issuance to the mining-based industries showed impressive growth, rising 11.7 percent to Rs 13.13 billion. The consumption sector saw growth of 10.5 percent, with total loan issuance reaching Rs 1.273 trillion.
The growth rate of BFIs' loans to the construction sector was 8.8 percent, amounting to Rs 281.70 billion. Similarly, the transport, communication and public service subsector took additional loans of 7.8 percent, bringing its total credit to Rs 513.86 billion.
