30 June, Kathmandu. The profitability of banks is affected by increased resource cost due to excess liquidity and increased loss due to non-performing loans.
In the current financial year 2080/81, banks and financial institutions have earned a total profit of 53 billion 31 crore 96 lakh rupees.
In the same period of the previous year, the profit has decreased by 14.86 percent in the same period of the current year.
The profit of commercial banks has been affected due to increasing operating expenses, excess liquidity, net interest income cannot increase due to increase in interest expenses compared to interest income and increase in loan loss provisions. Which has reduced the overall profit of banks and financial institutions.
The data of Nepal Rastra Bank shows that in the year 2078/79, banks and financial institutions earned 83.84 billion profit. The profit fell to 77 billion 77 million last year. The data of Nepal Rastra Bank has shown that the profit has decreased by about 15 percent in the 10 months of the current year compared to the same period last year.
Interest rates have decreased, while banks’ loans have not been able to expand. As a result, banks have more liquidity. On the other hand, last year most of the banks went into mergers, and the weighted average interest rate difference between loans and deposits could be increased by one percent, while the spread rate, which was 4.4 percent until March 2079, was 4.2 percent in March 2079, and in June 2080, the National Bank maintained 4 percent. .
The net interest income of the banks has decreased due to the fact that the facility to maintain more spread due to the benefit of the current year merger has ended and the spread rate has decreased. In the last 10 months of last year, banks and financial institutions collected 5 trillion 36 billion 47 billion interest and spent 3 trillion 59 billion 22 billion for the cost of resources.
In the same period of the current year, banks and financial institutions have spent 3.84 billion 92 billion to mobilize resources while earning 5.65 billion 76 billion in interest. Despite the decrease in interest rates, interest expenses have increased due to increase in deposits with banks. However, due to business expansion and spread, the interest income has not increased in the same proportion.
Similarly, the loan loss provision was only Rs 53.62 billion in the last 10 months, but it has increased to Rs 78.51 billion in the same period of the current year.
Employee expenses increased from 45.23 billion to 51.66 billion and office operating expenses increased from 31.16 billion to 34.10 billion. Profits of banks have shrunk as expenses will increase but income will be affected.
Profits of commercial banks fell by 15 percent
In the 10 months of the current year, commercial banks have earned 48.61 billion in profit. In the same period of the previous year, their profit has decreased by 14.96 percent while they earned 57.16 billion in profit.
In the 10 months of the current year, commercial banks have earned 4 trillion 94 billion 46 billion in interest and spent 3 trillion 34 billion in interest. During the same period last year, they earned 4 trillion 62 trillion 41 billion in interest, but spent 3 trillion 5 billion 66 billion in interest.
The difference between interest income and expenses has not increased significantly. The difference between interest income and expenses in 10 months of the current year is 1 trillion 60 billion. During the same period last year, this difference was around 1 trillion 57 billion.
Compared to last year, the net income after deducting interest income has increased by only about 3 billion. However, expenses and loss arrangements are increasing. The loan loss provision of commercial banks has increased from 44.89 billion to 65.53 billion.
Likewise, employee expenses have increased from 39 billion 50 million to 45 billion 54 million. Office operating expenses have increased from 26 billion 65 million to 29 billion 40 million. Due to the increase in expenses and loss arrangements, the profit of the banks has decreased.
Profits of 15 banks out of 20 in operation have decreased. Although the profit of Prabhu Bank, which merged with Century Bank in December last year, has increased compared to last year, the profit of the bank has decreased compared to last year due to separate accounting of the profit earned by Century before the merger.
Similarly, Lakshmi and Sunrise Bank merged in June last year. It is seen that the profit of Lakshmi Sunrise Bank has also increased since the 1.37 billion profit earned by Sunrise before the merger was accounted for separately.
In order to increase the real profit, the bank has Prime Commercial, Everest, Krishi Bikas, Sidrdhath and Citizens. Prime’s profit increased by 15.22 percent to 3.23 billion. Everest’s profit increased by 8.04 percent to 2.98 billion, agricultural development increased by 120 percent to 2.7 billion, Siddharth’s profit increased by 10.7 percent to 1.98 billion and Citizen’s profit increased by 5.10 percent to 1.5 billion. Even though the profit of Nabil Bank decreased by 10.75 percent till April, it is the highest amount of 5.46 billion.
In the 10 months of the current year, the annual average earnings per share of banks is 16 rupees 26 paise. Out of which Standard Chartered Bank has the highest 33 rupees 93 paisa and Nepal Bank has the lowest 4 rupees 82 paisa.
Nepal Bank has earned the lowest profit of only 59 crores. Which is 76 percent less than the same period last year. Similarly, the profit of NIC Asia has decreased by 50.75 percent to 2.16 billion. The profit of National Commercial Bank has decreased by about 37 percent to 2.56 billion.
Profits of development banks and finance companies also decreased
Development banks have earned 4.17 billion profit in 10 months of the current year. In the same period of last year, the profit of Bikas Banks has decreased by 2.80 percent, while the profit of Bikas Banks in the current year is 4 billion 290 million.
It seems that the income of development banks has not increased relatively and the profit has been affected due to the increase in staff expenses due to the increase in loan loss provisions. Loan loss provision increased from 7.31 billion to 8.98 billion.
Similarly, employee expenses have increased from 4.61 billion to 4.9 billion. The office operating expenses which were 3.56 billion till April of last year have reached 43.73 billion during the same period of the current year.
Muktinath Development Bank has the highest profit till April. Garima Bikas Bank is second as the bank earned 99.49 million profit. Out of 17 development banks, 12 are in profit while five development banks are in loss. While 12 development banks, including eight at the national level, are profitable, the condition of the regional level development banks looks weak.
1. Muktinath Development Bank: 99.49 million
2. Garima Bikas Bank: 75 crores 74 lakhs
3. Shine Resunga Development Bank: 58.38 million
4. Mahalakshmi Development Bank: 46.18 million
5. Kamana Seva Bikas Bank: Rs 40 Crore 41 Lakh
6. Lumbini Development Bank: 34 crore 22 lakhs
7. Sangrila Development Bank: 27 crore 91 lakhs
8. Jyoti Bikas Bank: 23.9 million
9. Miteri Development Bank: 6.55 million
10. Karnali Development Bank: 2.44 million
11. Corporate Development Bank: 1 crore 35 lakhs
12. Green Development Bank: 1 crore 67 lakhs
13. Salpa Development Bank: 1 lakh loss
14. Narayani Development Bank: 66 lakh loss
15. Sindhu Bikas Bank: 3 crore 25 lakh loss
16. Saptakosi Development Bank: 7.26 million loss
17. Excel Development Bank: 27 crore loss
On the other hand, finance companies have made a profit of 42 crores in 10 months. During the same period last year, the profit of the finance company was 1.15 billion.
Loan loss provision has increased from 1.42 billion to 2.4 billion. Employee expenses increased from 1.12 billion to 1.21 billion, while office operating expenses increased from 95 million to 97 million.
Profits of finance companies have also decreased as income has not increased and expenses have increased along with loan loss provisions. Manjushree has the highest profit in the finance company. While eight of the 17 were in financial loss, Manjushree earned the highest profit of 204.3 million.
1. Manjushree Finance: 204.3 million
2. Gorkhaz Finance: 65.4 million
3. ICFC Finance: Rs 4 crore 90 lakhs
4. Mr. Investment and Finance: 3.58 million
5. Nepal Share Market and Finance: 20.9 million
6. Multipurpose Finance: 1 crore 94 lakhs
7. Capital Merchant Banking and Finance: 1 crore 53 lakhs
8. Excellent Finance: Rs 39 Lakhs
9. Nepal Finance: 12 lakh loss
10. Guheshwari Merchant Banking and Finance: 49.8 million loss
11. Reliance Finance: 53 million loss
12. Central Finance: 5 crore 24 lakh loss
13. Progressive Finance: 6 crore 14 lakh loss
14. Goodwill Finance: 749 million loss
15. Janaki Finance: 97 million loss
16. Samriddhi Finance: 13.36 million loss
17. Pokhara Finance: 17.34 million loss
