Kathmandu, Aug 15: The combined profit of Nepal’s 20 commercial banks increased by 31.95 per cent in fiscal year 2025/26, according to their unaudited financial statements for the fourth quarter.
The banks earned a combined Rs 69.78 billion in profit in fiscal year 2025/26, compared with Rs 52.88 billion in fiscal year 2024/25.
Some banks recorded profit growth of thousands of per cent. Himalayan Bank reported a sharp rise in profit, while Kumari Bank’s profit increased by around 300 per cent.
However, the sharp increase is partly due to differences in reporting. The banks had presented audited financial statements for fiscal year 2024/25, while the latest figures are unaudited. Based on the unaudited figures for 2024/25, the banks had combined profits of Rs 68.77 billion.
Prabhu Bank reported a loss of Rs 240 million while Nabil Bank posted the highest profit in absolute terms, earning Rs 7.90 billion.
Banks made provisions of Rs 37.30 billion this fiscal year, down from Rs 44.69 billion previously. Kumari Bank, Nepal Bank and Standard Chartered Bank Nepal also wrote back some of their earlier provisions. Kumari Bank wrote back Rs 1.43 billion, Standard Chartered Rs 150 million and Nepal Bank Rs 1.01 billion.
The banks’ net interest income increased by only 1 per cent, rising from Rs 189.84 billion to Rs 192.35 billion.
Interest income has remained weak as credit expansion has failed to grow at the expected rate and banks have struggled to recover loan instalments. More than Rs 1.3 trillion remains idle in the banking system because it has not been deployed as loans.
Four banks have negative distributable profits. Himalayan Bank, Nepal Investment Mega Bank, NIC Asia Bank and Prabhu Bank have combined negative distributable profits of Rs 21.63 billion.
The banks have an average dividend capacity of 13.42 per cent. Everest Bank has the highest dividend capacity at 38.32 per cent.
Banks have set aside Rs 4.82 billion in regulatory reserves due to uncollected interest. Under Nepal Rastra Bank’s provisions, banks are required to maintain reserves equivalent to 51 per cent of such uncollected interest.
The average non-performing loan ratio of the banks has increased to 5.35 per cent from 4.51 per cent. Five banks have non-performing loans above 7 per cent. Prabhu Bank has the highest ratio at 15.55 per cent, while Everest Bank has the lowest at 0.49 per cent.
The banks’ average earnings per share stand at Rs 19.96, up from Rs 16.42 previously.
The primary capital adequacy ratios of Prabhu Bank, Himalayan Bank and NIC Asia Bank are below the required minimum of 8.5 per cent. This has also constrained their ability to expand lending.
People’s News Monitoring Service
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