Bank profits up 18pc on higher interest earnings
KATHMANDU, FEB 19 -
Profits of commercial bank s were up 18 percent to Rs 9.38 billion as of the second quarter due to higher interest earnings. Only one out of the 30 commercial bank s in the country suffered losses. During the first half of the last fiscal, their combined profits amounted to Rs 7.94 billion.
Interest earnings as at the end of the second quarter of this fiscal amounted to Rs 21.47 billion. The figure for the first quarter was Rs 9.79 billion.
Income from interest has swelled and pushed up profits even though bank s have been complaining about a slowdown in demand for loans and the central bank ’s directive to reduce the spread rate. The spread rate is the difference between the interest rate bank s pay on deposits and the interest rate they charge on loans.
Income from other sources such as foreign exchange, service charges and other earning sources have remained almost unchanged from the first quarter.
Sashin Joshi, chief executive officer of NIC Asia Bank, said that although profits have risen when seen in isolation, returns on equity and assets have decreased which suggests that there has been a decrease in the yield of investment.
“We should not get carried away by the profit figures in the second quarter. The actual performance of bank s will be seen at the end of the fiscal year,” he added.
He said that despite a rise in interest income in the second quarter, it would no longer remain the same in the following quarters due to decreasing interest rates.
“If the central bank implements its directive on the spread rate and service charge in its present condition, it will severely limit the profit margin of bank s,” he said.
Nepal Rastra Bank (NRB) has told bank s to bring their spread rate to 5 percent within the current fiscal year. NRB is also trying to get bank s to remove most of the fees they have been charging for customer services.
Nepal’s commercial bank s earned Rs 2.03 billion in profits from foreign exchange during the first half of the fiscal year while profits for the first quarter stood at Rs 1.02 billion. Income from various fees reached Rs 2.81 billion as of the end of the second quarter while it was Rs 1.4 billion in the first quarter. Similarly, income from other sources reached Rs 3.03 billion during the first half of the fiscal while it amounted to Rs 1.04 billion in the first quarter.
Nabil Bank topped the chart in terms of earnings with Rs 1.05 billion in profits as of the second quarter.
Investment Bank earned the highest profits in the first quarter with Rs 940 million. Rastriya Banijya Bank, Everest Bank and Standard Chartered Bank, Nepal are the other bank s that earned good profits.
Kist Bank continued to remain in the red in the second quarter with losses amounting to Rs 198.80 million. Janata Bank pulled out of the red in the earlier quarter and earned profits amounting to Rs 12.6 million in the second quarter. Commerz and Trust Bank Nepal, which is merging with Global IME Bank, Civil and Century Bank are the other bank s whose profits remained in the lows during the second quarter.
Meanwhile, Sanima Bank posted the lowest non-performance loan (NPL) of 0.10 percent. Its deposits stood at Rs 1,097 billion while lending reached Rs 815.89 billion. Rastriya Banijya Bank retained its position as the largest deposit collector.
Nepal Investment Bank, Nabil Bank, Agricultural Development Bank and Nepal Bank come next in the list of the top five in terms of deposit collection.
Top five bank s in terms of net profit
Banks Profit
Nabil Bank Rs 1.05b
Nepal Investment Bank Rs 940.39m
Rastriya Banijya Bank Rs 717.88m
Everest Bank Rs 679.11m
Standard Chartered Bank Rs 633.31m
Source: The Kathmandu Post
