BoK profit drops by 17.25 % in Q2 mainly due to provisioning of Rs 7.31 crore

ShareSansar, January 26:

Bank of Kathmandu Limited (BoK) has reported a 17.25 percent drop in its profit in the second quarter of the current fiscal year 2070/71.

Publishing the unaudited quarterly report for the second quarter today, the commercial bank, which has been in trouble owing to its counter balance guarantee for an elusive Chinese company in the Melamchi Drinking Water Project row, has stated that it posted a profit of Rs 25.04 crore in the second quarter, down from Rs 30.26 crore in the corresponding quarter last fiscal year.

The profit was largely stemmed by a provisioning of Rs 7.31 crore.

Its  core business has also suffered a bit as its net interest income has dropped from Rs 60.73 crore in the second quarter of the last fiscal year, down to Rs 58.43 in the current second quarter.

BoK, nonetheless, mobilized Rs 29.31 arba in deposit and Rs 24.83 arba in loan as compared to just Rs 23.97 arba in deposit and Rs 21.15 arba in the corresponding quarter last year.

Despite the slight profit drop, the bank’s non-performing loan has also decreased to 1.33 percent, down from 2.02 percent in the same period of the previous fiscal year.

Its EPS (annualized) stands at Rs 26.09 and its net worth per share stands at an impressive 185.14.

This has still come as a respite to the shareholders who were much concerned about about the financial health of the commercial bank following the Melamchi row.

Notably, following an order of Appellate Court Patan earlier this month, the central bank had asked both BoK and Himalayan Bank to deposit a sum equivalent to the counter guarantee they have provided to the Chinese contractor which was fired for non-performance by the Melamchi Project.

The two commercial banks were also asked to keep one third of the amount in reserves as contingent strategy so that even if they have to maintain the provisioning of counter guarantee amount, their net worth would not be affected.

These banks had provided a counter guarantee to China Construction Bank in the form of a performance security of US$ 6.62 million and guarantee for advance payment of US$ 6.62 million and 1.4 million euros.

The Chinese bank had stood guarantee for the Chinese contractor with which the Melamchi project has terminated its contract.