Key Takeaways From NRB’s 13th Financial Stability Report

Sun, May 22, 2022 1:34 PM on Latest, Economy, National,

As part of the Financial Stability Report, which is published twice each year, the Nepal Rastra Bank (NRB) also conducts a Systemic Risk Survey, wherein it asks experts and market participants to assess the financial system on five different types of risks — global, financial, macroeconomic, institutional and general.

On May 19 2022, The NRB released the 13th Financial Stability Report (FSR), which is based on the provisional data of Bank and Financial Institutions (BFIs) and other financial institutions as of mid-July 21. Here’s the summarized version of the report published by the NRB.

  • The world economy is in the process of recovering from the COVID 19 However, the speed of recovery has been hampered by repeated waves of COVID19. Infection and lack of global availability of COVID19 vaccine.
  • In 2020/21, annual average consumer inflation increased to 3.60 percent, compared to 6.15 percent the previous year. Inflation is within goal, despite the ongoing COVID-19 pandemic.
  • The Nepalese economy is growing at a rate of 4%.
  • In 2020/21, the GDP grew by 4.0 percent, compared to -2.1 percent in 2019/20.
  • In 2020/21, the merchandise trade imbalance grew by 27.3 percent to Rs.1,398.71 billion.
  • The overall number of BFIs has reduced to 133 as of mid-July 2021, with 27 commercial banks, 18 development banks, 17 finance firms, 70 microfinance institutions, and 1 Infrastructure Development Bank.

  • Similarly, 19 life insurance firms, 20 nonlife insurance companies, 2 reinsurance businesses, and a number of nonbank financial institutions such as EPF, CIT, SSF, HIDCL, and a postal savings bank are also in operation.
  • In mid-July 2021, the banking sector's overall profitability improved by 21.01 percent to Rs.71.30 billion.
  • As of mid-July 2021, development banks' ROE and ROA were 13.72 percent and 1.14 percent, respectively. The key contributions to the vast expansion of returns were aggressive increases in credit as well as an increase in profit.

  • The branch network of Commercial banks, Development banks, Finance companies and MFIs reached 4,753, 1023, 222 and 4,685 respectively.
  • In a year, the NEPSE Index rose by 111.65%, reaching Rs. 2,883.41. The float index climbed by 109.85% to 200.34 in FY 2020/21, from 95.47 in FY 2019/20.                                                                                                    

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