Pokhara, 30 January | Nepal’s commercial banking sector has demonstrated significant financial resilience by registering an 11.50 percent growth in net profit during the second quarter of the current fiscal year. Despite a persistent slowdown in the national economy and sluggish credit demand, the twenty commercial banks operating in the country managed to rake in a collective net profit of NPR 30.59 billion by the end of the mid-January period. This marks a notable increase compared to the NPR 27.43 billion recorded during the corresponding period of the previous fiscal year, signaling a gradual recovery in the banking industry’s operational efficiency.
The financial reports indicate that the primary driver behind this profit surge is the improvement in net interest income, which grew by 9.38 percent to reach NPR 96.05 billion. Bankers attribute this growth to a strategic reduction in interest expenses amid high liquidity in the financial system and a concerted effort toward the recovery of previous dues. While the expansion of new business remained below expectations, the banks successfully leveraged the high deposit levels and improved recovery mechanisms to bolster their bottom lines. Additionally, improvements in fee and commission income, alongside trading gains, contributed positively to the overall financial performance during this six-month period.
However, the rise in non-performing loans (NPL) remains a point of concern for the sector. The average gross NPL of commercial banks climbed to 5.07 percent, up from 4.48 percent in the same period last year. Consequently, banks were required to significantly increase their loan loss provisioning, which jumped by 38 percent to NPR 28.46 billion. Among the individual players, Nabil Bank emerged as the top performer with a net profit of NPR 4.75 billion, while Laxmi Sunrise Bank faced a setback, reporting a net loss of NPR 27.36 million. In terms of asset quality, Himalayan Bank reported the highest NPL at 7.96 percent, whereas Everest Bank maintained the strongest position with a remarkably low NPL of 0.68 percent.
