Nepal banking sector profits rise 32% to Rs 69.86 billion

Nepal’s commercial banking sector reported a combined net profit of Rs 69.86 billion for the last fiscal year, representing a 32.27 percent increase from the previous year. This growth occurred despite a decline in interest income, driven instead by improved loan recovery, tighter operating expense controls, and changes in loan-loss provisions.

Nabil Bank recorded the highest net profit at Rs 7.90 billion, followed by Kumari Bank and Global IME Bank. While 14 of the 20 commercial banks reported profit increases, four saw declines, and Prabhu Bank reported a loss.

However, the sector faces challenges as the average non-performing loan (NPL) ratio rose to 5.44 percent. Some individual banks reported much higher bad loan ratios, with Prabhu Bank reaching 15.55 percent. Additionally, banks are experiencing weak credit demand and excess loanable funds, leading to a moderate reduction in deposit interest rates, which now average 4.13 percent for individuals.