ADBL becomes first bank to post Rs 3b yearly profit

Agriculture Development Bank Limited (ADBL) has become the first commercial bank in the country to earn a net profit of more than Rs3 billion in a fiscal year. Although the bank is yet to formally publish its financial results, a top ADBL executive said the bank posted Rs3.65 billion profit in 2015-16. While big private sector banks, including Nabil Bank, Everest Bank and Standard Chartered Bank Nepal,  are yet to publish their results, state-run banks have posted handsome profits. Nepal Bank Limited (NBL) said its net profit for the last fiscal year was just below Rs3 billion, while Rastriya Banijya Bank (RBB) said its earned 2.6 billion. ADBL CEO Lila Prakash Sitaula attributed the record-breaking profit to a growth in business volume. “We increased our lending avenues significantly. So our loans and advances increased, resulting in high profit,” said Sitaula. “Also, we were able to recover some bad loans and write back provisioning.” Despite a prolonged political unrest in southern plains and Indian embargo for four and half months last year, a number of commercial banks have posted profits in excess of Rs2 billion, including RBB and Nepal Investment Bank. Bankers have attributed the profits to growth in business volume and write backs of loans. Sanima Bank CEO Bhuvan Dahal said although the country was hit hard by last year’s earthquakes and unofficial trade blockade by India, most of the businesses to which we have lent performed well. “Majority of our clients, specially manufacturers of construction materials like cement and iron rods,  registered handsome profits. Automobile industry too performed well,” he said. Although the overall economic growth remained pretty low, businesses somehow weathered the crisis. “Most of the earthquake-affected districts are not known industrial hubs,” he said. “The Tarai unrest mainly affected the Birgunj industrial corridor, but other parts of the country were not as affected,” said RBB CEO Kiran Shrestha. “The trading sector in fact has registered growth.” Bank lending was estimated to fall last fiscal year due to the crises, but the loans in fact swelled by Rs281 billion in 2015-16 compared to the previous year’s Rs202 billion, according to Nepal Bankers’ Association. Industrialists said the lending growth was a result of increased import and distribution financing. Higher lending contributes to greater income for the banks as long as they are recovered. Also, businesses passed on their increased costs during the blockade to their customers, which made them able to secure profits and repay loans, bankers said. “Both industrialists and traders faced rise in cost of goods due to the supply disruption,” said a CEO of a commercial bank. “But they were able to pass that overhead costs on to customers to secure profits. Hence, their overall business was not hit by the adversity in the business environment and they were able to service their loans,” he said. COMMERCIAL BANK PROFITS (2015-16)   Name                    Amount Agriculture Development Bank  Rs3.65 billion Nepal Bank         Rs3 billion (approx) Rastriya Banijya Bank     Rs2.60 billion Global IME Bank               Rs1.39 billion Siddhartha Bank               Rs1.24 billion Prabhu Bank      Rs1.22 billion Nepal Bangladesh Bank Rs1.19 billion Citizens Bank     Rs1.08 billion NIC Asia Bank    Rs1.07 billion Sanima Bank      Rs1.04 billion Sunrise Bank      Rs0.95 billion Laxmi Bank         Rs0.67 billion Source: ekantipur