Performance Analysis of A-Class Banks in Q2 2081/82: Key Financial Metrics and Insights

The release of the second-quarter financial reports for FY 2081/82 by all 20 commercial banks sheds light on their financial performance, offering a detailed view of profitability, business volume, and key financial metrics. This analysis covers the second-quarter results, highlighting trends across net profit, capital adequacy, and other pivotal indicators.

Net Profit:

In Q2 FY 2081/82, Nabil Bank Limited (NABIL) led with a net profit of Rs. 3.24 Arba, marking a 1.29% increase over the same period last year. Global IME Bank Limited (GBIME) followed with a net profit of Rs. 3.05 Arba, though this represents a 49.51% incline from the previous year. Nepal Investment Mega Bank (NIMB) took third with Rs. 2.83 Arba.

Prabhu Bank Limited (PRVU) recorded the highest growth, a staggering 85.50% rise, while NIC Asia Bank Limited (NICA) saw the largest decline at 92.03%.

Paid-Up Capital:

Global IME Bank Limited (GBIME) holds the highest paid-up capital at Rs. 38.12 Arba, followed by Nepal Investment Mega Bank Limited (NIMB) at Rs. 34.13 Arba, and Nabil Bank Limited (NABIL) with Rs. 27.06 Arba. Standard Chartered Bank Nepal Limited (SCB) has the lowest paid-up capital at Rs. 10.04 Arba.

Note: ADBL Capital includes Rs. 5.43 Arba in irredeemable non-cumulative preference shares.

Reserve and Surplus:

The combined reserve and surplus of all commercial banks totaled Rs. 3.28 Kharba, with the industry average standing at Rs. 16.41 Arba. Rastriya Banijya Bank Limited (RBBL) led with Rs. 35.94 Arba, followed by Nabil Bank Limited (NABIL) at Rs. 32.02 Arba and Nepal Investment Mega Bank Limited (NIMB) with Rs. 29.03 Arba.

Deposits From Customers:

Collectively, commercial banks gathered Rs. 58.91 Kharba in customer deposits, with ten banks surpassing this average. Global IME Bank Limited (GBIME) led at Rs. 5.13 Kharba, followed by Nabil Bank Limited (NABIL) at Rs. 4.8 Kharba and Rastriya Banijya Bank (RBBL) at Rs. 4.47 Kharba. Standard Chartered Bank Nepal Limited (SCB) recorded the lowest deposit collection at Rs. 1.22 Kharba.

Loans and Advances to Customers:

Global IME Bank Limited (GBIME) topped the list in loans and advances with Rs. 4.07 Kharba, followed by Nabil Bank Limited (NABIL) with Rs. 3.91 Kharba.

Standard Chartered Bank Nepal Limited (SCB) had the smallest portfolio at Rs. 78.17 Arba. The industry average loan disbursement was Rs. 2.27 Kharba, with eight banks exceeding this average.

Net Interest Income:

Net interest income, reflecting core banking earnings, saw Global IME Bank Limited (GBIME) leading at Rs. 8.30 Arba, closely followed by Nabil Bank Limited (NABIL) at Rs. 7.9 Arba.

Provisions (Impairment/Reversal):

Banks allocated Rs. 24.67 Arba for loan loss provisions and delayed loan repayments. Kumari Bank Limited (KBL) recorded the highest impairment charge at Rs. 3.27 Arba, with Nepal Bank Limited (NBL) next at Rs. 2.53 Arba.

Major Indicators:

Earnings Per Share (EPS):

Standard Chartered Bank Nepal Limited (SCB) posted the highest annualized EPS at Rs. 32.67, followed by Everest Bank Limited (EBL) at Rs. 32.06 and Nabil Bank Limited (NABIL) at Rs. 23.98. The industry average EPS was Rs. 14.72, with nine banks above this benchmark. NIC Asia Bank Limited (NICA) had the lowest EPS at Rs. 2.03. 

Distributable Profit Per Share:

Everest Bank Limited (EBL) reported a distributable profit exceeding Rs. 20.99 per share, followed by Sanima Bank Limited at Rs. 13.25. Six banks reported negative distributable profit per share for the quarter.

Net Worth Per Share:

Rastriya Banijya Bank Limited (RBBL) reported the highest net worth per share at Rs. 329.84, followed by Nepal Bank Limited (NBL) at Rs. 261.96 and Everest Bank Limited (EBL) at Rs. 225.79. Kumari Bank Limited (KBL) recorded the lowest net worth per share at Rs. 133.51, with the industry average at Rs. 190.92.

P/E Ratio:

Nepal Investment Mega Bank Limited (NIMB) had the lowest P/E ratio at 12.71 times, followed by Prime Commercial Bank Limited (PCBL) at 12.81 times. This reflects quarter-end ratios and current ratios may vary with recent stock prices.

Capital Adequacy Ratio (CAR):

Standard Chartered Bank Nepal Limited (SCB) reported the highest CAR at 16.94%, with Machhapuchchhre Bank Limited (MBL) at 13.26%. This ratio indicates a bank’s capital in relation to its risk-weighted assets.

Non-Performing Loan (NPL):

Everest Bank Limited (EBL) had the lowest NPL at 0.66%, while Kumari Bank Limited (KBL) reported the highest NPL at 6.96%.

Return on Assets (ROA) & Return on Equity (ROE):

Standard Chartered Bank Nepal Limited (SCB) recorded the highest ROA at 2.16% and ROE at 16.10%. Prime Commercial Bank Limited (PCBL) and Everest Bank Limited (EBL) followed with strong performances.

Additional Indicators: Cost of Funds, CD Ratio, Base Rates, and Interest Spread

- Cost of Funds:  Prime Commercial Bank Limited (PCBL) reported the highest cost of funds at 5.69%, with Standard Chartered Bank Nepal Limited (SCB) having the lowest at 3.38%.

- CD Ratio: NMB Bank Limited (NMB) had the highest CD ratio at 86.76%, while Rastriya Banijya Bank Limited (RBBL) had the lowest at 63.20%.

- Base Rate:  NIC Asia Bank Limited (NICA) had the highest base rate of 7.52%, and Standard Chartered Bank Nepal Limited (SCB) reported the lowest at 5.13%.

- Interest Spread: The average net interest spread across commercial banks was around 3.96% to 4%.

The table below provides a detailed overview of these financial indicators across the 20 commercial banks for Q2 FY 2081/82.

**Note: All figures are reported in Arba except for net profit, which is presented in crores for clarity.