Profit of commercial banks likely to surge

It seems commercial banks will generate high profit in the first quarter of this fiscal as compared to the corresponding period of the previous fiscal as profit generation in the last fiscal was slightly affected due to spillover effect of the earthquake. As per the unaudited financial reports published by 11 commercial banks out of 28 banks in operation, the banks’ profit surged by a whopping 47.6 per cent. The profit of commercial banks is expected to rise in this fiscal as credit expansion of the banks increased significantly from the beginning of this fiscal. Banks have been expanding credit as their capacity to float loans increased along with Nepal Rastra Bank (NRB)’s mandatory provision to increase capital by four folds. Banks need to abide by the central bank’s provision by the end of this fiscal. Among 11 banks, which have already published their financial report of the first quarter, Nabil Bank Ltd has topped the list with total profit of Rs 798.37 million as compared to Rs 653.51 million of the corresponding period of the previous fiscal. In terms of profit growth, NMB Bank is the forerunner as the bank’s profit grew by 147.6 per cent in the review period as compared to previous fiscal. NMB Bank increased its net profit to Rs 353.69 million as compared to Rs 142.85 million of last fiscal. Likewise, Citizens Bank, Siddhartha Bank and Sunrise Bank doubled their profit in the first quarter of this fiscal as compared to the previous fiscal. Among high profit earning banks, Nepal Investment Bank Ltd (NIBL) increased its profit by 75 per cent. In the review period, NIBL earned Rs 740.8 million as compared to Rs 423.8 million last fiscal, as per the financial statement published by the bank. Total profit of 11 commercial banks was Rs 4.28 billion against Rs 2.9 billion in same period of last fiscal. “We can expect the profit of commercial banks to surge substantially in the first quarter when compared to the corresponding period of the previous fiscal due to rapid credit expansion and low profit base of last fiscal when lending remained sluggish and earthquake’s impact was felt on recovery of loans,” said Bhuvan Kumar Dahal, CEO of Sanima Bank. Though a majority of commercial banks are yet to publish their financial report, the financial reports of 11 commercial banks hint towards the possibility that profit of class ‘A’ financial institutions of the country will increase substantially in first quarter of this fiscal. Source: The Himalayan Times