Laxmi Capital News
Banks defy credit crunch, see profits surge by 10 percent

Nine commercialbanks have earned net profits of over Rs 1 billion in the first half of thecurrent Fiscal Year 2017/18. Not only half-dozen new commercial banks havejoined the one-billion profit earners' league, the net profits of most of the commercialbanks have also gone up in the review period. 

The surge in thenet profits fuelled by the rise in the net interest incomes of most of thecommercial banks indicates that the shortage of lendable fund did notsignificantly hit the banks' business, as claimed by their executives. 

According to thesecond quarterly unaudited financial results of 28 commercial banks compiled byNepal Bankers' Association, 20 out of 28 commercial banks have seen growth intheir net profits over the first six months of the current fiscal year comparedto the same period of the last Fiscal Year 2016/17. 

Everest Bank Ltd,Agricultural Development Bank Ltd, Standard Chartered Bank Ltd, NMB Bank Ltd,and Global IME Bank Ltd were the commercial banks that joined the club of bankswhose half annual net profit stood above Rs one billion. Prabhu Bank Ltd, whosenet profit had climbed up above a billion in the second quarter in thelast fiscal year, however, fell to Rs 635 million. 

Nepal Bank Ltd,Citizens Bank International Ltd, and Sunrise Bank Ltd are the banks whose netprofit took dives in the review period compared to the corresponding period ofthe last fiscal year. NIC Asia Bank Ltd and Bank of Kathmandu also registereddecline in their net profit in the current fiscal year. The net profit ofMachhapuchchhre Bank Ltd and Nepal Bangladesh Bank Ltd also squeezed in thecurrent fiscal year, according to the compiled financial results. Rest of othercommercial banks saw a growth in their net profit in the current year.

In total, thetotal net profit earned by 28 commercial banks have jumped by nearly 10 percentin the first half of the current fiscal year compared to the same period of thelast year. The total net profit rose to Rs 23 billion in the review period ofthe current fiscal year from Rs 20.8 billion of the same period lastyear. 

Bankers say thatthe rise in the paid-up capital by nearly four-fold has put them under pressureto increase loans and investment. “On the one hand, there is rise in thepaid-up capital of banks, which has propelled investment. Also, many banks havewritten back loans that they had provisioned earlier, which showed surge inprofits,” said a banker. “The non-interest income of banks like fees andcharges from guarantee, Letter of Credit, and cards have also increased, whichalso explains the rise in profit in recent time,” he added.

Source: MyRepublica, 7th February 2018


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