Commercial banks post massive profits

KATHMANDU, Aug 19 - The last fiscal year has been a good year for Nepali commercial banks with their profits surging by 33.2 percent.
The net profit of 26 commercial banks reached Rs. 14.16 billion in the fiscal year 2008/09 from Rs. 10.63 billion in the previous fiscal year.
The government-owned and some other private banks, who are suffering from bad loans, succeeded in recovering substantial amount, pushing the overall profits of the commercial banks up.
The unedited fourth quarterly reports of most of the banks show they have made substantial profits in the year 2008/09. It was initially feared that the profitability of the commercial banks might be affected due to the global economic crisis.
The handsome profit the banks have posted in the fourth quarterly report shows that the global economic crisis has not made a serious impact on Nepal's banking sector. "It was a good fiscal year for commercial banks," said Sujit Mundal, CEO of Standard Chartered Bank.
The top names in the Nepali banking sector like Standard Chartered Bank, Nabil Bank, Nepal Investment Bank, Himalayan Bank, Everest
Bank, Nepal Industrial and Commercial (NIC) Bank and others have witnessed a notable growth in profits in the last fiscal year.
Twenty-three out of 26 commercial banks have registered more profits this time around compared to that of previous year. Only three banks have reported a negative growth. "The net profit has gone up as some of the ailing banks have recovered their bad loans," said Sashin Joshi, CEO of NIC Bank.
There are five commercial banks who have posted over Rs. 1 billion as net profit in the last fiscal year. Nepal Bangladesh Bank (NBB) had the highest profit of Rs. 2.47 billion up to the last quarter, followed by Rastriya Banijya Bank (RBB) and Agricultural Development Bank (ADBN) which made profits of Rs. 2.03 billion and Rs. 1.23 billion up to the last quarter, respectively. The profits of NBB, RBB and ADBN increased substantially due to write back of their non-performing loans. NB Bank has recovered Rs. 1.3 billion loan from the NB Group, the promoters of the bank over the last fiscal year.
The other two banks who have crossed the billion mark are Nabil Bank and Standard Chartered Bank with a net profit of Rs. 1.03 billion and Rs. 1.02 billion respectively. Nabil Bank has for the first time overtaken Standard Chartered Bank in terms of net profit.
Compared to the period up to the fourth quarter of last year, the profit of Nabil Bank went up by 38.12 percent while Standard Chartered Bank posted an increase of 25.17 percent. Likewise, Nepal Investment Bank, Nepal Industrial and Commercial (NIC) Bank and the Bank of Kathmandu saw their profits go up by 31.26 percent, 30.27 percent and 27.66 percent, respectively.
In terms of percentage growth, Bank of Asia and Prime Bank saw
the biggest growth but these being new banks had a much smaller base to start with.
However, bankers believe that the profitability of the commercial banks might decline from next year onwards. Sashin Joshi has a word of caution: "With increasing competition and decreasing margins, the profitability of the banks on their equity will decline in the coming days." Profit in the last fiscal year
Banks In Rs. millions
Nepal Bangladesh Bank 2472.189
Rastriya Banijya Bank 2032.229
Agriculture Development Bank 1237.990
Nabil Bank 1031.053
Standard Chatered Bank 1025.115
Nepal Investment Bank 914.575
Nepal Bank Limited 794.400
Himalayan Bank 742.425
Everest Bank 624.000
Bank of Kathmandu 461.507
NCC Bank 410.621
Nepal SBI Bank 334.350
Lumbini Bank 332.207
NIC Bank 316.646
Kumari Bank 258.462
Siddhartha Bank 215.602
Laxmi Bank 186.169
Prime Bank 141.776
DCBL Bank 103.055
Sunrise Bank 102.50
Citizens Bank 95.810
Machhapuchchhre Bank 92.935
KIST Bank 88.376
Bank of Asia 61.510
NMB Bank 61.339
Global Bank 30.488
Kantipur Report