Deprosc Laghubitta (DDBL) Reports Strong Profit Growth Despite Rising NPL Pressure

Deprosc Laghubitta Bittiya Sanstha Limited (DDBL) has published its audited Q4 results for FY 2024/25, reflecting impressive revenue growth and profitability improvement, though asset quality challenges remain due to a surge in non-performing loans (NPLs).

The company reported total revenue of Rs. 3.49 billion, up from Rs. 3.25 billion in Q4 2023/24, though showing a 20.37% year-over-year contraction due to volatility in income recognition. On a sequential basis, revenues improved steadily across the year, highlighting a recovery momentum in core lending activities.

Gross profit reached Rs. 1.83 billion, representing a margin of 52.52%, higher than last year’s 45.12%, demonstrating better cost efficiency. Net income rose sharply to Rs. 691.15 million, compared to Rs. 581.65 million last year, delivering a net margin of 19.77%, the highest in the past five quarters.

For shareholders, EPS (annualized) climbed to Rs. 36.99, up from Rs. 34.09 last year, while the PE ratio stood at 23.85, reflecting a balanced valuation relative to earnings. Book Value per Share remained strong at Rs. 208.84, slightly lower than last year’s Rs. 216.80 due to expanded lending. The market price per share closed at Rs. 882.25, higher than last year’s Rs. 841.00, showing continued investor confidence.

Financial Sector Indicators

While profitability strengthened, DDBL faces challenges in asset quality:

• Capital Fund to RWA was 13.20%, stable compared to 12.42% last year, ensuring regulatory compliance.

• NPL Ratio surged to 7.73%, from just 2.89% a year earlier, indicating stress in loan recoveries.

• Loan Loss Provision coverage weakened to 38.34%, significantly down from 47.60%, highlighting under-provisioning risk.

• Cost of Funds eased to 7.77%, down from 9.34% last year, providing relief on funding expenses.

• Credit-to-Deposit Ratio remained high at 112.97%, reflecting aggressive lending practices.

• Base Rate fell to 12.12%, down from 13.60%, improving affordability for borrowers.

• Net Interest Spread widened to 7.13%, compared to 5.58% last year, underscoring improved core lending profitability.

• Net Liquid Asset was 6.09%, showing a slight improvement but still on the lower side.