NIC Asia Laghubitta Q4 Results: Revenue Declines, Heavy Losses, and Asset Quality Concerns

NIC Asia Laghubitta Bittiya Sanstha Limited (NICLBSL) has released its audited financial results for the fourth quarter of FY 2024/25, revealing a significant decline in revenue, heavy losses, and rising non-performing loans.

The company posted a total revenue of Rs. 1.89 billion in Q4, down 15.31% year-on-year compared to Rs. 2.30 billion in Q4 of 2023/24. Sequentially, revenue fell from Rs. 1.34 billion in Q3, continuing the downward trend observed throughout the fiscal year.

The gross profit stood at Rs. 751.92 million, with a gross margin of 39.78%, slightly higher than 36.96% in Q3 but lower than last year’s 41.29%. This indicates that while operating efficiency is relatively stable, revenue contraction is straining profitability.

NICLBSL reported a net loss of Rs. 448.67 million in Q4, a drastic reversal compared to the small profit of Rs. 1.30 million in Q3 and Rs. 127.12 million in Q4 of last year. The net profit margin plunged to -23.74%, compared to 5.52% a year ago, highlighting worsening financial pressure.

Return indicators reflected this downturn. Return on Assets (ROA) fell to -2.14%, compared to +0.65% in the same quarter last year. Similarly, Return on Equity (ROE) deteriorated to -17.18%, from +4.28% a year ago, reflecting sharp erosion of shareholder value.

On a per-share basis, EPS (annualized) dropped to -25.79, down from +7.31 in Q4 last year. The PE ratio turned negative, reflecting loss-making operations, with earlier quarters showing extremely inflated multiples due to weak earnings.

From a balance sheet perspective, the book value per share declined to Rs. 121.24, compared to Rs. 168.19 in Q4 last year. Meanwhile, the market value per share in Q3 stood at Rs. 636.03, showing the stock trades at a significant premium despite deteriorating fundamentals.

Financial Sector Indicators

• Capital Fund to RWA dropped to 9.48%, down from 14.72% last year, approaching regulatory minimums.

• NPL ratio worsened sharply to 16.99%, up from 9.92% in Q4 last year, reflecting rising credit stress.

• Loan loss coverage ratio stood at just 47.57%, well below the 100% benchmark, raising concerns about adequacy of provisions.

• Cost of funds eased slightly to 6.85%, compared to 8.20% last year, while the base rate remained high at 12.34%.

• Net interest spread improved to 8.13%, higher than 6.74% last year, but this was offset by worsening asset quality.

• Liquidity position weakened, with net liquid assets at 0% in Q4, compared to 47.73% last year, signaling tight funding conditions.

Dividend per share has not been declared, in line with the company’s large losses.