Q2 2082/83 Fundamental Analysis of Commercial Banks in Nepal: Profit, EPS and ROE Breakdown

The second quarter results of fiscal year 2082/83 have brought a wealth of data for investors tracking Nepal's commercial banking sector. With 18 listed commercial banks publishing their financials, this is the most comprehensive period to evaluate earnings quality, profitability trends, and valuation metrics across the sector. In this detailed analysis, we break down the Earnings Per Share (EPS), Return on Equity (ROE), Net Profit Margin (NPM), Price to Earnings (P/E) ratio, and Net Asset Value (NAV) of every commercial bank listed on the Nepal Stock Exchange (NEPSE). Whether you are a long-term investor or a short-term trader, understanding these fundamentals is critical to making informed decisions in the current market environment. The banking sector continues to dominate NEPSE's market capitalization, and Q2 results reveal significant divergence in performance among banks. Some institutions have posted record earnings while others struggle with thin margins. The sector-wide Credit to Deposit (CD) ratio stands at 74.32%, Non-Performing Loans (NPL) at 5.42%, and Capital Adequacy Ratio (CAR) at 12.61%, with the NRB repo rate held at 4.25%.

Complete EPS, ROE and P/E Comparison Table — Q2 2082/83

The table below presents a consolidated view of all 18 commercial banks. Sorting by EPS allows investors to identify which banks are generating the most earnings relative to their outstanding shares. A higher EPS generally indicates stronger profitability, although it must be contextualized with P/E ratio and ROE for a complete picture.

Symbol	EPS (Rs)	P/E Ratio	ROE (%)	NAV (Rs)	NPM (%)	LTP (Rs)
NABIL	35.18	13.86	14.93	235.64	44.56	543
EBL	30.86	21.39	13.13	235.04	40.31	712
SCB	27.35	23.09	12.96	210.97	44.58	677
KBL	20.74	8.63	13.72	151.16	35.3	240
SANIMA	20.48	16.45	11.88	172.39	38.69	364.7
PCBL	19.5	12.25	11.76	165.8	40.6	262.9
SBI	18.93	21.66	9.8	193.1	34.59	429.9
SBL	17.93	21.51	8.49	211.23	29.31	412.9
NBL	17.76	13.57	6.77	262.43	26.8	288
NMB	17.1	13.98	10.1	169.36	32.99	265
GBIME	17.06	13.24	9.73	175.29	38.53	254.8
MBL	16.73	13.61	10.35	161.63	29.29	266.9
ADBL	9.89	30.33	4.41	224.37	19.7	333.1
NIMB	9.45	20.2	4.85	194.77	29.38	224.5
PRVU	8.62	21.27	5.9	146.17	19.36	223.7
CZBIL	4.63	41.7	3.09	149.79	15.7	229
NICA	1.76	190.01	0.89	198.33	4.51	401
LSL	-2.04	0	0	166.23	-9.53	235

Top Performers by Earnings Per Share

NABIL Bank leads the commercial banking pack with an EPS of Rs 35.18, followed by Everest Bank at Rs 30.86 and Standard Chartered Bank Nepal at Rs 27.35. These three banks have consistently maintained their top positions over several quarters, reflecting strong lending portfolios, diversified income streams, and disciplined cost management.

NABIL's dominance is further supported by its industry-leading Net Profit Margin of 44.56%, indicating that nearly half of every rupee in revenue converts to net profit. Standard Chartered matches this efficiency with an NPM of 44.58%, although its higher P/E of 23.09 suggests the market is pricing in premium expectations.

Rank	Bank	EPS	ROE	P/E
1	NABIL	35.18	14.93%	13.86
2	EBL	30.86	13.13%	21.39
3	SCB	27.35	12.96%	23.09
4	KBL	20.74	13.72%	8.63
5	SANIMA	20.48	11.88%	16.45

Return on Equity Analysis

ROE measures how effectively a bank uses shareholder equity to generate profits. NABIL Bank again tops this metric at 14.93%, followed by Kumari Bank at 13.72% and Everest Bank at 13.13%. A ROE above 12% is generally considered strong for Nepali commercial banks.

At the lower end, NICA stands at just 0.89%, while Laxmi Sunrise Bank has turned negative with an EPS of Rs -2.04. These figures raise questions about asset quality and operational efficiency at these institutions. ADBL at 4.41% and NIMB at 4.85% also fall well below the sector average.

Valuation Assessment Using P/E Ratio

The P/E ratio helps investors determine whether a stock is overvalued or undervalued relative to its earnings. Kumari Bank stands out with the lowest P/E of 8.63, suggesting potential undervaluation. PCBL at 12.25 and NABIL at 13.86 also trade at relatively modest multiples given their earnings power.

On the expensive side, NICA trades at a staggering P/E of 190.01, largely because its EPS of Rs 1.76 is extremely thin. CZBIL at 41.7 and ADBL at 30.33 also carry elevated valuations that may not be justified by their current earnings trajectories.

Net Asset Value and Book Value Perspective

NAV represents the per-share book value of a bank. Nepal Bank Limited has the highest NAV at Rs 262.43, followed by NABIL at Rs 235.64 and EBL at Rs 235.04. Banks trading below their NAV may present value opportunities, while those trading significantly above NAV are priced on growth expectations.

Comparing LTP to NAV, KBL trades at Rs 240 against a NAV of Rs 151.16, representing a price-to-book ratio of approximately 1.59x. In contrast, SBI at Rs 429.9 vs NAV of Rs 193.1 trades at around 2.23x book value.

Net Profit Margin Trends

NPM reveals how much of a bank's total revenue is retained as profit after all expenses. SCB leads with 44.58%, closely followed by NABIL at 44.56%. These banks benefit from lower cost-to-income ratios and efficient operations. At the bottom, LSL's NPM of -9.53% signals operational distress that warrants caution from investors.

The average NPM across the 18 commercial banks stands at approximately 28%, with significant variance between the top and bottom performers. Banks with NPM above 35% are generally better positioned to weather economic slowdowns and maintain dividend payouts.

Sector-Wide Macro Indicators

The Banking and Financial Institution (BFI) sector as a whole shows a CD ratio of 74.32%, which remains within Nepal Rastra Bank's prescribed limits. The NPL ratio of 5.42% has seen a slight uptick, indicating growing stress in certain loan portfolios. The Capital Adequacy Ratio of 12.61% exceeds the regulatory minimum, providing a buffer against potential shocks. With the repo rate at 4.25%, monetary policy remains accommodative, supporting credit growth and potentially improving bank earnings in subsequent quarters.

Investment Implications and Sector Outlook

For value investors, KBL (P/E 8.63), PCBL (P/E 12.25), and GBIME (P/E 13.24) offer attractive entry points given their solid earnings profiles. Growth-oriented investors may find NABIL and EBL appealing despite slightly higher valuations, as their consistent earnings growth and strong ROE metrics suggest sustained performance ahead.

The divergence between top and bottom performers is widening, which suggests that stock selection within the banking sector matters more than ever. Investors should avoid solely relying on EPS and instead evaluate a combination of ROE, NPM, and P/E to construct a balanced banking portfolio. The upcoming Q3 results will provide further clarity on whether current trends are sustainable or if sector-wide headwinds are emerging.

Q2 2082/83 confirms that Nepal's commercial banking sector remains a mixed bag. NABIL, EBL, and SCB continue to deliver strong fundamentals, while NICA, LSL, and CZBIL face significant profitability challenges. Investors should focus on banks with EPS above Rs 17, ROE above 10%, and P/E below 15 for the most attractive risk-reward profiles. The sector's macro indicators remain supportive, but rising NPL ratios deserve close monitoring in the quarters ahead.