Nabil Bank becomes the most profitable bank
Author
NEPSE trading
Nabil Bank Limited (NABIL) has published its unaudited financial statement for the third quarter of the fiscal year 2081 (as of the end of Chaitra 2081, Nepali calendar, corresponding to mid-April 2025). According to the report, Nabil Bank has emerged as the highest profit-earning commercial bank in Nepal. Below is a detailed analysis of the bank’s financial performance.
Net Profit and Growth
In the first nine months of the fiscal year 2081, Nabil Bank earned a net profit of NPR 5.051 billion (5 billion 51 million). This represents an 8.21% increase compared to the same period in the previous fiscal year 2080, during which the bank had earned a net profit of NPR 4.668 billion. The primary reasons for this profit growth are the significant reduction in impairment charges and a notable increase in operating profit.
Income and Expenditure Analysis
Net Interest Income
During the review period, the bank’s net interest income decreased by 3.96%. By the end of the third quarter of fiscal year 2081, the net interest income stood at NPR 12.054 billion, down from NPR 12.551 billion in the same period of the previous year. This decline in interest income has impacted the bank’s total operating income.
Net Fee and Commission Income
Despite the drop in net interest income, the bank’s net fee and commission income increased by 2.27%. In the current fiscal year, this income reached NPR 2.277 billion, up from NPR 2.226 billion in the same period last year. This growth has positively contributed to the bank’s non-interest income.
Total Operating Income
The bank’s total operating income saw a marginal decline of 0.20%. By the end of the third quarter of fiscal year 2081, the total operating income was NPR 15.298 billion, compared to NPR 15.328 billion in the same period of the previous year. The reduction in net interest income is the primary reason for this slight decrease.
Impairment Charges
A significant factor in the bank’s profit growth is the reduction in impairment charges. In the current fiscal year, impairment charges decreased from NPR 3.235 billion to NPR 2.293 billion. This reduction has directly contributed to the increase in operating profit.
Operating Profit
Due to the decrease in impairment charges, the bank’s operating profit surged by 14.03%. The operating profit for the current year reached NPR 7.622 billion, up from NPR 6.684 billion in the same period last year.
Per Share Earnings and Other Indicators
Earnings Per Share (EPS)
By the end of the third quarter of fiscal year 2081, the bank’s Earnings Per Share (EPS) increased by NPR 1.65 to NPR 24.89. Last year, the EPS was NPR 23.24. This increase indicates better returns for the bank’s shareholders.
Distributable Profit and EPS
The bank’s distributable profit stands at NPR 2.874 billion. The distributable EPS is NPR 12.68, reflecting the bank’s capacity to distribute dividends to its shareholders.
Price-to-Earnings (PE) Ratio
As of the end of Chaitra 2081, the bank’s Price-to-Earnings (PE) Ratio is 19.56 times, compared to 18.85 times last year. This ratio indicates how the market values the bank’s earnings.
Net Worth Per Share
The bank’s net worth per share has increased to NPR 226.36, up from NPR 208.39 in the previous year. This growth reflects an improvement in the bank’s overall financial position.
Capital, Reserves, and Investments
Paid-Up Capital
Nabil Bank’s paid-up capital remains unchanged at NPR 27.056 billion, the same as last year.
Reserves and Surplus
The bank has accumulated NPR 34.189 billion in its reserves and surplus, an 8.13% increase from NPR 31.619 billion in the same period last year. This growth indicates the bank’s strengthened long-term financial stability.
Reserve Fund
The bank’s reserve fund stands at NPR 31.315 billion, up from NPR 28.537 billion last year, showing an increase in accumulated reserves.
Deposits and Loans
By the end of the third quarter of fiscal year 2081, the bank collected deposits amounting to NPR 502.106 billion, an 8.66% increase from NPR 462.974 billion in the same period last year. Similarly, the bank’s loan portfolio grew to NPR 401.162 billion, a 7.38% increase from NPR 373.574 billion in the previous year. This growth reflects the bank’s business expansion.
Other Financial Indicators
Capital Fund to RWA: 11.72% (down from 12.01% last year), showing a slight decline.
Non-Performing Loans (NPL): 1.59% (up from 1.25% last year), indicating a slight rise in bad loans.
Credit-to-Deposit Ratio: 82.31% (up from 81.51% last year), showing a marginal increase.
Base Rate: 5.97% (down from 8.36% last year), reflecting a significant decrease.
Interest Spread: 3.57% (down from 4.00% last year), indicating a reduction in the interest spread.
Nabil Bank has successfully strengthened its financial position by the end of the third quarter of fiscal year 2081. Despite a decline in net interest income, the significant reduction in impairment charges and a 14.03% increase in operating profit have driven an 8.21% growth in net profit. Additionally, improvements in EPS, net worth per share, reserves, and growth in deposits and loans highlight the bank’s robust financial health. However, the slight increase in non-performing loans and the reduction in the base rate suggest the need for caution in the future.
