Nepal Bank Reports Massive Profit Surge Due to Prior-Year Data Revision; Core Income Posts Solid Growth

Nepal Bank Limited (NBL) has released its unaudited financial results for the fourth quarter of fiscal year 2081/82, showing an extraordinary surge in net profit largely due to a revision in last year’s figures, while operational performance also strengthened.

Extraordinary Profit Growth from Restated Figures
As of Ashad-end 2082, Nepal Bank recorded a net profit of NPR 3.77 billion. This represents a 13,175% jump compared to the NPR 28.42 million reported in the restated financials for the same period last year. However, the dramatic percentage increase is due to the downward revision of last year’s net profit figure, which was initially published as NPR 1.65 billion in FY 2080/81 but has now been revised to NPR 28.42 million.

The revision stems from updated impairment charge data. Previously, impairment charges for FY 2080/81 were recorded as NPR 2.59 billion, but the revised report places them at NPR 4.75 billion. This substantial adjustment reduced last year’s reported profit, making the year-on-year growth rate appear exceptionally high.

Operational Performance: Growth in Core Banking Income
In FY 2081/82, NBL’s net interest income rose by 16.82% to NPR 10.09 billion, reflecting improved interest spreads from lending and investment activities. Net fee and commission income increased by 6.07% to NPR 1.17 billion, indicating stable income from banking services. Total operating income jumped by 15.65% to NPR 11.94 billion, underlining overall expansion in core banking operations.

Operating profit soared to NPR 5.42 billion from just NPR 683 million in the revised figures for FY 2080/81, driven by lower impairment charges this year (NPR 1.13 billion versus NPR 4.75 billion last year).

Balance Sheet and Capital Position
The bank’s paid-up capital remained unchanged at NPR 14.69 billion. Reserves and surplus climbed by 12.14% to NPR 23.48 billion, strengthening the bank’s capital base. Customer deposits expanded by 17.29% to NPR 332.02 billion, while loans and advances to customers grew by 13.89% to NPR 221.70 billion, demonstrating strong credit demand.

Earnings Per Share and Distributable Profit
Earnings per share (EPS) improved significantly to NPR 25.68 from just NPR 0.19 last year, in line with the higher profit. However, distributable profit stood at a negative NPR 449.09 million, although this is an improvement over the negative NPR 965.07 million recorded in the prior year. Distributable EPS also improved from -6.57 to -3.06.

Financial Ratios and Asset Quality
The capital fund to risk-weighted assets (RWA) ratio rose slightly to 13.06%, indicating adequate capitalization. Non-performing loans (NPL) were at 4.47%, slightly higher than sector averages but within a manageable range. The bank’s base rate decreased from 7.97% to 5.58%, reflecting reduced cost of funds, while the interest rate spread narrowed marginally to 3.90%.

Nepal Bank’s FY 2081/82 results show robust core banking growth alongside a remarkable headline profit increase. However, the unusually high profit growth rate is largely an accounting effect caused by the prior year’s restatement of impairment charges, rather than purely operational gains. The underlying business remains strong, as evidenced by double-digit growth in deposits, loans, and net interest income. Moving forward, sustaining profitability will depend on maintaining asset quality and keeping impairment charges under control, while leveraging the expanded deposit and loan base for stable earnings growth.