NIC Asia Bank's Financial Report: Net Profit Drops by 92%

NIC Asia Bank Limited has released its unaudited financial report for the second quarter of FY 2081/82, revealing a significant decline in profitability.

Net Profit Declines by 92%

As of Poush 2081, the bank has reported a net profit of NPR 151.73 million, marking a sharp 92.03% decline compared to NPR 1.90 billion in the same period last year. This steep drop highlights significant pressure on the bank’s profitability.

Decline in Net Interest and Operating Income

During the review period, the bank's net interest income fell by 6.40%, reaching NPR 5.18 billion. Similarly, the total operating income dropped by 15.03%, settling at NPR 6.05 billion, reflecting challenges in revenue generation.

Significant Increase in Impairment Charges

The bank’s impairment charges surged from NPR 480 million last year to NPR 2.54 billion, a staggering 429.06% increase. This massive rise in impairment charges has severely impacted the bank’s operating profit.

Operating Profit Declines by 90%

The bank’s operating profit decreased by 90.40%, falling to NPR 341.96 million, indicating a substantial reduction in its profit-generating capacity.

Earnings Per Share and Distributable Profit Decline

The bank's Earnings Per Share (EPS) dropped from NPR 25.59 to NPR 2.04, which is a significant decline for investors. Additionally, the distributable profit was negative at NPR 2.65 billion, further highlighting financial challenges.

Decline in Deposits and Loans

By Poush 2081, the bank had mobilized NPR 308.35 billion in deposits, which is 12.92% lower than the same period last year. Similarly, the bank's loans and advances decreased by 9.63%, totaling NPR 245.14 billion.

NIC Asia Bank’s financial report indicates severe challenges in profitability and operational performance. The significant rise in impairment charges, coupled with declining interest income, has negatively impacted the bank’s performance.

The bank needs to focus on controlling impairment charges and strategizing to boost its interest income. Exploring new lending sectors and expanding digital banking initiatives could help address these issues.

While the current financial results are concerning for investors, NIC Asia Bank must implement robust strategies to regain profitability and operational efficiency. The reduction in the base rate may create opportunities for new loans, but the bank needs significant efforts to improve its financial performance.