Prime Commercial Bank’s Third Quarter Performance of FY 2081-82: Net Profit at NPR 2.22 Billion, Distributable Profit Surges by Over 450%
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Prime Commercial Bank Limited has reported a net profit of NPR 2.22 billion (NPR 222.93 crore) for the third quarter of the current fiscal year 2081-82 (Nepali calendar, corresponding to 2024-2025). This profit marks a decline of 22.56% compared to the same period in the previous fiscal year 2080-81, when the bank earned a net profit of NPR 2.87 billion (NPR 287.87 crore).
Income and Expenditure Breakdown
Net Interest Income: The bank’s net interest income increased by 15.17% to NPR 6.66 billion (NPR 666.13 crore), up from NPR 5.78 billion (NPR 578.38 crore) in the same period last year. This growth reflects positive performance in the bank’s core lending and deposit activities.
Total Operating Income: Total operating income grew by 16.48%, reaching NPR 8.34 billion (NPR 834.38 crore), compared to NPR 7.16 billion (NPR 716.33 crore) in the previous year, indicating an overall improvement in revenue generation.
Impairment Charge (Provision): The impairment charge surged by 160.51%, rising from NPR 89.50 crore last year to NPR 2.33 billion (NPR 233.15 crore) this year. This significant increase, primarily due to provisioning for non-performing loans, has directly impacted the bank’s profitability.
Operating Profit: Operating profit decreased by 9.58% to NPR 3.71 billion (NPR 371.83 crore), down from NPR 4.11 billion (NPR 411.76 crore) in the same period last year.
Total Operating Profit: Total operating profit saw a decline of 4.09%, standing at NPR 6.12 billion (NPR 612.25 crore), compared to NPR 6.26 billion (NPR 626.83 crore) last year.
Distributable Profit and Dividend Potential
The bank’s distributable profit witnessed a remarkable increase of 452.87%, reaching NPR 1.73 billion (NPR 173.23 crore), compared to just NPR 31.33 crore in the same period last year. This substantial growth is a positive sign for shareholders. Based on this distributable profit, the bank is in a position to distribute a dividend of 10.57%.
Capital and Reserves
Paid-Up Capital: The bank’s paid-up capital remains steady at NPR 19.40 billion (NPR 1,940.25 crore), unchanged from the previous year.
Reserves: Reserves increased by 5.40% to NPR 10.80 billion (NPR 1,080.83 crore), up from NPR 10.25 billion (NPR 1,025.44 crore) last year. This growth strengthens the bank’s financial stability.
Retained Earnings: Retained earnings dropped significantly by 74.05% to NPR 1.73 billion (NPR 173.23 crore), down from NPR 9.95 billion (NPR 995.33 crore) last year. This decline suggests that the bank may have utilized retained earnings for dividend distribution or other expenses.
Deposits and Loans
Customer Deposits: Deposits from customers grew by 15.93%, reaching NPR 244.80 billion (NPR 24,480.42 crore), compared to NPR 211.16 billion (NPR 21,116.27 crore) in the previous year. This growth indicates increased customer confidence in the bank.
Loans and Advances to Customers: Loans and advances to customers increased by 13.37% to NPR 205.24 billion (NPR 20,524.20 crore), up from NPR 181.02 billion (NPR 18,102.95 crore) last year. This expansion reflects the bank’s active lending operations.
Key Financial Indicators
Non-Performing Loan (NPL) Ratio: The NPL ratio rose from 4.29% to 5.65%, an increase of 1.36 percentage points. This rise indicates challenges in loan recovery and management.
Base Rate: The base rate decreased by 2.45 percentage points, from 9.27% to 6.82%. This reduction could provide relief to borrowers through lower interest rates on loans.
Cost of Funds: The cost of funds dropped by 2.28 percentage points, from 7.75% to 5.47%, reflecting a decrease in the interest rates paid on deposits.
Earnings Per Share (EPS): EPS declined by 4.46%, falling from NPR 19.78 to NPR 15.32, primarily due to the drop in net profit.
Net Worth Per Share: The net worth per share stands at NPR 164.63, which is a positive indicator for shareholders.
Prime Commercial Bank’s financial performance in the third quarter of FY 2081-82 shows a mixed picture. The bank has achieved significant growth in deposits, loans, net interest income, and total operating income, reflecting strong operational activity. However, the sharp rise in the NPL ratio and impairment charges has put pressure on profitability, leading to a decline in net profit. The substantial increase in distributable profit is a bright spot for shareholders, offering potential for a decent dividend payout. Moving forward, the bank needs to focus on managing non-performing loans and controlling provisions to improve its profitability in the coming quarters.
