Support Laghubitta Bittiya Sanstha Reports Strong Financial Growth in Q3 2081

Kathmandu, April 21, 2025 – Support Laghubitta Bittiya Sanstha, a prominent microfinance institution in Nepal, has released its financial performance report for the third quarter of the Nepali fiscal year 2081 (ending 31st Chaitra 2081), showcasing remarkable growth across key metrics. The institution’s results reflect a robust increase in profitability and operational efficiency, underscoring its strong position in the microfinance sector.

Significant Growth in Profitability

Support Laghubitta reported a net profit of Rs. 306.49 million for the quarter, a staggering 148.37% increase compared to Rs. 123.40 million in the same period of the previous year. This growth was driven by a 249.28% surge in operating profit, which rose to Rs. 465.69 million from Rs. 133.33 million. The institution also successfully reversed its provision for possible losses, recording a positive figure of Rs. 1009 million, compared to a provision of Rs. 1009 million in the prior year. Additionally, the write-back of provisions for possible losses amounted to Rs. 2080 million, a significant improvement from the Rs. 6254 million provision in the previous year.

Expansion in Core Financial Metrics

The institution’s paid-up capital grew by 28.57%, reaching Rs. 1224.43 million, up from Rs. 952.38 million. Reserves and surplus also saw a healthy increase of 11.62%, rising to Rs. 646.36 million from Rs. 579.07 million. On the lending side, loans and advances expanded by 22.50%, totaling Rs. 18434.02 million compared to Rs. 15044.01 million in the previous year. Deposits, however, experienced a slight decline of 0.71%, dropping to Rs. 12689.24 million from Rs. 12779.59 million.

Income and Efficiency Gains

Support Laghubitta’s net interest income soared by 63.39%, reaching Rs. 872.80 million, up from Rs. 491.81 million. Total operating income also grew by 55.96%, climbing to Rs. 10055.69 million from Rs. 6960.07 million. Other operating income saw a modest increase of 2.50%, rising to Rs. 202.10 million from Rs. 197.17 million. The institution’s cost of funds decreased significantly by 4.72 percentage points to 7.19%, down from 11.91%, reflecting improved funding efficiency. Additionally, non-performing loans (NPLs) dropped to 1.64% from 3.25%, a reduction of 1.61 percentage points, indicating better asset quality.

Shareholder Metrics and Valuation

Earnings per share (EPS) on an annualized basis increased sharply by 16.10 points to Rs. 33.37, up from Rs. 17.28. However, the net worth per share saw a slight decline of 8.01 points, falling to Rs. 152.79 from Rs. 160.80. The price-to-earnings (PE) ratio stood at 71.8, slightly down from 77.97. The capital fund to risk-weighted assets (RWA) ratio improved to 9.53% from 8.66%, reflecting a stronger capital position.

Analysis and Outlook

The financial results highlight Support Laghubitta’s strong operational performance and its ability to manage risks effectively. The significant reduction in non-performing loans and the reversal of provisions for possible losses indicate improved credit quality and risk management practices. The growth in loans and advances, coupled with a substantial rise in net interest income, points to the institution’s success in expanding its lending portfolio while maintaining profitability.

However, the slight decline in deposits suggests a need for strategies to bolster deposit mobilization, which is crucial for sustaining lending growth in the microfinance sector. The decrease in the cost of funds is a positive development, as it enhances the institution’s ability to offer competitive lending rates while improving margins.

Analysts view Support Laghubitta’s performance as a testament to its resilience in a challenging economic environment. The institution’s focus on microfinance continues to empower underserved communities in Nepal, while its financial growth strengthens its capacity to expand outreach. Moving forward, the institution will likely aim to maintain its growth trajectory while addressing the marginal decline in deposits and ensuring sustainable capital adequacy.

Support Laghubitta Bittiya Sanstha’s Q3 2081 results position it as a key player in Nepal’s microfinance landscape, with a promising outlook for the remainder of the fiscal year.