14 banks in 'billionaire club'; four post net profit of more than Rs2b
KATHMANDU, May 18: Shortage of lendable fund, which nearly brought credit flow to a halt since the beginning of the current fiscal year, did not seem to have affected profit of banking industry.
Cumulative net profit of 28 commercial banks jumped by 40 percent year-on-year to Rs 33.48 billion in the first three quarters of the current fiscal year 2016/17. Altogether 29 commercial banks have logged net profit of Rs 23.78 billion in the same period of the last fiscal year.
According to unaudited financial results of commercial banks for the third quarter compiled by Nepal Bankers Association, half of the commercial banks in the country have made profit of more than Rs 1 billion each. Out of 28 commercial banks, 14 registered net profit of more than one billion rupees as of third quarter of the current fiscal year. Four banks in the 'billionaire club' have earned net profit of more than Rs 2 billion.
While Nabil Bank Ltd and Nepal Investment Bank Ltd (NIBL) have posted net profit of Rs 2.68 billion and Rs 2.38 billion, respectively, two state-owned banks Rastriya Banijya Bank Ltd (RBBL) and Nepal Bank Ltd (NBL) have logged net profit of Rs 2.52 billion and Rs 2.07 billion.
Prabhu Bank Ltd (Rs 1.45 billion), NMB Bank Ltd (Rs 1.14 billion), NIC Asia Bank Ltd (Rs 1.14 billion), Nepal SBI Bank Ltd (Rs 1.1 billion), Standard Chartered Bank Nepal Ltd (Rs 1.06 billion) and Machhapuchhre Bank Limited (1.01 billion) are the new members of 'billionaire club'. Himalayan Bank Ltd, Global IME Bank Ltd and Everest Bank Ltd and Agricultural Development Bank also made logged net profit of more than Rs 1 billion in the review period.
However, Siddhartha Bank Ltd and Sanima Bank Ltd fell short of nearly Rs 50 million to enter into the 'billionaire club'.
Only seven commercial banks had earned net profit of more than Rs 1 billion in the corresponding period of the last fiscal year. However, Prabhu, NMB, NIC Asia, Nepal SBI Bank and Standard Chartered Bank Nepal Ltd along with Siddhartha Bank Ltd, Prime Commercial Bank Ltd, Citizens Bank International Ltd, Nepal Bangladesh Bank Ltd had managed to earn net profit of more than Rs 1 billion in the last fiscal year.
The whopping rise in net profit of commercial banks has been attributed to rapid growth in credit flow - in most cases by breaching the prudential regulatory limits of lending. Aggressive lending in the wake of rising demand for loans after the economy gained momentum and slowdown in deposits have resulted to credit crunch dubbed as 'financial friction' by the Nepal Rastra Bank (NRB).
Bankers, however, say that the profit growth of banks is justified if it is compared with the resources mobilize“. "Business volume has increased and so have the interest rates. If you see the profit by comparing with the capital mobilized by banks, it may seem high. But it should be compared with the resources that we mobiliz”d," Ashok Sherchan, CEO of Prabhu Bank Ltd, told Republica.“
"And there are other non-funded incomes for banks like guarantee bills, commissions and fees from other banking facilities like ASBA, e-banking and electronic cards. The non-interest income of banks is also increasing through their alternative delivery channe”s," he added.