Nepal’s commercial banks earned hefty profits of over Rs 67.23 billion in the first 11 months of the last fiscal year despite a slump in the country’s economic activities.
Amid hue and cry of the commercial banks that they had been facing a liquidity crisis followed by the increased bad debt, as reported by banks, they have secured handsome returns in form of hefty profits. Traders blamed the banks earned hefty profits at the cost of high interest rates that they charged on their lending throughout the period.
The records with Nepal Rastra Bank (NRB) show that the profits of commercial banks increased Rs 2.28 billion in the review period of the last fiscal year compared to the same period in the fiscal year 2021/22. During mid-July 2021 and mid-June 2022, the profits of the country’s ‘A’ class banks stood at Rs 64.95 billion in total.
According to NRB, the commercial banks increased their profits by 17.59 percent just in one month between mid-May and mid-June. During mid-July 2022 and mid-May 2023, the profit was Rs 57.17 billion.
More often, banks have been criticized for charging high interest rates to earn a high rate of profitability. The spread rate is the main source of the banks’ earnings.
In the review period, the banks charged interest rates as high as 17 percent in their lending. Although they were flushed with excess liquidity for the past few months, they hardly reduced their interest rates for their clients.
“At a time when the economy is facing recession and the production and commercial sectors have been performing poorly, the increase in banks’ profits is something to raise questions for,” said a member of the Confederation of Nepalese Industries.
Among the individual banks, Nabil Bank secured the biggest profits of Rs 7.11 billion during the review period. Global IME Bank, with an earning of Rs 6.50 billion, was in second place. Likewise, Nepal Investment Mega Bank earned Rs 4.76 billion and NIC Asia Bank earned a profit of Rs 4.63 billion.
The three state-owned banks also made a notable size of profits during the period. In this category, Rastriya Banijya Bank had its profits of Rs 4.47 billion, while Nepal Bank Limited earned Rs 3.07 billion. Agriculture Development Bank, with the profit earning of Rs 1.56 billion, was the lowest in the row.
Of 21 commercial banks, five earned profits of less than Rs 2 billion. These included Laxmi Bank, Machhapuchchhre Bank, Citizens Bank International, Sunrise Bank and Agriculture Development Bank. Laxmi Bank and Sunrise Bank have merged and their joint operation began last week.
Top ten profit-making banks in the first 11 months of FY 2022/23:
Banks Profit
Nabil Bank Rs 7.11 billion
Global IME Bank Rs 6.50 billion
Nepal Investment Mega Bank Rs 4.76 billion
NIC Asia Bank Rs 4.63 billion
Rastriya Banijya Bank Rs 4.47 billion
NMB Bank Rs 3.32 billion
Himalayan Bank Rs 3.29 billion
Prime Commercial Bank Rs 3.21 billion
Standard Chartered Bank Rs 3.11 billion
Nepal Bank Limited Rs 3.07 billion
