Commercial banks in Nepal recorded an 11.51 percent increase in net profits in the first half of the current fiscal year, supported by improved loan recovery, even as provisions against non-performing loans (NPLs) rose sharply.
Financial statements released by 20 commercial banks show that the sector earned a combined net profit of Rs 30.59 billion between mid-July 2025 and mid-January 2026, compared to Rs 27.43 billion during the same period last fiscal year—an increase of Rs 3.16 billion.
Bankers attributed the profit growth mainly to higher net interest income and increased commission earnings. Nepal Bankers’ Association President Santosh Koirala noted that loan recovery improved significantly in the second quarter of the fiscal year, helping banks absorb the impact of higher provisioning requirements.
Out of the 20 commercial banks, 12 reported higher profits, while seven experienced a decline in earnings. Laxmi Sunrise Bank was the only lender to post a net loss, amounting to Rs 273.61 million during the review period.
Nabil Bank led the sector with a net profit of Rs 4.75 billion, followed by Global IME Bank at Rs 3.25 billion. Kumari Bank recorded the highest growth rate, with profits soaring by 886.50 percent, while Everest Bank posted the lowest growth at 2.04 percent.
Despite the overall rise in profitability, the banking sector continues to face pressure from increasing NPLs. Provisions set aside for bad loans climbed by 16.84 percent during the period. As of mid-January, total provisions stood at Rs 28.75 billion, up from Rs 24.67 billion a year earlier.
Fourteen banks allocated more than Rs 1 billion each to meet regulatory provisioning requirements. Himalayan Bank recorded the steepest increase in provisioning, with a 462.95 percent jump to Rs 1.03 billion.
Meanwhile, banks are grappling with excess liquidity amid weak credit demand. Lending rates have declined to a three-year low of 5.36 percent, down from 6.81 percent a year earlier, reflecting subdued borrowing activity in the economy.
