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27 Jan, 2025

11 Nepalese Commercial Banks Reported Net Profit in Quarter 2 of 2081/82

As the second quarter of the ongoing fiscal year 2081/82 ended, every commercial bank in Nepal released its financial performance, showing a somewhat challenging situation in the banking sector. While 11 out of Nepal’s 20 commercial banks reported an increase in net profits, the 9 other banks faced major losses, significantly impacting the collective net profit compared to the same quarter last year. Previously, commercial banks' collective earnings were Rs. 28.76 Arba, but this year, it is only Rs. 27.43 Arba, marking a 4.62% decline.

Among these commercial banks, Nabil Bank is currently leading the list with a whopping profit of Rs. 3.24 Arba, a modest increase of 1.29% from Rs. 3.20 Arba last year. Similarly, Prabhu Bank had the highest growth in net profit, with an 85.49% increase, reaching Rs. 1.33 Arba from Rs. 72 Crore. That said, NIC Asia’s net profit dropped by 92% as they collected only Rs. 15 Crore compared to Rs. 1.9 Arba last year.

Given the mixed performance of Nepalese commercial banks, it's clear that the banking sector isn’t in the best shape right now. The root causes? An increase in Non-performing loans (NPL), slower-than-expected growth in loan investments, and a failure to boost net interest income. According to official reports, the average NPL ratio has risen from 3.27% to 4.33% in the current fiscal year, directly affecting their profitability and stability. Now, where does this put you? Let us find out.

S.N.BankPoush 081Poush 080Difference (%)
Net profit (In Crores)
1Nabil Bank3243201.29
2Global IME Bank30520449.51
3Nepal Investment Mega Bank28318057.18
4Everest Bank20717121.11
5NMB Bank20013745.61
6Prime Commercial Bank187218-14.34
7Standard Chartered Bank164172-4.97
8Himalayan Bank1511500.98
9Prabhu Bank1337285.49
10Sanima Bank1191134.72
11Laxmi Sunrise Bank1161059.71
12Agriculture Development Bank95135-29.35
13Nepal SBI Bank90847.11
14Machhapuchhre Bank80800.24
15Rastriya Banijya Bank76201-62.14
16Citizens Bank6678-15.45
17Siddhartha Bank53113-53.36
18Nepal Bank4659-21.87
19Kumari Bank2786-68.20
20NIC Asia Bank15190-92.03
Total Profit27432876-4.62

What Does This Mean for Customers and Investors?

While these changes often go unnoticed by the general public, they play a crucial role in shaping the economy and can directly influence your daily life. The collective net profit of commercial banks facing ups and downs creates ripple effects that influence:

1. Interest Rates

When there’s a positive change in net profits, the interest rates often remain constant. However, banks may increase interest rates in savings accounts to attract more deposits and decrease them for loans. So, if your bank is earning profits, you’re likely to earn more interest on your deposits and enjoy lesser fees on borrowing money.

On the other hand, when net profit dips, banks may do the exact opposite to boost their revenue. Increasing interest rates on loans and lowering them on savings accounts to reduce the costs of borrowing your money. But remember, a decline in profits in a quarter does not necessarily mean they will bring forth drastic changes that influence your earnings or charges.

As these changes in interest rates can occur periodically, it can become a hassle to keep track of them. So, you can use various comparison tools of our Saral Banking Sewa to stay updated easily.

A detailed chart showing the current interest rates for various financial products, including savings accounts, loans, and mortgages, with labeled data points and a clear layout.

2. Loan Availability

Similar to interest rates, changes in the net profits of commercial banks greatly influence the ability of banks to provide loans to you. When commercial banks' financial performance is soaring high, they loosen up the loan policies, making it easier for you. However, during the lows, getting loans is much harder with stricter policies.

Currently, high levels of non-performing loans have become one of the main reasons behind the declining profits in many banks. So, during this time, banks with negative performance might be unable to allow new loans or at higher interest rates. Nevertheless, if you want to know and compare the current loan interest rates of various banks, use our loan comparison tool.

An infographic illustrating the availability of different types of loans, including personal, home, and auto loans, with key features, interest rates, and eligibility criteria highlighted.

3. Services or Rewards

Whether you are a customer or investor, a bank's financial performance directly influences the quality of services and rewards you receive. For instance, low-performing banks are unable to pay dividends to their investors, and as part of their recovery strategy, they might cut back on their costly customer services. 

Meanwhile, a bank with positive net profit has greater financial strength and has the flexibility to offer various customer services, including higher potential dividend payouts to its shareholders.

An infographic showcasing various banking services and rewards programs, highlighting features such as cashback offers, loyalty points, and account benefits with visually appealing graphics.

4. Financial Stability

Being pillars of the nation’s financial ecosystem, their collective net profit is crucial in maintaining economic stability. With the bank's growth, they can provide reliable credit and financial services, adding confidence among customers, investors, and businesses. However, a significant decline in profitability can significantly raise stability and safety concerns, resulting in the withdrawal of funds.

Final Thoughts

While 11 commercial banks reported impressive profit increases, the overall net profit took a hit compared to last year. With this mixed performance of banks, a slight shift across interest rates, loan availability, and financial stability might appear. So, remain proactive and keep an eye on your bank’s performance using our Saral Banking Sewa to ensure you can make smarter financial decisions.