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Banks post record first quarter profits
Banks posted record profits in the first quarter ended mid-October despite encountering an acute shortage of loanable funds. Unaudited financial reports of 27 commercial banks show a staggering 45.87 percent growth in profits year-on-year. One bank among the 28 commercial banks in the country is yet to issue its financial report for the first quarter.bookmark
Bibek Subedi
Published at : November 20, 2018
Updated at : November 20, 2018 08:47
Kathmandu
Banks posted record profits in the first quarter ended mid-October despite encountering an acute shortage of loanable funds. Unaudited financial reports of 27 commercial banks show a staggering 45.87 percent growth in profits year-on-year. One bank among the 28 commercial banks in the country is yet to issue its financial report for the first quarter.
The 27 banks generated a combined net profit of Rs14.31 billion in the first three months compared to Rs9.81 billion in the same period last year.
The top profit generator in the first quarter was Nepal Investment Bank. It posted a net profit of Rs1.054 billion compared to Rs894.99 million in the previous year, marking a 17.84 percent jump.
Nabil Bank came second with a net profit of Rs1.052 billion, up 23.61 percent, followed by Nepal Bank with Rs913.88 million in third place. Nepal Bank saw a 5.91 percent drop in its net profit from Rs971.31 million in the previous year.
NIC Asia took the fourth spot posting a net profit of Rs780.67 million. The bank’s profit swelled a whopping 180.89 percent from Rs277.92 million in the first quarter of the last fiscal year.
Bankers cited aggressive lending despite an insignificant growth in deposits for the surge in profits. The 27 commercial banks saw their deposits grow by Rs67.14 billion during the first three months of the fiscal year while lending was up by Rs157.71 billion.
“Banks were in a good liquidity position at the beginning of the fiscal year, and there was high demand for loans from the private sector. As a result, they expanded their business by lending aggressively,” said Bhuvan Kumar Dahal, CEO of Sanima Bank. “The industry started facing an acute shortage of loanable funds towards the end of the quarter, and it will be impossible for them to increase lending in the coming days.”
According to Nabil Bank CEO Anil Shah, demand for loans from the private sector is still high, although banks are not in a position to increase lending. “Their performance in the future will depend on the availability of funds,” said Shah. “If the government increases capital expenditure, money will flow into the system which will enable banks to lend more. But if that does not happen, banks will be forced to curb their lending.”
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