Bank profits down 1.87pc in Q2

KATHMANDU, FEB 18 -

The net profit of commercial banks at the end of the second quarter was down 1.87 percent compared to the same period in 2009-10.

According to the unaudited financial reports published by 30 commercial banks, they made a combined net profit of Rs 7.33 billion in Q2, down from Rs 7.47 billion in 2009-10. Earnings in Q1 totalled Rs 3.46 billion.

“Over the period, both the deposit base and lending portfolio could not rise significantly. Further, other sources of income had also shrunk,” said Sashin Joshi, chief executive officer of NIC Bank.

The deposit base of the banks is suffering from a liquidity crunch which is yet to get resolved. The liquidity crunch further increased the cost of funds with the rise of branch expansion and shrinking of the spread rate.

“With the rise in the expansion of bank branches, the cost of fuel and staff overhead have significantly climbed up,” said Joshi.

Following the liquidity crunch, the banks had to increase the interest rate on normal savings accounts, while the rate of lending could not rise accordingly. Joshi said that the shrunk spread rate will impact performance in the coming quarters. According to bankers, profit growth of established banks has shrunk compared to newer banks. As per the unaudited financial reports, Rastriya Banijya Bank (RBB) has realized the highest profit of Rs 864.93 million, up from Rs 343.55 million in the previous quarter. Over the period the interest income of Rastriya Banijya Bank stood at Rs 2.21 billion from Rs 999.62 million previously.

Among the top five banks in terms of highest net profit are RBB, Nabil Bank, Agricultural Development Bank Nepal (ADBN), Nepal Investment Bank, and Standard Chartered Bank. The RBB posted a net profit of Rs 864.98 million, whereas Nabil and ADBN recorded net profits of Rs 664.62 million and Rs 654.98 million, respectively.

The RBB and NIBL have maintained their position as top two banks in terms of deposit mobilisation. In the second quarter, deposits of RBB and NIBL stood at Rs 62.64 billion and Rs 48.38 billion, respectively. However, their deposits in the second quarter have declined compared to the first quarter. But in terms of lending, NIBL is still ahead of other banks with a lending exposure of Rs 43.09 billion. Meanwhile, 10 banks saw a growth in non-performing loans. The average NPL of the 30 commercial banks stands at 2.86 percent, up from 2.80 percent in the previous quarter. Bankers attribute the rise in NPL to the ceiling on lending to the realty sector.

Top five banks in terms of net profit

Rastriya Banijya Bank Rs 864.93 million

Nabil Bank Rs 664.62 million

Agriculture Development Bank Rs 654.98 million

Nepal Investment Bank Rs 651.66 million

Standard Chartered Bank Rs 527.89 million

Top five banks in terms of deposits

Rastriya Banijya Bank Rs 62.64 billion

Nepal Investment Bank 48.38 billion

Nabil Bank Rs 46.33 billion

Standard Chartered Bank Rs 34.09 billion

Nepal SBI Bank Rs 39.80 billion



Source: http://www.ekantipur.com/2011/02/18/business/bank-profits-down-1.87pc-in-q2/329777.html, Posted on: 2011-02-18 09:07