Nepal’s commercial banks recorded a 1.4% year-on-year increase in net profit by the end of the third quarter of the current fiscal year, 2024/25, despite lower-than-expected credit expansion in the market.
According to unaudited financial reports for the third quarter (mid-January to mid-April), the country’s 20 commercial banks collectively posted a net profit of Rs 41.25 billion so far in the fiscal year, compared to Rs 40.68 billion during the corresponding period last fiscal year.
Of the 20 banks, 11 reported an increase in net profit, while the remaining nine saw declines. Nabil Bank topped the profitability chart with a net profit of Rs 5.05 billion. However, the most remarkable year-on-year growth was recorded by Nepal Bank Limited, whose profit surged more than 2,000%—from Rs 130.91 million in the same period last year to Rs 2.78 billion this year.
Other strong performers included Nepal Investment Mega Bank, Global IME Bank and Everest Bank, with net profits of 4.54 billion, Rs 4.53 billion and Rs 3.45 billion, respectively.
Read: Commercial Banks’ Net Profit Drops 4.62% Y-O-Y in First Six Months of FY 2024/25
In contrast, NIC Asia Bank posted the sharpest decline, with its net profit plunging by 91.81%—from Rs 1.91 billion last fiscal year to just Rs 156.78 million this year. Other banks that experienced significant profit drops include Himalayan Bank (down 74.33%), Kumari Bank (72.85%), Rastriya Banijya Bank (49.29%), Prime Commercial Bank (22.56%), Citizens Bank (20.6%), Standard Chartered Bank (11.17%), Agricultural Development Bank (10.17%), and Siddhartha Bank (0.94%).
Despite the sluggish credit environment, industry insiders attribute the overall profitability to relief measures introduced by Nepal Rastra Bank (NRB).
While deposits have grown and interest rates have declined, credit flow to the private sector remains constrained due to subdued economic activity. According to NRB, banks and financial institutions (BFIs) increased lending by Rs 304.82 billion as of mid-March in the current fiscal year (FY 2024/25), reflecting a 6% rise compared to the same period last year. However, the central bank’s monetary policy had projected 12.5% credit growth to the private sector this fiscal year.
Among the key relief measures provided by NRB were the restructuring and rescheduling of loans extended to the construction sector and a reduction in loan loss provisioning requirements for performing loans.
As part of its mid-term monetary policy review, NRB reduced the provisioning rate from 1.1% to 1%, restoring it to the pre-pandemic level. Previously, the central bank had lowered the rate from 1.2% to 1.1% following the monetary policy announcement in July 2024, after having raised it to 1.3% during the COVID-19 pandemic.
