Banks’ profits surge on higher interest earnings

Banks’ profits surge on higher interest earnings

Commercial banks posted 18 per cent increment to Rs 9.38 billion profit in the second quarter of the current fiscal year 2013-14 due to higher interest earnings. In the last fiscal year's second quarter they have posted a combined profit of Rs 7.94 billion. Of the total 30 listed commercial banks, only one posted loss in the second quarter. Despite the low borrowing, the interest earning of the 30 banks – in the half year – swelled up to Rs 21.47 billion from the first quarter's interest earning of Rs 9.79 billion. The commercial banks have however failed to increase income – compared to the first quarter – from other sources like foreign exchange, service charges and others. Despite the rising profits, they have also failed to increase returns on equity and assets, apart from yield of investment that has decreased, which is a wake up call for the bankers. The central bank has been asking the banks to reduce the spread rate – the difference between lending and deposit rates – to five per cent, which will further tighten the profit prospects in the next quarter. The central bank has also asked the banks not to charge any fees for customer services limiting the scope for the profit expansion of the banks. The commercial banks have earned Rs 2.03 billion profits – in the second quarter – from foreign exchange, compared to Rs 1.02 billion in the first quarter of the current fiscal year. Likewise, income from various fees stood at Rs 2.81 billion compared to Rs 1.4 billion in the first quarter. Nabil Bank posted the highest net profit (Rs 1.05 billion) followed by Nepal Investment Bank (Rs 940.39 million), Rastriya Banijya Bank (Rs 717.88 million), Everest Bank (Rs 679.11 million) and Standard Chartered Bank (Rs 633.31 million), whereas Kist Bank posted Rs 198.80 million loss in the second quarter.
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