August 6, 2023, 11:14 pm The recession has hit the financial intermediaries as not only net profit but also distributable profit of commercial banks decreased in the last fiscal year compared to a fiscal year ago.
According to the unaudited financial statements of the commercial banks, they have earned a total of Rs 70.17 billion net profit in the last fiscal year 2022-23. A fiscal year ago in 2021-22, there were 26 commercial banks, which earned net profit of Rs 74.80 billion. Some six commercial banks have merged to be a total of 20 commercial banks in the last fiscal year.
Likewise, the distributable profit has also gone down by 26 per cent due to economic slowdown. The commercial banks can distribute Rs 31.90 billion from their profit from the last fiscal year, whereas a fiscal year ago in 2021-23, they had Rs 53.06 billion distributable profit. It is, however, not mandatory to distribute all the distributable profit, according to the central bank.
According to the unaudited financial statements, out of 20 commercial banks, some 18 have increased their profits but 2 failed. Likewise, two commercial banks crossed Rs 7 billion profit, while 10 earned profit between Rs 3 billion and Rs 7 billion.
Nabil Bank topped the chart with Rs 7.52 billion profit, followed by Global IME Bank with Rs 7.25 billion and Rastriya Banijya Bank with Rs 4.91 billion profits. Despite having more than Rs 7 billion net profit, Nabil Bank has the distributable profit of only Rs 3.96 billion. Similarly, Global IME Bank can also distribute only Rs 2.71 billion from its net profit.
Kumari Bank’s profit declined by 24.13 per cent to Rs 1.95 billion compared to a fiscal year ago. Likewise, Prime Commercial Bank also failed to increase its profit with 18.80 per cent drop to earn Rs 2.26 billion profit in the last fiscal year.
According to the bankers, the distributable profits declined mainly due to a notable rise in bad debts. The bad debts increased to more than double after debtors did not turn up to clear their loans citing the recession. Thus, the Non-Performing Loans (NPLs) of the banks have also doubled to 2.80 per cent in the last fiscal year, compared to only 1.26 per cent a fiscal year ago in 2021-22. The NPL has, however, declined in the fourth quarter compared to the third quarter, when it stood at 3.23 per cent, as the banks concentrated on recovery. The merged banks NPL has increased compared to others.
