Net profit of commercial banks has gone up by a marginal 1.62 percent over the first seven months of fiscal year 2024-25. According to Nepal Rastra Bank, 20 commercial banks reported a combined net profit of Rs 36.06bn in the review period (mid-July 2024 to mid-Feb 2025). The combined net profit of 20 commercial banks was Rs 35.49bn in the review period of the previous fiscal year.
Nabil Bank has reported the highest net profit of Rs 4.01bn in the first seven months of 2024-25. Following closely are Global IME Bank Ltd and Nepal Investment Mega Ltd with net profits of Rs 3.89bn and Rs 3.43bn, respectively. Nepal Bank Ltd saw its net profit grow by a whopping 156.31 percent, rising to Rs 2.45bn in mid-February from Rs 959.17m in mid-February last year. Prabhu Bank Ltd also reported a 97.78 percent growth in its net profit to Rs 1,834.67bn in mid-February 2025.
While net profit of most of the commercial banks have crossed the billion-rupee mark, a handful of banks are still not close to the one-billion-rupee threshold. NIC Asia Bank recorded the lowest net profit of Rs 464.7m in the seven-month period, followed by Kumari Bank (Rs 738.6m) and Agricultural Development Bank Ltd (Rs 799.9m). Siddhartha Bank (Rs 855.1bn), Citizens Bank (Rs 902.6bn) and Machhapuchchhre Bank (Rs 869.1m) have also reported net profits below Rs 1bn.
In contrast, only four commercial banks had reported net profit below one billion rupees in mid-February last year. Out of 20 commercial banks in the country, 11 managed to increase their net profit in mid-February compared to last year, while nine saw their net profit drop. NIC Asia reported the biggest drop of 78.31 percent in its net profit, with the bank’s net profit dropping from Rs 2.14bn in mid-February last year to Rs 464.73m in mid-February. Next is Rastriya Banijya Bank Ltd, which saw a 53.83 percent drop in its report to Rs 1.23bn. Agricultural Development Bank Ltd and Siddhartha Bank also saw net profit drops of 49.16 percent and 39.7 percent to Rs 799.95m and
Rs 855.19m, respectively.
Low-interest income and the need to allocate substantial provisions for non-performing loans (NPLs) have significantly impacted the profitability of commercial banks. Despite a strong showing of
Rs 36.06bn in collective net profits in seven months, banks are grappling with a dual burden: diminished revenue from lending and rising costs to cover bad debts.
The banking system is currently awash with liquidity, with deposits rising amid slow credit disbursement. Nepal’s post-pandemic recovery has faltered because of global inflationary pressures and domestic issues like political instability and infrastructure delays, which have resulted in a slowdown in business expansion and consumer spending. As a result, banks have struggled to disburse credit effectively, leaving large pools of funds idle. This low credit off-take has directly affected interest income of banks.
Meanwhile, the economic slowdown has affected borrowers’ ability to repay loans and pushed non-profit loan (NPL) levels higher. The surge in bad loans has forced banks to set aside sizable provisions to cushion potential losses which has eroded profitability of banks.
