KATHMANDU, MAY 11 - 2012
Banks expect their third quarter profits to drop in a reflection of a general decline in earnings. Five out of the 10 commercial banks that have published their Q3 reports saw a growth in their profits, and a number of leading banks say Q3 profits will be down.
Everest, Global, Nabil, Nepal SBI and Grand Bank (formerly DCBL Bank) saw a rise in their profits while the Bank of Kathmandu, Citizens, Nepal Investment and NMB have reported a decline in their net profits. Himalayan, NIC and Kist officials said that their Q3 profits had taken a beating.
Bankers have attributed the drop in profits to lack of investment opportunities amid excessive liquidity. They have also blamed increased loan loss provisioning and higher operating costs for their reduced earnings.
CEO of NIC Bank Sashin Joshi said that a prevalence of high cost demand amid poor lending and recovery had affected the profits of many banks. “Loan loss provisioning has also increased in the case of commercial banks due to poor recovery of real estate loans which has hit profits,” said Joshi.
Kist Bank has also reported a net loss in the third quarter as it struggled to recover loans. “Although we are operating at a profit, increased provisioning has resulted in a net loss in the third quarter,” said Kist CEO Kamal Gyawali.
Even banks that registered a growth in profits are not happy with the business environment that is affecting revenues. “The business environment in the country has not improved, and a majority of the banks are still struggling to find trustworthy borrowers to lend to,” said Bhuvan Dahal, chief investment officer at Nabil Bank. “However, our fund management has been pretty good and it ensured good returns from our long-term investment compared to other banks.” Nabil made a net profit of Rs 1.12 billion compared to Rs 948 million in the corresponding period last year.
Everest Bank saw a marginal increase in its profit, but it was not due to improved business. “We were successful in lowering the rate on deposits which increased our interest income and ultimately net profits,” said PK Mohapatra, CEO of Everest. The bank’s net profit at the end of Q3 increased to Rs 786 million compared to Rs 698 million previously.
Himalayan Bank reported that despite a better operating profit, its net profit suffered in the third quarter. “It is due to an increase in the operating cost,” said Ashoke Rana, CEO of Himalayan Bank.
Banks expect their third quarter profits to drop in a reflection of a general decline in earnings. Five out of the 10 commercial banks that have published their Q3 reports saw a growth in their profits, and a number of leading banks say Q3 profits will be down.
Everest, Global, Nabil, Nepal SBI and Grand Bank (formerly DCBL Bank) saw a rise in their profits while the Bank of Kathmandu, Citizens, Nepal Investment and NMB have reported a decline in their net profits. Himalayan, NIC and Kist officials said that their Q3 profits had taken a beating.
Bankers have attributed the drop in profits to lack of investment opportunities amid excessive liquidity. They have also blamed increased loan loss provisioning and higher operating costs for their reduced earnings.
CEO of NIC Bank Sashin Joshi said that a prevalence of high cost demand amid poor lending and recovery had affected the profits of many banks. “Loan loss provisioning has also increased in the case of commercial banks due to poor recovery of real estate loans which has hit profits,” said Joshi.
Kist Bank has also reported a net loss in the third quarter as it struggled to recover loans. “Although we are operating at a profit, increased provisioning has resulted in a net loss in the third quarter,” said Kist CEO Kamal Gyawali.
Even banks that registered a growth in profits are not happy with the business environment that is affecting revenues. “The business environment in the country has not improved, and a majority of the banks are still struggling to find trustworthy borrowers to lend to,” said Bhuvan Dahal, chief investment officer at Nabil Bank. “However, our fund management has been pretty good and it ensured good returns from our long-term investment compared to other banks.” Nabil made a net profit of Rs 1.12 billion compared to Rs 948 million in the corresponding period last year.
Everest Bank saw a marginal increase in its profit, but it was not due to improved business. “We were successful in lowering the rate on deposits which increased our interest income and ultimately net profits,” said PK Mohapatra, CEO of Everest. The bank’s net profit at the end of Q3 increased to Rs 786 million compared to Rs 698 million previously.
Himalayan Bank reported that despite a better operating profit, its net profit suffered in the third quarter. “It is due to an increase in the operating cost,” said Ashoke Rana, CEO of Himalayan Bank.
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