Kathmandu. The financial details up to the third quarter of the current fiscal year clearly show the real situation in the banking sector of Nepal. Although the overall profitability of commercial banks has increased, not all banks are equally strong. <\/p>\n
The net interest income, the main business income of banks, indicates which banks are under pressure and which are protecting their base despite adverse conditions. As of mid-April of the current fiscal year, commercial banks have earned a net interest income of Rs 142.68 billion. Such income was Rs 139.76 billion in the same period of the previous FY. On this basis, the net interest income of the banks has increased by 2.09 percent. <\/p>\n
Net interest income is the difference between the interest charged by the bank from the loan and the interest paid to the depositor. This income is considered to be the main operating base of the banks. According to analysts, net interest income is an important indicator when evaluating a bank’s sustainability, loan operational capacity and cost management. <\/p>\n
The main challenge for banks now is credit expansion. The demand for investment in the market is weak. The private sector is not aggressive in expanding and industries and businesses are not fully operational. <\/p>\n
In such a situation, banks can sustain net interest income only if they can control the cost of deposits and expand quality credit. This is the reason why there is a big gap between the banks. <\/p>\n
Nabil Bank has become the largest bank with the highest net interest income. The bank has earned Rs 12.45 billion in net interest income till mid-April. However, its growth rate is limited to 3.36 percent. <\/p>\n
Nepal Investment Bank earned Rs 9.57 billion in net interest income while Kumari Bank earned Rs 9.30 billion. <\/p>\n
Rastriya Banijya Bank (RBB) is ahead in terms of growth rate. The bank has increased its net interest income by 22.58 percent to Rs 8.70 billion. Sanima Bank posted a growth of 20.48 percent to NPR 5.16 billion while Kumari Bank Bank and NMB Bank also posted double-digit growth in the same period. <\/p>\n
The growth of these banks indicates that some banks have been able to maintain relative balance in deposit cost management and loan mobilization despite adverse economic conditions. In the current situation, the main challenge for banks is to maintain the spread. <\/p>\n
On the other hand, there has been a significant decline in the net interest income of some banks. NIC Asia Bank’s net interest income declined by 20.78 percent to Rs 6.30 billion. This is the biggest decline among commercial banks. <\/p>\n
The financial statements indicate that the income structure of the bank is under pressure. High interest costs, sluggish credit expansion and falling spreads have affected the core earnings of some banks. <\/p>\n
Global IME Bank’s net interest income decreased by 3.51 percent while Himalayan Bank’s net interest income decreased by 11.87 percent. Global IME had earned Rs 12.31 billion in net interest income in the same period of the last fiscal year, which was Rs 11.88 billion in the same period of the current FY. <\/p>\n
Standard Chartered Bank is the bank with the lowest net interest income. The bank has earned a net interest income of Rs 2.91 billion in the first nine months of the current fiscal year. Nepal SBI Bank has a net interest income of Rs 3.86 billion and Machhapuchchhre Bank has a net interest income of Rs 4.39 billion. <\/p>\n
The commercial banks have earned a net profit of Rs 49.21 billion in the first quarter of the current fiscal year. The profit of the banks increased by 19.30 percent compared to the same period of the last FY. However, the state of net interest income shows that the real competition within the banking sector is no longer limited to profits. <\/p>\n
Now, the power of the banks is determined not by how big a profit they make, but by how sustainable the basis of that profit is. The financial statements indicate that in the coming days, the competition among the banks to expand quality credit, manage cheap deposits and maintain stable income structure will intensify.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The financial details up to the third quarter of the current fiscal year clearly show the real situation in the banking sector of Nepal. Although the overall profitability of commercial banks has increased, not all banks are equally strong. The net interest income, the main business income of banks, indicates which banks are under […]<\/p>\n","protected":false},"author":16,"featured_media":228981,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45117,45031,45159],"tags":[],"class_list":["post-298205","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bank-finance-en","category-banner-news-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/298205","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=298205"}],"version-history":[{"count":1,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/298205\/revisions"}],"predecessor-version":[{"id":298206,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/298205\/revisions\/298206"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/228981"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=298205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=298205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=298205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}