Kathmandu: Nabil Bank Limited has reported robust full-year results for FY 2081/82, with net profit rising about 15% to NPR 7.12 billion. Total operating income grew modestly (3.4% year-over-year) to roughly NPR 21.05 billion, driven by stable interest margins and higher service fees.
Net interest income (NII) of NPR 16.32 billion accounted for roughly three-quarters of revenue, with non-interest income – notably fees and commissions – contributing NPR 3.41 billion (up ~5.4% YoY).
This revenue mix – largely interest-based with a healthy fee component – underpinned the bank’s earnings base.
Revenue Mix and Operating Income. Nabil Bank’s income structure remains dominated by core lending operations. Net interest income was essentially flat (+0.06%) at NPR 16.32 billion, reflecting marginal improvement in loan yields partly offset by funding costs. Meanwhile, net fees and commission climbed 5.4% to NPR 3.41 billion as the bank expanded transactional and account services. Together with smaller trading and other gains, total operating income reached roughly NPR 21.05 billion, marking a 3–3.4% annual increase.
This steady revenue growth reflects broad-based business: deposits rose 13.5% and loans and advances by 10.5% during the year, providing a larger base for interest income.
Profitability Drivers and Efficiency
The bank’s operating profitability surged on the back of this revenue growth and unusually low provisioning. Operating profit jumped 25.44% to about NPR 10.85 billion, while net profit rose 15.0% to NPR 7.13 billion. A key driver was sharply lower impairment charges – down nearly 48% from the prior year to NPR 2.40 billion. This suggests much-improved credit-loss provisioning requirements, bolstering the bottom line. Operating costs (personnel and overhead) grew, but at a slower rate; the bank absorbed a ~12% rise in staff expenses without eroding margins. In fact, cost control and cheaper funding helped: Nabil’s cost of funds fell to 4.41% from 5.86%. Together, these factors yielded strong operating leverage – revenue growth outpaced expense growth, lifting operating profit margins and underwriting the double-digit profit gain.
Improved Asset Quality and Credit Trends
Asset quality showed a mild improvement. The non-performing loan (NPL) ratio eased to 4.27% from 4.45% a year earlier, reversing a slight prior uptick. This NPL reduction – modest as it is – underscores better collection performance or write-offs, and partly explains the steep drop in provisions. It also places Nabil’s NPLs in line with industry averages; for context, Nepal’s commercial banks have generally reported NPLs around the mid–single digits in the latest period. Overall, the trend suggests prudent lending standards and effective risk management. Supporting this, deposits grew strongly (+13.5% to NPR 524.6 billion) ahead of loans (+10.5% to NPR 412.8 billion), which may help keep future loan growth sustainable and credit risk in check.
Surging Distributable Profit and Dividend Outlook
The bank’s distributable profit (profit after setting aside reserves and regulatory adjustments) shot up 54.8% to NPR 4.77 billion. This far outpaced net profit growth, reflecting higher retained earnings and regulatory adjustments (notably in provisioning) that freed up more surplus cash for shareholders. As a result, Nabil’s dividend-payout capacity jumped to 17.64% of paid-up capital, up from 11.39% last year. In practical terms, the board now has much more room to boost dividends or bonuses. Investors should view this positively: the bank can reward shareholders more richly while still bolstering its capital base. (By comparison, many Nepalese banks have dividend capacity in the low teens, so 17.6% is relatively generous.) The higher distributable earnings also signal that Nabil has preserved profitability internally to support growth – a healthy sign of financial strength.
Outlook: Efficiency and Sustained Earnings
Nabil Bank’s performance reflects both cyclical and structural factors. On the cyclical side, the economy’s modest recovery has supported loan demand and kept asset quality stable, while earlier high interest rates have begun to ease (lowering funding costs). Structurally, the bank’s diversified revenue (interest plus fees) and prudent provisioning policy have improved earnings resilience. The jump in operating profit – far above the growth in income – indicates improving efficiency: each unit of income is now generating more profit. Management will aim to sustain this by controlling costs (the cost-to-income ratio can improve if revenue picks up faster than expenses) and by capturing more non-interest income. Looking ahead, Nabil’s strong deposit franchise (13.5% growth) and growing loan book should support net interest margins, especially if rate cuts widen spreads. Meanwhile, the expanded distributable base provides a buffer: even if the bank retains a higher capital cushion, there is still scope for generous dividends or bonus shares. All told, the results point to solid operational momentum. As one industry roundup noted, “Nabil Bank saw a 15% profit growth to Rs 7.12 billion… NPLs improved to 4.27% from 4.45%”. With efficiency gains and prudent risk management, Nabil appears well-positioned to sustain its earnings growth and shareholder returns in the coming year.
