NIC Asia Bank Profit Declines by 13.54 Percent
29th January 2026, Kathmandu
The financial landscape for one of Nepals largest private lenders is currently undergoing a period of intense correction and consolidation. According to the recently released unaudited financial statements for the second quarter of the fiscal year 2082/83 NIC Asia Bank Limited has reported a significant decline in its overall profitability. The latest figures show that the bank earned a net profit of 131.19 million rupees for the first half of the year which is a notable decrease from the 151.73 million rupees earned in the same period of the previous fiscal year. This 13.54 percent drop in net profit is a clear indicator of the headwinds facing the institution as it attempts to clean its balance sheet and manage rising credit risks.
NIC Asia Bank Profit
The primary factor dragging down the NIC Asia Bank Profit is the substantial decline in net interest income. For any commercial bank interest income serves as the lifeblood of its operations representing the difference between interest earned on loans and interest paid to depositors. During the review period this core revenue stream plunged by 15.87 percent to 4.36 billion rupees. The decline suggests that the banks previous strategy of aggressive high yield lending is being tested as market interest rates fluctuate and borrowers struggle to meet repayment schedules in a sluggish economy. Furthermore higher competition for stable deposits has pushed up the cost of funds which has narrowed the interest spread that the bank traditionally relied upon for its high octane growth.
Another critical area of concern highlighted in the financial report is the sharp fall in operating profit. The banks operating profit crashed by 42.16 percent during the first six months falling to just 197.77 million rupees. This steep decline is largely the result of massive impairment charges that the bank has had to set aside. In the banking industry impairment charges act as a buffer against potential loan defaults. During this quarter the bank allocated 2.43 billion rupees for impairment which is an increase from the 2.35 billion rupees allocated in the previous year. This heavy provisioning is a strategic but painful move by the management to acknowledge the deteriorating quality of its loan portfolio and sanitize the balance sheet for future stability.
The rise in non performing loans is perhaps the most visible sign of the stress within the banks assets. The non performing loan ratio surged from 4.61 percent to 7.47 percent within a single year. This jump indicates that a significant portion of the banks lending particularly in sectors like retail and wholesale trade is facing repayment delays. As these loans move into the non performing category the bank is forced to stop recognizing interest income from them and must instead increase its provisions. This cycle of rising defaults and higher provisions has created a direct downward pressure on the bottom line.
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For shareholders the most alarming detail in the report is the massive negative distributable profit. NIC Asia Bank has reported a distributable loss of seven point three nine billion rupees as of mid January 2082. This negative figure acts as a regulatory deadbolt because under the guidelines of Nepal Rastra Bank a bank cannot distribute any dividends—whether in the form of cash or bonus shares—until it clears its accumulated distributable deficit. This signals a prolonged dividend drought for investors who have historically looked to NIC Asia for consistent returns. The road to wiping out a seven billion rupee deficit will require a massive recovery of bad debts and a sustained period of high profitability in the coming years.
Despite these operational struggles the bank maintains a strong capital and reserve foundation. The paid up capital stands at fourteen point nine one billion rupees and the reserve fund is at 14.66 billion rupees. This capital adequacy provides a necessary buffer that allows the bank to absorb these large scale provisions without facing a systemic crisis. Additionally the bank still holds a staggering 327.0 billion rupees in deposits which reflects continued public trust in the institutions brand despite the current financial volatility. However the bank has been cautious with its lending with total loans standing at 209.31 billion rupees. This high liquidity suggests that the bank is intentionally pulling back from aggressive lending to focus on stabilizing its existing portfolio.
The shareholder metrics reflect the current reality of the bank. The earnings per share have declined to 1.76 rupees which is quite low compared to the banks historical performance. While the net worth per share remains relatively healthy at 198.33 rupees the market sentiment remains cautious. Investors are closely watching to see if the bank can initiate a write back of its provisions by recovering non performing loans. If the recovery team can successfully reclaim even a portion of the bad debts that money would flow directly back into the profit column potentially narrowing the distributable profit gap.
In conclusion the second quarter results of NIC Asia Bank for the fiscal year 2082/83 highlight a period of deep correction. The decline in net profit and the rise in non performing loans are significant challenges that require disciplined management and aggressive loan recovery efforts. While the negative distributable profit is a blow to short term investor expectations the banks strong capital base and massive deposit network provide it with the tools necessary to navigate this rough patch. The coming quarters will be decisive in determining whether NIC Asia can transform this strategic retreat into a sustainable long term recovery.
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