NDBL Financial Performance Q2: 2082/83 Recovery and Strategic Recapitalization
29th January 2026, Kathmandu
Narayani Development Bank Limited (NDBL) has released its unaudited financial statements for the second quarter of fiscal year 2082/83, highlighting a period of intense structural transition as it works to move beyond its legacy financial issues. For the quarter ended Poush 2082, the bank reported a net loss of 25.24 million rupees.
NDBL Financial Performance
On a cumulative basis for the first half of the fiscal year, the bank’s net loss stood at 47.34 million rupees, a significant increase from the 5.21 million rupee loss reported in the corresponding period of the previous year. These results underscore the bank’s ongoing struggle with high non performing loans and elevated provisioning costs.
Interest Income and Revenue Analysis
The bank’s revenue generation remains heavily reliant on its core lending operations despite a restricted business environment. For the second quarter, interest income was recorded at 4.95 million rupees, with the cumulative year to date interest income reaching 9.99 million rupees. After accounting for interest expenses of 12.31 million rupees for the half year, the bank reported a negative net interest income of 2.31 million rupees. This negative margin reflects the high cost of deposits relative to the yield on its limited performing loan portfolio.
To supplement its income, the bank generated 110,000 rupees in net fee and commission income during the quarter, bringing the half year total to 2.27 million rupees. Total operating income for the first six months remained negative at 5.10 million rupees, indicating that core operations are not yet sufficient to cover the institution’s fixed costs.
Operating Expenses and Asset Quality Challenges
Operating expenses continue to be a significant burden on the bank’s path to profitability. Cumulative personnel expenses reached 10.15 million rupees, while other operating expenses totaled 9.58 million rupees for the half year period. These costs, combined with the lack of core revenue, resulted in a cumulative operating loss of 37.20 million rupees.
Asset quality remains the primary concern for the institution. The non performing loan NPL ratio was reported at a very high 43.68 percent as of Poush 2082. While this is a slight improvement from the 47.55 percent reported earlier in the year, it continues to significantly constrain the bank’s capacity for new business and necessitates high impairment charges. For the first half of the year, the bank set aside 12.30 million rupees for loan loss provisions.
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Balance Sheet and Capital Adequacy Status
As of mid January 2026, the total assets of Narayani Development Bank stood at 625.88 million rupees. Customer deposits were recorded at 449.43 million rupees, showing relative stability compared to the immediate previous year end. Loans and advances to customers stood at 144.38 million rupees, as the bank focuses more on recovering existing debts than expanding its lending base.
The bank’s capital position is currently its most critical focus area. The paid up capital stands at 494.33 million rupees following recent capital infusion efforts. However, due to accumulated losses, the bank’s total equity is 142.87 million rupees, and it continues to have negative retained earnings of 501.26 million rupees. The capital adequacy ratio CAR was reported at 25.35 percent, which appears high due to the significant reduction in risk weighted assets as the bank shrinks its loan book. Despite this, the bank remains under close regulatory supervision due to past breaches of capital requirements.
Shareholder Indicators and Strategic Outlook
For investors, the current performance has resulted in weak shareholding metrics. The annualized basic earnings per share EPS was recorded at a negative 1.99 rupees. The net worth per share of the bank is approximately 28.90 rupees, reflecting the impact of historical losses on the company’s book value. The bank’s stock remains active on the Nepal Stock Exchange, with a closing price of 530 rupees per share during the review period, suggesting that market participants are pricing in potential recovery through upcoming right share issuances.
The management’s primary strategy involves a two pronged approach of aggressive loan recovery and capital raising through right shares. The bank has already initiated plans to issue a 100 percent right share to meet the minimum regulatory capital requirement of 500 million rupees for regional level development banks. Additionally, the management aims to expand its branch network once regulatory restrictions are lifted following capital regularization.
In summary, the Narayani Development Bank financial results for the second quarter of 2082/83 reflect a regional bank in the midst of a difficult turnaround. While the narrowing of the NPL ratio and the successful infusion of fresh capital are positive steps, the institution still faces a long road to operational profitability. The success of the current fiscal year will depend entirely on the management’s ability to recover non performing assets and finalize the recapitalization process to allow for a resumption of regular banking activities.
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