Nepal Development Banks Profit Report for Seven Months

16th March 2026, Kathmandu

The latest financial data released by Nepal Rastra Bank (NRB) reveals that the 17 development banks operating in Nepal achieved a combined profit of NPR 4.20 billion during the first seven months of the fiscal year 2082/83.

Nepal Development Banks Profit

While this figure highlights the sector’s continued relevance in the national financial ecosystem, it also reflects the broader economic headwinds currently impacting the banking industry.

Performance Overview and Market Trends

Despite a challenging economic climate characterized by market uncertainty and rising non-performing loans (NPLs), the development banking sector has remained largely resilient. The collective profit of NPR 4.20 billion represents a marginal decline of 4.19 percent compared to the NPR 4.38 billion earned during the same period in the previous fiscal year (2081/82).

The sector’s performance is notably uneven. While 12 out of the 17 institutions recorded growth, five banks experienced a contraction in earnings, indicating that institutional performance is increasingly tied to effective credit quality management and operational efficiency rather than just market expansion.

Leading Performers: Driving Profitability

A few major institutions continue to command a significant portion of the sector’s total earnings.

Muktinath Bikas Bank: Remains the sector leader, recording an impressive profit of NPR 821.5 million—a 30.50 percent increase year-on-year.

Garima Bikas Bank: Secured the second position with a profit of NPR 779.4 million, marking a 14 percent growth.

Shine Resunga Development Bank: Reported a profit of NPR 518.2 million, demonstrating a 16 percent upward trajectory.

Kamana Sewa Bikas Bank: Showed consistent performance with NPR 476 million in earnings, a 14.80 percent increase.

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Sectoral Resilience and Resilience Drivers

The data shows a clear divide between the large-cap development banks and smaller, regionally focused entities. Several smaller banks recorded extreme profit surges, likely due to specific balance sheet adjustments or recovery of previously written-off loans:

• Narayani Development Bank: Surged by 500 percent to NPR 51.4 million.
• Corporate Development Bank: Experienced an 842 percent jump to NPR 19.3 million.

However, these figures contrast sharply with larger institutions like Mahalaxmi Bikas Bank, which saw a 15.5 percent decrease, and Excel Development Bank, which faced a 61 percent drop. These declines are largely attributed to the increasing burden of provisioning for bad loans, as the economic slowdown continues to affect small-to-medium enterprise (SME) borrowers.

The Role of Development Banks in Nepal’s Economy

Development banks serve as the vital bridge between urban commercial banking and the grassroots economy. Their importance lies in their ability to:

• Provide specialized credit to local businesses and small enterprises.
• Facilitate infrastructure financing in underserved regions.
• Promote regional economic activities that often remain outside the scope of larger commercial banks.

Analytical Perspective: Challenges and Outlook

The slight decline in overall sectoral profit underscores the difficulties of the current fiscal year. Key challenges include:

Economic Slowdown: Decreased demand for new credit as businesses remain cautious about expansion.

NPL Management: The rising volume of bad loans requires higher provisioning, which directly eats into the net profit of these banks.

Market Uncertainty: Fluctuations in interest rates and liquidity constraints have made it difficult for banks to maintain consistent interest spreads.

As Nepal moves into the final quarter of the fiscal year, the sector’s ability to maintain these profit levels will depend heavily on the effective management of credit risk and the potential for an uptick in economic activity.

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