NMB Bank Earns NPR 915.9 Million in Q1 FY 2025/26
7th November 2025, Kathmanu
NMB Bank’s Q1 financial results present a paradoxical picture of robust core business growth overshadowed by heightened credit risk management.
NMB Bank Earns Profit
The data clearly shows a substantial improvement in the bank’s main revenue stream, yet this momentum was not enough to offset a major expense.
The Core Growth Driver: Net Interest Income
The bank’s core business of lending was highly successful in Q1, demonstrated by a remarkable 24.49% jump in Net Interest Income (NII), which reached NPR 2.48 billion from NPR 1.99 billion in the same period last year. This figure is calculated as the difference between interest earned on loans and investments and interest paid on deposits. A growth of nearly one-quarter in this metric, alongside a 23.47% rise in Total Operating Income, signifies effective asset deployment and strong demand for credit or favorable interest rate spreads.
The Profit Killer: Impairment Charges
The crucial factor that eroded the strong operating performance and dragged the final net profit down was the higher impairment charges. Impairment charges, also known as loan loss provisions, are funds that banks are required to set aside to cover potential losses from loans that are unlikely to be fully repaid (Non-Performing Loans or NPLs).
In an environment of economic slowdown, regulatory tightening, and increased stress on borrowers, banks proactively increase these provisions to fortify their balance sheets. The massive increase in these charges directly reduces the Operating Profit, as seen by the 14.31% drop in this metric, and subsequently cuts the Net Profit. A sharp rise in the ‘Impairment Charges’ component is the explicit reason provided for the profit decline, indicating a conservative provisioning strategy to address potential future loan defaults and asset quality pressure within the banking sector.
Financial Stability and Investor Ratios
Despite the year-on-year profit decline, the bank’s overall financial structure signals robust stability and a conservative outlook.
Capital Strength: The bank maintains a significant Paid-up Capital of NPR 18.36 billion and a healthy Reserve Fund of NPR 14.26 billion. This strong capital base suggests that NMB is well-equipped to absorb potential losses and support future business expansion, which is essential after taking high impairment charges.
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Business Volume Growth: The foundation for future interest income remains strong with Deposits at NPR 290 billion and Loans and Advances at NPR 234 billion. This scale of business provides a solid platform for future profitability once the economic environment stabilizes and provisioning requirements ease.
Impact on Shareholder Value
The decline in net profit directly impacted shareholder-centric metrics:
Earnings Per Share (EPS): The annualized EPS fell from NPR 24.95 to NPR 19.95, a direct reflection of the reduced profit distributed over the same paid-up capital.
Net Worth Per Share: This metric remains strong at NPR 178.64, indicating a high intrinsic value per share backed by the bank’s substantial reserves and retained earnings.
Price-to-Earnings (P/E) Ratio: Standing at 11.78 times, the P/E ratio suggests the market values NMB Bank’s earnings at a moderate multiple, which is common in the Nepali banking sector, especially following a quarter of heightened provisioning.
Outlook: Long-Term Resilience vs. Short-Term Headwinds
The Q1 results highlight the current environment of credit risk and caution prevalent across the financial sector. While the 20.04% reduction in profit is disappointing for the short term, the underlying 24.5% growth in core interest income is a powerful indicator of the bank’s operational efficiency and market presence.
The higher provisioning is a forward-looking measure, reinforcing the bank’s financial stability and its preparedness to navigate potential asset quality challenges. Analysts will look for a moderation in impairment charges and a continued strong growth in NII in subsequent quarters as the key signs of a turnaround back towards higher net profitability. NMB Bank’s consistent ability to grow its top-line revenue—the Net Interest Income—reassures investors of its long-term potential for stable and sustained earnings growth once the economic headwinds subside and the high-provisioning cycle concludes.
For More: NMB Bank Earns Profit
