NIC Asia Bank Shows Increase in Net Profit for Q1 FY 2025/26

7th November 2025, Kathmandu

NIC Asia Bank Limited has demonstrated a notable financial recovery, underscoring its resilience in a challenging economic landscape.

NIC Asia Reports Profit

The bank’s unaudited financial statement for the first quarter of fiscal year 2082/83 reveals a clear upward trajectory in profitability and operational strength. Despite a marginal dip in its primary revenue stream, the bank successfully leveraged improved operational efficiency and prudent risk management to achieve an impressive increase in its bottom line.

The bank reported a Net Profit of NPR 122.1 million, marking a solid 10.52% year-on-year growth. This performance is a testament to the bank’s successful internal restructuring and strategic focus, particularly following the leadership transition under the new CEO, Santosh Rathi, whose capable management appears to have prioritized asset quality and cost control.

The Strategic Turnaround: Operating Profit and Efficiency

The most compelling story in NIC Asia’s Q1 report lies in the significant improvement in its operational metrics. The bank’s Operating Profit surged to NPR 193.5 million, representing an 11.30% increase from NPR 173.8 million in the corresponding period last fiscal year. This boost in operating profit is the engine that powered the net profit growth, even while core interest revenue faced pressure.

Mitigating Risk: The Key to Profitability

In commercial banking, the link between Non-Performing Loans (NPLs) and profitability is direct and critical. Banks are required by the central bank (Nepal Rastra Bank) to set aside mandatory provisions (impairment charges) against potential losses from NPLs. These provisions are deducted before calculating net profit.

NIC Asia’s impressive turnaround, as highlighted in the provided context, is rooted in its ability to reduce non-performing loans. A lower NPL ratio means the bank needs to make fewer provisions. By effectively managing and reducing its bad loan portfolio, the bank:

Lowered Impairment Charges: Less money was siphoned off as mandatory provisioning, leading to a much larger portion of the operating revenue flowing down to the operating profit.

Enhanced Operational Efficiency: The growth in operating profit that outpaced the growth in net interest income suggests that the bank either effectively contained its operational expenses (non-interest expenses) or significantly improved its income from non-interest sources (such as commission, fees, and foreign exchange). This dual focus on cost control and non-interest income diversification is characteristic of a strong operational recovery.

The Nuance of Revenue: Net Interest Income Declines

A notable detail in the financial highlights is the marginal decline in Net Interest Income (NII), which fell from NPR 2.55 billion to NPR 2.29 billion. NII is the backbone of a commercial bank’s revenue, representing the core difference between interest earned on loans and interest paid on deposits. The decline can be attributed to several macroeconomic factors:

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Fluctuating Interest Rate Environment: Nepal’s banking sector has experienced volatility in interest rates. A general compression of the interest rate spread, or a reduction in the volume of high-yield loans, could lead to a lower NII.

Loan and Advance Contraction: The bank may have adopted a more cautious lending approach in line with its prudent risk management focus, resulting in a slightly lower volume of loan disbursement and thus less interest earned, especially compared to the rapid growth phases of previous years.

The fact that NIC Asia achieved a higher net profit despite a lower NII powerfully underscores the success of its internal strategies—specifically, the significant benefit derived from reduced provisioning and optimized cost management, effectively insulating the final profit figure from the core revenue pressure.

Investor Metrics and Future Outlook

The bank’s financial recovery is clearly reflected in its per-share metrics, offering a stable outlook for stakeholders.

Earnings Per Share (EPS): The EPS stands at NPR 3.21. While modest, the growth rate indicates an increasing return for shareholders on a per-share basis, aligning with the rising net profit.

Net Worth Per Share: At a strong NPR 198.74, the bank’s net worth per share demonstrates sound underlying equity value and capital strength relative to its Paid-up Capital of NPR 14.91 billion. This high net worth per share figure suggests that the bank holds substantial reserves and retained earnings, providing a strong buffer against future economic shocks.

Digital Transformation and Resilience: NIC Asia’s continued focus on digital transformation is a long-term strategy for financial resilience. Digital platforms enhance customer reach, generate new fee-based income streams, and drastically lower the operational cost per transaction, further bolstering operational efficiency in the upcoming quarters. This commitment to technology positions the bank favorably for sustainable growth in the modern financial environment.

In conclusion, NIC Asia Bank’s Q1 results are a strong indication that strategic management and focused risk control can successfully counteract broad industry headwinds. By managing its bad loans effectively and boosting operational efficiency, the bank has laid a robust foundation for continued stability and growth in the Nepalese banking sector.

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