24th January 2025, Kathmandu
First Microfinance Laghu Bitta Bittiya Sanstha has released its financial results for the second quarter of the current fiscal year. The company reported a 38.41% decline in net profit compared to the same period last year.
First Microfinance Q2 Results
The company earned NPR 52.3 million in net profit this year, a significant decrease from the NPR 84.9 million profit recorded in the previous year.
Causes Behind the Profit Decline
The primary reasons for the drop in profit include a reduction in interest income and operating profit. In the previous fiscal year, the company earned NPR 153.8 million in interest income. However, this year, it fell to NPR 111.4 million. Additionally, the operating profit dropped from NPR 130 million to NPR 70 million during the same period.
Key Financial Indicators
Earnings Per Share (EPS): The company’s EPS decreased by NPR 4.87, dropping to NPR 7.78 from last year’s NPR 12.65.
Net Worth Per Share: The net worth per share currently stands at NPR 125.33.
Non-Performing Loans (NPL): The company’s NPL ratio rose to 4.44% from 2.87% last year.
Reserve Fund: The company holds a reserve fund of NPR 30 million.
Capital and Loan Disbursement
The company’s paid-up capital is NPR 1.34 billion, and it has set aside NPR 34 million in reserves. As of the second quarter, it has disbursed loans totaling NPR 6.06 billion, an increase from NPR 5.51 billion in the previous year. The company’s distributable profit for the period stands at NPR 3.91 million, with earnings per share of NPR 5.83.
Challenges Ahead
Although First Microfinance has managed to maintain a solid capital reserve, it is facing significant challenges due to the increased non-performing loans and reduced interest income. These factors have put pressure on the company’s overall profitability. To stabilize its financial position, the company will need to address these challenges in the upcoming months.
The drop in profits emphasizes the ongoing difficulties faced by financial institutions in the current economic landscape. First Microfinance will need to adapt and implement effective strategies to ensure future growth and stability.
For more: First Microfinance Q2 Results
