20th January 2025, Kathmandu
Machhapuchchhre Bank reported a net profit of NPR 80.07 crore for the first six months of the current fiscal year. This marks a slight increase from last year’s NPR 80.53 crore.
Machhapuchchhre Bank Interest Income Growth
Despite the rise in profit, the bank has faced an uptick in non-performing loans (NPL), which is a cause for concern in terms of asset quality.
Modest Profit Growth and Improved Operating Income
The bank’s profit increased by just 0.24% compared to the same period last year. This growth is mainly attributed to an improvement in operating income and a reduction in impairment charges.
The operating income grew from NPR 127.92 crore to NPR 162.27 crore, indicating that the bank’s day-to-day operations are performing well. At the same time, impairment charges decreased by 14%, from NPR 23.85 crore to NPR 20.47 crore, contributing positively to overall profitability.
Interest Income Boost Despite Decline in Lending Income
Interest income saw a 7% increase, rising from NPR 263.74 crore to NPR 282.36 crore. This was achieved even though the bank experienced a slight decline in lending income.
The reduction in interest expenses played a crucial role in the increase in net interest income, demonstrating the bank’s ability to efficiently manage its financial resources.
Solid Capital and Deposit Growth
Machhapuchchhre Bank continues to have a strong capital base. The bank’s paid-up capital stands at NPR 11.62 billion, with a share premium of NPR 3 crore.
The bank’s reserves have also increased to NPR 6.10 billion, further solidifying its financial position. The bank’s loan portfolio has reached NPR 134.61 billion, while total deposits have risen to NPR 165.48 billion, reflecting growth in both its lending and deposit-taking operations.
Rising Non-Performing Loans: A Concern for the Bank
One of the significant challenges the bank faces is the rise in its non-performing loan (NPL) ratio. The ratio has increased from 2.6% to 4.54% over the past year, signaling potential risks in the loan portfolio.
Despite this, the bank is addressing the issue through its risk management strategies, aiming to control the growth of bad loans and recover outstanding amounts.
Strong Shareholder Returns Amid Market Volatility
Despite the concerns with NPLs, the bank’s earnings per share (EPS) increased by 3 paisa, reaching NPR 13.89. The net worth per share stands at NPR 154.2, providing solid returns to shareholders.
The price-to-earnings (P/E) ratio remains favorable at 16.27, signaling positive market sentiment towards the bank’s financial health.
Conclusion: Stable Financial Performance with Challenges Ahead
In conclusion, Machhapuchchhre Bank has posted stable financial results for the first half of the fiscal year, with growth in profit, operating income, and interest revenue.
However, the increase in non-performing loans remains a challenge that the bank needs to address. The bank’s strong capital, deposits and efficient management of its operations provide a solid foundation for future growth.
For more: Machhapuchchhre Bank Interest Income Growth