8 August 2024, Kathmandu
Nepal Investment Mega Bank is grappling with significant challenges in loan recovery, as highlighted in its latest financial statement.
Mega Bank Loan recovery
By the end of June in the last fiscal year 2080/81, the bank’s non-performing loans (NPLs) stood at 1.21 percent of its total loans, down from 1.66 percent in the previous fiscal year 2079/80. Despite a year-on-year improvement, the bank’s NPLs remained a critical concern, having been as high as 4.83 percent in the first quarter of the previous year.
The bank’s struggles with loan recovery have led to an increase in loan loss provisions, with 3.2 billion rupees set aside for this purpose, slightly down from 3.5 billion rupees the previous year. Although the bank’s profit has seen a substantial 39 percent increase, reaching 5.19 billion rupees, the distributable profit remains negative at 3.43 billion rupees. Earnings per share (EPS) also decreased from Rs 17.84 in the first quarter to Rs 15.23 in the fourth quarter, with the net worth per share standing at Rs 180.
Loan disbursement by the bank increased by 1.54 percent over the past year, totalling 3 trillion 7 billion rupees by the end of June. Deposit collection saw a notable 13 percent rise, amounting to 4 trillion 3 billion rupees by mid-June. The bank’s paid-up capital is 34.12 billion rupees, with reserves of 30.56 billion rupees
The increase in net interest income, which grew from Rs 12.30 billion in the previous fiscal year to Rs 15.1 billion in the last fiscal year, has contributed to the bank’s profit growth. Despite these gains, the financial health of Nepal Investment Mega Bank remains under pressure due to the ongoing challenges in loan recovery.