22nd January 2025, Kathmandu
Nepal Finance Limited has seen a dramatic rise in its profits and reserves, driven by an increase in interest income.
Nepal Finance Reports Q2 Profit Surge
For the second quarter of the fiscal year 2024/2025 (2081/82), the company earned a net profit of NPR 2.05 million, marking an incredible 2,424% increase compared to the NPR 812,000 earned during the same period last year.
Surge in Interest and Operating Income
Interest income for the company grew by 12.15%, reaching NPR 52.2 million. Operating revenue also saw a significant boost, rising from NPR 55.4 million to NPR 89.5 million. These increases directly contributed to the rise in operating profit, which now stands at NPR 29.2 million.
Decline in Fee and Commission Earnings
However, Nepal Finance faced a 3.78% decrease in fee and commission income, amounting to NPR 5.66 million. This represents a reduction compared to the previous fiscal year’s performance.
Impairment Charges and Negative Retained Earnings
The company set aside NPR 26.1 million for impairment charges during the review period. Despite the positive revenue growth, retained earnings remain negative, showing a loss of NPR 261.9 million.
Growth in Reserves and Expanded Loan Portfolio
On a more optimistic note, Nepal Finance’s reserves grew by 10.83%, reaching NPR 481.3 million. The company’s total deposits increased to NPR 3.57 billion, and its loan portfolio expanded to NPR 2.13 billion, signaling strong growth in both areas.
Improved Loan Quality and Reduced NPL Ratio
The non-performing loan (NPL) ratio showed a slight improvement, decreasing from 10.52% in the previous fiscal year to 10.46%. This indicates that the company is making progress in managing the quality of its loan portfolio.
Key Financial Indicators and Ratios
As of the review period, Nepal Finance reported the following key financial indicators:
Earnings Per Share (EPS): NPR 5.62
Price to Earnings (P/E) Ratio: 163.22x
Net Worth Per Share: NPR 137.07
Total Asset Value Per Share: NPR 663.07
Liquidity Ratio: 56.55%
These metrics reflect the company’s strong financial health, with steady asset growth and solid liquidity, even amidst challenges.
Conclusion
In conclusion, Nepal Finance Limited has demonstrated remarkable growth in profit and reserves, driven largely by increased interest income.
Despite a slight drop in fee income, the company continues to show a positive trajectory, especially in terms of reducing its non-performing loan ratio. The increase in reserves and growth in the loan and deposit portfolio indicate that Nepal Finance remains strong and competitive in the financial sector.
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