15th August 2025, Kathmandu
Prime Bank has announced impressive financial results for the fiscal year 2024/25, posting a net profit of NPR 4.24 billion, which represents a 14.72% increase over the previous year.
Prime Bank Reports Profit
This robust performance is a testament to the bank’s operational efficiency and strategic growth initiatives. One of the most significant takeaways from the report is the bank’s strong dividend-paying capacity of 14.33%, a direct result of a substantial increase in its distributable profit. This not only signals a healthy financial position but also provides a positive outlook for investors.
The Driving Force Behind Profitability and Core Growth
Prime Bank’s success in FY 2024/25 was built on a foundation of solid core banking operations. The bank’s net interest income, the primary revenue source for any commercial bank, saw a healthy 11.92% rise to NPR 8.82 billion. This growth can be attributed to an expansion in its lending portfolio and effective management of its loan products. By successfully balancing its interest-earning assets and interest-bearing liabilities, the bank was able to improve its interest spread, thereby boosting its overall profitability.
The efficiency of its operations is further highlighted by the growth in operating profit, which increased to NPR 5.93 billion from NPR 5.31 billion in the previous year. Operating profit provides a clear picture of the bank’s performance before taking into account non-core activities and taxes. The growth in this metric indicates that the bank is effectively managing its day-to-day operations and keeping costs in check, which is crucial for sustained profitability in Nepal’s competitive banking landscape.
A Major Win for Shareholders: The Dividend Story
The most positive news for Prime Bank’s shareholders is the significant improvement in its dividend capacity. The bank’s distributable profit surged from just NPR 995.3 million in the previous year to a remarkable NPR 2.78 billion in FY 2081/82. This dramatic increase is a key indicator of the bank’s enhanced profitability and its ability to return value to its investors.
Distributable profit is a crucial metric as it represents the portion of profit that a bank can legally distribute to its shareholders after making all necessary provisions and regulatory adjustments. Based on this robust distributable profit and the bank’s paid-up capital of NPR 19.40 billion, Prime Bank has a dividend-paying capacity of 14.33%. This figure, which could be distributed as cash or bonus shares, makes the bank an attractive prospect for investors seeking a strong return on their investment. The significant increase in distributable profit over the previous year underscores a powerful turnaround in the bank’s ability to generate and allocate funds for shareholder rewards.
Navigating a Key Challenge: The Rise in Non-Performing Loans
Despite the impressive profit growth, the bank’s report also highlights a key area of concern: the non-performing loan (NPL) ratio, which increased from 4.65% to 5.56%. An NPL is a loan on which the borrower has failed to make scheduled payments for a specified period, typically 90 days. An increase in this ratio signals a potential strain on asset quality and indicates that a larger portion of the bank’s loan portfolio is under stress.
While a rising NPL ratio is a challenge that must be addressed, it is not uncommon in the current economic climate. The banking sector in Nepal has experienced an overall increase in NPLs in recent years, influenced by a slower economic growth and challenges in various business sectors. A key factor that allowed Prime Bank to post a higher net profit despite the rise in NPLs is a potential decline in its impairment charges (provisions for potential loan losses), which could indicate the bank’s confidence in its recovery processes. The bank’s focus in the coming fiscal year will need to be on strengthening its risk management frameworks and intensifying loan recovery efforts to bring this ratio down to a more manageable level.
A Strong and Stable Foundation
Beyond the headline numbers, Prime Bank’s financial position remains fundamentally strong. The bank’s paid-up capital stands at NPR 19.40 billion, supported by a robust reserve fund of NPR 11.52 billion. This strong capital base provides a solid foundation for future growth, regulatory compliance, and a buffer against potential economic shocks.
The bank’s performance is further reflected in its shareholder metrics. Its Earnings Per Share (EPS) improved from NPR 19.45 to NPR 20.74, a clear sign of growing profitability on a per-share basis. The net worth per share of NPR 173.72 also shows that the bank’s total assets exceed its liabilities by a healthy margin, reinforcing its financial health and value for shareholders.
Conclusion and Strategic Outlook
Prime Bank’s financial results for FY 2024/25 present a compelling story of resilience and strategic success. The significant growth in net profit and core income streams, coupled with a healthy dividend-paying capacity, positions the bank as a strong player in the Nepalese banking sector. While the rise in non-performing loans is a challenge that needs careful management, the bank’s robust capital and reserve funds provide the necessary stability to address it. By continuing to focus on operational efficiency, prudent risk management, and strategic growth, Prime Bank is well-positioned to maintain its positive momentum and deliver sustained value to its shareholders and stakeholders in the years to come.
For More: Prime Bank reports Profit