Shangri-La Development Bank Posts NPR 537 Million Profit
15th August 2025, Kathmandu
Shangri-La Development Bank Limited posted a net profit of NPR 537.095 million in fiscal year 2024/25, a 6.51% increase from the previous year.
SADBL Reveals Financial Indicators
While this signals a steady performance, the bank’s results present a mixed financial picture, with strong growth in distributable profit and operating profit balanced against a concerning rise in non-performing loans (NPLs).
A Closer Look at Profitability and Operational Efficiency
The bank’s ability to increase its net profit despite a slight dip in net interest income is a testament to its operational resilience and effective cost management. Net interest income, the primary revenue source for any bank, dropped marginally from NPR 1.90 billion to NPR 1.88 billion, suggesting pressure on lending margins. However, this was more than offset by a significant growth in operating profit, which rose by 7.70% to NPR 753.989 million. Operating profit is a key indicator of a bank’s core business efficiency, as it reflects earnings before taxes and other non-operational expenses. This growth highlights the bank’s success in optimizing its operational costs and leveraging other revenue streams, such as fee and commission-based income.
The Dividend Outlook: A Sharp Rise in Distributable Profit
For shareholders, the most encouraging news in the report is the remarkable surge in distributable profit. This figure, which is the amount of profit available for dividend payouts after setting aside statutory reserves, shot up from a modest NPR 131.878 million to an impressive NPR 413.845 million. This near 214% jump is a strong signal of the bank’s improved financial health and liquidity. It suggests that the bank is well-positioned to offer a substantial dividend to its shareholders, which is a major draw for investors and a key indicator of the bank’s commitment to creating value for its owners.
The Major Challenge: Rising Non-Performing Loans
While the profitability numbers are positive, the report also raises a significant red flag concerning asset quality. The bank’s non-performing loan (NPL) ratio saw a substantial increase, climbing from 3.93% to 5.64%. NPLs are loans for which borrowers have failed to make scheduled payments for a specified period, and a rising NPL ratio signals a deterioration in the quality of the bank’s loan portfolio. This increase suggests that the bank’s credit risk management will need to be a top priority in the coming fiscal year. A high NPL ratio can lead to increased provisioning, which directly reduces profitability, and a more cautious lending environment, which can slow down future growth. This is a common challenge faced by development banks in Nepal, which often lend to higher-risk sectors.
Capital Strength and Market Position
As a development bank, Shangri-La operates in a niche that focuses on medium- to long-term financing for sectors vital to national economic growth, such as agriculture, infrastructure, and small and medium-sized enterprises (SMEs). This role often involves a higher risk profile than commercial banking. Despite the challenges, the bank maintains a solid financial foundation. Its paid-up capital stands at NPR 3.5562 billion, with a strong reserve fund of NPR 1.60 billion. This robust capital base provides a crucial cushion against market fluctuations and potential losses from its NPLs, ensuring the bank’s stability and ability to continue its operations. For shareholders, the bank’s Earnings Per Share (EPS) is a healthy NPR 15.10, and its net worth per share is NPR 156.71, reinforcing its long-term value.
Conclusion and Outlook
Shangri-La Development Bank’s financial results for FY 2081/82 paint a picture of a resilient institution that is effectively managing its operations to achieve profitability despite market pressures. The impressive growth in operating and distributable profit showcases the bank’s improved efficiency and commitment to shareholder value. However, the rise in non-performing loans is a clear challenge that must be addressed with renewed focus on risk management and credit recovery. Moving forward, the bank’s strategy will likely involve leveraging its strong capital base and positive cash flow to tackle its NPLs, which will be key to sustaining its growth trajectory and securing its position as a competitive player in Nepal’s development banking sector.
For More: SADBL Reveals Financial Indicators
