Sana Kisan Profit Decline Hits Q2 Performance
2nd February 2026, Kathmandu
Sana Kisan Bikas Laghubitta Bittiya Sanstha Limited has released its unaudited financial statements for the second quarter of the fiscal year 2082 2083, revealing a significant Sana Kisan Profit Decline that has sparked concern among stakeholders in Nepal’s microfinance sector.
Sana Kisan Profit Decline
The report, covering the period up to the end of Poush 2082, details a substantial contraction in net earnings and interest income, alongside a notable rise in non performing assets. As a premier wholesale lending institution for small farmer cooperatives, the financial health of Sana Kisan is often seen as a barometer for the broader agricultural credit landscape in Nepal.
Sharp Contraction in Net Profit and Operating Income
The most striking feature of the second quarter report is the 26.42 percent Sana Kisan Profit Decline in net earnings. The institution reported a net profit of 380.9 million rupees for the first half of the current fiscal year, a steep drop from the 517.7 million rupees recorded during the same period in the previous fiscal year 2081 2082. This downward shift highlights the intensifying pressure on the institution’s primary revenue streams.
Total operating income also faced a heavy setback, plummeting by 32.84 percent to 654.4 million rupees from a previous 974.5 million rupees. This reduction in the top line indicates that the institution is struggling to generate income at the same scale as previous years, likely due to a combination of reduced credit demand from partner cooperatives and lower interest collection rates.
Decline in Net Interest Income and Margins
A major driver of the Sana Kisan Profit Decline is the weakening of its net interest income, which is the traditional backbone of any microfinance institution. During the review period, net interest income fell from 968.1 million rupees to 654.3 million rupees, marking a sharp year on year contraction of 32.41 percent.
The factors contributing to this decline include:
Reduced Interest Spreads: Narrower margins between the cost of funds and the interest rates charged on wholesale loans.
Impact of Repayment Delays: Interest income is only recognized upon collection, and delays in payments from partner cooperatives directly impact this figure.
Liquidity Constraints: Higher borrowing costs for the institution have put additional strain on its interest margins.
Deterioration in Asset Quality and Rising NPL
Parallel to the fall in profitability, Sana Kisan is also facing a rise in credit risk. The non performing loan (NPL) ratio increased to 4 percent as of Poush 2082, up from 2.27 percent in the previous year. While a 4 percent NPL is still lower than that of many retail microfinance institutions, for a wholesale lender like Sana Kisan, this trend is particularly concerning.
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An increase in bad loans requires the institution to allocate more funds toward loan loss provisioning, which further accelerates the Sana Kisan Profit Decline. The rise in NPL reflects the persistent financial distress faced by small farmers and rural cooperatives, many of whom are struggling with slow agricultural growth and repayment discipline issues currently prevalent in the sector.
Impact on Shareholder Value and Earnings Per Share
The Sana Kisan Profit Decline has had a direct negative impact on shareholder returns. The annualized earnings per share (EPS) fell significantly to 15.46 rupees, down from 24.01 rupees in the previous year. This reduction in EPS, combined with a relatively high price to earnings (P/E) ratio of 49.87 times, suggests that the stock may be facing valuation pressure in the capital market.
Despite these challenges, the company’s capital base remains a strong point of resilience.
Paid up Capital: 4.92 billion rupees.
Total Reserves: Over 5.7 billion rupees across general and other reserve funds.
Net Worth Per Share: 216.48 rupees.
Future Outlook and Strategic Challenges
To reverse the Sana Kisan Profit Decline, the management will need to focus on aggressive recovery strategies and diversifying its income sources. As the wholesale lender for thousands of Small Farmer Agricultural Cooperative Societies (SFACLs), the company’s recovery is closely tied to the stability of the rural economy.
Moving into the second half of 2082/83, the institution faces the challenge of managing rising costs while supporting its partner cooperatives. The company’s strong reserve position provides a temporary safety net, but sustainable long term performance will require a stabilization of interest margins and a significant reduction in the NPL ratio.
Conclusion
The second quarter results for Sana Kisan Bikas Laghubitta Bittiya Sanstha Limited serve as a stark reminder of the volatility currently affecting the microfinance industry. With a 26.42 percent drop in net profit and a 32.41 percent decline in net interest income, the Sana Kisan Profit Decline is a critical issue that demands strategic attention. While the company maintains a robust capital foundation, its ability to navigate credit risks and restore earnings momentum will be the key focus for investors for the remainder of the fiscal year.
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