Citizens Bank Withholds Stronger Dividend Capacity Despite a Dip in Profit
10th August 2025, Kathmandu
Citizens Bank International Limited has released its unaudited fourth-quarter financial report for the fiscal year that ended mid-July 2025, presenting a mixed but ultimately stable picture.
Stronger Dividend, Lower Profit
The bank saw a significant 26.45% rise in distributable profit, indicating a stronger potential for rewarding shareholders. This growth comes even as the bank registered a slight dip in net profit and earnings per share (EPS), highlighting a period of strategic rebalancing in a challenging economic environment.
The increase in distributable profit is a key metric for investors and signals the bank’s improved capacity to pay dividends. At the end of the last fiscal year, this figure stood at NPR 775.4 million, a notable increase from NPR 613.2 million in the same period of the previous year. This suggests that while some bottom-line figures were under pressure, the bank’s core profitability and financial management have placed it in a solid position to deliver returns to its shareholders. This is a crucial takeaway for the market, which values stable and consistent dividend payouts.
Revenue Growth vs. Profitability Challenges
A closer look at the financial report reveals a dynamic interplay between revenue generation and operational costs. The bank’s net interest income, a primary indicator of its core lending business, showed healthy growth, climbing 11.20% to NPR 6.36 billion from NPR 5.72 billion in the previous year. This upward trend reflects the bank’s continued expansion in lending activities and its ability to attract and maintain a stable customer deposit base. Similarly, total operating income increased by 15.13%, reaching NPR 8.12 billion, further demonstrating the bank’s success in generating revenue from various banking operations.
However, despite these positive top-line trends, the bank’s profitability metrics showed some weakness. Net profit for the fiscal year saw a minor decline of 2.08%, settling at NPR 1.29 billion, down from NPR 1.32 billion. Operating profit also decreased slightly to NPR 2.00 billion from NPR 2.04 billion. This dip suggests that rising operational costs, increased loan provisions, or other financial headwinds may have impacted the bottom line. This is a common challenge faced by banks in the current economic climate, where balancing growth with risk management is paramount.
Key Financial Indicators and Balance Sheet Strength
The dip in profitability was also reflected in the bank’s per-share performance. EPS fell from NPR 9.30 in the previous year to NPR 8.76. This indicates that while the bank’s total earnings remained high, the growth didn’t keep pace with the increase in share capital, or a reduction in earnings was a factor. This metric will be a key focus for analysts and investors moving forward.
On the balance sheet, Citizens Bank maintains a robust and stable financial position. Its paid-up capital stands at a strong NPR 14.76 billion. The bank’s reserve fund is also significant, holding NPR 879.3 million, with retained earnings in its reserves reaching NPR 7.14 billion. These strong reserves provide a solid capital foundation, enabling the bank to support future growth initiatives and absorb potential financial shocks. This capital strength is a vital indicator of the bank’s long-term stability and resilience.
Asset Quality and Market Position
In its core operations, Citizens Bank has disbursed loans totaling NPR 168.95 billion and collected deposits worth NPR 211.31 billion. This indicates a healthy loan-to-deposit ratio, a crucial measure of a bank’s liquidity and lending efficiency. However, a significant area of concern highlighted in the report is the deterioration of asset quality. The bank’s non-performing loan (NPL) ratio increased from 4.10% to 4.94%. This rise in NPLs signals a need for the bank to strengthen its credit risk management and loan recovery mechanisms to ensure long-term profitability.
Despite this challenge, the bank maintains a per-share net worth of NPR 155.42, which shows that its underlying financial strength remains intact. This figure is a critical measure of the bank’s intrinsic value and its ability to withstand market pressures. Market analysts believe that while the bank has shown positive signs in revenue and dividend capacity, it must now prioritize addressing the rise in NPLs to maintain its competitive edge in the increasingly dynamic Nepali banking sector. The focus will likely shift to a strategy of enhanced loan portfolio management and improved operational efficiency to bolster the bottom line and ensure sustainable growth.
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