Despite undergoing a prolonged credit demand crunch, commercial banks have been able to register decent growth in net interest income in the first half of the current fiscal year.
The banks were able to record 13 per cent growth in net interest income till the second quarter of 2013-14. The lower rate of lending expansion coupled with accelerated deposits had been sapping the income of the banks. The 31 commercial banks earned Rs 21.5 billion as net interest income by mid-January, 2014, against an earning of Rs 18.9 billion during the corresponding period a year ago.
Since the beginning of the fiscal year, the financial sector was battling low credit demand while liquidity in the system swelled. The increased deposits mean more interest expense to be paid to depositors, whereas lower credits mean less income on interest being earned on loans. However, by the end of the first half, the net interest income grew by Rs 2.5 billion.
“Although, the growth in banks’ income isn’t as good as last year, it is also not disappointing,” said CEO of Sanima Bank Bhuvan Kumar Dahal.
During the review period, deposits at class ‘A’ financial institutions grew by 25 per cent while loans had expanded by 23 per cent, according to unaudited financials.
“The beginning of second quarter saw slow rate of lending expansion. However, near the end, credit demand has gone up with lending rate cuts,” he informed, adding that the obligation to pay taxes by the end of second quarter also depleted the deposits from banks.
The comfortable growth in interest income has also led the banks to register a modest increment of 18 per cent in net profit in the second quarter of the current fiscal year in comparison to last fiscal’s corresponding quarter, according to the banks’ unaudited financial data.
The 31 commercial banks earned Rs 9.38 billion as net profit in the second quarter — till mid-January 2014 — which stood at Rs 7.9 billion a year ago. Although banks did not succeed in repeating the exciting growth of profit in second quarter as it had during the corresponding period a year ago, the second quarter seemed to have fared well than the first quarter.
“If the government treasuries and interbank lending rate had been higher than one per cent, the income of the banks would have been
better,” added Dahal. The banks earned Rs 4.8 billion as fees and other operating income. Likewise, they added Rs 2.04 billion as additional foreign exchange income.
During the first quarter ending mid-October 2013, the banks had been able to increase their profit by a mere 12 per cent when compared to mid-October, 2012.
The banks’ interest income is expected to shrink further by the end of current fiscal year, as the banks are supposed to bring down the difference in lending interest and deposit interest to below five per cent. The average interest spread stands at 5.12 per cent at present, with banks such as Standard Chartered Bank and Nabil Bank having a net interest spread higher than eight per cent.
Top earners
Nabil Bank: 1,055.34
Nepal Investment Bank: 938.81
Rastriya Banijya Bank : 717.88
Everest Bank : 679.12
Standard Chartered Bank: 633.31
Low earners
Kist Bank: -198.80
Janata Bank: 12.65
Commerz and Trust Bank: 14.56
Civil Bank: 33.98
Century Bank: 39.53
Figures in Rs million
Source: Unaudited first quarter financials
news source: The himalayan times,19 feb 2014
LINK
The banks were able to record 13 per cent growth in net interest income till the second quarter of 2013-14. The lower rate of lending expansion coupled with accelerated deposits had been sapping the income of the banks. The 31 commercial banks earned Rs 21.5 billion as net interest income by mid-January, 2014, against an earning of Rs 18.9 billion during the corresponding period a year ago.
Since the beginning of the fiscal year, the financial sector was battling low credit demand while liquidity in the system swelled. The increased deposits mean more interest expense to be paid to depositors, whereas lower credits mean less income on interest being earned on loans. However, by the end of the first half, the net interest income grew by Rs 2.5 billion.
“Although, the growth in banks’ income isn’t as good as last year, it is also not disappointing,” said CEO of Sanima Bank Bhuvan Kumar Dahal.
During the review period, deposits at class ‘A’ financial institutions grew by 25 per cent while loans had expanded by 23 per cent, according to unaudited financials.
“The beginning of second quarter saw slow rate of lending expansion. However, near the end, credit demand has gone up with lending rate cuts,” he informed, adding that the obligation to pay taxes by the end of second quarter also depleted the deposits from banks.
The comfortable growth in interest income has also led the banks to register a modest increment of 18 per cent in net profit in the second quarter of the current fiscal year in comparison to last fiscal’s corresponding quarter, according to the banks’ unaudited financial data.
The 31 commercial banks earned Rs 9.38 billion as net profit in the second quarter — till mid-January 2014 — which stood at Rs 7.9 billion a year ago. Although banks did not succeed in repeating the exciting growth of profit in second quarter as it had during the corresponding period a year ago, the second quarter seemed to have fared well than the first quarter.
“If the government treasuries and interbank lending rate had been higher than one per cent, the income of the banks would have been
better,” added Dahal. The banks earned Rs 4.8 billion as fees and other operating income. Likewise, they added Rs 2.04 billion as additional foreign exchange income.
During the first quarter ending mid-October 2013, the banks had been able to increase their profit by a mere 12 per cent when compared to mid-October, 2012.
The banks’ interest income is expected to shrink further by the end of current fiscal year, as the banks are supposed to bring down the difference in lending interest and deposit interest to below five per cent. The average interest spread stands at 5.12 per cent at present, with banks such as Standard Chartered Bank and Nabil Bank having a net interest spread higher than eight per cent.
Top earners
Nabil Bank: 1,055.34
Nepal Investment Bank: 938.81
Rastriya Banijya Bank : 717.88
Everest Bank : 679.12
Standard Chartered Bank: 633.31
Low earners
Kist Bank: -198.80
Janata Bank: 12.65
Commerz and Trust Bank: 14.56
Civil Bank: 33.98
Century Bank: 39.53
Figures in Rs million
Source: Unaudited first quarter financials
news source: The himalayan times,19 feb 2014
LINK
Comments
Post a Comment