KATHMANDU, Jan 29: The impact of the COVID-19 pandemic on the banking sector is beginning to show. Bankers have said that the impact of COVID-19 has started to be felt after the profit of most banks declined in the first six months of the current fiscal year.
Since the onset of the COVID-19 pandemic, the regular work of banks has been affected and on the other hand, a large amount of loan has been given to the borrowers. Similarly, banks are in trouble due to excess liquidity.
Anil Sharma, chief executive officer of Nepal Bankers' Association (NBA), said that all banks had given Rs 13 billion in interest rebates to borrowers since the COVID-19 entered the scene. The concessional amount given to the borrowers may increase further because as per the directive issued by Nepal Rastra Bank, the commercial banks have made provision for loans till December.
Out of the 27 commercial banks, 26 commercial banks have published their financial statements till Thursday which shows that their profit has plummeted. Bankers say that even the banks that have increased their profits have improved by a very small number. Sharma said that the impact of loan provisioning on the banks’ profits is yet to be seen. “The impact of COVID-19 on the banking sector may persist till another year or two,” he said.
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According to the financial statements published by the banks, the profit of 10 commercial banks has increased in the last six months. Compared to the same period last year, Global IME, NMB, Prabhu, Mega, Prime Commercial and Kumari Bank are among the gainers. Similarly, profits of NIC Asia, Citizens, Sunrise and NB Bank have also increased.
Apart from this, the profit of all other banks that have published their financial statements has decreased compared to the previous year. The state-owned Rastriya Banijya Bank has not yet published its financial statement.
Global IME Bank has made the highest profit in the last six months. The bank, which made a profit of Rs 1.68 billion last year, has made a profit of Rs 2.31 billion this year. Similarly, NIC Asia has made a profit of Rs 2.06 billion in the first six months of the current fiscal year. It had made a profit of Rs 2.1 billion last year.
Prime Bank, which made a profit of Rs 1.30 billion last year, has made a profit of Rs 1.81 billion till mid-January. NMB Bank has made a profit of Rs 1.61 billion. Last year, the bank had made a profit of Rs 1.9 billion.
Prabhu Bank, which made a profit of Rs 1.51 billion in the first six months of the current year, had made a profit of Rs 1.8 billion last year. Mega Bank has made a profit of about Rs 350 million more than the previous year. It made a profit of Rs 950 million last year, and this year it made a profit of Rs 1.30 billion.
Similarly, Kumari Bank has increased its profit by Rs 410 million to Rs 1.21 billion as compared to the previous year. The bank had made a profit of Rs 800 million last year. The profit of Nepal Bank is Rs 1.35 billion this year and was the same last year.
So far, Rastriya Banijya Bank has not released its financial statements. The profit of all commercial banks was Rs 29.89 billion as of mid-January last year, but it has been limited to Rs 29.22 billion by mid-January this year.
