NBL registers Rs 705 million operating profits
Kathmandu, August 15:
Nepal Bank Ltd (NBL) has registered a growth of 45.6 per cent in its operating profits during the fiscal year 2004-05, in comparison to the previous fiscal year. It has posted Rs 705 million operating profits, while the net profit accounted for Rs 1,399 million, during the period. Based on provisional balance sheet, the bank has been able to increase its net profit by 151.9 per cent in comparison to the last fiscal year. The increment in net profit is mainly due to profit on sale of Standard Chartered Bank’s shares, provisions made for probable expenses and losses, staff gratuity and accumulated leave as well as voluntary retirement scheme, states a press release issued here today by the bank. Increased interest income aided by strong recovery in NPA, tight control in overhead costs and significant reduction in the cost of funds are the basic reasons for growth in the operating profits, while newly implemented systems and procedures installed during the restructuring period also supported it.
According to NBL, it collected Rs 1.5 billion (principal + interest) from NPA accounts during the period. The bank also introduced three new products — home loan, auto loan and margin lending — to compete in the current business environment. Since the initiation of reform project from July 2002 under the World Bank/ DFID Financial Sector Reform Project, administered by Nepal Rastra Bank, the bank has shown improvement in operating results.
Earlier, the bank has posted a loss of Rs 3071 million during the fiscal year 2001-02. But, in the first year of the project, NBL posted a growth of Rs 44 million in operating profits (in 2002-03), and the net loss came down to Rs 252 million from Rs 3,071 million. During the fiscal 2003-04, NBL returned to sustainable profitability with net profits of Rs 710 million and operating profits of Rs 511 million. The bank has made a provision of Rs 9,056 million till the end of last year, which is sufficient to cover all loan losses, states the NBL release.