Net interest income of banks up 2.09% despite slow credit growth

KATHMANDU: Interest income of commercial banks increased by a modest 2.09% over the first nine months of fiscal year 2025/26 despite slow credit growth.

Twenty commercial banks earned Rs 142.68 billion till mid-April of the current fiscal year, a study of third-quarter financial statements of Class ‘A’ banks shows. Such income stood at Rs 139.76 billion in the same period of the previous fiscal year.

Private sector credit increased by a mere 4.4% in the current fiscal year, compared to the same period of the previous fiscal year. In comparison, private-sector credit had risen by more than 20% in 2020/21.

Interest earnings are the largest source of income for commercial banks. Net interest income is the difference between the interest that banks earn from borrowers and investments in government bonds and the interest they pay to depositors.  A high net interest income indicates that the bank’s core business is sound.

Commercial banks posted a combined net profit of Rs 49.21 billion in the first nine months of the current fiscal year, 193% higher than the net profit of Rs 41.25 billion in the same period of the previous fiscal year.

Nabil Bank Ltd led the commercial banks in terms of net interest income. The bank earned Rs 12.45 billion as net interest income in the nine months. Next were Global IME Bank Ltd and Nepal Investment Mega Bank Ltd with net interest income of Rs 11.88 billion and Rs 9.57 billion, respectively.

On the other hand, Standard Chartered Bank Nepal Ltd mobilized the net interest income of Rs 2.91 billion in the review period.

The state-owned Rastriya Banijya Bank Ltd posted the highest growth in net interest income at 22.58% in the review period. The bank mobilized Rs 8.7 billion in net interest income in nine months.

Sanima Bank followed with a 20.48% growth in net interest income to Rs 5.16 billion, while Kumari Bank reported a 17.8% growth to Rs 9.3 billion in the review period.

Seven commercial banks saw their net interest income decline during the review period. NIC Asia Bank suffered the biggest decline of 20.78% to Rs 6.3 billion. Next were Himalayan Bank Ltd and Standard Chartered Bank Nepal Ltd, which saw their net interest income plummet by 11.87% and 10.06%, respectively.