Commercial banks see net profit surge 32% to Rs 69.88 billion

KATHMANDU: Commercial banks recorded a sharp 32.32% surge in aggregate net profits for fiscal year 2025/26, driven largely by reduced loss provisioning and recovery write-backs rather than core lending growth.

A study of preliminary financial statements released by 20 commercial banks shows their combined net profit reached Rs 69.88 billion in 2025/26, up from Rs 52.82 billion in the previous fiscal year.

Despite the improvement, net interest income, the core revenue driver for commercial banks, grew by a modest 1.27%. The strong net profit growth was primarily fueled by a 27.65% drop in total impairment charges and provisioning expenses, coupled with substantial provision reversals at major institutions.

Nabil Bank maintained its position as the nation’s most profitable commercial lender, generating a net profit of Rs 7.90 billion in the review year. Kumari Bank jumped to second place, with a massive 305.96% growth in net profit to reach Rs 7.38 billion. Similarly, Global IME Bank ranked third with a net profit of Rs 6.22 billion.

In percentage terms, Himalayan Bank Ltd posted the highest year-over-year surge. The bank’s net profit expanded 1,041.40% to reach Rs 1.48 billion. Citizens Bank International also posted a strong 63.05% growth.
Overall, 14 of the 20 commercial banks increased their net profits during the review year, whereas Laxmi Sunrise Bank, Standard Chartered Bank Nepal, Nepal Investment Mega Bank and Agriculture Development Bank experienced declines.

At the lower end of the earnings spectrum, Prabhu Bank Ltd recorded a net loss of Rs 240 million. NIC Asia Bank and Himalayan Bank were next with net profits of Rs 180 million and Rs 1.48 billion, respectively.

Net interest income across all 20 lenders grew by just 1.27% during the review year. Nabil Bank topped the list with a net interest income of Rs 17.01 billion, followed by Global IME Bank (Rs 16.20 billion) and Nepal Investment Mega Bank (Rs 12.98 billion).

Standard Chartered Bank Nepal recorded the lowest net interest income at Rs 3.94 billion. Nepal SBI Bank and Machhapuchchhre Bank were next with net interest incomes of Rs 5.33 billion and Rs 6.07 billion, respectively.

The net profit growth was largely due to a 27.65% reduction in overall loan loss provisioning. Significant provision write-backs directly bolstered profit figures for several banks. For example, Kumari Bank’s provisioning fell by Rs 1.44 billion. However, heavy provisioning continued at other major lenders. Nepal Investment Mega Bank has set aside Rs 6.19 billion for provisioning, followed by Prabhu Bank (Rs 4.94 billion) and Global IME Bank (Rs 4.78 billion).

Meanwhile, asset quality across the banking system continued to deteriorate in the review year. The average non-performing loan ratio rose by 0.83 percentage points over the past year. Everest Bank Ltd. maintained the healthiest credit standing with the lowest non-performing loan ratio of 0.49%, while NIC Asia Bank Ltd. reported the highest ratio at 15.55%.