Machhapuchchhre Bank’s Profit Jumps 25% in First Half, Asset Quality Improves

Machhapuchchhre Bank has published its unaudited financial statement for the first six months of the current fiscal year, showing a notable improvement in net profit alongside steady growth in business volume, despite pressure on operating income.

According to the statement, the bank earned a net profit of Rs 1.01 billion by mid-January (end of Poush). In the same period of the previous fiscal year (FY 2081/82), the bank had posted a profit of Rs 807.3 million. This represents a 25.25 percent year-on-year growth in net profit, reflecting improved earnings efficiency and better control over credit risk.

The bank’s distributable profit stood at Rs 436.3 million during the review period. Based on this, Machhapuchchhre Bank’s dividend-paying capacity as of the second quarter is estimated at 7.22 percent, indicating moderate room for shareholder returns, though lower retained earnings compared to last year may limit aggressive dividend distribution.

While net profit increased, the bank’s operating profit declined during the review period. By mid-year, operating profit fell to Rs 1.45 billion, down from Rs 1.62 billion in the corresponding period last year. This marks a 10.22 percent decrease, suggesting rising operating costs, provisioning requirements, or margin pressures despite overall profit growth.

Interest income, however, showed steady improvement. The bank earned Rs 2.94 billion in interest income in the first six months, up from Rs 2.82 billion in the same period last year. This reflects a 4.16 percent increase, supported by expansion in lending and a higher volume of interest-earning assets.

On the capital and reserves side, Machhapuchchhre Bank’s paid-up capital stands at Rs 12.08 billion. The bank has Rs 30.8 million in share premium, Rs 436.3 million in retained earnings, and Rs 6.98 billion in reserves. Compared to the end of the previous fiscal year, retained earnings have declined, while reserves have strengthened, indicating internal adjustments in profit allocation and provisioning.

The bank’s business size expanded noticeably over the past six months. As of mid-January, Machhapuchchhre Bank had mobilized deposits worth Rs 204.04 billion and extended loans totaling Rs 154 billion. By comparison, at the end of the last fiscal year, deposits stood at Rs 184.17 billion and loans at Rs 141.43 billion. The growth in both deposits and lending signals rising customer confidence and an expansion in overall banking activity.

Asset quality showed improvement during the review period. The bank’s non-performing loan (NPL) ratio declined to 4.25 percent, down from 4.54 percent a year earlier. This reduction suggests better loan recovery, improved credit monitoring, or restructuring of stressed assets, which has positively contributed to profitability.

Earnings indicators also strengthened. The bank’s annualized earnings per share (EPS) increased to Rs 16.73, up from Rs 13.36 last year. At the same time, the price-to-earnings (P/E) ratio stands at 13.61 times, while net worth per share has reached Rs 161.6, reflecting a stable capital base and improved shareholder value.

Overall, Machhapuchchhre Bank’s mid-year financials present a mixed but largely positive picture. Strong profit growth, expanding business volume, and improving asset quality have offset the decline in operating profit. Analysts say sustaining earnings momentum will depend on controlling costs, further reducing bad loans, and maintaining balanced growth in lending amid a competitive banking environment.