By Dipesh Ghimire
Nabil Bank Defies Market Odds: Profits Leap 47% to NPR 4.75 Billion
KATHMANDU – In an economy where most commercial banks are struggling to stay afloat, Nabil Bank Limited (NABIL) has emerged as a powerhouse of recovery. The bank’s second-quarter (Q2) financial results for the current fiscal year have sent a strong signal to the market, showing a massive 46.71% surge in net profit, totaling NPR 4.75 billion.
This double-digit growth marks a dramatic shift from the NPR 3.24 billion reported in the previous year’s mid-term report, cementing Nabil’s status as a market leader in asset management.
The "Recovery" Engine The standout feature of Nabil’s balance sheet this quarter is not just its lending, but its efficiency in debt collection. While its peers are setting aside billions to cover "bad loans," Nabil has successfully turned the tide. The bank reported a write-back of NPR 48.8 million in impairment charges.
In simpler terms, money that the bank once feared was lost has been recovered, flowing directly back into the profit column. This recovery was the primary catalyst that pushed the bank's operating profit up by 26.95%, proving that Nabil's risk management strategy is currently the most effective in the industry.
Shareholder Windfall: Attractive EPS and Dividends For long-term investors, the bank’s Earnings Per Share (EPS) has reached a decade-high territory for its current capital size, jumping by NPR 11.06 to settle at NPR 35.04.
Distributable Profit: The bank holds NPR 3.27 billion available for distribution, which translates to a distributable EPS of NPR 22.50.
Dividend Outlook: If this trend continues into the fourth quarter, Nabil is positioned to be one of the highest dividend-paying stocks on the Nepal Stock Exchange (NEPSE) this fiscal year.
Capital Fortification Nabil’s capital base has also seen a strategic expansion. By issuing NPR 5 billion in 8% non-cumulative perpetual preference shares, the bank has bolstered its paid-up capital to NPR 32.05 billion. Furthermore, with reserves of NPR 36.70 billion, the bank is essentially sitting on a "war chest" of capital that allows it to absorb shocks or expand aggressively when the economy fully recovers.
Detailed Interpretation: Why is Nabil succeeding where others are failing?
Efficiency Over Volume: Despite having the highest deposit base in the private sector at NPR 566.05 billion, Nabil’s interest income grew by only 2.42%. This shows the bank is being extremely picky about who it lends to. It is prioritizing "quality loans" over "large loans," which is why its bad debt provisions are reversing while others' are spiking.
Valuation Sweet Spot: With a P/E ratio of 13.91, the market is pricing Nabil very conservatively. For a bank growing at 46% and yielding an EPS of 35, many analysts would consider this stock currently "undervalued" compared to its historical premium.
Capital Utilization: The bank's Net Worth per share of NPR 235.64 provides a massive safety net. For every 100 rupees of investment, shareholders currently have nearly 236 rupees in book value, making it one of the most fundamentally "safe" bets in the banking sector.
