NIC Asia Laghubitta (NICLBSL) posts sharp profit growth, but negative distributable earnings and rising NPL signal underlying stress

Kathmandu. NIC Asia Laghubitta Bittiya Sanstha Limited (NICLBSL) has published its third-quarter financial results for the fiscal year 2082/83, showing a strong rise in core earnings and net profit. However, key underlying indicators such as distributable profit and non-performing loans (NPL) present a more cautious picture of the institution’s financial health.

The company’s net interest income surged by 72.21 percent year-on-year, reaching Rs. 854 million, compared to Rs. 495 million in the same period last year. This sharp increase reflects an expansion in lending activities and improved income generation from interest-bearing assets.

Net profit also recorded an extraordinary jump, climbing to Rs. 106.9 million from just Rs. 1.29 million a year ago—an increase of over 8,100 percent. Despite the impressive growth rate, analysts note that the comparison is based on a very low base from the previous year, which inflates the percentage gain.

However, the most concerning aspect of the report is the distributable profit, which has turned significantly negative at Rs. -323.7 million, compared to a positive Rs. 30.75 million last year. This suggests that although the company is reporting accounting profits, it is not in a position to distribute dividends to shareholders. Such a situation is often driven by high provisioning requirements, regulatory adjustments, or deterioration in asset quality.

Earnings per share (EPS) improved to Rs. 8.20 from Rs. 0.10, indicating better profitability on paper. In contrast, dividend per share (DPS) fell sharply into negative territory at Rs. -24.81, down from Rs. 2.44 last year, further reinforcing the company’s inability to reward shareholders in the current period.

Another red flag is the rise in non-performing loans (NPL), which increased from 13.55 percent to 16.59 percent. This 3 percentage point rise highlights growing stress in loan recovery and weakening asset quality—an issue particularly critical in the microfinance sector.

Overall, while NIC Asia Laghubitta has demonstrated strong growth in income and net profit, the negative distributable earnings and rising NPL levels suggest that the quality of earnings remains a concern. Unless the company improves credit risk management and controls provisioning pressures, sustaining this growth in the long term may prove challenging.