NIFRA’s Profit Drops 20% Despite Strong Loan Expansion

Kathmandu — Nepal Infrastructure Bank Limited (NIFRA) expanded its lending portfolio substantially in the last fiscal year, but a decline in core interest income and a sharp rise in financing expenses pulled down its profitability.

According to the bank’s unaudited fourth-quarter financial statement, NIFRA earned a net profit of Rs 987.4 million in the fiscal year ending mid-July 2026. The figure represents a decline of 19.98 percent from Rs 1.23 billion recorded in the previous fiscal year.

The fall in profit has also weakened returns for shareholders. Earnings per share dropped to Rs 4.57 from Rs 5.71, while net worth per share declined by Rs 1.66 to Rs 117.22.

The bank’s core income remained under pressure despite the expansion of its business. Net interest income fell by 23.89 percent to Rs 1.45 billion, compared with Rs 1.90 billion a year earlier. In absolute terms, the bank lost more than Rs 454 million in net interest income during the year.

The decline indicates that the growth in interest earned from lending was not sufficient to offset the increase in the bank’s interest expenses. Although NIFRA increased its loan portfolio by nearly 26 percent, the higher cost of deposits, debt instruments and other funding sources appears to have narrowed its interest margin.

Interest expenses rose from approximately Rs 569 million to Rs 977 million, an increase of more than 70 percent. This sharp rise in funding costs was the principal factor affecting the bank’s earnings.

Income from fees and commissions provided some support. Such income increased by 175.17 percent to Rs 58.1 million from Rs 21.1 million. However, the amount remained relatively small and could not compensate for the decline in net interest income.

Consequently, total operating income fell by 21.71 percent to Rs 1.50 billion. Operating profit also declined by 19.80 percent to Rs 1.42 billion from Rs 1.77 billion in the previous year.

The bank benefited from the reversal of impairment charges amounting to Rs 212.8 million. This reversal helped soften the impact of weaker operating income. Without this support, the fall in profit could have been more pronounced.

NIFRA’s lending activity, however, showed strong growth. Loans and advances increased by 25.96 percent to Rs 31.42 billion from Rs 24.95 billion. The bank expanded its loan book by around Rs 6.48 billion within a year, reflecting greater financing of infrastructure projects and corporate customers.

The bank has reportedly approved loans worth Rs 56.13 billion. As project financing is generally disbursed in phases according to construction progress, a substantial portion of the approved amount has yet to be released.

The undisbursed loan pipeline could become an important source of future interest income. However, the positive impact will depend on how quickly the projects progress and whether the bank can secure sufficient long-term funding at a manageable cost.

Deposit growth remained limited compared with lending growth. Deposits increased by only 1.94 percent to Rs 7.84 billion from Rs 7.69 billion. The bank added approximately Rs 149 million in deposits during the year, while its loan portfolio expanded by more than Rs 6 billion.

As a result, the credit-to-deposit ratio rose sharply to 79.92 percent from 65.25 percent. This suggests that the bank used a larger proportion of its available deposit resources for lending. Further disbursement of approved loans may require it to mobilise additional deposits, issue debt instruments or obtain other long-term funding.

Despite rapid credit expansion, the bank maintained a zero percent non-performing loan ratio. This remains one of the strongest aspects of its financial position, indicating that none of its reported loans had crossed the regulatory threshold for classification as non-performing by the end of the fiscal year.

Nevertheless, infrastructure projects generally involve long construction and repayment periods. Their actual credit quality becomes clearer over time, making continued monitoring of project implementation, cash flows and repayment capacity essential.

NIFRA’s capital fund-to-risk-weighted exposure ratio declined to 67.15 percent from 76.76 percent. The fall appears to be associated with the expansion of the loan portfolio and the resulting increase in risk-weighted assets. Despite the decline, the ratio indicates that the bank continues to maintain a substantial capital cushion.

Its paid-up capital remained unchanged at Rs 21.60 billion. The bank therefore has a large equity base compared with its current level of earnings, which is also reflected in its relatively low return per share.

NIFRA’s price-to-earnings ratio stood at 53.73 times. The high valuation relative to its current earnings suggests that the market may be pricing in expectations of future growth from its approved infrastructure loan portfolio. It also means that continued weakness in earnings could place pressure on the share’s valuation unless income improves.

The financial summary shows reserves and surplus falling by 91.07 percent. However, this figure appears inconsistent with the relatively small decline in net worth per share. The difference may be related to an adjustment, reclassification or presentation issue and should be verified from the bank’s complete audited financial statements.

There is also a discrepancy regarding the bank’s base rate. The published table lists the rate at 6.67 percent, down from 6.97 percent, while the accompanying information mentions 6.77 percent. The final figure will require confirmation from the bank’s official detailed disclosure.

Overall, NIFRA’s latest results present two contrasting trends. The bank has expanded lending aggressively and maintained clean asset quality, but the growth has not yet translated into stronger earnings.

Its future profitability will largely depend on the timely disbursement of approved loans, the income generated from infrastructure projects and its ability to control funding costs. While zero non-performing loans and a strong capital position remain positive, the decline in net interest income and earnings per share shows that improving the return from its expanding business will be the bank’s main challenge.

नेपाल इन्फ्रास्ट्रक्चर बैंक (निफ्रा) को खुद नाफा गत आर्थिक वर्षमा करिब २० प्रतिशतले घटेको छ। बैंकले असार मसान्तसम्म ९८ करोड ७३ लाख रुपैयाँ नाफा कमाएको छ। अघिल्लो आर्थिक वर्षमा यस्तो नाफा १ अर्ब २३ करोड ४० लाख रुपैयाँ थियो।

ब्याज खर्च बढ्नु र खुद ब्याज आम्दानी घट्नुले बैंकको नाफामा दबाब परेको हो। समीक्षा अवधिमा खुद ब्याज आम्दानी २३ दशमलव ८९ प्रतिशतले घटेर १ अर्ब ४४ करोड रुपैयाँमा सीमित भएको छ। बैंकको ब्याज खर्च भने ५६ करोड ९१ लाखबाट बढेर ९७ करोड ७३ लाख रुपैयाँ पुगेको छ।

बैंकले २१ करोड २७ लाख रुपैयाँ बराबरको इम्पेयरमेन्ट चार्ज फिर्ता गरेकाले नाफामा अझ ठूलो गिरावट आउनबाट जोगिएको छ। नाफा घटेसँगै बैंकको प्रतिसेयर आम्दानी पनि खुम्चिएको छ।

नाफा घटे पनि बैंकले कर्जा विस्तारलाई तीव्रता दिएको छ। पूर्वाधार आयोजना तथा ग्राहकमा प्रवाह भएको कर्जा २४ अर्ब ९४ करोडबाट बढेर ३१ अर्ब ४२ करोड रुपैयाँ पुगेको छ। बैंकले ५६ अर्ब १३ करोड रुपैयाँ बराबरको कर्जा स्वीकृत गरिसकेको जनाएको छ।

निक्षेप संकलन भने सामान्य बढेर ७ अर्ब ८३ करोड रुपैयाँ पुगेको छ। बैंकको कुल सम्पत्ति ४१ अर्ब ८४ करोड रुपैयाँ रहेको छ।

बैंकको निष्क्रिय कर्जा शून्य प्रतिशत छ। कस्ट अफ फन्ड ६ दशमलव ४६ प्रतिशत, आधारदर ६ दशमलव ७७ प्रतिशत र कर्जा–निक्षेप अनुपात ७९ दशमलव ९२ प्रतिशत कायम भएको बैंकको वित्तीय विवरणमा उल्लेख छ।