Kathmandu — Prime Commercial Bank has reported a significant improvement in financial performance in the fiscal year 2082/83, posting a net profit of Rs 4.11 billion. The profit increased by 28.48 percent compared to Rs 3.20 billion recorded in the previous fiscal year, reflecting improved earnings capacity amid a challenging banking environment.

The rise in profit was mainly supported by growth in core banking income, expansion of lending activities, and improvement in non-interest-based earnings. The bank’s net interest income increased to Rs 9.21 billion from Rs 8.81 billion a year earlier, indicating that the bank was able to maintain growth in its primary source of revenue.

Along with higher interest income, the bank also strengthened its operating performance. Total operating income reached Rs 11.90 billion, while operating profit increased to Rs 6.83 billion. Net fee and commission income stood at Rs 1.94 billion, suggesting that the bank has gradually diversified its income sources beyond traditional interest-based earnings.

The bank’s balance sheet also expanded during the year. Deposits increased by 5.46 percent to Rs 277.74 billion, while loans and advances grew by 8.29 percent to Rs 226.44 billion. The higher growth in lending compared to deposits indicates that the bank actively utilized available liquidity to expand credit.

The credit-to-deposit ratio of 83.36 percent shows that the bank still maintained a comfortable liquidity position. In an environment of lower interest rates and excess liquidity in the banking system, the bank appears to have focused on increasing credit exposure to improve earnings.

However, the expansion in lending has also brought pressure on asset quality. The bank’s non-performing loan (NPL) ratio increased from 5.81 percent to 6.69 percent during the review period. The rise in bad loans indicates that loan recovery and credit risk management will remain key challenges for the bank.

Higher NPL levels could affect future profitability by increasing loan-loss provisions and reducing the quality of earning assets. Although the current profit growth is encouraging, sustaining profitability will depend on the bank’s ability to control further deterioration in loan quality and recover stressed assets.

The bank’s distributable profit stood at Rs 1.90 billion, indicating a dividend-paying capacity of around 9.10 percent. Earnings per share (EPS) improved significantly to Rs 19.63 from Rs 16.50 a year earlier, reflecting better profitability for shareholders.

The bank’s paid-up capital reached Rs 20.95 billion, while reserves stood at Rs 13.97 billion. The net worth per share remained at Rs 175, indicating a relatively strong capital base.

Despite business expansion, capital adequacy indicators showed slight pressure. The Tier-1 capital adequacy ratio declined marginally to 9.88 percent from 9.98 percent, while the overall capital adequacy ratio stood at 12.87 percent. Continued credit growth without adequate capital strengthening could create additional pressure on regulatory capital in the future.

Prime Commercial Bank has identified loan recovery, strengthening internal control systems, and improving risk management as major priorities. The bank has also planned to expand lending toward small and medium enterprises and productive sectors to support sustainable growth.

The bank is also moving toward technology-driven banking services by adopting artificial intelligence, data analytics, and robotics to improve operational efficiency and customer service. Such digital transformation could help reduce costs and strengthen competitiveness in the increasingly technology-oriented banking sector.

However, the banking sector continues to face challenges from economic uncertainty, slower economic recovery, inflation pressure, policy changes, and global financial risks. These factors could influence credit demand and repayment capacity of borrowers.

Overall, Prime Commercial Bank has demonstrated strong financial recovery through higher profit, increased lending, and improved operating income. However, the rise in non-performing loans remains the key risk factor. The sustainability of future growth will depend largely on how effectively the bank manages credit risk, improves asset quality, and converts loan expansion into healthy earnings.