By Sandeep Chaudhary
Sana Kisan Bikas Bank (SKBBL) Q4 2024/25 Financial Review: Examining Performance Amid Declining Revenue and Strong Financial Indicators
Total Revenue
Sana Kisan Bikas Bank reported a 34.96% decline in total revenue for Q4 2024/25, amounting to Rs. 2,893,840.13 thousand compared to Rs. 4,162,160.26 thousand in Q4 2023/24. The drop in revenue is a major concern, especially when considering that the bank had previously seen positive growth of 17.29% in Q4 2023/24. The quarter-over-quarter declines in Q3 and Q2 2024/25 further reflect the challenges the bank faces in revenue generation, likely due to external economic factors or operational setbacks.
Gross Profit
Despite the revenue decline, the gross profit remained relatively strong at Rs. 1,794,998.56 thousand in Q4, down from Rs. 2,193,126.38 thousand in the previous year. The gross profit margin of 62.03% in Q4 indicates that the bank is still managing its direct costs effectively. This strong margin, though slightly lower than 52.69% in Q4 2023/24, reflects efficient cost control despite the overall revenue drop.
Net Income
The net income for Q4 2024/25 stood at Rs. 878,701.12 thousand, a slight decrease compared to Rs. 949,698.75 thousand in the same period last year. However, the net margin improved to 30.36%, a positive result considering the decline in revenue. This reflects the bank's ability to manage its expenses and achieve higher profitability, even in the face of declining revenue.
Return on Assets (ROA) and Return on Equity (ROE)
The Return on Assets (ROA) decreased slightly to 2.11% in Q4 2024/25, from 2.06% in Q4 2023/24, showing that the bank continues to generate reasonable returns from its assets. The Return on Equity (ROE) of 8.87% is still robust, though slightly lower than 10.51% in the previous year. This slight decline in ROE indicates that the bank’s equity returns have decreased in line with its slightly reduced profitability.
Earnings Per Share (EPS) and Price-to-Earnings (P/E) Ratio
The Earnings Per Share (EPS) decreased to 20.38 in Q4 2024/25, down from 24.95 in the previous year. However, the Price-to-Earnings (P/E) ratio remains high at 43.41, indicating that investors are still confident in the bank’s future prospects despite the short-term dip in earnings. The high P/E ratio suggests that market expectations for future growth remain strong.
Book Value and Market Value per Share
The book value per share stood at Rs. 239.05 in Q4 2024/25, showing a slight increase from Rs. 248.81 in the same period last year. The market value per share increased to Rs. 884.41, a significant rise from Rs. 853.70 last year, indicating continued investor confidence in the bank, despite revenue challenges.
Non-Performing Loan (NPL) and Loan Loss Provisions
The Non-Performing Loan (NPL) ratio stands at 2.65% in Q4, up from 2.18% in Q4 2023/24. While the NPL ratio has increased, the Total Loan Loss Provision to NPL ratio remains high at 172.11%, suggesting that the bank is adequately provisioning for potential loan losses. This indicates a conservative and cautious approach to credit risk management.
Cost of Funds and Liquidity
The cost of funds for the bank decreased to 3.14% in Q4 2024/25, down from 5.32% in the previous year, showing improved efficiency in managing funding costs. Additionally, the Credit Deposit Ratio stands at 116.67%, indicating that the bank is using its deposits effectively for lending purposes, though the higher ratio could also point to liquidity pressures.
Investment Portfolio
The bank continues to maintain a strong investment portfolio, with long-term investments totaling Rs. 17,153,143.81 thousand in Q4, providing a solid base for future growth. Short-term investments increased to Rs. 2,913,500.00 thousand, signaling the bank’s focus on maintaining liquidity.
