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By Dipesh Ghimire

Shangrila Development Bank Reports Strong Profit Growth in Second Quarter

Shangrila Development Bank Reports Strong Profit Growth in Second Quarter

Kathmandu — ShangriLa Development Bank has posted a notable improvement in its financial performance for the second quarter of the current fiscal year, with both net profit and earnings per share recording solid growth. The unaudited financial statement published by the bank shows a sharp rise in profitability, supported mainly by higher interest income and lower impairment charges.

During the first six months of the fiscal year, the bank earned a net profit of Rs. 302.6 million, marking an increase of 53.95 percent compared to the same period of the previous year. In the corresponding period last year, the bank had recorded a net profit of Rs. 196.6 million. The strong year-on-year growth reflects improved operational efficiency and better income generation amid a gradually stabilising banking environment.

The bank’s performance was largely driven by growth in core income. Net interest income rose by 18.49 percent to Rs. 1.09 billion, while net fee and commission income increased by 11.29 percent to Rs. 120 million. As a result, total operating income expanded by 19.46 percent, indicating steady improvement in the bank’s ability to generate income from its primary banking activities.

Operating profit also saw a significant jump during the review period. The bank recorded an operating profit of Rs. 451.3 million, up by 59.33 percent from the previous year. This improvement was further supported by a decline in impairment charges, which fell from Rs. 208.5 million to Rs. 176.8 million, easing pressure on the bank’s bottom line.

Alongside profit growth, the bank’s earnings per share (EPS) improved markedly. EPS increased by Rs. 4.75 to reach Rs. 16.21, reflecting stronger returns to shareholders. However, distributable profit declined to Rs. 94.7 million, resulting in a distributable EPS of Rs. 5.07, lower than the previous year. This suggests that while overall profitability has improved, the amount available for distribution has been affected by internal adjustments and capital requirements.

On the balance-sheet side, Shangri-La Development Bank maintained a stable capital position. The bank’s paid-up capital stands at Rs. 3.73 billion, while reserves and surplus amount to nearly Rs. 1.99 billion. Net worth per share increased modestly to Rs. 153.24, signalling a gradual strengthening of shareholders’ equity.

In terms of business expansion, the bank mobilised Rs. 54.39 billion in customer deposits and extended Rs. 44.41 billion in loans and advances by mid-Poush. While deposits declined marginally by 0.50 percent, loan growth of 3.70 percent indicates continued credit expansion. The credit-to-deposit ratio remained stable at 83.55 percent, suggesting balanced liquidity management.

However, asset quality remains an area to watch. The bank’s non-performing loan (NPL) ratio rose to 6.87 percent from 4.99 percent a year earlier, reflecting some stress in the loan portfolio. Despite this, a decline in the base rate to 6.17 percent and a slightly improved interest rate spread of 4.57 percent point to easing funding costs and better interest management.

Overall, Shangri-La Development Bank’s second-quarter results show a strong rebound in profitability and operational income, supported by improved margins and controlled costs. While rising NPLs pose a challenge, the growth in earnings and stable capital indicators suggest that the bank is gradually strengthening its financial position in a cautious but improving banking landscape.

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