Detailed Financial Analysis of Machhapuchchhre Bank's 2nd Quarter, FY 2081/82
Author
NEPSE trading
Machhapuchchhre Bank has reported a net profit of Rs. 80.73 crores for the second quarter of FY 2081/82, reflecting a slight 0.24% increase compared to Rs. 80.53 crores during the same period last year. The financial statement indicates stability and improvements in certain areas, though there remain challenges that require attention.
Particulars | FY 2081/82 (Rs. '000) | FY 2080/81 (Rs. '000) | Change (%) |
|---|---|---|---|
Net Profit (Net Profit/Loss) | 807,327 | 805,380 | 0.24% |
Net Interest Income | 2,823,670 | 2,637,497 | 7.06% |
Total Operating Income | 3,699,941 | 3,348,540 | 10.49% |
Impairment Charge | 204,702 | 238,588 | -14.20% |
Operating Profit | 1,622,797 | 1,279,233 | 26.86% |
1. Growth in Net Profit and Interest Income
The bank achieved a 7.06% growth in net interest income, rising from Rs. 263.75 crores to Rs. 282.37 crores. Similarly, total operating income increased by 10.49%, reaching Rs. 369.99 crores compared to Rs. 334.85 crores in the previous year.
While net profit improved slightly by 0.24%, this growth was primarily driven by a significant reduction in impairment charges rather than operational efficiencies.
2. Reduction in Impairment Charges
Impairment charges dropped from Rs. 23.85 crores to Rs. 20.47 crores, a 14.20% reduction. This played a key role in improving both operating profit and net profit.
3. Stable Paid-Up Capital and Reserve Funds
The bank's paid-up capital remained stable at Rs. 1,162.13 crores, while its reserve fund grew by 4.81%, reaching Rs. 610 crores. This stability in reserves highlights the bank's ability to sustain its financial position in the long term.
4. Challenges in Non-Performing Loans (NPL)
The bank’s Net NPL ratio increased from 1.03% to 1.97%, indicating potential challenges in asset quality management. This rise in NPLs may require closer attention to mitigate financial risks in the future.
5. Distributable Profit and Per-Share Metrics
The bank posted a distributable profit of Rs. 16.62 crores.
Its Earnings Per Share (EPS) stood at Rs. 13.89, showing a slight improvement compared to Rs. 13.86 last year.
The Net Worth Per Share was reported at Rs. 154.20, reflecting strong financial stability.
6. Reduction in Base Rate and Cost of Funds
The bank's base rate declined from 9.78% to 7.14%, making it more competitive in the market. Similarly, the cost of funds decreased from 7.26% to 4.82%, showcasing improved efficiency in financial management.
Positive Aspects
Reduction in impairment charges, boosting profitability.
Growth in interest income and total operating income.
Improved cost efficiency with a lower base rate and cost of funds.
Challenges
Increase in NPL ratio, indicating risk in asset quality.
Marginal growth in net profit (0.24%), reflecting limited profitability improvement.
Relatively low distributable profit for shareholders.
Machhapuchchhre Bank has maintained financial stability, with improvements in interest income and cost management. However, the rise in NPLs presents a potential challenge that the bank must address to sustain long-term profitability.
