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Samriddhi Finance's losses increase, Rise in NPL

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Nepse trading

Samriddhi Finance's losses increase, Rise in NPL

Samriddhi Finance Company Limited (SFCL) has published its financial report for the second quarter of the fiscal year 2081/82. According to the report, the company's losses have significantly increased compared to the same period last year.

Main reasons

  • Increase in Losses: The company has reported a loss of NPR 62.8 million in the first six months of the current fiscal year. This is a significant rise compared to a loss of NPR 21.3 million during the same period last year.

  • Sharp Rise in Non-Performing Loans (NPLs): The non-performing loan (NPL) ratio increased sharply from 4.68% to 19.34%. As a result, impairment charges surged from NPR 6.2 million to NPR 61.2 million.

  • Growth in Net Interest Income: Net interest income grew by 8.13% to NPR 387.61 million.

  • Increase in Fee and Commission Income: Fee and commission income increased by 176.19% to NPR 56.95 million.

  • Total Operating Income: Total operating income rose by 17.57% to NPR 513.27 million.

Other Financial Details

  • Paid-up Capital: The company's paid-up capital remains at NPR 818.91 million.

  • Reserves and Surplus: Negative NPR 407.78 million.

  • Deposits Collection: Deposits amounted to NPR 2.58 billion.

  • Loan Disbursement: Loans disbursed stood at NPR 1.57 billion.

  • Earnings Per Share (EPS): Negative NPR 15.34.

  • Distributable Profit: Negative NPR 680.19 million.

  • Base Rate: The base rate decreased to 10.94%, down by 5.72% compared to the previous year.

  • Credit to Deposit Ratio: Recorded at 72.93%.

Reasons for Increased Losses

  1. Rise in Non-Performing Loans: The sharp increase in NPLs led to a significant rise in impairment charges, affecting the company's overall profitability.

  2. Decline in Operating Profit: Despite growth in total operating income, high impairment charges resulted in negative operating profit.

The financial report highlights that while the company has seen growth in various income streams, weak management of non-performing loans has caused substantial losses. Although deposit collection and loan disbursement showed moderate growth, the company will face challenges in turning profitable unless financial management is improved, In the coming quarters, Samriddhi Finance needs to focus on controlling its NPLs and managing operating expenses more effectively. Additionally, strategic measures are required to mitigate the impact of rising impairment charges and improve financial stability.

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