Shine Resunga Development Bank Reports Robust Growth in Q3 2081
Author
Nepsetrading
Kathmandu, April 21, 2025 – Shine Resunga Development Bank has released its financial statement for the third quarter of the fiscal year 2081 (ending Chaitra 31, 2081), showcasing significant growth in key financial metrics compared to the same period last year (Chaitra, 2080). The bank's performance reflects a strong upward trajectory in profitability and operational efficiency, positioning it as a resilient player in Nepal's competitive banking sector.
Balance Sheet Highlights: Strong Growth in Core Metrics
As of Chaitra 31, 2081, Shine Resunga Development Bank's share capital stood at Rs. 4,875,701, marking a 3.00% increase from Rs. 4,733,690 in the corresponding quarter of 2080. This growth in share capital underscores the bank's efforts to bolster its equity base.
The bank's reserves and surplus saw a notable 7.95% rise, reaching Rs. 2,329,777 from Rs. 2,158,213 in the previous year. This increase reflects improved retained earnings, which grew to Rs. 387,194 in 2081 from a significantly lower Rs. 141,885 in 2080—a staggering 160.00% jump. This sharp rise in distributable profits highlights the bank's ability to generate substantial earnings for reinvestment and shareholder returns.
Deposits from customers increased by 4.74%, amounting to Rs. 6,908,4125 in 2081, up from Rs. 6,595,6224 in 2080. Similarly, loans and advances to customers grew by 5.24%, reaching Rs. 5,472,7801 compared to Rs. 5,200,2767 in the previous year. These figures indicate sustained growth in the bank's core banking activities, reflecting customer confidence and effective lending strategies.
Income Statement: Mixed Performance with Strong Profit Growth
The bank's net interest income for the third quarter of 2081 rose impressively by 18.41%, reaching Rs. 1,913,256 compared to Rs. 1,615,911 in 2080. This growth in net interest income highlights the bank's ability to optimize its interest-earning assets amidst a competitive interest rate environment.
However, net fee and commission income saw a decline of 10.70%, dropping to Rs. 209,207 from Rs. 234,269 in the previous year. This decrease may point to challenges in fee-based services, possibly due to market conditions or shifts in customer behavior.
Total operating income for the quarter stood at Rs. 2,169,678, a 15.74% increase from Rs. 1,874,590 in 2080. Despite this growth, operating profit dipped by 8.07%, amounting to Rs. 747,171 compared to Rs. 812,725 in the previous year. The decline in operating profit can be attributed to a significant rise in impairment charges, which surged to Rs. 676,949 in 2081 from Rs. 371,857 in 2080. This increase in impairment charges suggests a more conservative approach to provisioning for potential loan losses, likely in response to economic uncertainties.
The profit for the period remained relatively stable at Rs. 514,014, a marginal 0.13% decrease from Rs. 514,659 in 2080. However, the distributable profit soared by 160.00% to Rs. 387,194, as mentioned earlier, providing a strong cushion for dividend payouts and future growth initiatives.
Key Financial Ratios: Stability with Room for Improvement
Earnings per share (EPS) slightly declined to Rs. 14.06 in 2081 from Rs. 14.50 in 2080, a drop of 0.44. Similarly, distributable EPS increased to Rs. 10.59 from Rs. 4.19, aligning with the growth in distributable profits. The price-to-earnings (PE) ratio stood at 28.93, indicating that the market values the bank's earnings at a relatively high multiple, reflecting investor confidence in its future growth.
Net worth per share grew by 6.38%, reaching Rs. 147.78 in 2081 from Rs. 141.4 in 2080, signaling an increase in the intrinsic value of the bank's shares. The capital fund to risk-weighted assets (RWA) ratio improved slightly to 12.59% from 12.78%, indicating a stable capital adequacy position.
On the asset quality front, the non-performing loan (NPL) ratio improved to 3.41% from 4.76%, reflecting better credit risk management. However, the credit-to-deposit ratio increased to 85.12% from 82.4%, suggesting a higher utilization of deposits for lending, which could pose liquidity risks if not managed carefully.
The base rate decreased to 9.04% from 9.99%, a reduction of 2.05 percentage points, which may have contributed to the bank's competitive lending rates. The interest rate spread also narrowed slightly to 4.34% from 4.6%, indicating a tighter margin between lending and borrowing rates.
Outlook: A Promising Future with Strategic Focus
Shine Resunga Development Bank's third-quarter performance in 2081 demonstrates resilience and growth in a challenging economic environment. The significant increase in distributable profits, coupled with growth in deposits and loans, positions the bank well for future expansion. However, the decline in operating profit and the rise in impairment charges highlight the need for cautious risk management and cost optimization.
Moving forward, the bank may benefit from diversifying its fee-based income streams to offset the decline in net fee and commission income. Additionally, maintaining a balanced credit-to-deposit ratio will be crucial to ensuring liquidity while sustaining lending growth.
Overall, Shine Resunga Development Bank continues to strengthen its financial foundation, making it a noteworthy player in Nepal's development banking sector as it navigates the opportunities and challenges of the fiscal year 2081.
