Kathmandu. According to the financial statement up to the fourth quarter of the last fiscal year 2082/83, the overall financial condition of commercial banks has improved. During the review period, 29 out of 36 major financial indicators of the institution improved while seven indicators decreased compared to the previous year.

The net profit of the company increased by 32.28 percent compared to the corresponding period of the previous FY. Likewise, the bank’s earnings per share earnings (EPS), distributable profit, net worth per share, rate of return (ROE) and other indicators have improved.

Similarly, the business size of the banks has also expanded during this period. Deposits from customers increased by 14.92 percent and increased by 6.36 percent. The total assets of the company increased by 13.84 percent, paid-up capital by 6.80 percent and total equity by 9.42 percent. The impact of the decrease in interest rates during the review period has been seen in the interest income of the company. As a result, the interest income of the banks decreased by 8.47 percent.

During this period, interest expense decreased by 14.39 percent. Interest expense is the amount of interest that banks and financial institutions have to pay to depositors. Since interest expenses make up a large portion of the bank’s total expenses, its fluctuations have a direct impact on the bank’s profit. The reduction in the interest expense of the bank is generally considered to be positive. The lower the interest amount on deposits, the cost of funding of the bank decreases. Net interest income increased by 1.07 percent due to reduction in interest expense.

Similarly, the cost of funds of commercial banks decreased by 22.70 percent to 3.36 percent. Similarly, the base rate has decreased by 19.48 percent to 4.86 percent and the spread rate has also decreased by 9.14 percent.

The potential loan loss provision i.e. impairment charge of the company has decreased by 27.65 percent. Non-performing loans, however, increased to 5.44 percent from 4.60 percent in the previous year.  Similarly, the company’s debt-deposit ratio has decreased to 71.08 percent and liquid assets ratio has reached 38.20 percent.