Profit of Banks Could not Increase Due to Loan Loss Provision: President KC

Kathmandu : President of Nepal Bankers Association Sunil KC has said that there is no need to panic for the time being as the interest rates of banks are decreasing.

Speaking at the press conference held today by the Bankers Association, he gave this information. In the first three months of last year, the amount of loan loss provision was 7 billion, and by the end of the current year, it has reached 16 billion.

KC said that in the first quarter of the current year, the profit of the banks could not increase due to the loan loss provision. Deposits also did not increase much. 120 billion increase is not much. The decline in business in the private sector affected the bank’s profitability. Bad loans reached 3.61 percent’ he said, ‘Looking at South Asian countries, there is no need to be afraid. However, you have to be careful. We are becoming aware.’

Casey said that the impact of economic recession has affected the banks. He said that Nepali Bank is in a good condition when compared to South Asian countries. He said that the interest rate abroad is higher than in Nepal. Interest rates have decreased in Nepal recently. He said that due to lack of demand for loans, banks are reducing premiums. He said that there is a directive of the National Bank to maintain the spread rate at 4 percent and the banks are working accordingly.

The NBA informed people that they have pledged to donate 50 million rupees to the victims of the Jajarkot earthquake last Friday. KC expressed the commitment of the union to help in the reconstruction of the earthquake affected areas.

KC, who is also the Chief Executive Officer (CEO) of NMB Bank, said that due to the increase in bad loans of the banks, a provision of 16 billion rupees was made in the first quarter. Whereas last year they made only 7 billion rupees as a provision. He said that the profit of 13 banks has decreased due to the high interest rates that have increased globally.

“Bad loans have increased due to the lack of recovery of the banks. Last year, they had to make a provision of only 7 billion, but this year they had to make 16 billion,” he said. Yes.’

He said that due to the slowdown in private sector business, the impact of this has automatically been on the banks. He said that banks have recently increased deposit collection by 1 trillion 20 billion rupees and increased loans by 84 billion rupees.He said that the average bad loan of banks was 2.98 percent last year, and by the end of October, the bad loan had reached 3.61 percent.

“It seems that bad loans have increased even in foreign countries, now we are practicing how to improve them,” he said.President KC said that it was good when the government gave the (Stumelite) package, but it was not given in Nepal.

Ashok Rana, CEO of Himalayan Bank, also said that the bank’s interest rate will decrease. “Now it seems that the interest rate will decrease, the Central Bank’s policy is affecting the interest rate. It may go down, but it is not likely to go up,” he said. According to him, banks have given more priority to recovery.