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Kathmandu, Jan 30: Nepal’s commercial banks booked a solid rise in profits in the first half of the current fiscal year, helped by stronger loan recovery, even as they were forced to set aside more money to cover bad loans.

Net profit of 20 commercial banks climbed by 11.51 per cent between mid July 2025 and mid-January 2026. The sector earned Rs 30.59 billion during the period, up from Rs 27.43 billion a year earlier. That is an increase of Rs 3.16 billion.

The earnings growth came at a time when banks are sitting on excess cash and facing weak demand for loans. Lending rates have dropped sharply over the past year, sliding to a three-year low of 5.36 per cent from 6.81 per cent, squeezing margins.

Bankers say better recovery of previously stressed loans made the difference. Nepal Bankers’ Association President Santosh Koirala said collections improved in the second quarter, helping banks absorb the pressure from rising provisions. Higher net interest income and commission earnings also supported the bottom line.

Out of the 20 banks, 12 posted profit growth, while seven saw earnings fall. Laxmi Sunrise Bank slipped into the red, reporting a loss of Rs 273.61 million during the review period.

Nabil Bank topped the profit chart with Rs 4.75 billion, followed by Global IME Bank at Rs 3.25 billion. Kumari Bank delivered the strongest jump, with profits rising by 886.50 per cent. Everest Bank recorded the weakest growth at just over 2 per cent.

Even with higher profits, the problem of bad loans has not eased. Provisions against non-performing loans rose by 16.84 percent. By mid-January, banks had set aside Rs 28.75 billion, compared to Rs 24.67 billion a year earlier.

Fourteen banks earmarked more than Rs 1 billion each to meet regulatory requirements. Himalayan Bank saw the steepest rise, with provisioning surging by 462.95 per cent to Rs 1.03 billion.

People’s News Monitoring Service