KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The recent economic developments in Nepal highlight both challenges and growth in key sectors.
The banking sector is facing a worrying rise in non-performing loans (NPLs), which have more than doubled in the past five years, reaching 4.92% in the current fiscal year.
This ongoing upward trend in NPLs signals potential financial strain for banks, particularly in commercial and development groups, despite some short-term declines.
On a more positive note, the stock market experienced a slight decline in the NEPSE index, while the price of gold saw a significant increase of Rs. 1,400 per tola, reflecting global market trends.
Meanwhile, companies like Deprosc Laghubitta and Citizen Life Insurance reported impressive gains in profits, showcasing resilience and strong financial performance.
Additionally, the announcement of the expansion of the Chisapani-Gaddachauki section of the East-West Mahendra Highway to a six-lane road demonstrates the government’s commitment to addressing infrastructure needs to accommodate growing traffic.
These developments suggest a mixed economic landscape of challenges and promising opportunities.
Non-performing loans in banking sector double in five years
The average non-performing loans (NPLs) of Nepal’s A, B, and C category banks have more than doubled in the last five years.
According to recent data, NPLs in the banking sector have been steadily increasing over the past four years, showing a consistent upward trend.
While the NPLs of commercial and development bank groups decreased in the month of Poush during the fiscal year 2078/79, compared to the same period in the fiscal year 2077/78, these loans have been on the rise continuously since then.
The average NPLs of finance companies have been increasing steadily over the past five years. In fiscal year 2077/78, the NPLs of A, B, and C category banks stood at 1.84 percent. By mid-Poush of the current fiscal year, this figure had nearly doubled to 4.92 percent.
NEPSE Index drops 10.98 points to close at 2,677.32
The Nepal Stock Exchange (NEPSE) on Monday saw a decline of 10.98 points (0.40%), closing at 2,677.32, following a drop of 11.49 points in the previous session.
Starting at 2,684.96, the index fluctuated throughout the day, reaching a high of 2,699.79 and a low of 2,665.72.
The total turnover for the day was Rs. 6.96 billion, with 14,443,765 shares traded in 74,864 transactions across 322 companies.
Gold price rises by Rs 1,400 per tola on Monday
The price of gold in Nepal increased by Rs 1,400, reaching Rs 169,600 per tola on Monday, up from Rs 168,200 the previous day, according to the Federation of Gold and Silver Dealers Association.
Similarly, the price of silver increased to Rs 1,975 per tola, up from Rs 1,960.
The fluctuations in gold and silver prices in Nepal are influenced by trends in the international market, where gold is currently trading at around USD 2,879 per ounce.
Deprosc Laghubitta’s net profit soars in Q2
Deprosc Laghubitta Bittiya Sanstha Limited (DDBL) reported a net profit of Rs. 24.56 Crores for the second quarter (Q2) of fiscal year 2081/82, reflecting a remarkable increase of 102.49% compared to Rs. 12.13 Crores in the same period last year.
The company’s net interest income surged by 68.98%, reaching Rs. 99.46 Crores, while impairment charges saw a significant jump of 81.84%, totaling Rs. 23.37 Crores.
Operating profit also witnessed an impressive rise of 111.92%, hitting Rs. 36.72 Crores.
Citizen Life Insurance reports an impressive 86.78% rise in net profit for Q2
Citizen Life Insurance Company Limited (CLI) has recorded an outstanding 86.78% increase in net profit for the second quarter of fiscal year 2081/82, rising to Rs. 23.09 Crores from Rs. 12.36 Crores during the same period last year.
The company continues to demonstrate strong financial stability with a paid-up capital of Rs. 3.93 billion.
It also holds Rs. 83.8 Crores in retained earnings, Rs. 63.88 Crores in other equity, and Rs. 19.28 Crores in catastrophe reserves, with a share premium of Rs. 1.55 billion.
Chisapani-Gaddachauki section to be upgraded to six lanes
Foreign Minister Dr. Arzu Rana has announced that the construction of the six-lane Chisapani-Gaddachauki section of the East-West Mahendra Highway will begin soon.
Minister Rana stated that a survey is currently underway for the expansion of the highway from Chisapani in Kailali to Gaddachauki in Kanchanpur, due to the increasing vehicle traffic.
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