Machhapuchhre Bank Grows Profit as Balance Sheet Expands
Machhapuchhre Bank grows profit 12.24% as deposits and loans expand but higher impairment charges weigh on earnings growth.
Machhapuchhre Bank Limited (MBL) has reported a 12.24% increase in net profit to Rs. 2.11 arba in the fourth quarter of fiscal year 2082/83, up from Rs. 1.88 arba in the corresponding period a year earlier.
The bank’s results show strong balance-sheet expansion, with both deposits and lending growing at double-digit rates. Deposits increased 19.72% to Rs. 2.20 kharba, while loans and advances rose 15.95% to Rs. 1.64 kharba. The faster growth in deposits gave the bank a larger funding base for expanding its loan book.
Core interest income also improved. Net interest income increased 5.53% to Rs. 6.07 arba from Rs. 5.76 arba a year earlier. At the same time, the bank’s cost of funds fell sharply by 22.70% to 3.27%, compared with 4.23% in the previous fiscal year, supporting margins despite higher operating costs.
However, asset-quality costs increased substantially. Impairment charges nearly doubled, rising 94.35% to Rs. 1.08 arba from Rs. 55.67 crore. Personnel expenses also increased 10.27% to Rs. 2.72 arba. Despite these pressures, operating profit edged up 0.54% to Rs. 3.16 arba.
The bank’s capital base expanded significantly during the year. Paid-up capital rose 29.81% to Rs. 15.09 arba, partly due to the issuance of Rs. 3 arba in irredeemable preference shares. Reserves increased 17.69% to Rs. 7.44 arba, while retained earnings rose 4.87% to Rs. 98.20 crore.
Capital adequacy also improved, with the capital adequacy ratio rising to 10.04% from 9.27%. Asset quality remained relatively stable, although the non-performing loan ratio edged up to 3.98% from 3.96%.
Despite the increase in net profit, earnings per share declined 4.72% to Rs. 15.44 from Rs. 16.21, reflecting the expansion in the bank’s share capital. Net worth per share, meanwhile, increased 4.44% to Rs. 169.91.
The bank reported distributable profit after profit/loss appropriation and regulatory adjustments of Rs. 98.20 crore, up from Rs. 93.64 crore a year earlier. At the end of the review quarter, MBL’s share price stood at Rs. 248, giving the stock a reported P/E ratio of 16.06 times.
Overall, the results point to a bank expanding its balance sheet while maintaining modest profit growth. Strong deposit and loan growth, lower funding costs and improved capital adequacy are positive, but the sharp rise in impairment charges and decline in EPS remain important factors for investors to monitor.