Muktinath Bikas Bank Limited has reported a net profit of Rs 1.52 billion in fiscal year 2082/83, up 12.44% from Rs 1.35 billion in the previous fiscal year.

The increase in profit was supported by growth in net interest income and a significant reduction in impairment charges. However, the bank’s results also highlight concerns around rising non-performing loans (NPLs) and a sharp decline in distributable profit.

The bank’s net interest income increased 3.63% to Rs 4.74 billion, while impairment charges fell 27.87% to Rs 572.4 million. The lower provisioning requirement helped operating profit grow by 20.23% to Rs 2.42 billion.

On the balance sheet, deposits increased 5.20% to Rs 123.54 billion, while loans and advances grew 3.38%. The bank’s cost of funds also improved significantly, declining from 4.90% to 3.53%.

However, asset quality weakened considerably. The bank’s NPL ratio increased from 2.97% to 4.77%, a rise of 1.80 percentage points in a year.

More importantly for shareholders, distributable profit fell 50.10% to Rs 675.8 million from Rs 1.35 billion. This decline could constrain the bank’s ability to distribute dividends despite the increase in reported net profit.

The bank’s capital adequacy ratio improved from 12.88% to 13.47%, while its reserve fund increased 25.26% to Rs 4.27 billion.

Earnings per share (EPS) declined slightly from Rs 19.16 to Rs 18.98, while net worth per share fell from Rs 167.59 to Rs 161.82. The bank’s paid-up capital increased 13.53% to Rs 8 billion.

At the end of Ashad, Muktinath Bikas Bank’s share price stood at Rs 363, with a reported P/E ratio of 19.13 times.

The results therefore present a mixed picture: reported profit and operating performance improved, but rising bad loans and a 50% decline in distributable profit remain significant concerns for shareholders.