KATHMANDU: Nepal Investment Mega Bank Ltd. (NIMB) reported a sharp decline in net profit in fiscal year 2025/26, as a steep rise in loan-loss provisions and a contraction in net interest income weighed on its earnings.

The bank posted a net profit of Rs 2.75 billion in FY 2025/26, down 36.59% from Rs 4.33 billion a year earlier.

The decline in earnings also dragged down earnings per share (EPS) to Rs 8.05 from Rs 12.69 in the previous fiscal year.

Net interest income contracts

NIMB’s core interest income came under pressure during the year. Net interest income fell 8.55% to Rs 12.99 billion from Rs 14.20 billion a year earlier.

The decline came despite an improvement in the bank’s spread rate, which rose to 3.15% from 3.01%.

Net fee and commission income edged up 1.43% to Rs 2.23 billion.

The bank, however, recorded stronger growth in trading and other operating income. The income from these sources increased 42.72% to Rs 1.78 billion from Rs 1.25 billion a year earlier.

Loan-loss provisions jump 41.5%

The biggest pressure on NIMB’s bottom line came from loan-loss provisioning.

The bank set aside Rs 6.19 billion as impairment charges in FY 2025/26, up 41.55% from Rs 4.38 billion in the previous fiscal year.

The sharp increase in provisioning coincided with a deterioration in asset quality. NIMB’s non-performing loan (NPL) ratio rose to 8.66% as of mid-July 2026, from 6.35% a year earlier.

The rise in bad loans and provisioning has emerged as a major concern for the bank, significantly affecting its profitability.

Deposits rise, but credit remains stagnant

NIMB’s deposit base expanded during the year. Total deposits increased 11.49% to Rs 526.63 billion from Rs 472.34 billion a year earlier.

Credit growth, however, remained weak. Total loans declined marginally by 0.57% to Rs 321.34 billion from Rs 323.17 billion.

With deposits growing while lending remained largely stagnant, the bank’s credit-to-deposit ratio fell to 68.17%.

The figures indicate that the bank accumulated deposits at a significantly faster pace than it expanded its loan portfolio.

Dividend capacity turns negative

The most challenging aspect of the financial results for shareholders is NIMB’s negative distributable profit.

The bank’s distributable profit stood at negative Rs 5.09 billion, mainly due to accumulated losses from previous years and additional regulatory adjustments.

As a result, NIMB does not have the capacity to distribute dividends from its FY 2025/26 earnings based on the reported distributable profit position.

Net worth improves despite profit decline

NIMB’s paid-up capital remained unchanged at Rs 34.13 billion.

Its reserves and other funds, however, increased 15.38% to Rs 38.43 billion.

The growth in reserves helped lift the bank’s net worth per share to Rs 197.71 from Rs 190.40, despite the sharp decline in annual profit.

The bank’s base rate fell to 4.53% from 5.83%, while its spread rate increased to 3.15% from 3.01%.

NIMB’s price-to-earnings ratio stood at 23.60 times.

Overall, NIMB’s FY 2025/26 results present a mixed picture: deposit mobilisation strengthened and reserves expanded, but weak credit growth, declining net interest income, rising non-performing loans and sharply higher impairment charges significantly eroded profitability. The bank’s negative distributable profit also leaves shareholders without a dividend prospect for the year.