Banks Register Increase In Returns And Capital Fund

Commercial banks’ average return has increased by 2 per cent over the last one year. This is shown by the unaudited report of 30 banks for the second quarter of the current fiscal year.
 

Average return of the banks in second quarter of the last year was 9.46 per cent while this year, it is 11.44 per cent. Shovan Dev Panta, the CEO of Lumbini Bank said the average return increased as there was progress in the repayment of bad loans. “However with the increase in cost of fund, the returns have not increased as expected,” he added. Cost of fund that was 5.43 per cent in the second quarter last year has increased to 7.86 per cent in the same period this year.
 

Maheswor Lal Shrestha, the Management Coordinator of Nepal Bank Limited said it is positive to have increasing returns for banks in the current difficult situation. “But along with the return, cost of fund has also increased which is not a good sign,” he said. He cites the increase in interest rate for deposits as the main reason behind the rise in cost of fund. “This would also increase the rate of interest in loans which will eventually affect investment and consumption,” he explained.