Everest Bank profit edges higher as margins narrow

Everest Bank lifted full-year net profit 3.1% to Rs 5.07 arba as lower funding costs helped offset softer interest income and a narrower spread.

The result covers FY 2082/83 through Ashadh. Interest income fell 3.4%, while net interest income edged up 0.7%; total operating income grew 6.3%. Operating profit dipped 0.9%, but net profit increased 3.1%. EPS fell 2.7% to Rs 36.95, reflecting the larger share base. The interest spread narrowed 0.43 percentage points to 3.05%.

Why it matters: earnings growth remains modest, and the lower EPS and return on equity show that profit gains have not translated into stronger per-share returns.

Lending grew as securities holdings contracted

Customer deposits rose 5.8% and customer loans advanced 10.3%, while investment securities fell 43.3%. The shift toward customer lending helped support income as interest income declined, and the cost of funds fell 0.72 percentage points to 3.15%. Asset quality remains comparatively strong: non-performing loans increased 0.11 percentage points to 0.49%. Return on equity, however, fell 2.03 points to 14.41%, and capital adequacy declined 1.05 points to 12.23%.

Peer context and trading

EBL’s 3.1% profit growth was below Nabil Bank’s 10.9% but ahead of Global IME’s 0.4%; EBL’s 0.49% NPL ratio was also far lower than both peers’ reported levels. Shares closed at Rs 715 on 26 October, down 0.56% on the day, after gaining 1.13% over five sessions and 3.47% over 20. The close was near the 52-week high of Rs 723.71, but the session’s price slipped from the prior close, with 7,607 shares traded.

Next test

The next test is the next quarterly filing: whether lower funding costs can keep supporting net interest income as the spread narrows, while loan growth holds and asset quality remains controlled. A sustained improvement in spread and return on equity would change the picture; further compression or rising NPLs would temper the earnings advance.