Kumari Bank full-year profit up 249% on lighter provisioning

Kumari Bank reported net profit of Rs 7.39 arba for the full year to Ashadh, up 249% from a year earlier, on a sharply lower impairment charge rather than stronger lending. Why it matters: the accumulated deficit is gone — retained earnings swung from minus Rs 2.79 arba to Rs 79.17 crore, and the board now has a pool it can propose distributing at the AGM.

What drove the swing

Total operating income rose 8.1% to Rs 16.36 arba, but the engine was subdued: net interest income grew only 4% to Rs 12.01 arba and interest income fell 11.9% to Rs 28.46 arba, so the bank earned less from lending on a larger balance sheet. Operating profit rose 83.1%, and the gap between that and the 249% net profit jump sits below the operating line, where the impairment charge was a fraction of the prior year's. Earnings per share went from Rs 8.07 to Rs 28.17 and return on equity from 5.68% to 16.49% — both restatements of that one swing.

The single ratio that explains the period is asset quality. Non-performing loans reached 6.95% of the book, up 0.53 percentage points: profit rose while the impaired stock grew, so the gain is in what the bank stopped setting aside, not in what it recovered.

Where the money went

Deposits rose 10.4% to Rs 402.74 arba while customer loans grew 3.8% to Rs 270.92 arba, leaving the credit-to-deposit ratio at 75.73%. The surplus was placed in investment securities, up 42.6% to Rs 114.42 arba — the main reason interest income fell even as total assets grew 10.8%. Capital adequacy slipped 0.67 points to 12.31%, thinner cover for a 6.95% impaired book.

Versus the peer group

The 16.49% return on equity is the best in the listed commercial bank group — Everest 14.41%, Nabil 10.99%, Global IME 8.92%, Laxmi Sunrise 6.58% — but it follows a 249% jump against Nabil's 10.9% and Global IME's 0.4%, so the level carries a low-base caveat. On asset quality the ranking reverses: only Nepal Investment Mega, at 8.66%, carries worse loans. At eight times earnings, Kumari sits well below a peer group whose trailing multiples run from 15.5 to 23.8.

How the stock traded

Kumari closed at Rs 243.10 on 29 October, up 1.29% on the day and 8.04% over twenty sessions, close to a 52-week high of Rs 256 against a low of Rs 176. Turnover of Rs 23.6 crore across 1,368 trades was balanced, with buy-initiated volume at 56.8%, the largest prints all on the buy side, and buying spread across many participants rather than concentrated in a few names; sellers were more top-heavy, the three largest taking 33.9% against 24.4% for the three largest buyers. Buying was eager early — 69.6% of the first third of volume — eased to 59% later, and the close sat 0.27% above the volume-weighted average, steady into the close rather than faded.

The next test

The next catalysts are the dividend proposal drawn from that Rs 79.17 crore pool at the AGM, and the first-quarter filing of FY 2083/84. What would change the picture is a provisioning charge that stays low while NPLs stop climbing and loans grow faster than securities; if the spread holds at 3.59% and the credit-to-deposit ratio starts rising, the earnings base becomes repeatable rather than a one-year swing.