Siddhartha Bank profit rises as funding costs ease

Siddhartha Bank reported annual net profit of Rs 3.52 arba, up 3.7% as lower funding costs supported net interest income. The result shows modest earnings growth, but per-share returns weakened as capital expanded faster than profit.

Financial read

Net interest income rose 7.2% to Rs 9.05 arba, while total operating income increased 8% to Rs 12.05 arba. Operating profit grew 2.6% to Rs 5.16 arba, leaving net profit ahead 3.7%. EPS fell 20.2% to Rs 19.24, reflecting the larger share base. The interest spread narrowed 0.29 percentage points to 3.69%, so the improvement in core interest income did not translate into equally strong bottom-line growth.

The latest quarter alone contributed Rs 1.5 arba of profit, indicating that earnings remained positive into the year-end, although the annual result is the relevant measure for the cumulative filing.

Balance sheet and peers

The balance sheet expanded, with customer deposits up 16.7% and customer loans up 9%. Investment securities grew 37.4%, while borrowings fell 58.1%, pointing to a funding mix increasingly supported by deposits and a larger allocation to securities. Total assets rose 15%, ahead of loan growth, while total equity increased 19.1%. That growth strengthened the capital position, but retained earnings fell 8.4% and book value declined 8.3%.

Siddhartha Bank’s 3.7% profit growth was slightly ahead of Everest Bank’s 3.1% and Global IME Bank’s 0.4%, but behind Nabil Bank’s 10.9%. Its 9.53% return on equity was below Nabil’s 10.99% and Everest’s 14.41%, though above Global IME’s 8.92%.

Tape

The stock closed at Rs 454.8 on 29 October, up 4.31% in the session and 6.79% over five sessions. Buyers paid up into a move that brought the price close to its 52-week high of Rs 455, with 566,094 shares traded. The advance was also broad enough across the recent tape to leave the 20-session gain at 9.47%, rather than looking like a one-day reaction that faded into the close.

The next catalyst is the next quarterly filing, alongside any AGM or book-closure notice. What would change the picture is evidence that the spread holds while loan growth catches up with the balance-sheet expansion; a further rise in credit stress would weaken that case.