. The decline in net interest income and a significant increase in impairment charge have contributed to the decline in the profit of Agricultural Development Bank Limited. The bank has earned a net profit of Rs 2.63 billion in the fourth quarter of FY 2082÷83, down 29.52 percent from the same period of the previous FY.
The bank had posted a net profit of Rs 3.73 billion in the first quarter of the previous FY.
In the review period, the bank’s net interest income decreased by 3.45 percent to Rs 9.12 billion. The bank has a net income of Rs 10.04 billion and an operating profit of Rs 3.94 billion.
The increase in impairment charges is one of the main reasons for putting pressure on the bank’s profits.
During the review period, the bank has set aside an impairment charge of Rs 1.17 billion for the management of potential credit risk. Such amount was only Rs 63 crore in the same period of the previous fiscal year.
Despite the decline in profit, the bank’s deposit and credit expansion remained positive.
The total deposit of the bank has increased from Rs 293 billion to Rs 347 billion in a year. Similarly, credit flow has increased from Rs 212 billion to Rs 247 billion. However, the bad loan ratio (NPL) of the bank has increased. The NPA ratio stood at 4.07 percent in the review period from 3.44 percent in the fourth quarter of the previous fiscal year. With the rise in bad loans, banks have to make more arrangements to manage loan losses.
The distributable profit of the bank has also declined significantly.
In the fourth quarter of the previous fiscal year, the distributable profit was Rs 2.81 billion which was reduced to Rs 1.26 billion. This has also directly affected the bank’s ability to distribute dividends.
The bank’s dividend yield declined from 17.98 per cent to 6.54 per cent due to a decline in both net profit and distributable profit.
According to the bank, the bank’s earnings per share (EPS) stood at Rs 16.11, total asset value of Rs 2,893.61 and liquidity ratio of 37.45 percent.
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