The average non-performing loans (NPLs) of commercial banks increased by 13.28 percent in the fiscal year 2024/25, reflecting the continued strain on the country’s economic activities and credit recovery challenges faced by banks. A study of financial statements released by 20 commercial banks shows the average NPL ratio rose to 4.23 percent in fiscal year 2024/25, compared to 3.74 percent in the previous fiscal year.
Bankers attribute the rise in bad loans to sluggish economic activity, weak demand for credit and repayment constraints across several business sectors. Thirteen commercial banks saw their NPL level go up, while seven managed to bring it down. NIC Asia Bank reported the largest spike in NPLs, up by 82.02 percent to 6.28 percent, from 3.45 percent the previous year. Himalayan Bank recorded the highest NPL ratio overall at 7.28 percent. The bank’s NPL was 4.98 percent in the previous fiscal year.
Similarly, Sanima Bank’s bad loans rose by 75 percent to 3.01 percent, while Nepal SBI Bank’s increased by 70.91 percent to 3.35 percent. Siddhartha Bank’s NPL climbed by 20.73 percent to 2.62 percent, and Citizens Bank reported a 20.48 percent rise to 4.94 percent. Prime Bank’s NPL rose by 19.56 percent to 5.56 percent, Nepal Investment Mega Bank’s (NIMB) by 19.14 percent to 5.85 percent and Global IME Bank’s by 16.78 percent to 4.87 percent. Likewise, NMB Bank saw a 9.41 percent increase in NPL to 3.72 percent, Kumari Bank saw its NPL rise by 7.71 percent to 6.42 percent, Nepal Bank’s by 3.23 percent to 4.47 percent and Prabhu Bank’s by 0.40 percent to 4.96 percent.
In contrast, Everest Bank succeeded in lowering its NPL ratio by 46.47 percent to just 0.38 percent, the lowest among all commercial banks. Similarly, Standard Chartered Bank reduced its NPL by 18.69 percent to 1.74 percent, while Agricultural Development Bank brought its NPL by 16.62 percent to 3.26 percent and Rastriya Banijya Bank by 16.12 percent to 3.59 percent.
Likewise, Laxmi Sunrise Bank recorded an 8.20 percent decline in NPL to 4.25 percent, Nabil Bank’s NPL dropped by 4.04 percent to 4.27 percent, and Machhapuchchhre Bank trimmed its NPL by 0.77 percent to 3.83 percent.