Rastriya Sahakari Bank Limited has successfully increased its capital adequacy ratio to 11.66 percent and returned to profitability in the fourth quarter of the fiscal year 2082/83.
Capital Adequacy Ratio Goes Above Minimum Limit
Rastriya Sahakari Bank Limited has managed to push its capital adequacy ratio way above the minimum limit set by Nepal Rastra Bank. According to the unaudited financial report of fourth quarter of the fiscal year 2082/83 published on Wednesday, capital adequacy ratio of the bank reached 11.66 percent. The minimum limit set by Nepal Rastra Bank is only 8 percent.
In the previous quarter, this ratio was very low at 4.42 percent. Getting it up to 11.66 percent in such a short time shows that bank has improved its capital base and its capacity to handle risks.
Back to Profitability and Better Indicators
The financial report shows that bank made a net profit of around Rs 49 crore till the fourth quarter. The bank was suffering from losses in the last fiscal year, but it finally returned to profit in the current fiscal year. The net interest income also went up, crossing more than Rs 87 crore.
During this period, the bank’s operating income and operating profit also saw a positive growth. Also, the accumulated loss which was a huge headache for the bank in past has also decreased. The profit made in this fiscal year helped to reduce these losses, but they are not fully gone yet.
Non-Performing Loans Remain a Major Worry
Even though most financial indicators are getting better, bad loans are still the biggest challenge. By the end of the fourth quarter, the inactive loan ratio of the bank stood at a high 32.26 percent. Because of this high number of non-performing loans, the bank will have to focus more on recovering loans, managing risks, and improving the quality of its loans in coming days.
To tackle this, the bank has brought forward strategies to control bad loans, make loan recovery more effective, strengthen risk management systems, and make corporate governance even more strong.
CEO’s Views and Future Plans
The Chief Executive Officer of the bank, Badri Kumar Guragain, said that returning to profit, reducing accumulated losses, and keeping the capital adequacy ratio above the central bank’s minimum limit are major achievements in their journey of institutional reform. He also added that in future, they will give high priority to reducing bad loans, strengthening capital base, and making financial stability long-lasting.
Overall, the fourth quarter report indicates that Rastriya Sahakari Bank is moving towards stability through reform and restructuring. However, controlling non-performing loans, fully clearing the accumulated losses, and improving corporate governance will still be tough challenges for the bank in days ahead.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
