Kathmandu: Himalayan Bank’s accumulated losses have climbed to nearly Rs 9 billion, following significant revisions made after external auditing and approval by Nepal Rastra Bank (NRB).
Financial statements initially released after an internal audit showed markedly different figures from the bank’s final annual report, highlighting large discrepancies in reported profits and loan loss provisions.
For fiscal year 2024/25, Himalayan Bank was required to increase its loan loss provisions by Rs 2.22 billion when its accounts were finalized through external audit and regulatory approval. In the financial statement published in August after the internal audit, the bank had set aside Rs 1.535 billion for loan loss provisions. However, in the annual report later issued for the purpose of the annual general meeting, total loan loss provisions rose sharply to Rs 3.756 billion.
NRB directed the bank to strengthen its provisioning before approving the accounts. As a result, profits shown in the internally audited statements fell dramatically once the final provisions were applied. While Himalayan Bank had reported a profit of Rs 1.5125 billion in its August publication, the figure dropped to just Rs 129.7 million after external audit and regulatory adjustments.
The additional provisioning of Rs 2.22 billion not only eroded profits but also pushed accumulated losses higher. The bank’s accumulated loss, which stood at Rs 7.4415 billion at the end of fiscal year 2023/24, increased to Rs 8.8543 billion by the end of 2024/25, bringing the total close to Rs 9 billion.
During the last fiscal year alone, the bank wrote off Rs 3.3634 billion in unrecoverable loans. These write-offs further weighed on profitability and contributed to the growing accumulated losses.
The issue is not limited to a single year. Over the past three fiscal years, there has been a consistent and substantial gap between figures approved through internal audits and those finalized after external audits and central bank scrutiny. In fiscal year 2022/23, Himalayan Bank reported a profit of Rs 3.26 billion based on internally audited accounts. After external audit and approval by NRB, the profit was revised down to Rs 1.5628 billion, a reduction of Rs 1.7034 billion, or more than 52 percent.
The primary reason for that decline was insufficient provisioning against non-performing loans in the preliminary accounts. Initially, the bank had allocated only Rs 2.1562 billion for loan loss provisions. Following external audit and regulatory review, the required provision rose to Rs 4.8689 billion, forcing the bank to add an extra Rs 2.7127 billion in that fiscal year alone.
A similar pattern emerged in fiscal year 2023/24. Based on internal audit approval, the bank reported loan loss provisions of Rs 2.7868 billion and a profit of Rs 2.3082 billion. After external audit and central bank approval, provisions increased by Rs 2.48 billion to Rs 5.266 billion, while profit fell by Rs 1.0699 billion to Rs 1.2883 billion.
These repeated adjustments have raised serious questions about the reliability and credibility of the financial statements Himalayan Bank publishes after internal audit approval. The trend in accumulated losses underscores the concern. After external audit, accumulated losses stood at Rs 3.2426 billion in fiscal year 2022/23, rose sharply to Rs 7.4415 billion in 2023/24, and increased further to Rs 8.8543 billion in the most recent fiscal year, reflecting persistent stress in asset quality and provisioning practices.
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