Kathmandu: Mahalaxmi Development Bank has reported a modest improvement in earnings for the third quarter of the current fiscal year, posting a net profit of Rs 459.9 million by mid-April, slightly higher than the Rs 436.6 million earned during the same period last year.
The bank’s latest financial statement shows that despite stronger core banking income, rising loan-loss provisions and deteriorating asset quality continue to put pressure on overall profitability.
During the first nine months of fiscal year 2025/26, Mahalaxmi Development Bank increased its net interest income by around Rs 100 million to Rs 1.63 billion. Net fee and commission income also improved by roughly Rs 30 million to Rs 180 million, indicating stronger revenue generation from both lending and service-related operations.
However, the gains were partly offset by a higher impairment burden. The bank allocated Rs 330 million for possible loan losses during the review period, compared to Rs 260 million set aside in the same quarter of the previous fiscal year. The larger provisioning requirement reflects increasing stress in loan recovery and a rise in credit risk across parts of its portfolio.
Supported by the slight rise in net earnings, earnings per share improved to Rs 17.30.
As of the end of the third quarter, the bank had mobilized Rs 53.22 billion in deposits and extended Rs 42.36 billion in loans. The figures suggest the bank has reduced its deposit base while cautiously expanding credit, signalling a strategy focused on optimizing funding costs rather than aggressive balance sheet growth.
After regulatory adjustments, the bank reported distributable profit of Rs 109.9 million from the nine-month earnings. Based on retained profit, its annualized dividend-paying capacity currently stands at only 3.25 per cent, suggesting limited room for a large shareholder payout unless fourth-quarter earnings improve materially.
A more pressing concern lies in asset quality. The bank’s non-performing loan ratio rose sharply from 4.99 per cent to 6.59 per cent within a year, highlighting increased borrower stress and slower loan recovery. At the same time, the bank’s base rate declined to 5.83 per cent, while its interest spread narrowed to 4.24 per cent, reflecting reduced lending margins amid a softer interest rate environment.
The bank reported a return on equity of 8.52 per cent, net worth per share of Rs 162.01 and a price-to-earnings ratio of 27.61 times.
Overall, Mahalaxmi Development Bank’s third-quarter numbers show that while income lines are gradually improving, the pace of profit growth remains constrained by rising bad loans and higher provisioning costs. Unless credit quality stabilizes in the final quarter, the bank may find it difficult to translate operating gains into stronger shareholder returns.
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