Siddhartha and Global IME profits rise as loan-loss charges halve
Two Nepali lenders began 2026/27 with impairment charges cut by about half. At Siddhartha the fall drove most of the profit jump, while Global IME also gained from fees and trading.
Siddhartha Bank's net interest income grew 10.5% in the first quarter of 2026/27. Its net profit grew 162.75%. The gap between those two numbers is the story of the quarter, and it sits in one line of the accounts: money the bank did not have to set aside for bad loans.
Siddhartha earned Rs 851.56m in the three months to mid-October 2026, against Rs 324.09m in the same period of 2025/26. Its impairment charge, the amount set aside against loans that may not be repaid, fell 51.47%, from Rs 1.388bn to Rs 673.92m. That is a reduction of about Rs 714m. Net interest income and net fee and commission income each grew by roughly 11%.
Global IME Bank, which has the biggest balance sheet of any commercial bank in Nepal, reported a smaller rise in profit. Its net profit rose 24.5% to Rs 2.313bn. Its net interest income rose just 1.45%, to Rs 4.193bn. Impairment charges fell 51.69%, from Rs 1.011bn to Rs 488.3m, a saving of about Rs 522.6m.
Provisioning did much of the work
Impairment charges fell by almost the same proportion at both banks: 51.47% at Siddhartha and 51.69% at Global IME.
Source: Company unaudited financial statements
Global IME's lending margins were squeezed. Its average net interest spread, the gap between what it earns on loans and pays on funds, narrowed from 3.48% to 3.17%. Its cost of funds fell from 3.92% to 3.26%, and its base rate, the floor for lending rates, dropped from 5.40% to 4.61%. Surplus liquidity in the system pulled deposit costs down, and lending rates fell with them. Siddhartha Bank held its spread at 3.68% and cut its base rate from 5.90% to 4.87%.
On fees, Global IME did better. Net fee and commission income rose 34.5% to Rs 1.221bn, and net trading income rose 44.7% to Rs 412.16m. Those gains mean its profit growth leaned less on provisioning than Siddhartha Bank's did, though the provision saving still accounts for a large share of it.
Returns and valuation
Siddhartha Bank's annualised return on equity rose from 4.12% to 9.28%, and its return on assets from 0.38% to 0.79%. Annualised earnings per ordinary share rose from Rs 7.82 to Rs 18.76. These are large moves from a low base. The stock trades at 22.94 times earnings, against 10.08 times at Global IME, so investors pay more for each rupee of Siddhartha Bank's profit.
Siddhartha Bank's net distributable profit for the quarter, the amount available for dividends after statutory transfers, was Rs 277.98m. Including the surplus carried forward, the cumulative figure was Rs 390.63m. Separately, the board has earmarked Rs 3.573bn in reserves for bonus shares, including Rs 2.50bn released when debentures matured on 10 September 2026. Counting that reserve lifts effective distributable capacity to 25.63% from a regular 6.07%. This is a reclassification of reserves, not new earnings.
Global IME's net distributable profit stood at Rs 2.072bn, on paid-up capital of Rs 39.64bn. Its return on equity rose from 11.01% to 13.29%.
Credit quality
Asset quality improved modestly. Siddhartha Bank's gross non-performing loans (NPLs), loans in or near default, eased from 3.80% to 3.70% of the book, and net NPLs, after provisions, from 1.33% to 1.08%. Global IME's gross NPL ratio fell from 4.98% to 4.79%, and its net ratio from 0.95% to 0.60%. Its provision coverage rose from 109.63% to 120.17%, and Siddhartha Bank's reached 104.09%.
Source: Company unaudited financial statements
If impairment charges halve while gross NPL ratios fall by only 0.1 to 0.2 percentage points, the saving is unlikely to come mainly from a collapse in bad loans. One possible reading is that charges in the comparison period were unusually high, though nothing in the disclosures says so. Whether the lower charges will persist is a question for later quarters.
Both banks are also lending more. Siddhartha Bank's gross credit rose 4.25% in the quarter, to Rs 244.04bn, and its deposits 2.57%, to Rs 334.80bn. Global IME's loans rose 7.48%, to Rs 471.96bn, and deposits 3.11%, to Rs 690.00bn. Credit-to-deposit ratios of 75.29% and 70.11% leave room to lend more.
Capital
Siddhartha Bank's total capital ratio is 12.29%, with Common Equity Tier 1, the highest-quality capital, at 9.03%. Global IME's capital adequacy ratio is 11.32%. Bonus shares draw on reserves and cash dividends consume capital, so boards may have to weigh shareholder payouts against funding loan growth.
What to watch
The second quarter of 2026/27 will show whether impairment charges stay low. Net interest income, little changed at Global IME, and its narrowing spread are worth watching as base rates fall, as is loan growth against the headroom in credit-to-deposit ratios. Also watch how Siddhartha Bank uses its Rs 3.573bn bonus-share reserve, since that will shape how the market values a stock priced at nearly 23 times earnings.
How this story was made: researched and written by The Standard’s desk with AI assistance, from the published reporting and official data credited below, and checked against those sources. Our standards.
