Nepal's Development Banks Q1 FY 2083/84: Lumbini Leads Across Key Metrics as Sector Splits Between High Performers and Loss-Makers

Development Bank Q1 Report: Top Performers Across Five Key Financial Parameters

There are currently 17 Class B development banks operating in Nepal, all listed on the Nepal Stock Exchange (NEPSE). Based on the Q1 unaudited reports for F.Y. 2083/84, we analysed 16 development banks across five key parameters: net profit, earnings per share (EPS), price-to-earnings (P/E) ratio, distributable profit per share (DPS) and non-performing loans.

Note: Reports for Karnali Development Bank were not available.

Net Profit

The combined net profit of NEPSE-listed development banks for F.Y. 2083/84 stands at Rs 164.71 crore.

• Lumbini Bikas Bank leads the industry with a net profit of Rs 32.71 crore.
• Muktinath Bikas Bank follows closely at Rs 32.24 crore.
• Garima Bikas Bank ranks third at Rs 24.01 crore.

At the other end, several institutions reported negative earnings. Sindhu Bikas Bank recorded the lowest net profit, a loss of Rs -6.21 crore, followed by Salapa Bikas Bank with a net loss of Rs -1.74 crore.

Among banks with positive but low profits, Narayeni Development Bank posted the lowest at Rs 0.29 crore, followed by Excel Development Bank at Rs 0.40 crore and Saptakoshi Development Bank at Rs 0.43 crore.

Earnings Per Share (EPS)

Lumbini Bikas Bank dominates the sector with an outstanding EPS of Rs 36.11, reflecting exceptional capital efficiency and high profitability per share relative to its equity base. Kamana Sewa Bikas Bank at Rs 20.68 and Jyoti Bikas Bank at Rs 18.21 take second and third place, forming a strong top tier of high-earning institutions.

At the lower end, Excel Development Bank generated the lowest positive EPS at Rs 1.28 per share. The bottom of the list shows severe bottom-line pressure: Salapa Bikas Bank reported an EPS of Rs -3.34, while Sindhu Bikas Bank underperformed the entire industry with a negative EPS of Rs -11.15, reflecting acute profitability stress and capital erosion.

*Note: Preference share dividends were adjusted when calculating the EPS of Kamana Sewa Bikas Bank (KSBBL).*

Price-to-Earnings (P/E) Ratio

Lumbini Bikas Bank also has the most attractive valuation in the sector, with the lowest P/E ratio of 13.44x, indicating strong earnings support relative to its market price. It is followed by Jyoti Bikas Bank at 19.33x and Muktinath Bikas Bank at 21.34x, completing the top three value picks trading at reasonable multiples.

Other fundamentally strong performers — Kamana Sewa Bikas Bank at 23.01x, Shine Resunga Development Bank at 28.15x and Garima Bikas Bank at 28.62x — remain fairly priced below the 30x threshold.

At the opposite end, small-cap and low-earnings banks show extreme market overvaluation due to severely suppressed net earnings. Excel Development Bank records a steep P/E of 449.43x, followed by Narayeni Development Bank at 304.81x, reflecting speculative pricing relative to actual earnings capacity. Sindhu Bikas Bank stands at -9.39x due to its negative net earnings.

Distributable Profit Per Share (DPS)

Lumbini Bikas Bank leads the sector in dividend capacity with the highest distributable profit per share at Rs 18.36, underscoring strong retained earnings and superior dividend payout potential. Miteri Development Bank at Rs 13.95 and Excel Development Bank at Rs 11.89 take second and third place.

Conversely, nearly a third of the sector faces negative distributable figures, severely limiting their immediate capacity to pay dividends to shareholders. Shangrila Development Bank records a minor shortfall of Rs -0.34, while regulatory adjustments and accumulated losses weigh heavily on Corporate Development Bank at Rs -5.68 and Salapa Bikas Bank at Rs -5.72.