Today, we analyze income of commercial bank in terms of risk free income in Q3 of FY 2074/75.
As we know all 28 commercial banks has published the third quarter report of this fiscal year 2074/75. Many shareholders are analyzing the report to make their investment portfolios. All most all investors follow key indicators like Net profit, EPS, Net worth, PE , ROE, ROA etc. to make investment decision. These indicators are change from time to time due to change in income of banks.
Financial institutions majorly earn from two sources; risk free income & risky income.
Financial institutions majorly earned through floating a collected deposits into loans. They charges interest to customers while lending loans which are income of BFIs. Such interest income consist some degree of risks.
But BFIs also earned risk free incomes which are called non-interest income. Fees, Commission & discoun , other operating income & gain on foreign exchange are rick fee income. Financial institutions earn a significant portion of their income through fees, commission & Discount.
BFIs charges customers in different headings & generate revenue. Charges that generate fees incomes for BFIs are overdraft fees, late fees, over the limit fees, wire transfers fees, monthly & annual services charges for ATMs, mobile banking services etc. BFIs also sell insurance policy & others for getting commission. Such incomes don’t have any risks for financial institutions. They simply get income for providing services for their customers.
Let analyze 28 commercial Banks in terms of Risk free income in the third quarter of FY 2074/75. Also know the portion of risk free income in the net profit of commercial banks in Q3.
In total 58% of net income of commercial bank is from risk free income. It means there is less risk in the income of commercial banks. Only 42% of income is from floating loans which consist of certain risks. So, this factors shows that investing in commercial banks have less risk than other sectors.
In terms of portion of risk free income in net profit, Nepal Bangladesh bank stood at top position with 112% of NI. Civil bank stood at second row with 89% of NI & NIC Asia Bank at third row with 86% of net profit from risk free income.
Rastirya Banijya Bank stood at last row with 27% of of net profit from risk free income in this Q3.
Risk free income of 28 commercial banks
Nepal investment Bank has earned highest risk free income of Rs.1.48 arba in Q3 which is 52% of net income. Nabil bank stood at second position with Rs.1.28 arba with is 46% of net income. Standard chartered bank stood at third position with Rs.1.09 arba which is 73% of net income.
Civil bank has earned lowest risk free income of Rs.31.02 crore which is 89% of net income.
Analyzing individually; fees income, other operating income & income from foreign exchange
Nepal investment bank has earned highest fees income of Rs.71.05 crore in Q3. Nepal bank & standard chartered bank stood at second & third position with fees income of Rs.65.27 crore & Rs.49.62 crore. Century bank stood at last position with fees income of Rs.6.17 crore.
Agriculture Development has earned highest other operating income of Rs.69.08 crore. NIC Asia & Everest has earned 47.99 crore & Rs.43.09 crore stood at second & third position. Kumari bank stood earned lowest income of Rs.5.97 crore.
Nabil Bank has earned highest income from foreign exchanges of Rs.51.97 crore. Standard chartered bank & Nepal investment bank stood at second & third position with Rs.51.48 crore & 48.89 crore. Rastirya Banijya Bank earned lowest income of Rs.2.36 crore.
Disclaimer: Trade in your own risk. Whatsoever the find of this analysis. Once analyze yourself for better confirmation.