Despite MLR’s implication on Nu 57M in revenue in the last quarter
Despite a revenue implication of about Nu 57M from the revised interest rate towards the last quarter of the year, the Bank of Bhutan Limited (BoBL) recorded 17.5 percent increase in profit after tax, last year.
BoBL was the first financial institution to implement the minimum lending rate (MLR) in September last year. Minimum lending rate is the new policy that has replaced the base rate system.
Officials from the bank said that while there were implications of MLR on the interest income, the bank is also witnessing growth in terms of clients. Clients from other banks are shifting their loan accounts to BoBL.
The bank saw their net comprehensive income rise from Nu 827M in 2015 to Nu 934M last year. However considering revenues, expenses, gains and losses that have not yet been realised, the net comprehensive income was Nu 934M. Even then the net profit after tax for year was around Nu 936M.
Total deposits for the bank increased by 13.6 percent, from Nu 32.25B in 2015 to Nu 36.64B last year. Savings and term deposits increased by 25 percent and 18 percent respectively. This has also resulted in increased expense on interest from Nu 988M to Nu1.1B.
However, loans and advances saw an increase of 7.86 percent from Nu 19.9B in 2015 to Nu 21.5B last year. The growth was mainly seen in housing, personal and service sector. The housing sector dominated the 25.39 percent of the bank’s loan portfolio.
The bank’s non-performing loan is also highest in the housing sector. Of the total loan of Nu 5.45B issued to housing, Nu 323.3M was reflected as non-performing loans.
Service and tourism, which hold about Nu 4B of the loan portfolio, Nu 220M are non-performing. A nonperforming loan (NPL) is the sum of borrowed money upon which the debtor has not made his scheduled payments for at least 90 days.
BoBL’s net worth last year was Nu 5.5B, which is an increase of 15 percent. The bank’s assets are valued at Nu 44.77B.