… trade and commerce sector has the highest NPL

Thukten Zangpo 

The housing sector loans at Nu 56.12 billion tops the credit portfolio of the financial institutions (FIs) as of April this year as per the Royal Monetary Authority’s figures.  

It constituted 28.2 percent of the total loans. This was an increase of about 5 percent in the past four months compared to December last year. 

Because of the high credit exposure in the housing sector, the Authority suspended home and hotel construction loans from June 9 until December 31 this year. 

According to the Authority, the move was carried out concerning the outflow of foreign currency, high credit concentration, and risk of non-performing loans (NPL) in the sector.

This was followed by loans in production and manufacturing at Nu 26.08 billion, Nu 24.68 billion in the hotel and tourism sector, and Nu 16.02 billion in trade and commerce among others. 

An increase in the credit had pushed the FIs’ total credit in the economy to Nu 208.8 billion as of April this year from Nu 202.38 billion as of December last year.

At the same time, the NPL in the trade and commerce sector topped the list at Nu 1.65 billion while the housing sector saw a NPL of Nu 1.2 billion. NPL are loans with payments that are overdue by 90 days or more.

Service and transport loans recorded at Nu 12.22 billion and Nu 9.26 billion respectively saw NPL of Nu 1 billion each. 

The FIs total NPL reached Nu 18.2 billion with a gross NPL ratio to loans at 8.72 percent as of April this year. This was an increase of Nu 2.2 billion compared to last year. The highest NPL was reported at Nu 24.4 billion in 2020.

A bank official said that the current business scenario in the country is not good and the trade and commerce sector had the highest NPL because of default in overdraft loan accounts or working capital.  

Under Monetary Measures IV, the overdraft loan accounts or working capital was not provided the deferment because it was not considered as term loans. 

At the same time, FIs profit after tax was recorded at Nu 1.99 billion as of April this year compared to Nu 4.09 billion last year.