Finance Companies' Profits Plunge, Majority Report Losses ➤

Finance Companies’ Profits Plunge, Majority Report Losses

Third-quarter financial results reveal a downturn in profits for finance companies, with a significant number experiencing losses.

In the third quarter of the current fiscal year, finance companies faced a notable decline in net profits, indicating a challenging period for the sector. Among the fifteen companies reviewed, a substantial eight reported losses, while only seven managed to generate profits. This downturn reflects a concerning trend within the finance industry.

According to recent data, the combined net profit of the finance companies amounted to Rs 330.3 million, marking a decrease from Rs 357.2 million recorded during the same period last fiscal year. This decline highlights the financial strain experienced by these institutions.

Of the companies reporting profits, only Multipurpose Finance exhibited growth in its net profit, signaling a rare positive outcome amidst the prevailing challenges. However, the majority of profit-making companies faced setbacks in their financial performance.

Manjushree Finance, which previously boasted the highest profit, witnessed a significant decline of 12 percent in its net profit compared to the corresponding period last fiscal year. Similarly, Gorkhas Finance reported a 40 percent decrease in net profit, further indicating the sector’s struggles.

ICFC Finance, Shree Investment, Best Finance, and Nepal Finance also reported substantial declines in their net profits, ranging from 30 percent to a staggering 87 percent. These figures underscore the widespread challenges faced by finance companies during the review period.

On the contrary, Multipurpose Finance emerged as a standout performer, recording a remarkable 196 percent increase in net profit. Despite the overall downturn, this positive result offers a glimmer of hope for the industry’s recovery.

However, the majority of finance companies grappled with losses during the period, exacerbating the sector’s financial woes. Pokhara Finance incurred the highest loss of Rs 172.3 million, while Janaki Finance reported a loss of Rs 108.6 million. Despite these setbacks, the stock market has shown resilience, with the share prices of some struggling companies experiencing an unexpected rise.

Overall, the third-quarter financial results paint a challenging picture for finance companies, highlighting the need for strategic measures to address the underlying issues and restore profitability.