Microfinance Institution Laxmi Laghubitta Bittiya Sanstha Reports Turnaround in Third Quarter Financials
Laxmi Laghubitta Bittiya Sanstha (LLBS), a prominent microfinance institution in Nepal, has published its third-quarter report for the current fiscal year, revealing a remarkable turnaround in its financial performance. After incurring a net loss in the corresponding period of the previous fiscal year, the company has managed to earn a net profit of Rs 44.4 million during the review period.
The pivotal factor contributing to LLBS’s profitability can be attributed to a significant decline in impairment charges. In the review period, the company’s impairment charge decreased substantially to Rs 15.8 million, a sharp contrast from the Rs 150 million recorded in the same period last year. This reduction in impairment charges, which reflect the potential credit losses on loans and other financial assets, played a crucial role in LLBS’s ability to generate operating profit and net profit.
Despite the positive turnaround, LLBS did experience a 1.97 percent decrease in net interest income during the third quarter. However, this was partially offset by a 75.31 percent increase in net fee and commission income, reflecting the company’s efforts to diversify its revenue streams and capitalize on fee-based services.
LLBS’s financial performance was further bolstered by key indicators such as an Earnings Per Share (EPS) of Rs 13.41, a Price-to-Earnings (P/E) ratio of 65.6 times, and a net worth per share of Rs 187.04. Additionally, the company reported a distributable profit of Rs 18.9 million, indicating its potential to provide returns to shareholders.
With a paid-up capital of Rs 441.6 million and a reserve fund of Rs 384.4 million, LLBS maintains a strong financial position. During the review period, the company collected deposits and borrowed funds amounting to Rs 6.04 billion and extended loans worth Rs 6.55 billion, demonstrating its active role in promoting financial inclusion and supporting micro-enterprises.
The Nepali microfinance sector plays a crucial role in driving economic growth, fostering entrepreneurship, and empowering underserved communities. LLBS’s positive financial performance in the third quarter underscores the resilience and potential of the microfinance industry in Nepal, particularly in the face of challenges posed by the COVID-19 pandemic and evolving market dynamics.
Moving forward, LLBS will likely focus on strengthening its asset quality, expanding its outreach, and embracing digital transformation to enhance operational efficiency and customer experience. Effective risk management, good governance practices, and a commitment to sustainable lending will be essential for the company to maintain its profitability and contribute to the overall growth of the microfinance sector in Nepal.
