KYC #09
Nabil Bank: Bought with shares, audited down four years running. What did Nabil’s shareholders get for buying a bank?
Nabil Bank is Nepal’s oldest joint-venture bank and, after two acquisitions, one of its largest. We read its audited statements for ten years, the 2022 acquisition of Nepal Bangladesh Bank from the accounts and the press, the unaudited-to-audited profit revisions, the rating reports and the open legal and tax matters, and separated what the filings establish from what is only reported or our own arithmetic.
The short version
- Nabil Bank is Nepal’s first joint-venture bank (incorporated 11 May 1984). On 16 July 2026 it had total assets of Rs 73,473 crore and deposits of Rs 59,208 crore, and its audited profit for the year to mid-July 2026 was Rs 790.6 crore (bank only). The share closed at Rs 543 on 26 Oct 2026.2,1,24
- In January 2022 it agreed to buy Nepal Bangladesh Bank for 43 of its shares per 100 of the target’s. The bank’s accounts value the 4.34 crore shares it issued at Rs 1,618 crore (Rs 373.09 each) and show goodwill of Rs 6.59 crore. At Nabil’s own market price when the banks joined (Rs 792 to 826) those shares were worth Rs 3,435 to 3,582 crore (our calculation). We could not find the Rs 373.09 derived from a market price; the note says it rests on the acquired bank’s valuation in a due-diligence report.5,25,30,24
- For the shareholders who already owned Nabil, the per-share record is better than the share price suggests. On a constant share base, profit per share was between 12.7% and 46.0% above its pre-deal level in each of the four full years since (our calculation), and book value per share rose from Rs 184.28 to Rs 293.03. The price, adjusted for bonus shares, is nevertheless 39.2% lower than in January 2022. The multiple of book value paid by the market fell from 6.0 to 2.4 (on book after the declared dividends; 2.3 before them), and 65% of the fall in the price came before the merger took effect, when the NEPSE index fell 28% (our calculation).5,1,16,24
- Loan quality has deteriorated since the deal. Audited gross non-performing loans were 0.84% of loans in the year to mid-July 2021 and 4.20% in 2026; non-performing assets rose from Rs 172.0 crore to Rs 2,050.6 crore, 11.9 times. The rating agency ICRA Nepal cut the bank’s issuer rating from AA- to A+ in April 2024, citing the acquired bank’s “relatively moderate credit profile” among other reasons. Press reports say it cut the rating again to A in April 2025 and, in June 2026, reaffirmed A and removed the negative watch.6,1,23,44,45
- In each of the four years to mid-July 2022 to 2025, audited pre-tax profit came in below the unaudited fourth-quarter figure published after the year-end, by 11.5%, 13.9%, 12.2% and 15.6%: Rs 513.2 crore in all (our calculation). The bank’s own explanation each year was additional loan-loss provision. For the year to mid-July 2026 the gap was Rs 0.03 crore.15,14,13,12,11,5,4,3,2,1
- Three matters are open or unquantified, and one is closed. The bank paid Rs 161.7 crore of tax on bonus shares issued from the swap-difference reserve and contested the rule in the Supreme Court with other banks, which dismissed all the petitions in December 2023. A Chinese bank has not honoured a counter-guarantee of Rs 99.1 crore (US$74.4 lakh) on a Trishuli hydropower project; courts in China have reportedly ruled for Nabil, but we found no report that the money has been received. And the flood of 26 August 2026 damaged hydropower projects with Rs 379.8 crore of Nabil loans (preliminary, one outlet).4,41,42,43,46,47,48,13
The question: Nabil Bank paid for Nepal Bangladesh Bank with shares that were worth more than twice the figure in its accounts. Did that purchase create lasting value for the people who owned Nabil before it, and how much of each year’s reported profit should you expect to survive the audit?
The numbers
- Net profit, year to mid-July 2026: Rs 790.6 crore. Audited, bank only; up 33.5% from Rs 592.2 crore. 54.2% of the rise in pre-tax profit came from lower loan-loss provision (our calculation); the audited figure equals the unaudited one to within Rs 0.03 crore.
- Shares issued for Nepal Bangladesh Bank, as booked: Rs 1,618.0 crore. 43,367,218.87 shares at Rs 373.09, against identifiable net assets of Rs 1,611.4 crore: goodwill Rs 6.59 crore. At Nabil’s market price of Rs 792 to 826 in July 2022 the same shares were worth Rs 3,435 to 3,582 crore (our calculation).
- Gross non-performing loan ratio, audited: 4.20%. Rs 2,050.6 crore of Rs 48,798.1 crore of loans on 16 July 2026, against 0.84% in the year to mid-July 2021 (non-performing assets 11.9 times). The unaudited quarterly table shows the same 4.20%.
- Pre-tax profit removed at audit, four years: Rs 513.2 crore. Sum of the differences between the unaudited fourth-quarter pre-tax profit and the audited figure for the years to mid-July 2022 to 2025 (11.5%, 13.9%, 12.2%, 15.6%). Loan-loss provision was Rs 516.9 crore higher after audit in the same years.
- Share price since January 2022, adjusted for bonus shares: −39.2%. From the session around 11 January 2022, just before the boards endorsed the deal on 13 January, to 26 Oct 2026, price only. 65% of the fall in rupees came before the merger took effect on 11 July 2022, when the NEPSE index was down 28%. Everest Bank is up 78.4%, Global IME down 12.5%, the NEPSE index down 5.6% over the same dates. With cash dividends added, the original Nabil holder is down about 33% (our calculation).
- Tax paid on bonus shares from the swap-difference reserve: Rs 161.7 crore. Recorded in equity as prior-period tax in the first half of the year to mid-July 2024: Rs 152.5 crore from other reserves, an amount equal to the capital adjustment reserve left after the bonus (our reading), and Rs 9.2 crore from retained earnings. The bank says no bargain purchase gain arose and is challenging the rule in the Supreme Court with other banks.
01. Bought with shares. Audited down four years running.
Nabil Bank paid for Nepal Bangladesh Bank with shares that were worth more than twice the figure in its accounts. Did that purchase create lasting value for the people who owned Nabil before it, and how much of each year’s reported profit should you expect to survive the audit?
Nabil Bank opened on 12 July 1984 as Nepal’s first joint-venture bank. In July 2021 it took over United Finance and in July 2022 Nepal Bangladesh Bank (NBB), paying with its own shares both times. It now holds Rs 59,208 crore of deposits and made Rs 790.6 crore of audited profit in the year to mid-July 2026.2,1,31,25
This file follows the 2022 purchase through the audited statements, the rating agency’s reports and the press, and asks three things the headline numbers do not answer. What did the shares cost, in market value as well as in the accounts? What did the people who already owned Nabil get per share? And how much of each year’s reported profit has survived the audit?
The shares issued for NBB are booked at Rs 1,618.0 crore, giving goodwill of Rs 6.59 crore. At the price Nabil’s shares traded at when the banks joined they were worth Rs 3,435 to 3,582 crore, more than twice as much (our calculation). The bank’s note says the accounting figure follows the acquired bank’s valuation in a due-diligence audit, and the basis of that valuation is not published.5,24
On a constant share base, profit per share for the owners of 2021 has been 12.7% to 46.0% above its pre-deal level in each of the four years since, and book value per share is 59% higher (our calculation). The share price, adjusted for bonus shares, is nevertheless 39.2% lower than in January 2022. The market paid 6.0 times book value then and pays 2.4 times now (after the declared dividends; 2.3 before them): the multiple fell, not the profit per share. 65% of the price fall came before the merger took effect, while the NEPSE index fell 28%, so the market as a whole is part of the story.5,1,16,24
The unaudited and audited profits tell a second story. In each of the four years to mid-July 2022 to 2025 the audited pre-tax profit was below the unaudited fourth-quarter figure, by 11.5% to 15.6% and Rs 513.2 crore in all. In the year to mid-July 2026 the two were equal to within Rs 0.03 crore. Loan quality moved the other way: gross non-performing loans were 0.84% in 2021 and are 4.20% now.15,14,13,12,11,5,2,1
Nothing here alleges misconduct. The accounting treatment of the NBB deal, the tax paid on bonus shares and the audit revisions are matters of record; the bank gives its own reasons for each and we report them. Everyone named is presumed innocent, and private individuals are described by role.
02. Nabil Bank on one page
The facts a shareholder should be able to repeat from memory. The last column says whether each is established by a filing, differs between sources, or is our arithmetic.
| Item | What the sources show | Label |
|---|
| Company | Nabil Bank Limited, NEPSE: NABIL. Class A commercial bank; registered office Nabil Center, Tindhara, Durbarmarg, Kathmandu. Nepal’s first joint-venture bank. | Established |
| Incorporated; opened | 11 May 1984 under the Companies Act 1964; banking began on 12 July 1984. | Established |
| Capital | Ordinary paid-up capital Rs 2,705.7 crore (27.06 crore shares of Rs 100) at 16 July 2026, plus Rs 500 crore of 8% perpetual preference shares. The 5% bonus approved on 8 Oct 2026 takes ordinary shares to 28.41 crore. | Established |
| Owners | Promoters 58.44%, public 41.56% at 16 July 2025: NB (International) Limited, Ireland 39.44%; IFIC Bank PLC, Bangladesh 7.77%; Rastriya Beema Company 7.63%. Foreign holders in all 47.65%. Who owns the Irish company is not stated in any filing we read; the 2015/16 to 2017/18 reports list directors representing its interest. The 2026 shareholder table is not in the extract we hold. | Established; top owners unknown |
| Size, 16 July 2026 | Total assets Rs 73,473.1 crore; loans to customers Rs 46,031.7 crore net (Rs 48,798.1 crore gross); deposits Rs 59,208.3 crore; total equity Rs 7,190.6 crore including the preference capital (audited, bank only). | Established |
| Profit, year to mid-July 2026 | Rs 790.6 crore audited, equal to the unaudited figure to within Rs 0.02 crore. Earnings per ordinary share Rs 28.36 in the audited note (Rs 27.74 in the quarterly report). | Established; EPS differs by source |
| Asset quality | Gross non-performing loans 4.20% (Rs 2,050.6 crore of Rs 48,798.1 crore) in the audited note; watch list Rs 3,254.7 crore. | Established |
| Capital ratios | Capital adequacy 12.37%, tier 1 9.68%, common equity tier 1 8.87% at 16 July 2026, against minimums of 11%, 8.5% and 7% (unaudited, NRB basis). | Established (unaudited) |
| Network and group | 268 branches, 321 ATMs and over 25 lakh customers (bank, Jan 2026). Subsidiaries: Nabil Investment Banking (60%), Nabil Stock Dealer (100%); associate NADEP Laghubitta (25%). | Established |
| Board, management and auditor | Seven non-executive directors; chair since January 2026 is a promoter-group director who is managing director of Chaudhary Group. Chief executive since 4 June 2025, an insider. Statutory auditor B.R.S. Neupane & Co. | Established |
| Rating | ICRA Nepal: A+ with a negative watch (9 Apr 2024, primary document); A, watch kept (Apr 2025, press); A reaffirmed and watch removed (Jun 2026, press). A second agency’s “CARE-NP A (Is)” appears in the 2024/25 annual report. | Established for 2024; later actions reported |
| Market, 26 Oct 2026 | Closed at Rs 543 (52-week closing range Rs 464 to 547 on the bonus-adjusted series; the quoted Rs 485 to 581 is the raw intraday low and high, and the high came before the 1 Oct ex-date), ex-dividend and ex-bonus. On 28.41 crore listed shares: market value Rs 15,427 crore. | Established; our arithmetic for the total |
Sources: 1,2,11,3,23,24,37,36,35. Bank only unless stated. Rs figures are Nepali rupees; 1 crore = 100 lakh. The 2026 annual report is held as an extract of the audited statements and notes.
A bank that opened with Rs 2.8 crore of shareholders’ funds in 1984 and has Rs 7,190.6 crore today. How did it get here?
03. Nepal’s first joint-venture bank, and a franchise that earned 21% on equity
Nabil was incorporated on 11 May 1984 under the Companies Act 1964 as Nepal’s first joint-venture bank, then called Nepal Arab Bank, and opened on 12 July 1984. The bank’s own table of its first year shows two branches, deposits of Rs 14.6 crore and shareholders’ funds of Rs 2.8 crore. By the year to mid-July 2025 it had 268 branches, deposits of Rs 53,326 crore and shareholders’ funds of Rs 6,253 crore.2
Ownership is the other half of the origin. A 2019 report describes the early structure as 50% NB International, 10% Rastriya Beema, 30% public through the initial offer and 10% NIDC Bank. The central bank’s rule against one bank owning another forced NIDC to sell its 10% at auction, and in July 2019 the exchange converted 9,002,566 promoter shares to ordinary shares, leaving promoters at 60% and public at 40%.32
The franchise made money. Printed return on equity was 22.4% in the year to mid-July 2017 and 20.9% in 2018, and the bank’s printed gross non-performing loan ratio was between 0.55% and 0.98% in each year from 2017 to 2021. By 2025 printed return on equity was 9.8%. The two deals sit between those numbers.6,2
- 11 May 1984: Incorporated as Nepal’s first joint-venture bank. Nabil Bank, then Nepal Arab Bank Limited, is incorporated under the Companies Act 1964 and begins banking on 12 July 1984 at Durbarmarg. The annual report’s milestone page dates the change of name to Nabil to the period 1999 to 2004. It is a class A licensed commercial bank today.
- 16 Jul 2015: A foreign non-bank holder was due to sell down. An NRB circular of 11 March 2014 required foreign companies other than banks and financial institutions to sell their holdings in licensed banks by 16 July 2015. The 2015/16 annual report says NB International, a foreign non-bank shareholder with 50% of Nabil, had not done so and that dividends were on hold as the central bank’s directive required. Later reports carry no such note and declare cash dividends; we found nothing that explains how the matter was resolved. The 2015/16 to 2017/18 reports also list four directors who represent “A” class shareholders “in relation to 50% interest of NB International Ltd.”, among them the present chair.
- 2 Jul 2019: Promoter and public split reaches 60:40. The exchange converts 9,002,566 promoter shares to ordinary shares. ShareSansar describes the original structure: 50% NB International, 10% Rastriya Beema, 30% public through the initial offer and 10% NIDC Bank, whose stake was sold at auction after the central bank barred one bank from owning another. The converted units carried no lock-in.
- 30 Apr 2021: Agreement to acquire United Finance. Nabil agrees to take over United Finance Limited at 35 Nabil shares for 100 United Finance shares (last traded prices Rs 1,270 and Rs 423 that day). The bank’s board stays in place.
- 11 Jul 2021: United Finance joins (27 Ashadh 2078). Joint operation starts. The bank books 3,642,921 shares at Rs 490.55, a consideration of Rs 178.7 crore against net identifiable assets of Rs 168.3 crore, so goodwill is Rs 10.43 crore. The year’s accounts are later restated for this acquisition accounting.
- 13 Jan 2022: Boards endorse the Nepal Bangladesh Bank deal (29 Poush 2078). The boards of both banks endorse an acquisition of Nepal Bangladesh Bank (NBB) at 100:43, meaning 43 Nabil shares for 100 NBB shares. A director of each bank signs the memorandum. The press reports the new bank expecting 235 branches, deposits of Rs 31,400 crore and loans of Rs 30,000 crore.
- Mar 2022: Central bank letter of intent. Nepal Rastra Bank (NRB) issues its letter of intent on 29 Falgun 2078. Nabil’s own half-year figures at the time: net worth per share Rs 184.28, annualised earnings per share Rs 23.59, 18.50 crore shares.
- 21 May 2022: Both banks’ special general meetings approve (7 Jestha 2079). Shareholders approve the 100:43 ratio on the due-diligence report of an accounting firm; T.R. Upadhya & Co. is appointed appraiser of NBB’s assets and liabilities.
- 29 Jun 2022: NRB final approval (15 Ashadh 2079). The exchange circulates the central bank’s final approval letter.
- 11 Jul 2022: Joint operation starts (27 Ashadh 2079). The annual report gives 27 Ashadh 2079; ShareSansar gives 28 Ashadh, so sources differ by a day. 43,367,219 new Nabil shares are issued and listed on 3 Aug 2022; paid-up capital rises from Rs 1,849.6 crore to Rs 2,283.3 crore. Nabil’s share price is about Rs 792 to 826 in these days, down from about Rs 1,110 in January 2022 (as traded); the NEPSE index fell 28% over the same months.
- Year to mid-July 2023: The swap difference becomes bonus shares. NBB’s paid-up capital of Rs 1,008.5 crore less the Rs 433.7 crore issued leaves a capital adjustment reserve of Rs 574.9 crore. An 18.5% bonus of Rs 422.4 crore, declared on the year to mid-July 2022 profit together with 11.5% cash, is paid out of it. Nabil did the same with the smaller reserve from the United Finance swap.
- Mid-2023: A new tax rule and sixteen banks go to court. The Finance Act 2080 taxes bonus shares issued from a “bargain purchase gain” or from share premium, with an amnesty on interest and penalty if the tax is paid by the end of Mangsir 2080. In September 2023 sixteen commercial banks file writs in the Supreme Court; fifteen target the bargain-purchase provision. Nabil’s note says it recognised goodwill, so no such gain arose, and that it filed a writ “collectively with other Banks”.
- Mid-Dec 2023: The Supreme Court dismisses the banks’ petitions. A constitutional bench dismisses all petitions against the tax on bonus shares from bargain purchase gains and from share premium, upholding the government’s position; ShareSansar’s report of 15 Dec 2023 says the dismissal came on the Thursday before, close to the end-of-Mangsir 2080 deadline. The reports do not name Nabil individually; its own note says it filed with other banks. Nabil’s payment of Rs 161.7 crore falls in the same half-year.
- Jul to Dec 2023: Rs 161.7 crore of tax is paid. ICRA Nepal says the bank paid the tax during the first half of the year to mid-July 2024. The statement of changes in equity shows Rs 161.7 crore as prior-period tax: Rs 152.5 crore from other reserves, equal to the capital adjustment reserve left after the bonus (our reading), and Rs 9.2 crore from retained earnings.
- 1 Dec 2023: Call on the Trishuli guarantees. Trishuli Jal Vidyut Company calls the guarantees Nabil issued for its contractor. The Chinese bank that counter-guaranteed Nabil does not pay, citing an order of the Chengdu Financial Court of 10 Dec 2023.
- 9 Apr 2024: ICRA cuts the rating to A+ (first of two cuts). ICRA Nepal downgrades the issuer rating from AA- to A+ and the debentures from LAA- to LA+, with a negative watch. It cites asset quality, capital ratios (tier 1 at 8.93% and capital adequacy at 11.54% in mid-January 2024), the acquired bank’s credit profile, the unpaid foreign counter-guarantee and the tax payment.
- 20 Apr 2025: ICRA cuts the rating again, to A. A press report says ICRA Nepal downgraded the issuer rating from A+ to A and the subordinated debentures from LA+ to LA, keeping the watch with negative implications. We did not obtain ICRA’s rationale, so its reasons are not known to us.
- 27 Mar 2025: The chief executive resigns. The board’s 667th meeting accepts the chief executive’s resignation and appoints the deputy chief executive as officiating chief executive. On 4 Jun 2025 the 682nd meeting appoints him chief executive; the letter is dated 5 Jun 2025 (22 Jestha 2082) for four years. He is an insider who had spoken for the bank on the Trishuli claim as deputy chief executive.
- 23 Sep 2025: Chongqing court upholds the counter-guarantee ruling. Reported by one outlet in December 2025: a Higher People’s Court in Chongqing upholds a lower-court ruling in Nabil’s favour for US$7,449,386.32 under four guarantees. The report adds that Nabil had already paid the guaranteed amount to the hydropower company. We found no report of the money arriving.
- 17 Dec 2025: Rs 500 crore of preference shares. Nabil allots 5 crore 8% perpetual non-cumulative preference shares of Rs 100 to institutions, the first such bank issue approved by the securities regulator. They count as tier 1 capital; the annual dividend is Rs 40 crore if declared in full.
- 12 Jan 2026: New chair. After the 41st annual general meeting (28 Poush 2082) approves a 12.5% cash dividend and elects a director for the promoter group, the board chooses a new chair. The outgoing chair had served two terms. The new chair is a promoter-group director, described in the bank’s own annual report as a managing director of Chaudhary Group.
- 21 Jun 2026: ICRA reaffirms A and removes the watch. A press report says ICRA Nepal reaffirmed the issuer rating at A and the debenture rating at LA and removed both from watch, reflecting “improved confidence in the bank’s overall creditworthiness”. The report does not give a rationale.
- 26 Aug 2026: The Rasuwa flood. A flood on the Bhotekoshi and Trishuli river systems damages hydropower projects. The bank’s annual note on events after the year-end records a destroyed branch at Timure in Rasuwa and an insurance claim, with the loss not yet assessed. The Nepal Bankers’ Association’s preliminary list puts Rs 330 crore of Nabil’s funds in the 37MW Trishuli project and Rs 49.8 crore of loans to the Rasuwa Gadhi project.
- 6 Sep 2026: Audited accounts signed. The audited statements for the year to 16 July 2026 show net profit of Rs 790.6 crore, equal to the Q4 figure published on 5 Aug 2026 to within Rs 0.03 crore. The board proposes 5% bonus shares, 10.8% cash and the 8% preference dividend.
- 8 Oct 2026: 42nd annual general meeting. Shareholders approve the 5% bonus (Rs 135.3 crore), 10.8% cash (Rs 292.2 crore) and the preference dividend (Rs 23.3 crore) and elect three directors for the promoter group. The share trades ex-dividend and ex-bonus from about 1 October.
A bank that earned 21% on equity from a small, low-cost deposit base was a very different asset from a bank with 4% non-performing loans and a 10% return. Nabil chose to grow by buying other banks, and the price was paid in shares that the market then valued very highly. Chapter 5 asks what that cost.
04. United Finance in 2021, Nepal Bangladesh Bank in 2022
Both deals were share swaps, and the accounting is the same in both. The target’s paid-up capital exceeds the par value of the Nabil shares issued, the difference is left in equity as a capital adjustment reserve, and the bank distributed that reserve as bonus shares. The bank says it booked goodwill in both deals, so it says no bargain purchase gain arose.5,4
| Target | Swap ratio | Joined | Shares issued by Nabil | Booked value of those shares | Goodwill |
|---|
| United Finance Limited | 35 Nabil shares for 100 | 11 Jul 2021 (27 Ashadh 2078) | 3,642,921 | Rs 178.7 crore at Rs 490.55 a share | Rs 10.43 crore |
| Nepal Bangladesh Bank Limited | 43 Nabil shares for 100 (“100:43”) | 11 Jul 2022 (27 Ashadh 2079) | 43,367,219 | Rs 1,618.0 crore at Rs 373.09 a share | Rs 6.59 crore |
Sources: 6,5,31,25,30. Booked value is the consideration in note 5.8 of the 2021/22 annual report; the next table sets the Nepal Bangladesh Bank figure against market prices. Nabil’s share price on the day of the United Finance agreement was Rs 1,270; we have not computed a market-value comparison for that deal.
Five turning points, with the evidence
- 1984 to 2019: A first-mover bank with foreign partners. What happened: Incorporated on 11 May 1984 as Nepal’s first joint-venture bank and opened on 12 July 1984. The bank’s own table for 1984 shows two branches, deposits of Rs 14.6 crore, loans of Rs 13.3 crore and shareholders’ funds of Rs 2.8 crore. The bet: A commercial bank for a wide clientele: the bank lists individuals, corporates, multinationals, state-owned enterprises, aid agencies, embassies and NGOs. What it produced: By the year to mid-July 2025 it had 268 branches, deposits of Rs 53,326 crore, shareholders’ funds of Rs 6,253 crore and a net profit of Rs 592.2 crore. Printed return on equity was 22.4% in the year to mid-July 2017. What it left behind: The reference point for everything after 2020: printed return on equity was 20.9% in the year to mid-July 2018 and 9.8% in 2025.
- 2021: United Finance: the first deal paid in shares. What happened: Nabil agrees on 30 April 2021 to take over United Finance at 35 shares per 100 and begins joint operation on 11 July 2021, with goodwill of Rs 10.43 crore. The bet: More branches (147 after the deal) and a deposit base of about Rs 21,600 crore, bought with shares priced at about Rs 1,270 each. What it produced: Assets grew from Rs 23,768 crore to Rs 29,107 crore in the year to mid-July 2021 and loans from Rs 14,805 crore to Rs 19,802 crore. The year’s accounts were later restated for the acquisition accounting. What it left behind: A small deal at Rs 178.7 crore that set the template: shares as currency, the difference between the target’s paid-up capital and the shares issued left as a reserve, then paid out as bonus shares.
- 2022: Nepal Bangladesh Bank at 100:43. What happened: On 13 January 2022 the boards endorse an acquisition of Nepal Bangladesh Bank at 43 Nabil shares per 100 NBB shares. Joint operation starts on 11 July 2022 with 4.34 crore new shares. The bet: Nabil’s shares traded at 6.0 times net worth and about 45 times the latest year’s profit; NBB’s at 2.5 times net worth. Paying in the dearer paper cost existing holders 19.0% of the combined shares for 31.7% of combined net worth and 27.1% of half-year earnings (our calculation). What it produced: Pro forma net worth per share Rs 218.71 against Rs 184.28 and annualised EPS Rs 26.21 against Rs 23.59 (+18.7% and +11.1%, press analysis). Loans of Rs 7,760 crore and deposits of Rs 8,152 crore were added. What it left behind: On announced numbers the people who already owned Nabil gained: book value per share +18.7% and annualised earnings per share +11.1%. NBB’s holders took a premium of 21% to their market price and a 40% cut in book value per share.
- 2023 to 2025: Bonus shares, a tax bill and a profit cut at audit. What happened: The Rs 574.9 crore capital adjustment reserve funds an 18.5% bonus (Rs 422.4 crore). The new rule in the Finance Act 2080 makes bonus shares from such a reserve taxable; Nabil pays Rs 161.7 crore, and contests the rule. In the same years audited profit is Rs 513 crore below the unaudited figures. The bet: Paying out reserves as shares conserves cash; the loan book grew from Rs 30,021 crore to Rs 46,032 crore between mid-July 2022 and 2026 while non-performing assets rose from Rs 172 crore (mid-July 2021) to Rs 2,051 crore (2026). What it produced: Gross non-performing loans reached 4.48%; tier 1 capital fell from 10.22% to 9.47%; ICRA cut the issuer rating to A+ in April 2024; return on equity was 9.8% in the year to mid-July 2025. What it left behind: The deal added size, but the capital that came with it was distributed, taxed and then eroded by provisions. Profit fell while assets rose by 32%.
- 2025 to 2026: Preference capital and a profit recovery. What happened: Rs 500 crore of 8% perpetual preference shares are allotted on 17 Dec 2025; a prospectus is published for a 7% debenture of Rs 300 crore; audited profit rises 33.5% to Rs 790.6 crore with no audit revision. The bet: Rebuild tier 1 capital without issuing ordinary shares, keep the dividend and let provisions fall. What it produced: Capital adequacy 12.37% and tier 1 9.68% (unaudited, NRB basis); 54.2% of the rise in pre-tax profit came from lower provisions; the 5% bonus and 10.8% cash dividend were approved on 8 Oct 2026. What it left behind: The year looks like the first clean one after four revisions, but its profit leans on provisions: Rs 47.9 crore in the first three quarters and Rs 219.8 crore in the fourth.
The first deal was small and the second was about nine times larger by booked value. What exactly did Nabil’s shareholders pay for the second?
05. Nepal Bangladesh Bank: who paid, who gained
On 13 January 2022 (29 Poush 2078) the boards of Nabil and NBB endorsed an acquisition at 100:43, meaning 43 Nabil shares for every 100 NBB shares. Both banks’ special general meetings approved it on 21 May 2022, the central bank gave final approval on 29 June 2022, and joint operation began on 11 July 2022 with 43,367,219 new Nabil shares. NBB’s own annual report for the year to mid-July 2021 put its equity at Rs 1,545.8 crore on assets of Rs 11,159.3 crore, with an overdue-based non-performing ratio of 1.38% and capital adequacy of 13.85%.25,27,29,30,5,17
Why this matters. The price the market put on each bank decided who gained. In January 2022 Nabil traded at 6.0 times net worth and about 45 times its latest annual profit; NBB traded at 2.5 times net worth. A bank whose shares are worth more can pay for another in shares, and the holders of the cheaper bank receive paper that is priced for growth.
The table sets the two banks side by side at the agreement. NBB’s holders received 19.0% of the combined shares for 31.7% of the combined net worth and 27.1% of the half-year profit. At market prices they brought 16.2% of the value. They were paid a 21% premium to NBB’s share price, and gave up 40% of their net worth per share.26,16,5,24
| Measure at the agreement (January 2022) | Nabil holders | Nepal Bangladesh Bank holders | Label |
|---|
| Share of the combined bank’s shares | 81.0% | 19.0% | Our calculation |
| Share of combined market value (mid prices Rs 1,110.9 and Rs 394.75) | 83.8% | 16.2% | Our calculation |
| Share of combined net worth (mid-January 2022) | 68.3% | 31.7% | Our calculation |
| Share of the half-year profit (Rs 299.3 crore combined) | 72.9% | 27.1% | Our calculation |
| Price to net worth before the deal | 6.03 times | 2.51 times | Our calculation |
| What 100 NBB shares become | 43 Nabil shares | Rs 47,768.7 of Nabil shares for Rs 39,475 of NBB shares: +21.0% | Our calculation |
| Net worth per share | Rs 184.28 to Rs 218.71 (+18.7%) | Rs 157.18 to Rs 94.05 for 43 shares (-40.2%) | Reported pro forma, our arithmetic |
| Annualised earnings per share | Rs 23.59 to Rs 26.21 (+11.1%) | Not stated | Reported pro forma |
Sources: 25,26,16,5,24. Prices are the mid-points of closing ranges around the agreement (Nabil Rs 1,107.0 to 1,114.8; Nepal Bangladesh Bank Rs 389.5 to 400.0). Pro forma net worth per share and earnings per share are ShareSansar’s analysis of the two banks’ half-year figures, not a filing; we recomputed the net worth per share from the two net worths and the share count and match it.
On the announced numbers the deal was good for the people who already owned Nabil: net worth per share up 18.7%, annualised earnings per share up 11.1%, and a bank that the press expected to earn more than Rs 600 crore a year. It was also priced so that NBB’s holders took a premium to market and a cut to book. That is not a contradiction. Both can be true when the acquirer’s shares trade at a much higher multiple than the target’s.
Then the accounting. Nabil booked the 43,367,219 shares at Rs 373.09 each, Rs 1,618.0 crore, against identifiable net assets of Rs 1,611.4 crore: goodwill of Rs 6.59 crore. Nabil’s closing prices either side of 11 July 2022 were Rs 826 and Rs 792. At that range the same shares were worth Rs 3,435 to 3,582 crore, and goodwill would have been Rs 1,823 to 1,971 crore (our calculation).5,24
| Item | Figure | Label |
|---|
| Shares issued for Nepal Bangladesh Bank | 43,367,218.87, which is 43% of its 10.09 crore shares | Established |
| Booked consideration | Rs 1,618.0 crore, at Rs 373.09 a share | Established |
| Fair value of identifiable net assets acquired | Rs 1,611.4 crore | Established |
| Goodwill booked | Rs 6.59 crore | Established |
| Market value of the shares issued | Rs 3,435 to 3,582 crore at the Rs 792 to 826 closing range either side of 11 July 2022 | Our calculation |
| Goodwill if booked at that market value | Rs 1,823 to 1,971 crore | Our calculation |
| Booked price against market | -53.9% (Rs 373.09 against the Rs 809 mid-point) | Our calculation |
| Swap-difference reserve (capital adjustment reserve) | Rs 574.9 crore: the acquired bank’s paid-up capital of Rs 1,008.5 crore less Rs 433.7 crore issued at par | Established; our arithmetic |
| Bonus shares paid out of it | 18.5%, Rs 422.4 crore, declared on the year to mid-July 2022 profit | Established |
| Tax paid on such bonus shares | Rs 161.7 crore: 28.1% of the reserve, Rs 5.98 a share on 27.06 crore shares | Established; our arithmetic |
Sources: 5,4,13,24,30. The consideration, net assets and goodwill are from the table in note 5.8 (page 228) of the 2021/22 annual report. The market range is the closing prices either side of 11 July 2022 (Rs 826 and Rs 792); the booked price is not a quoted price, because the note says it follows the acquired bank’s valuation in a due-diligence audit and explanatory notes of the Institute of Chartered Accountants of Nepal. We do not say the accounting is wrong; we say the two numbers differ and the derivation is not published.
The bank’s note says goodwill was measured by considering the business valuation of the acquired bank from a due-diligence audit that both general meetings approved for the swap ratio, with the excess of consideration over that value treated as goodwill; it also says it followed explanatory notes of the Institute of Chartered Accountants of Nepal. The valuation report is not published. We therefore know what the booked figure rests on, and not how the valuation was reached.5,27
We do not say the accounting is wrong. We say the price in the accounts and the price in the market differ by more than a factor of two, the note ties the first to a valuation we cannot see, and a shareholder judging the cost of the deal should use the second: paying for NBB meant giving its holders 19.0% of the company.
There is a tax consequence too. The reserve left by the swap was Rs 574.9 crore. An 18.5% bonus of Rs 422.4 crore, declared on the year to mid-July 2022 profit, was paid out of it. In 2023 the Finance Act 2080 made bonus shares issued from a “bargain purchase gain” or share premium taxable, with an amnesty on interest and penalty. Nabil’s note says it booked goodwill, so no such gain arose, and that it filed a writ “collectively with other Banks”. It paid Rs 161.7 crore in the first half of the year to mid-July 2024, charged to equity: Rs 152.5 crore from other reserves, an amount equal to what was left of the reserve (our reading), and Rs 9.2 crore from retained earnings. The writ failed: in mid-December 2023 a constitutional bench of the Supreme Court dismissed all petitions against the rule, including the sixteen banks’ joint petition, and upheld the government’s position. Neither report we read names Nabil, and we did not read the judgment, so we rely on the bank’s own note that it filed with other banks.5,4,41,42,43,23,13
What is not here. How the due-diligence valuation was reached, the tax authority’s assessment and the Supreme Court judgment itself. They are listed in chapter 15. The deal’s approval by both banks’ shareholders and by the regulator is established; we make no allegation about how the swap ratio was set.
If paying more than a year’s profit in shares lowered the multiple, what did the owners of 2021 get per share?
06. Per share the old owners did better; the price did not follow
A shareholder who held Nabil before the deal can ask a simple question: did my share earn more than before? The table answers it on a constant base of 22.83 crore shares, the count when the merged bank started. Profit per share was Rs 23.01 before the deal (the year to mid-July 2022 profit over 18.50 crore shares). It was Rs 28.05, 27.14, 25.94 and 33.60 in the four years since: 21.9%, 18.0%, 12.7% and 46.0% higher. Break-even profit was Rs 525.4 crore; the bank earned Rs 640.5, 619.7, 592.2 and 790.6 crore. The year to mid-July 2022 was weaker than 2021, when profit per share on the same shares was Rs 24.48; against that base the four years are 14.6%, 10.9%, 6.0% and 37.3% higher.5,4,3,2,1,16,6
| Year to mid-July | Profit for ordinary shares, Rs crore | Profit per share, constant base, Rs | Against pre-deal | Book value per share, constant base, Rs | Cash dividend declared, per constant-base share, Rs |
|---|
| Before the deal: profit of the year to mid-July 2022 on 18.50 crore shares; book value at mid-January 2022 | 425.6 | 23.01 | | 184.28 | 11.50 |
| 2023 | 640.5 | 28.05 | +21.9% | 249.26 | 13.04 |
| 2024 | 619.7 | 27.14 | +18.0% | 256.98 | 11.85 |
| 2025 | 592.2 | 25.94 | +12.7% | 273.88 | 14.81 |
| 2026 (after the preference dividend) | 767.2 | 33.60 | +46.0% | 293.03 | 12.80 |
Sources: 5,4,3,2,1,16, our arithmetic. The constant base is 22.83 crore shares, the count when the merged bank started on 11 July 2022; later bonus issues (18.5% and 5%) are ignored so that every figure is for one share held then. The pre-deal row uses the 18.50 crore shares before the issue, the same shares held by existing holders. Book value in 2026 is ordinary equity (total equity less the preference capital). Break-even: existing holders needed profit of Rs 525.4 crore a year to keep profit per share at Rs 23.01; the bank earned Rs 640.5, 619.7, 592.2 and 790.6 crore.
Book value per share on the same base rose from Rs 184.28 to Rs 293.03, 59.0%, over four and a half years. That is not all the deal: even without it, retained earnings would have raised book value. We cannot isolate the deal because no filing shows what Nabil would have earned alone. What the numbers do rule out is the worry that the deal diluted the old owners’ earnings: they did not fall below the pre-deal level in any full year.
The market paid for something else. The share traded at about Rs 1,110.9 then and closed at Rs 543 on 26 October 2026. Adjusted for the 18.5% and 5% bonus issues, that is 39.2% lower. Everest Bank is up 78.4% on the same dates, Global IME down 12.5% and the NEPSE index down 5.6%. Most of Nabil’s fall came early: by the last close before NBB joined on 11 July 2022 the share was already down 25.7% and the NEPSE index 28.5%; since then Nabil is down 18.2% while the index is up 32.0% and Everest Bank up 150.7%. With five years of cash dividends added, an original Nabil holder is down about 33%, and a holder of NBB at the time about 19%, because those holders received a 21% premium to their own price.24,1
| Price only, bonus-adjusted, to 26 Oct 2026 | Since the session around 11 Jan 2022 | Since 11 Jan 2022, with cash dividends added | Since the last close before NBB joined (11 Jul 2022) |
|---|
| Nabil, per original share | -39.2% | -33.4% | -18.2% |
| Nepal Bangladesh Bank holder, per share (43 Nabil shares per 100) | -26.4% | -19.4% | not computed |
| Everest Bank | +78.4% | not computed | +150.7% |
| Global IME Bank | -12.5% | not computed | +13.8% |
| NEPSE index | -5.6% | not computed | +32.0% |
Source: 24, our arithmetic. Prices are the provider’s series adjusted for bonus shares. Between 11 January and the last close before NBB joined, Nabil fell 25.7% and the NEPSE index 28.5%: 65% of the fall in Nabil’s price came before the merger took effect. Nepal Investment Mega Bank is not shown: it was formed by a merger in January 2023 and its raw prices start on 23 Feb 2023, so its earlier history cannot be checked. For the dividend column, cash dividends declared on the profits of the years to mid-July 2022 to 2026 total Rs 64.00 per constant-base share, not reinvested and before tax; the Nabil price used is Rs 543 times 1.244 (the 18.5% and 5% bonus issues) against Rs 1,110.9 then. A holder of Nepal Bangladesh Bank at the time compares today’s value of 43 Nabil shares with Rs 394.75 then. The peers’ dividends are not included.
The fall is a fall in the multiple: from 6.0 times book value and about 45 times earnings to 2.4 times (book after the declared dividends) and 20 times. It is not a fall in profit per share. A multiple like 6.0 prices years of growth that did not come, and the bank’s printed return on equity fell from 22% in the year to mid-July 2017 to 10% in 2025. A KYC does not say what the right multiple is; our separate valuation does.49
Cash dividends have been steady: 11%, 10%, 12.5% and 10.8% of paid-up capital for the years to mid-July 2023 to 2026, with no bonus shares for 2023 to 2025 and a 5% bonus for 2026. The 2026 cash dividend is 38.1% of profit for ordinary shares, and with the bonus 55.7% (our arithmetic).5,4,3,2,1,35,36
| Year to mid-July | Cash % | Bonus % | Total as printed | Cash declared, Rs crore | Cash per constant-base share, Rs |
|---|
| 2017 | 18 | 30 | 48 | n/a | n/a |
| 2018 | 22 | 12 | 34 | n/a | n/a |
| 2019 | 22 | 12 | 34 | n/a | n/a |
| 2020 | 1.76 | 33.5 | 35.26 | n/a | n/a |
| 2021 | 4.4 | 33.6 | 38 | n/a | n/a |
| 2022 | 11.5 | 18.5 | 30 | 262.6 | 11.50 |
| 2023 | 11 | 0 | 11 | 297.6 | 13.04 |
| 2024 | 10 | 0 | 10 | 270.6 | 11.85 |
| 2025 | 12.5 | 0 | 12.5 | 338.2 | 14.81 |
| 2026 | 10.8 | 5 | 15.8 | 292.2 | 12.80 |
Sources: 5,4,3,2,1,35,36. Percentages are of paid-up capital and refer to the profit of the year shown, declared after the year-end. The 8% preference dividend (Rs 23.3 crore for 213 days in 2026) is separate. The 2026 cash dividend is 38.1% of profit for ordinary shares and, with the bonus, 55.7% (our arithmetic). The 2025 cash dividend was proposed on 5 Dec 2025 and approved on 12 Jan 2026.
The earnings per share held up. Was the profit that produced them the profit that survived the audit?
07. Owners, board and management
Promoters hold 58.44% and the public 41.56%. The largest holder, NB (International) Limited of Ireland, holds 39.44%. A foreign bank, IFIC Bank PLC of Bangladesh (7.77%), and an insurer, Rastriya Beema Company (7.63%), come next. Foreign holders in all hold 47.65%. The shareholder table is for 16 July 2025; we do not hold the 2026 table.2
- NB (International) Limited, Ireland (39.44%). 106,706,242 of 270,569,967 shares on 16 July 2025, the latest shareholder table we have (the table for 2026 is not in the extract of the 2026 report). The annual report does not say who owns the Irish company. The 2015/16 report records it as a foreign non-bank holder of 50% that had not sold down as a central-bank circular required, and the 2015/16 to 2017/18 reports list four directors “in relation to 50% interest of NB International Ltd.”, among them the present chair. ICRA Nepal says that individuals and individuals associated with the Chaudhary Group maintain the largest stake in the bank. We did not obtain the Irish company’s own filings, so we cannot confirm the chain.
- IFIC Bank PLC, Bangladesh (7.77%). 21,017,264 shares. The bank’s managing director sits on Nabil’s board for the promoter group. The seat changed hands in 2024: the board accepted the resignation of IFIC’s earlier representative on 22 Aug 2024 and appointed the present one on 4 Oct 2024.
- Rastriya Beema Company Limited (7.63%). 20,636,986 shares. One of the original partners: a 2019 report describes the early structure as 50% NB International, 10% Rastriya Beema, 30% public through the initial offer and 10% NIDC Bank. The NIDC stake was sold at auction after the central bank barred cross-holding between banks.
- Other promoter-group holders (3.60%). Muthoot Finance Limited of India holds 1,198,531 shares and the Nepal Stock Exchange 712,340. A further 7,849,782 shares (2.90%) are held by other individuals and institutions counted as promoters. Promoters in all hold 58.44%, or 158,121,145 shares.
- Public shareholders (41.56%). Two directors represent public shareholders. The table of holders above 0.5% also lists two individuals, at 0.70% (the chair, in his own name) and 0.67%; the report does not say whether they sit in the promoter or the public count. Public holders were about 40% in 2019 (ShareSansar) and 41.56% on 16 July 2025. Foreign holders in all, NB International, IFIC and Muthoot, hold 47.65%.
- Who stands behind NB International (Unknown). We searched the English annual reports from 2008/09 to 2025/26 and the 7% Nabil Debenture 2089 prospectus. The reports name the Irish company in share tables and board notes; none describes its owners. Board seats show a link: in 2017/18 three of the four directors listed for its 50% interest (the present chair, the outgoing chair and a former chief executive of an Indian financial institution) were still on the board in 2025. The rating agency’s sentence about the Chaudhary Group is the only description of the owners we found. We do not infer ownership from directors.
- Nepal Rastra Bank (Not an owner). Approved the 2022 acquisition (letter of 29 Jun 2022), approves dividends, and has acted against the bank twice that we found: a Rs 6.46 crore penalty, reported in April 2023, for credit-to-deposit shortfalls in August to October 2022 and a warning in February 2023 over a suspect’s account. The board was also cautioned over compliance with a directive in the year to mid-July 2024.
- Deposits. Customer deposits of Rs 59,208.3 crore (bank only, audited), up 12.9% on the year. The NRB-basis cost of funds was 3.09% in the fourth quarter and the credit-to-deposit ratio 80.18% (unaudited).
- Loans. Gross loans of Rs 48,798.1 crore, of which Rs 2,050.6 crore are non-performing (4.20%) and Rs 3,254.7 crore on the watch list (audited note). At 16 July 2025 the largest sectors were wholesale and retail (Rs 9,291.5 crore) and consumption loans (Rs 7,792.2 crore); power, gas and water was Rs 4,019.6 crore, 9.3% of loans.
- Branches and customers. Counts reported by the bank in January 2026 (268 branches, 321 ATMs). The network grew from 135 offices in the year to mid-July 2021 to 231 the next year after United Finance and Nepal Bangladesh Bank joined.
- Subsidiaries and associate. A merchant bank (60%), a stock dealer (100%, incorporated 19 Jul 2021 with Rs 152 crore of capital) and a 25% stake in NADEP Laghubitta, an associate listed on the exchange. In the year to mid-July 2025 the subsidiaries paid the bank Rs 11.6 crore of dividends and held Rs 56.8 crore of deposits with it. The group’s figures are a small addition to the bank’s.
- Capital raised. Rs 500 crore of 8% perpetual non-cumulative preference shares allotted on 17 Dec 2025 (tier 1). Debentures stood at Rs 1,273.6 crore in the accounts at 16 July 2026; a prospectus exists for a further 7% Nabil Debenture 2089 of Rs 300 crore, and we have not worked out whether it is inside that figure.
- Dividends. For the year to mid-July 2026 the board proposed (and the 42nd general meeting approved) 5% bonus shares, 10.8% cash (Rs 292.2 crore) and an 8% preference dividend (Rs 23.3 crore). Cash dividends declared on the profits of the years to mid-July 2022 to 2025 were Rs 262.6, 297.6, 270.6 and 338.2 crore. On our arithmetic the cash dividend is 38.1% of ordinary profit; with the bonus, 55.7%.
- Tax on bonus shares. Rs 161.7 crore paid in the first half of the year to mid-July 2024, recorded in equity. The bank says no bargain purchase gain arose and joined other banks in a writ that the Supreme Court dismissed in December 2023. Disputed income-tax assessments of Rs 165.8 crore are a separate contingent liability.
- Guarantee called. Rs 99.1 crore (US$74.4 lakh at the Post’s conversion) on the Trishuli 3B guarantees. A Chinese bank has not paid the counter-guarantee; the bank reports having paid its own beneficiary (one outlet). Courts in China have reportedly found for Nabil. We found no report that the money has been received.
The largest holder has a history. The 2015/16 annual report says NB International was a foreign shareholder that was not a bank, with 50% of the capital, and that it had not sold down by 16 July 2015 as a central-bank circular of 11 March 2014 required; dividends were on hold. The 2016/17 and later reports carry no such note and Nabil declared cash dividends from 2017. We found no explanation of how the matter ended. NB International’s stake has since fallen to 48.7% (2021) and 39.44% (2025) as other holders were added by the two acquisitions.10,9,6,2
The board listings add a second link. The reports for 2015/16 to 2017/18 name four directors under the heading “in relation to 50% interest of NB International Ltd.”. In 2017/18 they were the present chair, the outgoing chair, a former chief executive of an Indian financial institution and one other. Three of the four sit on the board in the 2024/25 report. This tells you who sat for the holder, not who owns it.10,9,8,2
Where we could not establish an owner, we say so. No filing we read names the owners of NB (International) Limited. ICRA Nepal says individuals and individuals associated with Chaudhary Group maintain the largest stake in the bank. The chair is the managing director of Chaudhary Group and holds 0.70% in his own name. We do not infer more than that.
| Holder | Shares | Share of ordinary shares | Role |
|---|
| NB (International) Limited, Ireland | 106,706,242 | 39.44% | Promoter group; owners not named in the filings |
| IFIC Bank PLC, Bangladesh | 21,017,264 | 7.77% | Promoter group; a director represents it |
| Rastriya Beema Company Limited | 20,636,986 | 7.63% | Promoter group |
| One individual, the chair since January 2026 | 1,897,459 | 0.70% | Director; holds in his own name |
| A second individual | 1,808,985 | 0.67% | Not described in the report |
| Muthoot Finance Limited, India | 1,198,531 | 0.44% | Promoter group |
| Nepal Stock Exchange Limited | 712,340 | 0.26% | Promoter group |
| Other individuals and institutions counted as promoters | 7,849,782 | 2.90% | Promoter group |
| All promoters | 158,121,145 | 58.44% | |
| Public | 112,448,822 | 41.56% | Two directors represent the public |
Source: 2, shareholder tables at 16 July 2025 (270,569,967 shares). The two individual holdings are from the table of holders above 0.5%; their share counts are our arithmetic from the amounts shown (Rs 18.97 crore and Rs 18.09 crore at par). A holder in the press is not a holder in the filing: no tier here is inferred from names.
Seven directors sat on the board in the year to mid-July 2025, all non-executive: four for the promoters, two for the public and one independent. In January 2026 the chair of two terms was succeeded by a promoter-group director who is managing director of Chaudhary Group. The board chooses its chair; ShareSansar reported that he would take office after taking the oath from the central bank. At the 42nd general meeting on 8 October 2026 three promoter-group directors were elected.2,37,36
| Seat | Represents | Background in the annual report (by role) | Status |
|---|
| Chair until January 2026 | Promoter shareholders | Former commercial banker; former president of a bankers’ association; listed in 2017/18 for NB International’s 50% interest | Two terms; left after the 41st general meeting |
| Director; chair since January 2026 | Promoter shareholders | Managing director of Chaudhary Group; chair of its foundation; holds 0.70%; listed in 2015/16 to 2017/18 for NB International’s 50% interest | Elected chair by the board; re-elected as promoter director on 8 Oct 2026 (reported) |
| Director | Promoter shareholders | Former chief executive of an Indian financial institution; former executive director of an Indian public-sector bank; listed in 2017/18 for NB International’s 50% interest | Re-elected on 8 Oct 2026 (reported) |
| Director | Promoter shareholders (IFIC) | Managing director of IFIC Bank PLC, Bangladesh | Appointed 4 Oct 2024 to the seat IFIC’s earlier representative left in Aug 2024, ratified at the 40th general meeting on 12 Dec 2024; re-elected 8 Oct 2026 (reported) |
| Director | Public shareholders | Entrepreneur; consultancy director | On the 2024/25 board |
| Director | Public shareholders | Entrepreneur with accounting and finance degrees | On the 2024/25 board |
| Independent director | Independent | Former executive director of Nepal Rastra Bank (bank supervision, foreign exchange) | Appointed Jan 2025 |
| A promoter-group director elected in January 2026 | Promoter shareholders | Not described in the documents we hold; we have not assumed a background | Elected unanimously at the 41st general meeting, Jan 2026 (ShareSansar) |
Sources: 2,37,36. All seven directors on the 2024/25 board are non-executive. The chief executive is not a director. Private individuals are described by role. The 2026 board table is not in the extract we hold, so the current seat-by-seat membership is not confirmed beyond the elections reported.
- The chair (Promoter-group director; chair since January 2026). Chosen by the board after the 41st general meeting in January 2026. The annual report describes him as managing director of Chaudhary Group, and ICRA says individuals associated with the group hold the largest stake in the bank. The 2015/16 to 2017/18 annual reports list him first among the directors who represent the 50% interest of NB International, the Irish company that is now the largest holder (39.44%); the filings do not name its owners. ICRA says individuals associated with the Chaudhary Group hold the largest stake, and the chair personally holds 0.70%. His predecessor came from commercial banking. At the 42nd meeting in October 2026 he was re-elected to a promoter seat (reported).
- The outgoing chair (Two terms as chair, a former commercial banker). Chaired the 41st annual meeting in January 2026 after two terms as chair (ShareSansar). The 2017/18 annual report lists him among the four directors representing the 50% interest of NB International. His tenure dates are not in the documents we hold, so we do not say whether he chaired the board that agreed the Nepal Bangladesh Bank deal. ShareSansar’s report lists merger management among the achievements of his two terms. The 2024/25 annual report, under his chair, records no regulatory action against the board for that year.
- The chief executive (Appointed 4 June 2025 for four years; previously deputy chief executive). The board appointed the officiating chief executive on 4 June 2025, after accepting the earlier chief executive’s resignation on 27 March 2025. As deputy chief executive he spoke for the bank on the Trishuli claim in January 2024. An insider carries continuity and the history of the loan book he helped run. Payments to the outgoing chief executive in the year to mid-July 2025 were Rs 2.22 crore. The first full year under him produced the first audit with no revision. One year is not a pattern.
- Directors from the foreign partner (A director who is managing director of IFIC Bank PLC, Bangladesh). IFIC holds 7.77% and has a board seat; its representative was replaced in 2024 (resignation accepted 22 Aug, successor appointed 4 Oct). A foreign bank partner with a seat adds regulatory and cross-border experience and one more owner in the promoter group. IFIC’s stake is the second largest; its holding in the 2026 table is not available to us.
- The statutory auditor (B.R.S. Neupane & Co. (since the year to mid-July 2024); two joint firms before). Two firms, S.A.R. Associates and P.J.P.N. & Co., signed the consolidated audit reports for 2022 and 2023; one firm signed from 2024. Opinions in 2022 to 2025 are unmodified. The key audit matters are interest recognition (every year) and investment valuation and impairment (2024 and 2025). We read each report’s opinion and key audit matters; we did not read them line by line for any reference to the unaudited figures. The 2026 auditor’s report is not in our extract; the statements were signed on 6 Sep 2026, and the bank reappointed the firm for 2026.
Why this matters. The people matter because the chief executive who took over in June 2025 was deputy chief executive before, and the chair since January 2026 leads a group that ICRA associates with the largest stake. Neither is a finding of anything. It does mean that the explanation of the audit gap comes from the same management that published the unaudited statements.
The related-party note is small. Directors’ fees and expenses were Rs 1.16 crore and the chief executive’s pay Rs 2.40 crore in the year to mid-July 2025; the subsidiaries paid the bank Rs 11.55 crore of dividends and kept Rs 56.83 crore of deposits with it. No transaction with any shareholder or with the chair’s group is itemised, and we cannot tell from the note whether any shareholder group is a borrower.2
| Related-party item, bank only | Year to mid-July 2025 | Year to mid-July 2024 |
|---|
| Directors: meeting fees, allowances and expenses | Rs 1.16 crore | Rs 1.22 crore |
| Chief executive: pay and benefits | Rs 2.40 crore, of which Rs 2.22 crore to the outgoing chief executive | Rs 2.36 crore |
| Dividends received from subsidiaries (net) | Rs 11.55 crore | Rs 4.86 crore |
| Deposits of subsidiaries with the bank | Rs 56.83 crore | Rs 49.43 crore |
| Loans to subsidiaries | Nil | Rs 9.62 crore |
| Loans to the associate | Rs 3.23 crore | Rs 4.43 crore |
| Guarantee issued for the stock dealer | Rs 5.1 crore (to the exchange and the clearing house) | Nil |
Source: 2, note 5.8. The bank states that all related-party transactions were on an arm’s-length basis and that there were no transactions with close family of key management except in the normal course of banking. No transaction with any shareholder or with the chair’s group is itemised. We cannot tell from this note whether any shareholder group is a borrower in the loan book.
The statutory auditor changed from two joint firms to one in the year to mid-July 2024. Opinions are unmodified in 2022 to 2025. Interest recognition is a key audit matter every year, and in 2022 the auditors wrote that it was difficult “given the lack of system capability to suspend recognition of income on the basis of overdue status of loan”.5,4,3,2
| Year to mid-July | Statutory auditor | Opinion on the statements | Key audit matters read |
|---|
| 2022 | S.A.R. Associates and P.J.P.N. & Co. (joint) | Unmodified | Interest recognition (first); second not read |
| 2023 | S.A.R. Associates and P.J.P.N. & Co. (joint) | Unmodified | Interest recognition (first); second not read |
| 2024 | B.R.S. Neupane & Co. (member of an international network) | Unmodified | Interest recognition; investment valuation, identification and impairment |
| 2025 | B.R.S. Neupane & Co. | Unmodified | Interest recognition; investment valuation, identification and impairment |
| 2026 | B.R.S. Neupane & Co. (reappointed) | Statements signed 6 Sep 2026; report not in our extract | Not available |
Sources: 5,4,3,2,1,22, read from the page images of each year’s report. In 2022 the auditors wrote that interest recognition was difficult “given the lack of system capability to suspend recognition of income on the basis of overdue status of loan”; in 2024 they described “the need for manual intervention in the interest recognition process”.
The auditors raised interest recognition every year. Did the profit move at audit for that reason?
08. Ten years: profit, margin and the credit cost
Assets grew 5.1 times between the years to mid-July 2017 and 2026, from Rs 14,402 crore to Rs 73,473 crore, and customer loans 5.2 times. Net profit grew 2.1 times, from Rs 370.2 crore to Rs 790.6 crore, a compound rate of 8.8% a year against about 20% a year for assets.8,1
| Bank only, year to mid-July | 2017 | 2019 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|
| Total assets, Rs crore | 14,402 | 20,114 | 29,107 | 41,982 | 48,120 | 55,702 | 63,679 | 73,473 |
| Loans to customers (net), Rs crore | 8,915 | 12,750 | 19,802 | 30,021 | 33,112 | 37,357 | 41,099 | 46,032 |
| Deposits, Rs crore | 11,744 | 16,295 | 22,347 | 32,622 | 39,684 | 46,210 | 52,463 | 59,208 |
| Net interest income, Rs crore | 556 | 716 | 808 | 892 | 1,775 | 1,632 | 1,633 | 1,701 |
| Impairment charge, Rs crore | -1.2 | 40.5 | 82.8 | 111.9 | 542.6 | 463.8 | 420.1 | 267.8 |
| Net profit, Rs crore | 370.2 | 423.9 | 452.8 | 425.6 | 640.5 | 619.7 | 592.2 | 790.6 |
| Credit cost, % of average customer loans | n/a | 0.34% | 0.48% | 0.45% | 1.72% | 1.32% | 1.07% | 0.61% |
| Return on ordinary equity | 22.41% | 19.37% | 15.16% | 9.80% | 11.66% | 10.72% | 9.77% | 11.85% |
| Gross non-performing loans | 0.80% | 0.74% | 0.84% | 1.62% | 3.39% | 4.45% | 4.48% | 4.20% |
| Tier 1 capital ratio | 11.70% | 11.40% | 10.67% | 10.77% | 10.22% | 9.47% | 9.31% | 9.68% |
| Total capital ratio | 12.90% | 12.50% | 12.77% | 13.09% | 12.54% | 12.24% | 11.81% | 12.37% |
| Dividend, cash % and bonus % | 18, 30 | 22, 12 | 4.4, 33.6 | 11.5, 18.5 | 11, 0 | 10, 0 | 12.5, 0 | 10.8, 5 |
Sources: 8,7,6,5,4,3,2,1,11. Statements are the bank-only columns as first reported, with 2017 from the 2017/18 comparative (which restates a derivative gross-up of Rs 83.04 crore against the 2016/17 report). Credit cost is the impairment charge over average loans to customers, our calculation. Return on ordinary equity is profit (less the preference dividend in 2026) over average ordinary equity: 2017 is the printed figure. Capital ratios are as printed (2026 unaudited, NRB basis). Dividends are for the profit of the year shown; the 2017 and 2019 bonus shares are before the later bonus issues.
Net profit, bank only, years to mid-July, Rs crore
- Jul 17: Rs 370.20 crore
- Jul 18: Rs 398.20 crore
- Jul 19: Rs 423.90 crore
- Jul 20: Rs 346.30 crore
- Jul 21: Rs 452.80 crore
- Jul 22: Rs 425.60 crore
- Jul 23: Rs 640.50 crore
- Jul 24: Rs 619.70 crore
- Jul 25: Rs 592.20 crore
- Jul 26: Rs 790.60 crore (provisional, unaudited)
Audited statements, bank only. The year to mid-July 2017 is read from the 2017/18 comparative; the year to mid-July 2021 is the restated figure. Profit was Rs 640.5 crore in the first merged year and Rs 592.2 crore in 2025; it reached Rs 790.6 crore in 2026. Axis starts at zero.
Gross non-performing loans, audited basis, % of loans
- Jul 17: Rs 0.80 crore
- Jul 18: Rs 0.55 crore
- Jul 19: Rs 0.74 crore
- Jul 20: Rs 0.98 crore
- Jul 21: Rs 0.84 crore
- Jul 22: Rs 1.62 crore
- Jul 23: Rs 3.39 crore
- Jul 24: Rs 4.45 crore
- Jul 25: Rs 4.48 crore
- Jul 26: Rs 4.20 crore (provisional, unaudited)
As printed in the bank’s five-year tables to 2025 and, for 2026, the audited note (Rs 2,050.65 crore of Rs 48,798.15 crore). Axis starts at zero.
Pre-tax profit removed at audit, % of the unaudited fourth-quarter figure
- Jul 22: Rs 11.50 crore
- Jul 23: Rs 13.90 crore
- Jul 24: Rs 12.20 crore
- Jul 25: Rs 15.60 crore
- Jul 26: Rs 0.00 crore (provisional, unaudited)
Our arithmetic from the unaudited and audited pre-tax profit of the same year, bank only. Axis starts at zero. The bank’s reason in its annual report is additional loan-loss provision in each of 2022 to 2025.
Profit per share on a constant base, Rs (after the preference dividend in 2026)
- Pre-deal: Rs 23.01 crore
- Jul 23: Rs 28.05 crore
- Jul 24: Rs 27.14 crore
- Jul 25: Rs 25.94 crore
- Jul 26: Rs 33.60 crore (provisional, unaudited)
Our arithmetic. Before the deal: profit of the year to mid-July 2022 over the 18.50 crore shares then in issue. After: audited profit over 22.83 crore shares, the count when the merged bank started, ignoring later bonus issues. Axis starts at zero.
Two things explain the gap between growth and profit. Net interest income was Rs 1,774.9 crore in the year to mid-July 2023, helped, ICRA says, by regulatory forbearance on interest spreads after the acquisition; it then fell to Rs 1,631.7 crore, Rs 1,632.7 crore and Rs 1,700.9 crore. And the impairment charge rose from Rs 111.9 crore in 2022 to Rs 542.6 crore in 2023 before falling to Rs 267.8 crore in 2026. Credit cost, our measure of impairment over average customer loans, was 0.45% in 2022, 1.72% in 2023 and 0.61% in 2026.5,4,3,2,1,23
The latest year’s rise in pre-tax profit, Rs 281.0 crore, has 54.2% of its source in lower provisioning. Net interest income added Rs 68.2 crore, trading income Rs 30.7 crore, other operating income Rs 21.6 crore and non-operating items Rs 48.1 crore; expenses took back Rs 52.3 crore. In the first three quarters the impairment charge was Rs 47.9 crore in total, including a reversal in the second quarter; in the fourth quarter alone it was Rs 219.8 crore.2,1,11,34
| Change in pre-tax profit, year to mid-July 2026 against 2025 | Rs crore | Share of the rise |
|---|
| Net interest income | +68.2 | 24.3% |
| Fee and commission income, net | +12.4 | 4.4% |
| Trading income | +30.7 | 10.9% |
| Other operating income | +21.6 | 7.7% |
| Lower impairment charge | +152.4 | 54.2% |
| Personnel expenses | -27.0 | -9.6% |
| Other operating expenses | -24.7 | -8.8% |
| Depreciation | -0.6 | -0.2% |
| Non-operating items, net | +48.1 | 17.1% |
| Total change in pre-tax profit | +281.0 | 100% |
Source: 2,1, our arithmetic from the audited income statements (bank only). The lines sum to the change in pre-tax profit (Rs 280.99 crore). Net profit rose Rs 198.3 crore, or 33.5%, because tax took 31.5% of pre-tax profit in 2026 against 32.2% in 2025.
A bank can legitimately release provisions when the loans behind them recover, and the audited accounts say provision cover rose. But profit that rises 33.5% while net interest income rises 4.2% depends on the provision line, and a reader should know which line carries it.
If provisions carry the year, were they right in the years before?
09. Four years in which the audited profit was lower
Nepal’s banks publish an unaudited fourth-quarter statement within weeks of the year-end, and the annual report later prints the audited figures beside it. For Nabil the audited pre-tax profit was lower than the unaudited figure in each of four consecutive years: 11.5% lower for the year to mid-July 2022, 13.9% for 2023, 12.2% for 2024 and 15.6% for 2025. In total Rs 513.2 crore of pre-tax profit disappeared between the two statements, and the impairment charge was Rs 516.9 crore higher after audit. In the year to mid-July 2026 the difference was Rs 0.03 crore.15,14,13,12,11,5,4,3,2,1
| Year to mid-July | Unaudited pre-tax profit, Rs crore | Audited, Rs crore | Difference | Impairment, unaudited to audited, Rs crore | Gross NPL, unaudited to audited | Reason in the bank’s annual report |
|---|
| 2022 | 710.4 | 628.8 | -81.7 (-11.5%) | 70.4 to 111.9 | n/a | Additional provisioning |
| 2023 | 1,078.4 | 928.1 | -150.3 (-13.9%) | 389.0 to 542.6 | 3.20% to 3.39% | Additional provision expense recognised as per statutory auditors and regulators |
| 2024 | 979.5 | 859.6 | -119.9 (-12.2%) | 322.4 to 463.8 | 3.85% to 4.45% | Adjustment of additional loan loss provision |
| 2025 | 1,034.6 | 873.3 | -161.3 (-15.6%) | 239.8 to 420.1 | 4.27% to 4.48% | Adjustment of additional loan loss provision (NRB and external audit) |
| 2026 | 1,154.3 | 1,154.3 | -0.03 (-0.00%) | 267.7 to 267.8 | 4.20% to 4.20% | No material variance reported |
| Four years to 2025 | 3,802.9 | 3,289.7 | -513.2 | +516.9 | | |
Sources: 15,14,13,12,11,5,4,3,2,1. Each annual report prints a comparison of the unaudited fourth-quarter statements, published within weeks of the year-end, with the audited statements; the reasons are the bank’s words. Our arithmetic gives the percentages and sums. The unaudited NPL ratio for 2021/22 is not in the tables we hold. The 2026 figures are equal to within Rs 0.03 crore.
The bank’s explanation in each annual report is additional loan-loss provision: “additional provisioning” (2022), “additional provision expense recognised as per statutory auditors and regulators” (2023), and an adjustment of additional loan-loss provision (2024 and 2025, the second naming NRB and the external audit). The reported gross non-performing loan ratio rose in the same step: from 3.20% to 3.39% (2023), from 3.85% to 4.45% (2024) and from 4.27% to 4.48% (2025).5,4,3,2,14,13,12
For the year to mid-July 2026 the unaudited and audited statements agree. The quarterly pattern is unusual: impairment of Rs 47.9 crore over three quarters and Rs 219.8 crore in the fourth. A profit announced at the half-year with annualised earnings of Rs 35.04 per share ended the year at Rs 28.36. We do not know whether the 2026 agreement reflects a change in how provisions are made or a different set of loans. The year to mid-July 2027 will show.11,34,1
An unaudited quarterly profit that is cut at audit is information about how the bank sets provisions. Four times in a row means a reader of the quarterly statement should treat it as an upper bound. Whether 2026 breaks the pattern is the single most useful thing the next annual report will tell you.
What is not here. An allegation that the bank misstated anything. Unaudited statements are provisional by design, the audit opinions are unmodified, and the revisions are disclosed by the bank itself. We report the pattern and the reasons the bank gives.
The provision charge went up. What did it say about the loans?
10. Non-performing assets 11.9 times in five years
Audited non-performing assets rose from Rs 172.0 crore at mid-July 2021 to Rs 2,050.6 crore at mid-July 2026, 11.9 times, against customer loans that grew 2.3 times. The gross ratio is 4.20% and fell from 4.48% in 2025. Loss-class loans rose 25.1% in the latest year and the watch list 37.4%, to Rs 3,254.7 crore, against loan growth of 12.5%. Provisions held against non-performing assets cover 86.2% of them on the audited note; the total loan-loss allowance is 119.7% of non-performing loans on the NRB-basis table.6,3,2,1,11
| Audited, bank only, at 16 July | 2024 | 2025 | 2026 |
|---|
| Gross loans, Rs crore | 38,939.4 | 43,368.0 | 48,798.1 |
| Non-performing assets, Rs crore | 1,732.3 | 1,941.7 | 2,050.6 |
| of which substandard | not itemised in the tables we read | 230.1 | 194.1 |
| of which doubtful | not itemised in the tables we read | 426.7 | 249.2 |
| of which loss | not itemised in the tables we read | 1,284.6 | 1,607.2 |
| Watch-list loans, Rs crore | not itemised in the tables we read | 2,369.3 | 3,254.7 |
| Gross non-performing loan ratio | 4.45% | 4.48% | 4.20% |
| Provision held against non-performing assets, Rs crore | 1,200.6 | 1,529.7 | 1,767.3 |
| Provision cover of non-performing assets | 69.3% | 78.8% | 86.2% |
Sources: 3,2,1. Earlier years (Rs crore): non-performing assets 172.0 (2021), 500.4 (2022), 1,156.8 (2023). In 2026 loss-class loans rose 25.1% and the watch list 37.4% against loan growth of 12.5%. The total loan-loss allowance is Rs 2,455.1 crore, 119.7% of non-performing loans on the NRB-basis table.
ICRA Nepal’s report of 9 April 2024 sets out how the rating agency read this. It downgraded the issuer rating from AA- to A+ and the debentures from LAA- to LA+, with a negative watch. It cited the deterioration in asset quality, with overdue loans of 0 or more days rising from 6.82% (2019) to 25.43% (January 2024), mostly in the first 30 days; capital ratios of 8.93% tier 1 and 11.54% total at mid-January 2024; the unpaid foreign counter-guarantee; the tax on the bargain purchase; and the acquisition of NBB “with relatively moderate credit profile”. It also noted that profit in the year to mid-July 2023 was helped by “regulatory forbearance on interest spreads following the acquisition of NBBL”, and that Nabil “remains relatively better in the industry in terms of scale and return on assets”. Later, press reports say ICRA cut the issuer rating again to A in April 2025 and, in June 2026, reaffirmed A and removed the negative watch, citing improved confidence in the bank’s creditworthiness; we did not obtain those rationales.23,44,45
The ratio went from 0.84% to 1.62% in the year the banks were combined and 3.39% the next. We cannot split that between NBB’s loans, Nabil’s own and the economy. NBB’s own report printed 1.38% overdue-based non-performing loans before the deal, and ICRA names the acquired book as one reason and the 2023 working-capital rules and the slowdown as others.6,5,17,23
A reader who wants to know whether the loan book is under control should watch the watch list and the loss class, not the headline ratio: the ratio fell in 2026 while both grew faster than loans.
The Rasuwa flood adds a specific exposure. How large is it, and what does the record show about the matters already open?
11. The legal and regulatory record: six matters, none of them a finding of misconduct
Six matters appear in the sources we read: two tax disputes, a guarantee claim in which Nabil is the claimant, and three regulatory notes. A penalty, a warning and a caution are records of supervision, not judgments of the courts. We found no criminal case against the bank or any director; we searched English-language press and the bank’s reports to 26 October 2026.
6 matters, newest checked 26 October 2026.
- L1 Tax on bonus shares paid out of the swap-difference reserve (Finance Act 2080) and the banks’ writ petitions. Status: Petitions dismissed by the Supreme Court in Dec 2023; Rs 161.7 crore paid. Role: Taxpayer and petitioner, with other banks (the reports do not name Nabil). Forum: Supreme Court of Nepal. Allegation: The Finance Act 2080 taxes bonus shares issued out of a “bargain purchase gain” in a merger or out of share premium from a further public offering, for distributions up to the year to mid-July 2022, with an amnesty on interest and penalty if the tax is paid by Mangsir 2080. Nabil paid Rs 161.7 crore, which ICRA ties to the bargain purchase gain on the acquisition. We did not see the tax authority’s assessment. Response: The bank says it recognised goodwill on both United Finance and Nepal Bangladesh Bank, so no bargain purchase gain arose, and that it filed a writ “collectively with other Banks” against the retrospective effect. The banks’ writ says the Income Tax Act has no provision for taxing such income and that bonus shares should not be income. Latest: Closed on the reports we found: the rule stands and the Rs 161.7 crore is paid. Charged to equity, not to profit. Beema Post puts the total payable by all banks and insurers at about Rs 4,000 crore (one outlet). Imposed: Rs 161.7 crore paid; claimed: Not stated in the sources; recognised in the accounts: Equity, as prior-period tax (not profit or loss). Sources: 4,41,42,43,13,23,2 Last checked .
- L2 Disputed income-tax assessments for the years to mid-July 2021 and earlier (contingent liability). Status: Under administrative review and before the Revenue Tribunal and the Supreme Court. Role: Taxpayer appealing. Forum: Administrative review, Revenue Tribunal and Supreme Court (the bank’s note does not say which case sits where). Allegation: The tax offices raised assessment orders for disputed tax of Rs 165.8 crore. Response: The bank contests the liability and has appealed to higher authorities. It does not provide for it. Latest: Pending. The amount is a contingent liability, not a provision. Imposed: Rs 165.8 crore disputed (16 July 2026); claimed: Same; recognised in the accounts: Not provided; disclosed as contingent. Sources: 1 Last checked .
- L3 Counter-guarantee on the Upper Trishuli 3B project: Nabil v. a Chinese bank. Status: Chinese courts reported to have found for Nabil in 2025; receipt of the money not reported. Role: Claimant (as guarantor with a counter-guarantee from a foreign bank). Forum: Chengdu Financial Court (prohibitory order, 10 Dec 2023); a first-instance court that the report does not name and the Higher People’s Court in Chongqing (as reported). Allegation: The project company terminated the contractor and called the performance and advance-payment guarantees. The Chinese bank that counter-guaranteed Nabil did not pay, citing the Chengdu order obtained by the contractor. Response: Nabil sued the Chinese bank. The Rising Nepal report says a court ruled for Nabil and the Higher People’s Court in Chongqing upheld it on 23 Sep 2025 for US$7,449,386.32 under four guarantees. In January 2024 the bank’s deputy chief executive said it was discussing the matter following the court’s order. The two reports differ on whether Nabil had already paid its own beneficiary: the 2024 report says it was hesitating, the 2025 report says it had already paid. Latest: Outcome on collection not found. Searched English reports and the bank’s annual reports to 26 Oct 2026. Imposed: n/a; claimed: US$7,449,386.32 (Rs 99.1 crore at the Post’s conversion of US$74.4 lakh); recognised in the accounts: Not disclosed. Sources: 46,47,23 Last checked .
- L4 Penalty for not keeping the credit-to-deposit ratio, August to October 2022. Status: Rs 6.46 crore penalty, reported April 2023. Role: Regulated bank. Forum: Nepal Rastra Bank (bank supervision). Allegation: The bank did not maintain the required ratio of loans to deposits in the three months. Response: None found. Latest: Closed on the information we have. Imposed: Rs 6.46 crore; claimed: n/a; recognised in the accounts: Not itemised. Sources: 39,17 Last checked .
- L5 An account Nabil did not freeze in a money-laundering investigation: warning, no fine (2023). Status: Warned by NRB; no penalty, February 2023. Role: Regulated bank. Forum: Nepal Rastra Bank bank supervision. Allegation: Nabil did not freeze the account when instructed. The report says no transaction passed through it, so NRB took no action and warned the bank. Four other banks were fined Rs 50 lakh each. Response: None found. Latest: Closed on the information we have. Imposed: Nil; claimed: n/a; recognised in the accounts: n/a. Sources: 40 Last checked .
- L6 Board cautioned over compliance with NRB directive 15/2078, clause 3.8 (year to mid-July 2024). Status: Board cautioned; the report does not describe the conduct. Role: Regulated bank. Forum: Nepal Rastra Bank. Allegation: The table records that the board was cautioned regarding compliance with the directive. It does not say what the clause covers or what was done. We did not locate the directive text, so we do not say what it covers. Response: None found. Latest: Closed on the information we have. Imposed: Nil; claimed: n/a; recognised in the accounts: n/a. Sources: 3,2 Last checked .
What is not here. Matters that rest on a single press report with no filing, no charge and no second source are not on this page. For the Trishuli claim the Rising Nepal report is the only source for the Chinese court outcome, and we say so.
What would you watch first in this record?
12. What could go wrong, ranked, and what is solid
Risks are ranked for this bank only. Each says the mechanism, the evidence of exposure and what would change our view. Strengths are on the same page because a KYC that lists only problems is not a reading.
- Credit quality: non-performing assets 11.9 times in five years: HIGH. Non-performing assets rose from Rs 172.0 crore (year to mid-July 2021) to Rs 2,050.6 crore, 4.20% of loans, with a watch list of Rs 3,254.7 crore that grew 37.4% in the latest year against loan growth of 12.5%, and loss-class loans up 25.1%. Provisions on non-performing loans cover 86.2% of them in the audited note; total allowance is 119.7% on the NRB-basis table. ICRA found 0+ day overdue loans rising from 6.82% (2019) to 25.43% (Jan 2024), mostly in the first 30 days. What would change our view: Two quarters of a falling watch list while loans grow above 10% would improve it. A further audit revision on the 2027 accounts would harden it.
- Profit that has been revised down at audit: HIGH. Four years in a row the audited profit was 12% to 16% lower than the unaudited figure published days after the year-end, because loan-loss provision rose by Rs 517 crore in total. The statutory auditor lists interest recognition as the first key audit matter every year and in 2022 cited the lack of system capability to suspend interest by overdue status. The year to mid-July 2026 is the first with no revision. What would change our view: The 2027 unaudited statement being matched by the audit would support a changed process; a fifth revision would settle it.
- Capital: thin cushions after distributions, now topped up with preference shares: MEDIUM. On 16 July 2026 capital adequacy was 12.37% against a 11% minimum, tier 1 9.68% against 8.5% and common equity tier 1 8.87% against 7% (unaudited, NRB basis). Rs 500 crore of the tier 1 is preference capital with an 8% non-cumulative dividend. In April 2024 ICRA put tier 1 at 8.93% and the total at 11.54%. The board approved 5% bonus shares and 10.8% cash. What would change our view: Loan growth faster than internal capital generation, or a restoration of a cash payout above half of profit with provisions rising, would worsen it.
- Hydropower lending and the August 2026 flood: MEDIUM. Power, gas and water was 9.3% of the book in 2025. The Nepal Bankers’ Association’s preliminary list puts Rs 379.8 crore of Nabil’s funds in two damaged projects: 9.4% of that sector’s loans a year earlier, 0.83% of loans and 5.7% of ordinary equity (our calculation). The bank’s own note says the Timure branch was destroyed, the loss has not been assessed and borrowers’ assets are “mostly covered by the insurance”. The Trishuli 3B project is also the subject of the counter-guarantee claim. What would change our view: A bank-by-bank breakdown, insurance cover and the regulator’s refinancing terms for damaged projects would decide how much of the exposure is credit loss.
- Tax: Rs 165.8 crore of disputed assessments (the bonus-share rule is settled): LOW. Rs 161.7 crore has been paid. The Supreme Court dismissed the banks’ petitions against the rule in December 2023, so the payment is final on the reports we found. Other disputed assessments of Rs 165.8 crore are not provided for and rose 15% in the year. What would change our view: A tax claim on the older United Finance reserve, or a new assessment on other reserves, would be new information; the Rs 165.8 crore of assessments are a separate dispute.
- Ownership and control are opaque at the top: MEDIUM. The largest holder, 39.44%, is an Irish company whose owners the filings do not name; in 2017/18 four directors were listed as representing its 50% interest, and three of them are on the board today. Promoters hold 58.44% and have chosen the chair. The related-party note is small: board payments of Rs 1.16 crore and subsidiary dividends of Rs 11.6 crore for the year to mid-July 2025, with no transaction with the chair’s group listed. What would change our view: A filing naming the owners of NB (International), or a related-party schedule that lists the chair’s group, would change this.
- Rating and funding: LOW. ICRA cut the bank to A+ with a negative watch in April 2024 (primary document) and, according to press reports, to A in April 2025; in June 2026 it reaffirmed A and removed the watch. The annual report for 2024/25 also carries another agency’s rating of “CARE-NP A (Is)”. We did not obtain ICRA’s 2025 or 2026 rationales. What would change our view: ICRA’s own 2026 rationale, with its capital and asset-quality tests, would show what it needs to see next.
What is solid: the bank is large, with 268 branches and 25 lakh customers; its audited profit for 2026 is the first of the five years we compared to equal the unaudited figure; provision cover of non-performing assets is 86.2% on the audited note and capital adequacy is 12.37% against 11%; and its per-share earnings have held above the pre-deal level in every full year. What is not: the profit leans on provisions, the watch list is growing faster than loans, and the largest holder’s owners are not named.1,11,37
- Nabil booked the shares it issued for Nepal Bangladesh Bank at Rs 373.09 each, while they traded at Rs 792 to 826. Why it matters: On our reading the booked price is the target’s valuation divided by the shares issued, so goodwill was Rs 6.59 crore. At market it would have been about Rs 1,823 to 1,971 crore (our calculation). The note says the figure follows the acquired bank’s valuation in the due-diligence audit and an ICAN explanatory note, not Nabil’s quoted price.
- Nepal Bangladesh Bank’s holders received 19.0% of the combined shares but brought 31.7% of the combined net worth and 27.1% of the half-year profit. Why it matters: That gap is why Nabil’s net worth per share rose on paper at announcement. It is also why NBB holders’ book value per share fell by 40%.
- In the year to mid-July 2026 the bank’s impairment charge was Rs 47.9 crore in the first three quarters together and Rs 219.8 crore in the fourth alone. Why it matters: The half-year headline earnings per share was Rs 35.04 annualised; the audited year ended at Rs 28.36. A quarterly figure can mislead in either direction.
- Net interest income was Rs 1,631.7 crore, Rs 1,632.7 crore and Rs 1,700.9 crore in the three years to mid-July 2024, 2025 and 2026. Why it matters: It was Rs 1,774.9 crore in the year to mid-July 2023, helped, ICRA says, by regulatory forbearance on interest spreads after the acquisition. Profit growth in 2026 came from lower provisions, not from a wider margin.
- Power, gas and water loans were Rs 4,019.6 crore on 16 July 2025, 9.3% of the book, and Rs 0.6 crore of them were non-performing. Why it matters: That is the sector hit by the 26 August 2026 flood. The reported exposure to two damaged projects is Rs 379.8 crore, 9.4% of that sector’s loans a year earlier (our calculation).
- On our arithmetic an original Nabil holder is down about 33% since January 2022, with five years of cash dividends, against a fall of 5.6% in the NEPSE index. Why it matters: A holder of Nepal Bangladesh Bank at the time is down about 19%, because they received a 21% premium to their market price.
13. Eight questions an investor should ask
These are questions, not findings. Each says where the answer is or will be.
| # | Question | Where to look |
|---|
| 1 | Is the profit announced after the year-end the profit the audit confirms? It was not in four consecutive years. | The table “Comparison of unaudited and audited financial statements” in each annual report |
| 2 | How many shares did the last deal cost you, and what were they worth when they were issued? | Note 5.8 of the 2021/22 report; the share price on the joint-operation date |
| 3 | Is the watch list growing faster than the loan book? | The non-performing and watch-list table in the notes; it grew 37.4% against loans up 12.5% in 2026 |
| 4 | How much of tier 1 capital is preference capital, and is the cash dividend consistent with building the cushion? | The capital table and the dividend proposal |
| 5 | Could the bonus-share tax reach any other reserve, such as the one left by the United Finance swap? | The next annual report’s tax and litigation notes |
| 6 | Has the Trishuli counter-guarantee been collected, and was a provision made? | The notes on contingent liabilities and impairment; the bank’s announcements |
| 7 | What is the bank’s loss and insurance recovery from the Rasuwa flood? | The first-quarter statements for 2026/27, due about mid-November 2026 |
| 8 | Who owns NB (International) Limited? | The shareholder register and the bank’s promoter disclosures |
These are questions, not findings. The next scheduled evidence is the unaudited first-quarter statement for the year to mid-October 2026.
14. What is known, what is not, and what would change our mind
Established from filings: the swap ratio and the Rs 1,618.0 crore booked value; the per-share record; four years of audited profit below the unaudited figure and the bank’s stated reason; the rise in non-performing assets; the tax paid on bonus shares and the bank’s position; the ownership table to 2025.5,1,15,12,13,2
Reported but not established: the Chinese court outcomes on the Trishuli guarantees, the flood exposure, and the board’s elections of October 2026. Unknown: who owns the Irish company at the top, how the acquired bank’s valuation was reached, ICRA’s own reasons for its 2025 and 2026 actions, and what Nabil would have earned alone.47,48,36,44,45
| Reading | For | Against | Where we land |
|---|
| The deal was good for the people who already owned Nabil | Constant-base profit per share 12.7% to 46.0% above pre-deal in each of four years; book value per share 59% higher; announced accretion of 18.7% and 11.1%. | Price 39% lower; book value would have grown from retained earnings anyway; credit quality worsened. | Yes on per-share fundamentals through 2026. We cannot isolate the deal from what the old bank would have earned on its own: no counterfactual exists in the filings. |
| The deal moved value from the acquired bank’s holders to Nabil’s | They took a 40% cut in book value per share at the agreement and a 21% premium to market price. | Their total return since is about 19% negative, against about 33% negative for the original Nabil holder, because they received a premium for paper that then fell. | On book, yes. In market value they came out ahead of Nabil’s original holders. |
| Credit quality fell because of the acquired book | ICRA cites the acquired bank’s “relatively moderate credit profile”; the audited NPL ratio went from 0.84% to 1.62% in the year of the deal. | Nabil’s own book also deteriorated in 2023 and 2024 with higher working-capital stress and economic slowdown, per ICRA. | Mixed. The files cannot separate the two causes because the banks’ loans were combined on 11 July 2022. |
| Provisions were set late and caught at audit | Four consecutive downward revisions of 11.5% to 15.6% in pre-tax profit; the bank’s stated reason is additional provisioning. | Unmodified audit opinions every year; no revision in 2026; unaudited statements may be provisional by design. | The pattern fits provisioning that was finalised at audit. The year to mid-July 2027 will show whether 2026 was a change of process. |
| The largest owner is linked to the Chaudhary Group | ICRA says Chaudhary Group individuals hold the largest stake; the chair is that group’s managing director, holds 0.70%, and was listed in 2015/16 to 2017/18 among the directors for NB International’s 50% interest. | Filings name an Irish company and do not say who owns it. Promoters hold 58.44% across several parties. | The board link is established; the ownership is not. A rating agency’s sentence is not a register. |
These are readings, not findings. The last column is our view.
What would change our mind. On the deal: a published valuation report that explains Rs 373.09, or an accounting standard’s requirement that settles the measurement, would turn the gap from a question into a fact. A restated constant-base profit per share below Rs 23.01 would undo the claim that the old owners did better. On the audit gap: a fifth revision in the year to mid-July 2027 would harden our reading; a clean second year would soften it. On ownership: a register entry naming the owners of NB (International) Limited.5
What does this establish, and what does it leave open?
15. How we checked, and where sources differ
The primary documents are the bank’s audited annual reports from 2015/16 to 2024/25 and an extract of the 2025/26 report with the audited statements and notes, its unaudited fourth-quarter statements for 2021/22 to 2025/26, the annual reports of Nepal Bangladesh Bank for 2019/20 and 2020/21 (read in Nepali), ICRA Nepal’s April 2024 rationale and the exchange’s price history. The scanned audit reports and appointment letters were read from page images. Press reports are used for dates and events the filings do not carry, and each says which outlet is the only source.1,2,5,11,17,18,23,24
Everything derived is recomputed from the printed statements: the bridge, the audit gap, credit cost, the per-share figures on a constant base, and the weights of the swap. Dates in the Nepali calendar were converted to the Gregorian calendar by hand and checked against a second date in the same source. Information is to 26 October 2026.
| Where sources disagree | What we found | How we settled it |
|---|
| Earnings per share for 2026 | Rs 28.36 in the audited note; Rs 27.74 in the quarterly report and the press. | Rs 28.36. The quarterly figure matches a full year of preference dividend (Rs 40.0 crore) taken off profit; the note deducts 213 days (Rs 23.3 crore). |
| Cost to income | The bank’s printed ratio is 71.95% for 2025; ours is 36.0%. | The printed ratio counts interest expense in the numerator; ours is operating cost (personnel, other operating and depreciation) over total operating income. We use ours and name it. |
| Date joint operation began | The annual report says 27 Ashadh 2079; one press report says 28 Ashadh. | 27 Ashadh 2079 (11 July 2022), the annual report’s date. |
| Net worth per share at 16 July 2026 | Rs 247.28 in the bank’s quarterly table; Rs 240.27 on the exchange portal. | Rs 247.28, the bank’s figure for ordinary shares before the bonus. The portal figure matches no basis we could reconstruct (total equity over shares, ordinary equity over listed shares, or after the declared dividends). |
| Loans on 16 July 2026 | Rs 46,031.7 crore (net, to customers); Rs 47,686.7 crore (including loans to banks); Rs 48,798.1 crore (gross, in the non-performing note); a press report gives Rs 47,687 crore. | We name which measure we use each time. Gross loans for the NPL ratio; net customer loans for credit cost. |
| Date of the 42nd general meeting | ShareSansar’s report is dated 9 Oct 2026 and says “on Thursday”. | 8 Oct 2026, from the weekday; the minute is not yet published. |
| Counter-guarantee amount | US$74.4 lakh (Kathmandu Post); US$7,449,386.32 (Rising Nepal). | Both stated; the second is the exact figure under four guarantees. |
| Whether Nabil had paid its own beneficiary | The 2024 report says it was hesitating to release the sum; the 2025 report says it had already paid. | Sources differ; neither is a filing. We say so in the legal register. |
Sources: 1,11,33,5,30,24,36,46,47. Rule: where two sources differ we show both, say which one we use and why.
| Limit | What we could not do | Effect on this file |
|---|
| The 2026 annual report | We hold an extract of 124 pages: audited statements and notes. There is no directors’ report, shareholder table or auditor’s report. | Ownership and board are as at 16 July 2025 plus reported elections; the 2026 audit opinion is not read. |
| The deal’s valuation | The due-diligence report that sets the acquired bank’s value is not published; the basis of Rs 373.09 is not stated. | We compare booked value with market value and do not judge the accounting. |
| Who owns the largest holder | No filing names the owners of NB (International) Limited; we did not obtain Irish filings. | We make no ownership claim beyond the rating agency’s sentence and the board listings. |
| The tax and the courts | The tax authority’s assessment and the Supreme Court’s judgment were not read; the dismissal rests on two press reports that do not name Nabil. | The writ is shown as dismissed, with the source and its limits stated. |
| The Chinese judgments | Neither the judgments nor a recovery were found. | We report what one outlet says and mark it. |
| The regulator’s own pages | Nepal Rastra Bank’s website was not reachable from our connection, so penalties are from press reports of its notices. | Two items rest on one outlet each. |
| Audit reports | The second key audit matters for 2022 and 2023 were not on the page images we read. | The auditors table marks the second matter as not read. |
| Press searches | We searched English-language outlets; we did not systematically search Nepali-language press. | Where we report an absence we say what we searched. |
| Prices | The price series is the exchange portal’s adjusted series; its method is not published. | For Nabil we checked the adjustment factor against its two later bonus issues (within 0.1%); for Everest Bank against its five announced bonus issues (13%, 10%, 10%, 6% and 5%, which reproduce the factor); Global IME only in part. Dates can be a day off the trading date. Nepal Investment Mega Bank is left out: it was formed by a merger in January 2023 and its raw prices start on 23 Feb 2023, so its earlier history cannot be checked. |
Information to 26 Oct 2026. A KYC is not a valuation; our separate valuation is linked at the foot.
| Claim | Figure | Period | Sources | Status | Note |
|---|
| Net profit after tax | Rs 790.6 crore (Rs 790.56 crore) | Year to mid-July 2026 | 1 | Verified | Audited, bank only. The unaudited statement published 5 Aug 2026 showed Rs 790.58 crore; the difference is Rs 0.02 crore. |
| Gross non-performing loans | 4.20% (Rs 2,050.6 crore of Rs 48,798.1 crore) | 16 July 2026 | 1,11 | Verified | Audited note and the unaudited quarterly table agree. Total loan-loss allowance is 119.7% of non-performing loans on the NRB-basis table. |
| Pre-tax profit removed at audit | 11.5%, 13.9%, 12.2%, 15.6%; 0.003% in 2026 | Years to mid-July 2022 to 2026 | 15,14,13,12,11,5,4,3,2,1 | Partially verified | Both statements are printed; the percentages are our arithmetic. The bank’s stated reason is additional provisioning each year. |
| Consideration for Nepal Bangladesh Bank | Rs 1,618.0 crore (43,367,218.87 shares at Rs 373.09) | Year to mid-July 2022 | 5 | Verified | Note 5.8, page 228. Net identifiable assets Rs 1,611.4 crore; goodwill Rs 6.59 crore. |
| Market value of the shares issued | Rs 3,435 to 3,582 crore | Around 11 July 2022 | 24,5 | Partially verified | Our arithmetic: 43,367,219 shares at the Rs 792 to 826 range of closing prices around 11 July 2022. It is not an accounting figure. |
| How Rs 373.09 was chosen | The note ties consideration to the acquired bank’s business valuation in a due-diligence audit approved by both general meetings | Year to mid-July 2022 | 5 | Not available | On our reading Rs 373.09 is that valuation divided by the shares issued; consideration is 1.004 times the acquired bank’s identifiable net assets. The due-diligence report is not published and we did not find a stated basis for its valuation. |
| Swap ratio | 100:43, meaning 43 Nabil shares for 100 Nepal Bangladesh Bank shares | Agreed 13 Jan 2022 | 5,25 | Verified | Note 5.8 gives the shares issued, which equal 43% of the acquired bank’s 10.09 crore shares. |
| Date the banks began joint operation | 11 July 2022 (27 Ashadh 2079) | July 2022 | 5,30 | Disputed | The annual report says 27 Ashadh; one report says 28 Ashadh. We use the annual report’s date. |
| Pro forma net worth and earnings per share | Rs 218.71 and Rs 26.21, against Rs 184.28 and Rs 23.59 for Nabil alone | Half-year to mid-January 2022 | 26,16 | Partially verified | Press analysis of the two banks’ half-year numbers. We recomputed net worth per share (Rs 218.71) from the net worths and 22.83 crore shares; the EPS is the report’s. |
| Profit per share on a constant base after the deal | Rs 28.05, 27.14, 25.94 and 33.60 against Rs 23.01 before | Years to mid-July 2023 to 2026 | 4,3,2,1,5 | Partially verified | Our arithmetic: audited bank profit (after the preference dividend in 2026) over 22.83 crore shares, the count after the merger and before later bonus issues. |
| Share price against January 2022 | 39.2% lower, adjusted for bonus shares | 11 Jan 2022 to 26 Oct 2026 | 24 | Partially verified | Provider’s adjusted series; its factor matches the two bonus issues to within 0.1%. Price only; dividends excluded. |
| Tax on bonus shares paid | Rs 161.7 crore | First half of the year to mid-July 2024 | 13,23 | Verified | The amount is in the statement of changes in equity. ICRA says it relates to the bargain purchase gain on the acquisition; the bank’s own annual report 2022/23 sets out its contrary position. |
| Writ petition outcome | All petitions dismissed by a constitutional bench of the Supreme Court | Mid-Dec 2023 | 42,43,4 | Partially verified | Two outlets report the dismissal of all petitions, including the sixteen banks’ joint writ. Neither names Nabil; its note says it filed with other banks. The judgment was not read. |
| Rating action, April 2024 | Issuer rating A+ from AA-; debentures LA+ from LAA-; negative watch | 9 Apr 2024 | 23 | Verified | Primary document read in full. |
| Later rating actions | A from A+ (Apr 2025, watch kept); A reaffirmed and watch removed (Jun 2026) | Apr 2025 and Jun 2026 | 44,45 | Partially verified | Press reports only; ICRA’s own rationales were not obtained. The debenture amount is Rs 200 crore in one report and Rs 400 crore in the other. |
| Largest shareholder | NB (International) Limited, Ireland: 39.44% | 16 July 2025 | 2 | Verified | From the shareholder table; 2026 table not available. |
| Who owns NB (International) | Not stated in any filing we read | To 26 Oct 2026 | 2,23,19 | Not available | ICRA says Chaudhary Group individuals hold the largest stake in the bank; that is a rating agency’s description, not a registry record. |
| Directors representing NB International’s interest | Four “A” class directors “in relation to 50% interest of NB International Ltd.”; in 2017/18 they include the present chair, the outgoing chair and a director who remains on the board | 2015/16 to 2017/18 | 10,9,8 | Verified | The board listing is in the annual reports. It shows who sat for that holder, not who owns it. |
| Chair is a managing director of Chaudhary Group | Annual report’s director profile | Year to mid-July 2025 | 2,37 | Partially verified | The profile is in the 2024/25 report; the board chose him chair after the January 2026 meeting (press). |
| Cash dividend declared for 2026 | 10.8% of paid-up capital, Rs 292.2 crore, with 5% bonus and 8% on preference shares | Year to mid-July 2026 | 35,36,1 | Verified | Approved at the 42nd general meeting; approval by NRB was a condition in the board’s proposal. |
| Rs 99.1 crore guarantee called | US$74.4 lakh (Post); US$7,449,386.32 (Rising Nepal) | December 2023 | 46,47 | Partially verified | The two outlets agree to the precision the Post gives. Courts’ rulings not read. |
| Rasuwa flood exposure | Rs 330 crore invested in Trishuli and Rs 49.8 crore of loans to Rasuwa Gadhi | Preliminary, early September 2026 | 48 | Unverified | One outlet reporting a trade association’s preliminary assessment; the bank has not published its own figure. |
| Disputed income-tax assessments | Rs 165.8 crore | 16 July 2026 | 1 | Verified | Note 4.28.5. Contingent, not provided for. |
| Statutory auditor and opinions | Unmodified opinions in the years to mid-July 2022 to 2025; audit firm changed from two joint firms to one in 2024 | Years to mid-July 2022 to 2025 | 5,4,3,2,22 | Partially verified | Read from page images. The 2026 auditor’s report is not in the extract we hold. |
| Term | Meaning here |
|---|
| Swap ratio 100:43 | 43 Nabil shares are issued for every 100 shares of the acquired bank. |
| Capital adjustment reserve | The difference between the acquired bank’s paid-up capital and the par value of Nabil shares issued for it, left in equity as a reserve. |
| Bargain purchase gain | The amount by which the fair value of net assets acquired exceeds the price paid. Nabil says none arose, because it booked goodwill. |
| Goodwill | The amount by which the price paid exceeds the fair value of net identifiable assets acquired. |
| Constant base | Per-share figures divided by 22.83 crore shares, the count when the merged bank started, so later bonus shares do not change the denominator. |
| Gross NPL ratio | Non-performing loans (substandard, doubtful and loss classes) over gross loans. |
| Watch list | Loans that are not yet non-performing but are flagged by the bank as needing close monitoring. |
| Impairment charge | The expense for expected loan losses in the income statement. |
| PNCPS | Perpetual non-cumulative preference shares: no maturity, and a missed dividend is not owed later. |
| Tier 1 and CET1 | The strongest layers of regulatory capital: tier 1 includes the preference shares; common equity tier 1 does not. |
Definitions are for reading this file, not legal definitions.
16. What this establishes, and what it does not
- Compare the price paid with the price of the paper. Nabil issued shares that traded at Rs 792 to 826 and booked them at Rs 373.09. Whether that is right under the accounting standards is for the accountants; for a shareholder the cost of the deal was the share count, and 19.0% of the company went to the acquired bank’s holders.
- Per-share numbers decide who gained. Assets grew 5.1 times in nine years and profit 2.1 times. On a constant share base profit per share was 13% to 46% above the pre-deal level in each of the four years since the deal: the people who owned Nabil first did better than the headline suggests.
- Ask what the audit changed. The same year, the unaudited quarterly statement and the audited statements gave different profits four times in a row. The size and direction of that difference is one of the few outside measures of how a bank sets provisions.
- A reserve left by a swap is not free. Paying out the swap-difference reserve as bonus shares created a Rs 161.7 crore tax bill, charged to equity rather than to profit, and the banks’ court challenge failed. Capital ratios fell; reported profit did not.
- Price followed the multiple, not the earnings. The share price fell 39% while book value per share on a constant base rose 59%. In January 2022 the market paid 6.0 times book; it now pays 2.4 times (book after the declared dividends; 2.3 before them). About two thirds of the price fall came before the merger took effect, in a market slump (NEPSE -28% from January to early July 2022). Our valuation file asks whether even that multiple is more than the cash flows justify.
- Nabil’s audited profit for the year to mid-July 2026 was Rs 790.6 crore, up 33.5%, and equal to the unaudited figure for the first time in five years; 54% of the pre-tax rise was lower provisioning.
- The 2022 purchase of Nepal Bangladesh Bank was paid in shares worth about Rs 3,435 to 3,582 crore at market and booked at Rs 1,618 crore, with goodwill of Rs 6.59 crore; the basis for the booked price is the acquired bank’s valuation, which we could not see.
- On a constant share base the shareholders who owned Nabil before the deal have earned 13% to 46% more per share in each of four years, and the book value per share is 59% higher. Their share price is 39% lower because the multiple fell.
- Loan quality worsened (gross NPL 0.84% to 4.20%) and four years of audit revisions removed Rs 513 crore of pre-tax profit; ICRA cut the rating to A+ in April 2024 and, per press reports, to A in April 2025, then lifted the negative watch in June 2026.
- The bonus-share tax is settled against the banks (Rs 161.7 crore paid). Two matters remain open and unquantified from filings: the Rs 99.1 crore Trishuli counter-guarantee and the flood exposure; and one question cannot be answered from public filings: who stands behind the largest holder.
Bought with shares. Audited down. Check the per-share numbers.
When a bank’s unaudited profit and its audited profit differ for four years and then agree, is that a better process, or a quieter year?
Which of the big banks that bought another bank with shares should we test the same per-share question on next?
Sources & further reading
Primary sources
- Annual report 2025/26, extract: audited statements and notes, year to 16 July 2026 (32 Ashadh 2083). Nabil Bank Limited, 6 Sep 2026 (audited statements signed).
- Annual report 2024/25 (English): directors’ report, audited statements, notes, auditor’s report, shareholder table. Nabil Bank Limited, Dec 2025.
- Annual report 2023/24 (English). Nabil Bank Limited, Dec 2024.
- Annual report 2022/23 (English): note 5.8 on the writ petition, first merged year. Nabil Bank Limited, Dec 2023.
- Annual report 2021/22 (English): note 5.8 on the acquisition of Nepal Bangladesh Bank (pages 228 to 229), five-year table. Nabil Bank Limited, Dec 2022.
- Annual report 2020/21 (English): audited statements, five-year indicators (page 197). Nabil Bank Limited, Dec 2021.
- Annual report 2018/19 (English). Nabil Bank Limited, Dec 2019.
- Annual report 2017/18 (English): first year under Nepal Financial Reporting Standards, with 2016/17 comparatives. Nabil Bank Limited, Dec 2018.
- Annual report 2016/17 (English): ownership structure and board representation. Nabil Bank Limited, Dec 2017.
- Annual report 2015/16 (English): note 4 on foreign promoter shareholding; board representation. Nabil Bank Limited, Dec 2016.
- Interim financial report, fourth quarter 2025/26 (unaudited), with the NRB-basis ratio table. Nabil Bank Limited, Aug 2026.
- Interim financial report, fourth quarter 2024/25 (unaudited). Nabil Bank Limited, Aug 2025.
- Interim financial report, fourth quarter 2023/24 (unaudited). Nabil Bank Limited, Aug 2024.
- Interim financial report, fourth quarter 2022/23 (unaudited). Nabil Bank Limited, Aug 2023.
- Interim financial report, fourth quarter 2021/22 (unaudited). Nabil Bank Limited, Aug 2022.
- Financial disclosure, second quarter 2021/22 (to mid-January 2022), the last half-year before the agreement. Nabil Bank Limited, Jan 2022.
- Annual report 2077/78 (year to mid-July 2021), Nepali, hosted by Nabil Bank. Nepal Bangladesh Bank Limited (erstwhile), Nov 2021.
- Annual report 2076/77 (year to mid-July 2020), Nepali, hosted by Nabil Bank. Nepal Bangladesh Bank Limited (erstwhile), Nov 2020.
- Prospectus of the 7% Nabil Debenture 2089 (Rs 300 crore). Nabil Bank Limited, 2025.
- Minute of the 41st annual general meeting (28 Poush 2082). Nabil Bank Limited, 12 Jan 2026.
- Appointment of the chief executive: letter dated 22 Jestha 2082. Nabil Bank Limited, 5 Jun 2025.
- Appointment of the statutory auditor for the year to mid-July 2026. Nabil Bank Limited, Jan 2026.
- Rating rationale: Nabil Bank Limited, issuer rating downgraded to [ICRANP-IR] A+@ and debentures to LA+@, from AA-@ and LAA-@, on watch with negative implications. ICRA Nepal, 9 Apr 2024.
- Company page and price history for NABIL, EBL, GBIME, NIMB and the NEPSE index. Merolagani (Nepal Stock Exchange data), accessed 26 Oct 2026.
Secondary sources
- Nabil Bank finally seals acquisition deal with Nepal Bangladesh Bank; shareholders of NBB to get 43 shares of NABIL for NBB’s 100 shares. ShareSansar, 14 Jan 2022.
- Nabil Bank and Nepal Bangladesh Bank: key facts and figures of the acquisition (pro forma net worth per share Rs 218.71, EPS Rs 26.21). ShareSansar, 12 Apr 2022.
- Nabil Bank and NBB call SGM to endorse acquisition and share swap ratio. ShareSansar, 6 May 2022.
- Details regarding the press release of Nabil Bank’s proposed acquisition of Nepal Bangladesh Bank. ShareSansar, 22 May 2022.
- Nabil Bank receives final approval from NRB to acquire Nepal Bangladesh Bank. ShareSansar, 30 Jun 2022.
- Nabil Bank acquired Nepal Bangladesh Bank: 4.33 crore shares listed in NEPSE. ShareSansar, 3 Aug 2022.
- Industry giant Nabil Bank to acquire United Finance: what is the share swap ratio. ShareSansar, 30 Apr 2021.
- Promoter shares of Nabil converted to ordinary shares, promoter-to-public ratio 60:40. ShareSansar, 2 Jul 2019.
- Nabil Bank’s Q4 profit surges 33.50%, distributable profit climbs to Rs 5.16 arba. ShareSansar, 5 Aug 2026.
- Nabil Bank earns Rs 4.76 arba net profit with EPS of Rs 35.04 in Q2. ShareSansar, 29 Jan 2026.
- Nabil Bank proposes 15.80% dividend for the year to mid-July 2026. ShareSansar, 7 Sep 2026.
- Nabil Bank’s 42nd AGM approves 15.80% dividend. ShareSansar, 9 Oct 2026.
- Nabil Bank approves 12.50% cash dividend, elects new chairman. ShareSansar, 13 Jan 2026.
- Nabil Bank allots Rs 5 arba worth of 8% irredeemable non-cumulative preference shares. ShareSansar, 18 Dec 2025.
- NRB takes action against these 8 commercial banks for violating NRB guidelines. ShareSansar, 21 Apr 2023.
- NRB fines 4 banks for not blocking Prithvi Bahadur Shah’s accounts. Onlinekhabar, 8 Feb 2023.
- Banks challenge government’s tax provisions in Supreme Court. Fiscal Nepal, 19 Sep 2023.
- BFIs lose tax dispute over mergers and FPO as Supreme Court ruling upholds government’s stance. ShareSansar, 15 Dec 2023.
- All petitions against the decision to collect tax on mergers and FPOs were dismissed by the Supreme Court. Beema Post, 15 Dec 2023.
- ICRA Nepal downgrades Nabil Bank to A, keeps it on watch with negative implications. ShareSansar, 20 Apr 2025.
- ICRA Nepal reaffirms Nabil Bank at A and removes the negative watch. ShareSansar, 21 Jun 2026.
- Nabil fails to cash hydel project bond from Chinese bank. The Kathmandu Post, 21 Jan 2024.
- Nabil Bank wins case relating to Trishuli Hydropower in Chinese court. The Rising Nepal (RSS), 22 Dec 2025.
- Back risk: hydropower projects damaged by the flood of 26 August. Onlinekhabar, Sep 2026.
- Nabil Bank: what the price of Rs 543 assumes. The Finance Aftermath, 26 Oct 2026.
- KYC #07: Chilime Hydropower, the hydropower lender’s counterpart. The Finance Aftermath, 2026.
Historical sources
Checked 26 October 2026. Educational research, not investment advice.