Mero Microfinance’s Net Profit Surges by 45.7%, EPS and Net Worth See Significant Growth

Mero Microfinance Laghubitta Bittiya Sanstha Ltd has published an impressive unaudited financial report for the fourth quarter of fiscal year 2081/82. The company posted a net profit of NPR 212.4 million, marking a 45.71% increase compared to the NPR 145.7 million recorded during the same period last year.

The growth is attributed to higher interest income, increased fee and commission income, and improved cost management. The company appears to have strengthened its revenue base while controlling operational risks and expenses effectively.

EPS, Net Worth, and Shareholder Value Witness Strong Growth

The company’s Earnings Per Share (EPS) has improved significantly from Rs. 11.04 last year to Rs. 15.23 this year. Similarly, the distributable EPS also rose to Rs. 15.41, indicating strong potential for dividend distribution.

The Net Worth Per Share increased from Rs. 132.04 to Rs. 182.27, reflecting strong internal capital growth and retained earnings. This signals financial resilience and long-term sustainability for shareholders.

Interest and Fee Income Rise Sharply, Operating Income Crosses Rs. 700 Million

Net interest income rose to Rs. 629.1 million from Rs. 374.2 million a year ago, a remarkable 68% increase. Likewise, fee and commission income reached Rs. 80.9 million, up from Rs. 58.4 million.

Total operating income surpassed Rs. 709 million, showing that the institution has diversified and strengthened its core revenue streams. Impairment charges stood at Rs. 186.8 million, and operating profit reached Rs. 526.4 million, compared to Rs. 347.1 million in the previous year.

Loan Portfolio and Customer Deposits Expand Steadily

Customer deposits surged from NPR 18.36 billion to NPR 20.82 billion, while loans and advances to customers rose from NPR 13.75 billion to NPR 15.01 billion.
This steady growth demonstrates Mero Microfinance’s expanding financial reach and market presence, particularly in underserved rural areas.

Strong Capital Fund, But Rising NPL a Concern

The Capital Fund to Risk-Weighted Assets (RWA) ratio rose from 13.86% to 22.99%, well above the regulatory requirement, indicating a strong capital buffer.

However, Non-Performing Loans (NPL) increased from 2.79% to 3.79%, signaling deteriorating loan quality. This calls for improved risk control measures and more aggressive recovery efforts.

Other Key Financial Ratios at a Glance

• PE Ratio: 63.28

• Base Rate: 13.56%

• Interest Rate Spread: 1.89%

• Credit-to-Deposit Ratio: 72.84%

While PE ratio suggests moderate investor optimism, the narrow interest rate spread points to growing competition in the microfinance segment.

What Does This Mean for Investors?

The strong improvement in EPS, net worth, and profit points toward a healthy financial trajectory for Mero Microfinance. Dividend prospects look promising, supported by higher distributable profit.

However, the uptick in NPL could raise caution among investors. Future performance will largely depend on how effectively the company manages its asset quality and continues expanding responsibly.

Mero Microfinance has shown consistent performance improvement in FY 2081/82. Rising profits, expanding assets, and a stronger capital base paint a positive picture.

Yet, the increase in non-performing loans and modest interest spreads demand attention. If these issues are addressed proactively, the institution has the potential to deliver even better returns to its investors in the coming years.