What it is
The balance sheet is a photo on one date. The profit or loss statement is a video over a period: this quarter, or the year so far.
For a bank it reads top to bottom like this: interest income − interest expense = net interest income. Add fees and other income. Subtract impairment (bad loan) charges and operating expenses to get operating profit. Subtract tax to get net profit. Divide by shares to get EPS.
Nepali quarterly reports print two columns: 'this quarter' and 'up to this quarter' (year to date). Most ratios and EPS use the year-to-date column.
How it is calculated
Net profit = Interest income − Interest expense + Fee and other income − Impairment charge − Operating expenses − Income tax.
Worked on Nabil Bank Limited, FY 2082/83 Q4
For FY 2082/83 (Q4 = full year), NABIL earned interest income of Rs 3,795.54 crore, paid interest of Rs 2,094.61 crore, leaving net interest income of Rs 1,700.93 crore. After fees, provisions, costs and tax, net profit was Rs 790.58 crore, or Rs 28.36 per share.
NABIL's share capital includes Rs 500.00 crore of preference shares, so per-share figures here use its 27,05,69,970 ordinary shares, as the filing does.
What good looks like
Net interest income growing, impairment charges steady or falling, and costs growing slower than income. Compare each line with the same period last year, not the previous quarter.
Watch out
- Q4 'this quarter' is a derived number (full year minus nine months) and can look odd.
- Quarter figures are unaudited; the audited full year can differ.
- One-off items like a provision write-back can inflate a quarter.
In Nepal
Nepali banks report under NFRS in the format NRB prescribes. The report also carries a ratio schedule (NPL, capital adequacy, spread, base rate) that is not part of the income statement itself.
Questions
Year to date for EPS and ratios. The single quarter is useful for spotting a sudden change.
Because the fiscal year ends with Q4 (mid-July). The year-to-date column in Q4 is the whole year.