After making losses for half a decade, Telenor Bank is finally out of the red

The key to sustainable growth is not trying to do much too fast. That is the lesson that Telenor Microfinance Bank appears to have learnt the hard way, though it looks like they are learning it at long last. The year 2023 was when the bank finally turned a profit after five long years deep in red, and the year 2024 seems to be off to a flying start, suggesting that last year was not a fluke.

For the 12 months ending June 30, 2024, the latest period for which financial statements are available, the bank earned a net income of Rs2,431 million, up almost five-fold from Rs502 million for the calendar year 2023. What makes this extraordinary is the fact that the bank’s lending book is one-third smaller than it was at its peak in 2018, when its streak of losses began.

Will this return to profitability off a small balance sheet be the right approach? And will this finally result in the bank’s long-suffering shareholders making adequate returns on their investments? It is too early to answer these questions definitively, but the indications so far look encouraging.