What it is
A percentage like ROE only makes sense for a full year. If a bank earned 4% on equity in three months, saying 'ROE is 4%' would be misleading; the yearly pace is about 16%.
Annualising fixes this by scaling the part-year number to twelve months. It assumes the rest of the year will look like the start.
It is a projection. Banks in Nepal tend to book heavier provisions and staff bonus in Q4, so the actual year often comes in below the Q3 annualised pace.
How it is calculated
Annualised value = Year-to-date value × (12 ÷ months in the period). Q1 × 4, Q2 × 2, Q3 × 1.333, Q4 × 1.
Worked on Nabil Bank Limited, FY 2082/83 Q4
In Q4 nothing is scaled: NABIL's FY 2082/83 annualised EPS Rs 28.36 equals its reported EPS Rs 28.36. In the Q1 report, a three-month EPS of Rs X would have been shown as Rs 4X annualised.
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
Treat annualised figures as a running estimate that firms up each quarter. Compare Q1 annualised with last year's actual only loosely.
Watch out
- Seasonality: Q4 carries most year-end charges, so annualised Q1 to Q3 numbers tend to be optimistic.
- A one-off gain in Q1 gets multiplied by four.
- Different banks annualise slightly differently (days vs months); small differences are noise.
In Nepal
NRB's quarterly format does not require annualisation, but it is the prevailing practice in Nepali BFI filings for EPS, ROE, ROA and cost of funds.
Questions
In effect, yes. It assumes the remaining quarters repeat the pace so far.
No. Only flows such as profit, income and expenses are annualised. Balances are a snapshot and are never scaled.