What it is
EPS tells you how much of the bank's profit belongs to one ordinary share. If the bank earned Rs 100 crore and has 10 crore shares, EPS is Rs 10.
It is the number that links a bank's results to your holding. Multiply EPS by the shares you own and you get your share of the profit (not the dividend; that is smaller).
EPS also feeds the P/E ratio: share price ÷ EPS. A Rs 500 share with EPS of Rs 25 trades at 20 times earnings.
Nepali quarterly reports usually print EPS 'annualised': the year-to-date profit scaled up to a full year. Read the annualised page before comparing quarters.
How it is calculated
EPS = Net profit attributable to ordinary shareholders ÷ Weighted average number of ordinary shares. Ordinary shares = ordinary share capital ÷ Rs 100; preference shares are excluded.
Worked on Nabil Bank Limited, FY 2082/83 Q4
NABIL's net profit for FY 2082/83 was Rs 790.58 crore. The filing counts 27,05,69,970 ordinary shares (its Rs 500 crore of preference shares are excluded). Rs 790.58 crore ÷ 27,05,69,970 ≈ Rs 28.36 per share, the EPS NABIL reported.
What good looks like
Higher and rising is better, but only per share. If profit grew 10% and shares grew 10% through a bonus issue, EPS is flat. Compare EPS across years adjusted for bonus shares, and compare P/E, not EPS, across banks.
Watch out
- Annualised vs year-to-date: a Q1 report's 'EPS' is often the quarter's profit × 4.
- Bonus shares dilute EPS. A 20% bonus cuts EPS by about 17% with no change in profit.
- A high EPS does not mean a cheap share; check the price (P/E).
- Diluted EPS can be lower if convertible instruments exist.
- If the bank has preference shares, EPS uses ordinary shares only; the filing prints the ordinary share count it used.
In Nepal
EPS follows IAS 33 / NAS 33 as adopted in NFRS. Nepali face value is Rs 100, so shares = paid-up capital ÷ 100. NRB's quarterly template reports EPS in the ratio schedule; most banks print it annualised. Where a bank has preference shares (NABIL: Rs 500 crore), EPS is on ordinary shares only.
Questions
No. EPS is profit per share. The dividend is what the board proposes and NRB approves from distributable profit, usually a fraction of EPS.
More shares now exist. The same or slightly higher profit divided by more shares gives a lower number per share.
Only if the share prices are similar. A Rs 30 EPS on a Rs 900 share (P/E 30) is dearer than Rs 20 on a Rs 300 share (P/E 15).