CHAPTER-1

INTRODUCTION

1.1 Background

Banks have come a long way towards Customer Relationship Management in the past five years.
In the 1980's most banks had not yet created a consolidated marketing Customer Information
File (MCIF). Their credit card accounts were kept on one computer, checking accounts on
another, and home mortgages on a third. By 1990, most banks had figured out how to group all
customer accounts together on an MCIF, even if they total customers are unprofitable. Some,
like will the Fleet Bank, have found that as many as half of their total customers are unprofitable.
Many will never be profitable. Their marketing staffs are busy working to acquire and retain
people who destroy value for the bank. With knowledge of profitability, banks begin to classify
their customers into profitability segments so that they can understand and modify customer and
employee behavior.
Every firm is most concerned with its profitability. One of the most frequently used tools of
financial ratio is profitability ratios, which are used to determine the company's bottom line and
its return to its investors. Profitability measures are important to company managers and owners
alike. If a small business has outside investors who have put their own money into the company,
the primary owner certainly has to show profitability to those equity investors. Profitability ratios
show a company's overall efficiency and performance. Profitability ratios are divided into two
types: margins and returns. Rations that show margins represent the firm's ability to translate
sales dollars into profits at various stages of measurement. Ratios that show returns represent the
firms's ability to measure the overall efficiency of the firm in generating returns for its
shareholders.
There are so many financial ratios liquidity ratios, debt or fanatical leverage ratios, efficiency or
asset management ratios, and profitability ratios that it is often hard to see the big picture. You
can bogged down in the detail. One method that business owners can use to summarize all the
ratios is to use the rations is to use the Dupont Model. The Dupont Model can show a business
owner where the component parts of the example, did ROA come from net profit or asset
turnover? Did return on equity come from net profit, asset turnover, or the business' debt
position? The Dupont Model is very helpful to business owners in determining in financial in
financial adjustments need to be made. Bank is financial institution where financial services are
broadly offered and performed. So, bank can be said a financial supermarket. In general sense,
bank is a kind of business, which deals in money by accepting deposits, advancing loan and
rendering other financial services. In a board senses, bank can be defined as the financial
intermediary between depositors and entrepreneurs. 'Bank' was originated from the italic
language 'Bunco' means bench or chair. People do all transaction of money by sitting on the
chair, in the Italy. So this types of business is been called bank.
In Nepal, the history of banking started on 17 th century, when Raja Gunakamdev took loan from
the public for the reconstruction of Kathmandu valley. Later on, the use of different types of
coins started in the periods of Malla rulers. In 1933, at the period of Ranodip Singh, Tejarath
Adda was established in Kathmandu, which aimed to provide the facilities related to loan for the
public. It then established many is considered to be one of the most important traditional
milestones in the banking system of Nepal. Then in 1989 B.S., when Taksar Bibhag was
established, since then coins were created scientifically. The modern banking system in Nepal
started on 1994 B.S. Kartik 30 th, where Nepal Bank Limited was established. This was the effect
of First World war, after which the new revolution and industrialism developed all over. Then in
2012 B.S. Baishak 14th, Nepal Rastra Bank was established, which is the central bank in Nepal. It
issued the Nepali note in 2015 Falgun 7th for the first time. Then in 2022, the government
established another commercial bank named Rastriya Banjiya Bank. After this, the banking
activates continued to increase and thus in the last 3 to 4 years, the number of banks and finance
companies are increased rapidly.

1.2 Profile of the Org./Place/Events etc.

Catering to more than 9 laces customers, Everest Bank Limited (EBL) is a name you can depend
on for professionalized & efficient banking services. Founded in 1994, the Bank has been one of
the leading banks of the country and has been catering its services to various segments of the
society. With clients from all walks of life, the Bank has helped develop the nation corporately,
agriculturally & industrially.
1.2.1 Profile of bank
Pujab National Bank (PNB), a joint venture partner (holding 20% equity) is the largest
nationalized bank in India having presence virtually in all important centers. Owing to its
performance during the year 2012-13, the Bank earned many laurels & accolades in recognition
to its service & overall performance. Recently, PNB was awarded with "IDRBT Banking
Technology Excellence Award" under Customer Management & intelligence Initiatives. The
Bank also bagged "Golden Peacock Business Excellence Award 2013" by Institute of Directors.
Similarly, the Bank was recognized as 'Best Public Sector Bank' by CNBC' TV 18. The bank has
now more than 6,635 branches and 8622 (as on 30th Sept 2015) ATMs spread all across the India.
As a joint-venture partner, PNB has been providing top management support to EBL under
Technical Service Agreement.
Everest Bank Limited was registered on November 17, 1992 and came into operation on October
18, 1994 with an objective of extending professionalized and efficient banking service to various
segments of the society. The bank had an initial paid up capital of Rs. 3 Corer. Today the bank
has grown to become one of the leading banks in Nepal. Punjab National Bank joint hands with
Everest Bank Limited as a joint venture in 1997 and turned it around to highly profitable bank.
There has been no looking back since then. PNB provides top management support under the
Technical Service Agreement. PNB, joint venture partner of EBL being one of the largest
nationalized bank in India having 114 years banking history, holds 20% equity in EBL.
Everest Bank has recognized the value of offering a complete range of service and has pioneered
in extending various customer friendly products such as home loan, education loan, EBL flexi
loan, EBL property plus (future lease rental), home equity loan, vehicles loan, loan against share,
loan against life insurance policy and loan for professionals. The bank is providing customer
friendly through its widely distributed networks of branches. Everest Bank Limited was the first
bank to introduce Any Branch Banking System (ABBS) in Nepal. All the branches of the bank
are connected with ABBS which enables the customers to do all their transactions from any
branches other than where they have their account. Everest bank has introduced the mobile
vehicle banking system to seen the segment deprives of poor banking through the Birtamod
branch, which is the first this kind.
The bank has committed to provide professional services & improve its position as a leader in
the field of financial related services. Use of latest technology aimed at customer satisfaction &
act an effective catalyst for socio-economic developments. The bank was bestowed with the
"NICCI Excellence award twice in 1999 and 2003 by Nepal India Chamber of Commerce for its
spectacular performance under finance sector and the bank has been conferred with "Bank of the
Year 2006, Nepal" by the banker, a publication of financial times, London.
1.2.2 Networks
Everest Bank Limited (EBL) provides customers-friendly services through its wide Network
connected through ABBS system, which enables customers for operational transactions from any
branches. The bank has 80 Branches, 113 ATM Counters, 7 extension counter & 28 Revenue
Collection Counters across the country making it a very efficient and accessible bank for its
customers, anytime, anywhere.
1.3 Objectives
The main objective of the study is to get entire knowledge of profitability ratio analysis and its
chief features on regarding to Everest Bank Ltd. Specific objectives of study are as follows:
 To determine the trend of profitability position of Everest Bank Ltd.
 To examine the profitability ratios like ROA, ROE, EPS, PER, DPS, GP Ratio, NP Ratio
etc.
 To analysis the organization's profitability status for given period of time.

1.4 Rationale
It is important for the management, outsiders and individual
 The researcher hope that this field work will be useful to various people, parties and to
the people who are interested in banking.
 To the management: the study will be helpful to go deeply to various matter or as to why
the performance of this better or worse than competitors.
 To the outsider: Outsider refers to those interested groups such as depositors, investors,
competitors, personnel, concern banks, market markers, stock brokers, merchant banks,
investment bankers etc. The study will be helpful to those groups and individuals by
getting different information about the financial performance. They can make decision
whether to deposit or not, invest or not, finance or not, etc.
  To the shareholders: It helps shareholders by creating awareness regarding the financial
performance of their banks and hoe properly their funds are mobilized and on what extent
they are gaining.
Interest spread =
1.5 Limitations
This study is simply conducted for the partial fulfillment of the requirement for the degree of
bachelor in business studies (BBS). And only the secondary data is used and analyzed which
could not disclose the actual result. And being the first endeavor, the report can comprise some
mistake which may cause the misinterpretation of the results.
Limitations of the study is with regard to temporary coverage of the study to arrive any
meaningful conclusion regarding the trend in the pattern and structure of financing a time service
of fairly a long
 Period are needed but this cover only financial year 2012/13 to 2016/17.
 Through there are 28 commercial bank, this study cover only one bank.
 This study is collected from secondary sources.
 Limited variable has been select.
 The result of the study is based on the data provided by the bank.

CHAPTER-2
 REVIEW OF LITERATURE
2.1 Review

Review of supportive text provides the fundamental theoretical framework and foundation to
present study. For this various book, research paper, article etc. Dealing with theoretical aspect
of investment policy analysis are taken into consideration in this section review of article,
review, of thesis of previous study is taken into consideration.

Lesakova (2007) entitled "Use and limitation of profitability ratio in the managerial practice."
Has study the evaluation of profitability performance appear an important lesson or our manager.
Numerical measures of performance are valuable tools but their use must be kept in perspective?
It is short-sighted to mange strictly by the number. Executives need to take broader more
qualitative view of the evaluation process. Firms are too complicated to allow the substitution of
mechanical rules for the creative thought. In her paper will be presented the quantitative and
qualitative approach to the profitability ratio analysis as well as the uses and limitation of
profitability ratio in managerial practice.

Innocent (2015) entitled "The relationship between financial ratio and corporate profitability" he
has study the relationship between financial ratio and corporate profitability a study of selected
quoted oil and gas companies in Nigeria. The issue of deciding an effective financial ration
analysis for corporate profitability has been a major problem of most oil and gas companies in
Nigeria. The successful selection and use of appropriate planning tools is one of the key element
of a firm's financial strategy therefore proper care and attention need to be given while such
decision is taken. Thus financial ratio analysis relationship has been discovered as having
immense potential to help organization in improving their revenue generation ability as well as
minimization.

Ali (2011) entitled "The analysis of profitability and its effect on price earnings ratio as well as
the impact of the spending policy working aggressive of food and beverage industrial in
Indonesia." he has study is to test whether the effect on the per profitability and its impact on
working capital aggressively in the food and beverage industry companies that is registered in
Indonesia stock exchange. The data used in the research is a secondary data in from of report of
the food and beverage companies registered in Indonesia stock exchange in the least five years.
The result show first there are significant influence between profitability on the price earnings
ratio. The improvement of profitability will increase the company price earnings ratio.

Azhagaih (2011) entitled "The important of capital structure on profitability with special
reference to IT in India" he has study the firm can use either debt or equity capital to finance
their assets. The best choice is mix of debt and equity. The present study mainly analysis how for
the capital firm in India the study tries to establish the hypothesized relationship as to how far the
affect the business revenue of firm and what the interrelationship between profitability ratio and
companies this study is cared out after categorizing the selected firm into three categories based
on two attribute viz.

Vahed (2014) entitled "examine the relationship between debt financing and profitability at
cement industries "he has study the population on this study are cement industries that have
active in Tehran stock exchange. Debt have extracted from financial statement of companies by
using comprehensive software of exchange and related interment sites and the overall
performance of liquidity maintained by steel sector and amount tied-up in various components of
working capital in order to analyze the data resulted from collected questionnaires deductive and
descriptive statistical method are used. The result kolmogorrov- smironov test show the test
distribution is not normal. So we can use spearman correlation coefficient to test the hypothesis
of the research.

Vaghi (2015) entitled "Analyzing the relationship between profitability and traditional ratios
major airline companies' sample "he has study the new condition in airline industries due to the
effect of liberalization have change the market consideration since the 1980s. the difficulties in
the industries force the airline companies to compete the financial analysis profitability among
the rivals worldwide. For this reason: it is aimed to reveal the relationship between profitability
and traditional financial and airline-specific ratio for seventeen leading major airline for the
2011-2013 period in the study here it is suggested profitability rates for the companies.

Khan (2015) entitled "growth and profitability analysis of selected IT companies "has study the
focuses on the performance of selected IT industries in tern of ratio. The study covers a period of
five year and expect in return on net worth and return on long term funds is satisfactory.

Ahmad (2016) entitled "A study of relationship between liquidity and profitability of standard
charted bank Pakistan: analysis of financial statement approach" has study the relationship
between two ratio of the financial statement i.e. profitability an liquidity. The study is focused on
the banking sectors. The relation is measured by the current ratio and net working capital the
bank under study is standard chartered bank Pakistan. From the finding of this study we came to
conclusion that there is week positive relation between liquidity and profitability, quantitative
research design is used as a tools for the study. To find the relation and strength of the relation
correlation and regression are used. So companies needs to focus on liquidity management which
has appositive relation with companies profit abilities.

Niki (2013) entitled "financial ratio analysis as a determinant of profitability in Nigerian

pharmaceutical industry" he has study the financial ratio is a vital one since the profitability of an
enterprises is directly affected by such decision. The successful selection and use of appropriate
financial ratio is one of the key element of the firm's financial strategy. Hence 'proper care and
attention need to be given while such decision is taken the purposes of this study is to examine
the relationship between the financial ratio analysis such as inventory turnover ratio, creditors
velocity total assets turnover and gross profit margin.

Dr. tulsian (2014) entitled "profitability analysis a comparative study of salt and TATA steel" has
study the main purposes of a business unit is to make profile. The profitability analysis is to done
to throw light on the current operating performance and effective of business firm. It should be
duly noted that net income figure alone is very helpful determining the effective and
performance of the business firm unless it is related to some other figure such as sales, of goods
sold, operating expenses, capital invested etc. the purposes is to obtain a deep insight and full
familiarity with the profitability of the companies of steel industry in India. The present study is
based on the secondary data i.e. annual report and account of the companies selected for the
study. Thus the profitability ratio are calculated to enlighten the end result and comparison of
business firms which is the sole criterion of overall efficiency of business concern.

Rengasamy (2014) entitled "impact of loan deposit ratio on profitability: panel evidence from
commercial bank in malaise. "ha has study the impact of loan deposit ratio on the profitability of
Malaysian commercial bank for the period of 2009 to 2013. Loan deposit ratio of the bank was
the independent variable of the study. The dependent variable was profitability which measure
through return on assets (ROA). Data were obtained from the annual report of the bank the ratio
analysis along with descriptive, correlation analysis, paired T-test and regression analysis were
used in this study the result of the study indicated that there was a positive and non-significant
impact that only one bank had a negative and non-significant impact of LRD on ROA and bank
seven had significant impact. Loan deposit ration is s useful instrument to determine bank
liquidity and by extension it influences the profitability of the banks. The bank profit is based on
the interest charged against the deposits: it means the profit is generated through the positive
difference between interest on deposit supported a study by joni taking borhan and towpek
(2006).

Adolppus J.toby (2008) entitled "profitability and its relationship with liquidity of Nigerian
manufacturing companies." He has study the revealed a significant relationship between
liquidity, profitability, efficiency and leverage measures. The study has also made an attempt to
suggest that in order to target money supply monetary policy could be used to facilitate monetary
transmission mechanism by integration a minimum liquidity requirement for the manufacturing
industry rational for the present study a study is compares performance of public sectors bank for
three year in the post reform period. He notes that while there is welcome increase in emphasis
on no-interest income, bank tended to show risk averse behavior by opting for relative risk free
investment over risky loans.

Mittal and Dhade (1999) entitled – A comparative study on profitability and productivity in
Indian bank." He has study the five year evaluation performance. In their study they found that
improved profitability is the only key parameter for evaluating performance from the shareholder
point of view. Now it is up to the bank management to decide how to strike a trade – off between
social and communication banking in order to improving market holding and service and play
the role of government agent at the same time. In our study we found that the public sectors bank
are less profitable than the public sectors and foreign bank are less profitable than the public
sector and foreign bank in tern of overall profitability but profitability is improving over the last
five year.

CHAPTER-3
 RESEARCH METHODOLOGY
3.1 Methods

The way and technique of the study applied in the research process are included in method of
study. It includes research design, population and sample, data collection procedure and
processing, tools and method of analysis. The rationale behind the study is to evaluate and assess
the profitability position or performance of bank Everest Bank Limited. Thus, this chapter
includes those methods and techniques used for finding out a fore said purpose.

Research methodology refers to the various sequential steps (along with the rationale of each
step) to he adopted by a researcher in studying a problem with certain objective in view. It is a
way to systematic solve the research problem it may be understood as a science of studying how
search is done scientifically. Includes the various steps that are generally adopted by a researcher
studying his/her research problem along with the logic behind them, it would be appropriate to
mention here that research project are not meaningful to any one unless they are in sequential
order which will be determined by the particular problem at hand. This focuses and deals with
the following aspects of methodology.

 Research design

 Population and sample

 Source of data

 Data collection procedure

 Method of data analysis

3.1.1Research Design

Research design is the task of defining the research problem. In other words, "A research design
is the arrangement of conditions. For collection and analysis of data in a manner that aims to
combine relevane to the research purpose with economy in procedure. In fact, the research
design is the conceptual structure within which the research is conduct. General objective; of this
research study is to examine and evaluate the financial performance of joint venture bank EBL in
order to achieve the objective, both descriptive and analytical research design has been followed.
The study focuses on the examination of relationship between those variables that influence-
financial decisions of the sampled batiks hence; it is an ex-post factor research.

A research design is the arrangement conditions, for the collection and analysis of data in a
manner that aims to combined relevance to the research purpose with economy in procedures.

This study aims on the profitability ratio analysis of the Everest Bank Ltd. This study is mainly
based on primary data and secondary data. The primary data, which are collected directly from
the question answer. Direct interview with customer and office staffs. The secondary data are
collected from respective annual reports especially from the Asian Life Insurance Company's
web sites and various other journals and from security Exchange board of Nepal (SEBON) and
Nepal stock exchange (NEPSE).

3.1.2 Population and Sample

The population for this study comprises 28 joint venture banks currently operating in the
country. All the joint venture banks perform the functions of commercial banks under rules,
regulations and directives of Nepal Rasta Bank. The sample consists of a judgmentally selected
bank- Everest Bank Limited. These units represent 3.57% of the total population and are
comparable to each other in various aspects. This project work is mainly based on secondary data
and also some related information's were directly collected from bank through personal interview
process.

3.1.3. Data collection techniques

I went to the main office of Everest Bank Ltd. Kathmandu, and get the important information. I
collected the main annual reports of this bank directly from the web site. And other various
articles and journals from various publication and some others from the SEBON, NEPSE and
previous field reports are also taken in to accounts.

3.1.4 Analysis Tools Data

Data analysis tools means which tools the research used for present and analyzed the data. The
main tools of analysis are mathematical and statistical tools. In this reports statistical and
financial ratio tools is used for data analysis. Mean and correlation is calculated for analysis the
data as statistical tools.
3.2 Ratios

An arithmetical relationship between two figures is called ratio. It is the most useful and
analytical tools to evaluate in respect to one variable over another. Here, for our purpose, only
the profitability related rations are calculated given below.

3.2.1 Return on assets (ROA)

This ratio is relationship between net profit after tax and total asset this measures the profitability
of all financial resources invested in firm assets. It indicates capacity of the firm in utilizing its
assets to earn a maximum profit. Calculation of ROA of SCBNL

Return on assets =

3.2.2.Return on equity (ROA)

Return on equity shows the relationship between net profit after tax and shareholder equity.
Ratio this means measure capacity of the firm in utilizing the shareholder fund to cash maximum
profit it is for any institution to be higher.

ROE =

3.2.3. Earnings per share (EPS)

This is the ratio of net income after tax to number of outstanding share. It means the per share
income for the company's ordinary shareholder. EPS measure the profitability per unit of the
equity share outstanding on every closing period. The higher ration of the usually indicates
efficiency in utilizing its overall resources and vice versa.

Earnings per share =

3.2.4 Price earning share (PER)

The relationship between market price per share (MPS) and earning per share is expressed in
price earning ratio. It reflects the impact of profitability in the market price of the stock for any
institution. The price of shares for any companies mainly gets fluctuated with earning position of
the company and this impact is studied through earnings ratio (PER)
Price Earnings Ratio=

3.2.5 Book value per share (BVPS)

It interpreted the actually per share position of any company. It shows the relationship between
net worth of the company and number of the equity share (NOES) outstanding. The real position
of the company's net worth is actually shown through this ratio.

BVPS =

3.2.6 Market price to book value ratio

This ratio between market price per share (MPS) of the stock for the any company with its book
value per share (BVPS) reflects the position of the company regarding its actual book value and
share price in capita market.

Market to Book ratio =

3.2.7 Net interest margin (NIM)

The main objectives of the commercial bank is to earn more owner management and creditors of
the bank expect more return. Efficiency of the bank can be measure in terns of the profit. The
profitability of the bank is directly related with the interest income generated from the loan and
the amount of interest expenses paid on deposit. The performance is measured by Net interest
margin (NIM) ratio.

Net interest margin (NIM) =

3.2.8 Interest Spread Ratio

Interest spared measure the gap between interest income and interest expenses as divided by
corresponding values of interest generating assets and paying liabilities. It reflects the actual
performance of the bank in tern of application of loan into the profitable investment sectors.
Interest spread =

CHAPTER-4
RESULTS AND ANALYSIS
4.1 INTRODUCTION

In the current chapter, all the important profitability related variables have been analyzed to give
the project a realistic and meaningful touch. In this chapter, the researcher has gathered data and
has applied various means of analytical tools, and gather result and done comparisons.

4.2 Data presentation

"Profitability Ratio Analysis is defined as the systematic way to interpret the profitability of the
organization, so that the strength and weakness of a firm as well as its historical and current
financial condition can be determined". Ratios point for planning action that will influence the
future course of events this section analyzes "the behavior of profitability and investment related
ratios of Everest Bank Limited". Profitability and investment ratios measure the ability of the
form to meet its required rate of return and to meet the desired outcomes. From an investor's
stand point predicting the future is what investment and return analysis is all about, while from
the management's stand point, investment and return analysis is useful both as a ways to
anticipate future conditions and more important as a starting point for planning action well
influence the future course of events/actions. The following ratios were calculated for this report:

 Returns on Investment (ROI)

 Returns on Assets (ROA)

 Returns on Equity (ROE)

 Earnings per Share (EPS)

 Dividend per Share (DPS)

 Price earnings Ratio (PER)

 Book Value per Share (BVPS)

  Net Interest Margin (NIM) Ratio.

 Interest Spread Ratio

 Growth rate of Investment

4.2.1. Growth rate of Investment

Table 1

Year Opening in value of Closing value in Percentage growth

investment investment
2012/13 85297 92638 8.61
2013/14 92638 65042 -29.79
2014/15 65042 151026 132.20
2015/16 151026 181987 20.50
2016/17 181987 119646 -34.26
Average 19.45

Growth of Investment (Figures in Lakhs)

Source. Balance sheet of Everest Bank
Figure 1: Trend value of Investments

Figure 2: Trend Line of growth rate.

4.2.2. Return on Investment (ROI) (Figures in Lakh)

Table 2

Fiscal year Net profit tax Total value Investment Return on

investment (ROI)
2012/13 14711 926638 15.88
2013/14 15497 65042 23.83
2014/15 15743 151026 10.42
2015/16 17302 181987 9.51
2016/17 20063 119646 16.77
Average 15.28
Source. Balance Sheet and Income Statement of Everest Bank

Figure 3: Trend value of Net Income & Total Investment

Figure 4. Trend Line of Return on Investment

 4.2.3Return on assets

Table no.: 3

Fiscal year Net Income Total Assets Ratio (%)

2012/13 14,711 657411.50 2.24
2013/14 15,497 704450.83 2.20
2014/15 15,743 991528.06 1.59
2015/16 17,302 1138850.46 1.52
2016/17 20,063 1165105.45 1.72
Average 1.85
Source. Balance sheet of Everest Bank

Figure5|: Trend value of net income and total assets

Figure6. Trend Line Showing ROA

. 4.2.4 Return on Equity (ROE)

Table 4

(Figures in Lakhs)

Fiscal Year Net Income Equity Ratio (%)

2012/13 14,711 48,278.45 30.47
2013/14 15,497 54,571.48 28.40
2014/15 15,743 68,903.77 22.85
2015/16 17,302 85,140.88 20.32
2016/17 20,.63 115,445.82 17.38
Average 23.88
Source. Balance Sheet and Income Statement of Everest Bank

Figure7. Trend value of net income and Total Equity .

Figure8. Trend line showing (ROE)

4.2.5Earning Per Share

Table 5 (Figures in Lakhs)

Fiscal year Net Income No. of outstanding Shares EPS

 2012/13 14,711 192.12 76.57
2013/14 15,497 213.74 72.50
2014/15 15,743 274.26 57.40
2015/16 17,302 460.64 37.56
2016/17 20,063 773.28 25.95

Source. Balance sheet & Income statements of Everest Bank

Figure 9. Chart showing EPS

4.2.6 Price Earnings Ratio

Table 6 (Figures in Lakhs)

Fiscal Year Earnings per share Market price per Share P/E Ratio
(EPS) (MPS)
 2012/13 76.57 1591 20.78
2013/14 72.50 2631 36.29
2014/15 57.40 2120 36.93
2015/16 37.56 3385 90.12
2016/17 25.95 1353 52.14
Average 47.25
Source. Balance sheet & Income Statements of Everest Bank

Figure 10. Trend values of EPS and MPS

Figure 11. Trend line showing P/E Ratio

4.2.7 Book Value Per shares

Table .7 (Figures in Lakhs)

Fiscal Year Net worth No. of Equity BVPS

shares
2012/13 46678 192.12 242.96
2013/14 53371 213.74 249.70
2014/15 67704 274.26 246.86
2015/16 83941 460.64 182.23
2016/17 114646 773.28 148.26
Average 214.00
Source. Balance Sheet of Everest Bank

Figure12. Chart showing BVPS

 4.2.8 Book value per share (BVPS)
Table 8: (Figures in Lakhs)

Fiscal Year MPS BVPS Ratio

2012/13 1591 242.96 6.55
2013/14 2631 249.70 10.54
2014/15 2120 246.86 8.59
2015/16 3385 182.23 18.58
2015/17 1353 148.26 9.13
Average 10.67
Source. Balance sheet of Everest Bank

Figure 13. Chart showing market to book value ratio.

Figure 14. Trend line showing market to book value ratio.

4.2.9 Net Interest Margin

Table 9: (Figures in Lakhs)

Fiscal Year Interest Income Interest Total assets Ratio (%)

Expense Earning
2012/13 2786218393 1744271203 21226687733 4.91
2013/14 28711690926 1811203220 27104417443 3.91
2014/15 3242635081 1854852163 32616506541 4.25
2015/16 3556635240 1968174155 4027093722 3.94
 2016/17 52.8727381 3304386188 57711391949 3.30
Average 4.06
Source. Balance sheet & Income Statement of EBL

Figure15. Trend values of interest income and interest expense.

Figure16. Trend line of interest income and interest expenses.

4.2.10 Interest spread Ratio

Table 10 (Figures in Lakhs)

Fiscal Interest Interest Interest Interest Paying Ratio

Year expenses Earning Assets Liabilities (%)

2012/13 2786218393 1744271203 21226687733 28798028030 7.07

2013/14 2871169026 1811203220 27104417443 34045262660 5.27
2014/15 3242635081 1854852163 32616506541 41005754566 5.42
2015/16 3556635240 1968174155 40272093722 48342121058 4.76
2016/17 5208727381 3304386188 57711391949 65855880385 4.01

Average 5.31
Source. Balance sheet & Income Statement of EBL
Figure 17. Trend line showing interest spread

4.3 Analysis of data

Table no.1 represents the growth of investment table we have find out the five year's growth rate,
it has shown that the 2012/13 to 2016/17 growth rate. In 2012/13 has eighty five thousand two
hundred ninety seven opening value of investment similarly, it has ninety two thousand six
hundred thirty eight at the same year the growth rate is eight point six one present at the next
year 2013/14 the growth rate is negative which is minus twenty nine point seven nine percent in
the third year 2014/15 the growth rate is increased and that is one hundred two point two percent
and the fourth year 2015/16 the growth rate is dresses and the growth rate is minus thirty four
point two six and the last year 2016/17 the growth rate is nineteen point four five.

Table no.2 represents the return on invest table we have find out the five year's ROE it has
shown the return on investment of five year presentation in 2013/13 the net profit after tax is
fourteen thousand seven hundred eleven and this year the total investment in ninety two thousand
thirty eight and the growth rate is fifteen point eighty-eight next year 2013/14 the growth rate is
twenty three point eighty three and the 2015/15 the growth rate is ten point four two the 2015/16
the nine point five one the 2016/17 the ROE is fifteen point two eight.

Table no.3 represents the return on assets of the Everest bank the table we have find out the five
year data presentation and the 2012/13 the net income is fourteen thousand seven hundred eleven
and the ratio is two point two four next year 2013/14 the net income I fifteen thousand four
hundred ninety sven next year 2014/15 the ratio is two point two in 2015/16 the ratio is one point
five nine in 2015/16 the ratio is one point five two and the last year the ratio is one point seven
two percent.

Table no.4 represents the rate of equity table represent the rate of five year data of Everest bank
and the has shown the growth are of 2012/13 to 2016/17 so that the first year 2012/13 the ratio is
thirty point four seven and the 2014/15 ratio's is twenty eight point four and the four year
2015/16 the ration is twenty point three eight and the last year the ratio is seventeen point three
eight.

Table no.5 represents the table has shown the five year data presentation so that according to the
data the growth rate is at the first year the 2012/2013 the EPS is seventy – six point five seven
and the 2013/14 the EPS is seventy-two point five third year 2014/15 the EPS is fifty-seven point
four fourth year the EPS is thirty-seven point five six and the last year 2016/17 the EPS is twenty
five point nine five.

Table no.6 represents the table has shown the five year data presentation the table has shown the
P/E ratio the first yer 2012/13 P/E ratio is twenty point seven eight and 2013/14 the ratio is
thirty-six point two nine and the third year 2014/15 the P/E ratio is thirty – six point nine three
and forth year the P/E ratio is fifty two point one four and the last year 2016/17 the P/e ratio is
fifty – two point one fore present.

Table no.8 represents from the above table it has given the five year data presentation 2012/13
the ratio is six point five and the next year the ratio is ten point five four and the third year
2014/15 the ratio is eight point five nine and the forth year the 2015/16 the ratio is eighteen point
five eight and the last year the ratio is nine point one three which is comparatively increases form
2012/13.

From above table no. 9 having trend values of interest income, interest expenses and the total
earning assets along with net interest margin ratio, it is clear that, the bank is able to increase
interest income but also the interest expenses is increasing and hence the NIM ratio is slightly
falling in recent periods than the starting years.

From above table no. 10 and figure no.17, it is clear that the interest spread of the Everest Bank
Limited in fluctuating trend and it is almost on decreasing trend with some exceptions. The
highest and lowest ratios are in the year 2012/13 and in 2016/17 respectively with slightly
decreasing trend throughout the study period. The maximum spread was observed during
2012/13 as 7.07% and the minimum ratio in 2016/17 as 4.01% with the average ratio of 5.31%
during this five years study period.

Appendix

Appendix – 1 Percentage growth

Year Opening in value of Closing value in Percentage growth

investment investment
2012/13 85297 92638 8.61
2013/14 92638 65042 -29.79
2014/15 65042 151026 132.20
2015/16 151026 181987 20.50
2016/17 181987 119646 -34.26
Average 19.45
Percentage growth =

For year 2012/13

Percentage growth =

= 8.61%

And so on.

Appendix 2 Return on Investment (ROI

Fiscal year Net profit tax Total value Investment Return on

investment (ROI)
2012/13 14711 926638 15.88
2013/14 15497 65042 23.83
2014/15 15743 151026 10.42
2015/16 17302 181987 9.51
2016/17 20063 119646 16.77
Average 15.28
Return on Investment (ROI) =

For year 2012/13

ROI =

= 15.88

And so on

Appendix – 3

Fiscal year Net Income Total Assets Ratio (%)

2012/13 14,711 657411.50 2.24
2013/14 15,497 704450.83 2.20
2014/15 15,743 991528.06 1.59
2015/16 17,302 1138850.46 1.52
2016/17 20,063 1165105.45 1.72
Average 1.85

Return on Assets (ROA) =

For year 2012/13

ROA =

= 2.24

Appendix – 4 Return on Equity (ROE)

Fiscal Year Net Income Equity Ratio (%)

 2012/13 14,711 48,278.45 30.47
2013/14 15,497 54,571.48 28.40
2014/15 15,743 68,903.77 22.85
2015/16 17,302 85,140.88 20.32
2016/17 20,.63 115,445.82 17.38
Average 23.88

Return on Equity (ROE) =

For year 2012/13

ROE =

= 30.47%

And so on.

Appendix – 5 Earning per share

Fiscal year Net Income No. of outstanding Shares EPS

2012/13 14,711 192.12 76.57
2013/14 15,497 213.74 72.50
2014/15 15,743 274.26 57.40
2015/16 17,302 460.64 37.56
2016/17 20,063 773.28 25.95
Average 54.00

Earning per share =

For year 2012/13

EPS=

= 76.57

And so on.

Appendix – 6 Price Earning (P/E) Ra

Fiscal Year Earnings per share Market price per Share P/E Ratio
(EPS) (MPS)
2012/13 76.57 1591 20.78
2013/14 72.50 2631 36.29
2014/15 57.40 2120 36.93
2015/16 37.56 3385 90.12
2016/17 25.95 1353 52.14
Average 47.25

Price Earning (P/E) Ratio =

For year 2012/13

P/E Ratio =

= 20.78

And so on.

Appendix – 7 Book value per share (BVPS)

Fiscal Year Net worth No. of Equity BVPS

shares
2012/13 46678 192.12 242.96
2013/14 53371 213.74 249.70
2014/15 67704 274.26 246.86
2015/16 83941 460.64 182.23
2016/17 114646 773.28 148.26
Average 214.00

Book value per share (BVPS) =

For year 2012/13

BVPS =

= 242.96

And so on,

Appendix-8 Book value per share (BVPS)

Fiscal Year MPS BVPS Ratio

2012/13 1591 242.96 6.55
2013/14 2631 249.70 10.54
2014/15 2120 246.86 8.59
2015/16 3385 182.23 18.58
2015/17 1353 148.26 9.13
Average 10.67
Book value per share (BVPS) =

For year 2012/13

BVPS =

= 6.55

And so on.

Appendix-9 Net interest Margin

Fiscal Year Interest Income Interest Total assets Ratio (%)

Expense Earning
2012/13 2786218393 1744271203 21226687733 4.91
2013/14 28711690926 1811203220 27104417443 3.91
2014/15 3242635081 1854852163 32616506541 4.25
2015/16 3556635240 1968174155 4027093722 3.94
2016/17 52.8727381 3304386188 57711391949 3.30
Average 4.06
Net interest Margin =

For year 2012/13

Net interest margin =

 = 4.91%

And so on.

Appendix-10 Interest Spread Ratio

Fiscal Interest Interest Interest Interest Paying Ratio

Year expenses Earning Assets Liabilities (%)

2012/13 2786218393 1744271203 21226687733 28798028030 7.07

2013/14 2871169026 1811203220 27104417443 34045262660 5.27
2014/15 3242635081 1854852163 32616506541 41005754566 5.42
2015/16 3556635240 1968174155 40272093722 48342121058 4.76
2016/17 5208727381 3304386188 57711391949 65855880385 4.01

Average 5.31

Interest Spread Ratio = -

For year 2012/13

Interest spread ratio = - = 7.07

And so on.

CHAPTER-5
SUMMARY AND CONCLUSION

5.1Findings

 Using different investment and profitability related ratios; the overall performance of the
Everest bank Limited is satisfactory and is in increasing trend.
 Its financial indicators are being improved as compared to previous years. The overall
financial position of the bank is also satisfactory but due to tight policy of NRB, the
financial indicators seems quite weak, but it seems that future is bright for this bank and
its investors.
  It is positive to observe that, this bank is able to make fulfillment of capital as required
from NRB, although there are banks which are still unable to maintain in capital
adequacy.
 The ability of this banks management to generate sufficient surplus from financial
business and adequate interest spread is positive factor for the success of this bank in
coming future periods.
 Almost maximum of the finical indicators of this bank are satifctory and in improvement
stage and most of loan and advances are good for current periods as compared to past few
years.

5.2.Conclusion:
 sWorking capital is the life blood of every organization. Now it is earning profits. The
working capital of the company is in satisfactory position. It is analyzed that, it is easy to make
profit in the future. This will not affect the existence of the company.
 A major study of working capital management explains the need and scope of the same in
the manufacturing industry. Its effective provision can do much to ensure the success of business
while its sufficient management can lead to loss or profit. A study of working capital is of major
importance to and external analysis of its close relationship with the current day-to-day
operations of business. Thus it can be concluded that all the precautions should be taken for the
effective management of working capital. The financial manager should pay careful attention to
the level of current asset. The risk return implication must be evaluated. Thus the role played by
the working capital is unmatchable and therefore righteously said that working capital is the life
blood of business. The purpose of the concern is to run the operations smoothly so that the
corporate objectives may be achieved and for this purpose, adequate working capital is a must.
 The major issue that the company is facing now days is the shortage of raw material
because of the new Act passed by the Kerala Government which prohibits cutting woods. So the
company has to keep large amount of raw material for future which makes the working capital
management a herculean task.