FINANCIAL POSITION OF EVEREST BANK LIMITED

Research Proposal

By:

Kalpana Koirala

Roll No: 362/071

T.U. Regd. No:7-2-39-292-2014

Group: Finance

Submitted to:

Research Management Committee

Swati Sadan College

Tribhuvan University

In the partial fulfillment of the requirement for the degree of

Bachelor of Business Studies (BBS)

Macchapokhari, Kathmandu

January, 2019

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 CHAPTER I

INTRODUCTION

1.1 Background
Generally, bank is an institution which accepts deposits, makes business loans, and offers related
services. In an economy the bank is regarded as one of the economic backbones of the country
for its development. Bank is a financial institution that deals in money. The basic function of
bank is collecting deposit and granting the loans. It involves in credit creation that in related to
creation of deposit and loan. In the economy, the banks collect small saving of general people,
accumulative it and lends the productive sectors of the society for the overall economic
development.

In Nepal the formal banking system commended with the establishment of Nepal Bank Limited
as a semi government ownership in 1937 A.D. The establishment of Nepal Rastra Bank, Central
Bank of Nepal, in 1957 A.D. was a significant dimension in the development of banking sector.
The second commercial bank with the government ownership i.e. Rastriya Banijya Bank Ltd.
was established in 1966 A.D.

Today, the banking sector is more liberalized and modernized and systematic managed. There
are various types of bank working in modern banking system in Nepal. It includes central,
development, commercial, financial, co-operative and Micro Credit (Grameen) banks.
Technology is changing day by day. And changed technology affects the traditional method of
the service of bank.

For the development of banking system in Nepal, NRB refresh and change in financial sector
policies, regulations and institutional developments in 1980 A.D. Government emphasized the
role of the private sector for the investment in the financial sector. These policies opened the
doors for foreigners to enter into banking sector in Nepal under joint venture.

Nepalese commercial banks need to maintain at least 6% Tier-1 capital and 10% total capital
(Tier-1 and Tier-2), that is, core capital and supplementary capital respectively.

The bank capital affects bank safety, the bank’s ability to refinance and the bank ability to
extract repayments from borrowers or its willingness to liquidate them. Financial performance is

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an output of a bank’s policies and operation in terms of monetary value. This output is reflected
in the bank’s return on investment, return on asset and value addition, Diamond and Rajan
(2000).

In financial analysis process, ratio analysis is the most dominant and logical structure to help
business related stakeholder. The trend of these ratios over time is studied to check whether
businesses are improving or deteriorating. Ratios are also compared within the bank namely,
Everest Bank Ltd. (EBL) to see how this banks perform and to get an idea of comparative
valuations. Analysis of financial position provides an insight into how efficient a bank is in using
its assets to generate profits and how sound was its financial health on a given period of time.

1.2 Profile of The Organization

Catering to more than 10 lacs 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.

Everest Bank Limited (EBL) was established in 1994 and started its operations with its first
branch at New Baneshwor, Kathmandu. EBL joined hands with Punjab National Bank (PNB) in
1997, the largest public sector bank in India holding 20% equity as its joint venture partner. EBL
is the first bank to introduce agro-specialized branch, “Krishi Udhyam Bikash Sakha” at
Rajbiraj.

Everest Bank Limited (EBL) provides customer-friendly services through its wide Network
connected through ABBS system, which enables customers for operational transactions from any
branches. The bank has 92 Branches, 116 ATM Counters & 28 Revenue Collection
Counters across the country making it a very efficient and accessible bank for its customers,
anytime, anywhere.

The bank has received the following awards:

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  The bank has been conferred with the "Best Managed Commercial Bank" by ASIAN
PAINT NEWBIZ Award 2013.
 The bank adjudged as "Number 1 Bank" under CAMELS (along with Customer Base &
Branch Network) rating conducted by KAROBAR national daily (a leading business media
house of Nepal).
 The bank has been conferred with “Bank of the Year 2006, Nepal” by the Banker, a
publication of financial times, London.
 The bank was bestowed with the “NICCI Excellence award” by Nepal India chamber of
commerce for its spectacular performance under finance sector.

Therefore, this report is brought for the investigation of EBL for the period 2013/14 – 2018/19.
Financial ratios are employed to measure the profitability, liquidity, and credit quality
performance. The study is conducted to ensure the overall performance of increasing or
decreasing trend in these five years and their comparison.

1.3 Objectives of the Study

The objective of this study is:
To analyze the financial position of Everest Bank Limited.

1.4 Rational of the Study

Financial analysis consists of tools and techniques applied analytically to commonly-used
financial statements such as balance sheets, income statements, etc. and other connected data to
identify useful information in making business decisions. For investment purposes, it is used as a
screening tool to determine which companies are worth investing in and as a forecasting tool to
estimate how well a business will perform in the future.

“Ratio analysis of financial statement is a study of relationship among various financial

factors in a business as disclosed by a single set of statements and a study of trend of
these factors as shown in a series of statements”, Myers (2003).

The rate of return on investment is a test of management’s efficiency in using available

resources. A common feature of all the areas of the financial ratio analysis research

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seems to be that while significant regularities can be observed, they are not necessarily
stable across different ratios, firms and time periods, Meigs and Meigs (2003).

A sustainable business and mission require effective planning and financial management. Ratio
analysis is a useful management tool that will improve your understanding of financial results
and trends over time, and provide key indicators of organizational performance. Managers will
use ratio analysis to pinpoint strengths and weaknesses from which strategies and initiatives can
be formed. Funders may use ratio analysis to measure your results against other organizations or
make judgments concerning management effectiveness and mission impact.

In this research, both categories of ratio analysis are used, Cross-sectional (firm to firm) analysis
and Time series (year to year) analysis. Cross-sectional analysis involves the comparison of
actual ratios of one firm with those of other similar firms belonging to the same industry or
industry averages at the same point of time. Time series analysis involves the comparison of
actual ratios of one period with those of earlier periods for the same enterprise.

Any successful business owner is constantly evaluating the performance of his or her company,
comparing it with the company’s historical figures, with its industry competitors and even with
successful business from other industries. As with any other form of analysis, comparative ratio
techniques aren’t definitive and their results shouldn’t be viewed as granted. Many off-the-
balance sheet factors can play a role in the success or failure of a company. But, when used in
concern with various other business evaluation processes, comparative ratios are invaluable.

1.5 Method of the Study

1.5.1 Research design

The research design refers to the overall strategy that one chooses to integrate the different
components of the study in a coherent and logical way; it constitutes the blueprint for the
collection, measurement, and analysis of data. Both quantitative and qualitative data collection
method has been opted. Descriptive research design has been followed.

1.5.2 Source of data

Secondary source of data will be used to collect the required information from various sources.
So, the major sources of Secondary data are:

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  Annual report of the concerned bank
 Newspapers, journals, articles and various magazines
 Website of commercial banks and Nepal Rastra Bank
1.5.3 Population and sample
There are 28 commercial banks operating in Nepal. It will be lengthy, time consuming and
difficult to obtain data and present as same if all those commercial banks are taken into
consideration. So, only Everest Bank Limited has been selected as the sample on the basis of
availability of data.
1.5.4 Methods of data analysis and presentation
Mainly financial tools will be applied for the purpose of the study. Financial tools are
used to measure the data from different sources. In this study the researcher has used
the following tools to analyze the data:
 Ratio Analysis
 Bar diagrams
1.6 Review of Literature

The main objectives of the review of literature is to develop the knowledge in one’s area as
well as to see what contribution can be made to receive some idea for developing the
research design.

Conceptual review:

Review is a process of systematic meticulous and critical summary of the published literature
in the field of research. It is a way to discover what other research in the area of your
problem has uncovered. It is also a way to avoid investigating problems that have already
been definitely answered. A literature review is an evaluative report of information found in
the literature related to the selected area of study. The review should describe, summarize,
evaluate and clarify this literature. It should give a theoretical base for the research and help
to determine the nature of research.

Shakya (2010), has conducted a thesis in financial position of Nepal SBI Bank Limited and
Everest Bank Limited, analyzed different ratios of NSBIBL and EBL for the period of five

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 years till fiscal year 2008. Here, in some cases the liquidity position of EBL is slightly
stronger where as in some cases the ratio of NSBIBL is higher. It concludes that liquidity
position of these two banks is sound.

James Hutchinson (2010), He realizes that about the long-term debt to equity ratio of a
business. The ratio of these numbers tells a lot about the business. It is calculated by taking
the debt owed by the company and divided by the owner’s equity, also known as capital. The
debt number may include all liabilities, or just long-term debt.

Gopinathan (2009), has presented that financial ratio analysis can spot better investment
options for the investors as the ratio analysis measures various aspects of the performance
and analyzes fundamentals of a company or an institution.

Bakar and Tahir (2009), in their paper used multiple linear regression technique and
simulated neural networks techniques for predicting bank performance. Return on Assets
(ROA) was used as dependent variable of bank performance and seven variables including
liquidity, credit risk, cost to income ratio, size and concentration ratio were used as
independent variables.

Review of journal and articles:

After liberalization and globalization of the world economy the economic transaction such as
trading and commerce, industrial and banking activities have grown up tremendously.
Likewise, an international trade of the developing country has also boosted up. But on the
other hand, the increasing competitiveness has also increased various type of risk in every
business.

1.7 Limitations of the Study

Every study consists of certain limitations and assumptions, as so the limitations of this study
are:

 Data of limited years has been taken into consideration. If that was not the case
the study report might be distorted.
 Findings and conclusions are based on the secondary data like annual report and
other publication of bank and audited data of the bank is treated as authentic.

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BIBLIOGRAPHY

Bakar & Tahir. (2009), An Evaluation of Lecture Perceptions Towards Research.

Everest Bank Limited. (2013/14 – 2017/18). Annual Reports. Kathmandu: EBL.

Gopinath. (2009), Investment cycles and Sovereign Debt Overhang

John, J.I M & at. Al. (2015) Business Research Methods. Kathmandu: Asmita Book

Publishers and Distributors.

Shakya, Suman. (2010), Financial Performance Analysis of Nepal SBI Bank Limited

and Everest Bank Limited. An unpublished Master’s Thesis. T.U.

https://www.everestbankltd.com/

https://www.nrb.org.np/