#1

Ace Institute of Management

MBAe
FIM
Group Assignment Question
Data Date: 20 Jul 2021
Traded Companies Closing Price Class
1 Nabil Bank Limited 1,454.00 A
2 NIC Asia Bank Ltd. 1,031.60 A
3 Everest Bank Limited 761.00 A
4 Standard Chartered Bank Limited 601.00 A
5 Siddhartha Bank Limited 553.50 A
6 Agriculture Development Bank Limited 545.00 A
7 Sanima Bank Limited 527.10 A
8 Prime Commercial Bank Ltd. 504.00 A
9 Prabhu Bank Limited 485.00 A
10 NMB Bank Limited 480.00 A
11 Global IME Bank Limited 470.00 A
12 Nepal Bank Limited 466.00 A
13 Nepal Bangladesh Bank Limited 460.00 A
14 Nepal SBI Bank Limited 419.00 A
15 Machhapuchhre Bank Limited 413.00 A
16 Citizen Bank International Limited 409.50 A
17 Laxmi Bank Limited 407.00 A
18 Bank of Kathmandu Ltd. 396.60 A
19 Kumari Bank Limited 387.00 A
20 Mega Bank Nepal Ltd. 384.10 A
21 Sunrise Bank Limited 376.00 A
22 Nepal Credit And Commercial Bank Limited 371.20 A
23 Civil Bank Ltd 297.00 A
24 Century Commercial Bank Ltd. 294.00 A

Go through the data and provide the answers to the following questions:

1. We used to have 27 A Class (Commercial) Banks. However as of stock price available that time we got the price
of only 24 banks. Why three bank’s stock price was not available?
2. Collect the stock prices of A Class Banks as of the latest date available and add in the table.
3. All the banks are of the same category. All the banks have already met the minimum Paid up Capital target fixed
by NRB. Even then why such a big differences in the stock price ?
 The stock price generally represents the strength & weaknesses of the banks. The strength &
weaknesses are supposed to be captured by CAMELS framework.
 All the data related with CAMELS are available in the QFH (Quarterly Financial Highlights) published by
the concerned banks.
 As the latest period for which data is available is of 3 rd Quarter (Mid April 2021), you have to base your
answer on that data.
o You segregate the banks into 3 groups:
 Banks having High Stock Price
 Banks having Medium Stock Price
 Banks having Low stock price
#2
Ace Institute of Management

MBAe
FIM

Group Assignment Question

CAR at the End of Apr 2020 & Apr 2021

Serial Bank
Number Name Apr 2020 Apr 2021
1 ADBL 19.74 21.10
2 Stan Chart 18.89 17.86
3 NIBL 11.97 14.78
4 NMB 15.42 14.26
5 SBI 13.30 14.15
6 Prime 12.13 14.07
7 SANIMA 12.97 13.99
8 Sunrise 11.87 13.91
9 BOK 13.73 13.88
10 Citizen 13.41 13.86
11 NCC 14.84 13.78
12 NBB 11.76 13.77
13 Nepal Bank 17.02 13.67
14 Sidhartha 12.37 13.37
15 RBB 12.81 13.26
16 Global IME 12.05 13.22
17 Himalayan 11.82 13.19
18 Kumari 12.73 13.06
19 Everest 13.38 12.82
20 Century 14.32 12.33
21 NABIL 12.50 12.28
22 MEGA 15.00 12.22
23 Machapuchre 12.63 11.75
24 Laxmi 11.60 11.72
25 Prabhu 11.44 11.53
26 NIC-Asia 13.10 11.44
27 Civil 18.82 11.43

Collect and Update the data as of the latest date available and add in the table.

Go through the data and provide the answers to the following questions:

1. Explain very briefly HOW the CAR is calculated?

2. How the Basel (II) method is different from Basel (I) method?
3. Why some of the banks have comparatively high CAR?
4. Why some of the banks have comparatively low CAR?
5. What are the implications of High CAR and Low CAR?
6. Why do you think some of the banks have recorded higher CAR compared to one year ago CAR?
7. Why do you think some of the banks have recorded lower CAR compared to one year ago CAR?
8. What is PCA (Prompt Corrective Action)? & when is it ignited?
#3
Ace Institute of Management
MBAe
FIM

Group Assignment Question

The statistics given below has been taken from One Bank

S.N. Particular Amount

1 Core Capital 3,785,482,444
2 Paid Up Capital 2,355,738,504
3 Supplementary Capital 1,103,155,547
4 Debentures 800,000,000
5 Capital Fund 4,888,637,991
6 Adjustment Under Pillar II (Addition) 773,736,256
7 Adjustment Under Pillar II (Subtraction) 0
8 Deposit 58,920,455,656
9 Loans & Advances 28,788,146,625
10 Investment 25,906,119,814
11 Balance Sheet CREDIT Exposures 32,611,072,072
12 Balance Sheet OPERATION Exposures 3,689,595,095
13 Balance Sheet MARKET Exposures 968,349,133
14 Credit Risk Mitigation 2,440,047,213
15 Risk Weighted Exposure for Credit Risk 36,300,667,167
16 Risk Weighted Exposure for Operational Risk 1,901,971,050
17 Risk Weighted Exposure for Market Risk 484,174,570
18 Gross Income 1,092,198,065
19 Open Position in Foreign Exchange 968,349,133

Go through the data and provide the answers to the following questions:

        Out of these 19 items:

Select the items relevant for calculating CAR (Capital Adequacy Ratio)
Select the items not relevant for calculating CAR (Capital Adequacy Ratio)
Give detailed reasons for Selection as well as Rejection
        Calculate the CAR by showing the Process as well as Result.
        Specify the items to be included in Numerator as well as Denominator
#4
Ace Institute of Management
MBAe
FIM

Group Assignment Question

Based on data presented above answer the following questions:

A. What are the factors behind significant increase in the Balance Sheet size of NIB as compared to SCB
B. Why do you think SCB could not make profit comparable to NIBL
C. In spite of big difference in the size of the balance sheet, as well as the amount of profit, why such big
difference has not taken place in the CAR
D. What is the nature of the relationship among Balance Sheet size, Deposits, Loans & Profit
E. Why do you think, SCB was able to reduce its Balance Sheet gap with NIBL between Jul 2016 & Apr
2021
#5
Ace Institute of Management
MBAe
FIM

Group Assignment Question

Commercial Banks: NPA Status: Jul 2020-& Apr 2021
NPA (Jul 2020) NPA (Apr 2021)
1 EVEREST BANK LIMITED 0.20 0.12
2 SANIMA BANK 0.36 0.21
3 Nepal SBI Limited 0.19 0.23
4 NIC ASIA BANK LTD. 0.75 0.47
5 Nabil Bank limited 0.63 0.48
6 SCB Nepal 0.22 0.50
7 MACHHAPUCHHERE BANK LTD. 0.45 0.51
8 Laxmi Bank LTD 1.78 0.71
9 Himalayan Bank Ltd 1.11 0.81
10 PRIME COMMERCIAL BANK LTD. 0.97 0.86
11 SIDDHARTHA BANK LIMITED 2.24 0.88
12 BOK LIMITED 1.53 1.01
13 KUMARI BANK LIMITED 0.98 1.09
14 Civil Bank LTD 2.96 1.13
15 MEGA BANK LIMITED 1.32 1.31
16 PRABHU BANK LIMITED 2.95 1.48
17 GBIME LTD. 1.14 1.61
18 CITIZENS BANK INT'L LTD. 0.97 1.83
19 NEPAL BANGLADESH BANK LIMITED 2.76 1.91
20 SUNRISE BANK LTD. 1.32 1.94
21 NMB BANK 2.48 1.97
22 NCC Bank LTD 2.75 2.05
23 NBL 2.64 2.29
24 NIBL 2.67 2.32
25 Century Commercial Bank 2.19 2.96
26 ADBL 3.65 3.08
27 Rastriya Banijya Bank Limited 4.64 3.62

Collect and Update the data as of the latest date available and add in the table.

Go through the data and provide the answers to the following questions:

1. How has NPA been defined in Nepal by NRB?

2. How is it calculated?
3. What are the impacts of NPA in the bank balance sheet: FIRST impact and LAST impact?
4. Explain the probable reasons behind some banks having very low NPA and some banks having very high NPA?
5. Some of the banks seems to have been successful in reducing their NPA between Jul 2020 and Apr 2021. How
they may have achieved this result? Explain.
6. Definition of NPA, methods of NPA calculation are all specified by NRB. However even then we have seen some
of the central banks conducting one exercise known as AQR (Asset Quality Review).
 What is this AQR?
 Why are they conducted?
 How is it conducted?
#6
Ace Institute of Management
MBAe
FIM

Group Assignment Question

Commercial Banks: Net Profit: 9 Months -- This FY vs Last FY
Rs in Thousands
First 9 Months First 9 Months
FY-20219/20 FY-2020/21
1 Nabil Bank limited 3,158,686 3,679,870
2 GBIME LTD. 2,702,615 3,578,269
3 Rastriya Banijya Bank Limited 3,036,296 3,270,086
4 NIC ASIA BANK LTD. 2,502,498 3,004,816
5 NIBL 2,495,527 2,847,131
6 PRIME COMMERCIAL BANK LTD. 2,030,675 2,817,676
7 NMB BANK 1,339,992 2,516,487
8 NBL 1,996,583 2,262,277
9 PRABHU BANK LIMITED 1,464,161 2,109,670
10 ADBL 2,044,635 2,073,061
11 SIDDHARTHA BANK LIMITED 1,339,983 2,065,239
12 MEGA BANK LIMITED 1,451,090 1,972,755
13 SANIMA BANK 1,618,721 1,856,169
14 KUMARI BANK LIMITED 1,012,713 1,808,484
15 NEPAL BANGLADESH BANK LIMITED 1,005,010 1,638,410
16 CITIZENS BANK INT'L LTD. 1,091,245 1,545,341
17 EVEREST BANK LIMITED 2,352,657 1,507,446
18 MACHHAPUCHHERE BANK LTD. 1,166,855 1,290,613
19 Laxmi Bank LTD 1,089,977 1,288,084
20 Himalayan Bank Ltd 2,317,113 1,287,157
21 SCB Nepal 1,802,595 1,183,620
22 BOK LIMITED 873,493 1,169,343
23 SUNRISE BANK LTD. 935,283 1,130,042
24 NCC Bank LTD 1,165,885 1,101,180
25 Century Commercial Bank 841,547 903,443
26 Nepal SBI Limited 1,438,210 878,646
27 Civil Bank LTD 360,533 502,555

Collect and Update the data as of the latest date available and add in the table.

Go through the data and provide the answers to the following questions:

1. Even though all are A Class Commercial Banks, apparently there are wide differences in the Net Profit which
they have managed to make.
 Classify the banks into 3 categories: Banks making Average Profit, Banks making above average
profit & banks making below average profit.
 Classify the banks:
o Which has significantly increased profit as compared to corresponding period of last year.
o Which has significantly decreased profit as compared to corresponding period of last year.
 Provide the reasons for this. (For this you will base your answer on the QFH (Quarterly Financial
Highlights) of the concerned banks.
#7
Ace Institute of Management
MBAe
FIM

Group Assignment Question

Table 47
Summary of Monetary Operation
(Rs. in Million)
mid-June
Details 2017/18 2018/19 2019/20
2019/20 2020/21
A. Liquidity Injection 145,664.98 322,488.97 219,155.00 219,155.00 192,558.60
1. Repo - 162,460.00 108,550.00 108,550.00 50,000.00
2. Outright Purchase 37,619.98 - - - -
3. Repo Auction * 69,720.00 5,700.00 7,322.00 7,322.00 9,288.60
4. Standing Liquidity Facility 38,325.00 154,328.97 103,283.00 103,283.00 133,270.00
B. Liquidity Absorption 195,000.00 100,350.00 78,000.00 78,000.00 303,290.00
1. Reverse Repo 84,750.00 20,700.00 48,000.00 48,000.00 109,540.00
2. Outright Sale 8,400.00 - - - -
3. Deposit Collection Auction 55,900.00 79,650.00 30,000.00 30,000.00 193,750.00
4. Deposit Collection Auction * 45,950.00 - - - -
C. Net Liquidity Injection (+) / Absorption (-) (49,335.02) 222,138.97 141,155.00 141,155.00 (110,731.40)
* Transaction under Interest Rate Corridor

Go through the data and provide the answers to the following questions:

1. Economic activity is influenced by the bank’s lending rates. Banks’ lending rates are impacted by the Liquidity
conditions of the economy. Liquidity conditions in turn is heavily affected by the Central bank’s Monetary
Operations. The above table provides the details of NRB’s Monetary Operations in different periods.

2. Now answer the following questions:

 Why do you think NRB injects/ absorbs liquidity?
 How are Repo and Reverse Repo operations conducted?
 How are they different from Outright Purchase and Sale operations?
 Why Deposit Collection operation is conducted?
 What is Interest Rate Corridor? And why this concept may have been introduced?
 What is the nature and significance of SLF (Standing Liquidity Facility)?
#8
Ace Institute of Management
MBAe
FIM

Group Assignment Question

Base Rate at the End of Apr 2020 & Apr 2021

Serial Bank
Number Name Apr 2020 Apr 2021
1 Stan Chart 7.27 5.33
2 RBB 6.72 5.50
3 NIBL 8.53 5.95
4 Nepal Bank 7.49 5.98
5 Everest 8.34 6.10
6 NABIL 7.82 6.18
7 SANIMA 9.25 6.23
8 Global IME 9.41 6.40
9 Himalayan 8.87 6.75
10 NIC-Asia 9.61 6.77
11 Laxmi 9.79 6.79
12 Sidhartha 9.98 6.99
13 Prabhu 8.98 7.06
14 Machapuchre 9.97 7.09
15 Prime 9.85 7.14
16 NMB 9.99 7.19
17 Sunrise 10.02 7.23
18 NCC 10.36 7.41
19 Citizen 9.88 7.44
20 SBI 9.86 7.46
21 ADBL 9.97 7.48
22 NBB 9.89 7.56
23 MEGA 9.94 7.59
24 BOK 9.33 7.60
25 Kumari 10.65 7.63
26 Century 10.27 7.77
27 Civil 10.92 7.82

Collect and Update the data as of the latest date available and add in the table.

Go through the data and provide the answers to the following questions:
It was only In 2012/13 that NRB introduced the concept of computing Base Rate. Since then all banks are regularly
publishing their Base Rates in their QFH (Quarterly Financial Highlights).
 How is this Base Rate calculated?
 Why do you think Base Rates of Banks differ so much?
 What are the benefits of this Base Rate system?
 How banks could be adversely affected by this system of Base Rates?
 Why do you think some of the bank’s base rate has gone down significantly as compared to base rates of one
year back?
 Why the same thing has not happened with some other banks?
#9
Ace Institute of Management
MBAe
FIM

Group Assignment Question

Table #:01: Required Paid Up Capital before increase and after increase. Capital amount mentioned in the
second row refers to the increased Capital amount required to be complied by July 2017.

Table #:02: Note: The number of Banks and Financial Institutions within last 40 years

Chart Title
100
90
80
70
60
50
40
30
20
10
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47
A B C D
Go through the Two Tables given above and answer the following:
(A) Why do you think 4 different types of financial institutions were created in Nepal?
(B) What might be the logic behind significant increase in the Paid Up Capital (implemented by Jul 2017)?
(C) Do you see any logic behind Paid up Capital not being increased in the case of D Class?
(D) Why very few Mergers seems to have taken place in A Class?
(E) Why large number of B and C Class institutions were established in the earlier phase?
(F) Why large number of B and C Class institutions went through Merger phase?
In the case of D Class, quite a large number of institutions were established and very few mergers had
happened. Why do you think so?
 #10
Ace Institute of Management
MBAe
FIM

Group Assignment Question

One of the general perception among the people is: banking sector is very profitable. Until recently, in fact,
banks normally have been consistently making higher and higher profits (with some exceptions). However the
scenario seems to have changed in the recent period. Looking at the profit and loss statements of the
Commercial Banks we see the following data:

Bank 01 +356.74 %
Bank 02 +71.90 %
Bank 03 +68.42 %
Bank 04 +46.66 %
Bank 05 +45.18 %

Bank 06 -42.92 %
Bank 07 -20.74 %
Bank 08 -18.97 %
Bank 09 -17.98 %
Based on these data, answer the following questions:
1. Why generally banks manage to make higher and higher profit?
2. What are the general reasons for some banks making exceptionally high profit?
3. What are the general reasons for some banks making exceptionally high Losses?
4. What are the typical developments which recently took place in the Nepalese Banking Sector,
which is adversely affecting the bank’s profit?
5. How long you think this period may last?