DEPOSIT MOBILIZATION OF NMB BANK

LIMITED

A Project Work Report

By

Sandesh Neupane

Exam Roll No: kjgjgjgdg

T.U. Regd. no 7-2-307-493-2019

Madhyabindu Multiple Campus

Submitted To

The Faculty of Management

Tribhuvan University

Kathmandu

In Partial Fulfillment of the requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Kawasoti, Nawalpur

March,2024

i
 DECLARATION

I hereby declare that the project work report entitled DEPOSIT MOBILIZATION OF NMB
BANK LIMITED submitted to the Faculty of Management, Tribhuvan University,
Kathmandu is an original piece of work under the supervision of Prof. Bishnu Lamsal, faculty
member, Madhyabindu Multiple Campus, Nawalpur and is submitted in partial fulfillment of
the requirements for the degree of Bachelor of Business Studies (BBS).The project work
report has not been submitted to any other university or institution for the award of any
degree or diploma.

Signature :

Name of Student : Sandesh Neupane

Date :

ii
 Supervisor's Recommendation

The project work report entitled DEPOSIT MOBILIZATION OF NMB BANK LIMITED
submitted by Sandesh Neupane of Madhyabindu Multiple Campus, Nawalpur, is prepared
under my supervision as per the procedure and format requirements laid by the Faculty of
Management, Tribhuvan University, as partial fulfillment of the requirements for the degree
of Bachelor of Business Studies (BBS). I, therefore, recommend the project work report for
evaluation.

Signature : ……….

Name of supervisor :

Madhyabindu Multiple Campus

Date :

iii
 Endorsement

We hereby endorse the project work report entitled DEPOSIT MOBILIZATION OF NMB
BANK LIMITED submitted by Sandesh Neupane of Madhyabindu Multiple Campus,
Kawasoti, Nawalpur, in partial fulfillment of the requirements for the degree of the Bachelor
of Business Studies (BBS) for external evaluation.

…………...........…..….. .……………………………..

Prof. Bishnu Lamsal Mr. Ganeshman giri

Head of Research Department Campus Chief

iv
 Acknowledgement

This study is mainly concern with the analysis of "DEPOSIT MOBILIZATION OF NMB
BANK LIMITED". It has been prepared as per the course of Bachelor of Business Studies
(BBS). In any course of study, only theoretical knowledge is not sufficient, we should also
practice in the field to get clear practical knowledge. While preparing this project report,
many people have assisted in different situation, whom I must thank.

I have pleasure in thanking my project supervisor Prof. Bishnu Lamsal, Madhyabindu

Multiple Campus for his constructive suggestions, techniques, procedure of research and
valuable suggestion that provide me the necessary energy and confidence to make this thesis
possible. The report in this form is the result of his inspiring guidance and supervision. My
thanks are due to him. I must, of course continue to offer my thanks to the staff of
`Madhyabindu Multiple Campus`, Faculty of management , B.B.S section.

Last but not least, I would like to thank all my family members, friends and related people
who were directly and indirectly involved to assist me in the entire preparation period.

Sandesh Neupane

Madhyabindu Multiple Campus

v
 Kawasoti, Nawalpur

TABLE OF CONTENTS
Title i

Declaration ii

Supervisor's Recommendation iii

Endorsement iv

Acknowledgement v

Tab le of Contents vi

List of Tables vii

List of Figures viii

Abbreviations ix

CHAPTER I: INTRODUCTION 1-8

1.1 Background 1

1.2 Profile of Organization 2

1.3 Objectives 3

1.4 Rationale 3

1.5 Review 4

1.6 Methods 6

1.7 Limitation 8

vi
CHAPTER II: RESULT AND ANALYSIS 9-18
2.1Presentation of Data 9

2.2 Analysis of Results 16

2.3 Findings 18

CHAPTER III: SUMMARY AND CONCLUSION 19-20

Summary 18

Conclusion 19

REFERENCES 20

List of Tables

Table No. Title Page No.

2.1 Total deposit position of NMB Bank Ltd. 9

2.2 Total loan lending position of NMB Bank Ltd. 10

2.3 Total investment of NMB Bank Ltd. 11

2.4 Total fixed assets of NMB Bank Ltd. 12

2.5 Liquid fund of NMB Bank Ltd. 13

2.6 Operating expenses of NMB Bank Ltd. 14

2.7 Deposit Lending Ratio 15

vii
 List of Figure

Figure No. Title Page No.

2.1 Total deposit position of NMB Bank Ltd. 9

2.2 Total loan lending position of NMB Bank Ltd. 10

2.3 Total investment of NMB Bank Ltd. 12

2.4 Total fixed assets of NMB Bank Ltd. 13

2.5 Liquid fund of NMB Bank Ltd. 14

2.6 Operating expenses of NMB Bank Ltd. 15

2.7 Deposit Lending Ratio 16

viii
 Abbreviations

ATM Automated Teller Machine

A/C Account
A.D. Anno Domi
BBS Bachelor of Business Studies
BFI's Bank & Financial Institution's
B.S. Bikram Sambat
etc. Etcetera
e. g Example
FY Fiscal Year
i.e. That is
Ltd. Limited
LC Letter of Credit
NRB Nepal Rastra Bank
No. Number
p.a Per Annum

ix
Rs. Rupees
TU Tribhuvan University
U.S. United States
% Percentage
& And

x
 CHAPTER-I

INTRODUCTION

1.1 Background
It is very hard to collect the correct information of the origin of bank. The word “Bank” has
derived from the Italian word “Banco” which means accumulation of money of stock. It is
believed that its origin is from the French word “Banque” which means “beach” for keeping,
lending and exchanging of money or coin in the market place by money lenders or money
changers. It is believed that the ancestors of modern banking system were merchants,
goldsmiths and moneylenders. Modern banking sowed its seed in the medieval Italy despite
strong Christian prohibitions against charging interest.

The bank had started in Italy in 12 th century as a public bank. The Bank of Venice that was
established in 1158 A.D. was the first bank in the history of banking. Following its
establishment various banks such as Bank of Barcelona, which was established in 1401 A.D
was the second bank of the world. Similarly, Bank of Geneva (1407), Bank of Amsterdam
(1609), and Bank of Hindustan (1770) were established. The first central bank was the “Bank
of England” which was established in 1844 AD.

Bank is a financial institution, which is engaged in monitory transaction. Bank has always
been the most importance and largest financial intermediates. Banks collect the scattered
money from public providing those interests and services. This collection becomes the capital
for the bank to invest. “Banking means the accepting of money for the view of lending or
investment of deposit from the public repayable on demand or otherwise and withdraw able
by cheque, draft or otherwise”, is according to Banking Regulation Act 1949 of India. World
Bank says “Banks or a financial institution that accepts funds in the forms of deposit
repayable on demand or at short notice.”

In the context of Nepal, like as in the other countries the goldsmith and landlords where the
ancient banker. The Nepalese people were highly exploited by ‘Sahu Mahajan’ by charging
higher interest rate, compound interest rate and even by manipulating the principal amount.
The introducing of ‘TejarathAdda’ during the tenure of the Prime Minister Ranoddip Singh
(1993 B.S.) was the first step towards the institutional development of banking in Nepal. The

1
first commercial bank ‘Nepal Bank Limited’ was established on 30th Kartik 1994 B.S.and
started to perform proper banking activities. With the realization of central bank to develop
monetary policy as well as to have proper control over commercial banks and banking sectors
Nepal Rastra Bank was established on 14th Baishak 2013B.S. under Nepal Rastra Bank Act
2012 B.S. Likewise, Rastriya Banijya Bank under the full ownership of government was
established on Magh 2022 B.S. The growths of the banks accelerated only after the adoption
of liberal economic policy by Nepalese Government. This has attracted many new investors
and encourages opening many new modern banks with joint venture of foreign banks. Nepal
Arab Bank was established on 29th Ashad 2041 B.S. as the first modern bank with the joint
venture of Dubai Bank Ltd. U.A.E. Himalayan Bank Ltd on 5th Marg 2049B.S. with the joint
venture of Habib Bank of Pakistan, Nepal SBI Bank Ltd. in28th Ashad 2050 B.S.with joint
venture of State Bank of India, Nepal Bangladesh Bank Ltd. on 28th Jestha, 2050 B.S. with
the joint venture of International Finance Investment and Commercial Bank, Everest Bank
Ltd. on 1st Kartik 2051B.S. with joint venture of Punjab National Bank Ltd. Since, the
financial sector in Nepal is small, it is growing fast. At present banking system
comprises of NRB, 27 Commercial banks and many financial companies, saving institution
and non-government organization conduction limited banking activities transaction.
1.2 Profile of the Organization
NMB Bank Ltd (previously Nepal Merchant & Banking Finance, a class C finance company
established in 1996), a class A commercial bank, has been in operation for over 23 years. It
was upgraded from a Class ‘C’ status to Class A status in May 2008 and has been functioning
as a Commercial Bank since then.

The vision of the bank is to build communities through responsible banking preferred by all
stakeholders, enabling customers and clients achieve their financial goals thus contributing
towards prosperous Nepal.

NMB Bank Limited licensed as “A” class financial institution by Nepal Rastra Bank, is one
of the leading commercial banks in the banking industry.The Bank has a Joint Venture
Agreement with NederlandseFinancierings-MaatschappijvoorOntwikkelingslanden (FMO),
wherein FMO holds 14.18% of the Bank’s shares and is the largest shareholder of the Bank.
In September 2016, the Bank signed a Joint Venture Agreement with
NederlandseFinancierings-MaatschappijvoorOntwikkelingslanden (FMO), the Dutch

2
development bank following which FMO became the single largest shareholder of the Bank.
The alliance with FMO positions the NMB Bank in becoming the market leader in managing
environmental & social risks and the leading player in renewable energy and agribusiness.
The bank successfully acquired BhrikutiDevelopment Bank, PathibharaBikas Bank,
Prudential Finance Company, Clean Energy Development, Om Development Bank& in the
path of acquiring Kanchan Development Bank in near future.The bank has 201 Branches, 9
Extension Counters&135 ATM terminals all over the country.

The bank has two subsidiaries company named NMB Capital Ltd. & NMB Microfinance
Company Ltd.NMB Bank Ltd. was awarded 'Bank of the Year - 2017','Bank of the Year-
2018'& 'Bank of the Year 2020' consecutively by The Banker, Financial Times, London.

CAPITAL STRUCTURE OF THE BANK ON F/Y 2020/21

Authorized Share Capital 8,000,000,000.00
Paid-up Capital 16,325,961,000

1.3 Objectives
The main objective of the study is to fulfill the partial requirement of TU to complete BBS
project. The objective of this fieldwork is to analyses deposits collected in NMB Bank Ltd.
The study intends to present a brief and clear picture of deposit and its utilization. The
objective of the study includes:
1. To identify deposit trend of NMB Bank Ltd.
2. To provide necessary suggestions and recommendation for further improvement.
3. To observe the trend of deposit and loan investment.
4. To identify deposit mobilization area.

1.4 Rationale
Deposit collection is the major function of all commercial banks, which help to carry out
almost all transaction of the bank. Mostly, among the various deposit features provided by
commercial banks, fixed and saving deposit are considered to be more important. But apart
from this, Current & Call deposit may also be treated as the part of deposit mix.

3
In the case of term deposit, the bankspay high interest (longer the period higher the interest).
However, saving deposit shall be treated as the good source of deposit as the interest rate on
such product is comparatively low.

Without deposit, bank can neither lend it to the needy people nor earn desired profit for the
stakeholders. So, the deposit mobilization study could be useful for various researcher &
investor.
This study will be significance in the following way:
1. This study helps to find out the position of NMB Bank Ltd.
2. It examinesthe strength and weakness of the bank.
3. This study will be useful for the potential managers, accountant, policy maker,
planners& further researcher.
4. It helps to find out the marketing style and public relation of the bank.

1.5 Review
1.5.1 Conceptual Review
According to Wikipedia, a deposit is the act of placing cash (or cash equivalents) with some
entity, most commonly with a financial institution such as bank. The deposit is a credit for the
party (individuals or organization) who placed it, and it may be taken back (withdrawn) in
accordance with the terms agreed at the time of deposit, transferred to some other party, or
used for a purchase at a later date. Deposits are usually the main source of funding for banks.
Deposit management is the task of collecting the maximum deposit at low cost and
mobilizing collected deposit in various profitable fields in order to gain the maximum profit.
Deposit mobilization is an integral part of any bank. It is the primary function of any
commercial banks. Bank cannot achieve its goal and objective without mobilizing the deposit
in the right sector in different activities. Banks will have to show an ascending order if profit
in order to ensure growth with stability. For this purpose, the bank will have to allocate the
resources to different sectors in such a way the bank can gain adequate profitability.
Therefore, banks should mobilize their deposits in suitable and profitable banking activities
in the right sector.

4
A commercial bank receives deposit in different accounts namely current, fixed and saving.
These are the direct deposits. When a bank receives cash it grants a right to the depositors to
withdraw it whenever they like.

RastriyaBanijya Bank Act 2021 B.S has regulated all the deposits. The act specifies
“Deposit” means amount deposited in current, fixed and saving deposit account of bank or
financial institutions. Among many functions of a commercial bank, the main function is
deposit collection.

ConceptualFramework: Funds Allocation and Saving Deposit Mobilization

Loan and Advance

Investment

Deposit
Mobilization Fixed Assets Purchase
Areas

Liquid Fund

Operating Expenses

1.5.2 Review of Previous Works

In this section effort has been made to examine and review of some related articles in
different economic journals. World Bank discussion papers, magazines, newspapers and
other related books.

Bajracharya (1990) has mentioned, mobilization of domestic savings is one of the prime
objectives of the monetary policy in Nepal. For this purpose, CBs stood as the active and vital
financial intermediary for generating resource in form of deposit of the private sector. So far
providing credit to the investors is a different aspect of the money.

5
Karmacharya (2004) concluded that commercial banks play a crucial role in accelerating
growth of a country. The bank mobilizes the savings of the people and diverts them into
productive channels. The expansion of branches as more as possible to encourage the savings
i.e. to increase the savings habits of people and thereby to mobilize the available financial
resources efficiently and effectively in a productive way and concluded that the branch
expansion helps to collect more deposits and utilize the available resources. The conclusion is
derived from the analysis of seven years' data from 1970 A.D. to 1977 A.D. using Karl’s
Pearson’s formula, percentage and ratio to meet the objective; the writer has analyzed how
far the bank is able to utilize the collected deposits.

1.6 Methods
Research methodology refers to the various sequential steps to be adopted by a researcher in
studying a problem with certain objectives. In other word, research methodology describes
the method and process applied in the entire subject of the study. This topic deals with the
research design, nature of data collection, process of data analysis and statistical tools used.

1.6.1 Research Design

The research methodology is the process of arriving to the solution of the problems through
planned and systematic dealing with the collection, analysis and interpretation of facts and
figures. As the research entirely considers about the “Deposit Analysis of NMB Bank Ltd.”
The main purpose of this study is to show deposits and its utilization with its financial
positions, collection and uses of funds, its prospects and its position in context of Nepal as
well as to recommended suggestions for its improvement. For the purpose of achieving the
objective, the following methodology is used. The data has been collected by acquiring
various kinds of reports, bulletins and journals from the organization. Similarly, data has been
acquired from NRB site also.

The study report is based mostly on secondary information of NMB Bank Ltd. In addition to
this, reference has been made in library consult, class lectures, Related books of banking,
financial management and accounting during the preparation of this study.

1.6.2 Population and sample

6
The large group about which the generalization is made is called the population under the
study, or the universe and small portion on which the study is made is called the sample of
the study. Out of 27 commercial banks of the country, NMB Bank Ltd has been chosen and
their performances have been analyzed. Due to various circumstances, study only depends on
the financial statement prepared by NMB Bank Ltd, which is the secondary source. Financial
statement of this bank for the last five years has been taken as the sample for this study
purpose.

1.6.3 Type of Data

For the preparation of this report, different kinds of books are followed. In this report, all the
data presented are secondary in nature. Almost all the data has been collected form published
annual reports, auditor's reports, balance sheet, P/L account, brochures and other relevant
published & unpublished documents related to concern bank.

1.6.4 Data Collection Procedure's

In this study, the main source of data is secondary which are collected from pre-published
data sources. The financial data from the published documents and audited financial
statements were manually extracted into the computer files of Microsoft Excel program
which acted as master database file.

1.6.5 Data Processing Techniques

The data collected from the above stated sources has been classified, tabulated and
interpreted for easier study. The data collected are classified, tabulated and arranged in
manner to make it easily understandable with the use of tables in chronological order. After
classification the data is tabulated.

1.6.6 Tools & Techniques of Analysis

Financial ratios are the major tools used for the descriptive analysis of the study. In addition
to the financial tools, simple statistical tools are also used Financial Ratio Analysis tools are
used to determine the performance of the banks in the framework components. These ratios
are categorized in accordance of the components.

7
 Following category of key ratios are used to analysis the relevant components in terms:
a) Deposit Lending Ratio
b) Other ratios comparison with total deposits.

1.7 Limitations
The study does not present detailed analysis of deposit in NMB Bank Ltd. due to lack of
time, relevant data and resources. This study is limited to the information that was available
from the bank and other sources. The study has following limitations:
1. Annual reports of NMB Bank Ltd.
2. Annual reports of NRB.
3. It is based on secondary data only.
4. This study covers the data of five years only. (i.e. 2016/17-2020/21)

8
 CHAPTER –II
RESULT AND ANALYSIS

2.1Presentation of Data
Table 2.1
Total Deposit of NMB Bank Ltd. (in billions)
Year Fixed Current Saving Others Call Deposit Total Growth
%
2017 41.192 4.911 16.972 2.326 7.821 73.222 13.0331
2018 46.723 4.681 20.619 4.25 8.23 84.503 15.1066
2019 49.406 5.763 28.195 5.467 9.684 98.515 16.5817
2020 70.7887 8.8975 38.313 4.4757 12.3351 134.81 36.8421
2021 81.9933 9.9038 53.1308 5.4096 16.0125 166.45 23.4701
Total(∑X) 557.5
Source: NMB Bank Ltd., Annual Financial Statement
Number of Years (N) 5
Arithmetic Mean (A.M.) ∑X/N 111.5

Figure 2.1
Total Deposit position of NMB Bank Ltd. (in billion)

180 166.45
160
140 134.81

120
98.515
100
84.503
80 73.222
60
40
20
0
2017 2018 2019 2020 2021

The above table and figure 2.1 shows the deposit trend of NMB Bank Ltd for the duration of
five years. The trend of total deposit is increasing rapidly. The average total deposit of last

9
five years is Rs. 111.5 billion. During the last years the current, saving, fixed, call & other
deposits have a fluctuating collection in the deposit mix. Here, total deposit of NMB in 2017
was Rs. 73.222 billion, which is 13.0331% growth rate from previous year. Similarly, deposit
reached to 84.503 billion by significant growth of 15.1066% between 2017/2018. In the same
way, itwas reached to 98.515, 134.81, 166.45billion in year 2019, 2020, 2021 respectively by
growth of 16.5817%, 136.8421%, 23.4701% p.a.It shows that the perception of customer
towards the bank is positive.
Table 2.2
Total Loan Lending Position of NMB Bank Ltd. (in billions)
Years Loan Lending Amount Growth%
2017 62.61 15.34
2018 75.65 20.8273
2019 91.89 21.4673
2020 121.78 32.528
2021 158.04 29.775
Source: NMB Bank Ltd., Annual Financial Statement

Figure 2.2
Total Loan Lending Position of NMB Bank Ltd. (in billion)

2017; 62.61

2021; 158.04
2018; 75.65

2019; 91.89

2020; 121.78

Above table and figure 2.2 shows that the total lending position of NMB Bank Ltd. There had
been during the year 2017, the total loan & advance lend was Rs. 62.61 billion, which was

10
increased by 15.34% than the previous year. Then the year 2018 lending
increase by20.8273% reaching 75.65 billion. In the same way, it was reached to 91.89 billion
by growing 21.4673% in 2019. In the year 2020, total lending was Rs. 121.78 billion, which
is 32.528% increment from 2019. Reaching to the final, the loan lentamount has reached to
158.04 bllion in 2021, which was increased by 29.775%. The comparison between deposit
&loan is well. We can conclude that, the bank's earning is outstanding by interest and other
commission earned by bank at the time of loan lending. Figure 2.2 is a pie chart showing
position of the bank in different year. (2017-2021)

Table 2.3
Total Investment of NMB Bank Ltd. (in billions)
Years Total Investment Growth%
2017 7.63 24.62
2018 9.70 27.13
2019 10.56 8.87
2020 15.37 45.55
2021 17.83 16.01
Source: NMB Bank Ltd., Annual financial Statement

The table and figure 2.3 shows the total investment made by NMB Bank Limited in different
area. They are namely government securities like treasury bills, saving bonds, local licensed
institution, foreign banks, corporate share etc. The totalinvestment of the bank was 7.63
billion in 2017 after 24.62% growth from 2016. In 2018 it was reached to 9.70 billion
respectively by growing 27.13%.

11
 Figure 2.3
Total Investment of NMB Bank Ltd. (in million)

Total Investment (in billions)

20
17.83
18
16 15.37

14
12 10.56
9.7
10
8 7.63

6
4
2
0
2017 2018 2019 2020 2021

Then in 2019, total investment was increase to 10.56 billion by increasing 8.87% for the first
time. But, it no last longer. Banks investment increased by 45.55%& 16.01% in 2020 &
2021, reaching 15.37 & 17.83 billion. We can conclude that investment area of bank is
satisfactory.

Table 2.4
Total Fixed Assets of NMB Bank Ltd. (in millions)
Years Total Fixed Assets Growth%
2017 1436.619106 259.52
2018 1559.569574 8.56
2019 1577.898704 1.18
2020 1599.772582 1.39
2021 1722.882856 7.70
Source: NMB Bank Ltd., Annual Financial Statement

12
 Figure 2.4
Total Fixed Assets of NMB Bank (in million)

Total Fixed Assets (in millions)

1750
1700
1650
1600
1550
1500
1450
1400
1350
1300
1250
2017 2018 2019 2020 2021

The above table and figure 2.4 is showing total fixed assets purchased by the bank from
2017-2021, which is significantly good. Assets purchased by bank are increasing in most of
the year instead of decreasing. The fixed assets hold by bank in 2016 was 374 million by
decrease of 2.40% comparison to 2015. But in 2017 the assets purchase ratio increased by
259.52% reaching 1436.619106 million. Similarly, assets reached to 1559.569574,
1577.898704 million in year 2018, 2019. But there was little bit increase in fixed assets
during the year 2020 by 1.39%, It was 1599.772582 million last years. In year 2021 it is
increase by 7.7% which is 1722.882856 million.

Table 2.5
Liquid Fund of NMB Bank Ltd. (in millions)
Years Cash Balance Balance at NRB Balance at BFI’s Total Liquid Assets Growth%
2017 1,491 6,390 2,298 10,180 61.45
2018 1,703 9,242 1,336 12,282 20.64
2019 2,409 6,864 1,667 10,941 -10.91
2020 2,452 10,829 909.222 14,190.222 29.698
2021 3,745 15,249 1,701 20,695 45.84

13
Source: NMB Bank Ltd., Annual Financial Statements

Figure 2.5
Liquid Fund of NMB Bank Ltd. (in millions)

25,000

20,000

15,000

10,000

5,000

0
2017 2018 2019 2020 2021

From table and figure 2.5 liquid fund of NMB Bank Ltd. is shown from year 2017-2021.
Total liquid fund consists of cash balance, balance at NRB, balance at bank and financial
institution of same year are shown. In the year 2017, it was increased by 61.45% reaching
10,180 million. It was again increased by 20.64% to 12,282 million in 2018. In 2019 liquid
fund reached to 10,941 milion. But there was decrease during the year 2019. It was decreased
by 10.91%. Then year 2020 and 2021 increase to 14190.222 and 20,695 million. In the year
2020 and 2021, it was increased by 29.698% and 45.84%.

Table 2.6
Operating Expenses of NMB Bank Ltd. (in millions)
Years Staff Expenses Other Operating Total Operating Growth%
Expenses Expenses
2017 736 737 1,473 17.17
2018 1,054 885 1,940 31.68
2019 1,380 1,290 2,670 37.63
2020 1,962 1,561 3,523 31.95
2021 2,260 1,985 4,245 20.49
Source: NMB Bank Ltd, Annual Financial Statement

14
 Figure 2.6
Operating Expenses of NMB Bank Ltd. (in millions)

Other Operating Expenses Staff Expenses

4500

4000

3500
1985
3000
1561
2500

2000 1290

1500 885
737 2,260
1000 1,962
1,380
500 1,054
736
0
2017 2018 2019 2020 2021

In above table and diagram 2.6, the total operating expenses of NMB Bank Ltd. over the
period of five years is shown. Total operating expenses consists of staff expenses and other
miscellaneous expenses. In the year 2017, total operating expenses was 1,473 million. In
which part of staff and other expenses was 736 and 737 million respectively. In year 2018, it
was increased to Rs. 1,940 million consisting 1,054 staff expenses & 885 other operating
expenses. Similarly, in 2019, 2020& 2021 it was reached to 2,670, 3,523 & 4,245 million by
increasing 37.63%, 31.95% & 20.49%% respectively. The data shown by bank shows that the
both department share similar ratio of expenses.

Table 2.7
Deposit Lending Ratio ( in billions)
Years Total Deposit Total Loans & Advance Deposit Lending Ratio (%)
2017 73.222 62.61 85.51
2018 84.503 75.65 89.52
2019 98.515 91.89 93.28
2020 134.81 121.78 90.33
2021 166.45 158.04 94.95
Source: NMB Bank Ltd. Annual Financial Statement

15
 Figure 2.7
Deposit Lending Ratio (in %)

96.00% 94.95%
94.00% 93.28%

92.00%
90.33%
90.00% 89.52%

88.00%

86.00% 85.51%

84.00%

82.00%

80.00%
2017 2018 2019 2020 2021

The above the table and figure 2.7 shows the ratio of total loans and advances to total
deposits of NMB Bank Ltd. During the year 2017 the deposit-lending ratio was 85.51% of
total deposit. The ratio increased to 89.52% of total deposit in the year 2018. The deposit
increased simultaneously loan lending also increased.Total loans and advances in the year
2019 were 93.28% of total deposit. In the year 2020, 90.33% of total deposit has been lent.
Both total deposit and loan and advances have been increased in 2021 maintaining the
deposit-lending ratio 94.95%.

2.2 Analysis of Data

None of the organizations is perfect in each and every way. Here are some brief points that
are been found after analysis of data of the bank. Almost all sides, which are been taken into
consideration on deposit mobilization are important. They directly or indirectly affect the
organization’s performance as well. It has lots of strength to be proud of, but besides with
some weakness and threats as well. And the organization does not remain same forever.
There will be lots of opportunities in order to expand the business. So, NMB Bank Ltd. has
also its strength to be proud, some weakness to be recovered and threats to be faced patiently.

2.2.1 Analysis on Deposit Collection

16
Deposit plays a key role in any business expansion. They are the sources of fund to run any
business. The starting point of the business is deposit collection. It may be from different
source. In the same way, Deposit collection of NMB is consistently well.Customer’s belief is
quite important in this. The data shows that deposit collection of the bank is increasing at the
average of 21.0067%in 5 years.

2.2.2 Analysis on Loan Lending

Without loan lending collection of deposit is useless. Interest and commission earned from
lending is the key source of profit. In comparison of deposit, loan and advance lend by the
bank is extraordinary. NMB Bank has the data of 23.9875% loan lend to the deposit
collection in average of 5 years.

2.2.3 Analysis on Investment

NMB Bank has fluctuating investment data from fiscal year 2017-2021. Investment on share
& debenture as well as government securities is on average. The averageinvestment for 5
years is 24.436%.

2.2.4 Analysis on Fixed Assets

Fixed assets are depreciating in nature. Due to the passage of time, their value should be
decrease. But the data of the bank shows that the fixed assets of the bank are increasing year
by year. The assets are being decreased just around 2-3 percent in year 2017 & 2021.

2.2.5 Analysis on Liquid Fund

Liquid fund can be treated as working capital for the entity. The fund is depending on the
Cash Reserve Ratio(CRR) set by Nepal Rastra Bank time to time. Liquid fund consist of cash
balance, balance at NRB & balance at other BFI's. The growth of the fund of the bank is on
average of29.3436% for 5 years.

2.2.6 Analysis of Operating Expenses

Staff expenses and other operating expenses of the bank seem parallel to each other. Due to
the expansion of branch & human resource, operating expenses is growing tremendously. The
data obtained for 5 years shows that the operating expenses is growing in the average
27.778% of per year since 2017.

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2.3 Findings
The major findings of this study based on the analysis of available secondary data are pointed
out below:
1. The bank has achieved almost all target set by itself on different year.
2. The data of last two years do not disclose the exact information of previous year.
The data are not exact.
3. By the analysis of deposit lending, we can conclude that the bank is able to utilize its
deposits a greater extent.
4. The bank’s performance is effective in profitability and towards the
customer'ssatisfaction.
5. Relevant internal and external markets are fully explored.
6. Almost all indicator of the bank is positive.
7. NMB Bank has not proper practice of segregating the cost into fixed and variable or
controllable and non-controllable.

CHAPTER-III
SUMMARY& CONCLUSION

3.1 Summary
A bank is an institution, which deals with money. A bank is like a reservoir. It draws surplus
money from the people who save and lend them to the people who want to use it for
productive purpose. In this process the bank earns commission. The rate of interest paid to
the depositors is generally lower than the rate charged to the borrowers. The difference
between these two rates of interest is the profit of the bank. Deposit collection is the main
function of commercial bank. The present study has been undertaken to examine and evaluate
the financial performance of NMB Bank Ltd. The financial statements of five years that is

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from 2016/17 to 2020/21 have been examined for the purpose the study. The study has
resorted mainly to secondary data that has been first processed and analyzed comparatively.
Individual interview with the management personnel has been taken whenever necessary.
This study is exploratory as well as analytical sometimes. NMB Bank was established in May
2008. It is a leading one, which is always running in profit due to its proper management and
good policies. Data that I have presented is all from the secondary sources, which are in the
annual reports or other printed matters. In the entire report, I have presented the deposit
collecting source and lending them in productive or needy sector.

3.2 Conclusion
The deposit of NMB Bank Ltd. is in increasing trend. The share of fixed deposit is more than
that of savings, current, call and other deposits in the deposit mix.The trend of loan lending &
investment has been gradually increasing but there has been more fluctuation in fixed assets
& liquid fund. Similarly, there is equal distribution of operating expenses on staff expenses
and other miscellaneous expenses.

The trend analysis shows that the deposit mobilization of the bank is in satisfactory trend. In
addition to this, the bank is being able to satisfy its customers and in providing higher quality
and newer services to them.Customer services should be diversified and should further be
accommodated. The bank should aim towards increasing its customers but it must also
provide the quality services to the present customers. For this the bank must make plans and
policies keeping customers in mind.
Bank should also pay attention towards the priority sector and industrial sector for lending
loans to develop the economic condition of the country.Bank should provide more facilities
to the staff, it has to provide job satisfaction, training and should encourage its staff.

Although NMB Bank Ltd. has a strong financial base and capital structure as well as good
market status and reputation in order to attract new customers and increase deposit collection,
NMB should introduce new schemes and engage customer to use digital tools of banking
such as mobile banking, internet banking, ATM, QR code payment etc.

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 REFERENCES

Annual Report of NMB Bank Limited from 2014/15 to 2018/19

Rastriya Banijya Bank Act (2021 B.S.)

Bank and Financial Institution Act (2073 B.S.)

Bajracharya, B.C. (1990). Monetary Policy & Deposit Mobilization in Nepal

Karmacharya, G. (2004) A Study on Deposit Mobilization by the NBL

Parajuli, Ganesh, (2019).'A Study on Saving Deposit Mobilization of Nabil Bank Ltd. '

Submitted to Pokhara University on the partial fulfillment of bachelor degree (BBA-BI).

Ghimire, Shiva Raj (2011) “Fundamentals of Investment”: Kathmandu

Khadka, Sherjung. (2011), “Banking and Insurance”. Kathmandu: Asia Publication.

Websites:

https://nmbbanknepal.com

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

https://www.google.com/

https://www.wikipedia.org/

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