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Ratio and Profitability analysis on Himalayan Bank Limited

Bachelors of Business Administration (Tribhuvan Vishwavidalaya)

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 Ratio and Profitability analysis on Himalayan Bank Limited

ACKNOWLEDGEMENT
This fieldwork has been presented to the department of commerce of Hamro College, Biratnagar.
This work has been undertaken for the partial fulfillment of the requirement for the degree of
Bachelor of business studies. It is sincerely hoped that this report will prove to be useful for
researchers, managers, and readers who are interested to know the detail and analytical study on
the financial performance of (in terms of ratio analysis) of Himalayan bank limited.
The fieldwork has been completed with the combined effort of any individual. I am heartily
thankful to the Manager of Himalayan Bank who helps me to access data and oral information
without which this fieldwork report would not be possible.
I would like to express my graduate to our respected Head of Department Prof. Dr. Name
Surname, Supervisor Mr. Name Surname for his excellent supervision, support and guidance
through the preparation of this report. and lastly, I would like to give special thanks to Mr. Name
Surname from “Hamro Computer Training Centre, Biratnagar” for Computer typing print.

Your Name
List of ABBREVIATIONS
& And
A.I Average Income
A/C Account
ABBS Any Branch Banking System
ATM Automatic Teller Machine
B.S Balance Sheet
BM Branch Manager
C.A Current Assets
C.L Current Liabilities
C.R Current Ratio
CBS central Bureau Of statistics
Co. Company
CRR Cash Reserve Ratio
CV Coefficient OF Variation
Dep Depreciation
Dept. Department
EBIT Earnings before interest & tax
F/Y Fiscal year

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GPR Gross Profit Margin
I.e. that is
LTD limited
Mgmt Management
MIS Management Information System
Mr. Mister
NBL Nepal bank Limited
NPAT Net Profit after Tax
NRB Nepal Rastra Bank
Pvt Private
Q.R. Quick Ratio
RBB Rastriya Banijya Bank
Rose Return On shareholder equity
ROTA Return on shareholders’ Equity
Rs Rupees
TATR Total Assets Turnover Ratio
TABLE OF
CONTENTS CHAPTER
-1
1. INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.1.1 PROFIT OF HBL
1.2 LITERATURE SURVEY
1.3 PURPOSE OF THE FIELD WORK
1.5 ASSUMPTION AND LIMITATION OF THIS STUDY
1.4 FIELDWORK PROCEDURE
1.5 METHOD OF DATA COLLECTION
CHAPTER -2
2. PRESENTATION AND ANALYSIS OF DATA
2.1 PRESENTATION OF DATA
2.2 ANALYSIS OF DATA
2.3 ANALYTICAL STUDY
CHAPTER -3
3. SUMMARY, CONCLUSION & RECOMMENDATION
3.1 SUMMARY
3.2 CONCLUSION
3.3 RECOMMENDATION
BIBLIOGRAPHY
APPENDIX1
APPENDIX2

LIST OF TABLE & FIGURES

1. List of table
1. HBL branches

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 2. Share pattern of HBL
3. A comparative balance sheet of HBL from 2067/2068 to 2069/070 18
4. Current Ratio
5. Quick Ratio
6. Debt Ratio
7. Debt to Equity ratio
8. Return on Shareholder’s Equity
9. Return on Asset
10. Earning per share
11. Analytical Table
2.List of figure
Share pattern of HBL
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF STUDY
In today’s world, a lot of financial activities are undertaken by all the peoples, industries and also
by the service providers.They are engaged in their own business, trade and profession but
whenever there comes a task of conducting financial transaction with any party, they need a
proper means, less risky and much believable and safe medium between them to exchange
finance. Financing is needed for every organization for the start of business to the end of
business. Investment, operating expenses, working capital expenses and also to keep the money
at safe and profitable place each and every organisation needs proper institution conducting
financing activities. Thus, a bank is the first and last choice of each and every organisation.
The role of bank become prominent for the all round development of the country because
it facilitates or adds social, economical and industrial sector. Bank help directly or indirectly to
invest and mobilize saving of the people in systematic way. It helps people not only saving
money but also enhance their living standard by providing various facilities. Hence, in the
present context it is essential for each and every individual to have sound knowledge of banking
and services provided by it for public and social welfare.
1.2 PROFIT OF HIMALAYAN BANK LIMITED
Commercial Banks are one of the most important engine to run the financial vehicles of
today’s world .Commercial Banks are very much important part of economy which required in
all sector whenever financial transactions is to be held. Thus, Himalayan Bank Limited is also a
commercial bank that is growing rapidly during past two decades.
Himalayan Bank Limited was established in 1992 B.S. and started its business
activities from 18 January, 1993 with an authorized capital of 24 corers. It was incorporated by
distinguished business personality of Nepal partnership with employee provident fund and Habib
Bank limited, one of the largest private sector commercial Banks of Pakistan. Chairman of
Himalayan Bank, Mr. Manoj Bahadur Shrestha informed in 25th Annual General Meeting that the
Bank’s total deposit base reached Rs. 92.88 billion during the period under review, recording a
growth of 6.35 percent over the previous year. Similarly, the loans and advances reached Rs.
77.64 billion recording a growth of 12.36 percent. Himalayan Bank Limited was forth private

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 sector joint venture bank to be given license to operate. HBL started its services with 77
employees from Trammel Banking Office. Now its employees are more than 300.
The bank given many facilities to their customers, such as credit card, tele banking, Any
Branch Banking system (ABBS), Automatic Teller Machine (ATM), 24 hours banking services.
To support both the trade financing and remittance business, the banks have been continuously
expanding its correspondent network. The bank has also been providing the facility of SMS
banking and Internet banking to ensure that customer optimally enjoys modern banking system.
1.2.1 Objectives of HBL
Bank was established with the aim of simulation the Nepalese economy and taking it’s to never
height. Whenever any business opportunity that has come along have been thoroughly evaluated
and tapped whenever economy globally with more competencies. It has following objectives:
a) Providing quality services for the customer with innovation and customization to meet
customer needs to uphold quality of services.
b) To get maximum financial and social benefit by operating its services.
c) To provide attractive returns for stakeholders.
d) To develop a fruitful bond with society through corporate social responsibilities.
e) To provide services for various and every organizations.
f) To uplift the living standard of Nepalese by developing easy, safe cheaper
banking services for all Nepalese.
1.2.2 HBL branches
Table 1
HBL Branches
Branches within the Kathmandu Valley:

1. Thamel Branch Maharajgunj Branch New Road Branch Patan Branch Bhaktapur Branch Teku Branch Kalanki B
2. . Naya Baneshwor Branch
. Dillibazaar Branch
3.
. Satdobato Branch
4. . Swayambhu Branch
5. . Kaushaltar Branch
6. . Battisputali Branch
7. . Samakhushi Branch
8.
9.
10
11
12
13
14
15
16
Branches outside the Kathmandu Valley:

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 1. Banepa Branch, Kavrepalanchowk
2. Butwal Branch, Rupandehi
3. Bharatpur Branch, Chitwan
4. Tandi Branch, Chitwan
5. Birganj Branch, Parsa
6. Bhairahawa Branch, Rupandehi
7. Pokhara Branch, Kaski
8. Hetauda Branch, Makwanpur
9. Biratnagar Branch, Morang
10. Dharan Branch, Sunsari
11. Nepalgunj Branch, Banke
12. Itahari Branch, Sunsari
13. Palpa Branch, Palpa
14. Ghorahi Branch, Dang Deukhuri
15. Trisuli Branch, Nuwakot
16. Damak Branch, Jhapa
17. Parsa Bazar Branch, Chitwan
18. Baglung Branch, Baglung
19. Gorkha Branch, Gorkha
20. Dhangadi Branch, Kailali
21. Kawasoti Branch, Nawalparasi
22. Barahabise Branch, Sindhupalchowk
23. Betrawati Branch, Rasuwa
24. Birtamode Branch, Birtamod
25. Dhading Branch, Dhading
26. Ram Bazaar Branch, Ram Bazaar Pokhara
Source: Annual Report of HBL
1.2.3 Share of HBL
The Shareholders are the real owners of the business. The bank has collected its share capital
by issuing share of different parties. The share pattern is shown below:
Share pattern of HBL
Bank promoter 51%
Employee provision fund 14%
habit Bank ltd, Pakistan 20%
General public 15%
Total 100%
Figure 1: Share pattern of HBL

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1.3 literature Survey
The business financial performance is analyzed to have information about the stability of
financial operation and activities of the business. The financial results of the business are
analyzed to know about efficiency and effectiveness of the business activities. Thus, the field
work report focused on analyzing the financial performance of the business organization.
1.3.1 Introduction to Financial Analysis
The financial analysis helps to analyze and know or study about the relationship that exists
between different items of financial statement. The process of evaluation of relationship between
different items of financial statement and their complementary part to get the information about
the situation and total activities of the business is called financial Analysis.
The analysis of financial data is necessary for different parties according to the need of
their own business matters. The shareholders or owners of the business are interested to know
the capacity to pay current liability , the buyer or purchaser or loan lender are interested to know
about the capital structure , past and project earning , change in financial situations , shareholder
or probable investors are interested to know about dividend payout ratio of the company. Thus,
their need can only be fulfilled with the help of analysis of financial statements.
1.3.2 Ratio Analysis:
The quantity of relationship that exists between two or more than two numerical items is called
ratio. Ratio is calculated by dividing one items of relationship with another items. Ratios are
calculated into two types. They are unity based ratio and percentage based ratio.
Ratio analysis of financial data represents the mathematical expression of relationship that
exists between two or more than two related items of financial statement. Ratio analysis focuses
on numerical relationship that exists between two or more than two financial statement.
According to O.P. Gupta and P.N. Abort, ‘‘Ratio of two quantities that have been measured in
monetary terms which is used in analysis they actually of a firm (also known as accounting ratio)
’’
According to R. Chopra, ‘‘Ratio services as a measuring of merits of several assets of an
enterprise when data from one accounting period are compared with similar data from another. ’’
1.3.3 Importance of Ratio Analysis:

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 Ratio analysis helps to clarify the relationship between the different complementary items of
financial statement. It helps the manager to actually judge the business and take some important
financial decisions. It also helps to judge the ability and health of a concern through which the
important decisions to improve the efficiency of the business can be taken. The importance of
Ratio analysis can be highlighted below:
a) Useful in expressing future trends
b) Useful in showing changes
c) Useful in explaining plan
d) Helps in setting standard
e) Helps in effective cost and other control
f) Comparison of efficiency and performance
g) Maintaining uniformity
1.3.4 Limitation of Ratio Analysis:
Ratio analysis is an important technique to pasteurize the actual financial situation of business.
Although it has certain limitations which are listed below:
a) Lack of proper basis of comparison
b) Give false result if the ratio are based on incorrect accounting data
c) Difficult to forecast future on the basis of past facts
d) Price levels changes can make difficult comparison for various years
e) Ignores qualitative factors
f) Misleading results in the absence of absolute data
g) No common standard for comparison
1.3.5 Classificationof Ratio Analysis:
Different parties have different purpose to know about the different types of ratio as per their
needs. The financial analysis of the business is done for different parties according to their need.
Liquidity position, solvency state, operating efficiency, earning capacity, capital structure
analysis of the business can be analyzed by different types of ratios. These types of ratio are:
a) Liquidity Ratio
Liquidity ratio helps to study about financial situation and capacity of the business to meet
short-term obligation. This ratio shows relationship between current assets and current liabilities.
These types of liquidity ratio are:
i. Current Ratio: current ratio is calculated by dividing current assets by
current liabilities.
Current Ratio = Current Assets/ Current liability

ii. Quick /acid test Ratio: it shows the relationship between the firm’s liquid assets
and current liabilities. Its shows the firm’s ability current liabilities with liquid assets.
Quick ratio =Quick/Acid test Ratio/current liabilities
b) Leverage/capital structure/solvency Ratio:
This types of helps to measure the long terms financial position of the business. It helps
to measure the ability of firm to pay interest on long terms loans, ability to redeem the debts and
financial stability of the business.

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The different types of leverage ratio are:
i. Debt to equity ratio: debt equity helps to calculate the efficiency of long term financial policy
of the business. It is calculated by dividing total debt or total long- term debt by shareholder’s
equity.
Debt equity ratio= total debt/ shareholder’s equity
ii. Interest coverage ratio: this is used to examine the capacity of loan service of the business. It
is calculated by dividing Earning before interest and tax (EBIT) by interest charges.
Interest coverage ratio= EBIT/Interest
c) Activity Ratio:
This ratio is used to measure the operating efficiency of the firm. It also helps to examine the
efficiency of utilization of available means and resources of firm. It also helps to examine
operating efficiency or functional efficiency of the firm indirectly. Its types are :
1. Inventory / Stock turnover ratio : It helps to find the relationship between average cost
of inventory and average cost of good sold during a certain period of time.
Inventory turnover ratio = cost of goods sold
Average inventory
2. Debt turnover ratio : It shows the relationship between amount due from debtors and credit sales
.
Debtors turn over ratio = Credit sales
Average Debtors
Average Debtors =Opening Debtors +Closing Debtors
2
3.Average Collocation Period : This ratio shows the average period that the organization have
to wait collect due amount from debtors .
Average Collocation period = Debtors × 365days
Credit sales
4.Net fixed assets Turnover Ratio: This ratio helps to examine the relationship between net fixed
assets and sales.
5. Total assets turnover ratio: It helps to know the use of total assets for promotion of sales :
Total assets turn over assets ratio = Sales
total assets
6. Capital employed turnover ratio : It helps to shows the relationship between capital employed
and total sales . It also helps to find the sales achieved by the use of long – term loan and owners
capital.
Capital employed turnover ratio = Sales
Capital employed
Capital employed =Net worth= shareholders equity +Long term libilities /debts = total assets –
current liabilities
D)Profitability Ratio:
The examination of total functional , operational efficiency of business is done by profitability
ratio . Generally , this ratio helps to find the relationship of sales or investment with other items .

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 The success or failure of the business is studied with the help of profit . The different types of
profitability ratio are :
On the basic of sales
 Net profit margin : this ratio shows the relationship between the net profit and total sales
. Net profit margin = Net profit after tax
/sales
 Gross profit margin : It shows the relationship between the gross trading profit and
sales . Gross profit margin =Gross profit
/sales
Gross profit =Sales –cost of good sold
 Operating ratio : It shows the relationship between the operating profit expenses and sales
Operating profit = Cost of good sold +Operating expenses/Sales
On the basic of Investment
 Return on Assets : The relationship between net income and total assets shown by return
on assets .
Retun on assets = Net income
total assets
 Return on capital employed : This ratio helps to examine the use of capital employed in the
firm by long term debt and shareholders of the form .
Return on capital employed = Net profit after tax
/capital employed
 Return on shareholders equity : It help to shows the relationship between net income and
total shareholder equity fund .
Return on shareholder equity = Net income /shareholder equity
 Earning per share: It shows the amount that each shareholders will get out of net profit
available for them.
Earning per share = Net profit available for equity share
/ no. Of equity share
1.4 Purpose of the study
The main purpose of the field work is to examine and analyze the financial position of the
HBL by using different tools of analysis. This field work also helps to derive different suggestive
measures, if the financial, liquidity, solvency etc. Position of the bank is not satisfactory . It
helps to find the operational , financial , managerial , administrative effiency and effectiveness of
the bank .
(A) To show liquidity position.
(B) To show profitability position
(C) To show leverage of the bank
(D) To provide external
(E) Knowledge to the student
1.5 Assumption and limitation of the study
1.5.1 Assumption of the study
The assumption of the study are as pointed below :

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(A) Oral information, interview and explanations given by the officials of the HBL are assumed
to be correct.
(B) Data available in published accounts are assumed to be correct.
(C) No abnormal condition has been in the bank during these accounting years.
1.5.2 Limitation of the study
There were certain limitation that were inherent in the completion of these field work study.
These limitations are:
(A) During the study, the officials of the respond in different manner and showed very little
interest to the researchers.
(B) Limited and certain tools area only used for the study which is also not free from
limitations.
(C) The primary and secondary data are used for the study which is also not free from
limitations.
(D) Instability in government roles ignored which effect the financial position of the bank.
(E) Information and study materials were not sufficient.
1.6 Field work Procedure
The newly secondary data have directly collected from the website of the bank. It means all the
financial statements , cash flow and accounts representing financial position of the bank were
availed from the website.
For the preparation of report, the researchers have gathered various informations and data form
the officials of the bank. However , the data available were not in systematic form .The available
informations and records presented were analyzed and synchronized in the systematic way .
Several questions were made about his introduction , present services , and policy of the bank .
1.7 Methods of data collection
Data are the aggregate of facts which can numerically be expressed from the very definition of
statistics. Collection of data means the methods used to get the necessary information's from
units under investigations. The methods of data collection depends upon the nature, object and
scope of the investigation . Collection of relevant data is essential for correct and important
decision making . Generally , two types of data are collected .They are :
(a) primary data (b) Secondary data

(a) primary data

The data which are directly collected or obtained by an investigator or an agent for the first
time is primary data . They are first time is primary data. They are first hand data and collected
generally by asking officials, staff members and other concerned authorities of the bank .But in
this field work this methods is not used.
(b) Secondary data:
Secondary data are originally collected but obtained from published or unpublished
sources. they are also called second hand data because they are not originally in character and
hace already been used by other people. They are generally collected from books, journals,
papers and websites.

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The data in this field work report have been collected from both primary and secondary sources.
Balance sheet, profit and loss A/C and other financial statement has been collection from
published sources. These all have provided researchers necessary information related to this
study. Different required information about the bank has been collected from official website of
the bank.
CHAPTER 2
2.1 PRESENTATION AND ANALYSIS OF THE
DATA Comparative Balance Sheet of HBL
Comparativ
e Balance
Sheet of
HBL 2072 2073 2074
Current
assets
Cash
Balance 1,349,261,530 1,498,347,320 1,558,322,040
Balance with
Nepal Rastra
Bank 5,873,158,748 5,677,702,310 6,141,151,917
Balance with
Bank/
Financial
Institutions 1,164,991,531 698,934,429 1,215,911,701
Money at
call short
notice 1,063,950,000 1,482,036,329 -
Loan
Advances
and bills 17,113,389,43 67,745,978,94
purchases 2 4 76,394,259,228
Others
Assets 1,439,297,602 1,530,968,746 1,840,677,103
Total
Current 28,004,048,84 78,633,968,07
Assets(A) 3 8 87,150,321,989
Fixed Assets
17,113,389,43 19,306,073,33
Investments 2 8 17,929,265,339
Fixed Assets 1,321,271,898 1,922,966,664 2,175,892,638
Total fixed 18,434,661,33 21,229,040,00
Assets(B) 0 2 20,105,157,977

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 Total 82,801,550,61 99,863,008,08
Assets(A+B) 4 0 107,255,479,966
Current
Liabilities
Borrowing - 1,000,000,000 40,000,000
Income Tax
Liabilities - - -
Bills Payable 95,873,089 504,174,092 82,892,887
73,538,200,18 87,335,785,84
Deposits 5 9 92,881,114,255
Other
liabilities 1,371,780,609 1,528,240,879 1,860,859,289
Total
current 75,005,853,88 90,368,200,82 94,864,8
libilities 3 0 66,431
Capital
Share
Capital 4,499,145,000 5,848,888,500 8,114,529,375
Reserve
&fund 2,459,754,626 2,974,879,628 3,590,667,378
Debenture &
Bond 600,000,000 600,000,000 600,000,000
Proposed
dividend 236,797,105 71,039,132 85,416,782
Total
Libilities &
capital(A+B 82,801,550,61 99,863,008,08
) 4 0 107,255,479,966
2.2 Analysis of Data
The Banks are financial institution which do not bill with sales of any items. Interest
received and interest paid is the main transactional items. Thus the ratio that we calculate for
analysis of data is limited. Here we focus on following ratios.
2.2.1 Liquidity Ratios
(a) Current Ratio
Current Ratio = Current Assets / Current
Liabilities Current Ratio of HBL From 2067/068 to
2069/070
Fiscal Year Current Assets Current liabilities Current Ratio
2072 28,004,048,843 75,005,853,883 0.374
2073 78,633,968,078 90,368,200,820 0.8702
2074 87,150,321,989 94,864,866,431 0.9187
Average 0.7210

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 The Current ratio of HBL is just below 1, its shows that the bank have capacity top Pay it`s
current liabilities through it`s current assets . Generally the current ratio of 1:1 is found to be
satisfactory . However the current ratio of fiscal years 2074 is 0.9187:1 which seems good. The
average of current ratio is 0.7210.
(b) Quick Ratio
Quick ratio = Quick Assets /Current liabilities
Quick ratio of HBL form 2067/068 to2069/070
Fiscal Year Quick assets Current liabilities Quick ratio
2072 28,004,048,843 75,005,853,883 0.374
2073 78,633,968,078 90,368,200,820 0.8702

2074 87,150,321,989 94,864,866,431 0.9187

Average 0.7210
Note: In balance sheet of HBL of 2072, 2073 and 2074, there are no inventory and prepaid
expenses so quick assets are the same as current assets .
The quick assets of the year is 0.7210 which shows that the bank is in very liquid position to pay
it`s debts with liquid assets currently .
2.2.2 Leverage Ratio
(a) Debt assets ratio
Debt assets ratio = Total Debt/ Total Assets
Where, Total debt = Creditors + Loan + Other liabilities
Total assets = Current Assets + Fixed
Assets
Debt Assets Ratio of HBL from 2067/068 to 2069/070
Fiscal year Total Debt Total Assets Debt Ratio
2072 467653698 82,801,550,614 0.00564 (0.5%)
0.01664
2073 1662414971 99,863,008,080 (1.66%)
0.01849
2074 1983752176 107,255,479,966 (1.85%)
0.01359
Average (1.35%)
The highest & lowest debt ratio of HBL are 0.018495579 & 0.005647886. The average debt
ratio of HBL is 0.01359. It shows that only a small portion of 1.35% or 0.0135 part of total
assets is created by liabilities of the bank.
(b) Debt Equity Ratio
Debt to equity ratio = Total debt /Total Shareholder`s equity
Where , Shareholder `s equity = total fund available for
Shareholder`s Debt to equity ratio from 2067/068 to 2069/070
Fiscal Total Shareholders’ Total debt to
year Total Debt Equity Equity Ratio
0.06720224 or 6.72
2072 467653698 6,958,900,000 times

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 0.18840191 or 18.84
2073 1662414971 8,823,769,000 times
0.20482833 or 20.48
2074 1983752176 9,684,950,000 times
0.1534775 or 15.34
Average times
From the above table , we can see that HBL have average debt to equity ratio of 15.34 times . Its
shows that the have invested for its lots of business assets from external sources . Generally , the
ratio of 1:1 is found to be satisfactory . Hence , HBL`s in risky position .
2.2.3 Profitability Ratio
(a) Return on Shareholder`s equity
Return on shareholder`s equity = Net profit After tax / Shareholder`s equity X
100 Return on Shareholder`s equity of HBL From 2067/068 to 2069/070
Fiscal Net profit after Shareholder`s
year tax equity ROSE
15.9836
2072 1,112,286,000 6,958,900,000 %
21.9396
2073 1,935,908,000 8,823,769,000 %
22.4909
2074 2,178,235,000 9,684,950,000 %
20.1380
Average %
Above the table shows that the return on shareholder`s equity is increasing year by year . The
average of return on shareholder`s equity is 20.1380 %.
(b) Return on total assets
Return on total assets = Net profit / Total assets
Return on total assets of HBL from 2067/068 to 2069/070
Net profit after
Fiscal year tax Total assets ROA
2072 1,112,286,000 82,801,550,614 1.3433 %
2073 1,935,908,000 99,863,008,080 1.9385 %
2074 2,178,235,000 107,255,479,966 2.0308 %
Average 1.7709 %
Above the table shows that the highest & lowest ROA are 2.0308 % & 1.3433 %. The average is
1.7709 %. It reflects that the management of HBL has consistently used its assets to earn
reasonable profit.
(C) Earning per share
Earning per share =Net profit for equity shareholder`s / No of equity share
Earning per share of HBL from 2067/068 to 2069/070
Fiscal year Net profit after No. of equity EPS

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 tax
2072 1,112,286,000 33,327,000 33.37
2073 1,935,908,000 44,991,450 43.03
2074 2,178,235,000 64,916,235 33.55
Average 36.65
The above table shows that the EPS of HBL is increasing year by year. However it declined in
2074. The earning per share is highest in the 2073 which reflect the consistent & effective
operation of activities by the bank.
2.3 Analytical study of each ratio from 2067/068 to 2069/070
Analytical table showing different ratio from 2067/068 to
2069/070
Ratios 2076/77 2077/78 2078/79
Current ratio 0.374 0.8702 0.9187
Quick ratio 0.374 0.8702 0.9187
Debt ratio 0.00564 (0.5%) 0.01664 (1.66%) 0.01849 (1.85%)
Debt to equity 6.72 times 18.84 times 20.48 times
ROSE 15.9836 % 21.9396 % 22.4909 %
ROA 1.3433 % 1.9385 % 2.0308 %
EPS 33.37 43.03 33.55
2.3.1. Study of results
The results obtained from, the study or calculation of above ratios helps the researchers to
analyze the financial performance of the bank. Generally, the ratios as calculated above of HBL
are found to be satisfactory.
(a) The current ratio of the bank is satisfactory but not good. The quick ratio of bank is not in
favourable condition. The bank is not in position to pay its current liabilities with the use of its
currents assets. The bank is not in position to pay its current liabilities with the use of its current
assets. The current ratio of the bank is declining state. Generally, quick ratio should be 1:1 but is
lower than it should be. Hence, the bank is in riskier position.
(b) The highest & lowest debt ratio of HBL are 0.018495579 & 0.005647886. The average
debt ratio of HBL is 0.01359. It shows that only a small portion of 1.35% or 0.0135 parts of
total assets is created by liabilities of the bank.
(c) The table shows that the return on shareholder`s equity is increasing year by year.
The average of return on shareholder`s equity is 20.1380 %.
(d) It shows that the highest & lowest ROA are 2.0308 % & 1.3433 %. The average is 1.7709 %.
It reflects that the management of HBL has consistently used its assets to earn reasonable profit.
(e) The study shows that the EPS of HBL is increasing year by year. However it declined in
2074. The earning per share is highest in the 2073 which reflect the consistent & effective
operation of activities by the bank. The earning of the bank is found to be satisfactory. The
amount available for distribution of dividend is also quite satisfactory. The amount available for
distribution of dividend is also quite satisfactory. The shareholder's are getting favourable
return on their investments.
Chapter 3

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 Summary, Conclusion and Recommendation
3.1 SUMMARY
This field work report has been prepared with a view to analyze the financial position of
HBL. This field work report have been prepared in systematized form by dividing its total part in
to three categories. These three parts are Introduction, presentation and analysis of data and
summary, conclusion and recommendation.
The narrator has used his own thought in preparation of the report. His thought might
disobey from other persons who are related with this report directly or indirectly. So he would
like to apologize with those personnel. The data of this report has been presented by the narrator
in his own form to enable the preparation of this repost easy. The other assets have been mixed
up with the current assets. If the reader finds any problem, they can see and get clarification from
the appendix attached with this report.
The main areas of analyzing the financial performance of the banks are liquidity position,
leverage or capital structure and profitability state of the bank. The narrator doesn't assume that
the usual standard of the ratio are fixed by the "Nepal Rastra Bank" . So there might arise some
misunderstanding with the readers. The conceptual view in liquidity area of the bank is
harmless. To give the stress definition area, the narrator wants to say that the data for trading
business is being pure liquidity but the financial institutions are being soured of investments.
That's why the narrator defines it in positive matters.
Apart from all this, the narrator could not be success in giving the activity ratio because
these ratios are not practicable with the nature of the activities of the bank. The data available
were unable to calculate such ratios. Thus, some ratios which are not feasible to calculate are left
out by the narrator.
3.2 CONCLUSION
The overall preparation of the report derives that the financial position of HBL is quite
good and favourable except current ratio and quick ratio. However, it has satisfactory liquid
assets and there is no liquid crisis in the organization. The other information's and ratios that
have been calculated by the narrator of past four years show the financial position of the bank is
consistently improving year after year. There are certain fluctuations in dividend policy of the
bank. The debt ratio of the bank is in risky position but it is quite familiar because the bank has
to deal with the debt, loans etc.
Apart from all above, the financial consistencies is maintained by the bank. The owners
of the company are getting favourable return.
3.3 RECOMMENDATION
Through the banks financial performance is satisfactory and improving year after year, the bank
needs some important improvements which are highlighted below:
(a) HBL should provide more modern service to attract more customers.
(b) HBL should implement proper marketing strategy to meet the competition of
commercial banks.
(c) The branches should be expanded to the rural areas of the country to meet banking
facilities for each and every Nepalese.
(d) The bank should investigate the new productive sectors and invest in such new sectors.

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(e) The services being provided by the bank should be clear and understandable by
each customers.
(f) The minimum balance for the account holders should be in liberal position.
(g) The unnecessary charges being charged by the bank on the account holders be eliminated.

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