CHAPTER I

INTRODUCTION

Background of the Study

A bank is an organization, which deals with money and credit. The bank may be a company,
firm, business, organization or person, which is involved in lending and borrowing activities. In
modern term, we cannot say that bank activities are limited to just borrowing and lending. This is
a very primitive concept. In modern concept, the bank is an institution that deals in monetary
transactions. Monetary transactions mean dealing in money and credit. It accepts the deposits
from different sectors in different accounts and provides loans of different types to the needed
sector.
Some definitions of the Bank from experts:
According to R.S. Sayers, ―a bank is an institution whose whole debts are widely accepted in
settlement of other people‘s debts.‖
In the words of Crowthese, ―the banker business is to take debts of other people to offer his own
in exchange and thereby create money.‖
According to Horace white, ‗bank is manufacturer of credit and money so facilitating exchange.‖
Origin of the word ―Bank‘
The word bank is derived from the Italian word ‗Banco‘ that means bench. The early years,
people transacted their business at benches in the market place in Italy. When people failed in
business their benches, (Banco) was broken up and the word bankrupt derived. The word bench,
which was termed as ―Banco‖ in Italy, was used, as Back‖ in the German language, ―bank‖ in
French and ―bank‖ is England so, the word bank derived to this world.
Introduction of Commercial bank
Commercial banks are an institution which accepts deposits, makes business loans,
and offers related services. Commercial banks also allow for a variety of deposit accounts, such
as checking, savings, and time deposit. These institutions are run to make a profit and owned by
a group of individuals. In Nepal, Nepal Rastra Bank is the central bank of Nepal. Nepal Rastra
Bank, the governing body of banking and financial institution has categorized the bank and

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financial institution in four distinct categories. i.e. ‗A‘ Class, ‗B‘ Class, ‗C‘ class and ‗D‘ class
institutions. Commercial banks are categorized under A class banks in Nepal. These categories
of banks in Nepal differ according to capital and service provided by them.
Commercial bank are taken as the backbone of eth nation as well as the helping hands of
National bank. When we talk about the commercial banks of Nepal, there are all together many
banks having many branches. Commercial bank mostly plays the role of supporting the economy
by investing the huge amount through their different function they gives the services of various
helps to the person of nation for promoting their living standard. When people get connect with
commercial bank, they get the chance of improving their standard of life. Commercial banks are
also the moving parts of nation that stands out in every remote to urban places for facilitating the
customer by their services.in Nepal also, the government always come ahead for opening the
branches in remote to urban area. Cash revolution is only possible by the establishment and
opening of bank everywhere. Cash can be only collected in huge amount by the people of nation
through its channel. Country can only step up their growth with its help because it takes more
courage and concuss about their growth.
That is why, the commercial bank are always in the search of beat places to expand their network
or branch. Commercial banks mostly deals with all types of customer and always is always
inclines to provide their best services to customer. It have also the special features of clasping all
the customer without analyzing and evaluating by dress up and faces. It does the full advocacy of
national growth. As we know that the nations runs and forms their economic collection by the
help of banks and their services. Government also plays role to grasp the economic condition of
nation by its fluxion of money and creating scarcity. Commercial banks are the main pillar for
making the economic growth increment and improvement that effects the national economic
growth by its services, many people get chance to channel their condition and misery of life.
That is why commercial bank is commonly known as the financial institution which deals with
motto of accepting deposits, announcing loans, granting welfare services if needed and other
relevant services too.
According to Culbertson,—―Commercial Banks are the institutions that make short make short
term bans to business and in the process create money.‖ If we highlights the other role of
commercial bank then we can see that it is mostly based on profit motives. The commercial bank
are organized and opened with the themes of earning the profit least for welfare and socialization

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objectives. Commercial banks in Nepal mostly highlights their earning from providing the loans
to small businessman, merchant and industrialist and other class of people for various purposes.
There also exist government commercial banks which explores the reason of establishment for
national growth and people welfare but working mostly for collecting the higher profits which is
exposed by their financial statement. Commercial bank in Nepal are operating their services w
by many channels from urban to rural by their different services.
There are 27 commercial banks in Nepal. ‗A‘ grade commercial bank of Nepal which are
operating its luxurious services through their networks and channel to lower to higher class
people.
Profitability Analysis
Profitability Analysis measures the firms‘ efficiency by analyzing firm's earning and operating
efficiency. It means ability to make profit from all the business activities of an organization,
company, firm, or an enterprise. It shows how efficiency the management can make profit by
using all the resources available in the market. Profitability is an index of efficiency and is
regarded as a measure of efficiency and management guide to greater efficiency. Though,
Profitability is an important yardstick for measuring the efficiency, the extent of profitability
cannot be taken as a final proof of efficiency. In this paper researcher try to analyze profitability
ratio of NABIL BANK LIMITED like Net Profit Margin, Return on Assets, Return on
Shareholder Equity& Earning per Share. To study variation in the financial performance of a
particular aspect of Nabil Bank Ltd. in Nepal, during the period of 'N' years on the basis of above
ratio to measure profitability of selected Nabil Bank Limited, Durbarmarg, Kathmandu, Nepal.
(Keywords: Profitability Analysis, Nabil Bank Ltd., Kathmandu, Nepal)

Profile of the Organization

This project report Analysis the "Profitability Analysis of Nabil Bank Limited" which has been
assigned of the subject Commercial Bank. NABIL is a commercial bank in Nepal, founded in
1984; the bank has branches all across the nation with its head office in Kathmandu. It has its
head office located at Nabil Center, Durbarmarg, which is also premium location of the capital. It
was earlier known as Nepal Arab Bank Ltd. It has the largest staff among private commercial
banks of Nepal.

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Nabil, the first foreign joint venture bank of Nepal, started operation in July 7, 1984. Nabil was
incorporated with the objectives of extending international standard modern banking services to
various sector of the society. Nabil Bank is established with the permission of central Bank
'Nepal Rastra Bank' where there is foreign investment in it. Persuading the core objectives of
Nabil bank brought about some major changes in the Nepalese banking sectors over last 38 years
of its operation. Nabil Provides a range of commercial banking sectors over last 38 years of its
operation. Nabil Provides a range of commercial banking services through its 51 points of
representation across the country and over 170 correspondent banks across the globe. NABIL
bank is distinguished for providing latest technology with vastly personalized service. Most of its
banking activities and services are done through computers. NABIL provides different services
like ATM, Credit Cards, Tele-banking services, safe deposit. Besides these services NABIL is
the only bank to maneuver inside the international airport of arrival and departure of cargoes.
NABIL has drawing arrangement with 75 banks in 40 countries of the world and with the
exchange companies and bank as well. The policies of His Majesty's Government and Nepal
Rastra Bank rule and regulation preside over NABIL.
Nabil, as a pioneer in introducing many innovative products and marketing concepts in the
domestic banking sector, represents a milestone in the banking history of Nepal as it started an
era of modern banking with customer satisfaction measured as a focal objective while doing
business. Operations of the bank including day-to-day operations and risk management are
managed by highly qualified and experienced management team. Bank is fully equipped with
modern technology which includes international standard banking software that supports the E-
channels and E-transactions. The data of F/Y2079/80 the bank have 135 branches & sub-
branches and 185 no. of ATM counter are operating. Nabil bank use the latest technologic for
good and fare daily transaction & operation.
Nabil is moving forward with a Mission to be ―1st Choice Provider of Complete Financial
Solutions‖ for all its stakeholders; Customers, Shareholders, Regulators, Communities and Staff.
Nabil is determined in delivering excellence to its stakeholders in an array of avenues, not just
one parameter like profitability or market share. It is reflected in its Brand Promise ―Together
Ahead‖. The entire Nabil Team embraces a set of Values ―C.R.I.S.P‖, representing the fact that
Nabil consistently strives to be Customer Focused, Result Oriented, Innovative, Synergistic and
Professional.

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Objectives of the Study
The main objective of the study is to analyze financial performance of this bank through the use
of profitability ratios other objective of this study is as follows:-
 To find out the profitability of the NABIL Bank Limited.
 To analyze the profitability.
 To determine factors of profitability.
 To evaluate profitability ratio of NABIL Bank Limited.

Significance of the Study

 Banks plays a vital role for the economic development of the country, so the following
are some important point of this field study report.
 To provide knowledge about the operation and performance of Nabil Bank Limited.
 To provide information about the Firm's Efficiency.
 To provide references point to general public, shareholder, managers, creditors,
government, and other stakeholder of the bank.
 To provide loan at lower interest rate.
 To know about the financial position of the firm.
 More importantly, I being a commerce student and interested in career in commercial
bank, this study will be very important in my individual level, for my career in the up
growing and challenging field of commercial bank.

Research Methodology
Methodology is the systematic, theoretical analysis of the methods applied to a field of study. It
comprises the theoretical analysis of the body of methods and principles associated with a branch
of knowledge. Typically, it encompasses concepts such as paradigm, theoretical model, phases
and quantitative or qualitative techniques.
A methodology does not set out to provide solutions - it is therefore, not the same as a method.
Instead, a methodology offers the theoretical underpinning for understanding which method, set
of methods, or [best practice] s can be applied to a specific case, for example, to calculate a
specific result.
It has been defined also as follows:

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"The analysis of the principles of methods, rules, and postulates employed by a discipline";
"The systematic study of methods that are, can be, or have been applied within a discipline";
"The study or description of methods".

Research Design
A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure. The
research design is the conceptual structure within research is conducted. In this study first of all
data are collected and presented in abutted in diagram and various financial and satirical tools
will be used to analysis the data. The analysis data will be interpreted for the conclusions.

Population and Sample

Among 27 commercial banks, NABIL bank limited have been selected for the the present study.
Financial statement of latest 5 years (2075/76 to 2079/80) have been taken as sample for the
comparative analysis of profitability ratio. The recommendation and suggestion, which are
derivative from the study, by taking the above commercial banks as samples, will be equally
useful.

Types of Data
The two types of data, that is primary data and as well as the secondary data will be collected so
as to make the research a balanced and realistic one. In primary data, the sources include
interviews, photographs, etc. similarly; the secondary sources of data of this study include prior
books and papers on a topic, essays, etc.

Sources of Data
The data used in this study are secondary in nature. Published annual reports of the concerned
banks are taken as basic source of data. Similarly, related books, magazines, journals, articles,
reports, bulletins, data from Nepal Stock Exchange and Nepal Rastra Bank, Central Bureau of
statistics, related website from internet etc. as well as other supplementary data and various
economic surveys are also used. Previous related studies to the subject are also counted as source
of information.

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Data Analysis Meaning
Data analysis is the process of developing answers to questions through the examination and
interpretation of data. The basic steps in the analytic process consist of identifying issues,
determining the availability of suitable data, deciding on which methods are appropriate for
answering the questions of interest, applying the methods and evaluating, summarizing and
communicating the results.
Analytical results underscore the usefulness of data sources by shedding light on relevant issues.
Some Statistics Canada programs depend on analytical output as a major data product because,
for confidentiality reasons, it is not possible to release the micro data to the public. Data analysis
also plays a key role in data quality assessment by pointing to data quality problems in a given
survey. Analysis can thus influence future improvements to the survey process.
Data analysis is essential for understanding results from surveys, administrative sources and pilot
studies; for providing information on data gaps; for designing and redesigning surveys; for
planning new statistical activities; and for formulating quality objectives.
Results of data analysis are often published or summarized in official Statistics Canada releases.

Meaning of Data Collection

Data collection is the process of gathering and measuring information on variables of interest, in
an established systematic fashion that enables one to answer stated research questions, test
hypotheses, and evaluate outcomes. The data collection component of research is common to all
fields of study including physical and social sciences, humanities, business, etc. While methods
vary by discipline, the emphasis on ensuring accurate and honest collection remains the same.
The importance of ensuring accurate and appropriate data collection:
 Regardless of the field of study or preference for defining data (quantitative, qualitative),
accurate data collection is essential to maintaining the integrity of research. Both the
selection of appropriate data collection instruments (existing, modified, or newly
developed) and clearly delineated instructions for their correct use reduce the likelihood
of errors occurring.
 Consequences from improperly collected data include.
 Inability to answer research questions accurately

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  Inability to repeat and validate the study
 Distorted findings resulting in wasted resources
 Misleading other researchers to pursue fruitless avenues of investigation
 Compromising decisions for public policy
 Causing harm to human participants and animal subjects

Data Collection Procedure

This study will adopt interviews, questionnaire, surveys, and observations as data collection
procedure. The numerical data collected from different sources were used in whole numbers for
the convenience of the study. The internet also proved to be a very good source of data. Various
sites were used for the collection of data. The sites used are listed in the bibliography.

Tools Used
The following instruments are used;
 Financial Tools.

Techniques of Financial analysis

Financial Analysis is defined as being the process of identifying financial strength and weakness
of a business by establishing relationship between the elements of balance sheet and income
statement. The information pertaining to the financial statements is of great importance through
which interpretation and analysis is made. It is through the process of financial analysis that the
key performance indicators, such as, liquidity solvency, profitability as well as the efficiency of
operations of a business entity may be ascertained, while short term and long term prospects of a
business may be evaluated. Thus, identifying the weakness, the intent is to arrive at
recommendations as well as forecasts for the future of a business entity.
Financial analysis focuses on the financial statements, as they are a disclosure of a financial
performance of a business entity. ―A Financial Statement is an organized collection of data
according to logical and consistent accounting procedures. Its purpose is to convey an
understanding of some financial aspects of a business firm. It may show assets position at
a moment of time as in the case of balance sheet, or may reveal a series of activities over a given
period of times, as in the case of an income statement.‖

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Since there is recurring need to evaluate the past performance, present financial position, the
position of liquidity and to assist in forecasting the future prospects of the organization, various
financial statements are to be examined in order that the forecast on the earnings may be made
and the progress of the company be ascertained.

Financial Tools
There are different types of financial tools (profitability ratio, leverage ratio, Activity ratio, and
Liquidity ratio) that can be applied to analysis the financial performance of Nabil Bank. For our
field work following ratio analysis tools is used.

Profitability Ratio:
Profitability ratio is related to profit. It shows the overall efficiency of the business concern. The
earning capacity of a business is measured by profitability ratio. The profitability is the net result
of a large number of policies and decisions. The ratio examined thus provide some information
about the way the firm operating, but the profitability ratios shows the combined effects of
liquidity, assets management and debt management on operating result. In this field work report
the following profitability ratio are used :

 Net profit Margin: From this ratio, the relation between sales and net profit become
clear. The amount after subtracting the whole operating expenses, income, tax, interest
etc. from the gross profit is known as Net Profit. To ascertain this ratio the net profit is
divided by sales. The formula for a ascertainment of this ratio is a s under;
Net Profit Margin = Net Profit after Tax/Operating profit

 Return on Assets: This ratio establishes the relationship between net profit and total
assets. This ratio is also called ‗Profit to assets ratio‘. It shown in percentage. The
formula ascertainment of this ratio is as under
Return on Assets= Net income/total assets

 Return on Shareholder Equity: This ratio shows the relation between the net profit
after tax and shareholder funds, Shareholder funds include equity share capital;

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 preferences share capital, reserve and surplus, reserve fund, general reserve, capital
reserve and share premium. The fictions assets should be deducted from total
shareholder‘s equity for finding out this ratio. The formula for finding out this ratio as;
Return on shareholder‘s equity=NPAT/Return on shareholders‘ equity
 Earnings per share: earnings per share (EPS) are the portion of a company profit
allocated to each outstanding share of common stock. Earnings per share serve as an
indicator of company‘s profitability. EPS is calculated as follows:
EPS= NPAT- preference dividend
no. of equity share
 % change is calculate by: New-old/old*100

Literature Review
The Literature review is a summary of previous research on a topic. The literature review
surveys scholarly articles, books, and other sources relevant to a particular area of
research or interest. Within the review the author provides a description, summary and critical
evaluation of each source, i.e. the strengths and weaknesses. The literature review may also
identify gaps or controversies in the literature and topics needing further research.
Anjay Kumar Mishra, Deepak Raj Kandel& P. S. Aithal ,(2020) the size of bank is increasing
trend. The decreasing trend of standard deviation shows that the size of Nepalese commercial
banks has lower variation in the use of total assets are the year increases. There is the negative
relation between ROA and ROE.

Haslem, J. (1968). A statistical analysis of the relative profitability of commercial banks. Journal
of finance 23:167-176 , this study analyzes the differential effects of management (management
effects) and others selected variables on commercial bank profitability and the operating
relationships through which these effects are the transmitted and relative profitability
determined. Management effects are the results of difference in bank management objective,
policies, and action reflected in differences in bank operating relationship, including profitability.

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Note what the purpose of this study is not. It is not to determine to actual determinats of a given
level of profitability .nor is its purpose to generalized how the overall level of bank profitability
performance can be improved.

Harward&Uption,"Profitability is the ability of a given investment to earn a return from its use."
However, the term 'Profitability' is not synonymous to the term efficiency and management
guide to greater efficiency. Though, Profitability is an important yardstick for measuring the
efficiency, the extent of profitability cannot be taken as a final proof of efficiency. Sometimes
satisfactory profits can mark inefficiency and conversely, a proper degree of efficiency can be
accompanied by an absence of Profit. The net profit figure simply revels a satisfactory balance
between the values receives and value given. There are many other factors besides efficiency,
which affect the profitability. In order to pin point the cause which are responsible for low/high
profitability, a financial manager should continuously evaluate the efficiency of a firms in term
of profit. The study increase or decrease in retained earnings various reserve and surplus will
enable the financial manager to see whether the profitability has improved or not. An increase in
the balance of these items is an indication of improvement in profitability, where as a decrease
indicates a decline in profitability.

Uppal,R. K. and Kaur, K. (2007) emphasized that cost should be properly managed to improve
the profitability of banks because the net profits were affected by the increase or decrease in
operating cost.

Tregenna,(2009) investigates the impact of structure on profitability in the US banking industry.

The profitability is measure by two different indicators: ROA and ROE .

Note what the purpose of this study is not. It is not to determine to actual determinats of a given
level of profitability .nor is its purpose to generalized how the overall level of bank profitability
performance can be improved.

The format of the literature review may vary from discipline to discipline, and from assignment
to assignment, but the purpose is standard: critical analysis of a body of knowledge through
summation and comparison.

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The literature review:
 provides the historical background for your research;
 describes issues, debates, theories, concepts and related research in the field; and
 Shows how your research will extend these or address a gap.

Conceptual Review
Profitability analysis is a component of enterprise resource planning (ERP) that allows
administrators to forecast the profitability of a proposal or optimize the profitability of an
existing project. Profitability analysis can anticipate sales and profit potential specific to aspects
of the market such as customer age groups, geographic regions, or product types.

Profitability analysis can help key personnel in an enterprise to:

 Identify the most and least profitable clients.
 Identify the most and least profitable products or services.
 Discover which sources of information offer the most reliable facts.
 Optimize responses to changing customer needs.
 Evolve the product mix to maximize profits in the medium and long term.
 Isolate and remedy the causes of decreasing profit margins.
Profitability Analysis measures the firm's efficiency by analyzing firm's earning and operating
efficiency. It means ability to make profit from all the business activities of an organization,
company, firm or an enterprise. It shows how efficiency the management can make profit by
using all the resources available in the market.

Profitability ratios are of two types those showing profitability in relation to sales & those
showing profitability in relation to investment. Together these ratio indicate firm's overall
effectiveness of operation.

Limitations of the Study

The overall profitability ratio suffers from certain important limitations. These are as under:
 Manipulation Possible: the overall profitability ratio is based on earnings and
investments. Both these figures can be manipulated by management by adopting varying

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 accounting policies regarding depreciation, inventory valuation, treatment of provisions,
etc… the decision in respect of most of these matters is arbitrary and subject to whims of
the management.
 Different Basis for Computation of Profits and Investments: There different bases for
calculating both profits and investments. For e.g. fixed assets may be taken at gross or net
values, earnings may be taken before or after tax, etc…
 Emphasis on Short-Term Profits: The overall profitability ratio emphasizes the
generation of short-term profits. The firm may achieve this objective cutting down cost
such as those on research and development or sales promotion. Cutting down of such cost
without any justification may adversely affect the profitability of the company in the long
run, though this ratio may indicate better performance in the short-run.
 Poor Measure: The overall profitability ratio is a poor means of a firm‘s performance
since it is also affected by many extraneous and non-controllable factors. Often the
present return is the result of the wisdom or the folly of the past management. Thus, the
present management cannot take credit or be held responsible for the doing of their
predecessors.
 Undue Significance to Capital Resources: The overall profitability ratio gives undue
significance to capital resources whereas profits are the result of contribution of various
other inputs particularly human resources. However, their role is not clearly visible in the
computation of overall profitability ratio.
 Chance Factor: Sometimes high or low profit may be due to chance. This ratio in such a
case, for judging the financial performance will be more or less irrelevant.

Numerous limitations have been faced while preparing the fieldwork report. Some of them which
can be pointed out as:
 Lack of time.
 Focus on only rations of Nabil Bank limited.
 It cannot be compared with the ration of other banks.
 Only Nabil bank is taken.
 Past 5 years trend is taken.

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Organization of the Study
The report is organized into the three chapters as indicated follows
CHAPTER I: INTRODUCTION
Background of the Study, Statement of Problem, Objectives of study, Significance of the Study,
Research Methodology, Review of Literature, Limitation of the Study, Organization of the Study
CHAPTER II: RESULTS AND ANALYSIS
Presentation of Data in Tables and Figures and their Analysis, Major Findings
CHAPTER III: SUMMARY AND CONCLUSION
Summary and conclusions

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 CHAPTER II
RESULTS AND ANALYSIS
Data Presentation
Data presentation is the interpretation of the study. Data analysis summarizes the collected data
and its interpretation presents the major findings of the study. Analysis is not complete without
interpretation and interpretation cannot proceed without analysis. In this course of analysis, data
has been gathered from various sources and has been analyzed by using financial and statistical
tools. The results of the computation have been summarized with appropriate tables. The
samples of computation of each model have been included in annexes. This chapter includes
presentation of data and analysis of that data to reach at a conclusion.
Data can be presented in various forms depending on the type of data collected. A frequency
distribution is a table showing how often each value (or set of values) of the variable in question
occurs in a data set. A frequency table is used to summarize categorical or numerical data.
Frequencies are also presented as relative frequencies, that is, the percentage of the total number
in the sample.
Under this topic, the various variables in their absolute value are measured. Unlike ratio analysis,
different variables are measured individually. The volume of variable and its variability are
measured. The value of individual variables enables to measure the gross contribution of the
bank in the respective years. Though the ratio analysis solely describes the ratio between the two
variables, it does not tell about the absolute value of those variables. Therefore, in this chapter,
some of the important individual variables in their absolute value of mean and standard deviation
is examined. At the same time, to measure the relative measure of variability of data; the
coefficient of variation is also measured. The absolute value of bank for different years is
compared to judge its contribution and its practices.

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Graphical Methods
Frequency distributions and are usually illustrated graphically by plotting various types of
graphs:
 Tabulation –we present the data in each n every year of each data in table. This table
shows the numerical numbers of data.
 Bar graph - A bar graph is a way of summarizing a set of categorical data. It displays the
data using a number of rectangles, of the same width, each of which represents a
particular category. Bar graphs can be displayed horizontally or vertically and they are
usually drawn with a gap between the bars (rectangles).
 Line graph - A line graph is particularly useful when we want to show the trend of a
variable over time. Time is displayed on the horizontal axis (x-axis) and the variable is
displayed on the vertical axis (y- axis).

.
Net Profit After Tax

Table no of Net Profit After Tax ( in million)

F/Y Net profit after tax(NPAT) % Change in NPAT

2075/76 3702.38 0

2076/77 3981.89 7.54

2077/78 4238.85 6.06

2078/79 3463.24 -22.39

2079/80 4527.55 30.73

(Sources: Annual Report of Nabil Bank Limited)

Above table shows that % change in Net Profit After Tax (NPAT) of NABIL Bank Limited is
0%, 7.54%, 6.06% ,-22.39% and 30.73% for the Fiscal Year 2075/76, 2076/77,2077/78, 2078/79
and 2079/80 respectively. In the fiscal year 2076/77 shows that -22.39% form the previous year.
Then after in F/Y 30.73% in 2079/80 it shows that the Bank.

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 Figure of Net profit After Tax

Net Profit After Tax

40

30

20

10
Series 1
0
2075/76 2076/77 2077/78 2078/79 2079/80
-10

-20

-30

40

30

20

10
Column3

0
2075/76 2076/77 2077/78 2078/79 2079/80
-10

-20

-30

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Operating profit
Table of Operating profit ( in Million )

F/Y Operating profit % Change in Operating profit

2075/76 5257.58 …….

2074/75 5652.96 6.99

2077/78 6026.65 6.61

2078/79 5093.06 -15.49

2079/80 6226.02 22.24

(Sources: Annual Report of Nabil Bank Limited)

Above table shows that % change in Operating profit of NABIL Bank Limited is 0%,6.99%
,6.61% ,-15.49% and 22.24% for the fiscal year 2075/76,2076/77, 2077/78 ,2078/79 and 2079/80
respectively. The highest % change in operating profit is 22.24% in fiscal year 2079/80.The
lowest value of % change in operating profit is -15.49% in Fiscal year in 2076/77. The present
operating profit in 2078/79 decreasing than 2076/77 so that it‘s value became in negative. This
value are shows in following line graph & bar graph. The slop of graph is increasing, deceasing
and increasing trend.

Figure of operating profit

25

20

15

10

0
2075/76 2076/77 2077/78 2078/79 2079/80
-5

-10

-15

-20

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 25

20

15

10

5
Series 1
0
Type your text
2075/76 2076/77 2077/78 2078/79 2079/80
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-10

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-20

Net profit margin

Table of Net Profit Margin (in million)

F/Y NPAT Operating profit Net profit % change in Net

margin profit margin

2075/76 3702.38 5257.58 70.42 0

2076/77 3981.89 5652.96 70.44 0.03

2077/78 4238.85 6026.65 70.34 -0.15

2078/79 3463.24 5093.06 68.00 -3.32

2079/80 4527.55 6226.02 72.72 6.94

(Sources: Annual Report of Nabil Bank Limited)

Above table shows that the Net Profit Margin of NABIL Bank Limited is 70.42% , 70.44% ,
70.34% , 68.00% and 72.72% for the fiscal year 2075/76, 2076/77 ,2077/78 , 2078/79 and
2079/80 respectively.Is shows that relationship between NPAT and Operating profit. Its value
are shows in following line graph and bar graph. The slop of line & bar graph is increasing,
decreasing and increasing trend.

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 Figure of Net Profit Margin

Net profit margin

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73

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71

70

69 Series 1

68

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66

65
Type your text
2075/76 2076/77 2077/78 2078/79 2079/80
Type your text

Net profit margin

74

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71

70

69 Series 1

68

67

66

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2075/76 2076/77 2077/78 2078/79 2079/80

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Net Income

Table of Net Income (in Million)

F/Y Net Income % Change in Net income

2075/76 3702.38 0

2076/77 3981.89 7.55

Type your text

2077/78 4238.85 6.45

2078/79 3463.24 -18.30

2079/80 4527.55 30.73

Type your text

(Sources: Annual Report of Nabil Bank Limited)

Above table shows that % change Net Income of NABIL Bank Limited is 0%, 7.55%, 6.445%, -
18.30% and 30.73% in fiscal year 2075/76, 2076/77, 2077/78, 2078/79 and 2079/80 respectively.
It shows that % change in Net Income .This value are shows in the following line & bar graph.
The slop of line & bar Graph is increasing, decreasing and increasing trend.

Figure of Net Income

Net income
40

30

20

10
Series 1
0
2075/76 2076/77 2077/78 2078/79 2079/80
-10

-20

-30

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 Net income
40

30

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2075/76 2076/77 2077/78 2078/79 2079/80
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Total assets

Table of Total Assets ( in million)

F/Y Total assets % Change in Total assets

2075/76 144107.86 0

2076/77 169076.09 17.33

2077/78 201138.82 18.96

2078/79 237680.02 18.17

2079/80 291066.22 22.46

(Sources: Annual Report of Nabil Bank Limited)

The above table shows that % change in Total Assets of Nabil Bank Limited is 0%, 17.33%,
18.96%, 18.17%, and 22.46% in the fiscal year 2075/76, 2076/77, 2077/78, 2078/79 and 2079/80
respectively. This values are presenting the following line graph & bar graph.

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 Figure of Total assets

Total Assets
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20

15

Series 1
10

0 Type your text

2075/76 2076/77 2077/78 2078/79 2079/80

Total Assets
25

20

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Series 1
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2075/76 2076/77 2077/78 2078/79 2079/80
Type your text

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Return on Assets

Table of Return on Assets ( in Million)

F/Y Net Income Total assets Return on Assets % change in ROA

2075/76 3702.38 144107.86 2.57 0

Type your text
2076/77 3981.89 169076.09 2.36 -8.33

2077/78 4238.85 201138.82 2.11 -10.52

Type your text

2078/79 3463.24 237680.02 1.46 -30.86

2079/80 4527.55 291066.22 1.56 6.75

Type your text

(Sources: Annual Report of Nabil Bank Limited)

Above table shows that the ROA of NABIL BANK LIMITED and the values are 2.57%, 2.36%,
2.11%, 1.46% and 1.56% for the year 2075/76, 2076/77, 2077/78, 2078/79 and
2079/80respectively.Below liner graph and bar graph show the return on assets of Nabil Bank
Limited in different year. The above trend line presented in graph chart is decreasing sloped.

Figure of Return on Assets

Return On Assets
3

2.5

1.5
Series 1

0.5

0
2075/76 2076/77 2077/78 2078/79 2079/80

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 Return on Assets
3

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1.5
Series 1

0.5

0
2075/76 2076/77 2077/78 2078/79 2079/80

Net Income

Table of Net Income ( in Million)

F/Y Net Income % Change in Net income

2075/76 3702.38 0

2076/77 3981.89 7.55

2077/78 4238.85 6.45

2078/79 3463.24 -18.30

2079/80 4527.55 30.73

(Sources: Annual Report of Nabil Bank Limited)

Above table shows that % change Net Income of NABIL Bank Limited is 0%, 7.55%, 6.445%, -
18.30% and 30.73% in fiscal year 2075/76, 2076/77, 2077/78, 2078/79 and 2079/80 respectively.

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It shows that % change in Net Income .This value are shows in the following line & bar graph.
The slop of line & bar Graph is increasing, decreasing and increasing trend.

Table of Net Income

Net income
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Series 1
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2075/76 2076/77 2077/78 2078/79 2079/80
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-30

Net income
40

30

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10
Series 1
0
Type
Type your
your text
text
2075/76 2076/77 2077/78 2078/79 2079/80
Type your text Type your text
-10
Type your text
-20

-30

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Shareholder’s Equity

Table of Shareholder’s Equity (in Million)

F/Y Shareholder‘s equity % Change in Shareholder‘s

equity

2075/76 16699.18 0

2076/77 20586.35 23.28

2077/78 23188.61 12.64

2078/79 25855.65 11.50

2079/80 33858.12 30.95

(Sources: Annual Report of Nabil Bank Limited)

Above table shows that % change in shareholder‘s equity of NABIL Bank Limited. The Values
are 0%, 23.28%, 12.64%, 11.50% and30.95% in fiscal year 2075/76, 2076/77, 2077/78, 2078/79
and 2079/80 respectively.The below line chart & Bar diagraph shows the % change in Equity.
The figure shows that the slop is increasing then decreasing and increasing trend.

Figure of shareholder‘s Equity

35 Shareholder's equity
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 Shareholder's equity
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Return On Shareholder’s equity

Table of Return On Shareholder’s equity

F/Y Net Income Shareholder‘s Return on equity % change in ROE

equity

2075/76 3702.38 16699.18 22.17 0

2076/77 3981.89 20586.35 19.34 -12.76

2077/78 4238.85 23188.61 18.28 -5.49

2078/79 3463.24 25855.65 13.39 -26.73

2079/80 4527.55 33858.12 13.37 -0.17

(Sources: Annual Report of Nabil Bank Limited)

Above table shows that the ROE of Nabil Bank Limited. The values are
22.17%,19.34%,18.28%,13.39% and 13.37% for the year 2075/76, 2076/77, 2077/78, 2078/79
and 2079/80 respectively.Above graph chart and liner Curve shows the return onShareholder‘s
equity of Nabil Bank Limited in different year. The above trend line presented in graph chart is
negatively sloped so it shows that the return on equity is in decreasing& constant trend.
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 Figure of Return On Shareholder’s Equity

Return On Equity
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2075/76 2076/77 2077/78 2078/79 2079/80

Return on Equity
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2075/76 2076/77 2077/78 2078/79 2079/80

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Earning Per Share (EPS)

Table of Earning Per Share

F/Y Earning Per Share

2075/76 59.86

2076/77 51.84

2077/78 50.57

2078/79 36.16

2079/80 33.57

(Sources: Annual Report of Nabil Bank Limited)

Above table shows the earning per share (EPS) of NABIL Bank Limited is Rs59.86, Rs51.84,
Rs50.57, Rs36.16 and Rs33.57 in the fiscal year 2075/76, 2076/77, 2077/78, 2078/79, 2079/80
respectively. Above values are representing the following line graph & bar graph. The slop of
EPS is decreasing trend.

Figure of Earning Per Share

Earning Per Share

70

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50

40

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 Earning Per Share
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2075/76 2076/77 2077/78 2078/79 2079/80

Major Findings
The Major Findings is given below:
 In the fiscal year 2075/76 the ratio of Net Profit Margin is 70.42% but it decrease up to
68.00% in the year 2078/79. In current year 2077/78 its ratio is 72.72% which is high
than last year ratio.
 In the fiscal year 2075/76 the ratio of ROA was 2.57% the high ROA is2.57% in F/Y
2075/76 then ROA decreasing trend till F/Y 2079/80which is 1.56% it is less than last
five year date. The net income is less increasing than as per Total Assets.
 In the fiscal year 2075/76 the ratio of ROE was 22.17% & 2079/80 ROA is 13.37%. ROE
also decreasing last five year. The high ROE is 22.17% and Lowest ROE is 13.37%. it
shows the relationship between Net income and shareholder‘s Equity. The net income is
less increasing than as per Total Assets.
 In the fiscal year 2075/76 the EPS is Rs.59.86 then it is in decreasing trend. The EPS of
current F/Y have Rs.33.57 in 2079/80. The EPS of last five year is decreasing trend.

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 CHAPTER III
SUMMARY AND CONCLUSION

Summary
This project work report has been prepared in prescribed format as required by the Tribhuvan
University and the faculty of management entitled with "Profitability analysis of Nabil Bank
Limited, Nepal." This bank is established in July, 1984 pursuing its objectives. Nabil Bank
provides a full range of commercial banking services through its 47 points of representations
across the kingdom and over 170 reputed correspondent banks across the globe. Due to the
limited time, only necessary data and information are taken. Only the secondary method of data
collection is used for this study. The main objective of this study is to evaluate the profitability
position of Nabil Bank Limited. For analysis of data, tabled and figures are used.
This Project Work report has been prepared in the format as required by the faculty of
management entitled with ―Profitability Analysis of NABIL." This report has been prepared in
three main chapters i.e. Introduction, Result & Findings and Discussion & Conclusion chapter.
The NABIL Bank Limited we use the data from the Secondary date which is Profit & loss
account& Balance Sheets of the company it is found in the link & Website od NABIL Bank.
Then after that data collected in tabulation the it represent in the line graph & Bar graph. Then I
use to Financial tools for finding the profitability of NBIL bank. Then calculate the % change in
NPAT, %change in Operating profit, Net profit Margin, % change in net income, % change in
total assets, ROA, % change in shareholder‘s Equity, ROE and EPS. Then the relation between
NPAT & operating profit I calculate the Net Profit Margin. The highest value of this calculate is
the highest value is 72.72% in F/Y 2079/80 and lowest value is 68.00% in F/Y 2078/79. It shows
that in 2078/79 the value of NPAT is decreasing the value of Net Profit Margin also decreasing.
The highest value shows the highest NAPT in that F/Y. then I use to calculate the ROA that
Ratio Shows the relationship between Net income & Total Assets. The highest ROA is 2.57% in

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F/Y 2075/76 then the lowest value is 1.46% in F/Y 2078/79. This Ratio shows the Decreasing
trend of Net Income. It‘s impact is that low Return is not for Bank. Then calculate the ROE it
shows the relationship between net income & Shareholders Equity. The highest value of ROE is
22.17% in F/Y 2075/76 and highest value of this calculation is 13.37% in F/Y 2079/80. It shows
that decreasing trend of ROE. It‘s impact is that where the low the net income then the ration
also low, where the high of net income then ROE also high. Then calculate the EPS it shows that
relationship between net income and no. of share. The highest value of EPS is Rs.59.86 in
F/Y2075/76 and lowest value of EPS is Rs.33.57. It also in decreasing trend. The ;last five year
net income also decreasing then the EPS also decreasing in last five year. This also high value is
good for the bank.

Conclusions
After analyzing the collected data from the sources profitability position of the bank can
conclude on the following points: The overall results are not satisfactory because due to the
COVID-19 crisis in all over the world in economic sectors. Profit Margin has some fluctuations .
So the profitability position of the bank is not so satisfactory.Net Profit Margin has some
fluctuations every year it is in decreasing trend. So the profitability position of the bank is not
satisfactory on the basis of net profit margin. Return on Assets of the bank has some fluctuations
and it can be concluded that it is in decreasing trend so its profitability position on the basis of
return on Assets can assumed to be not satisfactory. Return on equity also has some fluctuations
and above figure has shown that it can be concluded that it is in decreasing & stable some level
of time trend. So bank's profitability position on the basis of the return on equity is hopefully
stable and can be increase in next year.
On the overall study the profitability position of the bank can be conclude as unsatisfactory
because only the Net profit margin and has presented a little hopeful position of the bank. Profit
margin, ROA and ROE has presented that unsatisfying position of the bank. It shows that the
bank utilized its every tools & policies. Not with standing its many shortcomings, the system has
shown dynamism in meeting the challenges of mobilizing resources for country‘s development.
The government‘s liberalization policy led to dozen of commercial banks actively playing in the
financial marketing of the country. Banking markets tend to develop in any country is
determined by a number of factors like political, economic, socio-cultural etc. banking market is
followed than in a country having lower of economic development and state controlled economy.

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Currently, the economy of Nepal is witnessing historic changes in its issues and conforming new
challenging of transformation by the introduction makes economy in the country. As the
economy has changed in short period and is changing, the performance requirements and
prospects of banking industry have also undergone radical transformation. Today, there are many
challenges to Nepalese commercial banks. The entrance of capital market i.e. investment
banking, stock exchange, mutual funds, market makers etc. is also a serious threat to the activity
of commercial banks in Nepal. The commercial banks in the new competitive milieu should be
able to broaden its horizon and become ―problem-solver‖ to a customer rather that ―just
provider‖ of traditional working capital in different names and faces, moreover a position. Nabil
Bank is able to sustain and work in such environment.

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 BIBLIOGRAPHY

Anjay Kumar Mishra, Deepak Raj Kandel& P. S. Aithal, (2020) Profitability in Commercial
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profitability among US banks,"MAPR paper 13731,Univercity Library of Munich,
Germany, revised 2009.
Haslem, J. (1968). A statistical analysis of the relative profitability of commercial banks.
Journal of finance 23:167-176
Horace White ( august 10, 1834- September 16, 1916) was a United State Journalist and
financial expert, noted for this concern with the Chicago tribune, the new
york post.
John M Culbertson, ―Money and Banking‖ paperback – January 1, 1972
R .S. Sayers, ‖Modern Banking, LONDON: oxford university press, 1983‖whoe early
study of Bank of England operations 1890-1914.
Uppal,R. K. and Kaur, K. (2007)ZENITH International Journal of Business Economics &
Management Research ISSN 2249- 8826, Vol.4 (1), JANUARY (2014)
Annual report of Nabil Bank limited for F/Y 2075/76 to 2079/80.

Websites
www.google.com
www.nabilbank.np

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