Investment Behaviour in Nepalese Share Market

INVESTMENT POLICY AND PERFORMANCE OF
JOINT VENTURE BANKS

(A Comparative Study of NABIL Bank Limited and Himalayan
Bank Limited)
By:
Nirmal Gurung
Shanker Dev Campus
Campus Roll No: 1804/067
T.U. Reg. No: 7-2-39-606-2007
Year Exam Symbol No: 390642
A Thesis Submitted To:

Office of the Dean
Faculty of Management
Tribhuvan University
In partial fulfillment of the requirement of Degree of

Master of Business Studies (MBS)
Kathmandu, Nepal
November, 2015
DECLARATION
I hereby declare that this thesis work entitled “Investment Policy

And Performance of Joint Venture Banks (A Comparative Study of
NABIL Bank Limited and Himalayan Bank Limited)” submitted to
Office of the Dean, Faculty Management, Tribhuvan University, is my
original work and done in the form of partial fulfillment of the
requirement for the degree of Masters of Business Studies (M.B.S)
under the supervision and guidance of respected lecturer Prakash
Sapkota and Kapil Khanal, Shanker Dev Campus.
-------------------------------
Nirmal Gurung
Researcher
Campus Roll
N0:1804/067 Faculty of Management
Shanker Dev Campus
Putalisadak, Kathmandu
Shanker Dev Campus Library 2

ACKNOWLEDGEMENTS
As the partial fulfillment of the M.B.S degree, I have prepared this

report. During the course, I worked with sincerity, honestly and
diligently, as far as possible. But beside my continual efforts, I also
got unforgettable support from different people and parties. I am
extremely grateful and overwhelmed by their support while
completing my work.
I would like to express cordial gratitude to all my teachers, who taught

me up to now. For this dissertation, I would like to extend special
thanks to thesis supervisor lecturer Mr. Prakash Sapkota and Kapil
Khanal of Shanker Dev campus, T.U. despite their busy schedule, they
has made significant contribution for preparing this thesis. I am
extremely indebted by their efforts.
This is a study on banking sector. This study has been undertaken to

present report on the practical operation of bank in Nepal in its proper
perspective. In this regard study has been conducted at NABIL Bank
Limited (NABIL) and Himalayan Bank Limited (HBL).
I would also like to express my gratitude to all other members of

Shanker Dev Campus, especially, staffs from M.B.S. department,
libraries staffs as well as all known and unknown people who
supported as well as inspired me to complete this thesis.
------------------------
------
Nirmal Gurung
Researcher
Roll No: 1804/067
Faculty of
Management
Shanker Dev
Campus
RECOMMENDATION
This is to certify that the thesis
Submitted By:
NIRMAL GURUNG
Entitled:
INVESTMENT POLICY AND PERFORMANCE OF
JOINT VENTURE BANKS
Bank Limited)
has been prepared as approved by this Department in the prescribed format of the
Faculty of Management. This thesis is forwarded for examination.
…………………………………….. ……………………………………… ……………………………………

Kapil Khanal Prof.Dr.Kamal Deep Dhakal Prof.Prakash Singh Pradhan
(Thesis Supervisor) (Head, Research Department) (Campus Chief)
……………………………………..
Prakash Sapkota
(Thesis Supervisor )

VIVA - VOCE SHEET
We have conducted the vivavoce examination of the thesis
By:
NIRMAL GURUNG
Entitled:
INVESTMENT POLICY AND PERFORMANCE OF JOINT

VENTURE BANKS
Bank Limited)
And found the thesis to be the original work of the student and written
according to the prescribed format. We recommend the thesis to be
accepted as partial fulfillment of the requirements for the degree of
Master of Business Studies (MBS)
Viva - Voce Committee
Head of Research Department :………………………………………..
Member (Thesis Supervisor) : ………………………………………..
Member (Thesis Supervisor) : ………………………………………..
Member (External Expert) : ………………………………………..

Table of Content
Page No.
RECOMMENDATION
VIVA VOCE SHEET
DECLARATION
ACKNOWLEDGEMENTS
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
ABBREVIATIONS
CHAPTER - I INTRODUCTION ........................................................ 13

1.1 Background of the Study .................................................................. 13
1.2 Statement of the Problem ........................................................................ 17
1.3 Objective of the Study ............................................................................ 18
1.4 Significance of the Study ........................................................................ 19
1.5 Limitation of the Study ........................................................................... 19
1.6 Organization of the Study ....................................................................... 19
CHAPTERII REVIEW OF LITERATURE ...................................... 21

2.1 Conceptual Frame Work ......................................................................... 21
2.2 Features of Lending Policy ..................................................................... 25
2.3 Review of Related Studies ...................................................................... 26
2.3.1 Review of Articles ........................................................................... 26
2.3.2 Review of Thesis........................................................................... 27
2.4 Research Gap .......................................................................................... 31
CHAPTER - III REASERCH METHODOLOGY............................. 33

3.1 Research Design ...................................................................................... 33
3.2 Sources of Data ....................................................................................... 33

3.3 Population and Sample ........................................................................... 33
3.4 Analysis and Presentation of Data .......................................................... 34
3.4.1 Financial Tools.............................................................................. 34
Shanker
3.4.2 Statistical Tools Dev Campus Library 6
............................................................................. 38
CHAPTER - IV DATA PRESENTATION AND ANALYSIS .......... 42
4.1 Financial Tools ........................................................................................ 42
4.1.1 Liquidity Ratio .............................................................................. 42
4.1.1.1 Current Ratio ........................................................................... 42
4.1.1.2 Cash and Bank Balance to Total Deposit Ratio ...................... 43
4.1.1.3 Cash and Bank Balance to Current Assets Ratio .................... 44
4.1.1.4 Investment on Government Securities to Current Assets Ratio45
4.1.1.5 Loan and Advances to Current Assets Ratio .......................... 46
4.1.2Asset Management Ratio ................................................................. 47
4.1.2.1 Loan and Advance to Total Deposit Ratio .............................. 47
4.1.2.2 Total Investment to Total Deposit Ratio ................................. 48
4.1.2.3 Loan and Advance to Total Working Fund Ratio ................... 49
4.1.2.4 Investment on Government Securities to Total Working Fund50
4.1.2.5 Investment on Share and Debenture to Total Working Fund Ratio
............................................................................................................. 50
4.1.3 Profitability Ratios ........................................................................ 51
4.1.3.1 Return on Total Working Fund / Return on Total Assets Ratio51
4.1.3.2 Total Interest Earned to Total Outside Assets Ratio ............... 52
4.1.3.3 Return on Loan and Advance Ratio ........................................ 53
4.1.3.4 Total Interest Earned to Total Working Fund Ratio ............... 54
4.1.3.5 Total Interest Paid to Total Working Fund Ratio ................... 54
4.1.4 Risk Ratio ........................................................................................ 55
4.1.4.1 Credit Risk Ratio ..................................................................... 55
4.1.4.2 Capital Risk Ratio ................................................................... 56
4.1.5 Growth Ratios .................................................................................. 57
4.2 Statistical Analysis ............................................................................ 59
4.2.1 Coefficient of Correlation Analysis .............................................. 59
4.2.1.1 Coefficient of Correlation between Deposits and Investment 59
4.2.1.2 Coefficient of Correlation between Deposit and Loan and Advance
.............................................................................................................
Shanker Dev Campus Library 7 60
4.2.1.3 Coefficient of Correlation between Outside Assets and Net Profit
............................................................................................................. 60
4.2.1.4 Coefficient of Correlation between Loan and Advance and Net
Profit .................................................................................................... 61
4.2.2 Trend Analysis and Projection of Next Five Years ...................... 62
4.2.2.1 Trend Analysis of Total Deposits ........................................... 63
4.2.2.2 Trend Analysis of Total Investment........................................ 64
4.2.2.3 Trend Analysis of Loan and Advance..................................... 66
4.2.2.4 Trend Analysis of Net Profit ................................................... 68
4.2 Major Finding of the Study ............................................................... 70
CHAPTER - V SUMMARY, CONCLUSION AND

RECOMMENDATIONS ....................................................................... 74
5.1 Summary ........................................................................................... 74
5.2 Conclusion ........................................................................................ 74
5.3 Recommendation .............................................................................. 75
Bibliography
Appendixes

LIST OF TABLES
Table No. Title
PageNo.
1.1 List of Licensed Commercial Banks
6
4.1 Current Ratio
46
4.2 Cash and Bank Balance to Total Deposit Ratio
48
4.3 Cash and Bank Balance to Current Assets Ratio
49
4.4 Investment on Government Securities to Current Assets Ratio
50
4.5 Loan and Advances to Current Assets Ratio
51
4.6 Loan and Advance to Total Deposit Ratio
53
4.7 Total Investment to Total Deposit Ratio
54
4.8 Loan and Advance to Total Working Fund Ratio
55
4.9 Investment on Government Securities to Total Working Fund
56
4.10 Investment on Share and Debenture to Total Working Fund Ratio
57
4.11 Return on Total Assets Ratio
59
4.12 Total Interest Earned to Total Outside Assets Ratio
60
4.13 Return on Loan and Advance Ratio
61
4.14 Total Interest Earned to Total Working Fund Ratio
62
4.15 Total Interest Paid to Total Working Fund Ratio
63
4.16 Credit Risk Ratio
64
4.17 Capital Risk Ratio
65
4.18 Growth Ratio of Deposits
66
4.19 Growth Ratios of Loan and Advances
67
4.20 Growth Ratio of Total Investment
67 Shanker Dev Campus Library 9
4.21 Growth Ratio of Net Profit
68
4.22 Correlation between Deposits and Total Investment
69
4.23 Correlation between Deposit and Loan and Advance
70
4.24 Correlation between Outside Assets and Net Profit
71
4.25 Correlation between Loan and Advance and Net Profit
73
4.26 Trend Value of Total Deposit of NABIL and HBL
74
4.27 Trend Value of Total Investment of NABIL and HBL
77
4.28 Trend Value of Loan and Advance of NABIL and HBL
79
4.29 Trend Value of Net Profit of NABIL and HBL
81

LIST OF FIGURES
Figure No. Title Page No.

4.1 Trend Value of Total Deposit
76
4.2 Trend Value of Total Investment
78
4.3 Trend Value of Loan and Advance
80
4.4 Trend Value of Net Profit
82

ABBREVIATIONS
AGM : Annual General Meeting

BS : Bikram Sambat
CA : Current Assets
CB : Commercial Banks
Cov. : Covariance
CS : Common Stock
C.V : Coefficient of Variation
CRR : Cash Reserve/Statutory Liquidity Requirement
d.f. : Degree of Freedom
F/Y : Fiscal Year
HBL : Himalayan Bank Limited
GDP : Gross Domestic Product
JVBs : Joint Venture Banks
NABIL : Nabil Bank Limited
NG : Nepal Government
NEPSE : Nepal Stock Exchange
No. : Number
NRB : Nepal Rastra Bank
r : Coefficient of correlation
R&D : Research and Development
r2 : Coefficient of determination
S.D. : Standard Deviation
SEBO : Security Board
TU : Tribhuvan University
: t-test calculated value
: t-test tabulated value
VAT : Value Added Tax

CHAPTER - I
INTRODUCTION
1.1 Background of the Study
Nepal is mountainous, landlocked and developing county. Banking system of Nepal has
undergone significant changes since liberalization of the financial sector in the mid
eight’s. A financial institution is the lifeblood of economic development of the country.
Financial institutions are important for achieving the basic objective of country’s
economic and social progress. They enjoy a strategic and crucial position in our mixed
economy. Financial institution regulates different policies so that the economic standard
of the country will be improved at large. They in fact play catalyst role for resources
mobilization and capital formation to facilitate the process of economic development of
the country. A bank is a financial institution, which can play a significant role in the
upliftment of the economic situation of the developing country like Nepal. Bank plays a
vital role to encourage thrift and discourage hoarding by mobilizing the resources and
removing the habit of hoarding. They pursue economic growth rapidly by developing the
banking habit among the people, collecting the small-scattered resources in one bulk,
using them in the further productive purposes, and rendering other valuable service to the
country. Thus, this gives the individual an opportunity to borrow funds against future
income, which may improve the economic well being of the borrower. Bank deals with
the offer of collected deposits and provides the loan for commercial purpose.
In other words, bank facilities act as right hand for the growth of trade and industry for
national economy of developing country like Nepal. The above fact shows that a bank
plays vital role for the economic development of the country.
Talking about the history of bank, an institutional banking system came into existence in
Nepal only in the 19th century. Nepal Bank Limited was the first financial institutional of
Nepal established on the 30th of Kartik 1994. Being a commercial bank, it focuses on
income generating and profit maximization. As it was only one commercial bank, it has to
look the economic condition of country. Only one Nepal Bank Limited was not sufficient
to look all the sector of country. So in 2013 B.S. another bank named “Nepal Rastra
Bank” was established as the central bank. Similarly the 2nd commercial bank Rastriya
Banijya Bank was established as the second commercial bank of Nepal in Magh 10, 2022
B.S., under Rastriya Banijya Bank Act 2021. This act is now revised as Commercial Bank
Act 2031. B.S. “Accepting deposits, granting loan and performing commercial banking
functions are the main motto of commercial bank” (Commercial Bank Act, 2031). For the
development of industry, commerce and trade, Nepal Industrial Development Corporation
was established under Industrial Development Corporation Act 2016. For the
development of agricultural section, Agricultural Development Bank was established on
Magh 7th 2024 B.S., under the Agricultural Bank Act 2024 B.S.
The government of Nepal observed the necessities of rapid development of the country
for which it has adopted “liberalized economic policy, laissez fair economy and
encouraged foreign investment”. “The government formed Foreign Investment &
Technology Act 1981 A.D. which was later revised as Act 1992 A.D. by new elected
democratic government”(Foreign Investment and Technology Act, 1992). The joint
venture bank was introduced in Nepal in 2041 B.S. with the establishment of “Nepal Arab
Bank Limited”. It was established with joint venture of U.A.E bank, financial institution
of Pakistan.
The second joint venture bank, Nepal Indosuez Bank Limited was established in 6th Magh
2042 B.S. Similarly, others joint venture banks like, Nepal Grindlays Bank Limited on
16th Marg 2043, Himalayan Bank Limited on 2049 B.S., Nepal State Bank of India
Limited on 2050 B.S., Nepal Bangladesh Bank Limited on 2051 B.S., Everest Bank
Limited on 2051 B.S., Bank of Kathmandu on 2052 B.S. and Nepal Bank of Celon
Limited on 2052 B.S. have been established. Till now other commercial banks have
been also established.
Among them majority of banks are established as joint venture banks. “A joint venture is
the joining of forces between two or more enterprises for the purpose of carrying out a
specific operation industrial or commercial investment, production or trade” (Gupta,
1984: 15).
A business arrangement in which two or more parties agree to pool their resources for the
purpose of accomplishing a specific task. This task can be a new project or any other
activity. In a joint venture each of the participants is responsible for profits, losses and
costs associated with it. However, the venture is its own entity separate and apart from
the participants other business interests. Joint venture banks play an important role for
economic development of nation. They have been adopted new banking technique,
management like, hypothecation, syndication lending policies, tale banking credit card,
master card from international banking technique. They render various services to their
customers in order to facilitate their economic and social life. Joint venture banks are
operating in Nepal in an act as commercial banks are operating and performing their work
under the direction of Nepal Rastra Bank. Nowadays, there are many joint venture banks
and other financial institutions, but there are little opportunities to make fair investment.
Meanwhile, the banks and financial institutions are offering very low deposit and credit
interest rate. So to survive in the competitive banking market, one should follow the
fundamental principles of sound investment policy with minimum risk and maximum
profit.
At present, about a dozen of the joint venture banks are operating in Nepal and are
playing important role in the economic development of the country with their sound
investment policy so far.
Investment policy is a study in determining the importance of the bank’s

investment policy towards national economic development. Investment
policy is an important ingredient of overall national economic development
because it ensures efficient allocation of fund to achieve the materials and
economic well being of the society as a whole. In this regard, joint venture
bank investment policy push drives to achieve priority of commercial
sectors in the context of Nepal’s economic development. National
development of any country depends upon the economic development of
that country and economic development is supported by financial
infrastructure of that country. Banks constitute an important segment of
financial infrastructure of any country. Banking when properly organized it
aids and facilities the growth of trade and industry and hence of national
economy. In the modern economy, banks are to be considered not as
dealers in money butShanker
as the Dev
leaders of development.
Campus Library 14 In this regard loan
disbursement pattern has been a major catalyst in achieving priority of
industries in the context of Nepal’s economic development.
Banking constitutes an important segment of financial infrastructure of an

country. Banking when properly organized it aids and facilitate the growth
of trade and industry and hence of national economy. The foundation of
resource mobilization is pillared on the bank’s function of lending. Bank
is a financial institution which primary classes in borrowing and lending.
The banking business has its genesis from its function of lending. The pace
of time has changed the portfolio of banking business from its primary
function to other function such as merchant banking, credit card business,
documentary credit, travelers check business etc. nevertheless the
importance of lending and borrowing in banking business is undoubtedly
unchanged and remained vital as it was in the early day of business. The
classical economic function of bank and other financial intermediaries all
over the world have remained virtually unchanged in modern times. What
has been changed is the institutional structure, the instruments, the
techniques used in performing these function. Modern bank prefers
varieties of functions. Therefore it is difficult to decide the function of a
modern bank because of their complexity and versatility in operation.
Various authors have defined the word ‘Bank’ in different ways. “A
commercial bank is dealer in money and it substitutes for money such as
cheque or bills of exchange, it also provides a variety of financial service”
(Britannica, 1985:600).
Commercial banks are major financial institution, which occupy quite

important place in the framework in every economy because they provide
capital for the development of industry. Commercial banks formulate sound
investment policies to make it more effective, which eventually contribute
to the economic growth of country. The bound policies help commercial
banks maximizing quality and quantity of investment and hereby achieve
the own objective of profit maximization and social welfare. Formulation
of sound investment policies and co-ordinate and planned efforts pushed
forward the forces of economic growth.
“A joint venture is the joining of forces between two or more enterprises

for the purpose of carrying out a specific operation industrial or commercial
investment, production or trade” (Gupta, 1984: 15).
In the study the word investment conceptualized the investment of income, savings or
other collected fund. The term investment covers a wide range of activities. It is
commonly known fact that an investment is only possible where there is adequate saving.
If all the incomes and savings are consumed
Shanker Dev Campus to solve the problem
Library 15 of hand to mouth and to
the other basic needs. Then there is no existence of investment. Therefore, both saving
and investment are interrelated. Investment policy is an important ingredient of overall
national economy development because it ensures efficient allocation of fund to achieve
the materials and economic well being of the society as a whole. In this regards, joint
venture bank investment policy push drives to achieve priority of commercial sectors in
the context of Nepal’s economic development. The following table below shows in a
chronological order a list of the licensed commercial banks and their branches operating
in Nepal.
Table 1.1
List of Licensed Commercial Banks
S.N. Commercial Banks Established Head Office
Date
1. Nepal Bank Ltd. 1937/11/15 Kathmandu
2. Rastriya Banijya Bank. 1966/01/23 Kathmandu
3. Agricultural Development Bank Ltd. 1968/01/02 Kathmandu
4. NABIL Bank. 1984/07/16 Kathmandu
5. Nepal Investment Bank Ltd. 1986/02/27 Kathmandu
6. Standard Chartered Bank. 1987/01/30 Kathmandu
7. Himalayan Bank Ltd. 1993/01/18 Kathmandu
8. Nepal SBI Bank Ltd. 1993/07/07 Kathmandu
9. Nepal Bangladesh Bank Ltd. 1994/06/05 Kathmandu
10. Everest Bank Ltd. 1994/10/18 Kathmandu
11. Bank of Kathmandu Ltd. 1995/03/12 Kathmandu
12. Nepal Credit and Commercial Bank Ltd. 1996/10/14 Rupandehi
13. Lumbini Bank Ltd. 1998/07/17 Narayangadh
14. NIC Asia Bank Ltd. 1998/07/21 Biratnagar
15. Machhapuchhre Bank Ltd. 2000/10/03 Pokhara
16. Kumari Bank Ltd. 2001/04/03 Kathmandu
17. Laxmi Bank Ltd. 2002/04/03 Birgunj
18. Siddhartrha Bank Ltd. 2002/12/24 Kathmandu
19. Global IME Bank Ltd. 2007/01/02 Birgunj
20. Citizen Bank International Ltd. 2007/06/21 Kathmandu
21. Prime Commercial Bank Ltd. 2007/09/24 Kathmandu
22. Sunrise Bank Ltd. 2007/10/12 Kathmandu
23. Grand Bank Nepal Ltd. 2008/05/25 Kathmandu
24. NMB Bank Ltd. 2008/06/02 Kathmandu
25. Prabhu Bank Ltd. 2008/06/02 Kathmandu
26. Janta Bank Nepal Ltd. 2010/04/05 Kathmandu
27. Mega Bank Nepal Ltd. 2010/07/23 Kathmandu
28. Civil Bank Ltd. 2010/11/26 Kathmandu
29. Century Commercial Bank Ltd. 2011/03/10 Kathmandu
30. Sanima Bank Ltd. 2012/02/15 Kathmandu
Source: https://en.wikipedia.org
In our study only two bank are taken into consideration and main focus of study is to
explore the investment policy of these two banks i:e; Himalayan Bank limited (HBL) and
NABIL Bank Limited.
Brief profiles of these two banks are given below:-
NABIL Bank Limited

NABIL Bank Ltd. is the first joint venture commercial bank in Nepal which has in
corporate in Ashadh29, 2041(1984 A.D.) Dubai Bank Ltd. was the initial foreign joint
venture partner with 50% equity investment. The share owned Dubai Bank Ltd, were
transferred to Emanates Bank International Ltd. (EBIL) Dubai by north of its annexation
with the later on EBIL Dubai sold its entire 50% equity to national Bank Ltd of
Bangladesh.
Share subscription and capital structure:
Subscription % Holding
NB ( International ) Limited 50%

Nepal Industrial Development Corporation 10%
Rastriya Beema Sansthan 9.67%
Nepal Stock Exchange 0.33%
General Public 30%
Source: Annual report 2014
Himalayan Bank Limited

Himalayan Bank Limited is joint venture bank with Habib Bank of Pakistan,
which was established in 1992 A.D., under the company act 1964. This is the first
joint venture bank managed by Nepalese chief executive. The operation of the
bank has started from February 1993.
Share subscription and capital structure:

PARTICULARS PERCENTAGE
1. Domestic Ownership 80%
1.1 Government of Nepal
1.2 Employees Provident Fund 14%
1.4 Nepalese Business Groups 51%
1.5 General Public 15%
1.6 Others
2.Habib Bank Limited (Pakistan) 20%
Total 100%
Source: Annual report 2014
1.2 Statement of the Problem

In developing countries, the contribution of industrial sector is also very low in the output
Shanker
and the employment. In Nepal the Dev Campus
commercial Library
bank 17 a catalytic role in the
has played
economic growth. It’s investment range from small-scale cottage industries to large
industries, making investment in loans and government securities. One may always
wonder which investment is better. It can be hypothesized that bank portfolio variables
like loans, investment, cash reserve, deposit and borrowing affects the national income
and also how the government policy affects these variables, such as the effect of an
interest rate on the bank portfolio variables is of great concern, therefore when monitoring
money and credit conditions, the central bank has to keep an eye on the bank portfolio
behavior. Nepalese commercial banks have not formulated their investment policy in an
organized manner. They mainly rely upon the instructions and guidelines of Nepal Rastra
Bank. They do not have clear view towards investment policy. Furthermore the
implementation of policy is not in an effective way.
Thus the present study will make a modest attempt to analyze investment
policy of Himalayan Bank Ltd and NABIL Bank Ltd. In this study, Himalayan Bank
Ltd investment policy is analyzed comparing it with NABIL Bank Ltd. Following are
the major problems that have been identified for the purpose of this study.
• Do the Himalayan Bank Limited and NABIL Bank Limited utilize their
available fund?
• Whether these commercial banks are able to meet obligations?
• Is Himalayan bank fund mobilization and investment policy more effective and
efficient than NABIL bank?
• What is the relationship of investment, loan and advances with total deposit and
total net profit of NABIL bank and compare this performance with that of
Himalayan bank.
• What factors affects the total earning of the banks?
• Are they maintaining sufficient liquidity position?
1.3 Objective of the Study

Main objective of this study is to examine investment policy of Himalayan bank and
NABIL bank. The specific objectives of the study are as follows:
1. To analyze the trends of deposits utilization towards total investment and

loans and advances.
2. To evaluate the growth ratios of loan and advances, total investment with
other financial variables.
3. To examine fund mobilization and investment policy of Himalayan bank and
NABIL bank.
4. To evaluate the liquidity, efficiency and profitability and risk position.

1.4 Significance of the Study
This study is to find out the existing situation as well as future prospectus of marketing
and financial returns. If the collected fund is utilized in a good manner as investment,
then only good return and sustainability is possible. Return on investment first sustains
the institution and provides handful income to the investors. The better the investment
policy, the more valuable the company, the higher return to share holders etc and vice
versa. Since the different parties, shareholders, general public and government are
directly affected by the investment policy of the financial institutions. The researcher
feels the needs to study this policy effects on following stated parties.
• Management of banks
• Financial institution
• Share holder
• General public (customer, depositors and creditors)
• Researchers
• Related parties
Nepalese commercial banks have not formulated their investment policy in an organized
manner. They mainly depend upon the instructions and guidelines of Nepal Rastra Bank
(NRB). They do not have clear view towards investment policy. Furthermore the
implementation of policy is not in an effective way. Thus the present study will make a
modest attempt to analyze investment policy of Himalayan Bank and NABIL Bank.
This study will provide a useful feedback for academic institution, bank employees,
trainees, investors, financial person, policy making bodies and other concerned people
with bank.
1.5 Limitation of the Study

The followings are limitation of the study:
1. Most of the data used in the research are of secondary-nature; therefore there might
be reporting errors.
2. This study covers only a five year period i.e. from 2009/2010 to 2013/2014.
3. Data which are related to mobilization of loan & advance, investment on
government securities and other financial institutions are considered.
4. This study is based on secondary data from the banks’ annual report, different
publication, website and journals.
5. Only two joint venture banks i.e. Himalayan Bank and NABIL Bank are taken for
this study.
1.6 Organization of the Study

The study will be divided into five chapters:
Chapter One: Introduction
The first chapter “Introduction” describes the management information system, its role in
Organization and its functions. This chapter also specifies the statement of problem,
objective based on which the thesis is going to be written. It also specifies the scope,
limitation and organization of the study.
Chapter Two: Review of Literature

The second chapter “Review of Literature” contains the Conceptual Review of different
literature of the study field. It contains the definition, role, evolution and conceptual
framework along with the review of major books, journals, research works and thesis etc.
It contains the meaning of articles presented by different personal in book or Web Sites.
Chapter Three: Research Methodology

The third chapter “Research Methodology” deals with the research method and
techniques that is used during the system analysis and design, population and sample,
source and technique of data collection and data analysis tools along with its definition.
Chapter Four: Data Presentation and Analysis

The forth chapter “Data Presentation and Analysis” deals with all the data collection, data
analysis portion and its output, solution of the problem and drawback of the current
system are specified. It deals with analysis and interpretation of the data using financial
and statistical tools described in chapter three. After analysis is done, the new proposed
system, its flow of information, system requirement specification, system analysis and
design of the new system, data flow diagram, flow chart, design system architecture,
hardware and software requirement, data definition, input form and output reports etc are
specified. This is the main part of the thesis.
Chapter Five: Summary, Conclusion and Recommendations

The fifth chapter “Summary, Conclusion and Recommendations” regarding the thesis
provides summary and conclusion, suggestions and recommendations for improving the
future performance of the sample banks.
Besides these, a bibliography and appendices will also present at the end of the study.
Similarly, acknowledgement, table of contents, list of tables, list of figures, abbreviations
are included in the front part of the thesis report.

CHAPTERII
REVIEW OF LITERATURE
This chapter highlights the literature that is available in concerned subject. This deals
with conceptual frame work, review of reports related to concerned banks, review of
research works, review of books, review of articles and relevant study on this topic and
review of thesis works performed previously. This chapter helps to take adequate feed
back to broaden the information based and inputs to the study.
2.1 Conceptual Frame Work

2.1.1Meaning of Investment
Investment promotes economic growth and contributes to a nation's wealth. When people
deposit money in a saving account in a bank, the bank may invest by lending the funds to
various business companies. These firms in turn may invest the money in new factories
and equipment to increase their production. In addition to borrowing from banks most
companies issue stocks and bonds that they sell to investors to raise capital needed for
business expansion. Government also issue bonds to obtain funds to invest in different
projects like the construction of dams, roads and schools etc. All such investments
involve a present sacrifice of income to get an expected future benefit. As a result,
investments raise a nation's standard of living.
Investment usually involves putting money into an asset which is not necessarily
marketable in order to enjoy a series of return that investment is expected to yield. On the
other hand, speculation is usually a short-runer phenomenon. Speculators tend to buy
assets with the expecting of a profit that can be earned from a subsequent price change
and sale. Investments are usually made expecting a certain stream of income, which has
existed, will not change in the future.
According to Shakespeare Baidhya on sound investment policy: “A sound investment

policy of a bank is such that its funds are distributed in different types of assets with good
profitability on the one hand and provide maximum safety and security to the depositors
and banks on the other hand; moreover, risk in banking sectors tends to be concentrated in
the loan portfolio. When a bank gets a serious financial trouble its problem usually spring
from significant amounts of loan that have become uncollectible due to mismanagement,
illegal, manipulation of loan, misguided leading policy or unexpected economic
downturn. Therefore the bank investment policy must be such that it ensures that it is
sound and prudent in order to protect public funds”(Baidhya, 1997: 46-47).
V.K. Bhalla says, “Banks are those institutions which accepts deposits from the public
and in turn provide credit to trade, business and industry that directly makes a remarkable
impact on the economic development of a country. To collect the fund as a good
investment is a very risky job. Ad-hoc investment decision leads the bank out of the
business thereby drawn the economic growth of a country. Hence sound investment
policy is another secret of a successful bank”(Bhalla, 1983:2).
Jerome B. Chone Edward, D. Zinbarg an Arthur Zeiped, define that, “Investment has
factors. It may involve putting money into bond, treasury bills, or notes or common stock,
or painting of real estate, or mortgages or oil ventures, or cattle or the theater. It may
involve specially in bull markets or selling short in bear markets. It may involve options,
straddles, tights, warrants,Shanker Dev Campus
convertibles, Library 21mutual funds, money market
margin, gold-silver,
funds, index funds and result in accumulation of wealth or dissipation of resources
diversity and challenge characterize the field. For the Able or lucky, the rewards may be
substantial, for the uniformed results can be disastrous” (Edward, 1997:1).
Frank K. Reilly defines investment in this words “An investment may be defined as the
current commitment of funds for a period of time to derive a further flow of funds that
will compensate the investing unit for the time. The funds are committed for the expected
rate of inflation and also for the uncertainty involved in the future flow of the
funds”(Reilly, 1986:92).
According to William F. Sharpe, Gordon J. Alexander and Jeffery V. Baily, "Investment

in its broadest sense means the sacrifice of current dollars for future dollars. Two
different attributes are generally involved: time and risk. The sacrifice takes places in the
present and its magnitude are generally uncertain"(Sharpe, Alexander and Baily 1995:1).
In the study of the financial institutions the investment and investment problem will
revolve around the concept of managing the surplus financial assets in such a way, which
will lead to the wealth maximization and providing a significant further source of income.
Thus the investment for insures purpose will be the management of the surplus recourses
in such a way as to make it work for providing benefits to the supplier of the funds by
letting third party to use such resources. However the investments need to be a procedural
task. It must follow a definite investment process, which definitely being from the
formulation of proper investment policy.
Cheney and Moses said,“The investment objective is to increase systematically the

individual’s wealth, defined as asset minus liabilities. The higher the level of desired
wealth the higher must be received. As investor seeking higher return must be willing to
take higher level of risk" (Cheney and Moses, 1999:13).
J.K. Francis said, "An investment is a commitment of money that is accepted to generate
additional money. Every investment entails some degree of risk, it requires a present
certain sacrifice for a future uncertain benefit" (Francis, 1998:1).
According to I.M. Pandey, “In investment decision, expenditures and benefits should be
measured in cash. In investment analysis, cash flow is more important than accounting
profit. It may also be pointed out that investment decision affects the firm's value. The
firm's value will increase if investments are profitable and add to the shareholder's wealth.
Thus, investments should be evaluated on the basis of a criterion which is compatible
with the objective of the shareholder's fund maximization. An investment will add to the
shareholder's wealth if it yields benefit in excess of the minimum benefits as per the
opportunity cost of capital" (Pandey, 1999: 407).
2.1.2 Meaning of Commercial Bank
Commercial Banks are an institution which accepts deposits, makes business loans, and
offer related services. Commercial banks also allow for a variety of deposit accounts,
such as checking saving and time deposit. While commercial banks provide services to
individual, they are primarily concerned with receiving deposits and lending to business.
"Commercial Bank is a corporation which accepts demand deposits subject to check and
makes short-term loans to business enterprises, regardless of the scope of its other
services" (Banking, USA-1972: 345).
Commercial banks deal with other people's money. They have to find ways of keeping
their assets liquid so that could meet the demands of their customers. In this anxiety to
make profit, the bank cannot afford to lock up their funds in assets, which are not easily
releasable. The depositors must be made understand that the bank is fully solvent. The
depositor's confidence could be secured only if the bank is able to meet the demand for
cash promptly and full. The banker has to keep adequate cash for this purpose. Cash is an
idle asset and bankers can't afford to keep a large possession of his assets in the form of
cash. Cash brings in no income to the bank. Therefore the bankers have to distribute his
assets in such a way that he has adequate profits without sacrificing liquidity.
(Radhaswamy, 1979:27)
Mrs. Sunity Shrestha has expressed similar view on investment. She stresses on the
fulfillment of credit needs of various sectors, which ensures investments. She expressed
in her books ‘Portfolio Behaviors of commercial banks in Nepal’s.’ “The commercial
banks fulfill the credit needs of various economic sectors including policy of commercial
banks. It is based on the profit maximization of the institute as well as the economic
enhancement of the country”(Shrestha, 1995:51-52).
Commercial Bank Act 1975 A.D (2031 BS) of Nepal has defined that "A commercial
banks one which exchange money, deposits money, accepts deposits, grant loans and
performs commercial banking functions and which is not a bank meant for co-operative,
agriculture, industries for such specific purpose".
In conclusion that investment means use of rupee of amount today by expecting more
income in future. It is clear that investment is the mobilization of funds today with
expected additional return in future but the return sometimes may be negative also.
2.1.3 Managing the Joint Venture Company

An important function of the shareholders’ agreement and articles of association is to
reflect the agreed arrangements for managing the joint venture vehicle. Different
considerations will apply if it is a 50/50 joint venture where there is likely to be equal
representation on the board as opposed to a joint venture involving a minority shareholder
who requires special protection.
Board of the joint venture company

Firstly it should be established whether the board of the joint venture will have an
executive role or whether there will also be an executive body with a secondary
supervisory body consisting of shareholder representatives who approve the strategy and
important decision. There will be some matters that the ventures will regard as crucial to
protect the value of investments. It is not unusual for these to be subject to shareholder
approval rather than board approval.
It is not essential for the management rights and responsibilities to correspond with equity
ownership. Therefore, a party may be given greater management rights, for example,
rights over decisions affecting technical and management areas.
A director may face a conflict between the interests of the venture and interests of his
appointing company. There is a balance to be struck between his duty to exercise his
power for the benefit of the venture as a whole and his duty to protect the shareholder
who appointed him. In practice, the appointee can exercise his powers in accordance with
the wishes of the appointing shareholder provided that, in doing so, he does not act
blindly, but considers the venture as a whole. To the extent that there are areas for
conflict, it may be better for these to be dealt with at shareholder level
Advantages of Joint Venture
• Provide companies with the opportunity to gain new capacity and expertise.
• Allow companies to enter related businesses or new geographic markets or
gain new technological knowledge.
• Access to greater resources, including specialized staff and technology.
• Sharing risks with a venture partner.
• Joint ventures can be flexible. For example, a joint venture can have a
limited life span and only cover part of what you do, thus limiting both your
commitment and the business' exposure.
• In the era of divestiture and consolidation, JV’s offer a creative way for
companies to exit from non-core businesses.
• Companies can gradually separate a business from the rest of the
organization, and eventually, sell it to the other parent company. Roughly
all joint ventures end in a sale by one partner to the other.
Disadvantages of Joint Venture

• It takes time and effort to build the right relationship and partnering with
another business can be challenging. Problems are likely to arise if: The
objectives of the venture are not 100 per cent clear and communicated to
everyone involved.
• There is an imbalance in levels of expertise, investment or assets brought
into the venture by the different partners.
• Different cultures and management styles result in poor integration and co-
operation.
• The partners don't provide enough leadership and support in the early
stages.
• A lack of communication among the partner will prove fatal, in this case
both may focus on different projects instead on one common goal.
• The share of the profit, since you share the asset you need also share the
profit depending upon the size of the venture or the agreement.
Role of Joint Venture Banks
Joint venture banks in developing countries like Nepal have the greatest responsibility
towards the economic development of the country. In the present day world the developed
and developing money economies, the vital process of production and consumption are
significantly affected by the aggregate money supply consisting of the currency, demand
and time deposit with banks. The main goal of the banks as a commercial organization is
to maximize the surplus by the efficient use of its funds and resources. In spite of being a
commercial institution, it too has responsibility to provide social service oriented
contribution for the socio-economic enlistment by providing specially considered loans
and advancement towards less privileged sectors. The scope of this study lies mainly in
filing a research gap on the study of the investment policy analysis of joint venture banks
of Nepal. This study is basically confined in reviewing the investment policy of joint
venture banks within five year period. This study may also be useful to the person who is
interested to do research in banking sector.
The establishment of the joint venture banks, enforcement of priority sector and
productive sectors lending policies of Nepal Rastra Bank to financial institutions does not
seem to have an appreciative impact. Nepalese joint venture banks have not formulated
their investment policies in organized manner. They mainly rely upon the instruction and
guidelines of Nepal Rastra Bank. They don’t have clear view towards investment policy
further more. The implementation of the policy is not in an effective way. The problems
of joint venture banks are presented briefly as under:
• Joint venture banks are efficient but how far are they efficient?
• State the relationship of the investment and loans and advances with total
deposits and net profits.
• Are they maintaining sufficient liquidity position?
• Whether these commercial banks are able to meet obligation or not?
• Are they maintaining its deposit and credits to increase its volume of
banking operations?
2.2 Features of Lending Policy

The greater the credit created by the bank the higher will be the profitability. Income and
profit of the financial institutions like commercial banks and finance companies depend
upon its lending policy, investment policy of collected fund in different securities. A
sound lending and investment policy is not only prerequisite for bank’s profitability, but
also crucially significant for the promotion of commercial saving of a backward country
like Nepal.
A. Safety and Security

Financial institutions should inlets their deposit in profitable and secured sectors. They
should not invest their fund in securities of those companies whose securities are too
much depreciated and fluctuated because of risk of loss factors. It must not invest its fund
into speculative businessman, who may be bankrupt at once and who may earn millions
in a minute also. They should accept those securities, which are marketable, durable,
profitable and high market price as well as stable.
B. Liquidity
It is the position of the firm to meet current or short-term obligations. General public or
customers deposit their saving at the banks in different accounts having full confidence of
repayment by the banks whenever they require. To show a good current position and
maintain the confidence of the customers, every firm must keep proper cash balance with
them while investing in difference securities and granting loan for excess fund.
C. Purpose of Loan
This is very important question for any banker. Is customer in need of loan? If borrower
misuses the loan granted by the bank, there will be heavy bad debts. Detailed information
about the scheme of the project or activities would be examined before lending.
D. Profitability
To maximize the return on investment and lending position, financial institutions must
invest their collection in proper sectors. Finally they can maximize their volume of
wealth. Their return depends upon the interest rate, volume of loan its time period and
nature of investment on different securities and sectors.
E. Diversification
Diversification of loan helps to sustain loss according to the law of average; if a security
of a company is divided, there may be an appreciation in the securities of other
companies. A firm can invest its deposit collection in various securities to minimize the
risk. So, all the firms must diversify their fund or make portfolio investment. In this way,
the loss can be recovered.
F. Legality
A commercial bank must follow the rules and regulations as well as different directions
issued by Nepal Rastra Bank, Ministry of Finance, Ministry of Law and other while
mobilizing its funds. Illegal securities will bring out any problems to the investors.
(Source:http://kishakisi.blogspot.com/features-of-sound-lending-and-fund.html)
2.3 Review of Related Studies

2.3.1 Review of Articles
It review some of the related articles published in different economic journals, bulletin of
World Bank, dissertation papers, magazines, newspapers and other related books.
Bajracharya (2047) in his article has concluded “Mobilization of domestic saving is one
of the prime objectives of the monetary policy in Nepal and commercial banks and the
more active financial intermediary for generating resources in the form of deposit of
private sector and providing credit to the investor in different sectors of the economy”.
Pradhan (2053), in his article “Deposit mobilization, its problem and prospects” has
presented that deposit is the life-blood of every financial institutions, commercial banks,
financial company, and co-operative or non government organization. He further adds in
consideration of most of banks and finance company, the latest figure does produce a
strong feeling that a serious review must be made of problem and prospects of deposit
sectors. Leaving few joint venture banks, other organization relies heavily on the business
deposit and credit disbursement.

Rana and Pradhan (2062) in there article “Implementation evaluation of foreign direct
investment policy in Nepal” writes, “The present changing context of the economy calls
for a sustained revitalization of the resources. How much they have gained over the years
depends chiefly on how far they have been able to utilize their resources in an efficient
manner. Therefore, the task of utilization of resources is as much crucial as the
mobilization. The under utilization of resource not only results in loss of income but also
goes further to discourage the collection of deposits”.
Shrestha (2068) in his article, “Economic analysis of government policies, investment

climate and political stability” concludes that “following an introduction of the reform in
the banking sectors as an integrate part of the liberal economic policy more banks and
finance companies have come up as a welcome measure of competition. Slowly and
steadily, the two governments controlled banks, Nepal Bank Ltd. and Rastriya Banijya
Bank has also shown an improvement of non-performing loans and is taking steps to
adopt improved technology. However, higher economic growth with social justice
bringing a significant benefit to the poor is yet to the activated as envisaged by the NG”.
2.3.2 Review of Thesis

Some students regarding the accepts of commercial banks such as lending policy, interest
rate structure, capital structure and investment policy have been conducted, which are
relevant for this study. However during the course of study I found some of the thesis
relevant and helpful for my study.
Karki (2010) in her thesis entitled “Investment Policy Analysis Of Joint Venture Bank, A
Comparative Study Of Nepal SBI Bank And Everest Bank Ltd” has;
Main Objectives:
• To find out the relationship between total deposit and total investment,
total loan and advances, and net profit and outside assets of Nepal SBI Bank
in the comparison to other Joint Venture Bank
• To evaluate the liquidity, assets management efficiency and profitability
position in relation to fund mobilization of Nepal SBI Bank in the
comparison to other Joint Venture Bank.
• To evaluates the growth ratio of loans and advances and total investment
with respective growth rate of total deposit and net profit of Nepal SBI
Bank in comparison to other Joint Venture Bank.
Using different Financial and Statistical tools (Liquidity ratio, Asset Management ratio,
Profitability ratio, Risk ratio, Growth ratio, Mean, Standard deviation, Co-relation
Coefficient, Hypothesis Analysis etc.) and;
Major findings of the study:
• The liquidity position of Nepal SBI Bank Ltd is comparatively worse than
that of other JVBs. SBI Bank has more portions of current assets as loans
and advances butShanker Dev Campus
less portion Library
of investment on 27
government securities.
• Nepal SBI Bank is comparatively more successful in deposit mobilization
but failure to mountain high growth rate of profit in comparison to other
JVBs.
• Nepal SBI Bank is comparatively less successful in on-balance-sheet
operation as off-balance- sheet operation than that of other JVBs.
• There is significant relationship between deposit and loan advances as well
as outside assets and net profit but not between deposit and total investment
in case of both Nepal SBI bank and other JVBs. 4
• Profitability position of SBI Bank is not better than that of other JVBs.
Raya (2011) in his thesis entitled “Investment Policy Analysis Of Commercial Bank, A
Comparative Study Of NIBL With EBL And NABIL Bank” has;
Main Objectives:
• To evaluate the liquidity, profitability, risk position and assets management
of the sample banks.
• To evaluate and discuss the investment policy and fund mobilization of
NIBL, EBL and NABIL.
• To show the relationship between deposit and investment trends of the
bank.
Coefficient, Hypothesis Analysis, Trend Analysis etc.) and;
• Liquidity position of NIBL is comparatively average than NABIL and EBL.
• Assets management ratios of NIBL occupy the average position in
comparison with other two banks, NABIL and EBL.
• NIBL is successful in utilization of its overall working fund on profit
generating activity than the NABIL and EBL. But return from loan and
advances ratio is comparatively average, in this EBL has taken best
position.
• From the study of capital risk ratio and credit risk ratio of all three vanks
comparatively NIBL is successful to attract the deposits and inter banks
fund, and utilizeShanker
its loanDev
andCampus
advances from total
Library 28 assets in safest way by
taking high risk, which helps to increase the level of profit and maximizing
the value of the firm.
Devekota (2012) in his thesis entitled “Investment Policy Analysis Of Joint Venture
Bank, A Comparative Study Of Everest Bank Ltd (EBL) And Himalayan Bank Ltd (HBL)”
has;
Main Objectives:
• To evaluate the liquidity, profitability, risk position and assets management
of the sample banks.
• To analyze investments trend, deposit trend and total income and their
projection for next five years of EBL and compare them with that of HBL.
• To identify investment sectors of EBL and HBL.
• To evaluate and discuss the investment policy and fund mobilization of
EBL and HBL
• To study the relationship between investment and deposit of the bank.
• Liquidity position of EBL is comparatively average than HBL.
• Assets management ratios of EBL occupy the average position in
comparison with HBL.
• EBL is successful in utilization its overall working fund on profit
generating activity than the HBL. But return from loan and advances ratio is
comparatively average, in this HBL has taken best position.
Rishu Shrestha (2013), in his study entitled “Investment Policy And Analysis Of
Commercial Banks In Nepal, A Comparative Study Of NABIL With Standard Chartered
Bank And Himalayan Bank” has;
Main Objectives:
• To discuss fund mobilization and investment policy of SCBL in respect to
its fee based off-balance-sheet transaction and fund based on balance sheet
transaction.
• To evaluate the quality, efficiency and profitability and risk position.
• To evaluate trend of deposit, investment, loan and advances and projection
for next years.

• Mean current ratio of SCBL is slightly higher than that of SCBL and Nepal
Investment bank.
• Mean ratio of cash and bank balance to deposit of SCBL is lower than
NABIL and HBL.
• Liquidity position of SCBL is comparatively better than NABIL and HBL.
It has the lowest cash and bank balance to total deposit and cash and bank
balance to current ratio. SCBL has a good deposit collection. It has made
enough investment on government securities but it has maintained low
investment policy on loan and advances.
• SCBL is comparatively average successful in its on-balance-sheet
operation. But off balance sheet operation activities in compared to NABIL
and HBL has maintained the strong position.
• There is significant relationship between deposit of loan and advances and
between asset and net profit of SCBL.
Acharya (2014), has conducted the study on “Investment Analysis Of Commercial Banks,
A Comparative Study On NABIL Bank Ltd (NABIL) And Nepal Investment Bank Limited
(NIBL)” has;
Main Objectives:
• To analyze percentage of investment made by NABIL bank and NIBL in
total investment made by commercial banks.
• To analyze investments trend, deposit trend and total income and their
projection for next five years of NABIL and compare them with that of
NIBL.
• To identify investment sectors of NABIL bank and NIBL.

• To evaluate the liquidity, assets management efficiency, profitability and
risk position of NABIL Bank in comparison to that of NIBL.
• To study the relationship between investment and deposit of the bank
• Mean ratio of NABIL investment to commercial banks investment is higher
than of NIBL investment to total commercial banks. The portion of NABIL
investment is increasing in the total investment of commercial banks.
• Mean current ratio of NABIL bank is higher than that of NIBL. NABIL is
nearer to standardized current ratio but both banks hadn’t been able to
maintain standardized current ratio.
• The mean ratio of investment to total deposit of NABIL bank is higher than
that of NIBL. The mean ratio of investment plus loan and advances to
deposit ratio of NABIL bank is lower than that of NIBL. But its ratio is
more variable than that of NABL.
• Profitability ratio of both commercial banks shows that both banks are
running on profit. Mean return on loan and advances ratio, mean return on
total assets, mean return on equity ratio shoes that NABIL bank has higher
return than that of NIBL but the ratio of NIBL is more variable than that of
NABIL bank. But the mean ratio of interest income to total investment of
NABIL bank is 83.21% and that of NIBL bank is 86.37%. It shows that
both banks main income generating source is investment and loan and
advances.
2.4 Research Gap

The purpose of this study is to draw some ideas concerning to maintain good investment
policy and to determine its strength and weakness on the aspect of investment policies
with the NRB directives. To see what new contribution can be made and to receive some
ideas, knowledge and suggestion in relation to maintain good investment policies of
sample banks.
Though we have had a less amount of research work done on the topic “Investment
Policy Analysis Of Joint Venture Bank”. Here, this study also focuses on all the above
Shanker
issues related to the investment DevofCampus
policy the bankLibrary 31 kind of analysis tools.
with similar
However the previous study on their selection of the samples, i.e. on their selection of the
banks, they have done random sampling without any base to its selection. Hence in this
study the selection is categorized in definable way which makes sense. The selection of
the banks here is made on the basis of their establishment date, i.e. they are categorized
on the basis of their establishment time. Besides this study on the investment policy on
NABIL and HBL has covered the latest data which covers the information from FY
2009/10 to FY 2013/14; which makes it the latest version on this study with this banks.
Therefore to complete this research many books, journal, articles and various published
and unpublished dissertation and field opinion are followed as guideline to make the
research easier and smooth through the reference materials. The researcher can find out
the gaping from the past research that has to be fulfilled by the present research work. In
this regard, here the researcher is going to analyze the different policy in this topic.
It is expected the uncovered areas of this research work will be studied. The gaping
between old and new research work will be focused and filled up based on the given
objectives and limitation in this research.

CHAPTER - III
REASERCH METHODOLOGY
Research Methodology, describes the methods and process applied in the entire aspects of
study. Every research should be outlined in a systematic manner and for that reason
Research Methodology is one of the most important parts of every research. In fact,
Research Methodology is a way to systematically solve the research problems.
Research methodology refers to the various sequential steps to be adopted by a researcher

in studying a problem with certain objectives in view. In other words, research
methodology describes the method and proves applied in the entire aspect of the study.
This study helps to conclude the real position of NABIL Bank Ltd and Himalayan Bank
Ltd. The study will seek the conclusion to the point that what position NABIL Bank and
Himalayan Bank has got in whole commercial banks of Nepal and recommend the useful
and meaningful points so that all concerned can achieve something from this study. To
accomplish the goal, the study follows the research methodology described in this
chapter.
3.1 Research Design

A research design is the specification of methods and procedures for acquiring the
information needed. It is the over-all operational pattern or framework of the project that
stipulates what information is to be collected from which source by what procedures.
This study mainly has been based on secondary data of NABIL Bank Ltd and Himalayan
Bank Ltd. The data relating to the investment, deposit, loan and advance and profit are
directly obtained from the balance sheet and profit and loss account. The main source of
data assessed under the study includes, concerned banks i.e. NABIL Bank and Himalayan
bank. Supplementary data and information are collected from number of institutions and
regulating authorities like Nepal Rastra Bank, ministry of finance, Central library, and
department library. Various data and information are collected from the economic,
journals, periodicals, magazines and publications etc.
3.2 Sources of Data

Research Design is the plan, structure and strategy of investigation conceived so as to
obtain answers to research questions (Kerlinger, 1978). The research design basically
followed the comparative evaluation of investment policy in the sample firms. Analytical
and descriptive approaches are used to evaluate the investment policy’ of the sample
firms. In this study, descriptive and analytical research designs have been followed in
order to make the study more authentic and reliable, financial as well as statistical tools
are used to compare NABIL Bank with Himalayan bank separately.
Some financial and statistical tools have been applied to examine facts and descriptive
techniques have been adopted to evaluate investment of NABIL Bank and Himalayan
Bank Ltd.
3.3 Population and Sample

There are 30 commercial banks listed in Nepal Stock Exchange. Whose shares are traded
actively in stock market, hence it is not possible to study all of them because the research
is going to be conduct in a limited period of time as well as resources play a vital role.
Population is the number of joint venture banks of Nepal. In this study, two joint venture
banks NABIL Bank and Himalayan Bank have been taken into account for research
purposes as sample to compare their investment policy.
Among all, only two banks i.e. NABIL Bank Ltd and Himalayan Bank Ltd have been
taken into consideration and its data related to Investment performance are comparatively
studied.
3.4 Analysis and Presentation of Data

The analysis of data will be done according to the pattern of data available. To achieve
the objective of the study various financing, accounting and statistical tools have been
used to achieve the objective of study. This studies some financial and statistical tools to
accomplish the objectives of this study.
3.4.1 Financial Tools

Financial tools help to show the mathematical relationship between two accounting items
or figure. Ratio analysis is the only tools that can collect the financial performance and
status of a firm with the other firms. Ratio analysis is the part of whole process of analysis
of financial statements of any business or industrial concerned especially to take output
and credit decision. Only ratio has been covered in this study, which is related to
investment policy of banks. This study contains following ratios;
A. Liquidity Ratio
Liquidity ratios are used to judge the ability of banks to meet its short terms liabilities that
are likely to mature in the short period. Such insights can be obtained into present cash
solvency of the bank and its ability to remain solvent in the event of advertise. It is the
measurement of speed with which a bank’s assets can be converted into cash to meet
deposit with drawl and other current obligations. Under liquidity ratio following ratio are
evaluated.
I. Current Ratio
Ability for payment of current debt from current assets is current ratio. It refers to the
relationship between current assets and a current liability of a firm that also measures the
short-term solvency of the firm. Current assets involve cash and bank balance, money at
call or short notice, loans and advance, overdraft bill purchased and discounted,
investment on govt. securities and other interest receivables and misc. current assets.
Similarly, current liabilities involve deposit and other short term loans, tax provision,
dividend payable, bills payable, staffs bonus and sundry liabilities. Current ratio is
calculated by diving current assets by current liabilities. It can measured as,
Current Assets
Current Ratio =
Current Liabilitie s
Where, 2:1 standard of Current Ratio is acceptable.
II. Cash and Bank Balance to Total Deposit Ratio

Cash and bank balance are the most liquid current assets of a firm. Cash and bank balance
to total deposit ratio measures the percentage of most liquid assets to pay depositors. The
total deposit consists of current deposits, saving deposits, fixed deposits, money at call
and short notice and otherShanker
deposits.Dev
ThisCampus Library 34
ratio is computed by diving cash and bank
balance by total deposit. It can be presented as:
Cash and bank balance
Cash and Bank Balance to Total Deposit Ratio =
Total deposits
III. Cash and Bank Balance to Current Asset Ratio

This ratio measures the percentage of liquid assets i.e. cash and bank balance among the
current assets of a firm. Cash and banks balance includes cash in hand, foreign cash and
banks. This ratio is computed by diving cash and bank balance by total deposit. This can
be presented as:
Cash and bank balance
Cash and Bank Balance to Current Assets Ratio =
Current Assets
Higher ratio shows the higher capacity of firms to meet the cash demand.
IV. Investment on Govt. Securities to Current Assets Ratio

Investment on government securities includes treasury bills, development bonds, saving
bonds etc. This ratio is used to find the percentage of current assets invested on govt.
securities, treasury bills and development bonds. This ratio can be computed by diving
investment on govt. securities by current assets. This can be stated as:
Investment on govt. securities
Investment on Govt. Securities to Current Assets =
Total Current Assets
V. Loan and Advance to Current Assets Ratio

Loan and advance includes loans, advances, cash credit, loan and foreign bills purchase
and discounted. This ratio can be computed by dividing loan and advances by current
assets. This can be stated as:
Loan and advance
Loan and Advance to Current Assets Ratio =
Current assets
B. Assets Management Ratio
Asset management ratio is here used to indicate how efficiently the selected banks have
arranged and invested their limited resources. The following ratios are used under this
assets management ratio.
I. Loan and Advance to Total Deposit Ratio

This ratio is calculated to find out how successfully the selected banks and finance
companies are utilizing their total deposit on loans and advances for profit generating
purpose of earning profit. This can be stated as:
Loan and advance
Loan and Advances to Deposit Ratio =
Total Deposits
Where, greater ratio shows the better utilization of total deposits.
II. Loan and Advances to Total Working Fund Ratio

This ratio indicates the ability
Shankerof selected banks and
Dev Campus finance35companies in terms of
Library
earning high profit from loan and advances. Total working fund includes total amount of
assets given in balance sheet which refers to current assets, net assets, total loans for
development banks and other sundry assets except off balance sheet items i.e. letter of
credit, letter of guarantee etc. This ratio can be stated as;
Loan and advance
Loan and Advances to Working Fund Ratio =
Total workingfund
III. Total Investment to Total Deposit Ratio

Investment is one of the major credits created to earn income. This implies the utilization
of firm’s deposit on investment in govt. securities and share debentures of other
companies and banks. This ratio can be obtained by diving total investment by total
deposit. This can be mentioned as;
Total investment
Total Investment to Total Deposit Ratio =
Total deposit
IV. Investment on Government Securities to Total Working Funds Ratio

This ratio shows that banks’ investment on government securities in comparison to total
working funds. This ratio is calculated by dividing investment on govt. securities by total
working fund. This is presented as;
Investment on Govt. Securities to Total Working Fund Ratio

Total investment
=
Total workingfund
V. Investment on Shares and Debenture to Total Working Fund Ratio

Investment on share and debentures to total working fund ratio shows the investment of
banks and finance companies on the shares and debentures of other companies in terms of
total working fund. Where, total investment includes investment on govt. securities,
investment on debenture and bonds, shares of other companies. That can be calculated as:
Investment on Shares and Debenture to Total Working Fund Ratio

Investment on shares and debenture
=
Total working fund
C. Profitability Ratio
Profitability ratios are very helpful to measure the overall efficiency of operations of a
firm. It is a true indicator of the financial performance of any institution. For better
financial performance, profitability ratios of firms should be higher. The position of the
firms can be presented through the following different ways:
I. Interest Earned to Total Operating Income Ratio

It is calculated to find out the ratio of interest income with operating income of financial
institutions. This ratio indicates how efficiently the selected banks and finance companies
have mobilized their resources to bear the interest on total operating, income and it can be
stated as:
Total interest earned
Interest Earned to Total Operating Income Ratio =
Operating income
II. Return on Total Assets

Return on assets ratio measures the profitability position of the selected banks and finance
companies in comparison with total assets of those selected firms. This ratio is calculated
by dividing net profit by total assets (working fund). This can be stated as:
Net profit
Return on Total Assets (Working Fund) =
Total workingfund
This numerator indicates the portion of income, which is left to the internal equities after
deducting all costs, charges and expenses.
III. Return on Loan and Advance Ratio
Return on loan and advances ratio shows how efficiently the banks and the finance
companies have utilized their resources to earn good return from provided loan and
advances. This can be mentioned as:
Net profit
Return on Loan and Advances Ratio =
Total loan and advance
IV. Total Interest Earned to Total Working Fund Ratio

This ratio find out the percentage of interest earned to total assets. Higher ratio indicates
the better performance on financial institutions in the firm of interest earning on its
working fund. This is mentioned as:
Total interest earned
Total Interest Earned to Total Working Fund Ratio =
Total assets
V. Total Interest Paid to Total Working Fund Ratio

This ratio measures the percentage of total interest expenses against total working fund. A
high ratio indicates higher interest expenses on total working fund and others deposits.
This ratio can be calculated by dividing total interest paid by total working fund. This can
be stated as:
Total interest paid
Total Interest Paid to Total Working Fund Ratio =
Total working funds
D. Risk Ratio
Risk taking is the prime business of bank’s investment management. When a firms bear
risk and uncertainty, profitability and effectiveness of the firm increases. These ratios
indicate the amount of risk associated with the various banking operation, which
ultimately influences the bank investment policy. In this study, following risk ratios are
used to analyze and interpret the financial data and investment policy.
I. Credit Risk Ratio

Credit risk ratio helps to check the profitability of loan non-repayment or the possibility
of loan to go into default. Risk ratio is expressed as the percentage on non-performing
loan to total loan and advances. Here, dividing total loan and advances by total assets
derives this ratio. This can be stated as:
Total loan and advances
Credit Risk Ratio =
Total assets
II. Liquidity Risk Ratio

The liquidity risk of the bank defines its liquidity need for deposit. The cash and bank
balance are the most liquid assets and they are considered as banks liquidity sources and
deposit, as the liquidity needs. The ratio of cash and bank balance to total deposit is the
indicator of bank liquidity needed. The risk is low if funds are kept idle as cash and bank
balance. But this reduces profitability. When bank flow loan, its profitability increases
and also the risk. Thus higher liquidity ratio indicates less risk and less profitable bank.
This can be stated as:
cash and bank balance
Liquidity Risk Ratio =
Total deposit
E. Growth Ratio
A growth ratio helps to calculate the commercial bank’s economic and financial
condition. It is related to the fund mobilization and investment management of the bank.
The higher ratios represent the better performance of the selected firms to evaluate, check
and analyze the expansion and growth of the selected banks. The following growth ratios
are calculated.
(a) Growth Ratio of Total Deposits
(b) Growth Ratio of Total Investment
(c) Growth Ratio of Loan and advances and
(d) Growth Ratio on Net Profit
3.4.2 Statistical Tools

Some important statistical tools are used to achieve the objective of this study. The basic
analysis tools are follows.
• Mean of different variables.
• Standard deviation of different variables
• Coefficient of variation
• Coefficient of correlation between different variances.
• Trend analysis of important variables
• Test of hypothesis of important variables
A. Mean
Among the measures of central tendency mean is used in wide range. It represents the
entire data by a single value. It provides the gist and gives the bird’s eye view of the huge
mass of unwieldy numerical data. Mathematically it can be represented as:
Mean ( ) =
Where,
X = An observed value
N = Number of observations
x = Sum of observations
= Arithmetic mean
B. Standard Deviation
Standard deviation is an important and widely used to measure dispersion. A standard
deviation is the positive square root of the arithmetic mean of the squares of the
deviations of the given observations from their arithmetic mean. It is denoted by the letter
(sigma). In the study standard deviation of different ratios are calculated.
∑

Standard deviation (=
Where,
= Standard deviation (S.D.)

∑ = Sum of squares of observation after deducting mean

N = Number of observations
C. Coefficient of Variation
It is the most commonly used measure of relative variation. It is the relative measures of
dispersion, comparable across distribution, which is defined as the ratio if the standard
deviation to the mean expressed in percent. It is used in such problems where the
researcher wants to compare the variability of data more than two years. A series with
smaller C.V. is said to be less variable or more consistent or more homogeneous or more
uniform or more stable than the others and vice versa. It is calculated as;

Coefficient of variation (C.V) =
Where,
= Mean
= Standard Deviation
C.V. = Coefficient of Variation
D. Coefficient of Correlation Analysis

The coefficient of correlation measures the degree of relationship between two sets of
figures. This tool analyzes the relationship between those variables and helps the selected
banks to make appropriate investment policy regarding to profit maximization and
deposit collection, fund utilization through providing loan and advances or investment on
other companies. Among the various methods of finding out coefficient of correlation,
Karl Pearson’s method is applied. The result of the correlation coefficient is always lies
between +1 and -1. When r = +1, it means, there is perfect positive relationship between
two variables. When r = -1, it means, there perfect negative relationship between two
variables. When r = 0, it means, there is no relationship between two variables.
We know,
∑ ∑ ∑
Coefficient of correlation (r) =
! ∑ ∑ ! ∑ ∑
Shanker
Where, X and Y represents the twoDev Campus Library 39
variables
E. Trend Analysis
This type of statistical analyzes the trend of deposit; loan and advances, investment and
net profit of NABIL Bank and Himalayan Bank from 2009/2010 to 2013/2014 and make
the forecast for the next five years. The following trend value analysis has been used in
this study.
a. Trend analysis of total deposits.
b. Trend analysis of loan and advances
c. Trend analysis of total investment
d. Trend analysis of net profit.
The trends of related variables can be calculated as,

Y = a + bx
Where,
Y = Values of Y computed from relationship for a given X
a = Numerical constant value
b =Numerical constant which measures the change in Y per unit
change in X
F. Test of Hypothesis (T-test)

This test is to test the significance regarding the parameters of the population on the basis
of sample drawn from the population. This test has been conducted on the various ratios
related to the banking business. Test of hypothesis on total investment to total deposit,
loan and advances to total deposit ratio, outside assets to net profit and loan to net profit
of Himalayan bank and NABIL bank are done for study purpose.
t-test for observed sample correlation coefficient

In order to test if the sample correlation coefficient ‘r’ is significant of any correlation
between the variables in the population or it is just due to fluctuation of sampling, we use
t-test for significance of an observed sample correlation as follows:
Step 1: Hypothesis formulation
Null Hypothesis (Ho): ρ = 0
That is variables in the population are uncorrelated or there is no
relationship between variables in the population.
Alternative hypothesis (H1): ρ ≠0 (Two tailed test)
That is variables in the population are correlated or there is relationship
between variables in the population.
P < 0 (Left tailed test)
That is variables in the population are negatively correlated.
P > 0 (Right tailed test)
That is variables in the population are positively correlated.
Step 2: Test Statistics: Under Ho
#
" √% 2
√#
Where, Shanker Dev Campus Library 40
r = Sample coefficient of correlation between two variables
n = Sample size of pair observations
Step 3: Level of Significance (α) = either given or 5% as most commonly used
level of significance.
Degree of freedom (df) = n – 2
Step 4: Tabulated value (i.e. Critical value)
Step 5: Decision: if ' () is rejected so it is significant and hence we
conclude that there is significant existence of correlation
between variables.
If ' () is accepted so it is insignificant and hence
we concluded that there is no significant existence of
correlation between variables.

CHAPTER - IV
DATA PRESENTATION AND ANALYSIS
In this chapter secondary data are collected, analyzed and evaluated. Major financial
items which are mainly related to the comparison of investment management and fund
mobilization of NABIL Bank and Himalayan Bank. The calculated ratios are statistically
analyzed.
4.1 Financial Tools

Financial analysis is the process of identifying strength and weakness of the organization
presenting the relationship between the items of balance sheet. Financial ratio related to
the investment management and the fund mobilization are presented, evaluated, discussed
and analyzed. All these calculations are based on financial statements of concerned banks
i.e Nabil Bank and Himalayan Bank. The important financial ratios, which are to be
calculated for the purpose of this study, are mentioned below.
a) Liquidity ratio
b) Asset Management ratio
c) Profitability ratio
d) Risk ratio
e) Growth ratio
4.1.1 Liquidity Ratio

This ratio measures the firm’s ability to meet its maturing short term obligations.
Liquidity ratio measures the ability of the firm to meet its current obligations. A
commercial bank must maintain its satisfactory liquidity position to meet the credit need
of the community. Commercial banks collect the fund from community with commitment
of returning their money when demand it. So, they must maintain its sufficient liquidity
position to fulfill that commitment of returning depositor’s deposit, withdraw and convert
non cash-assets to cash to satisfy immediate needs without any loss to bank and
consequent impact on long-run profit. The following ratios are evaluated and interpreted
under liquidity ratio. Liquidity position of NABIL Bank and Himalayan Bank are
comparatively studies through following ratios.
4.1.1.1 Current Ratio

This ratio is computed dividing current assets by current liabilities; indicates the extent to
which the claims of short-term creditors are covered by asset expected to cover for cash
in the near future. This ratio shows the relationship between cash and other current assets
to its current liabilities. The current ratio’s standard deviation and coefficient of variation
of NABIL Bank and Himalayan Bank are given in the following tables.

Table 4.1
Current Ratio
Year NABIL Bank Himalayan Bank Limited(HBL)
Limited(NABIL)
2009/10 1.16 0.97
2010/11 1.14 0.93
2011/12 1.31 0.93
2012/13 0.77 0.81
2013/14 0.75 0.72
Total 5.129 4.362
Mean 1.03 0.87
S.D 0.256 0.105
C.V 24.85 12.07
Source: Appendix A
From the table 4.1 the current assets of NABIL Bank is higher than current liabilities but
shows a decreasing trend from FY 2009/10 to FY2010/11, before rising dramatically. No
much difference was noticed from FY 2012/13 to FY2013/14 though current assets were
lower than the current liabilities. However no much difference was noticed in current
ratio of Himalayan bank, though current liabilities were higher than current assets
throughout the period. It means Himalayan bank is not in sound ability to pay short term
obligation due to more liabilities. The table shows that in F/Y 20010/11 and 2011/12, the
Himalayan bank has similar current liabilities and current asset.
In average, both NABIL and HBL have current ratio i.e. 1.03 and 0.874. It shows that the
liquidity position of NABIL is good than HBL. The co-efficient of variation of NABIL is
greater than HBL i.e. 24.85% > 12.07%. It can be said that current ratio of NABIL is
more consistent than of HBL. From the point of view of working capital policy, HBL has
followed the aggressive working capital policy by attracting more current liabilities i.e.
current and saving deposits and deploying them into liquid sectors. From above analysis it
can be concluded that the current ratio is less than adequate i.e. 2:1. It means the firm has
difficulty in meeting its current obligation.
4.1.1.2 Cash and Bank Balance to Total Deposit Ratio

Cash and bank balance consist of cash in hand, foreign cash in hand, cheques and other
cash items, balance with domestic banks. These ratio measures the availability of bank’s
highly liquid or immediate funds to meet it unanticipated calls on all types of deposits.
High ratio indicates the greater ability to meet their deposit. The following table shows
the cash and bank balance to total deposit ratio of NABIL and HBL.

Table 4.2
Cash and Bank Balance to Total Deposit Ratio
Year NABIL Bank Limited Himalayan Bank Limited (HBL)
(NABIL)
2009/10 2.55 8.29
2010/11 4.46 4.94
2011/12 8.60 10.33
2012/13 9.25 6.87
2013/14 13.256 7.65
Total 38.12 38.08
Mean 7.62 7.616
S.D 4.215 1.972
C.V 55.31 25.89
Source: Appendix A
The table 4.2 shows that comparative cash and bank balance to total deposit ratio, which
is in fluctuating trend for both NABIL and HBL. NABIL has higher ratio (13.256%) in
F/Y 2013/14 and lower (2.55%) in F/Y 2009/10. Similarly, in case of HBL, higher ratio is
(10.33%) in F/Y 2011/12 and lower ratio is (4.94%) in F/Y 2010/11. The mean ratio of
NABIL is and HBL are almost similar i.e. 7.62% and 7.6161% respectively. On the basic
of co-efficient of variation it can be conclude that HBL has more consistent ratios than
that of NABIL i.e. 25.89% < 55.31%.
HBL and NABIL has maintained low ratios, it shows that the same difficulties to meet the
demand of its customers on their deposit to pay at any difficulties but it may earn more
due to invested cash to different sectors. All deposit amounts mostly to invest other
sectors due to investing opportunity occurs and gain more. However holding higher
amount of idle cash cannot be regarded favorable for joint venture banks. Holding less
cash and bank balance can have negative impact on the goodwill and reputation of the
bank to fulfill the demand.
4.1.1.3 Cash and Bank Balance to Current Assets Ratio

This ratio examines the banks liquidity capacity on the basis of its most liquid assets i.e.
cash and bank balance. This ratio reveals the ability of the bank to make the quick
payment of its customer’s deposits. A high ratio indicates the sound ability to meet their
daily cash requirement of their customer’s deposit. But high ratio is not preferred, as the
bank has to pay more interest on deposit and will increases the cost of fund. Bank should
be maintained sufficient and appropriate cash reserve properly for the customers demand
against deposit when required and less interest is required to be paid against the cash
deposit.

Table 4.3
Cash and Bank Balance to Current Assets Ratio
(NABIL)
2009/10 4.00 10.45
2010/11 6.17 6.40
2011/12 11.432 13.34
2012/13 11.46 8.28
2013/14 16.76 10.30
Total 49.83 48.77
Mean 9.966 9.754
S.D 5.013 2.6
C.V 50.31 26.67
Source: Appendix A
The table 4.3 shows banks ratios are fluctuating trend. HBL has maximum ratio (13.34%)
in F/Y 2011/12 and minimum (6.40%) in F/Y 2010/11.NABIL has also maximum
(11.46%) ratio in F/Y 2011/12 and minimum (4.0%) in F/Y 2009/10. Observing the same
ratio, they were also not maintaining the same level through the study period. The
comparative tables listed above shows that the mean ratio of HBL is lower than that of
NABIL i.e. 9.754% < 9.966%. It supports the conclusion that HBL has been not
successful to maintain its higher cash and bank balance to current assets ratio in
comparison to NABIL. However co-efficient of variation of NABIL is 50.31% which is
comparatively higher than HBL bank i.e. 50.31% > 26.67%. Thus it can be conclude that
NABIL is high capable for maintained cash and bank balance in comparison to HBL.
4.1.1.4 Investment on Government Securities to Current Assets

Ratio
This ratio examines that portion of commercial banks current banks current assets, which
invested on different government securities. More or less, each commercial bank is
interested to invest their collected fund on different types of securities issued by govt. in
different times to utilize their excess funds and have for other purpose. Though govt.
securities are not as liquid as cash balance of a commercial bank, they can be easily sold
in the market or they can be converted into cash in other ways.

Table 4.4
Investment on Government Securities to Current Assets Ratio
(NABIL)
2009/10 26.85 14.95
2010/11 24.31 20.28
2011/12 19.33 24.79
2012/13 15.43 22.43
2013/14 13.90 25.384
Total 99.82 107.834
Mean 19.965 21.567
S.D 5.5685 4.217
C.V 27.89 19.55
Source: Appendix A
From the table 4.4 shows HBL has made more investment on government securities in
F/Y 2013/14 and minimum in F/Y 2009/10 and NABIL has made more investment on
government securities in F/Y 2009/10 and minimum in F/Y 2013/14. It shows that mean
of government securities ratio of HBL is higher than the NABIL i.e. 21.567% > 19.965%.
It means HBL has invested more portions of current assets than NABIL bank. On the
other hand, co-efficient of variation of HBL is less than NABIL i.e. 19.55% < 27.8H%.
Which means that the variability of ratios of EBL is more consistent and homogenous
than that of NABIL bank.
4.1.1.5 Loan and Advances to Current Assets Ratio

A commercial bank should be invested as loan and advance to the customers to make
more profit by mobilizing its fund in the best way. It should pay interest on those
unutilized deposit funds and may lose some earning if a bank cannot be granted sufficient
loan and advances. Loan and advances are also included in the current assets of a
commercial bank because generally it provides short-term loan, advance, overdrafts and
cash credit. The table below shows that ratio of loan and advance to current assets ratio of
NABIL and HBL.
Table 4.5
Loan and Advances to Current Assets Ratio
(NABIL)
2009/10 109.10 93.71
2010/11 105.71 99.92
2011/12 100.51 94.59
2012/13 90.40 90.14
2013/14 91.72 94.43
Total 497.44
Shanker Dev Campus Library 46 472.79
Mean 99.49 94.56
S.D 8.3056 3.50
C.V 8.35 3.70
Source: Appendix A
From table 4.5 listed above shows that NABIL and HBL have fluctuating trend on their
loan and advance to current assets ratio. In case of HBL it has recorded highest ratios in
F/Y 2010/11 i.e. 99.92% and lowest in F/Y 2012/13 i.e. 90.14% similarly, NABIL
maintained highest ratio in F/Y 2009/10 i.e.109.10% and lowest in F/Y 2012/13 i.e.
90.4%.
While examining the mean ratio, HBL has maintained i.e. 94.56% which is less than
NABIL i.e. 94.56% < 99.49% and co-efficient of variation ratio of NABIL greater than
HBL i.e. 8.35% > 3.7%. In this case, HBL is poor its fund as loan and advances with
respect to current assets in comparison to NABIL. The mean reveals that HBL loan
advances to current are satisfactory level but overall liquidity position of HBL is not
satisfactory than of NABIL. Thus above table clearly indicate that loan and advance to
current assets ratios are being efficiently and properly utilized by HBL than NABIL bank.
4.1.2 Asset Management Ratio

A commercial bank must be able to manage its assets very well to earn high profit to
satisfy its customers and for its own existence. Assets management ratio measures how
efficiently the bank manages the resources its commands.
The following ratios measured the assets management ability of the NABIL and HBL in
comparison.
4.1.2.1 Loan and Advance to Total Deposit Ratio

This ratio measures the extent to which the banks are successful to mobilize their total
deposit on loan advances. The table below shows the ratio of loan and advances to total
deposit ratio of NABIL and HBL.

Table 4.6
Loan and Advance to Total Deposit Ratio
(NABIL)
2009/10 69.53 74.39
2010/11 76.53 77.14
2011/12 75.61 73.26
2012/13 72.897 74.85
2013/14 72.55 70.07
Total 367.12 369.71
Mean 73.42 73.94
S.D 2.767 2.5841
C.V 3.769 3.495
Source: Appendix A
From table 4.6 listed above shows that NABIL and HBL have maintained fluctuated trend
on their loan and advance to total deposit ratio. In case of HBL
it has recorded highest ratios in F/Y 2010/11 i.e. 77.14% and lowest in F/Y 2013/14 i.e.
70.07%. Similarly NABIL maintained highest ratio in F/Y 2010/11 i.e.76.53% and lowest
in F/Y 2009/10 i.e. 69.53%.
In average, the mean ratio of HBL has maintained i.e. 73.94% which is higher than
NABIL i.e. 73.94% > 73.42% and however co-efficient of variation ratio is greater of
NABIL than HBL i.e. 3.769% > 3.495%. It indicates that NABIL maintained fewer
consistencies than HBL.
4.1.2.2 Total Investment to Total Deposit Ratio

A commercial bank may mobilize its deposit by investing its fund in different securities
issued by government and other financial or non financial companies. Now an effort has
been made to measure the extent to which the bank are successful in mobilizing the total
deposit on investment. Total investment includes government securities, share, debenture
and other. Below table exhibits this ratio of the NABIL and HBL.
Table 4.7
Total Investment to Total Deposit Ratio
(NABIL)
2009/10 29.53 22.45
2010/11 26.32 21.43
2011/12 25.55 21.02
2012/13 25.68 24.48
2013/14 24.24 30.68
Total 131.322 120.06
Mean Shanker
26.26Dev Campus Library 48 24.01
S.D 1.776 3.9624
C.V 6.76 16.5
Source: Appendix A
From table 4.7 HBL has highest ratio in F/Y 2013/14 i.e. 30.44% and lowest ratio in F/Y
2011/12 i.e. 21.02%. NABIL has highest ratio in F/Y 2009/10 i.e. 29.53% and lowest
ratio in F/Y 2013/14 i.e. 24.24%.
The mean value of NABIL is greater than HBL i.e. 26.26% > 24.01% and co-efficient of
variation less than HBL i.e. 6.76% < 16.50%. The analysis shows that the average
investment policy of NABIL is greater than HBL. The analysis shows that the average
investment policy of NABIL is better than HBL, which means NABIL bank is more
successful in utilizing the outsider’s fund in the investment than HBL bank.
4.1.2.3 Loan and Advance to Total Working Fund Ratio

This ratio reflects the extent to which the commercial banks are success in mobilizing
their assets loan and advances for the purpose of income generation. A high ratio
indicates better in mobilization of funds as loan and advances. Total working fund
includes current assets, fixed assets and other assets which are a must to run an
organization successfully. The table 4.8 exhibits this ratio of the NABIL and HBL.
Table 4.8
Loan and Advance to Total Working Fund Ratio
(NABIL)
2009/10 61.96 65.50
2010/11 65.42 67.54
2011/12 65.83 64.32
2012/13 63.31 65.00
2013/14 62.67 61.59
Total 319.19 323.95
Mean 63.84 64.79
S.D 1.71 2.155
C.V 2.674 3.33
Source: Appendix A
The table 4.8 shows that ratio of NABIL bank is slightly decreasing trend for the last of
the five years periods. It has maintained highest (65.83%) ratio in F/Y 2011/12 and lowest
(61.96%) ratio in F/Y 2009/10. Whereas, HBL has this ratio in fluctuating trend, the
highest ratio is 67.54% in F/Y 2010/11 and lowest ratio is 61.59% in F/Y 2013/14.
On the basis of mean ratio HBL is greater than NABIL i.e. 64.79% > 63.84% from this it
can say that HBI is strong condition to mobilize its total working fund as loan and
advance than NABIL. Co-efficient of variation of HBL is greater than NABIL i.e. 3.33%
> 2.674% from this it can say that HBL is less consists than NABIL.

4.1.2.4 Investment on Government Securities to Total Working
Fund
Government securities are not risky therefore any investor gives first priority to invest in
this secured sector and so does a bank. This ratio reveals that the banks are successful in
mobilizing their total working fund on different types of govt. securities to maximize the
income. The bank should not utilize its all deposits in loan and advances and other form
of credit, from securities and liquidity point of view. Therefore commercial banks seem to
be interested to utilize their deposit by purchasing government securities. A high ratio
indicates better mobilization of fund as investment on government securities. The table
below shows the ratio of investment on govt. securities to total working fund of NABIL
and HBL.
Table 4.9
Investment on Government Securities to Total Working Fund
(NABIL)
2009/10 15.25 10.45
2010/11 15.04 13.71
2011/12 12.66 16.85
2012/13 10.81 16.18
2013/14 9.50 16.56
Total 63.26 57.36
Mean 12.65 11.47
S.D 2.5427 4.56
C.V 20.10 39.74
Source: Appendix A
From the table 4.9 it is clearly seen that investment on government securities to working
fund ratio of NABIL and HBL has in fluctuating trend. HBL has highest (16.85%) ratio in
F/Y 2011/12 and lowest (10.45%) ratio in F/Y 2009/10. NABIL has highest (15.25%)
ratio in F/Y 2009/10 and lowest (9.50%) ratio in F/Y 2013/14.
Comparing the mean ratio of investment on government securities to total working fund
HBL seems too weak to mobilize its working fund as investment in government securities
than NABIL i.e. 11.47% < 12.65%. Co-efficient of variation of HBL during study is
higher than NABIL i.e. 3974% > 20.10% that means HBL is less consistence than
NABIL. So from this analysis, it can be conclude that the HBL has invested less portion
of working fund on government securities than NABIL and also NABIL is less
homogeneous than NABIL.
4.1.2.5 Investment on Share and Debenture to Total Working Fund

Ratio
Investment on share means to purchase shares of other companies and firms that are
issued to operate business. And the shareholder may hold either voting right or be a
member of board of directors. And the investment on debentures means being a debt
holder with fixed interest income but do not hold the voting right generally. Investment
on shares and debenturesShanker
to total working fund ratio
Dev Campus reflects50the extent to which the banks
Library
are successful to mobilize their total working fund on purchase of share and debentures of
other companies to generate income and utilize excess fund. A high ratio indicates more
portion of investment on share and debenture out to total working fund.
Table 4.10
Investment on Share and Debenture to Total Working Fund Ratio
(NABIL)
2009/10 0.67 0.18
2010/11 0.64 0.19
2011/12 0.67 0.17
2012/13 0.35 0.24
2013/14 0.26 0.26
Total 2.59 1.04
Mean 0.518 0.21
S.D 0.197 0.0397
C.V 38.07 18.90
Source: Appendix A
Table 4.10 shows that both banks have invested nominal percentage of total working fund
into shares and debentures on other companies, in all case as the ratio percentage is less
than 1%. However in comparing, NABIL has invested slightly higher amount on share
and debentures on other companies in the study period. Whereas, NABIL has made too
low investment which is 0.26% in F/Y 2013/14 and highest ratio is 0.67% in F/Y 2009/10
and F/Y 2011/12. HBL has highest ratio i.e. 0.26% in F/Y 2013/14 and lowest ratio i.e.
0.17% in F/Y 2011/12.
On the basis of mean ratio, it can be stated that NABIL has invested higher amount in
share and debentures in comparison to HBL i.e. 0.518% > 0.21%. Moreover co-efficient
of variation of HBL ratio is lower than that of NABIL i.e. 18.90% < 38.07%. It means
investment ratio of HBL is more consistent than that of NABIL. From the above analysis,
it is clear that NABL has invested higher percentage of its total assets on shares and
debentures of other companies in comparison to HBL.
4.1.3 Profitability Ratios

The main objective of a commercial bank is to earn profit by providing different types of
banking services to its customers. To meet various objective like, maintains good
liquidity position, meet fixed internal obligations, overcome the future contingencies, and
grab hidden investment opportunities, expand banking transaction in different places,
finance govt. in need of development funds etc, a commercial bank have to earn sufficient
profit. Here, mainly those major ratios are presented and analyzed through with the effort
has been made to measure the profit earning capacity of NABIL and HBL comparatively.
4.1.3.1 Return on Total Working Fund / Return on Total Assets

Ratio
Return on working fund ratio measures the profitability with respect to each financial
resources investment of the bank assets if the bank’s working fund is well managed and
efficiency utilized, returnShanker Dev Campus
on such assets Library
will be higher. 51
Minimizing taxes within the legal
options available will also improved the return. The following table shows that
profitability position with respect to total assets.
Table 4.11
Return on Total Assets Ratio
(NABIL)
2009/10 2.19 1.19
2010/11 2.30 1.91
2011/12 2.68 1.76
2012/13 3.03 1.54
2013/14 2.66 1.30
Total 12.858 7.70
Mean 2.57 1.54
S.D 0.335 0.30
C.V 13.04 19.62
Source: Appendix A
From the table 4.11 it shows that profitability of banks is fluctuating trend. NABIL has
highest (3.03%) ratio in F/Y 2012/13 and lowest (2.19%) ratio in F/Y 2009/10. HBL has
highest (1.91%) ratio in F/Y 2010/11 and lowest (1.19%) ratio in F/Y 2009/10. When the
mean ratios are observed, it shows that HBL has low return than NABIL i.e. 1.54% <
2.57%. So NABIL is highly efficiency to earn net profit and return as well. On the other
hand co-efficient of HBL is highest than NABIL i.e. 19.62% > 13.04%. From the above
analysis it can be said that NABIL is strong position in the earning capacity by utilizing
available resources than HBL. Although NABIL utilized its assets more efficiently than
HBL but both of banks don’t seem to be utilizing their assets more efficiently. So the both
banks are required to increase the rate of return on total assets by making investment in
higher return sectors.
4.1.3.2 Total Interest Earned to Total Outside Assets Ratio

It reflects that the extent to which the bank is successful to earn interest as major income
on all the outside assets. Higher the ratio higher will be the earning power of total outside
assets. This is very important ratio as the main asset is the outside asset of a commercial
bank. Total outside assets includes loan and advance for commercial banks govt.
securities, share, debenture and other. The table below shows total interest earned to total
outside assets ratio of NABIL and HBL.
Table 4.12
Total Interest Earned to Total Outside Assets Ratio
Year Nabil bank (NABIL) Himalayan Bank Limited(HBL)
2009/10 10.57 11.63
2010/11 9.85 9.74
2011/12 7.92 8.16
2012/13 7.93 8.28
2013/14 Shanker
7.81Dev Campus Library 52 7.00
Total 44.08 44.81
Mean 8.82 8.96
S.D 1.30 1.78
C.V 14.73 19.87
Source: Appendix A
From the table 4.12 it shows that ratio of banks is fluctuating trend. HBL has highest
(11.63%) ratio in F/Y 2009/10 and lowest (7.00%) ratio in F/Y 2013/14. NABIL has
highest ratio (10.57%) in F/Y 2009/10 and lowest (7.81%) ratio in F/Y 2013/14. On the
basis of mean ratio, HBL is greater than NABIL i.e. 8.96% > 8.82%. Co-efficient of
variation of HBL is greater than NABIL i.e. 19.87% > 14.73%. From the above analysis it
can be concluded that HBL had been succeed in comparison to NABIL in the view point
of mean ratio. HBL is less consistent than NABIL in the view point of C.V. After the
analysis, it can be concluded that HBL bank is able to utilize its assets sufficiently to earn
more interest than NABIL. However, the ratio of both banks is not satisfactory. It
indicates that both banks failed to earn consistent income in relation to their total assets
due to security and peace problems in the country.
4.1.3.3 Return on Loan and Advance Ratio

This ratio measures the earning capacity of commercial bank through its mobilized fund
as loan and advances. A high ratio indicates greater success to mobilized fund as loan and
advances. Loan and advances include loan, cash, credit, overdraft bills purchases and
discounted. The following table shows that return on loan and advances ratio of NABIL
and HBL of this period.
Table 4.13
Return on Loan and Advance Ratio
(NABIL)
2009/10 3.53 1.82
2010/11 3.52 2.83
2011/12 4.08 2.74
2012/13 4.79 2.38
2013/14 4.24 2.12
Total 20.16 11.886
Mean 4.032 2.38
S.D 0.5326 0.122
C.V 13.21 17.74
Source: Appendix A
Table 4.13 shows that all bank ratios in the study period have in fluctuating trend. HBL
has highest (2.83%) ratio in F/Y 2010/11and lowest (1.82%) ratio in F/Y 2009/10.
NABIL has highest (4.79%) ratio in F/Y 2012/13 and lowest (3.52%) ratio in 2010/11. In
mean of the banks, HBL is less than NABIL i.e. 2.38% < 1.032%. So we can say NABIL
is strong to mobilize the fund based on loan and advances to return than HBL. On the
other hand, co-efficient ofShanker
variationDev
of HBL is greater
Campus than 53
Library NABIL i.e. 17.74% > 13.21%.
Thus we can be concluded that NABIL is less consistent than HBL. It can be concluded
that mean ratio of NABIL is higher than HBL. That means the greater success to mobilize
fund as loan and advances as compare to HBL.
4.1.3.4 Total Interest Earned to Total Working Fund Ratio

Total interest earned to total working fund ratio reflects the extent to which the banks are
successful in mobilizing their total assets to acquire income as interest. This ratio actually
reveals the earning capacity of a commercial bank by mobilizing its working fund. Higher
the ratio higher will be the income as interest. The following table shows total interest
earned to total working fund ratio of NABIL and HBL throughout the reviewing period.
Table 4.14
Total Interest Earned to Total Working Fund Ratio
(NABIL)
2009/10 7.77 7.37
2010/11 9.04 9.26
2011/12 9.71 8.69
2012/13 7.785 7.57
2013/14 6.46 6.45
Total 34.3696 39.335
Mean 6.874 7.867
S.D 1.895 1.323
C.V 27.57 16.82
Source: Appendix A
The table 4.14 shows HBL has highest (8.26%) ratio in F/Y 2010/11 and lowest (6.45%)
ratio in 2013/14. NABIL has highest (9.71%) ratio in F/Y 2011/12 and lowest ratio is
(6.46)% in 2013/14. On the other hand, mean ratio of NABIL is lowest than HBL i.e.
6.874% < 7.867%. It indicates that NABIL is lower to generate interest income from the
total working fund than HBL. Similarly, co-efficient of variation between ratios of
different five years under the study period, in case NABIL is found to be 27.57% whereas
HBL has 16.82% only. Its earnings ratio with respect to total working fund of NABIL is
less stable than that of HBL. Thus it can be concluded that HBL is able to earn high
interest return from the total working fund comparison with NABIL because high ratio is
an indicator high earning power of the bank of its total earning fund.
4.1.3.5 Total Interest Paid to Total Working Fund Ratio

Total interest paid is that amount which is paid to the lenders as well as bond
holders. This ratio measures the percentage of total interest paid against the total working
fund. A high ratio indicates the higher interest expenses on total working fund. The
following table shows the total interest paid to total working fund ratio of NABIL and
HBL.

Table 4.15
Total Interest Paid to Total Working Fund Ratio
(NABIL)
2009/10 3.76 3.64
2010/11 5.08 5.71
2011/12 4.99 5.18
2012/13 2.985 3.47
2013/14 2.223 3.06
Total 19.04 20.516
Mean 3.81 4.10
S.D 1.2454 1.00
C.V 32.69 24.39
Source: Appendix A
From the table 4.15 it shows that ratio of both banks is fluctuating trend. HBL has highest
(5.18%) ratio in F/Y 2011/12 and lowest (3.06%) ratio in F/Y 2013/14. NABIL has
highest (5.08%) ratio in F/Y 2010/11 and lowest (2.223%) ratio in F/Y 2013/14. On the
basis of mean ratio NABIL is lower than HBL i.e. 3.81% < 4.10%. It means HBL is more
interest paid on the respect of total working fund than NABIL. Similarly, co-efficient of
variation of NABIL is greater than HBL i.e. 32.69% > 24.39%. So it concludes NABIL is
less consistent than HBL.
4.1.4 Risk Ratio

Bank had to take risk to get return on its investment. The risk taken is satisfied by the
increase in profit. So, the banks operating for high profit have to accept the risk and
manage it efficiently. A bank has to have the idea of the level of risk that one had needed
to bear while investing its funds.
4.1.4.1 Credit Risk Ratio

Bank makes investment by utilizing its collected fund. The credit risk ratio measures the
risk behind making investment or granting loan. Actually, the proportion of non-
performing assets shows credit risk ratio in total loan and advances of a bank. But
unavailability of related data the ratio is calculated with the help of loan and total assets.
The following table presents the credit risk ratio of NABIL and HBL.
Table 4.16
Credit Risk Ratio
Year NABIL Bank Limited Himalayan Bank Limited
(NABIL) (HBL)
2009/10 52.90 65.50
2010/11 55.50 67.54
2011/12 60.19 64.32
2012/13 56.81 65.00
2013/14 Shanker Dev Campus Library 55 61.59
53.13
Total 278.53 323.95
Mean 55.71 64.79
S.D 3.00 2.155
C.V 5.39 3.34
Source: Appendix A
From the table 4.16 it shows that credit risk ratio of both banks is in fluctuating trend.
NABIL has highest (60.19%) ratio in F/Y 2011/12 and lowest (52.90%) ratio in F/Y
2009/10. Whereas HBL has highest (67.54%) ratio in F/Y 2010/11 and lowest (61.59%)
ratio in F/Y 2013/14.
When mean ratios are taken it is found that HBL is greater than NABIL i.e. 64.79% >
55.71%. It means HBL has higher credit in compare to NABIL. In the case of co-efficient
of variation NABIL is greater than HBL i.e. 5.39% > 3.34%. It means NABIL credit
policy is less consistent than that of HBL. From the above analysis, it can be concluded
that the credit risk of NABIL is higher in compare to HBL.
4.1.4.2 Capital Risk Ratio
The capital risk of a bank indicates that how much assets values may decline before the
deposition and other creditors in jeopardized. Therefore a bank must maintain adequate
capital in relation to the nature and condition of its assets, its deposit liabilities and other
corporate responsibilities. Capital risk measures banks ability to attract deposits and
interbank fund. It also determines the level of profit a bank can earn. If a bank chooses to
make high capital risk, its ROE will be higher. The following table exhibits the capital
risk ratio of NABIL and HBL during the study period.
Table 4.17
Capital Risk Ratio
(NABIL)
2009/10 7.35 3.37
2010/11 6.57 3.44
2011/12 6.42 9.88
2012/13 5.35 9.51
2013/14 5.35 8.30
Total 30.91 34.50
Mean 6.18 6.90
S.D 0.89 3.24
C.V 14.44 47.01
Source: Appendix A
Table 4.17 presents the capital risk ratios of banks, which shows fluctuating trend.
NABIL has highest (9.88%) ratio in F/Y 2011/12 and lowest (3.37%) ratio in F/Y
2009/10. HBL has highest (7.35%) ratio in F/Y 2009/10 and lowest (5.35%) ratio in F/Y
2012/13 and F/Y 2013/2014. On the basis of mean ratio HBL is highest that NABIL i.e.
6.90% < 6.18%. On the other hand co-efficient of variation of HBL is greater than
NABIL i.e. 47.01% > 14.44%. It indicates that the capital risk of HBL is less consistent
than NABIL. From the above analysis, it can be concluded that the degree of capital risk
in NABIL is greater than HBL.
4.1.5 Growth Ratios
Growth ratios are analyzed and interpret which are directly related to the fund
mobilization and investment of a commercial bank. Growth ratios represent how well the
commercial banks are maintaining their economic and financial position.
Higher the ratios better the performance of a bank. Following four topics i.e. growth ratio
of total deposit, loan & advances, total investment and net profit, the ratios can be
calculating to the compound interest tables.
Table 4.18
Growth Ratio of Deposits
(NABIL) (HBL)
2009/10 46410701 37611202
2010/11 49696113 40920627
2011/12 55023695 47730994
2012/13 63609808 53072319
2013/14 75388791 64674848
Growth Rate % 12.894 14.513
Source: Appendix (B)
The table 4.18 shows that the growth ratio of NABIL is lower than HBL i.e. 12.894% <
14.513%. It means that the performance of NABIL to collect lower deposit compared to
HBL.

Table 4.19
Growth Ratios of Loan and Advances
Year NABIL Bank Limited Himalayan Bank
(NABIL) Limited(HBL)
2009/10 32268873 27980629
2010/11 38034098 31566977
2011/12 41605683 34965434
2012/13 46369835 39723806
2013/14 54691648 45320359
Growth Rate % 14.10 12.81
The table 4.19 shows that the growth ratio of HBL is lower than NABIL i.e. 12.81% <
14.10%. It means that the performance of HBL to collect grant loan and advances in
compared to NABIL is lower position year by year.
Table 4.20
Growth Ratio of Total Investment
(NABIL) (HBL)
2009/10 13703024 8444910
2010/11 13081206 8769939
2011/12 14048966 10031580
2012/13 16332043 12992044
2013/14 18276753 19842060
The table 4.20 shows that the growth ratio of NABIL is lower than HBL i.e. 7.47% <
23.81%. It means that the performance of HBLL to invest in compared to NABIL is
higher position.

Table 4.21
Growth Ratio of Net Profit
(NABIL) (HBL)
2009/10 1138571 508798
2010/11 1337745 893115
2011/12 1696276 958638
2012/13 2219018 943697
2013/14 2319631 959107
The table 4.21 shows that the growth ratio of HBL is lower than NABIL i.e. 17.17% <
19.47%. It means that the performance of HBL to net profit in compared to NABIL is in
lower position.
4.2 Statistical Analysis

Under this chapter, some statistical tools such as co-efficient of correlation analysis
between different variables, trend analysis of deposit, loan and advances, Investment and
net profit are used to achieve the objective of the study.
4.2.1 Coefficient of Correlation Analysis

To find out the relationship between deposit and total investment, deposit and loan and
advances and newt profit and total outside assets have been used of Karl Pearson’s
coefficient of correlation.
4.2.1.1 Coefficient of Correlation between Deposits and Investment

The Coefficient of correlation between deposit and investment is to measure the degree of
relationship between two variables. In correlation analysis, deposit is independent
variables (X) and total investment is dependent variables (Y). The purpose of computing
coefficient correlation is to justify whether the deposits are significantly used in proper
way or not.
The table no. 4.22 shows the value of r, r2 calculated value of t and tabulated value of t
between deposits and total investment of HBL and NABIL for the study period.
Table 4.22
Correlation between Deposits and Total Investment
Evaluation criterions tcal ttab Conclusion Result
Bank r r2 Value Value
HBL 0.968 0.937 6.69 3.182 H0 Rejected Significant
NABIL 0.971 0.943 7.03 3.182 H0 Rejected Significant
Source: Appendix: (C)
From the above table no. 4.22 is found that the Coefficient of correlation between deposit
and investment value ‘r’ is 0.968 in case of HBL. It shows positive relationship between
these two variables. Similarly, the coefficient of determination in the dependent variables
‘r2’ is 0.937it means 93.70% of the variation in the dependent variables (total investment)
has been explained by theShanker Dev variable
independent Campus(deposit).
Library 59
In the case of NABIL also, that the Coefficient of correlation between total deposits and
total investment is 0.971. It shows the positive relationship between these variables. But
considering the value of r2 is 0.943. It means 94.30% in the dependent variable
(investment) has been explained by the independent variable (deposit).
In case of HBL calculated value of t is greater than tabulated value of t. Thus null
hypothesis is rejected. That is variables are uncorrelated in other words correlation
between deposit and total investment of HBL is significant.
In case of NABIL calculated value of t is greater than tabulated value of t. Thus null
hypothesis is rejected. That is variables are correlated in other words correlation between
deposit and total investment of NABIL is significant.
4.2.1.2 Coefficient of Correlation between Deposit and Loan and
Advance
Coefficient of correlation between deposit and loan and advances measures the degree of
relationship between these two variables. In the this analysis, deposit is independent
variable (X) and loan and advance are dependent variable (Y) the main objective of
computing ‘r’ between these two variables is to justify whether deposits are significantly
uses as loan and advances proper way or not.
between deposits and loan and advances of HBL and NABIL for the study period.
Table 4.23
Correlation between Deposit and Loan and Advance
Evaluation criterions tcal ttab
2 Conclusion Result
Bank r r Value Value
HBL -0.335 0.112 -0.626 3.182 H0Accepted Insignificant
NABIL 0.119 0.014 0.2076 3.182 H0Accepted Insignificant
From the above table 4.23, it is found that the coefficient of correlation between deposits
and loan and advances of HBL is -0.335. It shows positive relationship between these two
variables. Moreover, when we consider the value of coefficient of determination r2 is
0.112 and it means 11.20% of the variation in the dependent variable (deposit).
Likewise, in case of NABIL the coefficient of correlation between deposits and loan and
advances of NABIL is 0.119. It shows positive relationship between these two variables.
Moreover, when we consider the value of coefficient of determination r2 is 0.014 and it
means 1.416% of the variation in the dependent variable (deposit).
In case of HBL calculated value of t is smaller than tabulated value of t. Thus null
hypothesis is accepted. That is variables are uncorrelated in other words correlation
between deposit and loan and advance of HBL is insignificant.
In case of NABIL calculated value of t is smaller than tabulated value of t. Thus null
hypothesis is accepted. That is variables are correlated in other words correlation between
deposit and loan and advance of NABIL bank is insignificant.
4.2.1.3 Coefficient of Correlation between Outside Assets and Net

Profit
To measure and evaluate the coefficient of correlation between these two variables i.e.
total outside assets and net profit, Karl Person’s Coefficient of correlation has been
calculated under this topic. In this analysis, total outside assets is independent variable
(X) and net profit is dependent variable (Y). The purpose of computing correlation of
Coefficient is to justify whether the net profit is significantly correlated with respective
total assets or not.
between outside assets and net profit of HBL and NABIL.
Table 4.24
Correlation between Outside Assets and Net Profit
Evaluation criterions tcal ttab Conclusion Result
Bank r r2 Value Value
HBL 0.859 0.738 2.913 3.182 H0 Accepted Insignificant
From the above table no.4.24, it is found that the coefficient of correlation between
outside asset and net profit of HBL is 0.859. It shows positive relationship between these
two variables. Moreover, when we consider the value of coefficient of determination r2 is
0.738 and it means 73.80% of the variation in the dependent variable.
Likewise, in case of NABIL the coefficient of correlation between outside asset and net
profit of NABIL is 0.976. It shows positive relationship between these two variables.
Moreover, when we consider the value of coefficient of determination r2 is 0.958 and it
means 95.80% of the variation in the dependent variable.
hypothesis is accepted. That is variables are uncorrelated in other words correlation
between outside assets and net profit of HBL is insignificant.
hypothesis is rejected. That is variables are correlated in other words correlation between
loans and advance and net profit of NABIL bank is significant.
4.2.1.4 Coefficient of Correlation between Loan and Advance and

Net Profit
To measure and evaluate the coefficient of correlation between these two variables i.e.
total loan and advance and net profit, Karl Person’s Coefficient of correlation has been
calculated under this topic. In this analysis, total loan and advance is independent variable
(X) and net profit is dependent variable (Y). The purpose of computing correlation of
Coefficient is to justify whether the net profit is significantly correlated with respective
total assets or not.
between loan and advance and net profit of HBL and NABIL.

Table 4.25
Correlation between Loan and Advance and Net Profit
Evaluation criterions tcal ttab
2 Conclusion Result
Bank r r Value Value
HBL 0.744 0.554 1.929 3.182 H0 Accepted Insignificant
Source: Appendix:(C)
From the above table no. 4.25, it is found that the coefficient of correlation between total
loan and advance and net profit of HBL is 0.744. It shows positive relationship between
these two variables. Moreover, when we consider the value of coefficient of
determination r2 is 0.554and it means 55.40% of the variation in the dependent variable.
Likewise, in case of NABIL the coefficient of correlation between total loan and advance
and net profit of NABIL is 0.952. It shows positive relationship between these two
variables. Moreover, when we consider the value of coefficient of determination r2 is
0.906 and it means 90.60% of the variation in the dependent variable.
hypothesis is accepted. That is variables are correlated in other words correlation between
load and advance and net profit of HBL is insignificant
hypothesis is rejected. That is variables are uncorrelated in other words correlation
between loans and advance and net profit of NABIL bank is significant.
4.2.2 Trend Analysis and Projection of Next Five Years

Trend analysis occupies an important place in the analysis and interpretation of financial
statement. Trend in general terms, signifies a tendency. Trend
analysis helps in forecasting and planning future operation. It is a statistical tool, which
shows the previous trend of the financial performance and forecasts the future financial
result of the firms.
Trend analysis informs to various persons who are directly or indirectly related to joint
venture banks. To shareholders of the banks, it informs about the expected future return,
which helps them to decide whether to stick in the present investment or to search for the
alternative investment opportunities. Depositors can save the degree of safety in the form
of worthiness of financial credit of the banks in future. For the borrowers, it assures about
the financial capability of the banks to furnish their loans and advances in future and also
helps to continue the present trend.
Various methods are used for trend analysis, out of which least square method is one of
the popular method is used in the study. In the present study, the tendency of total
deposit, loan and advances, total investment and net profit are forecasted for next five
years on the basis of the past performance and records.
The projections are based on the following assumption.

1. The main assumption is that other things will remain unchanged.
2. The bank will run in this present position.
3. Shanker
The economy will remain Devpresent
in the Campus Library 62
stage.
4. The forecast will be true only when the limitation of least square method is carried
out.
5. Nepal Rastra Bank will not change its guidelines to commercial banks.
4.2.2.1 Trend Analysis of Total Deposits

Under this topic, an effort has been made to calculate the trend values of deposit of HBL
and NABIL for five years from 2009/10 to 2013/14 and forecast next five years till
2018/19. This following table shows the trend value of 10 years from 2009/10 to 2018/19.
Table 4.26
Trend Value of Total Deposit of HBL and NABIL
(In ‘000)
Year Actual Value Trend Value
HBL NABIL HBL NABIL
2009/10 37611202 46410701 35546201.2 22335331
2010/11 40920627 49696113 42174099.6 93716312
2011/12 47730994 55023695 48801998 58025821
2012/13 53072319 63609808 55429896.4 93716312
2013/14 64674848 75388791 62057794.8 129406802
2014/15 68685693.2 165097293.1
2015/16 75313591.6 200787783.6
2016/17 81941490.0 236478274.1
2017/18 88569388.4 272168764.6
2018/19 95197286.8 307859255.1
Source: Appendix: D
From above table, HBL bank expected total deposit in 2017/18 and 2018/19 are expected
to be Rs.88569388.4 and Rs.95197286.8 respectively. Similarly, NABIL bank expected
total deposit in 2017/18 and 2018/19 is expected to be Rs. 272168764.6 and Rs.
307859255.1 respectively.
Coefficient of regression (b) of total deposit of HBL is Rs.6627898.4. This means that the
annual increase in total deposit of HBL is Rs.6627898.4whereas coefficient of regression
(b) of total deposit of NABIL is Rs.35690490.5. This means that the annual increase in
total deposit of NABIL is Rs. 35690490.5.

Figure No. 4.1
Trend Value of Total Deposit
14000000
12000000
10000000
Rs in thousand
80000000
60000000
Trend Value HBL
40000000
20000000
0
2009/10 2010/11 2011/12 2012/13 2013/14
Fiscal year
From the above trend analysis it, is found that the total investment of HBL is very
low/high in compared to NABIL. Both banks have the positive growth rate but HBL
growth is consistent, which in case of NABIL shows fluctuating trend.
4.2.2.2 Trend Analysis of Total Investment
Under this topic, an effort has been made to calculate the trend values of investment of
HBL and NABIL for five years from 2009/10 to 2013/14 and forecast next five years till

Table 4.27
Trend Value of Total Investment of HBL and NABIL
(In‘000)
HBL NABIL HBL NABIL
2009/10 8444910 13703024 6612825.6 12610116

2010/11 8769939 13081206 9314466.1 13849945
2011/12 10031580 14055850 12016106.6 15089775
20012/13 12992044 16332043 14717747.1 16329604
20013/14 19842060 18276753 17419387.6 17569434
2014/15 20121028.1 18809263.7
2015/16 22822668.6 20049093.2
2016/17 25524309.1 21288920.2
2017/18 28225949.6 22528749.2
2018/19 30927590.1 23768578.2
Source: Appendix: D
From above table, HBL bank expected total investment in 2017/18 and 2018/19 are
expected to be Rs.28225949.6 and Rs.30927590.1. Similarly, NABIL bank expected total
investment in 2017/18 and 2018/19 is expected to be Rs.22528749.2 and Rs.23768578.2
respectively.
Coefficient of regression (b) of total investment of HBL is Rs.2701640.5. This means that
the annual increase in total investment of HBL is Rs.2701640.5, whereas coefficient of
regression (b) of total investment of NABIL is Rs.1239829.5. This means that the annual
increase in total investment of NABIL is Rs.1239829.5.

Figure No. 4.2
Trend Value of Investment
20000000
18000000
16000000
14000000
Rs in thousand
12000000
10000000
Trend Value HBL
8000000
Trend Value NABIL
6000000
4000000
2000000
0
2009/10 2010/11 2011/12 20012/13 20013/14
Fiscal year
From the above trend analysis, it is quite obvious that HBL total investment position in
relation to NABIL is proportionally better and looking the pace of HBL total investment
is expected to reach NABIL total investment level and exceed in near future.
4.2.2.3 Trend Analysis of Loan and Advance
Under this topic, an effort has been made to calculate the trend values of loan and
advance of HBL and NABIL for five years from 2009/10 to 2013/14 and forecast next
five years till 2018/19. This following table shows the trend value of 10 years from
2009/10 to 2018/19.

Table 4.28
Trend Value of Loan and Advance of HBL and NABIL
(In ‘000)
HBL NABIL HBL NABIL
2009/10 27980629 32268873 27344183.2 31957770.0
2010/11 31566977 38034098 31627812.1 37275898.7
2011/12 34965434 41605683 35911441.0 42594027.4
2012/13 39723806 46369835 40195069.9 47912156.1
2013/14 45320359 54691648 44478698.8 53230284.8
2014/15 48762327.7 58548413.5
2015/16 53045956.6 63866542.2
2016/17 57329585.5 69184670.9
2017/18 61613214.4 74502799.6
2018/19 65896843.3 79820928.3
Source: Appendix: D.
From above table, HBL bank expected loan and advance in 2017/18 and 2018/19 are
expected to be Rs.61613214.4 and Rs.65896843.3. Similarly, NABIL bank expected loan
and advance in 2017/18 and 2018/19 is expected to be Rs.74502799.6 and Rs.79820928.3
respectively.
Coefficient of regression (b) of total loan and advance of HBL is Rs.4283628.9. This
means that the annual increase in total loan and advance of HBL is Rs.4283628.9 whereas
coefficient of regression (b) of total loan and advance of NABIL is Rs.5318128.7. This
means that the annual increase in total loan and advance of NABIL is Rs.5318128.7.

Figure No. 4.3
Trend Value of Loan and Advance
60000000
50000000
Rs in thousand
40000000
30000000
Trend Value HBL
20000000 Trend Value NABIL
10000000
0
2009/10 2010/11 2011/12 2012/13 2013/14
Fiscal year
From the above trend analysis, it is quite obvious that HBL loan and advance
position in relation to NABIL is proportionally better in all years. It shows NABIL
bank loan and advance is increasing more rapidly in growing rate which in case of
HBL is growing slowly.
4.2.2.4 Trend Analysis of Net Profit

Under this topic, an effort has been made to calculate the trend values of net profit of
HBL and NABIL for five years from 2009/10 to 2013/14 and forecast next five years till

Table 4.29
Trend Value of Net Profit of HBL and NABIL
(In ‘000)
HBL NABIL HBL NABIL
2009/10 508798 1138571 662431 1093569.6
2010/11 893115 1337745 757551 1417908.9
2011/12 958638 1696276 852671 1742248.2
2012/13 943697 2219018 947791 2066587.5
2013/14 959107 2319631 1042911 2390926.8
2014/15 1138031 2715266.1
2015/16 1233151 3039605.4
2016/17 1328271 3363944.7
2017/18 1423391 3688284.0
2018/19 1518511 4012623.3
Source: Appendix: D.
From above table, HBL bank expected net profit in 2017/18 and 2018/19 are expected to
be Rs.1423391 and Rs.1518511. Similarly, NABIL bank expected net profit in 2017/2018
and 2018/2019 is expected to be Rs.3688284.0 and Rs.4012623.3 respectively.
Coefficient of regression (b) of total net profit of HBL is Rs.95120. This means that the
annual increase in total net profit of HBL is Rs.95120. whereas coefficient of regression
(b) of total net profit of NABIL is Rs.4283628.9 millions. This means that the annual
increase in total net profit of NABIL is Rs.324339.3.

Figure No. 4.4
Trend Value of Net Profit
3000000
2500000
Rs in thousand
2000000
1500000
Trend Value HBL
1000000
500000
0
2009/10 2010/11 2011/12 2012/13 2013/14
Fiscal year
From the above trend analysis, it is quite obvious that NABIL net profit position in
relation to HBL is proportionally better in all years. NABIL profit seems to be increasing
in sharply which in case of HBL is increasing steadily.
4.2 Major Finding of the Study
The main findings of the study are derived on the analysis of financial data of HBL and
NABIL, which are given below.
Liquidity ratio
i. The mean current ratio of HBL is lower than that NABIL, which means NABIL has
maintained the higher liquidity than HBL and the variability of ratio of HBL is more
consistence than NABIL in comparison.
ii. The mean ratio of cash and bank balance to total deposit of HBL is similar with
NABIL. But cash and bank balance to total deposit ratio of HBL is more consistent.
It states that the liquidity position of HBL is better than NABIL.
iii. The mean cash and bank balance to current assets ratio of NABIL is higher than
HBL. It exhibits the liquidity position of NABIL is better in this regard. Where in
case of consistency, HBL looks more consistent and stable.
iv. The mean ratio of investment on government securities to current assets of HBL has
maintained higher than NABIL. Moreover, NABIL seems to have more variable or
less consistent than that of HBL.
v. The mean ratio of loan and advance to current assets ratio of HBL is lower than that
of NABIL. The loan and advance to current assets ratio of HBL is more consistent
than that of NABIL.

Asset management ratio
i. The mean ratio of loan and advance to total deposit of HBL is higher than that of
NABIL. The variability of the loan and advance to total deposit ratio of NABIL
seems to be less stable and consistent than that of HBL.
ii. The mean ratio of total investment to total deposit of HBL is lower than that of
NABIL. The variability of the total investment to total deposit ratio of HBL is less
consistent than that of NABIL.
iii. The mean ratio of loan and advance to working fund of HBL is greater than that of
NABIL. The variability of loan and advance to working fund ratio of HBL is less
consistent than that of NABIL.
iv. The mean ratio of total investment on government securities to total working fund
of HBL is lower than that of NABIL. The variability of the total investment on
government securities to total working fund ratio of HBL is less consistent than that
of NABIL.
v. The mean ratio of investment on share and debenture to total working fund of
NABIL is greater than that of NABIL. The variability of the investment on share
and debenture to total working fund ratio of HBL is more consistent than that of
NABIL.

Profitability ratios
i. The mean ratio of return on total working fund of HBL is lower than that of
NABIL. The return on total working fund ratio of HBL is less consistent than that
of NABIL.
ii. The mean ratio of total interest earned to total outside assets of HBL is greater
than that of NABIL. The total interest earned to total outside assets ratio of HBL is
less consistent than that of NABIL.
iii. The mean ratio of return on loan and advance of HBL is less than that of NABIL.
The return on loan and advance ratio of HBL is less consistent than that of
NABIL.
iv. The mean ratio of total interest earned to total working fund of HBL is higher than
that of NABIL. The total interest earned to total working fund ratio of NABIL is
less consistent than that of HBL.
v. The mean ratio of total interest paid to total working fund of NABIL is lower than
that of HBL. The total interest paid to total working fund ratio of NABIL is less
consistent than that of HBL.
From the above findings, it can be conclude that the profitability position of HBL is not
satisfactory. Whereas in some ratios i.e. return on total working fund, return on loan and
advances of HBL is maintained lower than that of NABIL. But in cases those ratios of
total interest paid to total working fund, total interest earned to total outside assets, HBL
has maintained higher mean ratios than NABIL. So those banks have invested their fund
on profitable sectors for maintain their higher profit margin in future.
Risk ratio
This risk ratio of HBL and NABIL shows that:
i. The mean credit risk ratio of HBL is greater than that of NABIL. The credit risk
ratio of HBL is more consistent than that of NABIL.
ii. The mean capital risk ratio of HBL is higher than that of NABIL. The capital risk
ratio of HBL is less consistent than that of NABIL.
From the above result it can be concluded that the credit risk ratio of HBL is
highest and also the capital risk ratio of HBL is higher than that of NABIL.
Growth ratio
i. Growth ratio of deposit of NABIL is lower i.e. 12.894% in comparison to HBL.
i.e. 14.513%.
ii. Likewise, growth ratio of total loan and advance of HBL is lower than that of
NABIL i.e. 12.81% < 14.10%.
iii. Beside these, growth ratio of total investment of NABIL is significantly lower than
HBL i.e. 7.47% < 23.81%.
iv. The growth ratio of net profit in case HBL has been found 17.17% whereas; in
case of the NABIL is 19.47% during the study period. This was slightly greater.
From the analysis of above mentioned growth ratios it can be conclude that NABIL has
not been more successful to increase in source of funds i.e. deposit and total investment.
It seems NABIL has not made any effective strategy to win the confidence of
shareholders, depositors and its all customers.
Co-efficient of correlation analysis
Coefficient of correlation analysis between different variables of HBL and NABIL
reveals that:
i. Co-efficient of correlation analysis between deposit and total investment of both
HBL and NABIL has significantly positive value.
ii. Co-efficient of correlation analysis between deposit and loan and advances of both
HBL has significantly negative value and NABIL has significantly positive value.
iii. Similarly, the relationship between outside assets and net profit of both HBL and
NABIL has significantly positive value.
iv. Co-efficient of correlation analysis between loan and net profit of both HBL and
NABIL has significantly positive value.

CHAPTER - V
SUMMARY, CONCLUSION AND RECOMMENDATIONS
This chapter first concludes the fact-findings base on analytical chapter four where data
have been analyzed and interpreted applying different accounting and statistical tools.
Under financial analysis, various financial ratios related to the investment function of
commercial banks, they are liquidity ratio, profitability ratio, asset management ratio, risk
ratio and growth ratio, some relevant statistical are used. They are coefficient of
correlation, trend analysis and test of hypothesis.
5.1 Summary
In this study, the financial tools ratio analysis viz. liquidity ratio, asset management ratio,
profitability ratios, risk ratios, growth ratios and statistical tolls like percentage, mean,
standard deviation, coefficient of variation, correlation and trend analysis have been used
for the analysis and interpretation of the data. The data which were employed in this
research are secondary in nature. They are obtained from annual reports of the concerned
banks, likewise, the financial statement of five year from 2009/10 to 2013/14 were
selected for the purpose evaluation.
HBL has invested its more portions of current assets in government securities than
NABIL. HBL has made higher amount of investment on govt. securities this is due to
unavailable of other secured and profitable investment sector. Whereas the lower amount
of NABIL is invested in government security. It may be the reason of more investment on
other productive sector. The liquidity position of HBL and NABIL have not found
satisfactory. It is therefore, suggested them to improve cash and bank balance to meet
current obligations. HBL’s loan and advance to current assets ratio is lower than that
NABIL, it is recommended to follow liberal lending policy for enhancement of fund
mobilization. The profitability position of those banks is not satisfactory. So those banks
have to invest their fund in profitable sectors. From this study it can conclude that HBL is
in better position from interest expenses point of view than NABIL. NABIL seems that it
had collected its working funds from more expensive sources in comparison to HBL.
The risk ratio of HBL and NABIL are higher, it is suggested that they must careful about
risk either credit risk or capital risk and HBL need to be more careful being higher credit
and capital risk thank NABIL. The growth ratios are analyzed and interpret which are
direct related to the fund mobilization and investment of commercial banks. Growth ratio
represents how well the commercial banks are maintaining their economic and financial
position. Growth ratio of HBL is lower at loan and advance and net profit and higher at
total deposit, total investment than that of NABIL. Therefore in total amount factor
NABIL improve in two growth ratios than HBL but in terms of percentage HBL improve
in two growth rates than NABIL.
5.2 Conclusion
From the analysis of coefficient of correlation analysis we can conclude that both HBL
and NABIL have significant positive relationship between deposit and loan advance,
deposit and total investment and outside assets and net profit. The trend value of deposits
loan and advance, investment net profit shows that continuously increasing trend. We can
say that both HBL and NABIL have followed the policy of maximizing the investment.
Investment policy plays a key role on the development of countries utmost investment.
The political insanity, government rules, tax policy treaty with neighbor country, social
and economic condition of the country affect investment policy of bank. To keep up the
stability with the foreign policy results the improvement of investment policy.
Designing good investment policy helps to the improvement of investment policy in the
country. As political influence, intervention economic scenario and social, economic
scenario of the country is dramatically problem for the detection of designing investment
policy of bank.
Government policy affects the investment policy of the company, bank and institution.
Government intervention in investment policy is custom tariff initiated by the government
policy, VAT refund policy and tax holding policy including duty taxes i.e. export and
import directly influences investment policy.
Analysis of investment to avoid the risk, risk related investment influence the financial
and economic condition of investment. Technical and marketing analyses too reflect the
risk measurement.
As the investor, the adequate knowledge of investment policy is required. Major problem
for applying the investment policies are integrator of the consumer, changing policy of
the country, industrial policy and neighbor country’s policy.
5.3 Recommendation
Suggestion helps to take corrective action in their activities in future. On the basis of
above analysis and findings of the study, following suggestions can be advances to
overcome weakness, inefficiency and satisfactory improvement of the present fund
mobilization and investment policy of HBL as well as NABIL.
1) The liquidity position of a HBL has maintained the ratios of cash and bank balance
to total deposit and current assets considerably similar with that of NABIL but more
consistent and recommended to increased cash and bank balance to meet current
obligations and loan demand.
2) HBL has made lower investment amount on government securities. Investment on
those securities issued by government i.e. Treasury bills, Development bonds,
saving certificates are free of risk and highly liquid in nature and such securities
yield the low interest rates of particular maturity due to lowest risk in future, it is
more better in regard to safety that other means of investment. So, HBL is strongly
recommended to give more importance to invest more funds government securities
instead of keeping them idle with this proverb “something is better than nothing.”
3) HBL’s profitability position is low than that of NABIL. So HBL is strongly
recommended to utilize risky assets and shareholder’s fund to gain highest profit
margin. Similarly, it should reduce its expenses and should try to collect cheap fund
being more profitable. Out of working fund, NABIL has not invested its more fund
as total investment in comparison to HBL bank. Though the percentage of invested
by those banks have nominal. So, it is recommended to those banks to invest their
more funds in different types of companies in different areas.
4) Portfolio conditions of NABIL as well HBL should be examining carefully from
time to time and alternation should be made to maintain equilibrium in the portfolio
condition as far as possible. So it can be said that all eggs should not be kept in the
basket. The banks should make continuous yielding investment portfolio.
5) In the light of growing competition in the banking sector, the business of the bank
should be customer oriented. It should strengthen and activate its marketing
function, as it is an effective tool of attracting and retaining customers. For this
purpose, the banks should develop an “Innovative approach to bank marketing” and
formulate new strategic of serving customers in a more convenient and satisfactory
way.
6) HBL is operating with limited branch while NABIL has greater network of
branches all over country. Therefore HBL recommended to expand its hands
provide banking service and facilities to the rural areas and communities to
accelerate the rural areas economic development, through opening new branches in
particular areas after making feasibility study and study well about saving and
business potentiality of those areas, it is very helpful to bank in tapping the
resources of different areas.

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on NABIL and Nepal investment Bank Limited. Unpublished Master’s Thesis
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Appendixes
Appendix –A Calculation of Ratios
Current ratio
HBL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Current Assets 29858900 31590725 36965599 44069006 47994845
Current
Liabilities 30797200 33855546 39726157 54713793 66406434 Total
Ratios (X) 0.970 0.933 0.931 0.805 0.723 4.362
(X-*+) 0.1 0.063 0.061 (0.065) (0.147) -
+ )2
(X-* 0.01 0.0039 0.0037 0.0042 0.022 0.0438
,../
Mean ( ) = ∑ = ∑ = 0.87
0
∑ ).),.2
S.D.(1 ) = = = √0.01095 = 0.105
0
7 ).)0
C.V. = 100% = × 100% = 12.07%
).29
NABIL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Current
Assets 29576000 35980683 41395550 51294727 59629400
Current
Liabilities 25527000 31621871 31610554 66249910 79333590 Total
Ratios (X) 1.159 1.138 1.310 0.77 0.752 5.129
(X-*+) 0.129 0.11 0.28 (0.26) (0.28) -
+ )2
(X-* 0.02 Shanker
0.012 0.08 0.07
Dev Campus Library 79 0.08 0.262
0.:
Mean ( ) = ∑ = ∑ = 1.03
0
∑ )./
S.D.(1 ) = = = √0.0655 = 0.256
0
7 ).0/
C.V. = 100% = × 100% = 24.85%
.).
Cash and bank balance to total deposit ratio
HBL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Cash and Bank
Balance 3119014 2022672 4930497 3648197 4945018
Total deposit 37611202 40920627 47730994 53072319 64674848 Total
Ratios (X) 8.29 4.94 10.33 6.87 7.65 38.08
+)
(X-* 0.674 (2.676) 2.714 (0.746) 0.034 -
(X-*+ )2 0.454 7.161 7.366 0.567 0.0012 15.549
.2.)2
Mean ( ) = ∑ = ∑ = 7.616
0
∑ 0.0,:
S.D.(1 ) = = = √3.8874 = 1.972
0
7 .:9
C.V. = 100% = × 100% = 25.89%
9.//

NABIL BANK
(In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Cash and
bank bs 1185441 2218548 4732339 5882568 9993482
Total
deposit 46410701 46496113 55023695 63609808 75388791 Total
Ratios (X) 2.55 4.46 8.60 9.25 13.256 38.12
+)
(X-* (5.07) (3.16) 0.98 1.63 5.636 -
(X-*+ )2 25.7 9.98 0.96 2.66 31.76 71.06
.2.
Mean ( ) = ∑ = ∑ = 7.62
0
∑ 9.)/,0
S.D.(1 ) = = = √17.76612 = 4.215
0
7 ,.0
C.V. = 100% = × 100% = 55.31% done
9./
Cash and bank balance to current asset ratio
HBL BANK
(In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Cash and
bank bs 3119014 2022672 4930497 3648197 4945018
Current
assets 29858900 31590725 36965599 44069006 47994845 Total
Ratios (X) 10.45 6.40 13.34 8.28 10.3 48.77
+)
(X-* 0.696 (3.354) 3.586 (1.47) 0.546 -
(X-*+ )2 0.484 Shanker
11.249 12.86Library 2.173
Dev Campus 81 0.298 27.064
,2.99
Mean ( ) = ∑ = ∑ = 9.754
0
∑ 9.)/,
S.D.(1 ) = = = √6.7660 = 2.6
0
7 ./
C.V. = 100% = × 100% = 26.67%
:.90,
NABIL BANK
( In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Cash and
bank bs 1185441 2218548 4732339 5882568 9993482
Current
assets 29576000 35980683 41395550 51294727 59629400 Total
Ratios (X) 4 6.17 11.432 11.46 16.76 49.83
+)
(X-* (5.966) (3.796) 1.466 1.494 6.794 -
(X-*+ )2 35.59 14.41 2.149 2.232 46.158 100.539
,:.2.
Mean ( ) = ∑ = ∑ = 9.966
0
∑ )).0.:
S.D.(1 ) = = = √25.13486 = 5.013
0
7 0.).
C.V. = 100% = × 100% = 50.31%
:.://

Investment on government securities to current assets ratio
HBL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Investment on 1218297
gov.sec 4465372 6407363 9162223 9886760 3
2985890 3159072 3696559 4406900 4799484
Current assets 0 5 9 6 5 Total
Ratios (X) 14.95 20.28 24.79 22.43 25.384 107.834
(X-*+) (6.617) (1.287) 3.223 0.863 3.817 -
+ )2
(X-* 43.785 1.656 10.388 0.745 14.569 71.143
)9.2.,
Mean ( ) = ∑ = ∑ = 21.567
0
∑ 9.,.
S.D.(1 ) = = = √17.78587 = 4.217
0
7 ,.9
C.V. = 100% = × 100% = 19.55 %
.0/9
NABIL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Investment on
gov.sec 7941556 8745230 7999977 7914001 8290185
2957600 3598068 4139555 5129472 5962940
Current assets 0 3 0 7 0 Total
Ratios (X) 26.85 24.31 19.33 15.43 13.9 99.82
(X-*+) 6.885 4.345 (0.635) (4.535) (6.065) -
+ )2
(X-* 47.40 18.88 0.40 20.57 36.78 124.034
Shanker Dev Campus::.2

Mean ( ) = ∑ = ∑
Library 83
= 19.965
0
∑ ,.).,
S.D.(1 ) = = = √31.008 = 5.5685
0
7 0.0/20
C.V. = 100% = × 100% = 27.89 %
:.:/0
Loan and advance current assets ratio
HBL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Loan and
advance 27980629 31566977 34965434 39723806 45320359
Current
assets 29858900 31590725 36965599 44069006 47994845 Total
Ratios (X) 93.71 99.92 94.59 90.14 94.43 472.79
+)
(X-* (0.85) 5.36 0.03 (4.42) (0.13) -
(X-*+) 2
0.723 28.73 0.0009 19.54 0.02 49.01
,9.9:
Mean ( ) = ∑ = ∑ = 94.56
0
∑ ,:.)
S.D.(1 ) = = = √12.2527 = 3.5
0
7 ..0
C.V. = 100% = × 100% = 3.7 %
:,.0/

NABIL BANK
( In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Loan and
advance 32268873 38034098 41605683 46369835 54691648
Current
assets 29576000 35980683 41395550 51294727 59629400 Total
Ratios (X) 109.10 105.71 100.51 90.4 91.72 497.44
+)
(X-* 9.61 6.22 1.02 (9.09) (7.77)
(X-*+ )2 92.35 38.7 1.04 82.628 60.373 276.1309
,:9.,,
Mean ( ) = ∑ = ∑ = 99.49
0
∑ 9/..):
S.D.(1 ) = = = √69.033 = 8.3056
0
7 2..)0/
C.V. = 100% = × 100% = 8.35%
::.,:
Loan and advance to total deposit ratio
HBL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Loan and
advance 27980629 31566977 34965434 39723805 45320359
Total
deposit 37611202 40920627 47730994 53072319 64674848 Total
Ratios (X) 74.39 77.14 73.26 74.85 70.07 369.71
+)
(X-* 0.45 3.2 (0.68) 0.91 (3.87) -
+)
(X-* 2
0.203 10.24 0.4624 0.828 14.98 26.71
./:.9
Mean ( ) ∑ ∑
Dev Campus 0
= Shanker = = 73.94
Library 85
∑ /.9
S.D.(1 ) = = = √6.6776 = 2.5841
0
7 .02,
C.V. = 100% = × 100% = 3.495 %
9..:,
NABIL BANK
( In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Loan and
advance 32268873 38034098 41605683 46369835 54691648
Total
deposit 46410701 49696113 55023695 63609808 75388791 Total
Ratios (X) 69.53 76.53 75.61 72.897 72.55 367.12
+)
(X-* (3.89) 3.11 2.19 (0.523) (0.87) 0.00
+ )2
(X-* 15.13 9.67 4.796 0.274 0.757 30.623
./9.
Mean ( ) ∑ ∑

= = = 73.42
0
∑ .)/.
S.D.(1 ) = = = √7.6557 = 2.767
0
7 .9/9
C.V. = 100% = × 100% = 3.769%
9..,
Total investment
Shanker to total
Dev Campus deposit
Library 86 ratio
HBL BANK
( In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Total
Investment 8444910 8769939 10031580 12992044 19842060
Total
deposit 37611202 40920627 47730994 53072319 64674848 Total
Ratios (X) 22.45 21.43 21.02 24.48 30.68 120.06
+)
(X-* (1.56) (2.58) (3.0) 0.47 6.67 -
+ )2
(X-* 2.434 6.66 9.0 0.221 44.49 62.8039
).)/
Mean ( ) = ∑ = ∑ = 24.01
0
∑ /.2).:
S.D.(1 ) = = = √15.7009 = 3.9624
0
7 ..:/,
C.V. = 100% = × 100% = 16.5%
,.)
NABIL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Total
Investment 13703024 13081206 14048966 16332043 18276753
Total
deposit 46410701 49696113 55023695 63609808 75388791 Total
Ratios (X) 29.53 26.32 25.55 25.68 24.24 131.322
+)
(X-* 3.27 0.06 (0.71) (0.58) (2.02) -
+)
(X-* 2
10.7 0.0036 0.50 0.336 1.08 12.6196
...
Mean ( ) = ∑ = ∑ = 26.26
0

∑ ./:/
S.D.(1 ) = = = √3.1549 = 1.776
0
7 .99/.
C.V. = 100% = × 100% = 6.76%
/./
Loan and advance to total working fund ratio
HBL BANK
( In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Loan and
advance 27980629 31566977 34965434 39723806 45320359
Total
working
fund 42717125 46736204 54364428 61113501 73589846 Total
Ratios (X) 65.50 67.54 64.32 65.00 61.59 323.95
(X-*+) 0.71 2.75 (0.47) 0.21 (3.2) -
+
(X-*) 2
0.5041 7.56 0.221 0.0441 10.24 18.57
...:0
Mean ( ) = ∑ = ∑ = 64.79
0
∑ 2.09
S.D.(1 ) = = = √4.6423 = 2.155
0
7 .00
C.V. = 100% = × 100% = 3.33%
/,.9:

NABIL BANK
(In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Loan and
advance 32268873 38034098 41605683 46369835 54691648
Total
working
fund 52079726 58141437 63200298 73241448 87274619 Total
Ratios (X) 61.96 65.42 65.83 63.31 62.67 319.19
+)
(X-* (1.88) 1.58 2.0 (0.5) (1.17) 0.00
(X-*+ )2 3.534 2.50 4.0 0.25 1.369 11.6529
.:.:
Mean ( ) = ∑ = ∑ = 63.84
0
∑ ./0:
S.D.(1 ) = = = √2.913 = 1.71
0
7 .9
C.V. =
100% = /..2,
× 100% = 2.674 %
Investment on govt. securities to total working fund ratio
HBL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Investment on 1218297
gov.sec Shanker Dev
4465372 Campus Library
6407363 916222389 9886760 3 Total
4271712 4673620 5436442 6111350 7358984
Total working fund 5 4 8 1 5
Ratios (X) 10.45 13.71 16.85 16.18 16.56 57.36
+)
(X-* (1.02) 2.24 5.38 4.71 5.09 -
(X-*+ )2 1.04 5.02 28.94 22.18 25.91 83.09
09../
Mean ( ) = ∑ = ∑ = 11.47
0
∑ 2..):),
S.D.(1 ) = = = √20.7726 = 4.56
0
7 ,.0/
C.V. = 100% = × 100% = 39.74%
.,9
NABIL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Investment on
gov.sec 7941556 8745230 7999977 7914001 8290185
5207972 5814143 6320029 7324144 8727461
Total working fund 6 7 8 8 9 Total
Ratios (X) 15.25 15.04 12.66 10.81 9.5 63.26
+)
(X-* 2.6 2.39 0.01 (1.84) (3.15) -
(X-*+ )2 6.76 5.7121 0.0001 3.39 10 25.86
Mean ( ) = ∑ = ∑
/../
= 12.65
0
+
∑@A 0.2/
S.D.(1 ) = = = √6.4655 = 2.5427
B 0
7 .0,9
C.V. =

100% = ./0
× 100% = 20.1%

Investment on share and debenture to total working fund ratio
HBL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/2 2012/13 2013/14
Investment
on share
and
debenture 78882 90002 90002 144159 189884
Total
working
fund 42717125 46736204 54364428 61113501 73589846 Total
Ratios (X) 0.18 0.19 0.17 0.24 0.26 1.04
+)
(X-* (0.03) (0.02) (0.04) (0.03) (0.05) -
(X-*+ )2 0.0009 0.0004 0.0016 0.0009 0.0025 0.0063
.),
Mean ( ) ∑ ∑
0
= = = 0.21

∑ ).))/.
S.D.(1 ) = = = √0.001575 = 0.0397
0
7 ).).:9
C.V. = × 100% = × 100% = 18.90%
).
NABIL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Investment
on share
and 348150Shanker Dev Campus
371806 Library 257210
422822 91 222863 Total
debenture
Total
working
fund 52079726 58141437 63200298 73241448 87274619
Ratios (X) 0.67 0.64 0.67 0.35 0.26 2.59
(X-*+) 0.152 0.122 0.152 (0.168) (0.258) -
+ )2
(X-* 0.023 0.015 0.023 0.028 0.067 0.156
.0:
Mean ( ) ∑ ∑
0
= = = 0.518

∑ ).0/
S.D.(1 ) = = = √0.0389 = 0.197
0
7 ).:9
C.V. = × 100% = × 100% = 38.07%
).02
Return to total working fund ratio
HBL BANK
( In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Net profit 508798 893115 958638 943697 959107
Total
working
fund 42717125 46736204 54364428 61113501 73589846 Total
Ratios (X) 1.19 1.91 1.76 1.54 1.30 7.70
(X-*+) (0.35) 0.37 0.22 0.00 (0.24) -
+ )2
(X-* 0.1225 0.1369 0.048 0.00 0.0576 0.365
9.9)
Mean ( ) ∑ ∑
0
= = = 1.54

∑ )../0
S.D.(1 ) = = = √0.09125 = 0.30
0
7 )..)
C.V. = × 100% = × 100%= 19.62%
.0,
NABIL BANK
(In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Net profit 1138571 1337745 1696276 2219018 2319631
Total
working
fund 52079726 58141437 63200298 73241448 87274619 Total
Ratios (X) 2.19 2.30 2.68 3.03 2.66 12.858
(X-*+) (0.38) (0.27) 0.11 0.46 0.09 (0.00)
+ )2
(X-* 0.144 0.073 0.0121 0.212 0.008 0.4492
.202
Mean ( ) ∑ ∑
0
= = = 2.57

∑ ).,,:
S.D.(1 ) = = = √0.1123 = 0.335
0
7 )...0
C.V. = × 100% = × 100% = 13.04%
.09
Total interest earned to total outside assets ratio

HBL BANK
( In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Total
interest
earned 3148605 4326141 4724887 4627335 4742975
Total
outside
assets 27073129 43492207 57903026 55885688 67756785 Total
Ratios (X) 11.63 9.74 8.16 8.28 7.00 44.81
+)
(X-* 2.67 0.78 (0.80) (0.68) (1.96) 0.00
(X-*+ )2 7.1182 0.6053 0.6432 0.4651 3.8494 12.6813
,,.2
Mean ( ) ∑ ∑
0
= = = 8.96

∑ ./2.
S.D.(1 ) = = = √3.1703 = 1.78
0
7 .92
C.V. = × 100% = × 100% = 19.87%
2.:/
NABIL BANK
(In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Total
interest
earned 4047726 5254030 6133739 5702123 5636158
Total
outside
assets 38294474 53340406 77446199 71905712 72165915 Total
Ratios (X) 10.57 9.85 7.92 7.93 7.81 44.08
+)
(X-* 1.75 1.03 (0.90) (0.89) (1.01) (0.00)
(X-*+ )2 3.0765 1.0692 0.8028 0.7850 1.0120 6.7455
,,.)2
Mean ( ) ∑ ∑
0
= = = 8.82

∑ /.9,00
S.D.(1 ) = = = √1.6864 = 1.30
0
7 ..)
C.V. = × 100% = × 100% = 14.73%
2.2
Return on loan and advance ratio
HBL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Net profit 508798 893115 958638 943697 959107
Loan and
advance 27980629 31566977 34965434 39723806 45320359 Total
Ratios (X) 1.82 2.83 2.74 2.38 2.12 11.886
+)
(X-* (0.56) 0.45 0.36 0.00 (0.26) -
+ )2
(X-* 0.3136 0.2025 0.1296 0.00 0.0676 0.7133
.22/
Mean ( ) ∑ ∑
0
= = = 2.38

∑ ).9..
S.D.(1 ) = = = √0.178325 = 0.422
0
7 ).,
C.V. = × 100% = × 100% =17.74%
..2

NABIL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Net profit 1139099 1337745 1689392 2219018 2319631
Loan and
advance 32268873 38034098 41605683 46369835 54691648 Total
Ratios (X) 3.53 3.52 4.08 4.79 4.24 20.16
+)
(X-* (0.502) (0.512) 0.048 0.758 0.208 0.00
+ )2
(X-* 0.252 0.262 0.0023 0.575 0.0433 1.135
)./
Mean ( ) ∑ ∑
0
= = = 4.032

∑ ..0
S.D.(1 ) = = = √0.283641 = 0.5326
0
7 ).0./
C.V. = × 100% = × 100% = 13.21%
,.).
Total interest earned to total working fund ratio
HBL BANK
(In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Total
interest
earned 3148605 4326141 4724887 4627335 4742975
Total
working
fund 42717125 46736204 54364428 61113501 73589846 Total
Ratios (X) 7.37 9.26 8.69 7.57 6.45 39.335
+)
(X-* (0.497) 1.393 0.823 (0.297) (1.417) -
(X-*+ )2 0.247 Shanker Dev
1.94 Campus
0.677Library 96
0.088 2.01 7
.:...0
Mean ( ) ∑ ∑
0
= = = 7.867

∑ 9
S.D.(1 ) = = = √1.75 = 1.323
0
7 ...
C.V. = × 100% = × 100% = 16.82%
9.2/9
NABIL BANK
(In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Total
interest
earned 4047726 5254030 6126855 5702123 5636158
Total
working
fund 52079726 58141437 63200298 73241448 87274619 Total
Ratios (X) 7.77 9.04 9.71 7.785 6.46 34.3696
+)
(X-* 0.896 2.166 2.836 0.911 (0.21) -
(X-*+ )2 0.80 4.69 8.043 0.83 0.0449 14.363
.,../:/
Mean ( ) ∑ ∑
0
= = = 6.874

∑ ,../.
S.D.(1 ) = = = √3.5907 = 1.895
0
7 .2:0
C.V. = × 100% = × 100% = 27.57%
/.29,

Total interest paid to total working fund ratio
HBL BANK
(In ‘000)
Fiscal
Year 2009/10 2010/11 2011/12 2012/13 2013/14
Total
interest
paid 1553531 2414807 2816441 2119062 2248797
Total
working
fund 42717125 46736204 54364428 61113501 73589846 Total
Ratios (X) 3.64 5.17 5.18 3.47 3.06 20.516
+)
(X-* (0.46) 1.07 1.08 (0.63) (1.04) -
(X-*+ )2 0.2116 1.145 1.166 0.3969 1.0816 4.00
).0/
Mean ( ) ∑ ∑
0
= = = 4.1

∑ ,.)
S.D.(1 ) = = = √1.00 = 1.0
0
7 .)
C.V. = × 100% = × 100% = 24.39%
,.
NABIL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Total
interest
paid 1960108Shanker
2955431 3155490
Dev Campus Library2186185
98 1939745 Total
Total
working
fund 52079726 58141437 63200298 73241448 87274619
Ratios (X) 3.76 5.08 4.99 2.985 2.223 19.04
(X-*+) (0.05) 1.27 1.18 (0.825) (1.587) (0.00)
+ )2
(X-* 0.0025 1.613 1.39 0.68 2.52 6.20
:.),
Mean ( ) ∑ ∑
0
= = = 3.81

∑ /.)
S.D.(1 ) = = = √1.5510 = 1.2454
0
7 .,0,
C.V. = × 100% = × 100% = 32.69%
..2
Credit risk ratio
HBL BANK
( In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Loan and
advance 27980629 31566977 34965434 39723806 45320359
Total
assets 42717125 46736204 54364428 61113501 73589846 Total
Ratios (X) 65.5 67.54 64.32 65.00 61.59 323.95
+)
(X-* 0.71 2.75 (0.47) 0.21 (3.2) -
(X-*+ )2 0.504 7.563 0.221 0.044 10.24 18.572
...:0
Mean ( ) ∑ ∑
0
= = = 64.79

∑ 2.09
S.D.(1 ) = = = √4.643 = 2.155
0

7 .00
C.V. = × 100% = × 100% = 3.34%
/,.9:
NABIL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Loan and
advance 27589933 32268873 38034098 41605683 46369835
Total
assets 52151684 58141438 63193414 73241448 87274619 Total
Ratios (X) 52.90 55.5 60.19 56.81 53.13 278.53
+)
(X-* (2.81) (0.21) 4.48 1.1 (2.58) 0.00
(X-*+) 2
7.896 0.044 20.1 1.21 6.66 35.91
92.0.
Mean ( ) ∑ ∑
0
= = = 55.71

∑ .0.:
S.D.(1 ) = = = √8.9766 = 3.00
0
7 ..))
C.V. = × 100% = × 100% = 5.39%
00.9
Capital risk ratio

HBL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Share capital 1199500 1439400 2760000 2898000 3332700
Risk weight
assets 355941 418841 429925 446872 51466 Total
Ratios (X) 3.37 3.44 9.88 9.51 8.30 34.50
+)
(X-* (3.53) (3.46) 2.98 2.61 1.40 -
+ )2
(X-* 12.4609 11.9716 8.8804 6.8121 1.9600 42.0850
.,.0)
Mean ( ) ∑ ∑
0
= = = 6.90

∑ ,.)20
S.D.(1 ) = = = √10.5213 = 3.24
0
7 ..,
C.V. = × 100% = × 100% = 47.01%
/.:)
NABIL BANK
(In ‘000)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14
Share capital 2028774 2029769 2435723 3046052 3656602
Risk weight
assets 300576 394848 490846 588412 588412 Total
Ratios (X) 7.35 6.57 6.42 5.35 5.35 30.91
+)
(X-* (0.96) 1.17 0.39 0.24 (0.83) (0.00)
+ )2
(X-* 0.9254 1.3642 0.1505 0.0566 0.6922 3.1891
.).:
Mean ( ) ∑ ∑
0
= = = 6.18

∑ ..2:
S.D.(1 ) = = = √0.7973 = 0.89
0
7 ).2:
C.V. = × 100% = × 100% = 14.44%
/.2

Appendix – B: Calculation of Growth Rate
Calculation of Growth Rate of Total Calculation of Growth Rate of Total

Deposit for HBL Deposit for NABIL
Dn = total deposit in the nth year Dn = total deposit in the nth year
Do = total deposit in the initial year. Do = total deposit in the initial year.
g = growth rate g = growth rate
n=5 n=5
Now, we have Now, we have

Dn = Do (1+g)n-1 Dn = Do (1+g)n-1
or, D13/14 = D09/10 (1+g)5-1 or, D13/14 = D09/10 (1+g)5-1
or, 64674848 = 37611202 (1+g)5-1 or, 75388791 = 46410701(1+g)5-1
or, (1+g)4 = 64674848/37611202 or, (1+g)4 = 75388791/46410701
or, 1+g = (1.71956)1/4 or, 1+g = (1.62438)1/4

or, 1+g = 1.14513 or, 1+g = 1.12894
or, g = 1.1451 3- 1 or, g = 1.12894 - 1
or, g = 0.14513 × 100% or, g = 0.12894× 100%
∴ g = 14.513% ∴ g = 12.894%
Calculation of Growth Rate of Loan and Calculation of Growth Rate of Loan and
Advance for HBL Advance for NABIL
Dn = total loan and advance in the nth year Dn = total loan and advance in the nth year
Do = total loan and advance in the initial Do = total loan and advance in the initial
year. year.
n=5 n=5

n-1
Dn = Do (1+g) Dn = Do (1+g)n-1
or, D13/14 = D09/10 (1+g)5-1 or, D13/14 = D09/10 (1+g)5-1
or, 45320359 = 27980629 (1+g)5-1 or, 54691648 = 32268873(1+g)5-1
or, (1+g)4 = 45320359/27980629 or, (1+g)4 = 54691648/32268873
or, 1+g = (1.6197)1/4 or, 1+g = (1.6949)1/4

or, 1+g = 1.1281 or, 1+g = 1.1410
or, g Shanker
= 1.1281 - 1 Dev Campus Library
or, g 102
= 1.1410 - 1
or, g = 0.1281 × 100% or, g = 0.1410 × 100%
∴ g = 12.81% ∴ g = 14.10%
Calculation of Growth Rate of Calculation of Growth Rate of

Investment for HBL Investment for NABIL
Dn = total investment in the nth year Dn = total investment in the nth year
Do = total investment in the initial year. Do = total investment in the initial year.
n=5 n=5

Dn = Do (1+g)n-1 Dn = Do (1+g)n-1
or, D13/14 = D09/10 (1+g)5-1 or, D13/14 = D09/10 (1+g)5-1
or, 19842060 = 8444910 (1+g)5-1 or, 18276753 = 13703024(1+g)5-1
or, (1+g)4 = 19842060/8444910 or, (1+g)4 = 18276753/13703024
or, 1+g = (2.3496)1/4
or, 1+g = (1.3338)1/4
or, 1+g = 1.2381
or, g = 1.2381 - 1 or, 1+g = 1.0747
or, g = 1.0747 - 1
or, g = 0.2381× 100%
∴ g = 23.81% or, g = 0.0747 × 100%
∴ g = 7.47%
Calculation of Growth Rate of Net Profit Calculation of Growth Rate of Net Profit
for HBL for NABIL
Dn = total net profit in the nth year Dn = total net profit in the nth year
Do = total net profit in the initial year. Do = total net profit in the initial year.
n=5 n=5

Dn = Do (1+g)n-1 Dn = Do (1+g)n-1
or, D13/14 = D09/10 (1+g)5-1 or, D13/14 = D09/10 (1+g)5-1
or, 959107 = 508798 (1+g)5-1 or, 2319631 = 1138571(1+g)5-1
or, (1+g)4 = 959107/508798 or, (1+g)4 = 2319631/1138571
or, 1+g = (1.8850)1/4 or, 1+g = (2.0373)1/4
or, 1+g = 1.1717 or, 1+g = 1.1947
or, g = 1.1717 - 1 or, g = 1.1947 - 1
or, g = 0.1717 × 100% or, g = 0.1947 × 100%
∴ g = 17.17% ∴ g = 19.47%
Appendix –C: Calculation of Correlations and Testing of Hypothesis
For Table 4.22

HBL BANK
(In ‘milliion)
Fiscal Year 2009/10 2010/11 2011/12 2012/13 2013/14 Total
Investment
(X) 8444.910 8769.939 10031.580 12992.044 19842.060 60080.533
Deposit (Y) 37611.202 40920.627 47730.994 53072.319 64674.848 244009.989
X2 71316504.91 76911830.06 100632597.3 168793207.3 393707345.0 811361484.6
Y2 1414602441 1674497714 2278247788 2816671044 4182835964 12366854951
XY 317623207.4 358871402.6 478817284.8 689517903.6 1283282215 3128112013
∑ ∑ ∑
ρ= =
! ∑ ∑ ! ∑ ∑
0 .2). – /))2).0.. ,,)):.:2:
=0.968
√0 2./,2,./ /))2).0.. √0 .//20,:0 ,,)):.:2:
Null Hypothesis (H0): ρ = 0 i.e. variables are not correlated.

Alternative Hypothesis (H1): ρ ≠ 0 i.e. variables are correlated.
# ).:/2
Test Statistics: tcal = √# √% 2 = √).:/2 √5 2 " 6.69
Level of Significance: 5%
Degree of Freedom: n-2 = 5-2 =3
Critical Value: ttab @5%, 3d.f. = 3.182
Decision: Since calculated value of t is greater than tabulated value of t. Thus null
hypothesis is rejected. That is variables are correlated
NABIL BANK
(In ‘million)
Investment
(X) 13703.024 13081.206 14055.850 16332.043 18276.753 75448.876
Deposit (Y) 46410.701 49696.113 55023.695 63609.808 75388.791 290129.108
X2 187772866.7 171117950.4 197566919.2 266735628.6 334039700.2 1157233065
Y2 2153953167 2469703647 3027607011 4046207674 5683469808 17380941308
XY 635966949 650085091.6 773404803.4 1038878119 1377862312 4476197276
∑ ∑ ∑
ρ=
! ∑ ∑ ! ∑ ∑
0 ,,9/:99/ – 90,,2.29/ :):.)2

= √0
=0.971
√0 09..)/0 90,,2.29/
Shanker Dev9.2):,.)2 104
:):.)2
Campus Library
# ).:9
Test Statistics: tcal = √# √% 2 = √).:9 √5 2 " 7.03
hypothesis is rejected. That is variables are correlated.
For Table 4.23

HBL BANK
( In million)
Deposit (X) 37611.202 40920.627 47730.994 53072.319 64674.848 244009.99
Loan (Y) 27980.629 31566.977 34965.434 39723.806 45320.359 179557.205
X2 1414602516 1674497714 2278247788 2816671044 4182835964 7875686268
Y2 782915599.2 996474036.9 1222581575 1577980763 2053934940 6633886914
XY 1052385089 1291740491 1668934920 2108234504 2931087330 9052382335
∑ ∑ ∑
ρ=
! ∑ ∑ ! ∑ ∑
0 :)0.2..0 – ,,)):.:: 9:009.)0

= =-0.335
√0 9290/2//2 ,,)):.:: √0 //..22/:, 9:009.)0
Null Hypothesis (H0) : ρ = 0 i.e. variables are not correlated.

Alternative Hypothesis (H1) : ρ ≠ 0 i.e. variables are correlated.
# )...0
Test Statistics: tcal = √# √% 2 = √5 2 " 0.616
!)...0
Decision: Since calculated value of t is smaller than tabulated value of t. Thus null
hypothesis is accepted. That is variables are uncorrelated.
NABIL BANK
(In million)
Deposit (X) 46410.701 49696.113 55023.695 63609.808 75388.791 290129.108
Loan (Y) 32268.873 38034.098 41605.683 46369.835 54691.648 212970.137
X2 2153953167 2469703647 3027607011 4046207674 5683469808 17380941308
Y2 1041280165 1446592611 1731032858 2150161598 2991176361 9360243592
XY 1497621016 1890146832
Shanker 2289298412
Dev Campus 2949576301
Library 105 4123137221 12749779782
∑ ∑ ∑
ρ=
! ∑ ∑ ! ∑ ∑
0 9,:99:92 – :):.)2 :9)..9

= =0.119
√0 9.2):,.)2 :):.)2 √0 :./),.0: :9)..9

# ).:
Test Statistics: tcal = √# √% 2 = √).: √5 2 " 0.2076
Decision: Since calculated value of t is less than tabulated value of t. Thus null
For Table 4.24

HBL BANK
(In’ million)
Outside Assets (X) 27073.129 43492.207 57903.026 55885.688 67756.785 215523.015
Net Profit
(Y) 508.798 893.115 958.638 943.697 959.107 4263355
X2 1326819891 1627066712 2024731269 2048440535 2352623077 9379681483
Y2 258875.4048 797654.4032 918986.815 890564.0278 919886.2374 3785966.88
XY 18533241.39 36025503.84 43135847.51 42711444.05 46520378.23 186926415
∑ ∑ ∑
ρ=
! ∑ ∑ ! ∑ ∑
0 2/:/,0 – 00..)0 ,/...00

= =0.859
√0 :.9:/2,2. 00..)0 √0 .920://.222 ,/...00

# ).20:
Test Statistics: tcal = √# √% 2 = √).20: √5 2 " 2.91
NABIL BANK
(In million)
Outside Assets (X) 38294.474 53340.406 77446.199 71905.712 72165.915 274893.116
Net Profit
(Y) 1138.571 1337.745 1696.276 2219.018 2319.631 8711.241
X2 2110464305 2612774201 3098206256 3557321088 3910402103 15289167952
Y2 1296343.922 1789561.685 2877352.268 4924040.884 5380687.976 16267986.74
XY 52305712.64 68379241.01 94417322.55 132349516.3 145053967.8 492505760.3
∑ ∑ ∑
ρ=
! ∑ ∑ ! ∑ ∑
0 ,:0)09/).. – 9,2:../ 29.,

= =0.979
√0 02:/9:0 9,2:../ √0 //9:2/.9, 29.,

# ).:9:
Test Statistics: tcal = √# √% 2 = √).:9: √5 2 " 8.318
For Table 4.25

HBL BANK
(In million)
Loan (X) 27980.629 31566.977 34965.434 39723.806 45320.359 179557.205
Net Profit
(Y) 508.798 893.115 958.638 943.697 959.107 4263.355
X2 782915599.2 996474036.9 1222581575 1577980763 2053934940 6633886914
Y2 258875.4048 797654.4032 918986.815 890564.0278 919886.2374 3785966.888
XY 14236488.07 28192940.66 33519193.72 37487236.55 43467073.56 156902932.6
∑ ∑ ∑
ρ=
! ∑ ∑ ! ∑ ∑
0 0/:):../ – 9:009.)0 ,/...00

= =0.744
√0 //..22/:, 9:009.)0 √0 .920://.222 ,/...00

# ).9,,
Test Statistics: tcal = √# √% 2 = √).9,, √5 2 " 1.929
Degree of Freedom: n-2 = 5-2 Dev
Shanker =3 Campus Library 107
NABIL BANK
(in million)
Loan (X) 32268.873 38034.098 41605.683 46369.835 54691.648 212970.137
Net Profit
(Y) 1138.571 1337.745 1696.276 2219.018 2319.631 8711.241
X2 1041280165 1446592611 1731032858 2150161598 2991176361 9360243592
Y2 1296343.922 1789561.685 2877352.268 4924040.884 5380687.976 16267986.74
XY 36740403 50879924.43 70574721.54 102895498.5 126864442.1 387954989.6
∑ ∑ ∑
ρ=
! ∑ ∑ ! ∑ ∑
0 .29:0,:2:./ – :9)..9 29.,

= =0.952
√0 :./),.0: :9)..9 √0 //9:2/.9, 29.,

# ).:0
Test Statistics: tcal = √# √% 2 = √).:0 √5 2 " 17.60

Appendix -D
(i) Calculation of the Trend of Total Deposit of HBL Bank

(In ‘000)
2
Year (X) Total Deposit X= X XY Y = a+ bx
(Y) (X-2011/12)
2009/10 37611202 -2 4 -75222404 35546201.2
2010/11 40920627 -1 1 -40920627 42174099.6
2011/12 47730994 0 0 0 48801998
2012/13 53072319 1 1 53072319 55429896.4
2013/14 64674848 2 4 129349696 62057794.8
Total ∑Y=24400990 ∑X=0 X2=10 ∑XY=66278984 244009989.6
Calculation of a, b value
We know,
The straight line trend is given by the following formula:
Y = a + bx……..(i)
Where,
Y = Values of total deposit
a = Total deposit
b= Rate of change of total deposit
X = Year
Σy Σxy
a= b=
n Σx 2
244009990
a=
5
a = 48801998
66278984
b=
10
b = 6627898.4,
Put the value of a and b in equation (i)
If x = 2014/15
Then, y = 48801998+6627898.4×3
= 68685693.2
Similarly,
If X = 2015/16
Then, Y = 48801998+6627898.4×4
= 75313591.6

(ii) Calculation of the Trend of Total Deposits of NABIL Bank
(In ‘000)
Year (X) Total Deposit X= X2 XY Y = a+ bx
(Y) (X-2011/12)
2009/10 46410701 -2 4 92821402 22335331
2010/11 49696113 -1 1 49696113 93716312
2011/12 55023695 0 0 0 58025821
2012/13 63609808 1 1 63609808 93716312
2013/14 75388791 2 4 150777582 129406802
∑Y=29012910 ∑X=0 ∑XY=35690490
Total 8 ∑X2=10 5 361510088
We know,
Y = a + bx……..(i)
Where,
Y = Values of total deposit
a = Total deposit
b= Rate of change of total deposit
X = Year
Σy Σxy
a= b=
n Σx 2
290129108
a=
5
a = 58025821.6
356904905
b=
10
b = 35690490.5,
If x = 2014/2015
Then, y = 58025821.6+35690490.5×3
= 165097293.1
Similarly,
If X = 2015/2016
Then, Y = 58025821.6+35690490.5×4
= 200787783.6

(iii) Calculation of Total Investment Trend of HBL Bank
(In ‘000)
2
Year (X) Total X= X XY Y = a+ bx
Investment (Y) (X-2011/12)
2009/10 8444910 -2 4 -16889820 6612825.6

2010/11 8769939 -1 1 -8769939 9314466.1
2011/12 10031580 0 0 0 12016106.6
2012/13 12992044 1 1 12992044 14717747.1
2013/14 19842060 2 4 39684120 17419387.6
Total ∑Y=60080533 ∑X=0 ∑X2=10 ∑XY=27016405 60080533.00
We know,
Y = a + bx……..(i)
Where,
Y = Values of total Investment
a = Total Investment
b= Rate of change of total Investment
X = Year
Σy Σxy
a= b=
n Σx 2
60080533
a=
5
a = 12016106.6
27016405
b=
10
b = 2701640.5
If x = 2014/15
Then, y = 12016106.6+2701640.5×3
= 20121028.1
Similarly,
If X = 2015/16
Then, Y = 12016106.6+2701640.5×4
= 22822668.6

(iv)Calculation of Total Investment Trend of NABIL Bank
(In ‘000)
2
Year (X) Total X= X XY Y = a+ bx
Investment (X-2011/12)
(Y)
2009/10 13703024 -2 4 -27406048 12610116
2010/11 13081206 -1 1 -13081206 13849945
2011/12 14055850 0 0 0 15089775
2012/13 16332043 1 1 16332043 16329604
2013/14 18276753 2 4 36553506 17569434
Total ∑Y=75448876 ∑X=0 ∑X2=10 ∑XY=12398295 75448874
We know,
Y = a + bx……..(i)
Where,
Y = Values of total Investment
a = Total Investment
b= Rate of change of total Investment
X = Year
Σy Σxy
a= b=
n Σx 2
75448876
a=
5
a = 15089775.2
12398295
b=
10
b = 1239829.5,
If x = 2014/15
Then, y = 15089775.2+1239829.5×3
= 18809263.7
Similarly,
If X = 2015/16
Then, Y = 15089775.2+1239829×4
= 20049093.2

(v) Calculation of Loan and Advance Trend of HBL Bank
(In ‘000)
2
Year (X) Total Loan X= X XY Y = a+ bx
and Advance (X-2011/12)
(Y)
2009/10 27980629 -2 4 -55961258 27344183.2
2010/11 31566977 -1 1 -31566977 31627812.1
2011/12 34965434 0 0 0 35911441.0
2012/13 39723806 1 1 39723806 40195069.9
2013/14 45320359 2 4 90640718 44478698.8
∑Y=17955720 ∑XY=4283628
Total 5 ∑X=0 ∑X2=10 9 179557205
We know,
Y = a + bx……..(i)
Where,
Y = Values of Loan and Advance
a = Total Loan and Advance
b= Rate of change of Loan and Advance
X = Year
Σy Σxy
a= b=
n Σx 2
179557205
a=
5
a = 35911441
42836289
b=
10
b = 4283628.9,
If x = 2014/15
Then, y = 35911441+4283628.9×3
= 48762327.7
Similarly,
If X = 2015/16
Then, Y = 35911441+4283628.9×4
= 53045956.6

(vi)Calculation of Loan and Advance Trend of NABIL Bank
(In ‘000)
2
Year (X) Total Loan X= X XY Y = a+ bx
and Advance (X-2011/12)
(Y)
2009/10 32268873 -2 4 -64537746 31957770.0
2010/11 38034098 -1 1 -38034098 37275898.7
2011/12 41605683 0 0 0 42594027.4
2012/13 46369835 1 1 46369835 47912156.1
2013/14 54691648 2 4 109383296 53230284.8
∑Y=21297013 ∑XY=5318128 644179541.
Total 7 ∑X=0 ∑X2=10 7 9
We know,
Y = a + bx……..(i)
Where,
Y = Values of Loan and Advance
a = Total Loan and Advance
b= Rate of change of Loan and Advance
X = Year
Σy Σxy
a= b=
n Σx 2
212970137
a=
5
a = 42594027.4
53181287
b=
10
b = 5318128.7,
If x = 2014/15
Then, y = 42594027.4+5318128.7×3
= 58548413.5
Similarly,
If X = 2015/16
Then, Y = 42594027.4+5318128.7×4
= 63866542.2

(vii) Calculation of Net Profit Trend of HBL Bank
(In ‘000)
2
Year (X) Net Profit (Y) X= X XY Y = a+ bx
(X-2011/12)
2009/10 508798 -2 4 -1017596 662431
2010/11 893115 -1 1 -893115 757551
2011/12 958638 0 0 0 852671
2013/13 943697 1 1 943697 947791
2013/14 959107 2 4 1918214 1042911
Total ∑Y=4263355 ∑X=0 ∑X2=10 ∑XY=951200 4263355
We know,
Y = a + bx……..(i)
Where,
Y = Values of Net Profit
a = Total Net Profit
b= Rate of change of Net Profit
X = Year
Σy Σxy
a= b=
n Σx 2
4263355
a=
5
a = 852671
951200
b=
10
b = 95120,
If x = 2014/15
Then, y = 852671+95120×3
= 1138031
Similarly,
If X = 2015/16
Then, Y = 852671+95120×4
= 1233151

(viii) Calculation of Net Profit Trend of NABIL Bank
(In ‘000)
2
Year (X) Net Profit (Y) X= X XY Y = a+ bx
(X-2007/08)
2009/10 1138571 -2 4 -2277142 10935696
2010/11 1337745 -1 1 -1337745 1417908.9
2011/12 1696276 0 0 0 1742248.2
2012/13 2219018 1 1 2219018 2066587.5
2013/14 2319631 2 4 4639262 2390926.8
Total ∑Y=8711241 ∑X=0 ∑X2=10 ∑XY=3243393 8711241.00
We know,
Y = a + bx……..(i)
Where,
Y = Values of Net Profit
a = Total Net Profit
b= Rate of change of Net Profit
X = Year
Σy Σxy
a= b=
n Σx 2
8711241
a=
5
a = 1742248.2
3243393
b=
10
b = 324339.3
If x = 2014/15
Then, y = 1742248.2+324339.3×3
= 2715266.1
Similarly,
If X = 2015/16
Then, Y = 1742248.2+324339.3×4
= 3039605.4

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INVESTMENT POLICY AND PERFORMANCE OF

JOINT VENTURE BANKS

A Thesis Submitted To:

In partial fulfillment of the requirement of Degree of

I hereby declare that this thesis work entitled “Investment Policy

Shanker Dev Campus Library 2

As the partial fulfillment of the M.B.S degree, I have prepared this

I would like to express cordial gratitude to all my teachers, who taught

This is a study on banking sector. This study has been undertaken to

I would also like to express my gratitude to all other members of

…………………………………….. ……………………………………… ……………………………………

Shanker Dev Campus Library 4

INVESTMENT POLICY AND PERFORMANCE OF JOINT

Master of Business Studies (MBS)

Viva - Voce Committee

Head of Research Department :………………………………………..

Member (Thesis Supervisor) : ………………………………………..

Member (Thesis Supervisor) : ………………………………………..

Member (External Expert) : ………………………………………..

Shanker Dev Campus Library 5

CHAPTER - I INTRODUCTION ........................................................ 13

CHAPTERII REVIEW OF LITERATURE ...................................... 21

CHAPTER - III REASERCH METHODOLOGY............................. 33

3.2 Sources of Data ....................................................................................... 33

CHAPTER - V SUMMARY, CONCLUSION AND

Shanker Dev Campus Library 8

Shanker Dev Campus Library 10

Figure No. Title Page No.

Shanker Dev Campus Library 11

AGM : Annual General Meeting

Shanker Dev Campus Library 12

Investment policy is a study in determining the importance of the bank’s

Banking constitutes an important segment of financial infrastructure of an

Commercial banks are major financial institution, which occupy quite

“A joint venture is the joining of forces between two or more enterprises

NABIL Bank Limited

NB ( International ) Limited 50%

Himalayan Bank Limited

Share subscription and capital structure:

1.2 Statement of the Problem

1.3 Objective of the Study

1. To analyze the trends of deposits utilization towards total investment and

Shanker Dev Campus Library 18

1.5 Limitation of the Study

1.6 Organization of the Study

Chapter Two: Review of Literature

Chapter Three: Research Methodology

Chapter Four: Data Presentation and Analysis

Chapter Five: Summary, Conclusion and Recommendations

Shanker Dev Campus Library 20

2.1 Conceptual Frame Work

According to Shakespeare Baidhya on sound investment policy: “A sound investment

According to William F. Sharpe, Gordon J. Alexander and Jeffery V. Baily, "Investment

Cheney and Moses said,“The investment objective is to increase systematically the

2.1.3 Managing the Joint Venture Company

Board of the joint venture company

Disadvantages of Joint Venture

2.2 Features of Lending Policy

A. Safety and Security