BANESWOR MULTIPLE CAMPUS

Kathmandu, Nepal

RATIO ANALYSIS OF STANDARD CHARTERED BANK

Submitted By: Submitted to:

Sulochana Lamsal Tribhuvan University
The Faculty of Management Kathmandu
T.U. Reg: 7-2-280-196-2019

In partial fulfillment of the requirements for the degree of

BACHELOR OF BUSINESS STUDIES (BBS)
 CONTENTS

1. Introduction
2. Statement of the Problem
3. Objectives of the Study
4. Significance of Study
5. Theoretical Framework and Literature Review
6. Research Methodology
7. Limitation of the Study
8. Organization of the Study
9. References
 Chapter - 1

1. Introduction
Standard Chartered Bank is a banking and financial services company in Nepal and
a subsidiary of Standard Chartered PLC. Standard Chartered Bank Nepal Limited
has been in operation in Nepal since 1987 when it was initially registered as a
joint-venture operation. Today, the Bank is an integral part of Standard Chartered
Group having an ownership of 70.21% in the company with 29.79% shares owned
by the Nepalese public. Standard Chartered Bank is one of the world's leading
international banks having more than 1,000 branches located in 59 markets
around the world.
The main theme or the main purpose of this report is to conduct a comprehensive
ratio analysis of Standard Chartered Bank Limited in Nepal. Ratio analysis helps to
analyze financial factors like profitability, liquidity and efficiency. Ratio analysis
helps financial professionals understand company trends and perform competitive
analysis. It is a crucial tool for assessing the financial performance and health of a
bank, providing valuable insights into its operational efficiency, liquidity,
profitability, and overall financial stability. This analysis will help stakeholders,
including investors, management, and regulators, make informed decisions
regarding the bank's current status and future prospects.

2. Statement of the Problem

Standard Chartered Bank Limited, Nepal, has been a significant player in the
country's banking sector, affirms a comprehensive analysis of its financial ratios to
gain insights into its operational efficiency, risk management, and overall financial
performance. The problem statement for this report revolves around the
following key issues:
 1. Liquidity Challenges: The liquidity of Standard Chartered Bank needs to be
evaluated to determine its ability to meet short-term responsibilities. A low
liquidity position may indicate potential difficulties, while excessive liquidity
may suggest inefficient use of resources.
2. Profitability Trends: Examining the profitability ratios of bank is essential
to understand its ability to generate earnings in relation to its equity and
assets. Identifying trends will help stakeholders assess the sustainability of
the bank's profit margins and overall financial viability.
3. Leverage and Solvency Risks: analyzing and understanding the solvency
ratios is crucial to assess the bank's ability to meet its long-term obligations
and maintain financial stability.
4. Operational Efficiency: This includes analyzing the efficiency ratios to
evaluate the bank's operational performance. The overall financial
performance of the bank may be impacted by the operational inefficiencies.
5. Identifying Trends: This aims to identify any significant changes in Standard
Chartered Bank's financial ratios over the specified period. If recognized any
shifts in key ratios, then it will help stakeholders to anticipate potential
challenges or opportunities.
This analysis aims to offer a clear picture of the bank's financial health, assisting
stakeholders in making sound decisions and contributing to the stability of the
banking sector in Nepal.

3. Objectives of the Study

The main objectives of the ratio analysis are as follows:
 To evaluate the liquidity position of Standard Chartered Bank.
 To assess the profitability and efficiency of the bank.
 To analyze the overall financial health and stability of Standard Chartered
Bank.
 To examine the leverage and solvency of the bank.
4. Significance of the study
The proposed ratio analysis of Standard Chartered Bank, Nepal, holds
considerable significance for various stakeholders, contributing to a deeper
understanding of the bank's financial health and facilitating informed decision-
making. The study's importance is highlighted by the following factors:
1. Investor Decision-Making:
 Investors rely on financial ratios to assess the attractiveness of an
investment. This study will provide them with valuable insights into
the bank's performance, helping them make informed decisions
about buying, holding, or selling securities.
2. Risk Management:
 Understanding the leverage and solvency ratios will aid in assessing
the bank's financial risk. This information is crucial for risk
management professionals and regulatory bodies to ensure the
stability of the financial system.
3. Regulatory Compliance:
 Regulatory bodies use financial ratios to monitor the health and
compliance of financial institutions. This study will assist regulators in
evaluating Standard Chartered Bank Limited's adherence to financial
regulations and guidelines.
4. Strategic Planning:
 For the bank's management, the ratio analysis provides valuable data
for strategic planning. Identifying areas of strength and weakness
allows for targeted efforts in improving performance and achieving
long-term goals.
In summary, the significance of this study lies in its potential to inform
stakeholders about the financial standing of Standard Chartered Bank, enabling
them to make decisions that impact investment, risk management, regulatory
compliance, and strategic planning.
5.Theoretical Framework and Literature Review
The theoretical framework and literature review for this ratio analysis report
involves the application of key financial theories and models to understand the
dynamics of Standard Chartered Bank Limited's financial performance.
The following theories will guide the analysis:
a) DuPont Analysis
The DuPont analysis breaks down the Return on Equity (ROE) into its
component parts, namely, net profit margin, asset turnover, and leverage.
Applying this framework will provide a more clear and detailed
understanding of the factors influencing Standard Chartered Bank's ROE
and identify areas for improvement.

b) Capital Asset Pricing Model

CAPM is used to assess the expected return on an investment based on its
risk. The analysis will consider the bank's risk and return profile, using
CAPM as a reference to evaluate the appropriateness of its capital structure
and risk management practices.

The literature review includes:

a) Liquidity Ratios and Financial Stability
Research by Smith and Wilford (2017) highlights the critical role of liquidity
ratios in maintaining financial stability. A healthy liquidity position is
essential for banks to meet short-term obligations promptly.

b) Profitability and Sustainability

Scholars like Brigham and Houston (2020) emphasize the significance of
profitability ratios in assessing a company's ability to generate sustainable
earnings. The Net Profit Margin and Return on Equity are crucial indicators
of financial health and long-term viability.
 c) Efficiency Ratios and Operational Performance
The efficiency of operational performance is a key focus in the literature
(Gibson, 2016). Efficiency ratios like asset turnover and receivables turnover
provide insights into how effectively a bank utilizes its resources to generate
revenue.

6. Research Methodology
The ratio analysis will include the use of various financial ratios. The data for the
analysis will be gathered from the financial statements of Standard Chartered
Bank Limited for the most recent fiscal year. The ratios will be calculated and
compared to historical performance to provide a fruitful and meaningful context.
The key ratios to be considered include:
a. Liquidity Ratios: Current Ratio, Quick Ratio.
b. Profitability Ratios: Net Profit Margin, Return on Assets, Return on Equity.
c. Efficiency Ratios: Asset Turnover, Receivables Turnover, Inventory Turnover.
d. Overall Financial Stability Ratios: Debt-to-Equity Ratio, Interest Coverage Ratio.

7. Limitation of the study

a) This research is concerned only with standard chartered bank.
b) Non availability of sufficient time to gather more depth information.
c) Non availability of sufficient data.
d) Three to Five years data are only presented for the study.
e) Communicating and coordinating with standard chartered bank was difficult.
8. Organization of Study
The report will be organized into distinct sections to ensure clarity and coherence
in presenting the findings of the ratio analysis of Standard Chartered Bank, Nepal.
The proposed structure includes:
1. Introduction:
 Provides an overview of the report, introduces Standard Chartered
Bank Limited, and outlines the objectives and significance of the
study.
2. Theoretical Framework:
 Briefly presents the selected financial theories (Modigliani-Miller,
DuPont Analysis, EMH, CAPM) guiding the ratio analysis.
3. Literature Review:
 Summarizes relevant literature on financial ratio analysis,
emphasizing liquidity, profitability, solvency, efficiency, and market
efficiency.
4. Methodology:
 Details the approach for data collection, sources, and the specific
financial ratios to be analyzed (liquidity, profitability, leverage,
efficiency).
5. Data Collection:
 Describes the process of gathering financial statements, regulatory
filings, and other relevant data from Standard Chartered Bank Limited
over the past three to five years.
6. Analysis and Calculation of Ratios:
 Presents the calculated financial ratios and provides insights into
liquidity, profitability, leverage, and efficiency.
7. Interpretation of Results:
 Analyzes the results of the ratio calculations, offering insights into the
financial health of Standard Chartered Bank Limited and identifying
key trends or areas for improvement.
8. Discussion:
 Discusses the implications of the findings, relates them to the
theoretical framework, and considers how they align with bank
benchmarks.
9. Recommendations:
 Offers actionable recommendations based on the analysis to assist
stakeholders in decision-making and addressing identified areas for
improvement.
10.Conclusion:
 Summarizes the key findings and the significance of Standard
Chartered Bank Limited's financial health.
 Chapter – 2
Results And Findings
In this, the collected data will be presented in the respective manner by using
tables, graphs or by using equations, etc. and analyzed by using the methods
explained in the previous chapter. Chapter 2 will be the main part of the report
where different data and methods are used and studied for analysis and results
findings.
 References
The references for this report are provided below:
Brief introduction: from the official website of Standard Chartered Bank.
Altman, E. I. (2018). Financial Ratios, Discriminant Analysis and the Prediction of
Corporate Bankruptcy. The Journal of Finance, 23(4), 589–609.
Brigham, E. F., & Houston, J. F. (2020). Fundamentals of Financial Management.
Cengage Learning.
DuPont, P. S. (1919). The Du Pont System of Analysis. Harvard Business Review,
1(5), 291–298.