CHAPTER I

INTRODUCTION

1.1 Background of the study

A financial report on SBI Bank limited Limited has been performed as a summer
project to be informed about the banking industry, its culture and practices for the
partial fulfilment of the requirement of the degree of Bachelor of Business studies
(BBS) under the faculty of management, Tribhuvan University.

Bank is the financial institution that deals with monetary transaction. It acts as financial
intermediary. The intermediation takes place when banks accept deposits from general
public, corporate bodies and private organization and deploys those deposits for
profitable purpose in the form of loans and advances. Bank also bridges the gap
between the lender and the borrower of the fund. In simple term, a bank provides
certain interest to depositors and charges higher interest from the borrowers. The spread
between interest on loan and interest on deposit is the bank’s profit.

Banks play useful role in the economy by stepping between the firm and the individual
savers. In order to collect money from general public, the bank offers attractive rate of
return for their saving. Bank then mobilize their deposit in providing loan facility to
general public, business house, industries, agriculture and other needy sectors charging
certain interests rate.

1.2 Origin of bank

The evolution of banking industry had started a long time back, during ancient times. In
ancient Greece the famous temples of Delphi and Olympia served as the great
depositories for peoples’ surplus funds and these were the centres of money lending
transaction. The development of banking in ancient Rome roughly followed the Greek
pattern. Banking suffered oblivion after the fall of the Roman Empire after the death of
Emperor Justinian in 565 AD, and it was not until the revival of trade and commerce in
the Middle Ages that the lessons of finance were learnt a new from the beginning.

1
As a public enterprise, banking made its first beginning around the middle of the 12 th
century in Italy and the Bank of Venice, founded on 1157 was the first public banking
institution. Following it were established the Bank of Barcelona and the Bank of Genoa
in 1401 and 1407 respectively. The Bank of Venice and the Bank of Genoa continued to
operate until the 18th century. With the expansion of commercial activities in Northern
Europe there sprang up a number of private banking houses in Europe and slowly it
spread throughout the world. The oldest bank still in existence is Monte deiPaschi di
Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.
In Nepal, modern banking starts from the establishment of Nepal Bank Limited.

1.3 History of banking in Nepal

The goldsmiths and landlords were the ancient bankers of Nepal. The banking
requirements of the people were fulfilled to some extent by the organized financial
institutions “The TejarathAdda”. But all the financial activities were not carried out by
it. Prime Minister Ranoddip Singh (1993 BS) took first step for the institutional
development of the banking in Nepal. Formation of industrial Development Board
called “Udyog Parisad” was the landmark in opening new avenue in the field of
banking industry and commerce in Nepal and thus helped to enhance the economic
status in the country.

The formal banking sector in Nepal started with the establishment of Nepal Bank
Limited. It was established in 1994 B.S. after six decades of the establishment of
“TejarathAdda”. After that Nepal Rastra Bank was established in 2013 B.S. In the year
2022 B.S RastriyaBanijya Bank was established. The Agriculture Development Bank
was established in the year 2024 B.S. by observing the cooperative bank.

No matter what name we give to banks, like Business banks, Retail banks, clearing
banks, Joint venture banks, Merchant Banks etc., they all perform the same basic
function. Like other organization, the main objective of the banking industries is profit
maximization and wealth maximization.

The banking sectors remained still for a long period time but as the time passed on,
many developments occurred. In the present scenario, Nepalese banking system is

2
evolving itself as a powerful instrument of planning and economic growth of all the
developed and underdeveloped sectors. The scope and scale of banking too have
undergone substantial change in response to the saving and credit needs of people.

The Nepalese financial market was not opened up for private sector till the mid 1980s.
In Nepal, faster growth in the economy occurred especially after the initiation of
intensive reforms in the early 1990s adding business volume, size of assets and market
in Nepalese economy. One of the problems experienced by countries like Nepal due to
liberalization of banking and financial industry is that - the access to credit among the
rural population could not be increased. This is also partly true in the case of small
businesses operating in urban areas.

1.4 Background of the organization

SBI bank ltd. is fifteenth commercial bank of Nepal. It has been starting its banking
operations from Chaitra 21, 2057 B.S (April 03, 2001) with an objective by of
providing competitive and modern banking services in the Nepalese financial market.
The bank has paid up capital of Rs.7, 150,000,000.00 and authorized capital Rs.
10,000,000,000.00

SBI Bank Ltd has been providing wide-range of modern banking services through 76
points of representations located in various urban and semi urban part of the country, 74
outside and inside the valley and 2 Extinction of counters. The bank is pioneer in
providing some of the latest lucrative banking services like E-Banking and SMS
Banking services in Nepal. The bank always focus on building sound technology driven
internal system to cater the changing needs of the customers that enhance high comfort
and value.

The bank has been offering both domestic and international visa Debit card and credit
card assessable in entire VISA linked at ATMs in Nepal and India providing additional
service to the customer. Along with this, the bank has also been offering latest mobile
banking service.

The key focus of the bank is always centre of serving unfulfilled needs of all classes of
customers located in various parts of the country by offering modern and competitive
3
 banking products and services in their door step. The bank always prioritizes the
priorities of the valued customers.

SBI Bank Ltd. has been established for the delivery of comprehensive banking service
to the esteemed customer by the collective efforts of entrepreneurs from tourism sector,
professional bankers, pioneer of cooperative movement engineers, advocates, and other
professionals with excellent and high social profile. SBI Bank is combination of
Mahakali Development bank, Kastamandap Development bank, Kakrebihar Micro
finance and Paschimanchal finance company. In above development bank and finance
company are merger to establish SBI bank. We are fully committed to glorify our
corporate slogan "Sabai ka lagi, Sadhai ka lagi". SBI Bank Ltd. establish on 2057/12/21
with head office Kamaladi Kathmandu. The SBI Bank Ltd. has its own branch in
Dadeldhura district. It was established on operated from BS 2071. There are seven
staff working to operate their daily transaction. Mr. Prakash Chataut is the branch
head of SBI bank ltd. in Dadeldhura. The bank is providing SMS banking service, 24
hour ATM services and other services to its customers.

Mission

To win respectable market share through customers focused quality products and
services, innovative business solutions and technology driven banking thereby
enhancing the growth and profitability of the bank so as to ensure the optimum benefit
to all stake holders at all times.

. 1.5 Objectives of the study

The main objective of this report is to identify and analyze SBI Bank’s financial
position so that SBI Bank’s investors and creditors can easily be known about SBI Bank
limited. In short,

This project has the following objectives:-

 To know the general operations, banking process and culture.

 To analyze, examine and interpret the financial aspects of the SBI Bank limited
 To look out the strength and weakness of the bank.

4
1.6 Limitation of the study

 Due to inadequate knowledge and lack of sufficient information, it doesn’t seem so

suitable to prepare this report.
 It is naturally been constricted by time as a 2 day visit to the bank is not enough.
 The legitimacy of the report depends on the genuineness of the data sources that are
secondary by nature.
 It covers only three years data.

1.7 Significance of the Study

This research study is related with the aspect of profitability analysis which is the vital
and important role in the field of the managerial planning, decision making and
evaluating. The study tries to analyze the profitability performance of the business
organization. This study uses primary data to find out the cause of deviation between
planned and actual profit of the business organization, which provides venue for further
research in the similar field. The study will serve the general interest of various people,
public enterprises, researchers as well as other business organizations. The major
significance of the study is that it is much more important for the management of the
SBI Bank limited to improves its planned practices and implementation on the basis of
given recommendation. Mainly this study will be important for the following groups
and individuals:

1. Further researcher

2. University students who are new generation

3. Financial congers and analysis

4. Government

5
1.8 Organization of the Study

It has carried out a number of tasks to complete the proposed research study because
this study concerned with the profitability analysis of the both cooperative organization.
According to the objectives of this study, the study has been classified into five chapters
and the chapters are as follows.

Chapter – ONE: Introduction

Chapter one is the introductory part of the report which deals with background of the
study, statement of the problem, objectives of the study, significance of the study,
limitations of the study and organization of the study.

Chapter – TWO: Review of Literature

Chapter two deals with review of related literature which consists of conceptual
framework of profitability analysis of cooperatives and review of related previous
studies conducted on the same topic.

Chapter – THREE: Research Methodology

Research methodology section comprises of research design, population and sample,

nature and sources of data, data collection procedure, research variables, tools and
techniques used in this study used in this study.

Chapter – FOUR: Data Presentation and Analysis

Chapter four deals with the presentation and analysis of collected data. To fulfil the
objectives of the study, data have been collected, arranged, tabulated and calculated
using various financial and statistical tools.

Chapter – FIVE: Summary, Conclusion and Recommendation

Chapter five is the concluding part of the report which consists of summary of the
study, conclusion and suitable recommendations on the basis of the study.

At the end of the chapters, bibliography and appendices have been incorporated.
6
 CHAPTER II

REVIEW OF LITERATURE

2.1 Introduction

A literature review is a critical analysis of a segment of a published body of knowledge

through summary, classification, and comparison of prior research studies, reviews of
literature, and theoretical articles. Literature reviews are secondary sources, and as such,
do not report any new or original experimental work. Also, a literature review can be
interpreted as a review of an abstract accomplishment. The review of literature is a
crucial aspect of planning of the study. The main purpose of literature review is to find
out what works have been done in the area of the research problem under study and
what has not been done in the field of the research study being undertaken with
reference to the study, total deposit of SBI Bank limited. This unit of the study tries to
describe about the deposit position of SBI Bank limited. Besides these this chapter
highlights the literature that is available in concerned subject as to my knowledge,
research work, relevant study on this topic and review of thesis work performed
previously.

According to Cardesco and Gatner, “A literature Review is a self contained unit in a

study which analyses critically a segment of published body of knowledge through
summary, classification and comparison of prior research studies and theoretical
articles.”

2.2 Conceptual Framework:

Most all the research studies or projects work certain review of related literature to
some extent or more as per the nature and scope of the research study. This review
helps to find out what works has been done in field of research problem under study.
This study of financial analysis of SBI Bank limited Ltd. Analyzes about overall
financial activities done by the bank in form of different activities such as deposit, loan,
total assets, loan loss provision, net profit after tax, etc. which shows the financial
position of the bank.

7
2.3 Major services of the bank

2.3.1 Cards Products:

SBI Bank has the widest range of services in cards which include acquiring of Visa
Debit Card, Visa Credit Card and Visa Prepaid Card. SBI Bank is supported by the
‘State of the art Technology’ to provide online services, issue credit and debit cards
under the brand of Visa to the accountholders as well as non-accountholders.

2.3.2 Deposit:

The accountholders of SBI Super Saving enjoy higher interest rates and avail other
banking services like Debit Card, Any Branch Banking Service (ABBS), and internet
banking service, SMS banking, purchase or issuance of Travellers Cheques etc

2.3.3 Trade Finance:

Worldwide correspondent relationship enables SBI Bank to establish Letters of Credit

in any corner of world and have it confirmed by reputed international banks at
competitive rates whenever required. SBI Bank Offer all types of Trade services like
Documentary Credit, Guarantees and collections through one of the most experiences
foreign trade teams in the nation, and provides much needed support and advices in the
course of complex international trade dealings.

2.3.4 Corporate Lending:

SBI Bank provides a complete range of credit facilities that suits the needs of the
corporate sector from national, regional and multi-national corporations to business
houses. SBI Bank values its credit relationships very highly and believes in growing
together with its borrowing customers through mutually beneficial partnerships.

2.3.5 Personal Lending:

SBI Bank is committed to provide its customer the highest standards of services when it
comes to their personal financial needs. ‘Home Loan’ meets the customers’ needs of
purchasing or renovating their dream house, ‘Mortgage Loan’ enables customers to
borrow from the Bank for any of their financial needs by mortgaging their idle property.
‘Auto Loan’ provides financing to purchase vehicles Furthermore.
8
2.3.6 ATM’s:

The ATMs serves 365 days a year. SBI Bank’s ATMs also accept credit and debit card
products of Visa. SBI Bank serves its customers 24 hours through ATMs in the
Dadeldhura district and outside the district.

2.3.7 Safe Deposit Lockers:

SBI Bank offers complete safety of customer’s valuables (documents, jewellery etc)
through its Safe Deposit Lockers and nominal service charge.

2.3.8 Remittance Product:

SBI has been committed to provide top-notch services to its customers through its
remittance product-‘SBI Remit’. There are various departments concerned to providing
these services to the customers. The department work harmoniously in order to serve
the customers.

2.3.9 SBI Online:

Through SBI Bank’s internet banking facility ‘SBI Online’, customers can bring the
Bank right to their homes and offices. Customers, ranging from individuals, INGO’s,
development agencies, and corporate houses, can avail of a host of services like
transferring funds, viewing account balances, downloading and printing account
statements, inquiring status of issued cheques etc.

2.3.10 Any Branch Banking Service (ABBS):

SBI Bank uses state-of-art technology, software and hardware to provide the best
services to its customers. All the branches are connected through VSAT link or Radio
link, so that we can access your account from any of the branches located throughout
the country. All the branches of the bank serve us for deposit and withdrawal of cash,
balance enquiry, statement, balance certificate etc.

9
2.3 Research gap
It is clear from the above literature review that studies made on total deposit of
different firms offer limited finding in the context of Nepal. No special and core
studies have been conducted on the total deposit of the bank. The earlier few studies
conducted is unable to assess the recent total deposit. So, more extensive testing and
adjustment of necessary variables are needed to be done. This study will evaluate the
impact of total deposit of the bank more precisely and accurately. Four statistical tools
have been used in this study.
2.2 Review of previous work
The main purpose of literature review is to find what works have been done in the area
of the research problem under study and what has not been done in the field of books,
reports, journals and research studies published by various institutions unpublished
dissertation submitted by bachelor level student have been reviewed. The review of
textbook and other reference materials such as: newspaper, magazines, research
articles, journals and past project work have included in this topic.

10
 CHAPTER: III

RESEARCH METHODOLOGY
3.1 Introduction:

Research methodology is the scientific and sequential steps adopted by a researcher

with a predetermined objective for finding solution of a certain problem or to gain
knowledge on a particular field. For writing a project report, reliable data play a great
significant. During this study, two types of information about the bank have been
collected i.e. internal and external information .These information was collected with
the help of both primary and secondary sources.

3.4 Source of Data:

3.4.1 Primary data
Data that has been collected by the researcher himself/herself as per the objectives of the
research is known as primary data. Primary data can be collected from following
methods:
a. Direct personal interview
b. Questionnaire
c. Observation
d. Review of literature

3.4.2 Secondary data

If the researcher uses the data developed by others in the past for their own Purpose is
known as secondary data. It can be collected from following methods:

 Balance sheet.
 Profit and loss a/c.
 Cash flow statement
 Official related website
 Annual Report
 Brochures

11
3.5 Tools and Techniques of Analysis

In order to achieve the required objectives of this study, various tools i.e. Ratio analysis,
financial analysis and Regression analysis, Research design have played a vital role.
Meanwhile SWOT analysis is also performed to evaluate the performance of the bank
in competitive business scenario. The outcome from the calculation is analysed and
described briefly.

3.3 POPULATION AND SAMPLE

Population
In research, a population is not a demographic population but the entire collection of all
observation of interest i.e. people, objects or events as defined by researcher. It is the
entire collection of all observations of the interest for the research. Currently there are
more than dozen of commercial, development and financial institutions established in
Dadeldhura district which are providing their various services to their customers.
Sample
After the selection of subjects or problem for the study, it is very costly and time
consuming for the study of entire population. Thus, to make the study easier
representative portion of the population is selected for the study that is known as Sample.
Among the 11 commercial banks of Dadeldhura, SBI Bank Ltd. was selected as the
sample for the study.

12
 CHAPTER: IV

DATA PRESENTATION AND ANALYSIS

Data collected from different sources (primary and secondary) are evaluated and
interpreted so as to achieve the result. Such data are analysed and interpreted using
statistical, econometric and mathematical techniques which is known as data analysis.
Firstly, the raw data are to be arranged in a systematic order and they should be
analysed as to reach the conclusion. Presented data are further converted in to tables and
bar diagrams so that everyone can easily understand it. Following techniques are used
for analysis of financial performance of bank.

4.1 Ratio analysis

Ratio refers to the numerical relationship between two items. A ratio is defined as “The
indicated quotient of two mathematical expressions” and as “the relationship between
two or more variables analysis of the firms. Ratio analysis is first step of analyzing the
financial position of any firm. Generally, four main areas i.e. Profitability, Liquidity,
Credit quality, and Capital adequacy ratios are performed to access the financial
position of the bank.

A. Profitability Ratios

Profitability Ratio shows the combined effects of liquidity, assets management and debt
management on operating result. It measures the earning of the company for a certain
period. It includes net profit margin on sales, The Basic Earning Power ratio, ROA,
ROE, P/E Ratio and so on. Profitability can be measured as the discount rate that
makes the present value of all future cash benefits equal to the amount invested. This
rate of return does not reflect the performance of the company but it reflects the
discount rate investors apply to future cash flows in determining a price for the
company’s stock.

B. Liquidity Ratios

13
Liquidity ratio is used to measure the firm’s ability to meet its current obligations as
they come due. Liquidity is the probably the most difficult aspect of the financial
performance of a financial institution to measure from the published financial
statements. It involves current ratio, quick ratio, inventory turnover ratio, assets
management ratio and so on.

C. Credit Quality Ratios

One of the major problems faced by banks is the default risk. Credit quality ratio
measures the provision that the banks keep to face the default risk. Some of the credit
quality ratios are illustrated below.
1. Return on total assets (ROA)
Table: 4.1
Return on Assets
Net profit after
Total assets Return On
Year tax
(in millions) Assets
(in millions)

2072/073 61.23 8265.71 0.7%

2073/074 26.23 12626.47 0.2%
2074/075 73.00 17201.41 0.4%
Source: Dadeldhura Branch
ROA is calculated in above schedule is expressed as:

ROA
0.80.70000000000
0001
0.7
0.6
0.5
0.4
0.4
In %

ROA
0.3
0.2
0.2
0.1
0
2072/073 2073/074 2074/075
Fiscal Year

14
15
Chart no.: 4.1

*ROA = /
NET PROFIT TOTAL ASSETS

Higher ROA is preferred as higher ROA is a measure of high profitability. According to

the above table ROA has decreased in2073/074 as net profit decreased. However only
looking at the decreased figure we can’t say that there is loss. Hence increase in total
assets fluctuate the net profit of the bank.

2. Interest spread Ratio (ISR)

Table: 4.2

INTEREST SPREAD RATIO

Interest Total *Interes
Interest
Income Assets t
Years Expense
(in (in Spread
(in millions)
millions) millions) Ratio

2072/07
3 357.91 218.94 8265.71 1.68%

2073/07
4 638.93 495.78 12626.47 1.13%

2074/07
5 1464.97 962.00 17201.41 2.92%

Source: Dadeldhura Branch

Chart: 4.2

ISR
100%
90%
80%
70%
60%
50% 1.68 1.13 2.92
In %

40%
30% Column2
20% 16
10%
0%
2072/073 2073/074 2074/075
Fiscal Years
*ISR is calculated as follows:

ISR = (INTEREST INCOME – INTEREST EXPENSE)

TOTAL ASSETS

Higher spread is a measure of higher profitability. According to above graph, ISR is

fluctuated which states decrement in 2073/074 due to tremendous increment in total
assets. However in2074/075 ISR increases and becomes 2.92%.

3. Net operating cost ratio (NOCR)

NET OPERATING COST RATIO
Table: 4.3

Net operating
Total Assets *Net Operating
Year Cost
(in millions) Cost Ratio
(in millions)
2072/073 60.10 8265.71 0.72%
2073/074 132.89 12626.47 1.0%
2074/075 209.34 17201.41 1.2%
Source: Dadeldhura Branch

Charts: 4.3

NOCR
1.4
1.2
1.2
1
1
0.720000000000
0.8 001
In %

0.6
Net Operating Cost
0.4 Ratio
0.2
0
2072/073 2073/074 17
2074/075
Fiscal Years
*NOCR is calculated as follows:

NET OPERATING COST

NOCR = TOTAL ASSETS

Higher net operating cost ratio is a lower measure of profitability. Here we can see that
the NOCR is in increasing trend which defines the profitability of the bank is
fluctuating.

4. Loan to total asset ratio (LTAR)

LOAN TO ASSET RATIO

Table: 4.4

Loan Total Asset Loan to Total

Year
(in millions) (in millions) Asset Ratio

2072/073 5084.72 8265.71 61.51

2073/074 9063.09 12626.47 71.77
2074/075 11960.42 17201.41 69.52
Source: Dadeldhura Branch

Charts: - 4.4

LTAR
74
71.77
72
70 69.52
68
66
In %

64
62 61.51
Loan To Total
60 Assets Ratio
58
56 18
2072/073 2073/074 2074/075
Fiscal Years
19
*LTAR is calculated as follows:
TOTAL LOAN

LTAR =
TOTAL ASSET

Higher ratio shows lower liquidity position. From the table we can say that the ratio is
increasing over time which shows that the liquidity position of the bank is lower
whereas in2016/17 LTAR is decreased which indicates the liquidity position of bank is
higher

5. Cash to Total Asset Ratio (CTAR)

CASH TO TOTAL ASSETS RATIO

Table: 4.5
*Cash to
Total Cash Total Assets
Year Total Assets
(in millions) (in millions)
Ratio
2072/073 1267.98 8265.71 15.3%
2073/074 1412.13 12626.47 11.1%
2074/075 2434.33 17201.41 14.1%
Source: Dadeldhura Branch
Charts: 4.5

CTAR
18
16 15.3
14.1
14
12 11.1
10
In %

8
6 Cash To Total Assets
Ratio
4
2
0
2072/073 2073/074 2074/075
Fiscal Years

20
*CTAR is calculated as follows;

TOTAL CASH
CTAR
= TOTAL ASSETS
Higher ratio shows higher liquidity. The financial data of the bank shows that the
liquidity position of the bank is decreasing which indicates lower liquidity whereas in
2016/17 CTAR increased which leads to higher liquidity.

6. Provision for Credit Losses to Total Assets Ratio (PCLTAR)

PROVISION FOR CREDIT LOSSES TO TOTAL ASSETS RATIO
Table: 4.7

Provision for Provision for Credit

Total Asset
Year Credit Losses Losses to
(in millions)
(in millions) Total Assets
2072/073 16.91 8265.71 0.20%
2073/074 41.36 12626.47 0.32%
2074/075 106.47 17201.41 0.61%
Source: Dadeldhura Branch
Chart: 4.7

Provision for Credit Losses to Total Assets

0.7 0.610000000000
001
0.6
0.5
0.4 0.320000000000
001 Provision for
In %

0.3 Credit Losses to

0.2 Total Assets
0.2
0.1
0
2072/073 2073/074 2074/075
Fiscal Years

21
*PCLTAR is calculated as follows:
PROVISION FOR CREDIT LOSSES
PCLTAR =
TOTAL ASSETS
Higher the ratio, higher is the risk on lending. The ratio of the bank is increasing which
shows that the risk on lending is increasing but it is notable that higher ratio means that
the return is also higher.

7. Provision for Loan Losses to Total Loan Ratio (PLLTLR)

PROVISION FOR LOAN LOSSES TO TOTAL LOAN RATIO

Table: 4.7

*Provision for Loan

Provision for
Total Loan Losses to Total
Year Loan Losses
(in millions) Loan
(in millions)
Ratio
2071/ 072 16.91 5084.72 0.33%
2072/073 41.36 9063.09 0.45%
2073/0 74 106.47 11960.45 0.89%
Source: Dadeldhura Branch

Chart: 4.7

PLLTLR
1
0.89
0.9
0.8
0.7
0.6
0.45 Provision for
0.5
0.330000000000
In %

Loan Losses To
0.4 001 Total Loan Ratio
0.3
0.2
0.1
0
2072/073 2073/074 2074/075
Fiscal years

22
*PCLTLR is calculated as follows:

PLLTLR = PROVISION FOR LOAN LOSSES/ TOTAL LOAN

Higher the ratio, higher is the risk on lending. The ratio of the bank is increasing which
shows that the risk on lending is increasing but higher ratio means that the return is also
higher. The increasing provision indicates that the bank is safeguarding itself from the
default risk.

8. Credit Loss Coverage Ratio (CLCR)

CREDIT LOSS COVERAGE RATIO

Table: 4.8

Earnings
Provision for Loan
Before * Credit Loss Coverage
Year Loss
Tax Ratio
(in millions)
(in millions)
2072/ 073 68.34 16.91 504.13%
2073/074 58.89 41.36 242.38%
2074/0 75 149.28 106.47 240.20%
Source: Dadeldhura Branch
Charts: 4.8

CLCR
600
504.13
500

400
Credit Loss Cov-
Percentage

300 erage Ratio

242.38 240.2
200

100

0
2072/073 2073/074 2074/075
Fiscsal Years

23
*CLCR is calculated as follows:

(EBT + PROVISION FOR LOAN LOSS)/ PROVISION FOR LOAN LOSS

Higher is the credit loss coverage ratio; higher is the loss bearing capacity of the firm
and vice versa. From the data we can see that the CLCR is decreasing which indicates
that the loss bearing capacity of the bank is decreasing.

9. Loan to Deposit ratio (LTDR):

LOAN TO DEPOSIT RATIO

Table: 4.9

Total Loan Total Deposit *Loan to

Year
(in millions) (in millions) Deposit Ratio

2072/073 2072/073 2072/073 2072/073

2073/074 2073/074 2073/074 2073/074
2074/075 2074/075 2074/075 2074/075
Source: Dadeldhura Branch

Chart: 4.9

Loan To Deposit Ratio

12

10

6 Loan to
In %

Deposit Ra-
4 tio

0
2072/073 2073/074 2074/075
Fiscal Years

24
LTDR is calculated as follows:

TOTAL LOAN
LTDR = TOTAL DEPOSIT
Higher ratio shows the greater availability of capital to the firm. Data shows that the
bank’s ratio increased in 2072/073 and then decreased in 2073/074 which means lower
availability of capital to the firm on the same year.

4.2 SWOT Analysis

The main purpose of SWOT (strength, weakness, opportunities and threats) analysis is
to promote the strengths, reduce the weakness, grab the opportunity and neutralize the
threats. The analysis of the emerging trends and activities in the internal and external
business environment of SBI Bank gives the strength, weakness, opportunities and
threats. The SWOT analysis can be presented as below:-

Strengths:

 SBI Bank limited is highly reputed financial institution that provides its customers
with almost all introduced banking and financial services.
 SBI Bank limited has incorporated many services like ATM, LCs, Credit cards,
Tele-banking services, Internet banking services, Safe deposit lockers and a
number of depository skills.
 SBI Bank limited uses the latest technology to provide its services. The services
are prompt and convenient due to the use of the latest technology.
 The employees of SBI Bank limited are highly qualified; self-motivated and ready
to assume challenging Job.0
 The organizational structure is well defined and the flow of authority and
responsibility along with the chain of command is clear.
 The corporate culture of SBI is rich and values customer satisfaction and quality
services.

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Weakness:

 From this report, we can easily realize that SBI Bank limited is focusing on high
class people rather than the deprived portion of the population because it allows
low rate of interest to the customers and charges the high rates on loans.
 Promotional campaigns are less so that its reputation and customers aren’t to the
level that is expected relation to the quality service it provides.
 Due to the ATM machine not functioning properly, some complains are arising
day by day. Relative long document processing time is also the area in which the
bank must focus upon actively.
 The concept of rural banking can be completely ignored due to most of the
branches of the Bank are situated in the urban areas.

Opportunities:

 The profitable situation and increasing customers faith towards SBI is also a
mentionable opportunity. At such condition it should grab the opportunity by
utilizing its strengths to the optimum.
 Technological advances and incorporating them have made it possible to provide
reliable and quick customer services that is benefiting SBI.
 A major advantage to SBI Bank limited is the increasing need of banking for
growing economy of Nepal.
 The mixed economy of Nepal is also an advantage as it has helped to remain
detached from the SBIs financial crisis that is seriously influencing capitalist
economies.
 Emerging banking awareness among people is a major opportunity to attract and
retain customers
 The political change & stable government through a new constitution will
certainly benefit the businesses.

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Threats:

 The business environment in Nepal is fading due to various factors such as the fuel
crisis, lack of resources and other unwanted activities like: Chanda, Banda & Strike
etc.
 The growing competition and increasing banking service providers both national
and joint venture attempts may create tough competition for SBI Bank.
 The attitude and belief of customers is changing and there is trend of propagandas,
and irrelevant talks about banking industry & about the financial crisis may also
ruin the business
 The financial crisis that is prevailing in the world may also influence SBI Bank
because similar types of institution are being affected.

4.3 Major finding

From the analysis of anything researcher needs to conclude /find something about
study. From the above analysis the researcher finds the following things as major
findings.
1. Net profit is in decreasing order due higher payment of interest in liability sectors
and higher interest rate in deposit.
2. Return on equity, per share, return on assets etc. are decreasing because of
decrease in net profit which caused by interest.
3. Total deposit and loan flow of the bank is increased per years of the study from
2072/073 to 2074/075.
4. Different ratios helped for analysis of financial performance of the bank such as;
interest spread ratio, return on assets etc. That ratios show the better financial
performance of the SBI Bank limited.

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 CHAPTER V:

SUMMARY AND CONCLUSION AND RECOMMENDATION

5.1 Summary

During a very short span of time commercial banks are emerging continuously and also
their transaction on the financial market of the country. The rapid growth of commercial
banks made the competition very tough between them and to bear financial
performance is only the base of survival in this condition. In the context of Nepal, SBI
Bank is able to introduce itself as a major financial institution with financing and
banking activities. SBI Bank is recognized to be an institution having a different
banking culture which is characterized by three basic tools and based on customers,
computerized banking and modern technology and more importantly personalized
services through motivated employees in efficient and effective way. This culture has
been effective towards the better financial performance of the bank, which is the only
means for existence in the aggressive competition today.

SBI Bank limited is a limited liability company based in Nepal. The address of its
registered office is Kathmandu, Nepal. The Bank is listed in Nepal Stock Exchange.
The Bank is licensed by Nepal Rastra Bank (NRB) in order to carry out commercial
banking business in context of Nepal.

This report examines the financial position of SBI Bank limited with the help of past
three year data. The sources of data are both primary and secondary. This report is
mainly based on the financial activities and the financial performance of SBI Bank
limited Ltd. Thus, this report gives general ideas about the financial position of SBI
Bank limited Ltd. The financial statements have been prepared in accordance with
Nepal Accounting Standards (“NAS”) except otherwise stated, Generally Accepted
Accounting Principles (“GAAP”), Bank & Financial Institutions Act 2063, NRB
Directives and the Company Act 2063.

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 5.2 Conclusion

At last, based upon the financial indicators and reports, it may conclude that SBI Bank
limited has been running in the progressive way. The bank has successfully maintained
its corporate social responsibility by serving the society and conducting various other
social welfare activities. Moreover, the public attitude towards SBI Bank limited is also
positive. The financial ratios on an average are outstanding from competitive
positioning perspective. SBI Bank’s operation is also improving in comparison to
previous year and this should be focused to their valuable customer. SBI Bank limited
should try to give more emphasis on attracting customers. Its profit is in increasing
trend so it can satisfy its stockholder by providing more dividends. The success that SBI
Bank limited has achieved today is only a few portions of that can be actually achieved
by utilizing its resource to their optimum. In short, due to its competent management,
this bank is operating its function well and it is satisfying its customers properly.

. 5.3Recommendation

SBI Bank limited, as a pioneer in introducing many innovative products and marketing
concepts in the domestic banking sector, represents a milestone in the banking history
of Nepal as it started an era of modern banking with customer satisfaction measured as
a focal objective while doing business. The most important function of each bank is to
mobilize and utilize the funds, collected from the general public and help to promote the
economy of the nation. SBI Bank limited has been established itself in a reputed
position in Nepalese economy. Although the bank is able, depending upon the findings
from statistical and mathematical calculation, the following recommendations are
suggested:

1. A large amount of interest has been paid every year, which decreases the profit of
the bank. It also decreases EPS of the bank. Decrease in outsider's liability with the
help of the shareholder's equity is recommended.
2. During financial crisis, the financial institutions cannot mobilize its deposits in
different sectors so in that time the company is suggested to introduce some special
schemes in order to prompt banking and financial services

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3. With the aim of providing facilities to different level of customers of urban and
rural areas of the country, the bank should expand its branches.
4. The minimum amount to be deposited, while opening the bank account, should be
affordable by general public.
5. SBI Bank limited should maintain its quality services to its customer and also
should motivate and innovate its staff for the success of bank with different
facilities.
6. It has managed to increase profit every year except in the year of SBI financial
crisis so it should keep this position for all the time to make customer believe the
bank for long term.
7. On the study of the investment schedule, no figure has been drawn for making
contribution on agricultural and small cottage industries, so being a developing
country, investment should be made on those sectors.

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 APPENDIX

SUPPLYMENTARY QUESTIONNAIRES

The student used following question in annex to collect data for their study in SBI Bank
LTD.What are different types of account provided by your bank to public?

 What are different types of saving account provided by your bank to public?
 Whether you provide free ATM facility while opening saving account or not?
 Whether your bank provide ABBS facility or not?
 Whether your bank provides SMS banking service to customer while depositing and
withdrawal of money?

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 BIBLIOGRAPHY

REFERENCES

1. SBI Bank Ltd. (2072/073). Annual Report.

2. SBI Bank Ltd. (2073/074). Annual Report

3. SBI Bank Ltd. (2074/075/).Annual Report

BOOK REFERENCES

 Pant, Prem R., & Wolff, Howardev.K (2003 A.D). A Hand book for Social Science
Research and Thesis Writing. Kathmandu. Buddha Academic Publishers & Distributor
Pvt. Ltd.

 Sharma, N. (2001). A Text Book of Accountancy and Auditing. Kathmandu. Ekta

Books Distrubutors PVT. LTD.

WEBSITES:-

http://www.kbl.com

http://www.nrb.com

http://www.wikipedia.org

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