lOMoARcPSD|26220196

CHAPTER-I
INTRODUCTION

1.1 Background of Study

Financial Analysis is a tool that helps to make an analysis of financial statement
prepared during the year that shows internal as well as external performance of a
company or an organization, business or any firm or individuals involved in financial
activities with an aim of earning profit, welfare or others factor that drive human
interest to achieve a mission or fulfill objective for what purpose organization actions
are being carried out in a such way they engage in financial activities for generating
reward in terms of measuring and comparable units. So, while engaging in such
activities any registered under certain rules and regulations falls under compulsory
criteria to prepare financial statement of related year. So, Analysis of such financial
statement that speak about the profile of owners, partners, stakeholders, co-ventures
etc in terms of money and performance. Such procedures of evaluating financial
statements and analyzing those outcome and performance in a systematic way is
known as financial Analysis.

There is no doubt that everyone except certain exceptions has involved in financial
activities in regular life. Without the word finance that give rise to financial activities,
no one in this world can stay away from such protocol that shows relation among
consumer and Business Environment that slightly explain the reason of existence or
survival of such mediums in terms of providing products and services that are essentials
components for making human life easier and comfortable that are associated for
customer satisfaction. There are different medium through which we get involved in
financial activities one of the largest network of business in the world that is
established to deal money as a financial tool that serves as products and services both
by accepting and availing such instrument under certain schemes and procurement are
commercial banks. Commercial banks plays vital role in promoting economic

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activities. They are the backbone for every organization or units that are intending to
carry business for long term. They provides support and stand as pillar for operation of
regular activities.
In term of carrying business activities, individual involving in financial activities,
commercial bank acts as a medium for exchanging money as by transferring from one
place to another place or deposit made to account that are all way related to smooth
financial operations of any unit. Commercial banks helps to provide loan and advance
facilities to customer so that it will help in carrying out activities that would led to
income generation for any business or individuals for which it acts as secure and
legally acceptable medium for money transacting activities.

1.2 Profile of Organization

Nabil Bank Limited, previously known as Nepal Arab Bank Limited) is the first private
commercial bank in Nepal was founded in 1984.It was established with joint venture of
Emirates Bank international Limited (EBI), financial institution of Nepal and Nepalese
people with shares of 50%, 20% and 30% respectively. But later on shares of Emirates
Bank International Limited (EBI) were sold to National Bank Limited of Bangladesh in
2051 BS. Nabil Bank Limited was incorporated with the objective of extending
international standard modern banking services to various sector of society. Pursuing
its objectives, Nabil Bank Limited provides a full range of banking services.

After 11 years of active participation, Emirates Bank International Limited (EBI)

divested its' 50% shareholding to National Bank Limited (NBL) Dhaka, Bangladesh.
With increased economic cooperation under SAARC framework particularly in the
field of trade commerce and induction of SAPTA agreement, the participation in
National Bank Limited of Bangladesh in Nepal seemed to be most timely. However the
board of directors had decided to release the technical assistance contract with National
Bank Limited, Dhaka in May 2001 in a view to that the management of the Nabil Bank
Limited could be handled by the Nepalese employees.

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Truly a pioneer in the Domestic Banking Sector, Nabil Bank’s mission is to become the
Bank of 1st choice of all its stakeholders - including all strata of customers of retail,
SME, corporate, state-owned enterprises, non-profit entities, multinational development
agencies, along with the Bank’s employees and shareholders. The Bank strives to be
a one-stop solutions provider by offering a
complete line of commercial banking products such as branch banking, treasury, trade,
cards, remittance, and investment banking. The expert team of highly skilled
professionals provides industry-specific guidance and advisory for efficient financial
management, resulting in higher customer profitability.

Nabil Bank operates through its wide network of 230 branch offices, 254 ATMs,
numerous POS terminals, remittance agents spread across the nation. The Bank also
has over 170 international correspondent banking relationships. The Bank operates its
investment banking arm through its subsidiary Nabil Investment Banking Ltd.
The Bank understands that its role goes beyond just financial transactions, and towards
the development of society as well. Hence, the Bank is highly active in creating financial
literacy and providing financial access to a large section of the population across the
country as part of its Corporate Social Responsibility.

Extending credit to deprived sectors of the society through micro-lending and financing
priority sectors that include agriculture, renewable energy and tourism are key areas that
define the Bank’s commitment to the country’s development initiative. Nabil Bank has
also established its branch offices in multiple rural locations in the western and far-
western hills with its vision to reach the financially under-privileged population and
increase financial literacy therein.

Nabil is moving forward with a Mission to be “1st Choice Provider of Complete

Financial Solutions” for all its stakeholders; Customers, Shareholders, Regulators,
Communities and Staff. Nabil is determined in delivering excellence to its stakeholders
in an array of avenues, not just one parameter like profitability or market share. It is
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reflected in its Brand Promise “Together Ahead”. The entire Nabil Team embraces a
set of Values “C.R.I.S.P”, representing the fact that Nabil consistently strives to be
Customer Focused, Result Oriented, Innovative, Synergistic and Professional.

The bank has enrolled itself as SWIFT (Society of Worldwide Inter Bank Financial Tele
Communication) member to adopt fast communication means among the member bank
of SWIFT. Messages are transmitted through SWIFT to the member banks of time
which is widely used in remittance, Later of Credit and many more areas of
communication as well.
Board Members of Nabil Bank Limited
Name Position Representation
Mr. Upendra Prasad Board Chairman Promoter shareholders
Poudyal
Mr. Nirvana Chaudhary Board Member Promoter shareholders
Mrs. Asha Rana Adhikary Board Member Independent Director
Mr. Pravin Tibrewala Board Member Public shareholders
Mr. Malay Mukharjee Board Member Promoter shareholders
Mr. Ananta Poudyal Board Member Public shareholders
Mr. A.R.M Nazmus Sakib Board Member Promoter shareholders

1.3 Objective of the Study

This study is carried out for the fulfillment of following objectives:
 To provide the necessary information required by the users for informative
decision making, assessing the current and past performance of the company,
predicting the success or failure of the business etc.
 To identify the level of profitability of bank.
 To know the financial position of bank.
 To know the various task and operations carried out for improvement through
advancement in banking sectors.

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 To notify public about the importance and role of financial institution in

economic process.
 To provide recommendations and suggestions on the basis of major findings.

1.4 Rationale of Study

Optimum utilization of fund makes better impact on economy of nation. Bank Limited
is the commercial bank with highest capital infrastructure in Nepal. So, it has been
chosen for the study with below certain limitations:
 Importance to shareholders.
 Importance to the management bodies of the bank for the evaluation of
performance of bank.
 Importance to "outsiders" which are mainly the customers, financing agencies,
stock exchanges etc.
 Importance to government bodies or the policy makers such as the central bank.
 Interested outside parties such as investors, customers (depositors as well as
credit takers), and competitors, personnel of the banks, stockbrokers, dealer and
market makers.
So, this study helps to identify its unseen strength and weakness regarding
financial as well as credit administration.

1.5 Review of Literature

Literature review is the study of the available literature in one's field research. The
literature provides us the knowledge of the status of their field of research. Past study
knowledge provides foundation to the present study. So, analyzing and presenting the
following parts define this chapter:
i. Origin of Bank
ii. Conceptual/ Theoretical Framework
iii. Review of related journal, articles

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Detail explanation of the parts in this chapter is explained below:

i.) Origin of Bank

The origin of the word ‘Bank’ is linked to: German word ‘Bank’ means a joint stock
comp any, Latin word ‘Bank’ means a bench, Italian word ‘Bank’ means a bench and
French word ‘banquet’ means a bench. The first bank was set up in Venice, Italy as a
public bank, by the name ‘Bank of Venice’. Subsequently, ‘Bank of Barcelona’ in
1401 A.D. & ‘Bank of Geneva’ in 1407 A.D. were established. In 1609 A.D, “Bank
of Amsterdam’, a famous bank was established. In reality, the history of modern
banking had started from ‘Bank of England’ in 1694 A.D. But the modern joint stock
banks were established in England only in 1833 A.D. In 1844 A.D., ‘Bank of
England’ was established as a first the origin of the word 'Bank' is linked to: German
word 'Bank' means a joint stock company, Latin word 'Bank' means a bench, Italian
word 'Bank' means a bench and French word 'banquet' means a bench. The first bank
was set up in venice, Italy as a public bank, by the name of 'Bank of Venice'.
Subsequently, Bank of Barcelona' in 1401 AD & 'Bank of Geneva' in 1407 AD were
established. In 1609 A.D, "Bank of Amsterdam', a famous bank was established. In
reality, the history of modern banking had started from 'Bank of England' in 1694
A.D. But the modern joint stocks bank were established in England only in 1833
A.D. In 1844 A.D., 'Bank of England' was established as first central bank in the
world. The 'Banque De France' was established in France in 1807 A.D. Later, the
banks were established in the other parts of the world.

ii.) Theoretical Framework

The main objectives of the bank are to collect deposits as much as possible from the
customers and to mobilize into the most profitable sector. If a bank fails to utilize its
collected resources then it cannot generate revenue. Resource mobilization
management of bank includes resource collection, investment portfolio, loans and
advances, working capital, fixed assets management etc. To measure the bank
performance in many aspects, we should analyze its financial indicator with the help of
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financial statements.
Financial analysis is the process of identifying the financial strength and weakness of
the concerned bank. Financial Statement analysis is a method of reviewing and
analyzing a company's accounting reports in order to gauge its past, present or
projected future performance. This process of reviewing the financial statements allows
for better economic decision making. It is performed to determine the following:
• Profitability
• Liquidity
• Solvency
• Efficiency

The function or the performance of finance can be broken down into three major
decisions i.e. the investment decisions, the financing decision, and the dividend
decisions. An optional combination of the three decisions will maximize the value of
the firm.

Brigham E.F. & L.G. Gapensinki, (1992), "Financial Analysis means assessing the
viability, stability and profitability of project. It also includes technique used for
determining the needs of a business."

Ross, P.S. (2000), " Financial Analysis refers to the assessment of the business to deal
with planning, budgeting, monitoring, forecasting, and improving of all financial
details within an organization."

Tarawneh (2006) analyzed the financial statements of five omani banks for the
financial periods 1999-2003. In addition he used simple regression to estimate the
impact of asset management, operation efficiency, and bank size on the financial
performance of these banks. The result showed that financial performance of the bank
was strongly and positively influenced by the operational efficiency, assets
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management and bank size.

Almazari (2011) in his study attempted basically to measure the financial performance
of seven Jordanian commercial banks for the period 2005-2009, by using simple
regression in order to estimate the impact of independent variables on dependent
variable.

It was found that banks with higher total deposits, credits, assets, and shareholder's
equity do not always mean that has better profitability performance. Also found that
there exists a positive correlation between financial performance and asset size, asset
utilization and operational efficiency, which was also confirmed with regression
analysis that financial performance is greatly influenced by these independent factors.

Haque and Sharma (2011), their research studied the hypotheses tested imply that there
are significant differences amongst Saudi banks. The financial performance of banks in
Saudi Arabia is studied on the basis of financial variables and ratios through the help of
Spearman's' rank correlation method. Although, benchmarking performance of banks is
done using advanced linear programming models, this study attempts to develop an
efficiency frontier on the basis of simple linear regression.

Almumani (2014) the purpose of his study is to analyze and compare the performance
of Saudi banks that listed in stocks market for the period 2007-2011. The study is an
evaluator in nature, drawing sources of information from secondary data. The financial
performance of banks is studied on the basis of financial ratios and variables. Financial
performance was measured by two approaches; trend analysis and inter firm analysis. It
was found that increasing of assets, operating expenses, and cost to income causes an
increase in the profitability of Saudi Banks. Analysis shows that all the variables of
study have a positive mean value and all bank are generating income. Saudi Joint
Venture banks proved to be more proficient in generating profits, absorbing loan losses

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and dominating in ROE, while, Saudi established banks have more capacity of
absorbing asset losses and dominating in ROA.

1.6 Methods of Study

Research is a systematic, controlled, empirical and critical investigation of hypothesis
propositions about the presumed relations among natural phenomena.
In other words, it is a careful investigation or inquiry especially through research for
new facts in any branch of knowledge. This study focuses on the planned and
systematic dealing with the collection, analysis and interpretation of facts and figure. It
consists of research design, population and sample study, sources of data, data
processing procedure and technique of analyzing data.
For the purpose of achieving objectives of the study, the applied methodology will be
used:

1.6.1Research Design
"Research Design is a master plan specifying the methods and procedures for collecting
and analyzing the needed information."(Zikmund, 2007)
It is a blue print of research projects. It has the researchers to lay out their research
questions, methodologies, implementation procedures, and data collection and analysis
to conduct a research project. The research design then focuses on data collection
methods, the research instruments utilized, and the sampling plan to be followed.
What the researcher wants to know and what has to be dealt with in order to obtain the
required information? (Wolf & Pant, 2002)
It includes an outline of what the investigator will do from writing hypotheses and their
operational implication to the final analysis of data. Generally a common research
design possesses five basic elements viz.
• Selection of problem
• Methodology
• Data gathering
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• Data analysis, and

• Report writing

1.6.2 Population and Sample

Population refers to entire group of people, events, or things of interest that the
researcher wishes to investigate. Survey of each and every group of population by
researcher is not possible. For the held research, a portion of the population is taken as
the representation of the entire population. Sample of items and elements from the
population are taken for conducting our study. It comprises some observations selected
from the population.
There are altogether 21 commercial banks functioning all over the nations and most of
their stocks are traded actively in the stock market. Here Bank limited has been selected
as sample for our study. Similarly the financial statements of this bank for five years
have been taken as sample for the same purpose.

1.6.3 Nature and Source of Data

In regards to the primary data, some personal views and ideas of individual respondents
are collected. But in case of entire study, secondary data which are used are basically of
the following nature:
• Most of the data taken for the analysis is collected from the material
published by concerned bank through their annual reports.
• Since the stock of Bank is listed in NEPSE, the figures are almost reliable and
suitable too.
In order to fulfill the objective of this research work, all the secondary data are
collected, processed and tabulated in time series and bar diagram. This reliability
of data compiled in the annual report of the bank is judged and confirmed by an
independent auditor.
So, the major sources of secondary data used for this study are as follows:
• Annual Report of Bank Limited
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• Official website of Bank

• NRB Circulars
• NRB Directives

1.6.4 Data Processing Procedures

Data collected from various sources are in raw form. The method of analysis is directed
to find the actual financial performance of the bank. The obtained data are presented in
the tabular forms, diagrams and figures with the supporting interpretations. The
collected data are accumulated in organized way and are grouped for a calculation
using the method given by the formulas.

1.6.5 Data Analysis Tools

Analysis and presentation of data is the core of each and every research work. Financial
and statistical tools are considered as the most reliable tools to accomplish the objective
of the study. These tools are used in order to make the analysis more effective,
convenient, reliable and authentic.
The various result obtained are interpreted to portray the current position and
performance of the bank. Two types of tools have been used to achieve the certain
goals.
a) Financial Tools
b) Statistical Tools

a. Financial Tools
It basically helps to the financial strength and weakness of the firm by establishing
relationship between the items of the financial position and statement of profit or loss.
Financial tools are categorized into two parts. They are:

i.) Ratio Analysis

Ratio Analysis is the powerful tool of financial analysis. "A ratio is the mathematical

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relationship between two variables. It is significant for financial analysis. It also helps
to predict the future performance of a company based on study of ratios of earlier
years."(Benerjee: 1989,95) Quantitative relationship are established by the ratio which
facilitates the qualitative judgment to be made. They are presented below:

1.) Liquidity Ratio:

i) Cash and Bank Balance to Total Deposit Ratio:
ii) Cash and Bank Balance to Total Assets Ratio:
iii) Current Ratio:
2.) Profitability Ratio:
i) Return on shareholder's fund:
ii) Return on Total Assets
iii) Earnings Per Share

3.) Asset Management Ratio:

i) Loan and Advances to Total Deposits Ratio:
ii) Loan and Advances to Fixed Deposits Ratio:
iii) Loan and Advances to Total Assets Ratio:

1.7 Limitations of the Study

Limitation tends to narrow the area of study. It is caused due various undeniable
circumstances. The major limitations of this study are mentioned below:
• The Research is based on record of 5 fiscal years analysis.
• Most of the data used in this study are based on secondary sources mainly official
website of Bank Limited.
• The study is related only to the financial performance analysis of Bank and not of
others bank.
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• The main focus is given to the quantitative aspect rather than qualitative
aspect.
• It is only for partial fulfillment of Bachelor of Business Studies (BBS).

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CHAPTER-II
RESULTS AND ANALYSIS

2.1 Data Presentation and Analysis

This chapter deals with the presentation, analysis and interpretation of relevant data of
Bank Ltd to fulfill the objective of the study. According to the research methodology as
mentioned in the third chapter of this study the data have been analyzed competently.
The purpose of this chapter is to introduce mechanism of data analysis and
interpretation. Different type of analytical methods and tools such as financial ratio
analysis and statistical analysis are used.

2.2 Financial Statement Analysis

Financial statement analysis is the process of analyzing a company's financial
statement for financial decision making purposes and to understand the overall health
of an organization. Financial analysis is done by applying various financial tools in
order to have clear picture on the viability of the project. It is the method of evaluating
past, present and projected performance of a company. The financial analysis is done to
ascertain the liquidity, profitability, leverage, debt servicing and interest servicing
ability of the firm. The concept of financial statement analysis has been already
discussed in previous chapter. Here, we study and analyze the data by using accounting
tools.

2.2.1 Liquidity Ratio

Liquidity Ration refers to the ability of a firm to meet its short term or current
obligations. Inadequate liquidity can lead to unexpected cash short falls that must be
covered at excessive costs reducing profitability. In the worst case, inadequate liquidity
can lead to the liquidity insolvency of the institution. To find out the ability of the bank
to meet their short term obligations, which are likely to mature in the short period, the
following ratio are developed under the liquidity ratios to identify the liquidity position.
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i.) Cash and Bank Balance to Total Deposit Ratio:

This cash and bank balance to total deposit shows that percentage relation between
them. It means the liquid balance available in the respect to total deposit of the bank.

Table 1.1 Cash and Bank Balance to Total Deposit Ratio

(Amount In RS)
Cash & Bank
Fiscal Year Total Deposit Ratio
Balance
2018/19 13226437108 118684419344 0.111

2019/20 25765402410 134571083275 0.1915

2020/21 29863717905 162910477681 0.1833

2021/22 34638997699 190795945423 0.1816

2022/23 25799841173 223408097336 0.1155

Figure 1.1: Cash and Bank Balance to Total Deposit Ratio

Total Deposit Ratio

0.25

0.2

0.15

0.1

0.05

0
2018/19 2019/20 2020/21 2021/22 2022/23

Series 1

Source: Annual Report of Nabil Bank

The above Table 1.1 and Figure 1.1 shows that cash and bank balance to total deposit
of Nabil Bank limited is in fluctuating trend. Nabil’s cash and bank balance to total
deposit is highest of 0.1915 times in 2019/20 and lower in 2018/19 of 0.111 times.
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Ratio over the past five years in terms of percentage also reveals the fluctuation. Ratio
is found to be increase in year 2018/19 whereas decreased in the year 2019/20 and
subsequently decreased in the year 2020/21 and still decreasing in the year 2022/23.
The average is 0.1566 which is lower than 1. It means that Nabil Bank has more total
deposit than cash and bank balance. In this situation, there is insufficient cash on hand
to pay off the deposit of the customers. This may not be bad news if the bank has the
condition to extend normal credit terms to suppliers and very little credit extended to its
customers.
Similarly, the standard deviation of data analyzed is 0.0351 which is lower than the
mean, it means that most of the numbers are close to average. And cash and Bank
Balance and total deposit are less volatile.

ii.) Cash and Bank Balance to Total Assets Ratio:

This cash and balance to total assets ratio shows the relation between them. The cash
flows to total assets ratio shows investors how efficiently the business is using its
assets to collect cash from sale and customers.
Table 1.2: Cash and Bank Balance to Total Assets Ratio
Amount (NRs)

Fiscal Years Cash &Bank balance Total Assets Ratio

2018/19 13226437108 140697262241 0.0940

2019/20 25765402410 161525230103 0.1595

2020/21 29863717905 201574704173 0.1482

2021/22 34638997699 238175189306 0.1454

2022/23 25799841173 292566048971 0.0882

Source: Annual Report of Nabil Bank

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Figure 1.2: Cash and Bank balance to Total assets ratio

Total assets ratio

0.18
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2018/19 2019/20 2020/21 2021/22 2022/23

Series 1

Source: Annual Report of Nabil Bank

Table 1.2 and Figure 1.2 shows that cash and bank balance to total assets ratio of
Nabil Bank is in fluctuating trend. Nabil’s cash and bank balance to total assets is
highest of 0.1595 times in 2019/20 and lower in year 2022/23 of 0.0882 times. Ratio
in terms of percentage also reveals fluctuation. Ratio are found to be increased in
year 2018/19 by 69.68% and then in decreasing rate in year 2020/21, 2021/22,
2022/23.

The average is 0.1271 which is lower than 1. It means that Nabil will not be able to
pay off its liabilities with available cash and cash equivalents.
Similarly, the standard deviations of data analyzed as 0.0333 which is lower than
the mean, it means that numbers are close to the average. Cash and Bank and total
assets are not volatile.

iii) Current Ratio

This ratio is used to find the relation between current assets and current liabilities
of the bank. The current ratio is the liquidity ratio that measures the company
ability to pay short term obligations or those due within one year.

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Table 1.3: Current Ratio

Amount In (NRs)

Fiscal Year Current Assets Current Liabilities Ratio

2018/19 94261745303 122359915606 0.7704

2019/20 147768575442 138442641344 1.0674

2020/21 172150583988 167021238373 1.0307

2021/22 67043237065 207088542631 0.3237

2022/23 246518851420 252335075267 0.9771

Source: Annual Report of Nabil Bank

Figure 1.3: Current Ratio

2018/19 2019/20 2020/21 2021/22 2022/23

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Current Ratio (Source: Annual Report of Nabil Bank)

The above Table 1.3 and Figure 1.3 shows that the current ratio of Nabil is Fluctuating
over the past five years. Nabil’s current ratio is higher in year 2019/20 of 1.0674 times
and lower in year 2021/22 of 0.3237 times. Ratio over the past five years in terms of
percentage also reveals the fluctuation. Ratio are found to be decreased in the year
2022/23.

The average is 0.8338 which is lower than 1. This shows that the current asset of a
company is not sufficient to meet current liabilities.
Similarly, S.D of data analyzed is 0.2751 which is lower than the mean. It means that
most of the numbers are close to average. And volatility of current assets and current
liabilities are less.

2.2 Profitability Ratio:

A profitability ratio is a measure of profitability, it is a way to measure a company's
performance. Profitability is simply the capacity to make a profit. A profit is what is
left over the income earned after one has deducted all costs and expenses related
earning the income. It refers to the ability of the company to use its resources to
generate revenues in excess of its expenses. Profitability ratio are generally considered
to be the basic financial ratio in order to evaluate how well bank is performing in terms
of profit.

I) Return on Shareholder’s Fund:

This ratio, also called Return in Proprietor’s fund or Return in Net worth. It measures
the percentage of net profit to average shareholder’s fund.

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Table 1.4: Return on shareholder’s fund

Amount In (NRs)

Fiscal Year NPAT Shareholder’s Fund ROE

2018/19 3645279751 14173409689 25.72%

20859074021
2019/20 4021317727 19.28%

2020/21 4256032886 23459308414 18.14%

2021/22 3489730142 26133643908 13.35%

2022/23 4668476107 34255375385 13.63%

Source: Annual Report of Nabil Bank

Figure 1.4: Return on Equity

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2018/19 2019/20 2020/21 2021/22 2022/23

Source: Annual Report of Nabil Bank

The above Table 2.1 and Figure 2.1 shows that the return on shareholders fund of Nabil
Bank is in fluctuating trend. Nabil’s Return on shareholders fund is highest of 25.72
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percent in 2018/19 year and lowest in year 2021/22 of 13.35 percent. Ratio over the last
two years are found to be almost equal.

The average is 18.024 percent which means that the return on shareholder's fund is
18.024 percent of net profit on average.

Similarly, the standard deviation of the data analyzed is 4.516 percent which is lower
than the mean. It reveals that the most of the numbers are close to the average. And the
net profit after tax and the shareholders fund are less volatile.

ii.) Return on Total Assets:

Return on total Assets measures the profitability of the total investment of the
company. The ratio is computed by dividing net income after tax by average total
assets. The ratio is calculated to measure the profit after tax against the amount
invested in total assets to ascertain whether assets are being utilized properly or not.

Table 1.5: Return on Total Assets

(Amount in NRS)
Fiscal Year NPAT Total Assets ROA (%)
2018/19 3645279751 140697262241 2.5909%
2019/20 4021317727 161525230103 2.4896%
2020/21 4256032886 201574704173 2.1114%
2021/22 3489730142 238175189306 1.4652%
2022/23 4668476107 292566048971 1.5957%

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Source: Annual Report of Nabil Bank

Figure 1.5: Return on Total Assets
3.00%

2.50%

2.00%

1.50%

1.00%

0.50%

0.00%
2018/19 2019/20 2020/21 2021/22 2022/23

Series 1

Source: Annual Report of Nabil Bank

iii.) Earning Per Share (EPS):

EPS simply shows the profitability of the firm on a per share basis. It is calculated from
the point of view of ordinary shareholders.
Table 1.6: Earning Per Share
(Amount in NRS)
Fiscal Year NPAT No. of Share EPS (Rs)
2018/19 3645279751 61855070 58.93
2019/20 4021317727 80432210 50
2020/21 4256032886 90118454 47.22
2021/22 3489730142 100974974 34.56
2022/23 4668476107 138444511 33.72
Source: Annual Report of Nabil Bank

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Figure 1.6: Earning Per Share (EPS)

70

60

50

40

30

20

10

0
2018/19 2019/20 2020/21 2021/22 2022/23

Source: Annual Report of Nabil Bank

2.2. Findings

i. The current ratio of Nabil bank is less than the generally accepted standard of
2:1. However, the current ratio never falls below the ratio 2:1. So, current
ratio is satisfactory.
ii. Cash Reserve Ratio (CRR) shows the ability of banks funds to meet their
deposits. Dividing cash and bank balance this ratio by total deposit. Dividing
cash and bank balance calculate this ratio by total deposit. So, current reserve
ratio is increasing in every fiscal year.

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iii. The Return on Total Assets ratio measures how effectively a company can
earn a return on its investment in assets. In other words, ROA shows how
efficiently a company can convert the money used to purchase assets into net
income or profits. Return on Total Assets of NBL shows that the return is
satisfactory.
iv. Return of Net worth ratio is declining from FY 2018/19 to FY 22019/20 of
NBL Whereas from FY 2019/20 to FY 2022/23 is the almost constant. It
shows that the result of NBL is satisfactory.
v. Return on total capital is most useful when you’re trying to determine the
returns generated by the business operation itself, not the short-lived results
from one-time events. Return on total capital on NBL is declining in every
fiscal year.

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CHAPTER III
SUMMARY AND CONCLUSION

3.1 Summary
Nepali is one of the least developed countries of the world. For most of the
developing process, it is financially depending upon the foreign countries. It is
economically too weak. Thus the economic condition of the people is weak. In
Nepal 85% of the people are depended upon agricultural sector which is unable to
provide full employment to the people. Nepal government has to activate people in
the nation’s development through over all industrialization of nation. For this
purpose, development of sound banking system is essential.

In Nepalese banking sector, commercial banks including ventures banks are

operating at present. In the absences of modern banking any country cannot
develop the economic activity. Therefore, it is essential to find out whether or not
the banks are serving an important contribution to develop sectors of economy.
Finance is said to be general business of fund, which shows the bank ability to meet
cash requirement. In this record, this study has been based upon the objective to
evaluate the financial position of Nabil Bank Limited.

In the last two decades, the financial scenario of Nepal has dramatically changed.
The vast development of industrial sector or due to the presence of different kinds
of risk in the economy brings so many banking institutions from private as well as
public sector in Nepal. The first banking of Nepal, Nepal bank limited from
government sector was established in 1994.

The main purpose of selecting NBL, it is have been offering all kinds of available
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facilities available in banking sectors it the country. The study will be mainly based
on the secondary data publicly available in the NEPSE data base and the annual
report of respective banks. For the study, the five year’s data of the bank will be
pooled starting

from FY 2018/19 to 2022/23. The collected data of the bank for the study purpose
will be thoroughly processed, tabulated for the required format; different measures
of the data will be calculated using different graphical tools and financial tools with
the best effort.

3.2 Conclusions
It is concluded from the observed analysis of above data that ratios control the
major economic activities of the nation. Therefore, it is very important for the
policy maker to adopt appropriate policy with calculation interest rate. Therefore,
that large capital can be mustard at very low capital cost. It will encourage the
industrial & commercial activates eventually leading to better economic condition
growth, social economic development, and employment opportunities.

Descriptive and analytical research designs have been presented to analyze the
financial position of Nabil Bank. Limited. This study is based on secondary data
obtain from various sources such as annual general meeting of Nabil Bank Limited
of year 2018/19 to 2022/23, brochure, booklets, books and publications etc. Beside
this, relevant data are interpreted through various financial and statistical tools.

After the study of the final report, we will be able to analyze the financial
performance of the bank that whether the bank has sound financial performance or

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not. All the profitability ratios and liquidity ratios will help to determine the future
success of the bank and the condition of the bank in the coming days. The overall
results are satisfactory but in some case the Nabil Bank should take certain steps to
improve the bank current financial condition.

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Bibliography

Evans, J.D & W. (2007). The Complete Real Estate Encyclopedia, McGraw-Hill
Companies, Inc

Bhattarai, P. (2004). The Nepalese Financial System, Asmita Books Publications and
Distributors Pvt. Limited, Kathmandu

Khan, M.Y. & P.K, (1978). Financial Management Policy McGraw Hill Publishing co.
Limited, New Delhi.

Bahracharya, B.C. (2053). Business statistics & Mathematics, M.K. publishers and
Distributors.

Brigham, Weston, “Essentials of Management Finace”, Eleventh Edition, University

Publishers, USA.

Kothari, C.R. “Research Methodology”, Mc. Grow Hill Company, Second Edition.

Shekharand Shekhar, “Banking Theory & Practice”, Eighteenth Revised Edition, 1996.

Website:
https://www.nabil.com.np
https://www.nrb.org.np
Nabil Bank Limited 2018/19, 2019/20, 2020/21, 2021/22 & 2022/23 Annual Reports,
Kathmandu.

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APPENDIX

Table 1.1 Cash and Bank Balance to Total Deposit Ratio

(Amount In RS)
Cash & Bank
Fiscal Year Total Deposit Ratio
Balance
2018/19 13226437108 118684419344 0.111

2019/20 25765402410 134571083275 0.1915

2020/21 29863717905 162910477681 0.1833

2021/22 34638997699 190795945423 0.1816

2022/23 25799841173 223408097336 0.1155

Source: Annual Report of Nabil Bank

Table 1.2: Cash and Bank Balance to Total Assets Ratio

Amount (NRs)

Fiscal Years Cash &Bank balance Total Assets Ratio

2018/19 13226437108 140697262241 0.0940

2019/20 25765402410 161525230103 0.1595

2020/21 29863717905 201574704173 0.1482

2021/22 34638997699 238175189306 0.1454

2022/23 25799841173 292566048971 0.0882

Source: Annual Report of Nabil Bank

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Table 1.3: Current Ratio

Amount In (NRs)

Fiscal Year Current Assets Current Liabilities Ratio

2018/19 94261745303 122359915606 0.7704

2019/20 147768575442 138442641344 1.0674

2020/21 172150583988 167021238373 1.0307

2021/22 67043237065 207088542631 0.3237

2022/23 246518851420 252335075267 0.9771

Source: Annual Report of Nabil Bank

Table 1.4: Return on shareholder’s fund

Amount In (NRs)

Fiscal Year NPAT Shareholder’s Fund ROE

2018/19 3645279751 14173409689 25.72%

2019/20 4021317727 20859074021 19.28%

2020/21 4256032886 23459308414 18.14%

2021/22 3489730142 26133643908 13.35%

2022/23 4668476107 34255375385 13.63%

Source: Annual Report of Nabil Bank

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Table 1.5: Return on Total Assets

(Amount in NRS)
Fiscal Year NPAT Total Assets ROA (%)
2018/19 3645279751 140697262241 2.5909%
2019/20 4021317727 161525230103 2.4896%
2020/21 4256032886 201574704173 2.1114%
2021/22 3489730142 238175189306 1.4652%
2022/23 4668476107 292566048971 1.5957%

Source: Annual Report of Nabil Bank

Table 1.6: Earning Per Share

(Amount in NRS)
Fiscal Year NPAT No. of Share EPS (Rs)
2018/19 3645279751 61855070 58.93
2019/20 4021317727 80432210 50
2020/21 4256032886 90118454 47.22
2021/22 3489730142 100974974 34.56
2022/23 4668476107 138444511 33.72
Source: Annual Report of Nabil Bank

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