1

CHAPTER I
INTRODUCTION

1.1 Background of the study

A bank is a financial institution that offers a range of financial services to individuals,
businesses, and governments. The banks accept deposits from individuals and businesses,
providing a safe place for customers to store their money. Savings accounts, checking
accounts, and fixed deposits are examples of common deposit kinds. Banks provide credit
and loans to people and companies, enabling them to borrow money for a range of uses
including buying homes or vehicles or funding company activities. The terms and
conditions of loans, including interest rates, are determined by the bank services. Checks,
credit card transactions, wire transfers, and electronic fund transfers are just a few of the
payment and transaction options that banks enable.

They are essential to the economies' payment and settlement processes. Banks provide
investment services and products, such as the ability to purchase and sell bonds, stocks,
and other financial instruments. In order to assist clients in managing their portfolios, they
could also offer investment advisory services. Customers can purchase and sell foreign
currencies for international trade, tourism, or investment purposes through the foreign
exchange services provided by many banks. Customers can keep important documents and
valuables in safe deposit boxes that banks frequently offer. Financial advice on
investments, retirement planning, insurance, and other areas of personal or business finance
is provided by certain banks.

Some of the online banking services As a result of technological developments, banks now
provide electronic banking services that enable clients to view and manage their accounts
from a distance, which include online, mobile, and ATM banking. A certain kind of bank
called a central bank is essential to a nation's monetary policy and money supply control.
They are in charge of preserving economic stability and frequently act as the "bank of
banks". Because they facilitate the flow of money, provide financial intermediation, and
promote economic progress, banks are essential to the operation of modern economies.
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Government regulators control them to guarantee the financial sector's integrity, stability,
and protection of consumers.

Investing is an effective way to increase your wealth by forgoing current income in favor
of future profits. However, there is risk involved in investing, therefore one must exercise
caution when choosing where to place one's funds. Making a portfolio is therefore crucial.
Combining two or more securities to optimize profits and minimize risk is called a
portfolio.

An investment that comprises multiple securities is referred to as a portfolio. It is the

gathering of safety. Nobody is prepared to take a chance to limit the risk at a given rate of
return, the notion of portfolio diversity is important. It is one instrument that aids in the
efficient use of resources. An investor's constant goal is to reach his investment target.
They acquire various securities in order to achieve the purpose. The danger is spread out
by these securities. Most investors believe that if they own multiple securities, the whole
investment will be protected from loss if one of them performs poorly. A portfolio is only
an illustration of the common practice among investors to allocate their funds among
multiple assets. A portfolio is an assortment of investing assets according to Weston &
Brigham, 1982.

A systematic investment process should be followed to win the stock market.

Investment process describes how an investor should go about making decision with
regard to what marketable to invest in, how extensive the investment should be and
when the investors should be made.

The process of choosing, ranking, and managing an organization's initiatives and

programs following its ability to meet its goals and strategic objectives is known as
portfolio management. The objective is to maximize return on investment while striking
a balance between implementing change initiatives and maintaining business as usual.

1.2 History of Global IME Bank Ltd

Global IME Bank Ltd. (GIBL) emerged after successful merger of Global Bank Ltd (an
“A” class commercial bank), IME Financial Institution (a “C” class finance company) and
Lord Buddha Finance Ltd. (a “C” class finance company) in year 2012. Two more “B”
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class development banks (Social Development Bank and Gulmi Bikas Bank) merged with
Global IME Bank Ltd in year 2013. Later, in the year 2014, Global IME Bank made another
merger with Commerz and Trust Bank Nepal Ltd. (an “A” class commercial bank). During
2015-16, Global IME Bank Limited acquired Pacific Development Bank Limited (a "B"
Class Development Bank) and Reliable Development Bank Limited (a "B" Class
Development Bank). During 2019-20, Global IME Bank Limited acquired Hathway
Finance Limited (a “C” class finance company), merged with Janata Bank Nepal Limited
(an “A” class commercial bank) in year 2019 and merged with Bank of Kathmandu on
January 9, 2023, to become the biggest bank in Nepal.

Global Bank Limited (GBL) was established in 2007 as an ‘A’ class commercial bank in
Nepal which provided entire commercial banking services. The bank was established with
the largest capital base at the time with paid up capital of NPR 1.0 billion. The paid-up
capital of the bank has since been increased to NPR 35.77 billion. The bank's shares are
publicly traded as an 'A' category company in the Nepal Stock Exchange.

At present, the bank has 277 Branchless Banking facilities, 67 Extension and Revenue
Collection Counters, and 354 branches functioning all throughout Nepal. Every branch of
the bank has been designed to be a full-service establishment, providing a wide variety of
financial services to its patrons. Additionally, the bank has 378 ATMs around the nation
that are positioned thoughtfully for patron convenience. Global IME Bank has NPR
57,042.31 million in authorized capital and NPR 36,128.7 million in paid-up capital.
https://www.globalimebank.com/pages/company-profile

1.3 Statement of The Problem

The banks are the backbone of every economy, their success or failure has an impact on
the growth of the economy of each country. The development banks in Nepal operate
primarily through loans and similar forms of investment. There is a significant risk of bank
failure in the event of unforeseen economic events. This study will attempt portfolio
management of Global IME Bank Ltd. Special problems related to the Commercial bank
in Nepal are listed below:
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i) What is the portfolio management of Global IME Bank Ltd?

ii) What are the financial indicators and market performance of GBIME compare
to other major banks or financial institutions in Nepal?

1.4 Objective of The Study

The objective of this research is to perform a thorough investigation of Global IME Bank
Ltd's portfolio management systems. The study specifically attempts to investigate the
bank's methods for allocating assets, controlling risk, making investment decisions, and the
overall performance of its investment portfolio. Through the assessment of these factors,
the research aims to offer valuable perspectives on the efficacy and efficiency of Global
IME Bank's portfolio management strategy, as well as its conformity with the bank's
financial goals and risk appetite. The study also seeks to pinpoint possible areas for
development and provide suggestions to improve the bank's portfolio management
procedures. The general objective of the study is:
i) To analyze the portfolio management of Global IME Bank Ltd.
ii) To know the financial indicators and market performance of GBIME compare to
other major banks or financial institutions in Nepal.

1.5 Significances of the study

The analysis of portfolio management of Global IME Bank Ltd holds most important
significance in the world of banking and finance. It is an essential instrument for
determining the bank's level of risk exposure, analyzing its financial results, and refining
asset allocation plans. By conducting a comprehensive analysis, stakeholders can
effectively manage risks, enhance profitability, and ensure regulatory compliance.
Furthermore, strategic decision-making processes are informed by insights gleaned from
portfolio management analysis, which promotes sustainability and long-term growth.
Additionally, transparent reporting of portfolio performance metrics enhances investor
confidence, facilitating access to capital and maintaining a positive market reputation.
Overall, the study considered, the analysis of portfolio management at Global IME Bank
Ltd. offers priceless insights that support the bank's prosperity and adaptability in the fast-
paced financial environment of today.
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1.6 Literature Review

A literature review talks about information that has been published in a certain field and
occasionally information that has been published in a specific field within a specific time
frame. This chapter provides a more thorough and descriptive assessment of the capital
market. Various books, journals, newspaper articles, magazine articles, and related studies
about the appropriate share and its effect on stock price movement have been made
available for this purpose. There are two components in this chapter: a conceptual view
section and a research review section. This chapter comprises a conceptual review, which
includes reviews from national and international publications as well as previously
published research papers, in order to achieve this goal. It also contains summaries of the
security and financial markets in Nepal as well as the current investment climate; and
unpublished dissertations submitted. It includes also an overview of the Nepalese financial
market and security market and existing investment environment; unpublished
dissertations submitted by master levels students and, other related published and
unpublished materials.

Portfolio management is basically concerned with efficient management of portfolio

investment in financial assets including shares and debentures of companies. Portfolio
management presupposes that each security in the portfolio is periodically evaluated. All
that a portfolio signifies is the investor practice of spreading their money across multiple
assets. The assortment of investments referred to as a portfolio (Weston & Brigham, 2003)
Portfolio management is the art of handling a pool of funds so that it not only preserves its
original worth but also over time appreciates in value and yields an adequate return
consistent with the level of risk assumed (Feorge, Edward, & Arthur, 1999).

Nepal Rastra Bank's stringent regulations have contributed to a notable improvement in the
portfolio management of the country's banking industry during the past ten years. This
essay attempted to use both qualitative and quantitative methodologies to describe the
current credit portfolio management practices of Nepalese commercial banks. This study
examined bank concentration for credit portfolio management by examining loan
concentration by security, product, and sector, and the researcher discovered a variety of
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results. Additionally, this study attempts to offer some solutions for credit portfolio-related
issues Malla (2017).

According to Wagle (2013), the study's main goals were to determine the commercial
banks' investor portfolio, evaluate the risk and return of investment securities, and identify
the ideal portfolio for NEPSE security trading. The degree to which commercial banks use
the portfolio idea to manage risk and return is another useful finding from this study. The
primary goals of the research are to determine the commercial banks' investor portfolio and
evaluate the risk and return of investment securities. According to him, the majority of
commercial banks want to place their money in less hazardous and more liquid industries.
Because loans and advances provide stable interest income, they are a better investment
than shares, debentures, and government securities. Commercial banks allocate their
capital, including deposits, to successful industries. Due to their success, all banks are able
to draw in investors. Every bank has an estimated return of more than 45%.The banks are
able to win over people's confidence by offering investors a strong return. Every bank has
aggressive stock as its beta values are all greater than 1. by carefully observing the market
and analysing various tools and methods.

Koehn and Santamero (1980) emphasize the critical link between the risk profile of a bank's
portfolio, the level of retained capital, and the probability of bankruptcy, highlighting the
need for a clear understanding of these interconnections to effectively evaluate bank capital
regulation. By optimizing the allocation of assets, banks aim to achieve the optimal mean
rate of return per unit of capital while managing variance. This allocation among assets
serves as a pivotal choice variable in the study, ensuring that the analysis accounts
comprehensively for risk and return considerations. Consequently, this research endeavors
to advance understanding without sacrificing depth regarding the intricate dynamics
between portfolio risk, capital regulation, and financial performance within the banking
sector.
https://www.scirp.org/reference/referencespapers?referenceid=2948515
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1.7 Methodology of the study

Methodology is the way to solved or finds the answer of research problem or question in
various steps. Those are adopted by researcher to solve the problem along with the logic
behind researcher with certain objectives.

1.7.1 Research design

Research design is the arrangement of collecting and analysis of data in manner that aims
to combine relevance to the research purpose. Fieldwork design helps to collect right
quantum of accurate data. Here, researcher will apply descriptive and analytical research
design as it deals with description of situation and interpretation of data.

1.7.2 Sources and techniques of data collection

The major data used in this project are derived from the secondary source in order to meet
the requirement of this project work report. The detailed data sources are as follows:
a. Secondary Sources:
In this reports, researcher has selected secondary sources of data instead of primary data.
Data which are not originally collected but rather abstained from other resource are
secondary data. Here researcher has collected data from annual reports i.e. financial and
office records. The data are collected with the help of the followings:
Annual report,
Balance sheet,
Website,
Books and articles,

1.7.3 Method of presentation and analysis tools

After data has been collected from a variety of sources, it should be presented in a way that
makes it clear which tools are necessary for both data analysis and presentation. Tools
facilitate analysis and comprehension. These are the tools that the researcher used to
present and analyze the data. Data presentation tool are follows;
• Trend line
• Bar diagram
• Simple table
• Financial tools
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1.7.4 Data Analysis Tools

The collected data are analyzed by using various financial tools which are briefly profiled
below:

1.7.4.1 Statistical tools

Statistical methods are the mathematical techniques used to facilitate the analysis and
interpretation of numerical data secured from groups of individuals or groups of
observation from a single individual. The figures provide details descriptions and tabulate
as well as analyze data without subjectivity, but only objectivity. Some important statistical
tools have been used to achieve the objective of the study. In this study statistical tool as
Arithmetic mean, standard deviation has been used.

1.7.4.2 Mean
The most basic and frequently used way to measure a mean, or the average, is the arithmetic
mean. It only requires adding up all of the numbers in a group and dividing that total by
the total number of numbers in the series.
𝑇𝑜𝑡𝑎𝑙 𝐴𝑅𝑅
Mean ARR= 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑌𝑒𝑎𝑟𝑠

1.7.4.3 Standard Deviation

It is a statistical measure of the variability of a distribution of return around its mean. It is
the square root of the variance and measures the unsystematic risk on stock investment. It
is widely used to measure risk from holding a single asset. It is also a statistical measure
of the variability of a set of observations. The standard deviation represents a large
dispersion of return and is a high risk and vice versa. The symbol is called (σ) sigma. It
measures the total risk on stock investment.
𝑆𝑢𝑚(𝐴𝑛𝑛𝑢𝑎𝑙 𝐴𝑅𝑅−𝑀𝑒𝑎𝑛 𝐴𝑅𝑅)2
Standard Deviation= √ 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑦𝑒𝑎𝑟𝑠

Coefficient of Variance (CV)

It is the ratio of standard deviation of returns to the mean of that distribution. It is a measure
of relative risk and return. It measures the risk per unit of return. It provides a more
meaningful basis for comparison when the expected returns on two alternatives are not the
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same. The higher of the coefficient of variation is the higher in the risk and vice versa.
Symbolically,

𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝐷𝑒𝑟𝑎𝑣𝑖𝑎𝑡𝑖𝑜𝑛𝑠
CV= ∗ 100
𝑀𝑒𝑎𝑛 𝑜𝑓 𝐴𝑅𝑅

1.7.4.4 Financial tools

The financial tool that has been used to achieve the objective of study is:
i. Index
Index refers to ways of measuring how the value of a basket of selected stocks changes
over time. In this study, it is the one of the important financial tools that has been used to
achieve the objective of the study.

1.8 Limitation of the Study

It is not a comprehensive study. There are some limitations of the study. Lack of
experiences, time, limited budget, up to date information are the main limitation of the
study. Parts from this some more limitation are presented below:
➢ This study analyzes the portfolio management of Global IME bank Ltd.
➢ Up to 5 years period data are collected for the analysis purpose.
➢ The study covers only the past and present state of Portfolio management of Global
IME bank Ltd, hence does not make any prediction about the future.
➢ This study mainly conducted on the basis of secondary data.
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1.9 Organization of the Study

As discussed in the previous section, this study intends to find the Growth, problems,
prospects of stock markets in Nepal. This study has been organized into 3 chapters. Each
are devoted to some aspects of the study. This study is divided into three main chapters.

Chapter- first
The first chapter Introduction consists of general background, statements of Problems of
the study, and objectives of the study, Significance of the study, limitation of the study and
organization of the study and Review of Literature deals with of the related studies.
Therefore, this chapter includes the review of major journals, research work, and thesis etc.
This chapter also represents the Methodology adopted for the research design, sources and
technique of data collection, population and sample and Method of presentation and
analysis tools.

Chapter- Second
The second chapter includes presentation and analysis of secondary data only and Major
findings from secondary types of data h ave been also presented in the last portion of this
chapter.

Chapter- third
The third chapter represents the summary of the study, conclusion and recommendations
with bibliography and appendixes.
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CHAPTER II
DATA PRESENTATION AND ANALYSIS

2.1 Data Presentation And Analysis

This chapter focuses on the data analysis and data presentation of the sampled banks. This
chapter is mainly concentrated in analyzing “Risk and Return of sample banks and creating
optimal portfolio from among sample banks.” Detail data of MPS and total dividend of
each bank and their interpretation and analysis is done with reference to the various reading
and literature review in the preceding chapter. Efforts are made to analyze and diagnose
the recent banking index movement. This is sub-index of NEPSE, with a special reference
to the listed commercial banks.

This study covers seven years period. It consists of historical return, average return,
coefficient of variation, standard deviation, and correlation coefficient of sampled banks.
The standard deviation is used to measure diversify risk. Similarly, yearend return and
average return are used to evaluate the return position of sampled banks. It has
demonstrated the figures and tables to analyze the present data.

2.2 Analysis of Market Movement

Index is one of the most important indicators of secondary market which is considered as
mirror of country's economic trend. NEPSE index group consists of various indices and
they are calculated on the basis of market capitalization. Out of them, overall NEPSE index
is the oldest one which is being calculated from the initial days of NEPSE. Similarly, the
other indices are sensitive index, group wise index and Float index
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Table 1 NEPSE Index Movement

Fiscal Year NEPSE Index Point (Rs. In Millions) Percentage of Growth

2074/75 1212.36 -

2075/76 1259.02 3.8

2076/77 1362.35 8.2

2077/78 2883.41 111.65

2078/79 2009.47 -30.31

(Source: www.nepse.com.np)

From the table no 1 the NEPSE Index Point in millions of rupees over the fiscal years. In
fiscal 2074/75 the NEPSE index was at 1212.36 million rupees. In fiscal 2075/76
experienced a slight increase to 1259.02 million rupees, marking a growth of 3.8% over
the previous fiscal year. In fiscal year 2076/77 further increase to 1362.35 million rupees,
representing a growth of 8.2% compared to the previous year. In fiscal year 2077/78 the
NEPSE index surged significantly to 2883.41 million rupees, indicating a remarkable
growth of 111.65% over the previous fiscal year. In fiscal year 2078/79 there was a notable
decline in the index, dropping to 2009.47 million rupees, which reflects a decrease of
30.31% compared to the previous year.

In summary, there was fluctuation in the NEPSE index over the years, with notable growth
in some years and a significant decline in others. The year 2077/78 stands out as a period
of extraordinary growth, while 2078/79 experienced a substantial downturn. These
fluctuations could be influenced by various factors including economic conditions, market
sentiment, government policies, and global events affecting the financial markets.
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Figure no.1 NEPSE Index Movement

Percentage of Growth
Percentage of Growth of 150

100
Nepse

50
Percentage of Growth
0
2074/75 2075/76 2076/77 2077/78 2078/79
-50
Year

Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

From the figure no.1 show that the percentage of growth of NEPSE in Y-axes and fiscal
year from 2074/75 to 2078/79 in x-axes. In fiscal year 2074/75 NEPSE Index Point was
1212.36 million rupee and no growth rate in baseline year. In fiscal year 2075/76 NEPSE
Index Point was 1259.02 million rupees and Percentage of Growth was 3.8%. This
indicates a 3.8% increase in the NEPSE index compared to the previous fiscal year. In
fiscal year 2076/77 was NEPSE Index Point was 1362.35 million rupees and Percentage
of Growth was 8.2%. There was a further increase of 8.2% in the NEPSE index compared
to the preceding fiscal year. In fiscal year 2077/78 NEPSE Index Point was 2883.41
million rupees and Percentage of Growth: 111.65%.; A substantial growth of 111.65% was
observed in the NEPSE index during this fiscal year, indicating a significant market
expansion. In fiscal year 2078/79 was NEPSE Index Point 2009.47 million rupees and
Percentage of Growth was -30.31%. However, in the subsequent fiscal year, there was a
notable decline of 30.31% in the NEPSE index compared to the previous year, signaling a
downturn in the market. In fiscal year 2077/78 has higher increase in Nepse Index Point
i.e. 111.65 % and in fiscal year 2078/79 has highly decrease in NEPSE index point i.e.
30.31%.

Overall, this data reflects the fluctuating performance of the Nepalese stock market over
the specified fiscal years. It demonstrates periods of growth, stability, and decline,
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highlighting the dynamic nature of the market influenced by various economic, political,
and market-specific factors.

2.3 Global Ime Bank Limited (Gbime)

On the basis of MPS, cash dividend and stock dividend, total dividend and annual rate of
return of GBIME is analyzed.

2.3.1 Dividend per share

Dividend per share (DPS) is a financial ratio that represents the amount of dividend paid
out by a company to its shareholders for each share of stock they own. It is calculated by
dividing the total amount of dividends paid out by a company by the total number of shares
outstanding.

DPS is often used by investors and analysts to evaluate a company's dividend payout policy
and its financial performance. A higher DPS may indicate that a company is profitable and
has excess cash flow that it can distribute to its shareholders, which may be viewed
positively by investors. However, a company with a high DPS may also be seen as less
financially stable and more vulnerable to economic downturns

2.3.2 Market price per share

Market price per share refers to the current market value of a single share of a publicly
traded company's stock. It represents the price at which a share of the company's stock can
be bought or sold on the open market. The market price per share is determined by the
forces of supply and demand in the stock market, as buyers and sellers negotiate prices
based on a variety of factors such as the company's financial performance, industry trends,
economic conditions, and investor sentiment.

2.3.3 Dividend
Dividend refers to a distribution of a portion of a company's earnings to its shareholders,
as determined by the company's board of directors. Dividends are typically paid out in cash,
although they may also be paid in the form of additional shares of stock or other assets
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Dividends may be declared and paid on a regular basis, such as quarterly or annually, or
they may be paid as one-time special dividends. Some companies may also choose to
reinvest their earnings back into the company rather than paying dividends. There are
several types of dividends that a company may choose to pay to its shareholders but here
we used to analysis this only two types of dividend.

2.3.4 Cash dividend

This is the most common type of dividend, where a company pays out a portion of its
profits to shareholders in the form of cash. Cash dividends are usually paid on a regular
basis, such as quarterly or annually, and are typically announced in advance.

2.3.5 Stock dividend

A company may choose to issue additional shares of its stock to its shareholders as a
dividend, rather than paying out cash. Stock dividends are usually expressed as a
percentage, such as a 5% stock dividend, and shareholders receive additional shares 11-
3111based on the number of shares they already own.

Table: 2 Analysis of Total Dividend of GBIME

Fiscal Year MPS(Rs.) Cash Dividend (%) Stock Dividend (%) Total Dividend(Rs.)

2074/75 290 - 16 16
2075/76 293 13 13 26
2076/77 239 2 14 16
2077/78 441 3.5 10 13.5
2078/79 251.4 10.6 3 10.6
Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

The table provides information on the Market Price per Share (MPS), Cash Dividend (%),
Stock Dividend (%), and Total Dividend (in Rupees) for each fiscal year. In fiscal year
2074/75 MPS was Rs.290, Cash Dividend was null, and Stock Dividend was 16%. In fiscal
year 2075/76 MPS was Rs. 293, Cash Dividend was 13% and Stock Dividend 13%. In
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fiscal year 2076/77 MPS was Rs. 239, Cash Dividend was 2% and Stock Dividend was
14%. In fiscal year 2077/78 MPS was Rs. 441 Cash Dividend was 3.5% and Stock
Dividend was 10%. In fiscal 2078/79 MPS was Rs. 251.4, Cash Dividend was 10.6% and
stock Dividend was 3%. In summary, the Market Price per Share (MPS) fluctuated over
the years, with varying trends. Cash Dividend percentages some years having higher
percentages than others years. Stock Dividend percentages also fluctuated, showing
different levels of distribution of dividends in the form of additional shares. Total Dividend,
which is the combined value of Cash Dividend and Stock Dividend, also varied across the
fiscal years. These dividend distributions reflect the company's financial performance and
its policy regarding returning profits to shareholders. The fluctuations could be influenced
by factors such as company profitability, investment opportunities, and shareholder
expectations.
Figure: 2
Analysis of Total Dividend of GBIME

Analysis of Total Dividend of GBIME

500
Analysis of Total Dividend of

400
300
GBIME In Rs.

200 MPS(Rs.)
100 Total Dividend(Rs.)
0
2074/75 2075/76 2076/77 2077/78 2078/79
Year

Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

From the figure no. 2 provided that the Market Price per Share (MPS) in Nepalese Rupees
(Rs.) and the total dividend in Rupees for each fiscal year for GBIME in y- axes and fiscal
year in x-axes. In fiscal year 2074/75 MPS was Rs.290 and Total Dividend was Rs. 16.
The company distributed a total dividend of 16 Rs. per share to its shareholders in this
fiscal year. In fiscal year 2075/76 MPS was Rs. 293 and total dividend: 26 Rs. Despite a
slight increase in the MPS, the total dividend increased to 26 Rs. per share, indicating a
 17

higher dividend payout to shareholders compared to the previous year. In fiscal year
2076/77 MPS was Rs.239 and total dividend was Rs.16. Despite a decrease in the MPS,
the total dividend remained the same as the previous year at 16 Rs. per share. In fiscal year
2077/78 MPS was Rs. 441 total dividend: 13.5 Rs. Despite a significant increase in the
MPS, the total dividend decreased to 13.5 Rs. per share, indicating a lower dividend payout
compared to the previous year. In fiscal year 2078/79 MPS was Rs.251.4 and total
dividend: 10.6 Rs. The MPS decreased further, and the total dividend also decreased to
10.6 Rs. per share, reflecting a continued decrease in dividend payout to shareholders. In
summary, the data illustrates the relationship between the Market Price per Share and the
Total Dividend payout over the specified fiscal years for GBIME. Despite fluctuations in
the MPS, the total dividend payout fluctuated inconsistently, showing variations in the
company's dividend distribution policy or its financial performance over time.

2.3.6 Return on Investment Ratio (ROI) analysis of Global Ime Bank Limited

The Return on Investment (ROI) ratio is a financial metric used to evaluate the profitability
of an investment relative to its cost. It's calculated by dividing the net profit from the
investment by the initial investment cost and expressing the result as a percentage. The
organization's profit increases by a higher ratio. The ROI ratio calculates the effective rate
at which the company may recoup its investment. This type of approach gauges the
organization's profitability situation.
Table 3 Analysis of Return on Investment Ratio of Global IMe Bank(Amount in Crore)

Fiscal Year Net Profit Investment ROI

2074/75 132.09 172.41 1.6
2075/76 189.69 251.15 1.71
2076/77 146.07 325.42 1.45
2077/78 1,72.64 435.28 1.85
2078/79 232.25 512.25 1.92
Total 281.90
Mean 56.38
S.D. 16.12
C.V. % 28.61
Source: Annual Report of global Ime Bank from 2074/75 to 2078/79
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Table no.3 starting from 2074/75 and ending with 2078/79. From the table the ROI of the
global Ime bank limited is increasing and decreasing trend. In fiscal year 2074/75 has 1.6
ROI because this is base year. In fiscal year 2075/76, 2076/77, 2077/78, 2078/79 ROI ratio
has 1.71, 1.45, 1.85, and 1.92 respectively. The man of the ROI has 56.38 and s.d. is 16.12
and c.v. was 28.61 which indicate the higher standard deviation indicates greater variability
in ROI values and lower standard derivation indicate lower variability. From the C.V.
represents the relative variability of ROI values relative to their mean. A higher coefficient
of variation suggests a greater degree of variability in ROI relative to the mean.

Overall, the table offers a concise summary of global Ime bank financial performance and
investment activities over the specified period, providing insights into profitability,
investment strategies, and the variability of returns over time.
Figure 3
Analysis of Return on Investment Ratio Global IMe Bank

ROI
2.5

2
ROI Ratio

1.5

1
ROI
0.5

0
2074/75 2075/76 2076/77 2077/78 2078/79
year

Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

From the figure no 3 shows that the ROI in y-axes and fiscal year in y-axis. From the
figure show that the higher ROI in fiscal year 2078/79 and lower fiscal year in 2076/77.
ROI of Global IMe Bank has shown both increasing and decreasing trends over the five
 19

fiscal years. There is an overall upward trend in ROI, with fluctuations observed from
year to year.

2.3.8 Return on Assets (ROA)

Return on Assets (ROA) is a financial ratio that measures a company's profitability relative
to its total assets. It indicates how efficiently a company is utilizing its assets to generate
profits. This ratio measures the overall profitability of total assets. ROA indicates how
much profit a company generates for each dollar of assets it owns. A higher ROA indicates
that the company is more efficient in generating profits from its assets. It is calculated by
dividing net profit/loss by total assets.

𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
ROA=
𝑻𝑶𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔

Table 4
Analysis of Return on Assets Global IMe Bank

Fiscal Year Net Profit Total Assets ROA

2074/75 132.09 80.036 1.65
2075/76 189.69 144.771 1.31
2076/77 146.07 109.824 1.33
2077/78 1,72.64 91.894 1.88
2078/79 232.25 160.172 1.45
Total 8.62
Mean 1.724
S.D. 0.24
C.V. % 15.89
Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

From the table no 4 shows that the return on assets of global Ime Bank starting from
2074/75 to 2078/79. In fiscal year 2074/75 has 1.65 ROA. In fiscal year 2075/76 has 1.31
ROA. In fiscal year 2076/77 has 1.33 ROA. In fiscal year 2077/78 has 1.88 ROA and in
fiscal year 2078/79 has 1.45 ROA. In fiscal year 2077/78 has higher ROA and in fiscal
year 2075/76 has lower TOA compares then other years. The higher ROA indicate the
 20

company is able to earn more money with a smaller investment. Put simply, a higher ROA
means more asset efficiency. The mean of ROA has 1.724, S.D. of ROA has 0.24
And C.V. has 15.89.

Figure 4
Analysis of Return on Assets Global IMe Bank

Analysis of Roa
2

1.5
ROA

1
ROA
0.5

0
2074/75 2075/76 2076/77 2077/78 2078/79
Year

Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

From the figure 4 show that the return on assets in y-axes and fiscal year in x-axes. In fiscal
year 2075/76 has lower ROA and in fiscal year 2077/78 has higher ROA. The higher ROA
indicate the company is able to earn more money with a smaller investment. Put simply, a
higher ROA means more asset efficiency.

2.3.9 Return on Equity (ROE)

Return on Equity (ROE) is a financial ratio that measures a company's profitability relative
to its shareholders' equity. It shows how much profit a company generates with the money
shareholders have invested. This ratio measures how efficiently the bank has used funds of
the shareholders. This ratio can be computed by dividing net profit by total equity capital
(net worth).
 21

Table 5
Analysis of Return on Equity Global IMe Bank

Fiscal Year Net Profit Total Equity ROE

2074/75 132.09 124.52 1.0603

2075/76 189.69 131.25 1.4449

2076/77 146.07 143.10 1.0201

2077/78 1,72.64 163.28 1.0574

2078/79 232.25 178.21 1.3073

Total 5.890
Mean 1.178
S.D. 0.196
C.V. % 16.65
Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

From the table 5 measure the bank's profitability relative to its shareholders' equity,
reflecting how efficiently the bank generates profits with shareholder investments. The
ROE of Global IMe Bank also fluctuated over the five-year period, reflecting changes in
profitability relative to shareholder equity. The mean ROE for the period is 1.178, with a
standard deviation of 0.196, indicating moderate variability in ROE values. he coefficient
of variation (C.V.)
Figure 5 Analysis of Return on Equity Global IMe Bank

ROE
2
1.5
ROE

1
0.5 ROE
0
2074/75 2075/76 2076/77 2077/78 2078/79
Year

Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

 22

From the figure no 5 show that the ROE in y-axis and fiscal year in x-axis. In fiscal year
2074/75 has higher ROE i.e. 1.4449 and the lower ROE in fiscal year 2076/77 has 1.0201.
The higher ROE, the better a company is at converting its equity financing into profit.
Lower Roe indicate the lower profitability of the bank. Here the ROE flocculated in every
year. The roe shoe that the banks profitability sometime higher and some time lower
because other external factor the roe changeable in every year.

2.3.10 Annual Rate of Return

Annual Rate of Return (ARR) refers to the average rate of return earned by an investment
over a period of one year, expressed as a percentage of the initial investment amount. It is
a measure of the performance of an investment and is often used by investors and analysts
to evaluate the profitability of an investment.

The ARR is calculated by subtracting the initial investment amount from the final value of
the investment, dividing that figure by the initial investment amount, and then multiplying
by 100 to express the result as a percentage. The formula for calculating the ARR can be
expressed as follows:
ARR = ((Final Value of Investment - Initial Investment) / Initial Investment) x 100
Table 6 Movement of Annual rate of return
Year Annual ARR
2074/75 0.25
2075/76 -0.27
2076/77 -0.022
2077/78 0.24
2078/79 0.385
Total 0.585
Mean 0.117
Standard Deviation 0.5568
Coefficient Of Variation 475.726
Source: Annual Report of global Ime Bank from 2074/75 to 2078/79
 23

From the table no. 2.3 shows the movement of the Annual Rate of Return (ARR) over five
years. In fiscal year 2074/75 was the ARR is 0.25, indicating a positive return. In fiscal
year 2075/76 the ARR is -0.27, indicating a negative return. In fiscal year 2076/77 the ARR
is -0.022, indicating a slightly negative return. Now again in fiscal year 2077/78 the ARR
is 0.24, indicating a positive return. In fiscal year 2078/79 the ARR is 0.42, indicating a
higher positive return compared to the previous years. Overall, the table depicts
fluctuations in the Annual Rate of Return over the specified years, with both positive and
negative returns observed. The sum of all the Annual ARR values, providing the
cumulative return over the entire period. In this case, the total ARR is 0.585. The average
Annual ARR across all the years, calculated by dividing the total ARR by the number of
years. Here, the mean ARR is 0.117, indicating the central tendency of the returns. A
measure of the dispersion or variability of the Annual ARR values around the mean. It
quantifies the extent of deviation from the average return. In this case, the standard
deviation is 0.5568, suggesting a relatively high degree of variability in the returns. A
measure of the relative variability of the Annual ARR values, expressed as a percentage. It
is calculated by dividing the standard deviation by the mean and multiplying by 100. Here,
the coefficient of variation is 475.726%, indicating a significant level of relative variability
in the returns compared to the mean. In summary, the table provides a comprehensive
overview of the movement of Annual Rate of Return over the specified period, along with
key summary statistics that characterize the distribution and variability of the returns.
Figure No. 6 Movement of Annual rate of return

Movement of Annual rate of return

0.4
Movement of Annual

0.2
rate of return

0 Annual ARR
2074/75 2075/76 2076/77 2077/78
-0.2

-0.4
Year

Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

 24

From the figure no 3 represent the movement of annual rate of return in y- axes and fiscal
year in x-axes. A positive ARR indicates a positive return on investment, while a negative
ARR indicates a loss. The total ARR over the five-year period is positive i.e. 0.585. The
mean ARR was 0.117. The standard deviation of the ARR values is 0.5568 it indicates the
degree of dispersion of ARR values around the mean. The coefficient of variation, which
is the ratio of the standard deviation to the mean expressed as a percentage. It provides a
measure of relative variability, allowing comparison of the variability of ARR relative to
its mean. The coefficient of variation is 475.726%. Its mean, suggesting a high level of
variability in the returns compared to the average return. Overall, the figure provides
insights into the historical performance of Global IME Bank Ltd's investment portfolio,
indicating both positive and negative returns over the specified period and highlighting the
variability in annual returns relative to the average return.
2.4 Major Finding
From the above data analyses following major findings have been drawn:

• From the table no 1 and figure no 1 find out the NEPSE index experienced
significant fluctuations over the observed fiscal years. Notable growth was
observed in 2077/78, with the index point reaching 2883.41 million Rupees,
corresponding to a growth percentage of 111.65%. This suggests a period of good
market activity. However, in 2078/79, the NEPSE index witnessed a substantial
decrease, falling to 2009.47 million Rupees, representing a negative growth
percentage of -30.31%. This indicates a downturn or correction in the market.
• From the table no 2 and figure no 2 find out the Global IME Bank Limited (GBIME)
distributed dividends to its shareholders over the fiscal years. The dividend
distribution varied, with changes in both cash and stock dividends. While the total
dividend amount remained relatively stable, the distribution between cash and stock
dividends fluctuated across years.
• From the table and figure no 3 the ROI of Global IMe Bank has shown both
increasing and decreasing trends over the five fiscal years. There is an overall
upward trend in ROI, with fluctuations observed from year to year. The mean ROI
for the period is 56.38 with a standard deviation of 16.12, indicating moderate
 25

variability in ROI values. The coefficient of variation (C.V.) is 28.61%, suggesting

a moderate degree of variability in ROI relative to the mean.
• From the table and figure no 4 ROA measures the bank's profitability relative to its
total assets, indicating how efficiently the bank utilizes its assets to generate profits.
The ROA of Global IMe Bank fluctuated over the five-year period, with varying
levels of profitability.
The mean ROA for the period is 1.724, with a standard deviation of 0.24,
suggesting relatively low variability in ROA values. The coefficient of variation
(C.V.) is 15.89%, indicating moderate variability in ROA relative to the mean.
• From the table and figure no 5 ROE measures the bank's profitability relative to
its shareholders' equity, reflecting how efficiently the bank generates profits with
shareholder investments. The ROE of Global IMe Bank also fluctuated over the
five-year period, reflecting changes in profitability relative to shareholder equity.
The mean ROE for the period is 1.178, with a standard deviation of 0.196,
indicating moderate variability in ROE values. he coefficient of variation (C.V.)
is 16.65%, suggesting moderate variability in ROE relative to the mean.
• From the table no 6 and figure no 6 show that the annual Average Rate of Return
(ARR) for GBIME fluctuated over the observed years, with positive returns in most
years. The mean ARR was calculated to be 0.117, indicating overall positive
performance. However, the standard deviation and coefficient of variation suggest
considerable volatility in the ARR, highlighting the risk associated with investing
in GBIME.

The findings suggest a dynamic market environment characterized by fluctuating index

movements and company-specific financial metrics Investors should consider the volatility
in both the NEPSE index and GBIME's performance when making investment decisions,
emphasizing the importance of diversification and risk management strategies. These
major findings provide insights into the financial landscape of the Nepalese market and
highlight important trends that investors and analysts should consider when assessing
investment opportunities and managing risks. the analysis reveals that Global IMe Bank
experienced fluctuations in profitability metrics such as ROI, ROA, and ROE over the
specified period.
 26

CHAPTER III
SUMMARY, CONCLUSION AND RECOMMENDATIONS

3.1 Summary
Development banking institutions represent an essential part of the economy since they
have been established to protect the public's deposits and use them for investments and
loans. Development banks gather different financial resources from the public and
distribute them to individuals involved in the nation's business and economic endeavors.
Development banks are those financial institutions that deal with taking deposits from
individuals and organizations, lending money secured by securities, and offering
administrative and technical support to trade, commerce, and industrial firms.
Development banks are characterized as financial institutions that carry out the broadest
array of financial operations of any company in the country's economy. Development
banks supply domestic resources to support the economies of developing nations.

One of the hardest jobs for any financial institution is managing a portfolio. The banking
sector is extremely competitive these days, but there are very few opportunities to invest
without being well-positioned in the market. For the bank to make money, its resources
must be allocated to a variety of profitable investment opportunities. Investors face risk
due to uncertain profit margins; therefore, in order to reduce risk, investors should diversify
their holdings across many industries. Diversification of assets across several industries
reduces portfolio risk.

From the table no 1 and figure no 1 provides the movement of the NEPSE (Nepal Stock
Exchange) index over fiscal years 2074/75 to 2078/79. It shows the NEPSE index points
in millions and the percentage growth compared to the previous fiscal year. The index
experienced fluctuating growth rates, with notable increases in 2077/78 and a significant
decrease in 2078/79. From the Table 2 and figure no.2 presents an analysis of the total
dividend of Global IME Bank Limited (GBIME) over the five fiscal years. It includes the
market price per share (MPS), cash dividend percentage, stock dividend percentage, and
total dividend in Nepalese Rupees. The dividend distribution varied each year, with
 27

changes in both cash and stock dividends. From the table no 3 and figure no. 3 illustrates
the year and price movement of GBIME, depicting the annual Average Rate of Return
(ARR) for each fiscal year. It also provides the total ARR, mean ARR, standard deviation,
and coefficient of variation. Despite fluctuations in ARR, the overall performance shows a
positive mean ARR with considerable volatility, as indicated by the standard deviation and
coefficient of variation.

In summary, these tables and figures offer insights into the stock market performance of
NEPSE and the dividend distribution and price movement of GBIME over the specified
fiscal years. They provide valuable data for investors and analysts to assess the financial
health and trends of these entities within the Nepalese market.
3.2 Conclusion
The most sensible and significant component of development banks is portfolio
management. Since these banks must function with little capital, they must be astute in
selecting and allocating assets that maximize profits while lowering credit and operational
risk. It is a difficult undertaking for development banks to ensure appropriate portfolio
management, which will always have a big impact on the profitability and operational
effectiveness of the bank.

On the basis of provided data offers a comprehensive view of the financial performance
and market dynamics of both the NEPSE index and Global IME Bank Limited (GBIME)
over the fiscal years 2074/75 to 2078/79. The NEPSE index exhibited fluctuating growth
rates over the observed period. Notable increases were recorded in 2077/78, with a growth
percentage of 111.65%, reflecting significant market activity. However, a substantial
decrease of -30.31% was observed in 2078/79, indicating a period of market downturn or
correction. GBIME's dividend distribution varied across fiscal years, with changes in both
cash and stock dividends. While the total dividend amount remained relatively stable, the
distribution between cash and stock dividends fluctuated. The annual Average Rate of
Return (ARR) for GBIME fluctuated, with positive returns in most years. The mean ARR
of 0.117 indicates overall positive performance, albeit with considerable volatility, as
indicated by the standard deviation and coefficient of variation.
 28

In conclusion, these findings suggest a dynamic market environment with fluctuations in

both stock index movements and company-specific financial metrics. Investors and
analysts can utilize this information to make informed decisions regarding investment
strategies and risk management within the Nepalese market. Further analysis and
monitoring of these trends are recommended to adapt to the evolving market conditions.

3.3 Recommendations
On the basis of the study, following recommendations have been made as suggestions to
overcome the weaknesses and to strengthen the existing investment portfolio of Global Ime
Banks in Nepal.
Diversification: Investors should consider diversifying their portfolios across different
asset classes and sectors to mitigate risks associated with market fluctuations.
Diversification can help balance the impact of volatile market movements, as evidenced
by the varying performance of the NEPSE index over the observed fiscal years.
Risk Management: Given the volatility in the NEPSE index and the fluctuating
performance of GBIME, investors should implement robust risk management strategies.
This includes setting stop-loss orders, diversifying investments, and regularly reviewing
and adjusting investment portfolios based on market conditions and individual company
performance.
Long-Term Perspective: Investors should adopt a long-term investment perspective and
avoid making decisions based solely on short-term market movements. By focusing on the
fundamental strengths of investments and staying committed to their long-term financial
goals, investors can better withstand market fluctuations and achieve sustainable returns
over time.
Monitoring and Review: Continuous monitoring and review of investment portfolios and
market trends are crucial. Investors should stay updated with relevant news, economic
indicators, and company reports to identify opportunities and risks promptly. Regular
portfolio reviews can help investors adjust their strategies in response to changing market
conditions and optimize their investment outcomes.
 29

Reference

Feorge, E., Edward, M., & Arthur, B. (1999). Investment management: Portfolio

diversification, risk, and timing--fact and fiction. Oxford University Press.

Malla, S. (2017). Credit Portfolio Management of Nepalese Commercial Banks. Journal of

Investment and Management, 6(5), 88-97. doi:10.4236/jssm.2018.1110041

Koehn, M., & Santamero, A. (1980). Bank Portfolio Management: A Theoretical

Framework. Journal of Financial and Quantitative Analysis, 15(1), 99-109.

doi:10.2307/2330521

Weston, J. F., & Brigham, E. F. (2003). Essentials of managerial finance. Thomson/South-

Western.

Wagle, R. (2013). Investor Portfolio Management in Nepalese Commercial Banks.

International Journal of Management and Business Research, 3(3), 224-232.

 30

Appendices
APPENDICES

Appendix 1: Statistical Tools using excel formula

𝑇𝑜𝑡𝑎𝑙 𝐴𝑅𝑅
Mean ARR= 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑌𝑒𝑎𝑟𝑠

𝑆𝑢𝑚(𝐴𝑛𝑛𝑢𝑎𝑙 𝐴𝑅𝑅−𝑀𝑒𝑎𝑛 𝐴𝑅𝑅)2

Standard Deviation= √ 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑦𝑒𝑎𝑟𝑠
𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝐷𝑒𝑟𝑎𝑣𝑖𝑎𝑡𝑖𝑜𝑛𝑠
CV= ∗ 100
𝑀𝑒𝑎𝑛 𝑜𝑓 𝐴𝑅𝑅
 31

Appendix 2: Financial Profile of Sample Banks

Table 1
NEPSE Index Movement

Fiscal Year NEPSE Index Point (Rs. In Millions) Percentage of Growth

2074/75 1212.36 -
2075/76 1259.02 3.8
2076/77 1362.35 8.2
2077/78 2883.41 111.65
2078/79 2009.47 -30.31
(Source: www.nepse.com.np)

Table: 2
Analysis of Total Dividend of GBIME

Fiscal Year MPS(Rs.) Cash Dividend (%) Stock Dividend (%) Total Dividend(Rs.)

2074/75 290 - 16 16

2075/76 293 13 13 26

2076/77 239 2 14 16

2077/78 441 3.5 10 13.5

2078/79 251.4 10.6 3 10.6

(Source: Annual report of Global IME Bank Limited)

 32

Table 3
Analysis of Return on Investment Ratio of Global IMe Bank
Amount in Crore

Fiscal Year Net Profit Investment ROI

2074/75 132.09 172.41 1.6
2075/76 189.69 251.15 1.71
2076/77 146.07 325.42 1.45
2077/78 1,72.64 435.28 1.85
2078/79 232.25 512.25 1.92
Total 281.90
Mean 56.38
S.D. 16.12
C.V. % 28.61
Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

Table 4
Analysis of Return on Assets Global IMe Bank

Fiscal Year Net Profit Total Assets ROA

2074/75 132.09 80.036 1.65
2075/76 189.69 144.771 1.31
2076/77 146.07 109.824 1.33
2077/78 1,72.64 91.894 1.88
2078/79 232.25 160.172 1.45
Total 8.62
Mean 1.724
S.D. 0.24
C.V. % 15.89
Source: Annual Report of global Ime Bank from 2074/75 to 2078/79
 33

Table 5
Analysis of Return on Equity Global IMe Bank

Fiscal Year Net Profit Total Equity ROE

2074/75 132.09 124.52 1.0603
2075/76 189.69 131.25 1.4449
2076/77 146.07 143.10 1.0201
2077/78 1,72.64 163.28 1.0574
2078/79 232.25 178.21 1.3073
Total 5.890
Mean 1.178
S.D. 0.196
C.V. % 16.65
Source: Annual Report of global Ime Bank from 2074/75 to 2078/79

Figure no. 6
Year and Price Movement of GBIME

Year Annual ARR

2074/75 0.25
2075/76 -0.27
2076/77 -0.022
2077/78 0.24
2078/79 0.385
Total 0.585
Mean 0.117
Standard Deviation 0.5568
Coefficient Of Variation 475.726