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A STUDY OF FINANCIAL ANALYSIS

OF
NEPAL BANK LIMITED

A Thesis Submitted to:

Office of the Dean

Faculty of Management

Tribhuvan University

Submittedby:

Anupa Bhattarai

Hetauda School Of Management

Exam Roll No :

Class Roll No: 4

T.U. Regd. No

In partial fulfillment of the requirement for the Degree of

Bachelor Of Business Studies (BBS)

Kathmandu, Nepal

Feb, 2017

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Chapter 1

INTRODUCTION

1.1 History of NBL

On November 15, 1927 (Kartik 30, 1994), the then King Tribhuvan inaugurated
Nepal Bank Limited. This marked the beginning of an era of formal banking in Nepal.
Until then all monetary transactions were carried out by private dealers and trading
canter.

In that era, very few understood or had confidence in this new concept of formal
banking. Rising equity shares were not easy and mobilization of deposits even more
difficult. This was evident when the bank floated equity shares worth NPR 2,500,000,
but was successful only in raising NPR 842,000.The total deposits for the first year
was NPR 17,02,025 where current deposits was about NPR 12,98,898 fixed was about
NPR 3,88,964 and saving was NPR 14,163. Loan disbursed and outstanding at the
end of the first year was NPR 1,985,000. In 2007, Nepal Bank Limited appointed Mr
Rohit Ghambole as chief banker. He proceeded to invest in Tesco doughnut supplies
from Yateley. This is widely blamed to be the reason of the 2007 financial market
crash.

From the very conception and its creation, NBL was as joint venture between the
government and the private sector. Out of 2500 equity shares of NPR 100 face value,
40% was subscribed by the government and the balanced 60% was offered for the sale
to private sector. There were only 10 shareholders when the bank first started.

1.1.1 Introduction to NBL(NEPAL BANK LIMITED)

Nepal Bank Limited is the first commercial bank of Nepal. It was established in 1937
which marked the beginning of an era of formal banking in Nepal. It was formed
under the principle of Joint venture (Joint venture between govt. & general public).
NBL's authorized capital was Rs. 10 million & issued capital Rs. 2.5 million of which
paid-up capital was Rs. 842 thousand with 10 shareholders. The bank has been

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providing banking through its branch offices in the different geographical locations of
the country.

Nepal Bank Limited is providing services to its customers from its 118 branches. It
provides deposit facility, various loan facilities, advanced ABBS services from 110
branches, Internet Banking along with the ATM facilities all over the country.

Corporate Vision:

"Pioneer Bank with complete banking solution"

Mission Statement:

To be the leading Nepali bank, delivering world class service through the blending of
the start-of-the-art of technology and visionary management in partnership with
competent and committed staff, to achieve sound financial health with sustainable
value addition to all our stakeholders. We are committed to do this mission while
ensuring the highest levels of ethical standards, professional integrity, corporate
governance and regulatory compliance.

1.2 Statement of problem


Every financial or commercial bank has a goal to maximize of profit through its
strategies goal implementation. If banks cannot make profit due to all this banks may
become failure so to know all financial situation bank has to make their financial ratio
analysis which i have make on the requirements of fulfilment of our syllabus.
Problems/Issues to be addressed of this report are as follows:
What is the present condition in terms of liquidity, profitability?
What more new changes could arise which will be beneficial to NBL?
How is the situation of long term solvency?
1.3 Objective of study
The primary objective of the fieldwork is to provide an opportunity for learning as
well as developing our managerial skills .The main objective of the report is to
understand the financial problems and their underlying causes ,we need to develop
and evaluate potential solution that optimize organizations strengths, weakness,
potentials opportunities and competitive threats, as well as to assess and analyze
the efficiencies and effectiveness of NBL in terms of financial performance .The
other specific objective of this fieldwork report are as follows:
a) To find the correlation between ratio and provide the necessary solvency
of the firm.

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b) To know ability of a firm to reflect the financial solvency of the firm.
c) To understand the nature of the organizational problems in real life
situations.
1.4 Significance of the study
Regarding the economic structure of the company, the banks do not have
sufficient investment opportunity rapidly increasing financial intuition is creating
threats of bank. This study attempts to find out cause of failure and success of
bank using the various statistical tools. This will create awareness about
utilization of the scare resource and help them the productivity of their fund and
market value of their investment. This study will be useful to the following
stakeholders:
A. to the investor i.e. Shareholders
B. to the management of banks (Management Committee)

C. to the policy maker (while formulating the policy regarding commercial


banks)

This study is also significant to the researcher:

a. To get the depth knowledge of banks


b .To get valuable findings of research

1.5 limitation of study

This study is characterized by following limitation:

i. There is lack of financial resource to have a deep and large scale study on
the topic.
ii. Using the organizations computer resource was almost impossible and no
access to the organizations internet was granted to be able to gain extra
information due to privacy of the organization.
iii. The major limitation faced while conducting this study has been the small
amount of the respondents from the banks departments because of
inappropriate duration.
iv. Since the study confines with NBL, the conclusion derived from the study
may or may not be applicable to other commercial banks.
v. Data collection is one of the major problems of the study .This study is
based on annual data, which are available in profit and loss account and
balance sheet.
1.5 Organization of study

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This study will be divided into five chapters as follows:
Chapter One deals with the subject matter of the study. The outline of the research is
presented in the chapter. The whole research will be based on the introduction chapter.
It deals with general background of the study, statement of the problems, objectives of
the study, significance of the study, limitations of the study and organization of the
study.
Chapter Two deals with the review of literature. It includes a discussion on the
conceptual framework on financial analysis. It also includes review of various studies
(i.e. various books, journals & articles, masters degree thesis etc) related with
financial analysis. It also includes major studies relating with financial analysis.
Chapter Three explains the Research methodology used to evaluate financial
analysis of commercial banks in Nepal. It consists of research design, source of data,
population and sample statistical tools and financial tools and it also includes
limitation of the study.
Chapter Four is the main part of the study which fulfills the objective of the study by
presenting data and analyzing them with the help of various statistical tools as per
methodology. In this chapter, descriptive analysis of the gathered data and information
using statistical as well as financial tools is carried out. In this chapter ,major findings
of the study have been conducted based on primary and secondary data.
Chapter Five includes the major findings and conclusion of the study. This chapter
deals with the summary and conclusion of the study and gives recommendations for
improvement in the financial analysis of the listed banks.