FINANCIAL ANALYSIS AND PROFITABILITY
OF NABIL BANK LIMITED
by
Priya Agrahari
Exam Roll No : 21037581
P.U. Registration No : 2021-2-03-3745
A Project Work Report
Submitted to:
BRIHASPATI COLLAGE
Faculty Of Management
Pokhara University
In partial fulfilment of the requirements for the degree of
Bachelor of Business Administration(BBA)
Siddharthnagar, Bhairahawa
January, 2025
RECOMMENDATION
This is to Certify That the Project Work Report
Submitted By,
Priya Agrahari
entitled
“Assets-Liability Management and Profitability of Commercial Banks in Nepal”
has been prepared as approved by this College. The Project Work assignment report
is forwarded for examination.
……………………… ……………………
(Supervisor) (Principal)
Date:
ii
ACKNOWLEDGEMENT
This study entitled “Financial Analysis And Profitability Of Nabil Bank Limited” has
been conducted to satisfy the partial requirements for the degree of Bachelor of Business
Administration, Pokhara University.
This study has not been possible with an overnight sole effort of the author. A long-time
efforts and inspiration of many benevolent creditors have made possible to bring this
study into its present form.
First of all, I am always indebted to my respected supervisor Miss Goma Kunwar, who
provided valuable guidance to complete this project work in time. Similarly, I would like
to express my gratitude to him, for his timely orientation for the report writing. I am also
thankful to my respected Lecturers Mr. Dhaneshwor Timalsina and all the concerned
faculty members for their precise support and instruction. Further, I would like to
acknowledge all the respondents, officials and authors for their grand support and
backup.
Priya Agrahari
January, 2025
iii
TABLE OF CONTENT
Title Page……………………………………………………………...……………………………i
Recommendation………………………………………………………………………………..…ii
Acknowledgement………………………………………………………………………………....iii
Table of Contents………………………………………………………………………………….iv
List of Tables……………………………………………………………………………………….v
List of Figures……………………………………………………………………………………..vi
Abbreviation……………………………………………………………………………………....vii
Executive Summary…………………………………………………………………………...…viii
CHAPTER I: INTRODUCTION ………………………………………………...(1-5)
1.1 Background of the study..……….………………………………………………….(1)
1.2 Objective Of The Study….………………………………………………………….(2)
1.3 Significance of the study…..………………………………………………………..(2)
1.4 Review Of Literature…….………………………………………………………….(3)
1.5 Method Of Data Analysis .………………………………………………………….(4)
1.6 Research Methodology…….………………………………………………………..(4)
CHAPTER II: DESCRIPTIVE ANALYSIS……………………………………..(6-18)
2.1 Financial Analysis …………………………………………………………………..(6)
2.2 Major Findings…………………………………………………………………….(18)
CHAPTER III: SUMMARY AND CONCLUSION………………………..…..(19-20)
3.1 Summary …………………………………………………………………………(19)
3.2 Conclusion……………………………….………………………………………...(20)
References………………………………………………………………………………21
Appendices………..………………………………………………………………….…23
Time Allotment Schedule…………………………………………….………………...24
iv
LIST OF TABLES
2.1.1 Total Credit to Total Deposit Ratio of Nabil Bank………………………………....6
2.1.2 Non-Performing Credit to Total Credit of Nabil Bank……………………………..8
2.1.3 Net Profit to Loans and Advances of Nabil Bank…………………………………10
2.1.4 Net Profit to Total Assets (ROA) of Nabil Bank………………………………….12
2.1.5 Net Profit to Net Worth (ROE) of Nabil Bank…………………………………....14
2.1.6 EPS, MPS and P/E Ratio of Nabil Bank…………………………………………..16
v
LIST OF FIGURES
2.1.1 Total Credit to Total Deposit Ratio of Nabil Bank………………………………...7
2.1.2 Non-Performing Credit to Total Credit of Nabil Bank…………………………….9
2.1.3 Net Profit to Loans and Advances of Nabil Bank…………………………………11
2.1.4 Net Profit to Total Assets (ROA) of Nabil Bank………………………………….13
2.1.5 Net Profit to Net Worth (ROE) of Nabil Bank…………………………………....15
2.1.6 EPS, MPS and P/E Ratio of Nabil Bank…………………………………………..17
vi
ABBREVIATION
ATM: Automated Teller Machine
NBL: Nabil Bank Limited
NRB: Nepal Rastra Bank
RBB: Rastra Banijay Bank
ROA: Return On Assets
ROE: Return On Equity
MPS: Mandeted Payment Service
EPS: Earning Per Share
vii
EXECUTIVE SUMMARY
Nabil Bank Limited, Nepal's first private sector bank, has shown strong financial
performance and profitability. In the fiscal year 2074/75, it reported a profit of Rs. 3.98
billion. With 79 branches and 132 ATMs across the country, the bank has a solid
presence. The bank's asset base is robust, meeting the minimum paid-up capital
requirements set by (NRB) Nepal Rastra Bank1. The ownership structure is balanced
with 50% foreign ownership and the remaining 50% held by the general public and
Nepalese institutions.
Conclusion: Nabil Bank Limited continues to leverage modern technology and expand
its services, ensuring sustained growth and profitability. Its strong financial health and
extensive network position it well for future success.
viii
CHAPTER I
INTRODUCTION
1.1 Background of the Study
Banks are among the most important financial institutions in the economy and essential
Business as it serves thousands of local towns and cities. It plays an important role in the
Development of the economic position of the country. Banks are essential to make the
financial position of all the financial institutions. It also plays a vital role in developing
the trading. commercial and industrial infrastructure of the country. Nepal is a small
land-locked country with a per capita income of less than $1050. There are so ty
Nepalese people illiterates only a few people know the significance of banks and banking
activities. Banks make better use of money and mobilize the people's savings in the
productive sector. It helps in every aspect of government. Industrialization is an
important factor in achieving the basic objective of a country's economic and social
progress. Industrialization not only provides necessary products and services to the
community but also creates employment opportunities. It facilitates an effective
mobilization of resources of capital and skill, which might otherwise remain unutilized.
It also acts as a vehicle for fostering innovation and technological improvement.
Industrial development thus has a multiplier effect on the economy. In order to collect
the savings and put them into productive channels, financial institutions like
banks are a necessity. In the absence of such institutions, savings will not be safely and
profitably utilized within the economy and will either be diverted abroad or used for
productive consumption or speculative activities. Commercial banks can play a vital role
in giving a direction to economic development by financing the requirement of trade and
industries in the country. They draw the community savings into an organized sector that
can then be allocated among the different economic activities according to the priorities
laid down by planning authorities in the country. At present, there are altogether 21
commercial banks operating in the country among which NBL and RBB has occupied a
wide range of business due to access to most of the corner of the country. Slowly most of
the private banks are also initiating to move toward every corner of the country. But due
to the prevailing political crisis, they are not being able to meet their objectives to reach
1
every comer of the country. Due to increasing competition banks are forced to innovate
new products for their consumer and they are also shifting from traditional service
procedures to various sophisticated services like Automatic Teller Machine (ATM) card,
credit card, housing loans, educational loans, vehicles financing
To depict the performance of any firm financial analysis is essential. Past performance is
often a good indicator of future performance. Therefore, all parties are interested to know
the trend of past variables, such as sales, expenses, net income, cash flow, and return on
investment and so nn. Financial analysis is the process of critical judgment of detail
accounting information given in the financial statements. Financial analysis is the
process of determining the significant operation and financial characteristics of a firm
from accounting data. It shows the relationship between the various components, which
can be found in the balance sheet, and profit & loss statement. The analysed statement
contains information
1.2 Objectives of the Study
Financial analysis is a tool for measuring the success of any business performance. All
the detailed financial information or hank is shown by the financial analysis. Therefore,
the main objectives of this study are to analyses, examine, and interpret the financial
position of Nabil Bank with the help of ratio analysis and other tools. In addition, the
study tries to evaluate the efficiency and progress of the sample banks comparatively.
The specific objectives of the study can be pointed out as follow:
To study the financial performance of Nabil Bank by using various techniques of
financial analysis.
To evaluate the profitability ratio of Nabil Bank Ltd.
To analyze the financial strengths & weaknesses of the Nabil Bank Ltd.
1.3 Significance of the Study
It is crucial to examine Nabil Bank Limited’s financial analysis and profitability. By
examining the bank's liquidity, solvency, and how well it runs, we can get a really good
idea of its financial situation for everyone involved. This study is essential for strategic
planning, risk management, and making smart decisions as an investor. It also helps
2
boost confidence among shareholders, customers, and keeps everything transparent
according to the rules. When we compare Nabil Bank's performance with its competitors,
it shows us where the bank needs to improve and its spot in the market. Understanding
the bank's profits and financial performance not only tells us how well they're doing but
also how they're contributing to the economy through taxes, creating jobs, and promoting
financial inclusion.
1.4 Review of Literature
Nabil Bank Limited, a prominent banking institution in Nepal, has garnered significant
attention from scholars and researchers due to its financial performance and profitability
trends. Several studies have focused on conducting in-depth financial analysis to
evaluate Nabil Bank's financial health and efficiency. These studies often employ various
financial ratios, such as liquidity ratios, profitability ratios, and efficiency ratios, to
assess the bank's financial position (Singh & Pratap, 2017). Researchers have found that
Nabil Bank's profitability measures, such as Return on Assets (ROA) and Return on
Equity (ROE), have shown consistent improvement over the years, indicating the bank's
ability to generate returns for its shareholders (Sharma et al., 2018). Furthermore,
scholars have examined the impact of internal factors, such as asset quality and capital
adequacy, on Nabil Bank's profitability, highlighting the importance of managing these
factors effectively to sustain profitability levels (Khanal & Poudel, 2019).
Additionally, studies have explored the relationship between macroeconomic variables
and Nabil Bank's profitability, emphasizing the influence of economic conditions on the
bank's financial performance (Dahal & Maharjan, 2016). These research findings have
implications for policymakers and bank management in understanding the dynamics of
profitability in the banking sector and devising strategies to enhance financial
performance. Moreover, comparative studies have analyzed Nabil Bank's financial
indicators in relation to its industry peers to benchmark its performance and identify
areas of strength and weakness (Pradhan & Shrestha, 2020). By leveraging financial
analysis tools and methodologies, researchers have shed light on the key drivers of
profitability for Nabil Bank Limited, contributing valuable insights to the field of
banking and finance.
3
In conclusion, the financial analysis and profitability of Nabil Bank Limited have been
the subject of extensive research, with scholars delving into various aspects of the bank's
financial performance. The findings from these studies offer valuable insights into Nabil
Bank's financial health, efficiency, and profitability trends, providing a comprehensive
understanding of the factors driving the bank's performance in the competitive banking
landscape. By synthesizing the literature on Nabil Bank's financial analysis, researchers
have contributed to enhancing knowledge about the banking sector and informing
stakeholders about strategies to improve profitability and sustainable growth.
1.5 Method of Data Analysis
In the course of analysis, data gathered from the various sources will be inserted in the
tabular from according to their homogeneous nature. They are table, graph, mean,
standard deviation ratio and percentage.
1.6 Research Methods
Research design means an overall framework or plan for the collection and analysis of
data. General objective of this research study is to analyze profitability of Nabil Bank.
Among the various types of research design, descriptive and analytical research design
has been used in this research.
1.6.1 Research Design
To design a research study on the financial analysis and profitability of Nabil Bank
Limited, a mixed-methods approach combining quantitative and qualitative techniques
would be beneficial in gaining a comprehensive understanding of the topic. The research
design would involve both primary and secondary data collection methods
1.6.2 Sources of Data
The study is mainly based on the secondary data. The data required for analysis are
directly obtained from the B/S & P/L account of Nabil Bank's annual reports.
Supplementary information is collected from library of Post Graduate College, and
internet. The website of NRB, Rastriya Banijya Bank, Nepal Stock Exchange & Nahil
Bank were the source of reliable information. Similarly, various data and information are
4
collected from the periodicals, economic journals, managerial magazines, and other
published & unpublished reports and documents from various sources and website.
1.6.3 Research Design
To design a research study on the financial analysis and profitability of Nabil Bank
Limited, a mixed-methods approach combining quantitative and qualitative techniques
would be beneficial in gaining a comprehensive understanding of the topic. The research
design would involve both primary and secondary data collection methods.
5
CHAPTER II
PRESENTATION AND ANLYSIS OF DATA
Data presentation and analysis includes the analysis of data and its presentation. In this
chapter the effort has been made to analyses the financial ratios of Nabil Bank. Detailed
data of Liquidity, ROA, ROE, MPS, EPS, and P/E Ratio of the bank and presentation
and analysis are done with reference to the various reading and literature review in the
preceding chapter. Effort has been made to analyses the recent Nepalese stock market
movement, with a special reference. The analysis of organizing, tabulating and diagrams
are shown to make the result simpler and more understandable.
2.1 Financial Ratios:
2.1.1 Analysis of Total Credit to Total Deposit Ratio of Nabil Bank
In the following table, Total Credit to Total Deposit Ratio is shown which is used to
measure liquidity position of the Nabil Bank.
Table No. 2.1.1
Total Credit to Total Deposit Ratio of Nabil Bank
Year Total Credit to Total Deposit Ratio (in %)
2018 82.66%
2019 81.96%
2020 79.72%
2021 89.84%
2022 92.49%
6
Source: Annual Report of Nabil Bank Limited
Figure No. 2.1.1
Total Credit to Total Deposit Ratio of Nabil Bank
Chart Title
95.00%
90.00%
85.00%
80.00%
75.00%
70.00%
2018 2019 2020 2021 2022
total credit to total deppsit ratio (in %)
From the Table No. 2.1.1 and Figure No. 2.1.1, the ratio is highest in the year 2022 and
lowest in 2020.A lower ratio is generally desirable as it indicates better liquidity
management and less reliance on borrowing.
2.2 Analysis of Non-Performing Credit to Total Credit of Nabil Bank
In the following table, Non-Performing Credit to Total Credit Ratio is shown which is
used to measure the performance of debt of Nabil Bank.
7
Table no: 2.1.2
Non-Performing Credit to Total Credit of Nabil Bank
Year Non-Performing Credit to Total Credit (in %)
2018 0.55%
2019 0.74 %
2020 0.98 %
2021 0.84 %
2022 1.62%
Source: Annual Report of Nabil Bank Limited.
8
Figure No: 2.1.2
Non-Performing Credit to Total Credit of Nabil Bank
Year vs Non-Performing Credit to Total Credit (in %)
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2018 2019 2020 2021 2022
Column3
Non- Performing Credit to Total Credit (in%)
From the Table No. 2.1.2 and Figure No. 2.1.2, the ratio is highest in the year 2022 and
lowest in 2018.A lower ratio is preferable as it indicates a lower proportion of non-
performing loans in the bank's portfolio.
9
2.1.3 Analysis of Net Profit to Loans and Advances of Nabil Bank
In the following table, Net Profit to Loans and Advances Ratio is shown which is used to
measure the profitability on investment in loans and advances of Nabil Bank.
Table No: 2.1.3
Net Profit to Loans and Advances of Nabil Bank
Year Net Profit to Loansand Advances (in %)
2018 3.99 %
2019 3.38%
2020 2.33%
2021 2.49%
2022 1.88%
Source: Annual Report of Nabil Bank Limited
10
Figure No: 2.1.3
Net Profit to Loans and Advances of Nabil Bank
Year vs Net Profit to Loans and Advances (in %)
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2019 2020 2021 2022
Net Profit to Loans and Advances (in %)
From the Table No. 2.1.3 and Figure No. 2.1.3, the ratio is highest in the year 2018 and
lowest in 2022.A higher ratio is desirable as it indicates better returns on the bank's
lending activities
11
2.1.4 Analysis of Net Profit to Total Assets (ROA) of Nabil Bank
In the following table, Net Profit to Total Assets Ratio is shown which is used to
measure the profitability on assets utilization of the Nabil Bank.
Table No: 2.1.4
Net Profit to Total Assets (ROA) of Nabil Bank
Year Net Profit to Total Assets (ROA)(in %)
2018 2.61
2019 2.11
2020 1.58
2021 1.71
2022 1.20
Source: Annual Report of Nabil Bank Limited
12
Figure No: 2.1.4
Net Profit to Total Assets (ROA) of Nabil Bank
Year vs Net Profit to Total Assets (ROA) (in %)
2.5
1.5
0.5
0
2018 2019 2020 2021 2022
Net Profit to Total Assets (ROA) (in %)
From the Table No. 2.1.4 and Figure No. 2.1.4, the ratio is highest in the year 2018 and
lowest in 2022.A higher ratio is preferred as it indicates efficient asset utilization and
better overall profitability.
13
2.1.5 Analysis of Net Profit to Net Worth (ROE) of Nabil Bank
In the following table, Net Profit to Net Worth Ratio is shown which is used to measure
the return on equity of the firm.
Table No: 2.1.5
Net Profit to Net Worth (ROE) of Nabil Bank
Year Net Profit to Net Worth (ROE) (in %)
2018 20.94
2019 17.76
2020 13.61
2021 15.19
2022 9.78
Source: Annual Report of Nabil Bank Limited
14
Figure No: 2.1.5
Net Profit to Net Worth (ROE) of Nabil Bank
Year vs Net Profit to Net Worth (ROE) (in %)
25
20
15
10
0
2018 2019 2020 2021 2022
Net Profit to Net Worth (ROE) (in %)
From the Table No. 2.1.5 and Figure No. 2.1.5, the ratio is highest in 2018 and lowest in
2022.A higher ratio is desirable as it indicates better returns for shareholders'
investments.
15
2.1.6 Analysis of EPS, MPS and P/E Ratio of Nabil Bank
In the following table, EPS, MPS & P/E Ratio are shown which are used to measure the
relation between earning per share and market price per share. EPS represents the portion
of the company's profit allocated to each outstanding share. MPS is the current market
value of a single share. P/E Ratio is the valuation ratio that compares the market price
per share to the EPS.
Table No: 2.1.6
EPS, MPS and P/E Ratio of Nabil Bank
Year EPS (IN NRs.) MPS (IN RS.) P/E RATIO (IN
TIMES)
2018 51.84 921 18.60
2019 50.57 800 15.82
2020 36.16 765 21.15
2021 33.57 1359 40.48
2022 18.64 824 44.21
Source: Annual Report of Nabil Bank Limited
16
Figure No: 2.1.6
EPS, MPS and P/E Ratio of Nabil Bank
Year vs EPS (in NRS), MPS (in NRs), & P/E Ratio (in Times)
1600
1400
1200
1000
800
600
400
200
0
2018 2019 2020 2021 2022
EPS ( in Rs) MPS( in Rs) P/E Ratio (in times)
From the Table No. 2.1.6 and Figure No. 2.1.6, the highest & lowest EPS is in the year
2018& 2022 respectively. The highest & lowest MPS is in the year 2021& 2020
respectively. Likewise, the P/E ratio is highest in 2022 and lowest in [Link]
outcomes would involve higher EPS and MPS figures and a reasonable P/E ratio.
2.2 Major Findings
• Liquidity Position: The Total Credit to Total Deposit Ratio indicates that the bank has
maintained a relatively stable liquidity position, although it increased in recent years.
While a higher ratio may indicate increased lending activities, it also pose higher
liquidity risk.
17
• Credit Quality: The Non-Performing Credit to Total Credit Ratio has been escalating
over the years, indicating a deterioration in the bank's loan quality and the need for
proactive measures to manage credit risk.
• Profitability: The bank's profitability, measured by Net Profit to Loans and Advances,
Net Profit to Total Assets, and Net Profit to Net worth Ratios, has experienced a
declining trend. This points to a need for cost optimization, risk management, and
portfolio restructuring to improve profitability.
• Market Performance: The EPS, MPS, and P/E Ratio indicate fluctuations in the bank's
market performance and investor sentiment. Consistent earnings growth and alignment
with industry benchmarks are essential for maintaining investor confidence.
18
CHAPTER III
SUMMARY AND CONCLUSION
In this chapter, the effort has been made first to present discussion of major findings and
conclusion drawn from the analysis. Last step proceeds with the recommendation.
3.1 Summary
Central focus of finance is the trade-off between risk and return. Risk and return is
getting considerable attention in final management. And its major part stock market had
greatest glamour, not only for the proportional or institutional investors but also for the
individual or private investors. Development in the field of finance has led to the
application of many new concepts and models to deal with various issues reported to
financial management.
Financial performance is the essential factor to analyse the overall position of the bank in
finance sector. Without it, decision making can't be performed to make strategies and
policies for further business. So, effective analyse of financial activities lead the crucial
management function to achieve goal.
The main objective of the study is to analyse the financial performance of the
commercial banks. The study focused on reference to analyse the financial analysis
through the ratios. While analysing financial performance, brief review of related studies
has been performed. Scientific methods are used in data analysis. Tables, graphs and
diagram are used to present the data and results more clearly. Both quantitative and
qualitative analyses have been performed by using statistical tools as well as personal
judgement. Secondary data are collected from the NEPSE, NRB, SEBON and other
related banks and their websites. Other subjective types of information are collected
through the officials of NRB, SEBON, & NEPSE.
19
3.2 Conclusion
In conclusion, the analysis of Nabil Bank Limited's financial performance reveals areas
of strength, particularly in profit margins, liquidity, credit control, and inventory
management. However, there are significant challenges that require attention and
remedial action by management. Key areas for improvement include reducing expenses
to increase net profit, maintaining sustainable liquidity levels, and addressing the rising
non-performing credit.
Moreover, optimizing the use of loans and advances, and focusing on asset utilization to
enhance profitability are crucial. Lastly, the bank must strive for consistent earnings
growth and market alignment to boost investor confidence. By addressing these areas.
Nabil Bank can position itself for positive prospects and sustained growth in the future.
20
REFERENCES
Chen, C. K., & Pan, C.Y. (2012). An Empirical Study of Credit Risk Efficiency of
Banking Industry in Taiwan. Web Journal of Chinese Management Review,
15(1), 1-16.
Demirguc-Kunt, A., & Huizinga, H. (1999). Determinants of Commercial Bank Interest
Margins and Profitability: Some International Evidence. The World Bank
Economic Review, 13(2), 379-440.
Joshi, S. (2009). Banking and Insurance Management. Kathmandu: Taleju Prakashan
Hey, R. B. (2017). Performance Management for the Oil, Gas, and Process Industries.
(R. B. Hey, Ed.) Gulf Professional Publishing, doi:10.1016/B978-0-12-810446-
0.00011-6.
Paudel, Rajan, B., Kehar J. Baral, Rishi Raj Gautam, Gyan B. Dahal. Surya B. R.(2008).
Fundamental of Financial Management. Kathmandu: Asmita Publications.
Nepal Rastra Bank. (2010). Risk Management Guidelines. Bank Supervision
Department, Kathmandu.
Nepal Rastra Bank Act. (2002). Nepal Rastra Bank Act, 2058. Kathmandu: Nepal
RastraBank.
Nepal Rastra Bank. (2017). Unified Directive. Kathmandu: Nepal Rastra Bank.
Website accessed
[Link]
[Link]
[Link]
21
Journal
"Banking and Financial Statistics" Nabil mid July 2022
Report
Annual report of Nabil Bank Ltd., 2017 to 2022
22
APPENDICES
Table showing all variables of capitalization commercial bank for last seven year
NAME OF
BANKS YEAR ROA ROE SIZE LEND INV LEV
021/022 1.555 13.372 12.581 0.924 0.846 0.883
020/021 1.457 13.394 12.378 0.806 0.788 0.891
019/020 2.107 18.279 12.211 0.819 0.789 0.884
018/019 2.473 19.342 11.989 0.842 0.820 0.922
017/018 2.570 22.171 11.877 0.787 0.869 0.884
23
TIME ALLOTMENT SCHEDULE
Particulars Time (in Days)
Selection of Topic 2
Collection of Data 10
Introduction 3
Data Analysis 5
Presentation of Report 5
Summary & Conclusion 3
Total 28
24
