1.

1 Statement of the Problem

Merger of two renowned BFI’s named NIC Bank and Bank of Asia was completed on 30 June
2013. Nepal witnessed the first merger of two commercial bank in its history. With the
successful merger, in FY 2069/70 NIC Asia Bank recorded the figure of 40,113 million in
deposit and 31,416 million as total loans compared to its figure of 22,244 million in deposit and
17,523 million in loan before merger respectively. With the successful merger, bank was also
able to expand its footprint by increasing its branches to 58 branches post merger as compared to
its 36 branches countrywide before merger. Bank increased its area for serving its humble
customers and also allowing creating new customer base by on boarding new customers. With
increment in its portfolio of deposit and loans, bank was able to increase its profit as well as
financial of the bank post merger shows increase in net profit in FY 2069/70 of 642 million
which was 392 million before the merger. The financials also show that the annualized ROE has
slightly gone down to 0.28%
from 0.30% as well as annualized ROA also decreased to 1.38% from 1.53%. With increase in
stakeholders after merger, bank was able to increase its capital to 2,312 million from its previous
capital of 1,312 million. Performance of bank in NPA was good as the bank was able to reduce
its NPA to 0.75million after merger, NPA before merger was 2.32 million.

a) What are the effects of the mergers on bank ROA & ROE?

b) What is the net profit of sample bank after mergers?

c) What is the capital strength before and after merger?

d) What is the position of portfolio after merger?

e) What is the effect of merger in footprint expansion of the bank?

Merger of NIC Asia Bank is regarded as one of the most successful merger in Nepalese banking
industry as the bank at present is one of the most successful banks of Nepal. NIC Asia Bank has
been able to increase its branches to 317 branches, 405 ATMs, 95 Extension counters and 44
branchless banking services is the largest bank in terms of footprint expansion, customer base
including balance sheet size. Bank present figure stands as 150,100 million as total loan and
180,500 million deposit as total deposit