A STUDY ON

PROFITABILITY POSITION
OF
NEPAL BANGLADESH BANK LIMITED

Submitted By:

NISHU SHRESTHA
B.B.S 4th Year
TU REG No. 7-2-927-157-2017

A PROJECT WORK PROPOSAL

Submitted To:
SHWOYAMBHU INTERNATIONAL COLLEGE
Faculty of Management
TRIBHUVAN UNIVRSITY

In partial fulfillment of the requirement for the Degree of

Bachelor of Business Studies (B.B.S)

Kathmandu, Nepal
November, 2021
 Table of Contents

1.1 Background of the Study…………………………………………………………………………1

1.1.1 Introduction of Nepal Bangladesh Bank…………………………………………………………2

1.2 Objective of the study…………………………………………………………………………………………2

1.3 Significance of the study…………………………………………………………..........................3

1.4 Literature survey……….…………………………………………………………..........................3

1.4.1 Profitability Ratios ……………………………………………..……………………………………………3

1.5 Research and methodology ……………………………………………………………………….…4

1.6 Limitation of Study.......................................................................…..........................5

1.7 Organization of Study ……………………………………………………………………………………… 5

BIBLIOGRAPHY ………………………………………………………………………………………………………… 6
 INTRODUCTION

1.1 Background of the Study

Banks play a vital role for the development of Nepalese economic system. Banks are
the heart of financial system, holding the deposit of million people, government and
house units. Generally, an institution established by law, which deals with money and
credit is called Bank. It is obvious that in common sense institution involved in
monetary transactions is called bank. Banking provides an effective payment and
credit system, which facilitates the cannily of the fund from the surplus sending units
(savers) to the deficit spending units (investors) in the economy. According to section
2(a) of the NRB Act 2058(2003) define bank as follows:
“Bank means the NRB established under section 3 of this act.” Likewise,
according to Kent; “A bank is an organization whose principal operation are
concerned with the accumulation of the temporary ideal money of the general public
for the purpose of advancing to others for expenditure.”

The basic task of the financial institution is to mobilize the saving of the
community and ensure efficient allocations of these saving to high yielding
investment. Commercial bank plays an important role in affairs of the economy in
various ways. The operation of the commercial bank records the economic plus of the
economy. The size and the composition of their transaction mirror of the economic
happening of the country.

In Nepal, Commercial Banking started with the establishment of the Nepal

Bank Act, 1993 B.S. The authorized capital was contributed by government 51% and
remaining by public 49% Nepal Bank Ltd. Was established in 1994 B.S. NRB will
classify the institutions on the basis of the minimum paid-up capital into Group “A”
for Commercial bank, Group “B” for Development bank, Group “C” for the financial
institutions and Group “D” for the micro finance and provide the suitable license to
the bank or financial institution.

It also help to develop overall sector of a country lending and borrowing of

money by which it help to accelerate the peace to economic system, agriculture
industry and trade are getting sound environment for their transaction. Banking also
kind of business that provides banking services to ultimate consumer like receive
deposit, securing, property taking guarantee, remittance services etc.

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1.1.1 Introduction of Nepal Bangladesh Bank

Nepal Bangladesh Bank was established as a joint venture bank with IFIC Bank Ltd.,
Bangladesh. Nepal Rastra Bank has licensed Nepal Bangladesh Bank as a leading ‘A’
class Commercial bank. Nepal Bangladesh Bank was registered with office of
company Registrar (50-050/051, Dated January 14,994) as a public company limited
by shares.

Vision

Nepal Bangladesh Bank was established with a vision to offer financial services and
become the “bank for everyone”.

Mission

Nepal Bangladesh Bank is dedicated toward the progress and growth of the
bank to the community, customers, employees and stakeholders by meeting the
financial expectations of all level of society, providing quality services and products,
giving reasonable returns to all stakeholders, focusing on customer satisfaction and
maintaining high standard corporate governance in all levels.

Ethical Principles/Core Values and Code of Conduct

Nepal Bangladesh Bank has defined various core values for achieving the
vision and mission by delivering quality financial services, provide value to the
stakeholders, balanced in customer orientation and risk consciousness.

Overall Strategic Objectives

Nepal Bangladesh Bank sticks on core values and code of conduct for
betterment of the bank.

1.2 Objective of the study

The primary objectives of the study is to analyze and identify the nature of
relationship between risk and return of Nepal Bangladesh Bank. This study helps to
find out the actual contribution of bank to the stakeholders, competitors, investors,
creditors, financial customer & government.
The important purpose of the study are summarized as follows:
 To know about the profitability position of the Nepal Bangladesh
Bank.

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  To analyze the relative strength and weakness of Nepal
Bangladesh Bank.
 To suggest and recommend for the improvement of the financial
performance of the Nepal Bangladesh Bank.

1.3 Significance of the study

This study mainly fills a research gap on the study on profitability positions of Nepal
Bangladesh Bank. There are various obstacles faced by Nepal Bangladesh Bank and
this study attempts to analyze the profitability concerned to Nepal Bangladesh Bank.
Definitely the study will provide a useful feedback to the policy makers of the banks
and also becomes a useful reference for other banks of Nepal and central of Nepal
(NRB) for the formulation of appropriate strategies.

1.4 Literature survey

Profitability is the ability to earn of return on the owner investment. The profit earned
by the firm is the main financial performance indicator of business management.
Risks associated with adverse movement in exchange rates, interest rates, liquidity
and investment in equity are covered under market risk management. This risk is
continuously monitored by the Treasury Department under direct supervision of the
Executive Financial Officer & General Manager. “Combination of bank’s assets and
liability, its operation, determines the bank’s ultimate profitability. In view of I.M.
Pandey, “The relation of two accounting figure expressed is known as ratio.”

1.4.1 Profitability Ratios

Probability ratio analysis is widely used by managers, creditors and investors. The
techniques can reveal much about a company and its operations. But there are a few
things to take in mind about ratios.
1. Profit Margin Ratio:
More the ratio more the profitability of firm. Net profit margin (or
profit margin, net margin) is a ratio of profitability calculated as after-
tax net income (net profits) divided by sales (revenue).

Profit Margin = Net Income

Operating Profit

2. Net Interest Margin:

Net Interest Margin is also important tool of profitability measurement.

Net Interest Margin = Net Interest Income

Interest Earning Assets

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 3. Return on Assets:
The ratio of net income to total assets measures the return on total
assets (ROA) after interest and taxes.

ROA = Net Income

Total Assets

4. Return on Equity:
Return on Equity shows the ratio between net income and shareholders
equity.

ROE = Net Income

Shareholder’s Equity

5. Earning per Share:

Earning per share means the profit available to the equity holders no
per share basis i.e. the amount can get for every shareholder.

Earning Per Share = Net Income

Number of Share Capital

1.5 Research and methodology

Research methodology is the specific procedure or technique that helps to identify,

select, process and analyze information about a particular topic. The most used
research method for collecting the information are primary source of data and
secondary source of data
a) Primary Data:
Primary Data are determined as original data on which research are based. The
questionnaire was developed to study the profitability positions of Bank.

b) Secondary Data:
Secondary Data are originally collected, but obtained from some published
and unpublished sources. These kind of data is easily available in the internet,
journal articles, books, research report, websites and the more.

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1.6 Limitation of the Study

Every study has some limitations. The study is related to the profitability positions of
Nepal Bangladesh Bank. This study has been performed under some limitation
presented below:-
a) This study is for time period i.e. from 2075/76, 2076/2077 and 2077/2078.
b) This study is only focused of the profitability of Nepal Bangladesh Bank.
c) Lack of adequate information.
d) Here, most of the data collected from secondary sources, which is not
sufficient to make the report fully reliable.
e) Conclusions are based on the basis of data given in the annual report only for
the limited period of time
f) The study is based on the publication data and information available from its
websites.

1.7 Organization of the study

The present study will be organized into 3 chapters.

Chapter I- Introduction: Background, short introduction of Nepal Bangladesh Bank,

objective of the study, significance of the study, literature survey, limitation of the
study.

Chapter II- Result and findings: Presentation of data, analysis of data and findings
the study.

Chapter III- Discussions and Conclusions: Summary, Conclusion of the study and
presents recommendations.

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 BIBLIOGRAPHY

 Chandler, L.V (1985), The Economics of Money and Banking,

University of Chicago Press Chicago.
 Metcalf R.W. and Titard (1976), Principal of Accounting, Kitab
Mural; Allahabad.
 Sayers, R.S. (1976), Modern Banking, Oxford Clarendon Press, India.
 Van Horne J.C. and Wachowitch M. Johan (1997), Fundamental of
Financial Management, Prentice Hall of India; New Delhi
 Weston, J. Fred and Eugene, F. Brigham (1987), Essential of
Managerial Finance, the Dryden Press, Harcourt Brace Collage
Publishers.
 Annual Reports of Nepal Bangladesh Bank (2075/76) to (2077/78).

Websites:
https://www.nbbl.com.np

https://www.nrb.org.np

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