Professional Documents
Culture Documents
By:-
Pradeep Pariyar
Campus Roll No. – 1826/065
Exam Roll No. – 310307
Contact No. – 9849699402
TU Regd No. -
Tribhuvan University
Faculty of Management
Public Youth Campus,
Dhobichaur, Kathmandu, Nepal
A Dissertation Submitted for the Partial Fulfilment of the Requirement For Degree of Bachelor in Business
Studies (BBS),Public Youth Campus,
Dhobichaur, Kathmandu, Nepal
January 2011
Investigator
Pradeep Pariyar
BBS Final Year
Exam Roll No:-310307
Contact No:-9849699402
Email Address: pradeeppariyar@gmail.com
Public Youth Campus
Dhobichaur, Kathmandu
Tribhuvan University
Faculty of Management
Public Youth Campus,
Dhobichaur, Kathmandu, Nepal
Citation:
Pariyar, P. 2011. A CASE STUDY ON THE FINANCIAL PERFORMANCE OF HIMALAYAN BANK LIMITED: A
Project Work Report, BBS final year, Finance group (Tourism) Faculty of Management, Public Youth
Campus, Dhobichaur, Kathmandu, Nepal
TRIBHUVAN UNIVERSITY
PUBLIC YOUTH CAMPUS
DHOBICHAUR, KATHMANDU
Ref No……………..
Date:
CERTIFICATION OF ACCEPTENCE
This Report entitled " A CASE STUDY ON THE FINANCIAL PERFORMANCE OF HIMALAYAN BANK LIMITED
: A Project Work Report prepared and submitted by Pradeep Pariyar has been accepted for the partial
fulfilment of the requirement of Bachelor's Degree in Business Studies. This entire work is based on field
work and office work performed by the candidate and this work brings out useful findings in the
concerned field.
Supervisor
………………………...........
Head of Department
Public Youth Campus,
Dhobichaur, Kathmandu, Nepal
DECLARATION
I, Pradeep Pariyar, hereby declare that this report work is my sole effort/research and the information is
exclusively based on primary and secondary data collection. All the sources of information wherever
used are thus, duly acknowledged. I have not submitted it or any part of it to any other academic
institutions for any degree.
…………………………..
Pradeep Pariyar
BBS Final Year, Finance group
Public Youth Campus,
Dhobichaur, Kathmandu, Nepal
Date:
ACKNOWLEDGEMENT
Many individuals and institutions have contributed in myriad of ways by sharing their invaluable time,
resources and knowledge without which, materialization of the report in this form wouldn’t have been
possible. Space does not permit mentioning their entire good name however; it in no way does mean
belittling of my gratitude toward them. Thank you all, but I owe special thanks to some people who
deserve the acknowledgement.
I would like to express the deepest gratitude and the sincerest thanks to Prof. Dr. Madhav Raj Koirala,
my research advisor for his invaluable guidance, constructive criticism, intellectual support and
encouragement throughout the whole research period in order to accomplish this work. I feel a deep
sense of gratitude to him for his unconditional support and I am honored to have him as my advisor. His
crucial role to make this report to this final stage is indescribable. I am indebted to all lecturers of Public
Youth Campus and my friends.
I would like to express the deepest gratitude and the sincerest thanks to all lecturers of Public Youth
Campus and my friends.
I am thankful to Public Youth Campus for providing the references facilities during my analysis. I am also
thankful to all staff of Himalayan Bank for providing me secondary data. I would like to express my
sincere thanks to teachers and all people of my study area for responding my queries providing their
valuable time, help, generosity, hospitality and their co-operative attitude.
Sincere cordial thanks and heartfelt gratitude goes to my lovely friend Nirjana Nepali for providing me
continuous enthusiasm and endless support, guidance and help during my entire study period at PYC.
My heartfelt thank goes to Ms. Sharmila Tandukar and Mr. Prakash Kapri who cheerfully accompanied
me throughout the research study and shared many of their insights and information regarding my
research.
Love and affection of my family always encouraged and inspired me to perform any work intensively. I
am indebted to their inspiration and support in every turn of life but here I am unable to express my
feeling in words. At last but very far from the least are to my sister and brother-in-law whose wonderful
love, unconditional support and inspiration have been fundamental to pave the path for successful
journey in my academic pursuits.
Pradeep Pariyar
Dedicated to My
Mom
Parbati Pariyar
LIST OF ABBREVIATIONS
LC Letter of Credit
i.e. That is
etc. Etceteras
No. Number
% Percentage
List of Figures
Figure 1: Current Ratio (In RS ‘000)
Figure 2: Cash and bank balance to deposits ratio (In RS ‘000)
Figure 3: Long-term Debt to Net worth Ratio (In RS. ‘000)
Figure 4: Net worth to Total Liabilities Ratio (In RS. ‘000)
Figure 5: Capital Adequacy Ratio (In Rs. ‘000)
Figure 6: Interest Expenses to Total Expenses Ratio (In RS. ‘000)
Figure 7: Return on Asset (In Rs ‘000)
Figure 8: Return on Shareholder’s equity (In RS. ‘000)
Figure 9: Net Interest Earned to Total Assets Ratio (In RS. ‘000)
CHAPTER-1
INTRODUCTION
1.1 Meaning and Definition of Bank:
Bank is a financial institution which is engaged in monetary transaction. It accepts deposit and grant
loan to needy person against securities. So, banks are said to be “financial Supermarket”. It charges
certain interest at some fixed interest rate per annum. Beside this, a bank also involves on a number of
agency services like remitting and collection cash on behalf of its client opening bank drafts and LC
activities and or writing shares of newly established companies. Banks are those institution, which are
established under certain act to perform monetary and credit transactions
According to Crowther: “The bankers business is to take the debts of other people to offer
his own in exchange and these create money”.
According to US Law: “Any institution offering deposits subject to withdrawal on demand
and making loan of a commercial or a business nature is a bank”.
Therefore, summarizing the above, banks are those financial institution that offer the
widest range of financial services and accepts deposits with order or otherwise. Although the above act
defines the banking in broad sense, it does a lot more than these works.
The bank is also operating a counter in the premise of the Royal Palace. The bank has also set up
branches in the different part of the country. The bank had a very aggressive plan of establishing more
branches in the different parts of the kingdom in near future.
Narayangadh Branch Pokhara Branch
Siddharthanagar Branch Dharan Branch
Taadi Branch Bhairawa Branch
Birgunj Branch Bharatpur Branch
Hetauda Branch Butwal Branch
Biratnagar Branch Baglung Branch
Dang Branch Parsa Branch
Tabulation Method:
Generally, the tables are classified in two ways.
According to purpose:
a) Reference table: It is big and has large data and general in nature.
b) Summary table: It contains data, which may be useful for the study of particular problem and
specific in nature.
According to character:
a) Simple table: It provides information about only one characteristic of the particular data.
b) Complex table: the data are classified with respect to two or more inter-related characteristics.
Charts:
The chart is used to show the range of variation in the values.
v Pie-chart: It divides the data into several parts into which it is broken up form of circle. It is called pie-
chart because it looks like slices of a pie.
v Bar Graph: bar graph shows the comparatively between the two variables.
a) Current Ratio
2005/06 504,625
2,270,801 0.22
2006/07 595,968
2,742,468 0.22
2007/08 943,178
3,456,170 0.27
2008/09 500,000
3,619,881 0.14
2009/10 500,000
3,939,205 0.13
Figure-4
Figure 4: Net worth to Total Liabilities Ratio (In RS. ‘000)
2.2.3 Capital Adequacy Ratio:
Capital fund refers to paid-up capital, general reserve and undistributed profit. It is also called as
shareholders capital as well. High as well as low capital adequacy ratio is unfavourable in term of
lowered solvency. It is calculated as:
Capital Adequacy Ratio = Capital fund
Total Deposits liabilities
Table 5: Capital Adequacy Ratio (In Rs. ‘000)
Years Capital Fund Total Deposit Ratio
Liabilities
2005/06 28,813,632 26,490,852 1.088 Figure 5: Capital
2006/07 32,168,368 30,048,418 1.071 Adequacy Ratio
2007/08 34,344,633 31,842,789 1.079 (In Rs. ‘000)
2008/09 36,926,805 34,681,345 1.065
2.2.4 Activity /
2009/10 40,421,046 37,611,202 1.075
Efficiency /
Turnover Ratio:
This ratio reflects how efficiently the company is managing its resources. Thus these ratios measure
the degree of effectiveness in use of resources or funds by a firm. Under this ratio following ratio are
calculated.
0.90
2006/07 767,411 679,452 1.13
2007/08 823,745 658,357 1.25
2008/09 934,778 925,252 1.01
2009/10 1,553,531 1,414,614 1.10
1,766,176 0.26
2006/07 491,823 2,146,500 0.23
2007/08 635,869 2,512,992 0.25
2008/09 752,835 3,119,881 0.24
2009/10 508,798 3,439,205 0.15
Financial analysis is an important and useful technique and useful to check upon the efficiency of an
organization. The management can arrive at important decisions by using analysis. The financial
analysis’s used for expressing the mutual relation of different accounts consisting in the financial
statement. With the help of financial analysis, the big figures groups can be made short and simple. Out
of the various methods of financial statement analysis, ratio analysis is far and the most widely used
method. However, ratio analysis only is not enough to track down the financial performance of bank.
There are many ways to measure financial performance of a bank such as; cash flow analysis, funds flow
analysis, trend analysis, etc.
Chapter–3
Summary, Conclusion and Recommendation
3.1. Summary
Nepal is being and under privileged country and more then 90% of people being dependent upon
agriculture, which sector is unable to provide full employment to all people. HMG has to activate people
in the nation’s development through overall industrialization of nation. For which, development of
banking system is necessary.
Modern commercial banks make the economy always alive and smart to run and maintain day-
to-day commercial, economical and banning transaction. In short, banking transaction helps a country to
develop its economy swiftly.
If there were systematic and scientific programs for economic development, countries like Nepal
would have developed its economy as much as those countries, which have development the whole
economy. In addition, the today’s circle of the underdevelopment might have perhaps narrowed down.
At present, commercial banks including joint venture banks are operating in Nepal. Any country
cannot have a developed economy in the absence of modern banking system. As any development,
work needs, sufficient amount if capital and the lack of sufficient capital is also one of the main reasons
as to why Nepal has been backward in developing this economy.
Therefore it is utterly important to find out whether or not the banks are serving and import
contribution to develop different sector of the economy. Fixed deposit occupies major portion of
banking income. It also pays a vital role upgrading the rational economy.
3.2. Conclusion
It can be concluded from the observation and analysis of above data that ratio analysis controls the
banks and shows the general financial strengths and weaknesses. Similarly, it also shows the future
opportunities and threats for the banks. Therefore it is very important for the appropriate policy to
adopt with calculated various ratios. A large capital can be managed at very low capital cost. It will
encourage industrial and commercial activities eventually leading to better economic growth, socio-
economic development, employment opportunity etc.
In context of HBL, it will be found more effective in the sector of banking since its policies and
the implementations are towards the great achievement that symbolisms its need in the Nepalese
economy. HBL is going towards growth and hope it will ultimately goes for development very soon if the
political scenario and economic condition walk proper as its result says.
3.3. Recommendation
Some suggestion and recommendation are being put forward for the improvement of HBL and Banking
industry in Nepal.
I. Now, the economic condition of the country is deteriorating, there is danger of reduction of
business and industrial activities. Therefore banks should not focus only in collecting huge amount of
deposit by increasing the interest rate.
II. It is common complain that customers entering the branch premises have crave for
employee attention. The remedy lies in creation of a friendly behaviour to all customers who come into
the branch, whether valuable or not. A smile on the face would not cost but would go along way in
satisfying customer’s expectation.
III. Considering the present economic condition of the country, the bank should pay pivotal role
for the economic development of the country. They should promote balanced regional development by
financing funds in remote and other priority sectors.
IV. The banks mobilized capital should be made available for investment in productive
enterprises whether the business is of small, medium of large sized. Thus the bank should expand its
credit to promote economic development more rapidly.
V. Higher interest rate is a tool to attract customer to deposit their money. This will eventually
lead to the collection of funds. The cash deposited by the customer are liquid position to help maintain
adequate liquidity position of the bank. It also offers more chance to invest or lend.
VI. There is serious competition among joint venture banks, finance companies and insurance
companies being ruined or even strong companies going to losses and liquidate. Therefore the bank
should be service oriented. They should train and motivate the staffs, get up-to date information about
other bank and try to grow their market.
VII. The bank should concentrate in various investment policies, so that the investment is done in
wide range of profitable sectors in proportionate manner. The bank should scrutinize with, are parties,
bank are dealing with, are having good reputation or not otherwise, the transaction, the truncation with
bad parties may lessen the value of bank.
VIII. The bank should publish annual report and distribute booklets containing details information
about its activities and performance as well.
IX. The bank should follow the discipline and adopt directives of NRB. This helps to maintain
harmonious relationship between other banks as well.
X. The bank should launch various kinds of welfare programs for its staffs and the society.
Excellent staffs should be promoted in order to motivate them.
XI. The bank should grab opportunities as soon possible, by adopting efficient and latest market
strategies. Traditional method should be left behind.
XII. There should be certain fund for advertising. Advertising also helps to attract depositors and
borrowers.
XIII. NRB should invite commercial banks officials to participate in formulating policies rules,
regulation and directives.
XIV. Banks should bring attractive motivational programs to motivate their employees effectively
and efficiently.
XV. HBL should change its marketing concept. It should adopt new and modern marketing
concept. Now, it should go for the societal marketing concept for the betterment of the society and
itself.
XVI. Government, NRB and commercial banks should take necessary steps to form and regulation
banking habits of Nepalese people especially people of rural areas.
Bibliography
Singh, Hriday Bir (2006) “BANKING AND INSURANCE”, Kathmandu, Asian Publication.
Pant, P. R. (2001). Fieldwork Assignments and Report Writing, Ktm: Buddha Academic Enterprises Pvt.
Ltd.
Journal & Publication.
www.hbl.com.np
www.nrb.gov.np