Title Page

STUDY ON RATIO ANALYSIS OF RASTRIYA BANIJYA BANK

A Project Work Report

Submitted By:

MADHUSUDHAN POKHREL

T.U. Reg. No.

Butwal Kalika Campus

Butwal-10, Rupandehi

Exam Roll No:

Submitted to:

Office of Controller of Examination

The Faculty of Management
Tribhuvan University

In Partial Fulfillment of the Requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Butwal-10, Rupandehi
May, 2023

i
 DECLARATION

I hereby declare that the project work entitled “A STUDY ON RATIO ANALYSIS OF
RASTRIYA BANIJYA BANK” submitted to the Faculty of Management, Tribhuvan
University, Kathmandu is an original piece of work under the supervision of Mr.Keshav
Raj Neupane, faculty member of Butwal Kalika Campus, Butwal-10, Rupandehi, and is
submitted in partial fulfillment of the requirementsfor the degree of Bachelor of Business
Studies (BBS). This project work report has not been submitted toany other university or
institution for the award of any degree or diploma.

Signature:

Name of student : Madhusudhan Pokhrel

Date:

ii
 SUPERVISOR’S RECOMENDATION

The project work report entitled “A STUDY ON RATIO ANALYSIS OF RASTRIYA

BANIJYA BANK”submitted by Madhusudhan Pokhrel of Butwal kalika Campus,
Butwal-10,Rupandehi is prepared under mysupervision as per the procedure and format
requirements laid by the Faculty of Management, TribhuvanUniversity, as partial
fulfillment of the requirements for the degree of Bachelor of Business Studies(BBS). I,
therefore, recommend the project work report for evaluation.

Signature:

Name: Mr.Keshav Raj Neupane

Date:

iii
 ENDORSEMENT

We hereby endorse the project work report entitled “A STUDY ON RATIO ANALYSIS
OF RASTRIYA BANIJYA BANK”submitted by Madhusudhan Pokhrel of Butwal
Kalika campus, Butwal-10, Rupandehi in partial fulfillment of the requirements for the
degree of the Bachelor of Business Studies (BBS) for external evaluation.

Signature: Signature:

Chairman, Research Committee Campus Chief/Principal

Date: Date:

iv
 ACKNOWLEDGEMENT

This report has been prepared in partial fulfillment of requirement of the Bachelor
of Business Studies final year course. I would like to express my gratitude to Butwal
Kalika campus for providing a great opportunity of preparing a field work report in
accordance to its syllabus. What so ever was the situation this report is finally prepared
with the help and guidance of many of my well-wishers.

I am very much thankful to all the teachers of Butwal Kalika Campus; without
whose knowledge and suggestions in several ways, this report would not have been
prepared. My special thanks go to my teachers and lecturers in Butwal Kalika Campus,
who helped and guided me a lot in preparing this report.

I am also very much indebted to Rastriya Banijya Bank , and its concerned
official for providing me the necessary data’s and information related with the company.
Their friendly behavior and warm co-operation helped me gather necessary information.

While preparing this report, I would like to express my sincere thanks and
gratitude to my teacher for his good guidance, comment, and suggestion.

v
 TABLE OF CONTENTS

Page No.

Title Page......................................................................................................i
Declaration...................................................................................................................ii
Supervisor’s Recommendation......................................................................................iii
Endorsement................................................................................................................iv
Acknowledgement........................................................................................................v
Table of Contents.........................................................................................................vi
List of Tables..............................................................................................................viii
List of Figures...............................................................................................................ix
Abbreviation…………………………………………………………………………………………x

CHAPTER 1 : INTRODUCTION…………………………………………………………………1

Background of the Study........................................................................................................................1

Profile of the Organization......................................................................................................................2
Objectives of the Study...........................................................................................................................2
Rationale of the Study.............................................................................................................................3
Review Literature....................................................................................................................................3
Research Methods...................................................................................................................................5
Limitation of the study............................................................................................................................5

vi
CHAPTER II : RESULTS AND FINDING……………………………………………………

Data Presentation………………………………………………………………………………………………………..……
Analysis of Results……………………………………………………………………………………………………………
Findings……………………………………………………………………………………………………………………….

CHAPTER III: SUMMARY AND CONCLUSIONS………………………………………...

Summary………………………………………………………………………………………………………………………………
Conclusion…………………………………………………………………………………………………………………………….

BIBLIOGRAPHY…………………………………………………………………………….………..

APPENDICES…………………………………………………………………………………………..

vii
 LIST OF TABLES

Table no. Particulars Page no.

Table No .1 : Cuurent Ratio……………………………………………….

Table No .2 : Quick Ratio…………………………………………………
Table No .3 : Debt Ratio………………………………………………....
Table No .4: Debt to Equity Ratio………………………………………..
Table No .5 : Equity multiplier……………………………………………
Table No .6: Return on Equity……………………………………………
Table No .7 : Return on Assets……………………………………………
Table No .8: Trend Value of Total Investment Ratio…………………..
Table No .9 : Trend Value of Total Desposits Ratio……………………

viii
 LIST OF FIGURES

Figure no. Figure details Page no.

Figure 1 Organizational structure 4

Figure 2 Loan and advance to Total deposit ratio 15
Figure 3 Saving deposit to Total deposit ratio 17
Figure 4 Fixed deposit to Total deposit ratio 18
Figure 5 Cash and bank balance to Current deposit ratio 20
Figure 6 Cash and bank balance to Total deposit ratio 21
Figure 7 Cash reserve ratio 22

ix
 ABBREVIATIONS

S.No. Short Form Full Form

1 A.D. Anno Domini
2 ATM Automated Teller Machine
3 BBS Bachelor of Business Studies
4 B.S. Bikram Sambat
5 C.A Current Assets
6 CRR Cash Reserve Ratio
7 GIBL Global IME Bank Limited
8 IME International Monetary Fund
9 Ltd Limited
10 LCR Liquidity Coverage Ratio
11 NRB Nepal Rastra Bank
12 MIS Management Information System
13 NIBL Nepal Investment Bank Limited
14 NNFL Narayani National Finance Limited

x
 1

CHAPTER ONE
INTRODUCTION

1.1 Background of the Study

The term Liquidity is the ability of person or company that can convert assets into quick
assets at low cost. Liquidity is term used to describe how easy it is to convert assets to
cash. Liquidity can be viewed in term of liquidity stored in the balance sheet and in term
of liquidity available through purchased fund. Liquidity describes the degree to which a
security or assets can be quickly bought and sold in market without affecting assets price.
Mobilization of liquidity helps for the effective achievement of bank goal. It helps for the
existence in the markets. Liquidity position play vital role to meet regular operation and
make schedule payments, which as result helps to maintain confidence and trust of
customers.

Liquidity is crucial in the businesses like banking. Bank needs to maintain some
seasonable level of liquidity to fulfill different commitments such as provides money to
depositors when they demand for administrative expenses, for maintaining cash banks
capacity to pay cash in exchange of deposits. Therefore, managing and maintaining liquid
assets is termed as liquidity management for banks. Adequate Liquidity is crucial in the
banking because if bank has high liquidity it cannot earn desire profit and if the bank has
the short fall of the liquidity it cannot satisfy the customers. Inadequate liquidity may
lead to collapse of the bank while excess liquidity is determined to banks profitability. In
order to remove demerits associated with maintaining inadequate and excess liquidity,
bank should maintain an optimum level of liquidity. This is possible only when bank’s
liquidity needs are correctly predicted. Prediction covers in present outflows, bank should
be prepared to cover the short flow by borrowing or by liquidating assets. If the inflow is
greater than outflow, bank should plan where to invest so that income can be increase.
Bank attach great importance short term and long-term predictions. Prediction of liquidity
needs should be in the form of primary and secondary reserve so that bank generate
income and at the same time does not compromise to liquidity.
 2

Brigham and Houseton(2009), “liquidity ratio measures the organizations ability to meet
short term obligations which includes current and quick ratio.”
Layman Language, “liquidity means capacity to pay back cash in exchange of the deposit
on depositors demand.”

Sayers (1976), “Liquidity is a word that the banker used to decide his ability to satisfy
demand for cash in exchange of deposits.”

Thus, liquidity is concerned with the maintaining of adequate liquid assets as per needs.
Liquid assets mean cash in hand, cash in bank, cash reserve in central bank, reserve and
balance with other bank and its own bank, investments in Government securities and so
on. In evaluating the adequacy of liquidity position consideration should be given to the
current level and prospective source of liquidity compared to funding’s needs, as well as
to the adequacy of funds management practices relative to the institution’s sizes,
complexity, and risk profile. In general funds management practices should ensure that an
institution is able to maintain a level of liquidity sufficient to meets its financial
obligations in a timely manner to fulfill the legitimate banking needs of its community.
Practices should reflect the ability of the institution to manage unplanned change in
funding source, as well as react to change in markets condition that affects

1.2Organization Profile

1.2.1 Overviews of Sunrise Bank Limited

Sunrise Bank Limited, a leading commercial bank of Nepal was established as a 23rd
commercial bank of Nepal on 12th October, 2007 with its motto “Rising to Serve” with
comprehensive products and services. The Bank has its corporate office at Gairidhara
Crossing, Kathmandu Nepal. As the promoters are reputed entrepreneurs, the Bank
understands the needs of a growing economy and is well equipped to cater them. The
Bank's Board has 8 BOD members along with Chairman, Mr. Motilal Dugar. Mr.Ratna
Raj Bajracharya is working as CEO of the bank. Entire member of the Management team
are professional managers who have expertise in various aspects of bank management
and operations.
 3

The Bank previously acquired a “C” class financial institution - Narayani National
Finance Limited (NNFL). The joint operation started from 14th July 2016 A.D (B.S.
2072/03/30). The bank also has acquired another "C" class financial institution, viz.
N.I.D.C Capital Market Ltd.,along with its subsidiary NCM Merchant Banking Ltd.,
thereby entering into Capital Market as well.
The Bank has achieved rapid growth through the successful operation and with
acquisition of Narayani National Finance Limited.The banks geographical coverage has
widened enabling us to serve businesses and customers in the remote corners of Nepal as
well. While we are present across Nepal, we continue to expand our network to cover
more areas that are not being served in Nepal. Besides, with the help of up-to date
technology, the Bank continuously works towards providing efficient services to the
customers.
In an economy driven by appetite for success,Sunrise Bank Limited (SRBL)is “Rising to
Serve” by defining new levels of services and products.SRBL understands that banking is
no longer a number game. "Success" for the bank is not just the profit margin. Currently
SRBL has operates through 139 branches, 159 ATMs, 13 Extension Counters and 87
BLBs.

1.2.2Capital Structure 

 The Authorized Capital of the Bank: Rs. 10,000 Million

 Paid-up Capital: Rs. 10,118,892,808.60
 Promoter Shares: 51.10% of the Paid-up Capital
 Public Shares: 48.90% of the Paid-up Capital

1.2.3Boardof Director of Sunrise Bank Limited

Table 1:
Composition of Board of Directors
Name of BOD Position
Mr. Motilal Dugar Chairman, Board of Directors
Er. Bachh Raj Tater Director, Board of Directors

Mr. MalchandDugar Director, Board of Directors

 4

Er. Shailendra Guragain Director, Board of Directors

Mrs. Sharada Sharma Pudasaini Director, Board of Directors

Mr. Deepak Nepal Director, Board of Directors

(Source: Official website of SRBL)

1.2.4Share composition of Sunrise Bank Limited Strategic and Future Plans of

Sunrise Bank Limited
Its strategies and future plans are:
 To develop a customer-oriented service culture with special emphasis on customer
care and convenience.
 To increase its market share by following a disciplined growth strategy.
 To leverage its technology platform and pen scalable system to achieve cost effective
operation, efficient MIS, improved delivery capability and high service standards.
 To develop innovative products and service that attracts its targets customer and
market segments and explore new avenues for growth and profitability.
 To build an HR team that continuously supplements the growth of the organization.
 To become the best bank that has ability to quickly liquidate assets with minimal loss.

Figure 1:
Organizational Structure of Sunrise Bank
 5

1.3 Statement of problem and significance of study

Liquidity is the status and part of the assets which can be used to meet the obligation.
Liquidity is crucial in the business-like banking because if bank has high liquidity it
cannot earn desire profit and if the bank has the short fall of the liquidity, it cannot satisfy
the customers. Inadequate liquidity may lead to collapse of the bank while excess
liquidity is determined to banks profitability. The degree of liquidity depends upon the
relationships between cash assets plus those assets which can be quickly turned into cash
and liquidity awaiting payments.
The major problem in the study is that it is hard to submit information due to difficult
conclusion given by liquidity. It is hard task to used financial tools and mathematical
tools.
 What are the influencing factors of liquidity on profitability?

1.4Objectives of the Study

Each and every activity should be intended towards achieving the specific goals. This
research is also made for desired outcomes. Therefore, The main objectives of the Study
is to analyze the liquidity position of Sunrise Bank Limited.
           Other objectives can be listed below:
 To check the liquidity position of the Sunrise Bank Ltd.
 To analyze the financial performance
 Tofulfill the partial requirement of T.U. (department of management) for the degree
of bachelor of business study

1.5 Review of Literature

This section deals with the theoretical aspects of the topic under study of Sunrise Bank
Ltd. in more detail and descriptive manner. For this study, journals, articles, and some
research reports related with this topic have been reviewed. This study has to refer
different books related with this topic published. The purpose of the reviewing the
literature is to develop some expertise in one’s area, to see what new contribution can be
made and to review some idea for Developing research design.
 6

1.5.1 Review of Previous Works

Baker, H.K. and Powell, G. (2009), concluded that ,ratios allow the firm’s stakeholders to
better understand its liquidity and long-term debt paying ability, efficiency in employing
its various assets, profitability, and how the market is valuing the firm relative to key
financial variables.The study have significant relationship between liqudity, profitability,
efficiency and leverage measures. It find out composition of demand and supply of
liquidity. To analyze the cash to current assets ratio and current liabilities of the bank.
The findings of his study that the total supply has increase from Rs 57086 million in a
year2011/12 to Rs 72660 million in year 2015/16. The total loan and borrowing have
increase from Rs. 88 million in the year 2012/13 to Rs. 1000 million in the year 2015/16.
The Conclusion of his report is quite satisfactory and improving. Despite fragile law and
other situation and the country especially during last 2-3 year the bank has double its
deposits, advance as well as profits during the period. A notable strength of HBL, lies its
containment of NPAS which is restricted to 80% of total loans throughout the years. This
shows that HBL has been successful to foresee the quality of loans lent.

Mosnova (2014), concluded that the goal of this thesis was to investigate the ability of
banks to satisfy NSFR. The thesis could provide a NSFR analysis for European Banks.
Current studies indicate than European Banks had problem to meet NSFR as their
liquidity shortage is too large. This implied that current requirement of NSFR are too
strict, unsuitable ans that they could been probably subject to calibration or delayed
implication as we have seen by LCR. From a macro perspective, the thesis could provide
stress-testing of long-term liquidity risk for Czech banking system. He found that under
the stress scenario Czech bank could not able to satisfy NSFR. Additional shocks
imposed by different stress event change the amount of required stable funding,
denominator of NSFR. The stressed weight could be estimated through Monte Carlo
Simulation of specific liquidity risk premium.

Walhroos (2015), concluded that “The objective of this thesis was to examine the
liquidity level of finish SMS’S from 2007 to 2013. It studies the literature related to cash
management and liquidity, different ratio of liquidity and factors that effect on liquidity.
 7

It also takes information and communication sector into closer observation. This thesis
provided industry specific average from the liquidity ratio, gearing ratio and solvency
ratio as as many other variables that affect the liquidity. He found and shows that on
average the liquidity and solvency had stayed almost the same, but individual industries
faced major changes. In the IC sector, the factor that affect the liquidity are the profit
margin, number employees, total revenue, total assets, and credit period. Thus, this thesis
used reported financial data, which leaves less space for interpretation and studies the
amount of liquidity rather the operative sides of cash management.

Napit (2016), concluded that “which study to explore liquidity management of NMB
Bank for improvements. It also determines the deposit feature of NMB Bank. The finding of
her studied that how to maintain the Bank’s CRR as per ratios. The liquidity position of
NMB Bank is not satisfactory as there is fluctuation on current ratio and quick ratio. The
conclusion and finding of NMB Bank has not satisfactory financial portion on banking
sector of the Nepalese Economy. The bank should maintain satisfactory credit
management.

R A.(2016). on title concluded that this analysis helps to assess the financial performance
of NCNC. To provide information regarding the liquidity and activity ratio. The major
finding in this review that cash ratio of NNLNC was in increasing trend up to the fiscal
year 2070 and decreasing to 2071.Investment and assets trends shows satisfactory results
because of its sound analysis. The conclusion and finding of this review are satisfactory
due to its sound and effectives management.
The recent global financial cries demonstrated the importance of the liquidity risk for the
stability of the financial sector. So, in response to the market’s failure revealed in the
crises Basel Committee on Banking Supervision developed a new banking regulation
Base III. This thesis evaluates whether the NSFR (Net Stable Funding Ratio) was the
subject of similar change as they could had been seen by the LCR (Liquidity Coverage
Ratio). Based on the approximation of the NSFR between 2012 they test the ability of
banks to satisfy the NSFR requirement on the sample of European banks. The liquidity
situation in PIIGS countries and in the Czech Republic is analyzed in more details.
 8

Subsequently, they evaluate whether the NSFR is correctly specified. Using the profit
model, they test whether as it is currently defined will really decrease the probity of
bank’s default and therefore, increase the stability of the banking sector. Finally, they
perform a simple stress test, i.e. they analyze whether the probability of default could be
better predicted if the NSFR was defined more strictly. This motivated them to analyze
the whether the LCR and NSFR will subject to similar change.

1.6Research Methodology
Research methodology refers to the various sequential steps adopted by a researcher in
studying a problem with certain objective in view. It is a way to systematic solve the
research problem. It may be understood as a science of studying how search is done
scientifically. It focuses and deals with the following aspects or methodology.

1. Research design
2. Population and Sample
3. Source of data
4. Data collection procedure
5. Method of Data analysis

1.6.1. Research design

Research design is the set of methods and procedures used in collecting and analyzing
measures of the variables specified in the problem research. It constitutes the blue-print
for the collection, measurement and analysis of data. As per nature of data, descriptive
research designs have been followed to meet the objective of this study and Descriptive
research design is a research design used to describe characteristics of a population or
phenomenon being studied. It does not answer questions about how/when/why the
characteristics occurred are. Historical data are collected from Sunrise Bank of over five
years and analyzed them based on the statistical and financial tools. The overall study is
designed analytically as well as descriptively under specific major headings so as to meet
the objective of the study.
 9

1.6.2. Population and Sample

A. Population:
Population for this study comprises of 27 commercial banks currently operating in
the country. All the banks perform the functions of commercial banks under the
rules, regulations and directives of Nepal Rastra Bank.

B. Sample:
Sample is the selection of certain percentage of a group of a items among the
entire group. The single unit has been taken as sample in this case study. The
name of this unit is Sunrise Bank Limited.

1.6.3. Nature and Sources of Data

Mainly the study is conducted on the basis of secondary data with negligible primary data
collected. The supplement data and information have been acquired from journals
published from various institutions like NRB, Nepal Chamber of Commerce, and
frequent visit in the Sunrise Bank Limited etc. The sources of data are elaborated as
below:

A. Primary data collection

The data which are originally collected by an investigator or an agent for the first time for
the purpose of statistically enquiry are known as primary data collected personally
through questionnaire, observation and interviewing method. These data highlight the
real fact information of Sunrise Bank Limited. In this report, structured review and
unstructured observation method was used.

B. Secondary data collection

The data which are originally collected but obtained from some published or unpublished
sources are secondary data. This type of data is not original in character. The secondary
data are collected from secondary sources. These secondary sources consist of two
sources:
 10

1. Internal Sources
 Annual Report of Sunrise Bank Limited
 Quarterly Reports

 Brochure, Prospects

2. External Sources
 Books and publications
 Journal Article, articles from newspaper
 Local Newspaper
 Previous Fieldwork report etc
 Bank’s web sites.

1.6.4. Data Collection Procedure

For the study of liquidity of concerned bank, various data are required. For the collection
of data, researcher made several visits of the bank website. Regarding the information
needed, the profit and loss account and balance sheet of the bank of last five years were
observed.

1.6.5. Techniques of Analysis

5.1. Financial tools

Financial analysis tools are one of the most efficient ways that can be used for ensuring
good profit from ourinvestments.Fundamental analysis studies the key financial
statements and other financial affairs of a business using ratios and other techniques and
careful interpretation of the data.These financial analysis tools are highly helpful in
evaluating the market and investing in a way so as to maximize the profit from the
investments made. The analysis of business condition here is done by using the financial
ratios such as Loan and advance to total deposit ratio, Saving deposit to total deposit
ratio, Fixed deposit to total deposit ratio, Cash and bank balance to current deposit ratio,
Cash and bank balance to total deposit ratio etc.

5.1.1 Loan and advance to total deposit ratio

 11

This ratio shows the amount existing in the bank after providing loan of deposit collected.
It indicates the deposit management of bank. It is the main source of bank liquid assets. It
measures the extent to which the bank is efficient in mobilizing total deposit in total
credit. The total credit includes loan advances and overdrafts, bills purchased and
discounted. Loan and advance to total deposit ratio is calculated as follows.
Loan∧advance
Loan∧advance ¿ total deposit ratio=
Total deposit

5.1.2 Saving deposit to total deposit ratio

Saving deposit to total deposit ratio is a commonly used statistic for assessing a bank’s
saving deposit by its total deposit. It is calculated as follows.
Saving deposit
Savingdeposit ¿ total deposit ratio=
Total deposit

5.1.3 Fixed deposit to total deposit ratio

Fixed deposit to total deposit ratio is a commonly used statistic for assessing a bank’s
fixed deposit by its total deposit. It is calculated as follows.
¿ deposit
¿ deposit ¿ total deposit ratio=
Total deposit

5.1.4 Cash and bank balance to current deposit ratio

Cash and bank balance to current deposit ratio is a commonly used statistic for assessing
a bank’s cash and bank balance by its current deposit. It is calculated as follows.

Cash∧bank balance
Cash∧bank balance ¿ current deposit ratio=
Current deposit

5.1.5 Cash and bank balance to total deposit ratio

Cash and bank balance to total deposit ratio is a commonly used statistic for assessing a
bank’s cash and bank balance by its total deposit. It is calculated as follows.
Cash∧bank balance
Cash∧bank balance ¿ total deposit ratio=
Total deposit

5.1.6 Cash Reserve Ratio

 12

Cash reserve ratio means the bank’s liquidity funds to meet its uncertain demand on
deposits. This ratio is calculated as follows.
Balance with NRB
Cash reserve ratio=
Total deposit

5.2 Statistical tools

Statistics deals with the collection, organization, analysis of data and drawing of
interferences from the sample to the whole population. Statistical significance is
determined by running statistical tests using statistical analysis tools. The statistical tools
are as follows:

5.2.1 Percentage: A percentage is another way of expressing proportion. A percentage is

equal to the proportion times 100.

5.2.2 Mean: Two variables are said to have “correlation”, when they are so related that
the change in the value of one variable is accompanied by the change in the value of the
other.

5.2.3 Correlation: The study of the correlation helps us to know whether the change in
deposit effects the change in loan or not. Value of correlation always lies between +1 and
-1. When correlation is +1, there is perfect positive correlation between two variables.
When correlation is -1, there is perfect negative correlation between two variables. When
correlation is 0, the variables are uncorrelated. Correlation is indicated by r. It is
calculated as;

n ∑ xy – ∑ x ∑ y
r=
√ n ∑ x −(∑ x) √ n ∑ y −(∑ y)
2 2 2 2

5.2.4 Diagram (Pie Chart, Bar diagram, Trend graph)

Pie chart: A graphic representation of quantitative information by means of a circle
divided into sectors, in which the relative sizes of the areas (or central angles) of the
sectors correspond to the relative sizes or proportions of the quantities.

Bar diagram: Bar diagram or Bar graph is a chart or graph that presents data

with rectangular bars with heights or lengths proportional to the values that they
 13

represent. The bars can be plotted vertically or horizontally. A vertical bar chart is
sometimes called a line graph.

Trend Line: There are things in nature which shows gradual increase or decrease over a
period of time. The basic tendency of an enterprise to increase or decrease with the
passage of time is known as trend. For example, the size of population, the volume of
production etc. Thus, trend is a smooth, regular and long-term movement of statistical
series. The significance of these tools has been continuously elaborated alone with the
presentation and analysis of data.

1.7 Limitation of the study

This study is simply conducted for the partial fulfilment of the requirement for the degree
of the Bachelor in Business Studies (BBS). And only the secondary data is used and
analyzed which could not disclose the actual result. The other limitation of the study is
listed below:
 Data contains mostly of the annuals reports of the bank through fiscal
year2015/2016to 2019/2020.
 Only five years observation covering from fiscal year 2016/2017 to 2020/2021 is
analysed. The study has been carried out for five year from 2016 to 2020.
 The secondary data have been analysed like through annual report of bank,
unpublished thesis work, documents etc.
 The study deals with limited financial and statistical tools only.
 This study only includes correlation, mean and ratio as statistical tools, none other
tools are used.
 The data is taken as average so the results obtained from the use of the statistical
tools may not be exact.

1.8 Report Structure

In the beginning, some preliminary pages have incorporated the content,

acknowledgement, list of abbreviation, etc. This study has been segregated into three
chapters along with references. The report structure will be as follow:
 14

Chapter I - Introduction
This chapter includes the background of the study, Profile of the organization, statement
of the problem, objective of the study, significance of the study, research method used,
review of literature and limitation of the study.

Chapter II - Results and Findings

This chapter analyses the data related with the study and presents the finding of the study
and also comments briefly on them. Data processing, analysis and interpretation shall be
done using the various techniques such as ratio, descriptive expression, diagram and so
forth.

Chapter III - Summary and Conclusion

It will on the basis of analysis help the researcher include the discussion, conclusion and
implications of the study. This section will be concerned with providing the summary of
the findings and the recommendations.
 15

CHAPTER TWO
RESULT AND ANALYSIS
Presentation is the process of understanding the study or the report and calculating the
opinion. In other word, Presentation means presenting the collected data through table,
figure etc. An analysis of a data means the process where the statement or the report gets
resolve by breaking them into simple statement. Analysis means to find out something
and give opinion about the presented data. This chapter consists presentation and analysis
of secondary data related with different variable using both financial and statistical tools.
The main objective of this chapter isto present and analyses the gathered data with the
help of different tools. So, it is the central part of this study which helps to examine the
liquidity and profitability position of Sunrise Bank Limited.

2.1 Data analysis

2.1.1 Loan and advance to total deposit ratio

Table 2:
Loan and advance to total deposit ratios
Amount (in Millions)
Fiscal Year Loan and advance Total Deposit Loan and advance
to Total Deposit
ratios
2016/2017 50677 60895 0.8322
2017/2018 60545 69308 0.8736
2018/2019 70014 75212 0.9309
2019/2020 83413 90223 0.9245
2020/2021 102397 106432 0.9621
Average 0.90466
Source: Appendix
The table 2showsLoan and advance to total deposit ratios of Sunrise Bank Limited of
fiscal year from 2016/17 to 2020/21. In the fiscal year 2016/17, the Loan and advance to
 16

total deposit ratio 0.8322 times, the Loan and advance to total deposit ratio is
0.8736times in the fiscal year 2017/18. Again, in the fiscal year 2018/19, the Loan and
advance to total deposit ratio is 0.9309 times and in fiscal year 2019/20 the Loan and
advance to total deposit ratio is 0.9245 times,ON fiscal year 2020/21the Loan and
advance to total deposit ratio is 0.9621. On average, Loan and advance to total deposit
ratio is 0.90466times.

Loan and Advance to Total Deposit ratio

1

0.95

0.9

0.85

0.8

0.75
2016/17 2017/18 2018/19 2019/20 2020/21

Loan and Advance to Total Deposit ratio

Figure 2:
Loan and advance to total deposit ratios

The figure 2shows Loan and advance to total deposit ratios of Sunrise Bank Limited of
fiscal year from 2016/17 to 2020/21. In the fiscal year 2016/17, the Loan and advance to
total deposit ratio 0.8322 times, the Loan and advance to total deposit ratio is 0.8736
times in the fiscal year 2017/18. Again, in the fiscal year 2018/19, the Loan and advance
to total deposit ratio is 0.9309 times and in fiscal year 2019/20 the Loan and advance to
total deposit ratio is 0.9245 times.likewise in the fiscal year 2020/21, the Loan and
advance to total deposit ratio is 0.9621times On average, Loan and advance to total
deposit ratio is 0.90466 times.

Evaluating Correlation Coefficient between Loan and advances and Total deposit
by using “Karl Pearson’s Correlation Coefficient”
 17

Properties:
1. Correlation Coefficient is denoted by ’r’ and lies between +1 to -1
2. When r=1, there is perfectly positive correlation between two variables.
3. When r=-1, there is perfectly negative correlation between two variables.
4. When r=0, there is no correlation between the variables.
5. If the value of r is near to +1 or -1, the relationship between two variables is
closer andnearer the value of r to 0, lesser will be the relationship.
Table3:
Computation of Correlation Coefficient between Loan and advance and Total deposit
Year Loan Total U= V= U2 V2 UV
and deposi X-a Y-b
advance t
s (Y)
(X)
2016/201 50677 60895 - -14317 373919569 204976489 276847829
7 19337
2017/201 60545 69308 -9469 -5904 89661961 34857216 55904976
8
2018/201 70014 75212 0 0 0 0 0
9
2019/202 83413 90223 13399 15011 179533201 225330121 201132389
0
102397 10643 32383 31220 104865868 974688400 101099726
2020/202 2 9 0
1
(Amount in million)
Source: Appendix

From the computation of correlation between loan and advance and total deposit, we can
find0.9956which means degree of Positive correlation between loan and advancesand
total deposit. It means if the loan and advances of SRBL increase total deposit will also
increases. (Since loan and advances is increasing annually and the total deposit is
increasing annually positively.)

2.1.2 Saving deposit to total deposit

Table 4:
Saving deposit to total deposit ratios
 18

Amount(in Millions)
Fiscal Year Saving deposit Total Deposit Saving deposit to
Total Deposit ratios
2016/2017 16,382 60895 0.2690
2017/2018 19787 69308 0.2855
2018/2019 23308 75212 0.3099
2019/2020 28504 90223 0.3159
2020/2021 39078 106432 0.3672
Average 0.3095
Source: Appendix

The table 4 shows saving deposit to total deposit ratios of Sunrise Bank Limited of fiscal
year from 2016/17 to 2020/21. In the fiscal year 2016/17, the saving deposit to total
deposit ratio is 0.2690 times, the saving deposit to total deposit ratio is 0.2855 times in
the fiscal year 2017/18. Again, in the fiscal year 2018/19, the saving deposit to total
deposit ratio is 0.3099 times and in fiscal year 2019/20 the saving deposit to total deposit
ratio is 0.3159 times .And in the fiscal year 2016/17, the saving deposit to total deposit
ratio is 0.3672 times. The average saving deposit to total deposit ratio is 0.3095 times.

Saving deposit to Total Deposit %

24% 17%
2016/17
2017/18
2018/19
18% 2019/20
2020/21
20%
20%

Figure 3:
Saving deposit to total deposit ratios
 19

The figure3shows saving deposit to total deposit ratios of Sunrise Bank Limited of fiscal
year from 2016/17 to 2020/21. In the fiscal year 2016/17, the saving deposit to total
deposit ratio is 17%, the saving deposit to total deposit ratio is 19% in the fiscal year
2017/18, the saving deposit to total deposit ratio is 20% in the fiscal year 2018/19. Again,
in the fiscal year 2019/20, the saving deposit to total deposit ratio is 20% and in fiscal
year 2020/21 the saving deposit to total deposit ratio is 24%. The average saving deposit
to total deposit ratio is 0.3095.

2.1.3Fixed deposit to total deposit ratio

Table 5:
Fixed deposit to total deposit ratiosAmount(in Millions)
Fiscal Year Fixed deposit Total Fixed deposit to Total
Deposit Deposit ratios
2016/2017 35375 60895 0.5809
2017/2018 38945 69308 0.5619
2018/2019 41113 75212 0.5466
2019/2020 47926 90223 0.5312
2020/2021 49275 106432 0.4630
Average 0.5367
Source: Appendix

Fixed Deposit to total deposit ratio

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2016/17 2017/18 2018/19 2019/20 2020/21

Fixed Deposit to total deposit ratio

 20

Figure 4:
Fixed deposit to total deposit ratios

The above table5 and figure4 shows fixed depositto total deposit ratios of Sunrise Bank
Limited of fiscal year from 2016/17 to 2020/21. In the fiscal year 2016/17 the fixed
deposit to total deposit ratio 0.5809times, the fixed deposit to total deposit ratio is 0.5619
times in fiscal year 2017/18. Again, in the fiscal year 2018/19, the fixed deposit to total
deposit ratio is 0.5466 and in fiscal year 2019/20 the fixed deposit to total deposit ratio is
0.5312times.whereasthe fixed deposit to total deposit ratio is 0.4630. On average, Fixed
deposit to total deposit ratios is 0.5367times.

2.1.4Cash and bank balance to current deposit ratio

Table 6:
Cash and bank balance to current deposit ratio
Amount (in Millions)
Fiscal Year Cash and bank Current deposit Cash and bank balance
balance to current deposit
ratios
2016/2017 2159 1856 1.1633

2017/2018 7456 3615 2.0625

2018/2019 6515 4288 1.5194

2019/2020 8011 5857 1.3678

2020/2021 11772 8588 1.3707

Average 1.4967

Source: Appendix

The table 6 shows Cash and bank balance to current deposit ratios of Sunrise Bank
Limited of fiscal year from 2016/17 to 2020/21. In the fiscal year 2015/16, , the Cash and
 21

bank balance to current deposit ratio is 1.1633 times, the Cash and bank balance to
current deposit ratio is 2.0625 times in fiscal year 2017/18. Again, in the fiscal year
2018/19, the Cash and bank balance to current deposit ratio is 1.5194 times and in fiscal
year 2019/20 the Cash and bank balance to current deposit ratio is 1.3678 times,whereas
the Cash and bank balance to current deposit ratio is1.3707 times in fiscal year 2020/21.
On average, Cash and bank balance to current deposit ratios is 1.4967times.

Cash and Bank Balance to Current Deposit ratios

2.5

1.5

0.5

0
2016/17 2017/18 2018/19 2019/20 2020/21

Cash and Bank Balance to Current Deposit ratios

Figure 5:
Cash and bank balance to current deposit ratios

The figure5 shows Cash and bank balance to current deposit ratios of Sunrise Bank
Limited of fiscal year from 2016/17 to 2020/21. In the fiscal year 2016/17, the Cash and
bank balance to current deposit ratio is 1.1633 times, the Cash and bank balance to
current deposit ratio is 2.0625 times in fiscal year 2017/18. Again, in the fiscal year
2018/19, 2019/20 and 2020/21the Cash and bank balance to current deposit ratio is
1.5194 times,1.3678 times and 1.3707 respectively.

2.1.5 Cash and bank balance to total deposit ratio

Table 7:
Cash and bank balance to total deposit ratiosAmount (in Millions)
Fiscal Cash and bank Total Cash and bank balance to total
Year balance deposit deposit ratios
2016/2017 2159 60895 0.0355
 22

2017/2018 7456 69308 0.1076

2018/2019 6515 75212 0.0866
2019/2020 8011 90223 0.0888
2020/2021 11772 106432 0.1106
Average 0.0858
Source: Appendix
The table 7 shows Cash and bank balance to total deposit ratios of Sunrise Bank Limited
of fiscal year from 2016/17 to 2020/21. In the fiscal year 2016/17, the Cash and bank
balance to total deposit ratio is 0.0355 times, the Cash and bank balance to total deposit
ratio is 0.1076 times in the fiscal year 2017/18. Again, in the fiscal year 20118/19, the
Cash and bank balance to total deposit ratio is 0.0866 times and in fiscal year 2019/20 the
Cash and bank balance to total deposit ratio is 0.0888times,whereas the same ratio has
increased to 0.1106 times in fiscal year 2020/21

0.12 Cash and Bank Balances to Total Deposit Ratios

0.1

0.08

0.06

0.04

0.02

0
2016/17 2017/18 2018/19 2019/20 2020/21

Cash and Bank Balances to Total Deposit Ratios

Figure 6:
Cash and bank balance to total deposit ratios

The figure6 shows Cash and bank balance to total deposit ratios of Sunrise Bank Limited
of fiscal year from 2016/17 to 2020/21. In the fiscal year 2016/17, the Cash and bank
balance to total deposit ratio is 0.0355 times, the Cash and bank balance to total deposit
ratio is 0.1076 times in the fiscal year 2017/18. Again, in the fiscal year 2018/19, the
Cash and bank balance to total deposit ratio is 0.0866 times and in fiscal year 2019/20 the
 23

Cash and bank balance to total deposit ratio is 0.0888 times. And in fiscal year 2020/21
the cash and bank balance to total deposit ratio is 0.1106 times.

2.1.6 Cash Reserve Ratio (CRR)

Table 8:
Cash Reserve RatioAmount (in Millions)

Fiscal Year Cash Reserve Ratio (%)

2016/2017 9.43
2017/2018 7.24
2018/2019 4.31
2019/2020 8.67
2020/2021 6.36
Source: Appendix

The table 8 shows cash reserve ratio of Sunrise Bank Limited of fiscal year from 2016/17
to 2020/21. In the fiscal year 2015/16 the cash reserve ratio is 9.43%, , and the cash
reserve ratio is 7.24% in the fiscal year 2017/18. Again, in the fiscal year 2018/19, the
cash reserve ratio is 4.31% and in fiscal year 2019/20 the cash reserve ratio is 8.67% and
in the fiscal year 2020/21 is 6.36%.

Cash Reserve Ratio

18%
26% 2016/17
2017/18
2018/19
24% 2019/20
20% 2020/21
12%

Figure 7:
 24

Cash Reserve Ratio

The figure7shows cash reserve ratio of Sunrise Bank Limited of fiscal year from 2016/17
to 2020/21. In the fiscal year 2016/17,the cash reserve ratio is 9.43%, and the cash
reserve ratio is 7.24% in the fiscal year 2017/18. Again, in the fiscal year 2018/19, the
cash reserve ratio is 4.31% and in fiscal year 2019/20 the cash reserve ratio is 8.67% and
in fiscal year 2020/21 the cash reserve ratio is 6.36%.

2.2Analysis of Primary Data

Questionnaire:
These are the set of questions asked during the research activity in order to collect
necessary data and information. Some questions asked during survey are as follows:
 Does your bank have a strategy for liquidity risk management approved by
banks’ management?

5%

15%
Yes
No
To some Extent
80%

 Are there any mechanisms to identify and react to changes that can have a
dramatic and pervasive impact on organization in regards to liquidity?
 25

30%
Yes
No
55%
To some Extent
15%

 Do controls exist for approving decisions regarding liquidity of the bank?

2% 8%

Yes No
To Some Extent

90%

 Does it include regular liquidity monitoring and management?

5%

15%
Yes
No
To some Extent
80%

 How often monitoring and management activities are taken?

 26

Periodicity Daily Weekly Monthly Other (Please

Specify)
Monitoring 1 to 90 days span
Reporting Same as monitoring

 Does your bank continuously monitor bid-ask spreads for financial

instruments (main liquidity indicator on securities)?

2% 8%

Yes No
To Some Extent

90%

 Has your bank set warning signals for possible liquidity crises?
 27

30%
Yes
No
55%
To some Extent
15%
 28

CHAPTER THREE
SUMMARY AND CONCLUSIONS

This chapter is dedicated to provide the summary of the study and conclusions after
liquidity analysis of Sunrise Bank Limited. It also tries to provide some action
implication to the concerned banks from the conclusion derived from the study.

3.1. Summary

Liquidity position of any company can evaluate the financial soundness. And to measure
the liquidity, it is necessary to measure the working capital of the same company, since
generally the liquidity position of any company is measured by the working capital.
Working capital based on the current assets & current liabilities. The Analysis of liquidity
position of SBI bank is done by evaluating different financial ratios like current ratio,
quick ratio, debt equity ratio, Return on assets, interest coverage ratio, etc. The main
objective of this study is to evaluate the liquidity position of Nepal SBI Bank. The main
sources of data for this study is Secondary data which is obtained by annual reports of the
SBI Bank, different published source, newspaper, magazines etc.
The data has been extracted from the fiscal year 2015/16 to 2019/20 for the analysis of
the bank liquidity. The data has been shown in tables and figures. The Bar diagram is
used in this study to clear the data of different fiscal year, which made the study easier to
understand. The Current ratio tools that measure the short-term solvency of the SBI bank,
Quick ratio that measures the short-term debt repaying ability of the bank are examined
in detail under this study.

3.2. Conclusion

In Nepalese banking sector, commercial banks including ventures banks are operating at
present. In the absences of modern banking any country cannot develop the economic
activity. Therefore, it is essential to find out whether or not the banks are serving an
important contribution to develop sectors of economy. Establishment of commercial
banks especially joint venture banks have continued in response to the economic
 29

liberalization policies of the government. These joint venture banks are mainly
concentrated themselves on financing foreign trade, commerce and industry. This study
has been mentioned already that the research concentrates. The researcher has evaluated
data for the least 5 years period i.e. 2015/16 to 2019/20. The researcher has analyzed the
data by using financial tools as well as statistical tools.

The liquidity ratio measures the ability of a firm to meet its short-term obligations and
select the short-term financial solvency of a firm. The liquidity position of the bank in
term of Loan and advance to total deposit ratios shows that the ratios of Sunrise Bank are
in increasing trend after fiscal year 2015/16 to 2019/20. So, it can be concluded that
Sunrise Bank is having better short-term solvency and in term of saving deposit to total
deposit ratios the ratios are in decreasing trend, it shows that the liquidity positionis weak
in Sunrise Bank Limited. The liquidity position of the bank in term of fixed deposit to
total deposit ratio of Sunrise Bank is in increasing trend after fiscal year 2015/16 which
shows good position of bank. In term of cash and bank balance to current deposit ratios
and cash and bank balance to total deposit ratios and the liquidity position of the bank is
in fluctuating trend. The major expenses of Sunrise Bank are interest expenses, staff
expenses, office expenses and provision for bonus.

3.3. Major Findings

The major findings of this study are as follows:
 On average, loan and advance to total deposit ratio is 0.90466 times.
 ,On average the saving deposit to total deposit ratio is 0.3095 times.
 On average, fixed deposit to total deposit ratio.0.5367 times.
 On average, cash and bank balance to current deposit ratio is 1.4967 times.
 On average, cash and bank balance to total deposit ratio is 0.0858 times.
 In the fiscal year 2015/16, the cash reserve ratio is 10.49%, the cash reserve ratio is
9.43%, in the fiscal year 2016/17, and the cash reserve ratio is 7.24% in the fiscal
year 2017/18. Again, in the fiscal year 2018/19, the cash reserve ratio is 4.31% and
in fiscal year 2019/20 thecash reserve ratio is 8.67%.
 30

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Khadka, S. (2062). Banking and insurance. Kathmandu: Asia Publication Pvt. Ltd.

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 31

Websites
www.nrb.org.com
www.sunrisebank.np

APPENDICES

1. Balance Sheet of Last Five Years

Balance Sheet of 2016/2017

 32

Balance Sheet of 2017/2018

 33

Balance Sheet of 2018/19

 34

Balance Sheet of 2019/20

35
 36

Balance Sheet of 2020/21

 37

2. Profit and Loss account of Last Five Year

Profit and loss of 2016/17

 38

Profit and loss of 2017/18

 39

Profit and loss of 2018/19

 40

Profit and loss of 2019/20

 41

Profit and loss of 2020/21