1

CHAPTER I

INTRODUCTION

1.1 Background of the Study

Every firm is most concerned with its profitability. Profitability is a measure of firm’s efficiency.
It is also a control measure of the earning power of a firm as well as operating efficiency. Weston
and Copland (1998) described profitability as net result of a large number of policies and
decisions. One of the most frequently used tools of financial ratio analysis is profitability ratios
which are used to determine the company’s bottom line and its return to its investors. Therefore,
profitability measures are important to company managers, creditors and owners.

Profitability ratios show a firm’s overall efficiency in using its assets and performance. These are
divided into two types: margin ratios and returnratios. Margin ratiosrepresent the company’s
ability to turn revenue into profits. And return ratios represent the firm’s ability to generate
returns to its shareholders.

Profitability analysis is a component of enterprise resource planning (ERP) that allows

administrators to forecast the profitability of a proposal or optimize the profitability of an
existing project. Profitability analysis can anticipate sales and profit potential specifics to aspects
of the market such as customer age groups, geographic regions and product types.

A commercial bank is a financial institution that provides services like accepting deposits,
providing business loans and offering basic investment products. The general role of commercial
bank is to provide financial services to the general public, business and companies, ensuring
economic and social stability and sustainable growth of the economy. In the context of Nepal,
many commercial banks are operating and providing banking facilities to the people.

Now-a-days, banking sector acts as the backbone of modern business. Development of any
country mainly depends upon the banking system. A bank is a financial institution which deals
 2

with deposits and advances and other related services. It receives money from those who want to
save in the form of deposits and it lends money to those who need it. In most countries, banks are
regulated by the national government or central bank. Mobilization of savings through intensive
deposit Collection has been regarded as the major task of banking in Nepal. Acceptance of
deposits is the primary function of commercial banks. As such, deposit mobilization is one of the
basic innovations in current Nepalese banking activity.

1.2 Brief Profile of NIC ASIA Bank Limited

NIC ASIA Bank was founded as Nepal Industrial and Commercial Bank on 21 July, 1998. It was
renamed as NIC ASIA Bank on 30 June, 2013 after it merger with Bank of Asia which is the
Nepal’s first merger of two commercial bank in history. After the merger, NIC ASIA was
recognized as “Bank of the Year-2013 Nepal” by The Banker, Financial Times UK. This is the
second time that the bank was recognized with its prestigious award, the previous occasion being
in 2007. Today, NIC ASIA has established itself as one of the most successful commercial banks
in Nepal. NIC Asia LaghubittaBittiyaSanstha Limited and NIC Asia Capital Limited are the
wholly owned subsidiaries of the bank.

NIC ASIA Bank is now, one of the largest private sector commercial bank in the country in
terms of capital base, balance sheet size, number of branches, ATM network and customer base.
It has 356 branches, 473 ATMs, 70 extension counters and 81 branchless banking services across
Nepal with a network covering all major financial centers of the country. The Bank strongly
believes in Meritocracy, Transparency, Professionalism, Team spirit and Service Excellence.
These core values are internalized by all functions within the Bank and are reflected in all actions
the Banks takes during its business.

The vision of the bank is “To ensure creation of optimum values for all the stakeholders” while
its mission is “To be a Bank of 1st Choice for all the stakeholders”. The Bank has adopted the
latest technologies in Core Banking System, business intelligence, customer relationship
management and process automation to enhance its capacity to cater to customers’ demands by
reducing service delivery time and adding various new products and services. The Bank is
 3

headed by Tulsi Ram Agrawal as its chairman and Roshan Kumar Neupane as chief executive
officer.

The bank is rapidly expanding to newer markets with the aim of serving the growing demand for
professional financial services such as innovative saving accounts, term deposits, home and auto
loans, small business loans, microfinance, insurance etc. The bank actively promotes digital
channels such as internet and mobile banking to complement the growing number of branches as
part of the bricks and clicks strategy allowing customers to touch us through a channel of their
choice: branches, ATM, internet and mobile phones.

Some features of the bank are as follows:

• It believes relationships are more important than transactions and will strive to offer the
best customer experience keeping our clients at the front and center in order to realize
their economic potential.

• It expand physically and digitally to allow customers to access us through the channel of
their choice and leverage technology to help make banking smart, simple and secure.

• The banks believe in responsible banking and adopt high standards of governance,
transparency, ethics and integrity across the company.

• Understanding the banks responsibilities extend beyond financial services and actively
invest in the communities where it operate and work towards being a green company
reducing our carbon footprint for a sustainable future.

1.3 Objectives of the Study

Our primary objective is to provide us with an opportunity for developing managerial skills by
working in the organization. It is to evaluate of compare the theoretical aspects with practical
life. It also to identify the problem and their underlying causes. It helps us to develop and
evaluate potential solution that optimizes organizations strength, weakness, potential
 4

opportunities and competitive threats. For the achievement of the general objective, the specific
objective is as follows.

• To examine the profitability position of NICA Bank by using financial and

statistical tools.
1.4 Rationale of the Study
The deposit analysis is an effective managerial evaluation of performance. It studies the effect on
the shareholder’s return and risk. Consequently, the effect on market value of the share can be
verified with profitability analysis. A proper profit planning contributes to improve the overall
performance and leads the organization towards success. Some of the significance of this study
are given below:

• It helps the shareholders, depositors and creditors to identify the productivity of their
firms.
• Identify the most and least profitable products or services.
• Discover which sources of information offer the most reliable facts.
• Every individual as well as further researcher will have a good source of literature review
about findings done by this research.
1.5 Review of the Study

The term review of literature is very important for the researcher or investigator in the area of
concerned problem. This is related to the present study with the view to find out what had
already been explained and how the present research adds new dimension to the study. It is an
integral and mandatory process in research work.

1.5.1 Conceptual review

Our country has been involved in business and trade since long time ago. Though the production
of copper utensils had been started during the 7th century, business relationship could not be
established with India since India was involved in the production of copper utensils. However,
the craft concerned with copper, wood and metal in our country did attract the Chinese and the
Tibetan a lot, thus, resulting in the establishment of business relationship with China and Tibet.
 5

In 12th century there was silver coin called ‘Dam’. Later on in 14th century ‘TANKADHARI’ one
is that dealt with the lending money to the public. It’s remain objective was to earn profit, so they
used to change high interest rate. To control interest rate ‘ TEJARATH ADDA’ was established
in 19th century. It provides loans to the people working in government offices on the basis of the
security and to public on the basis of collateral they deposit.

It charges only 5% interest rate per annum. It only provides loan but does not accept deposit.
Nepal Bank Ltd is the first modern bank of Nepal. It is taken as the milestone of modern banking
of the country. Nepal Bank marks the beginning of a new era in the history of the modern
banking in Nepal. This was established in 1973 AD. Nepal

Bank Ltd remained the only financial institution of the country until the foundation of Nepal
Rastra Bank in 1956 A.D. in 1957 A.D. Industrial Development Corporation was established to
promote the industrialization in Nepal, which was later converted into Nepal Industrial
Development Corporation (NIDC) in 1959 A.D. RastriyaBanjiya Bank was established in 1965
A.D. as the second commercial bank of Nepal.

There are various types of bank working in modern banking system in Nepal. It includes central,
development, commercial, financial, co-operative and micro credit banks. The NRB will classify
the institutions into ‘A’, ‘B’, ‘C, ‘D’ groups on the basis of the minimum paid-up capital and
provide the suitable license to the bank or financial institutions. Group ‘A’ is for commercial
bank, ‘B’ for the development bank, ‘C’ for the financial institutions and ‘D’ for the micro
finance development banks. There are 27 commercial banks, 18 development banks, 22 finance
companies, 85 micro finances ( licensed by Nepal Rastra Bank) are established so far in Nepal.

The modern financial evaluation has greatly affected the profitability ratio of banks. Nowadays,
finance is best characterized as ever changing with new ideas and techniques. Only efficient
manager of the company can achieve the set up goals. If a bank does not equity maintain
adequate equity capital, it makes the bank .more risky. If a bank has inadequate equity capital, it
must be used more debt that has high fixed cost. Themain objectives of the bank are to collect
deposits as much as possible from the customers and to mobilize into the most profitable sector.
If a bank fail to utilize its collected resources than it cannot generate revenue. Resource
 6

mobilization management of bank includes resource collection, investment portfolio, loans and
advances, working capital, fixed assets management etc. It measures the extent to which bank is
successful to utilize its resources. To measure the bank profitability in many aspects we should
analyze its indicator with the help of the financial statements. Profitability ratio is the process of
identifying the financial strength and weakness of the concerned bank. In this regard various
books, journals and articles concerned to this topic have been reviewed.

1.5.2 Review of previous study

Further R.S. Sayers in his book Modern Banking Writers, “Ordinary banking business consist of
changing cash for bank deposits and bank deposits from one person to corporation giving bank
deposits in exchange for bill of exchange, government banks, recurred and unsecured promises
businessman repay. Erich A.H. in his books has described profitability ratio as “Profitability ratio
is both an analytic and judgmental process that helps to answer the questions that have been
properly posed to and therefore it mean to an end”. We can stress enough that financial analysis
is an aid that allows those responsible for results to make sound decisions. Liquidity is other
financial indicator of the business enterprises. I.M. Pandey says, “ A firm should ensure that it is
not too much highly liquid. The failure of a company to meet its obligations due to lack of
sufficient liquidity will result in bad credit image. Loss of creditor’s confidence, or even in low
suits resulting in the closure of the company. A very high degree of liquidity is also bad; idle
assets earn nothing. The firm’s fund will be unnecessary tied up in current assets. Therefore, it is
necessary to strike a proper balance between liquidity and lack of liquid. Liquidity measured by
the speed with which a bank’s assets can be converted into cash and other current obligations. It
is also important in view of survival and growth of a bank.In this regards, some of the reviewed
thesis related to this topic are studied.

Regmi (2015), in a study entitled “Performance of Public Sector Banks” analyzed the
profitability of NIC ASIA Bank by analyzing the relationship between EPS, DPS and MPS of the
bank. The study did not deal with the profitability forecasting through capital budgeting
techniques.
 7

Adhikari (2008) thesis" A Comparative Study Of Financial Performance Of NSBIBL and EBL"
conclude that EBL is found superior regarding the liquidity, quality assets they possessed and
capital adequacy overall capital structure of NSBIBL appears more levered than that on EBL.
But NSBIBL is found superior in terms of profitability and turnover comparatively interest
remained more dominant in the total income and expenses of NSBIBL than that of EBL.
Regarding the test of hypothesis is (at 5% level of significance) the performance of the sampled
banks significantly different with respect to the ratios, loans and advances to saving deposits.
Loan loss provision to total deposit interest earned to total assets and tax per share correlation
analysis signifies that EBL is successful to utilize its resources more efficiently than NSBIBL.
(Adhikari, 2001, p.28) The review of the above mention bunch of research writes have definitely
enriched my vision to elaborate analysis to come to the meaningful conclusion in realistic term
and thereby come with some conclusion, few key suggestions that help in improvement of
commercial banks. Previous researches on the basis of financial performance of commercial
banks in Nepal. But this research is about joint venture bank of Nepal with sample of Nepal SBI
Bank Limited and Everest Bank Limited. This research is about the financial performance of
selected two banks. In the previous research, there is no clear-cut financial performance of joint
venture banks. The research can help the people who wanted to know about the overall financial
performance of joint venture bank in Nepal. There are two-selected bank to find out the
comparative financial position of selected bank. Therefore, this topic may not new but the
researches efforts may be appreciable.

Shah (2016), in a study entitled “Commercial Banks of Nepal” stated that financial performance
not only benefits its shareholders but also plays a crucial role in handling the economy of the
country.

1.6 Methods

Research methods refer to the various sequential steps to be adopted by a researcher or

investigator inn studying a problem with certain objectives in view. Themethodology used to
prepare this report is based upon primary and secondary data. The methodology entitled in the
following topics is used for my analysis.
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1.6.1 Research design

Research design is purely and simply the framework or plan for a study that guides the collection
and analysis of the data. It is the plan, structure and strategy of investigation conceived as to
obtain answer to the research questions and to control variances. A true research design is
basically concerned with various steps to collect data for analysis and a relevant conclusion. To
achieve the objectives of the study descriptive and analytical research design has been used.

1.6.2 Population and sample

The population refers to the industries of the same nature and its services and product in general.
Thus, the total commercial banks constitute the population of the data and the banks under the
study constitute the sample for the study. So, from the population of 27 commercial banks
operating in Nepal, NIC ASIA Bank Limited has been

selected as the sample for the study.

1.6.3 Types of data

In this report, all the data has been collected from published annual reports, brochures and books.

Primary Data:

The data which are originally collected by an investigator or an agent for the first time for the
purposes of statistical enquiry are known as primary data. The primary data are personally
collected through questionnaire, direct observation and interviews.

Secondary data:

Those data which are originally collected but obtained from some published or unpublished
source is known as secondary data. The data presented in this study are of secondary types. The
sources of data and information are:

• Annual reports of NIC ASIA Bank

• Newspapers and magazines
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• Website of NIC ASIA Bank

• Website of Nepal Rastra Bank
1.6.4 Data collection techniques

The study is mainly based on secondary data obtained from various sources. Secondary data are
collected from the annual report of the bank. So by direct visit to organization, search from
internet are the main way of datacollection.Data collection is the important work of research.
Collection and analysis of appropriate and accurate information helps to take right decision.
Thus, data should be collected carefully. Similarly various data and information are collected
from the economic journals, periodicals, bulletins, magazines and other published reports and
documents from various sources.

1.6.5 Data analysis tools

Presentation and analysis of the collected data is the core of the research work, the collected raw
data are first presented in systematic manner in tabular form and then analyzed by applying
different financial and statistical tools to achieve the research objectives. Besides these, tables
have been presented to analyze and interpret the findings of the study.

1.6.5.1 Financial tools

Financial tools are those tools which are used for the analysis and interpretation of financial data.
Ratio analysis is one of the important financial tools that have been used in the study. A ratio is
simply a number expressed in terms of another and such it expresses the quantitative relationship
between any two numbers. Ratio can be expressed in terms of percentage, proportion and as
coefficient. Logarithmic graph and break-even chart are the graphic form of expressing a ratio.
They help to analyze financial strength and weakness of the firm. These tools can be used to get
the precise knowledge of a bank, which in turn is meaningful in finding the result about the
profitability of a bank. Financial ratio is the mathematical relationship between two accounting
figures. Even though there are many ratios to analyze and interpret the statement, only those
ratios that are related to the investment operation of the bank have been covered in this study.
Different types of ratios have been used in this study.
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1) Cash and bank balance to total deposit ratio (cash reserve ratio)

Cash and bank balances are the most liquid current assets. This ratio measures the percentage of
most liquid fund with the bank to make immediate payment to the depositor. This ratio is
calculated by dividing the cash and bank balance by the amount of total deposits. Mathematically
it is expressed as,

Hence, cash and bank balance includes cash on hand, foreign cash on hand, cheques and other
cash items, balance with domestic and abroad banks whereas the total deposits include current
deposits, saving deposits, fixed deposits, money at call and short term notice and other deposits.

2) Earnings per share (EPS)

Earnings per share are calculated by dividing firm's income available to common stockholders by
the number of share outstanding. Net income available to common stock holders is net income
less preferred stock dividend payments. If there is sinking fund payment, then it also should be
deducted. EPS can be calculated as follows:

Net income available for common stock

EPS= Number of common share outstanding

3) Total investment to total deposit ratio

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This ratio implies the utilization of firm’s deposit on investment in government securities and
share debentures of other companies and bank. This ratio can be calculated by dividing total
investment by total deposit. Which can be states as.

Total Investment

Total Investment to Total Deposit Ratio =

Total Deposit

4) Return on assets (ROA)

A financial ratio, the role of Return on Asset (ROA) is to display the percentage of profit which
any company/ organization gains against its entire capital investment. It is rather known as net
income (or pretax profit)/ total assets.. It is seen in relation to management's performance in
manipulating the properties of the business to create benefits. ROA is used by companies and
banks to furnish them with a valuable tool for evaluating their progress including use of
resources and financial strength.

ROA can be calculated as follows:

Netincome

ROA= Totalassets X 100 %

1.7 Limitation
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This study is mainly covered in the activity of NICA. This study is none free from limitation.
Here, following are major limitation of study:

• The study is based on the published annual report of NICA  This report can't be
precise because almost all the data are secondary.

• The study period covers only fiscal year from 2073/74 to 2077/2078.
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CHAPTER II

RESULTS AND FINDINGS

2.1 Data Presentation

This chapter is devoted to the presentation, analysis, interpretation and scoring the empirical
finding out of the study through definite course of research methodology. To achieve the stated
objective of the study researcher has tabulated the available data in different figure, table and
analyzed using the tools where necessary and applicable stated in the research methodology.
Presentation of data refers to the organization of data into tables, graphs or charts, so that logical
and statistical conclusions can be derived from the collected measurements this chapter deals
with the analysis and interpretation of data following the researcher methodology dealt in the
chapter. In the course of analysis, data gathered from the various sources have been inserted in
the tabular form according to 'heir' homogenous nature. The various tables prepared for the
analysis purpose have been shown in Appendixes. Using financial and statistical tools, the data
have been analyzed the result of the analysis has been interpreted keeping in mind the
conventional standard with respect to ratio analysis, directives of NRB and other factors while
using other tools. Moreover, financial performance of the sampled banks has especially been
analyzed in cross-sectional manner. Ratio analysis has been adapted to evaluate the financial
health, operating result and growth of the sampled banks. In order to analyze and interpret the
tabled data, the following ratios have been used. An average is a single value selected from a
group of values to represent them in same way, which is supposed to stand for whole group of
which it is a pare, as typical of all the values in the group (Waugh A.E.), Out of various measures
of the central tendency, arithmetic mean is one of the useful tools applicable here, it is easy to
calculate and understand and based on all observations. Arithmetic mean of a given set of
observations is their sum divided by the number of observation.
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1) Cash and bank balance to total deposit ratio

Cash and bank balance is the most liquid asset. The ratio between the cash and bank balance and
total deposit measures the ability of the bank to meet the unanticipated cash and all types of
deposits.

Total Deposit

Cash and bank balance to total deposit ratio =

Cash and Bank Balance

Where,

Cash and bank balance includes cash on hand, foreign cash on hand, cheque and other cash
items, balance with domestic and abroad banks whereas the total deposits include current
deposits, saving deposits, fixed deposits, money at call and short term notice and other deposits.

Table no 2.1

Cash and Bank Balance to Total Deposit Ratio (%)

Year Cash and Bank Balance to Total Deposit Ratio (%)

NICA (In %)

2073/74 5.39

2074/75 4.44

2075/76 11.79

2076/77 6.10

2077/78 8.32
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Total 36.04

Mean 7.21

(Source: Appendix 1)

14

12

10

0
2073/74 2074/75 2075/76 2076/77 2077/78

Figure 2.1 cash and bank balance to total deposit ratio

The ratio in remained 5.39%, 4.44%, 11.79%, 6.10 % and 8.32% in the respective years (2073/74
to 2077/78) of review period and mean of the NICA is 7.21%. It is in increasing trend.

2) Return on assets (ROA)

Return is the measure of investment and it measures the profit earning capacity of the investible
resources into different types of assets. It shows the overall efficiency of the bank in generating
profit with its available assets. Total asset means the working capital of the bank. If the bank’s
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assets are well managed and utilized efficiently, return on such assets will be higher and vice
versa. This ratio is calculated by dividing net profit by total assets.

Table no 2.2

Return on Assets

Year Return on Assets

NICA (In %)

2073/74 1.64

2074/75 0.97

2075/76 1.56

2076/77 1.32

2077/78 0.94

Total 6.43

Mean 1.29

(Source: Appendix 2)
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1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2073/74 2074/75 2075/76 2076/77 2077/78

Figure 2.2 ROA of NICA

From the above table and figure, return on assets from the F/Y 2073/2074 to F/Y 2077/78 is
1.64%, 0.97%, 1.56%, 1.32%, 0.94% respectively. It is in fluctuating trend. It shows high return
on assets is in F/Y 2073/74 and low return on assets is in

F/Y 2077/78.

3) Total investment to total deposit ratio

A commercial bank mobilizes its deposit by investing its fund in different securities issued by
government and other financial or non-financial companies. This ratio measures the extent to
which the banks are able to mobilize their deposit on investment in various securities.

Total Investment

Total investment to total deposit ratio =

Total Deposit

Where,
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Total investment consists of investment on government securities, investment on debenture and

bonds, share in subsidiary companies, shares in other companies and other investment.

Table No.2.3

Total Investment to Total Deposit Ratio (%)

Year Total Investment to Total Deposit Ratio (%)

NICA (In %)

2073/74 17.97

2074/75 12.54

2075/76 10.59

2076/77 14.54

2077/78 11.53

Total 67.16

Mean 13.43

(Source: annual report of NICA)

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20
18
16
14
12
10
8
6
4
2
0
2073/74 2074/75 2075/76 2076/77 2077/78

The ratio in remained 2.69%, 2.61%, 2.11%, 1.58% and 1.71 % in the respective years (2073/74
to 2077/78) of review period and mean of the NICA is 6.07%. It is in decreasing trend

4) Earnings per share (EPS)

The performance and achievement of a bank can be identified with the earning power of the
bank. It measures the efficiency of a firm in relative terms. The figure is the indicative of overall
good or bad performance of an organization. How far an organization is able to use its resources
to generate profit is determined by the profit it has earned. It is computed by dividing total net
profit by total number of share outstanding.
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Table No.2.4

Earnings per share

Year Earning per share (%)

NICA (In %)

2073/74 22.05

2074/75 16.62

2075/76 34.22

2076/77 31.89

2077/78 28.11

Total 132.89

Mean 26.578

(Source: Appendix 4)
 21

40

35

30

25

20

15

10

0
2073/74 2074/75 2075/76 2076/77 2077/78

Figure 2.4 EPS of NICA

From the above table and figure no.4, EPS from the F/Y 2073/74 to F/Y 2077/78 is

23.06, 16.62, 34.22, 31.89, 28.11respectively. It is in fluctuating trend. The highest EPS of NIC
ASIA Bank is 34.22 in the fiscal year 2075/76 and the lowest is 16.62 in the F/Y 2074/75.

2.2 Analysis of Results

The return on assets ratio measures how effectively a company can earn a return on its
investment in assets. In other words, ROA shows how efficiently a company can convert the
money used to purchase assets into net income or profits. Since all assets are either funded by
equity or debt, some investors try to disregard the costs of acquiring the assets in the return
calculation by adding back interest expense in the formula. It only makes sense that a higher ratio
is more favorable to investors because it shows that the company is more effectively managing
its assets to produce greater amounts of net income. A positive ROA ratio usually indicates an
upward profit trend as well. ROA is most useful for comparing companies in the same industry
as different industries use assets differently. For instance, construction companies use large,
 22

expensive equipment while software companies use computers and servers. In the above data we
find the ROA of NICA is not in satisfactory level.

Total investment to total deposit of the company is decreasing trends; it means deposit is
growing higher.

Earnings per share are the same as any profitability or market prospect ratio. Higher earnings per
share are always better than a lower ratio because this means the company is more profitable and
the company has more profits to distribute to its shareholders. Although many investors don’t
pay much attention to the EPS, higher earnings per share ratio often make the stock price of a
company rise. Since so many things can manipulate this ratio, investors tend to look at it but
don’t let it influence their decisions drastically. As we can see, NICA EPS is in decreasing trend.

2.3 Major Findings

The preceding chapter have discussed and explored the facts and matters required for the various
part of the study. Analytical part, which is the heart of the study, makes an analysis of various
aspects of the investment policy of commercial banks by using some important financial as well
as statistical tools.

Having completed the basic analysis required for the study, the final and most important task of
the researcher is to enlist findings issues and gaps of the study and give suggestions for further
improvements. This would be meaningful to the top management of the bank to initiate action
and achieve the desired result. The objective of the study is not only to point errors and mistakes,
but also to correct them and give directions for the further growth and investment.

The main findings of the study that are derived on the basis of financial data analysis of NICA
are presented below:

i. The highest ROA is in F/Y 2073/74 i.e. 1.64% and the lowest in F/Y 2077/78 i.e.
0.94%. The ratio of return on assets of NIC ASIA Bank is low. .
 23

ii. The EPS from the F/Y2073/74 to F/Y 2077/78 are 22.05, 16.62, 34.22, 31.89,
28.11respectively. The EPS is highest in F/Y 2075/76 i.e. 34.22 and lowest in F/Y
2074/75. This shows return of each equity

shareholder is in satisfactory condition.

iii. Total investment to deposit ratio is higher in the year 2073/74.

iv. The cash & bank balance to total deposit ratio is higher in the year

2075/76

.
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CHAPTER III

SUMMARY AND CONCLUSION

3.1 Summary

In this chapter, the evaluation of NIC ASIA Bank is done with the help of the answers derived
from available data. Some major issues have been taken into consideration for discussion and
conclusions for the same have also been discussed. The data of past five years have been taken
for purpose. This study has been undertaken to evaluate the performance of assessment of
deposit analysis of NICA. The financial statement of 5 years has been taken into consideration
for the performance of analysis of the bank. During the study, secondary data were used to
analyze performance of the bank.

Collecting scattered small amount of capital through different Medias & investing the deposited
fund in productive sector with a view to increase the income of the depositor is meant deposit
mobilization. In the other words, investing the collecting fund in the productive sectors &
increasing the income of the depositor, it also supports to increase the saving through the
investment of increased extra amount The economic development of a country cannot be
 25

imagined without the development of commerce and industry. The role of commercial banks in
the economic growth of nation can be estimated to be prominent. The very challenging job of
commercial banks is to collect the scattered idle resources from the small savers. Actually,
commercial banks pool the fund in the sizable volume in order to feed the fund requirement of
productive sector promote trade and industrialization in the country there by raising the
employment opportunity and earned to the labors and materials suppliers to such industries and
traders.

3.2 Conclusion

With some commercial banks and development banks operating in Nepal, the market seems
overcrowded and the banks are now finding a tough competition among themselves. Since the
entry barriers are not so high due to the government’s liberal policy, this competition is expected
to be more intense in the near future, as there is always the possibility of a new player entering
this sector. Consequently, the bank does not seem to be able to utilize its high cost resources in
high yielding investment portfolio. The investment portfolio of the bank has not been managed
efficiently as to maximize returns from there. The operational efficiency of the bank is found
unsatisfactory because of the series of operational loss over the period. Lower market value is the
reflection of a weaker profitability ratio of the bank. On the basis of this study, the following
conclusions can be made:

• The overall results are quite satisfactory. But in some case the NIC ASIA Bank Ltd
should take certain steps to improve the bank current financial condition.
Therefore, some recommendations are being put forward for its improvement
along with the development of the country.

• The bank should try to generate profit by effective utilization of its various
resources and try to reduce unnecessary expenses.
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• Bank should not spend too much in the fixed assets because its yields only a
nominal portion.

• The bank will have to increase the amount of net profit to maintain the consistency
in the ratio of return on assets and to maintain proper return on total assets.

• The above analysis and computation shows that the bank is improving their
weakness and trying to make gain by utilizing the resources and the opportunity in
proper manner.

From this, it can be concluded that the management of NIC ASIA Bank Ltd is
quite satisfactory.
 27

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