Research Report of Nabil Bank Limited

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Research report of nabil bank limited
Strategic management (Tribhuvan Vishwavidalaya)
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LIQUIDITY AND PROFITABILITY ANALYSIS OF NABIL BANK

LIMITED
A project work report

By
Prajwal Bhusal
T.U. Registered No.: 7-2-271-112-2017
Symbol No.: 702710093
People’s campus
Paknajol kathmandu
Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu
In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES
(BBS)
Kathmandu, Nepal
February, 2022

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DECLARATION
I hereby declare that the project work entitled LIQUIDITY AND PROFITABILITY
ANALYSIS OF NABIL BANK LIMITED submitted to the Faculty of Management,
Tribhuvan University, Kathmandu is an original piece of work under the supervision of
Rajendra Raya, faculty Member, People’s campus Paknajol Kathmandu, and is submitted
in partial fulfillment of the requirements for the degree of Bachelor of Business Studies
(BBS). This project work report has not been submitted to any other university or
institution for the award of any degree or diploma.
……………………
Prajwal Bhusal
date:
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SUPERVISOR’S RECOMMENDATION
The project work report entitled LIQUIDITY AND PROFITABILITY ANALYSIS OF
NABIL BANK LIMITED submitted by Prajwal Bhusal of People’s Campus, Paknajol,
Kathmandu is prepared under my supervision as per the procedure and format
requirements laid by the Faculty of Management, Tribhuvan University, as partial
fulfillment of the requirements for the degree of Bachelor of Business Studies (BBS). I,
therefore, recommend the project work report for evaluation.
………………
Rajendra Raya
Supervisor
Date:
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ENDORSEMENT
We hereby endorse the project work report entitled LIQUIDITY AND PROFITABILITY
ANALYSIS OF NABIL BANK LIMITED submitted by Prajwal Bhusal of People’s
Campus, Paknajol, Kathmandu, in partial fulfillment of the requirements for the degree of
the Bachelor of Business Studies (BBS) for external evaluation.
................................ .................................
Gopal Krishna Shrestha Chhatra Mangal Bajracharya
Chairperson, Research Management Committee Campus Chief
Date: Date:
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ACKNOWLEDGMENTS
I would like to express my sincere gratitude to several individuals and organizations for
supporting me throughout my research study. First, I wish to express my sincere gratitude
to my supervisor, Sabin Shrestha, for his enthusiasm, patience, insightful comments,
helpful information, practical advice and unceasing ideas that have helped me
tremendously at all times in my research and writing of this report.
I would also thank my friends for helping me throughout the study with their guidance
and support.
Prajwal Bhusal
Date:

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Table of Contents
Page No
Title Page ……………………………………………………………………………….... i
Declaration ……………………………………………………………………………….. ii
Supervisor's Recommendation …………………………………………………………. iii
Endorsement ……………………………………………………………………………….. iv
Acknowledgement..................................................................................................... v
Table of Contents ................................................................................................. vi
List of Table................................................................................................................viii
List of Figures ........................................................................................................ i x
Abbreviation............................................................................................................. x
CHAPTER 1: INTRODUCTION ……………………………................................ 1

Background …………………..…….............. .............................................................1
Profile of Nabil Bank Limited…………………………………… ……………..….2
Objectives …………..……………………………………………………………….. 4
Rationale……………...…………………………,………….……….…………….... 5
Review ….. ..………………………………………………………………………... 5
Research Methodology……………………… …………………………………..… 7
Limitation of the Study …………………………………………………………..... ...9
CHAPTER 2: RESULT AND FINDINGS ………………………………….. …..10

Data Presentation ……………………………………………………………………10
Analysis ………………………………………………………….…………..............10
Findings …………………………………………………………………………… 17
CHAPTER 3: SUMMARY AND CONCLUSION ………...………………… …..18

Summary ……………………………………………………….……………….......18
Conclusion ………………………………………………………………………… 19
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REFERENCES ………………………………………………………………..….. ..20

APPENDICES ……………………………………………………………………21
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LIST OT TABLES
Table 1 Current ratio…………………………………………………………………...11
Table 2 Cash and bank balance to current assets ratio…………………………………12
Table 3 Cash and bank balance to total deposit ratio…………………………………..13
Table 4 Earning per share……………………………………………………………...15
Table 5 Return on Assets………………………………………………………………16
Table 6 Return on equity…………………………………………………………….…17
Table 7 Net profit to loan and advance ratio……………………………………….…..18
Table 8 Correlation coefficient between cash balance and deposit……………………19
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LIST OF FIGURES
Figure 1 Current ratio……………………………………………………………….....12
Figure 2 Cash and bank balance to current assets ratio………………………………..13
Figure 3 Cash and bank balance to total deposit ratio…………………………………14
Figure 4 Earning per share……………………………………………………………..15
Figure 5 Return on Assets………………………………………………………...……16
Figure 6 Return on equity………………………………………………….…..………17
Figure 7 Net profit to loan and advance ratio………………………………..…….…..18
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ABBREVIATION
AGM : Annual General Meeting

CCD : Cash Concentration and Disbursement
EPS : Earning Per Share
NGIB : Nilgiri Bikas Bank Limited
NIBL : Nepal Investment Bank Limited
POL : Position Of Liquidity
ROE : Return on Assets
ROA : Return on Equity

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CHAPTER- I
INTRODUCTION
Background of the study
Liquidity is the word that the bankers use to describe his ability to satisfy demand for
cash, in exchanging of deposits. Liquidity simply means money less. It is characterized
by the use of converting an asset into money at a little cost. In the assets side of the
balance sheet of the commercial bank, will be liquid assets, which can be easily
converted into cash- such assets are called liquid assets. In another words, a liquid assets
is one which can easily expendable, marketable (transferable) and has capital certainly.
Hence, managing and maintaining sufficient degree of liquid assets is termed as liquidity.
Liquidity can also be defined as the bank’s ability to meet immediate maturing liabilities.
Liquid assets mainly include, Money at call and short deposit, Investment in government
securities such as treasury bills, development bonds, saving bonds etc. Among these, first
two are the most liquid assets and next two are termed as near-liquid assets. But both of
these assets are maintain to meet the liquidity needs of bank. But, however, one
difference among these is that, the most liquid assets don’t earn same returns whereas the
near-liquid asset does.
According to Nepal Commercial Bank Act 2031, 1 (f), “Liquidity is supposed to include
bank cash in vault, amount deposited in current account, amount deposited in Nepal
Rastra Bank and those assets which are specified as liquid. The liquidity management
function of a bank is regular one. Each and every bank attach with great importance of
liquidity for maintaining confidence of customer and its survival. The importance of
liquidity is considered very sensitive because if it can’t maintain the liquidity, it has to
pay fine. The commercial banks and financial institutions should keep the stock of liquid
assets in the ratio of their deposit liability, as fixed by the Nepal Rastra Bank. For the
bank, the words liquidly and profitability come again and again. They are in no
possibility of profitability without liquidity and also there is no growth in liquidity
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without profitability. These are complement to each other of high liquidity in Bank; the
bank cannot gain profit because most part of the liquidity is reserved in the bank. It is not
possible to hope profitability without investment. The bank should be aware of the excess
supply of found excess demand of fund in order to move nearest toward the accuracy of
tradeoff between the liquidity and profitability.
The principality of liquidity and profitability are very much crucial. In the lack of
liquidity the bank can’t give payment to the depositors and the creditors. The bank
becomes unable to face any economic rise and fall occurring in coming days. So to keep
liquidity is very important. It is very difficult for the bank to discharge both of these
functions together, to keep liquidity and earn profit are compulsory for the bank. The
bank should maintain understanding between these two principals. If the bank attempts to
run its transaction ignoring these two principals, certainly the bank will bear an economic
disaster. Hence, the bank gives emphasis upon the necessity of internal co-ordination
between liquidity and profitability due to Liquidity is necessary to make payment of al
sorts of deposits. The liquidity and the profitability have their peculiar importance in the
bank. So, from business point of view, it is necessary to maintain balance between
principalities of liquidity and profitability.
Profile of Nabil Bank
Nabil bank limited, the first foreign joint venture bank of Nepal, started operations in July
1984 AD. Nabil was incorporated with the objective of extending international standard
modern banking services to various sectors of the society. Pursuing its objective, Nabil
provides a full range of commercial banking services through its 74 points of
representation. In addition to this, Nabil has presence through over 1500 Nabil Remit
agents throughout the nation. Nabil Bank Limited (NABIL) has continued to show minor
progress in the third quarter of the FY 2074/75. As per the unaudited financial report, its
net profit has increased by 4.3 percent as compared to last year’s report. Its net profit
now stands at Rs 2.79 arba. Its operating income has also increased by 3.17 percent to Rs
4.23 arba. As of Q3, Nabil Bank’s deposit base stands at a staggering Rs 1.23 kharba. Out
of this, it has floated loans of Rs 1.05 kharba. With 15.98 percent increase in floated
loans, it has been able to increase its net interest income by 10 percent to Rs 4.49 arba. Its
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CCD ratio stands at a tight 76.2 percent. Its paid up capital now stands at Rs 8.04 arba
with a reserve of Rs 8.81 arba. Its annualized EPS has now reached Rs 46.41, net worth
per share at Rs 209.62 with P/E ratio of 21.12.
Nabil, the first foreign joint venture bank of Nepal, started operations in July 7, 1984.
Nabil was incorporated with the objective of extending international standard modern
banking services to various sectors of the society. Nabil provides a range of commercial
banking services through its 74 points of representation across the country and over 170
correspondent banks across the globe. It was earlier known as Nepal Arab Bank Ltd. It
has its head office located at Nabil Center, Durbar marg, which is also a premium
location of the capital. It has the largest staff among private commercial banks of Nepal.
Nabil bank limited, the first foreign joint venture bank of Nepal, started operations in July
1984 AD. Nabil was incorporated with the objective of extending international standard
modern banking services to various sectors of the society. Pursuing its objective Nabil
provides a full range of commercial banking services through its 19 points of
representation across the kingdom and over reputed correspond banks across the globe.
Nabil as a pioneer in introducing many innovative products and marketing concepts in

the domestic banking sector represents a milestone in the banking history of Nepal as it
started as an era of modern banking with customer satisfaction measured as a focal
objective while doing business. Nabil provides a full range of commercial banking
services through its outlets spread across the nation and reputed correspondent bank
across the globe. Moreover, Nabil has a good name in the market for its highly
personalized services to the customers. The Head Office of NABIL Bank Ltd. is located
at NABIL House, Kamaladi, and Kathmandu, one of the main cities in the capital of
Nepal. Nabil Bank Limited is the nation’s first private sector bank, commencing its
business since July 1984. Nabil was incorporated with the objective of extending
international standard modern banking services to various sectors of the society. Pursuing
its objective, Nabil provides a full range of commercial banking services through its
74 points of representation. In addition to this, Nabil has presence through over 1500
Nabil Remit agents throughout the nation.
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Nabil, as a pioneer in introducing many innovative products and marketing concepts in

the domestic banking sector, represents a milestone in the banking history of Nepal as it
started an era of modern banking with customer satisfaction measured as a focal objective
while doing business. Operations of the bank including day-to-day operations and risk
management are managed by highly qualified and experienced management team. Bank
is fully equipped with modern technology which includes international standard banking
software that supports the E-channels and E-transactions. Nabil is moving forward with a
Mission to be “1st Choice Provider of Complete Financial Solutions” for all its
stakeholders; Customers, Shareholders, Regulators, Communities and Staff. Nabil is
determined in delivering excellence to its stakeholders in an array of avenues, not just
one parameter like profitability or market share. It is reflected in its Brand
Promise “Together Ahead”. The entire Nabil Team embraces a set of Values “C.R.I.S.P”,
representing the fact that Nabil consistently strives to be Customer Focused, Result
Oriented, Innovative, Synergistic and Professional.
Statement of the Problem
As like many other commercial banks in Nepal, Nabil bank also has fluctuating financial
performances over past few years. So, the study will be carried out in order to know what
has affected the financial performance of the Nabil bank. Similarly, the aim of the study
is to know about the structural position of Nabil with the help of various ratios. Along
with that, this study will help in knowing the causes of various such problems which had
been leading Nabil bank’s financial performance over past few years.
Objective of the Study
As per NABIL Act.1984, NABIL related to the commercial banking system has its own
objectives for the welfare of the general people of Nepal. The main objectives of NABIL
Bank Ltd. are as follows:
1. To examine the profitability position i.e. EPS, ROE and ROA.

2. To assess out the ‘Position of Liquidity’ i.e. current ratio and quick ratio.
3. To assess the condition of cash movement in NABIL Bank Ltd
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Rationale of the study
Since this study has been conducted on Banking and Insurance for meeting the
requirement of partial fulfillment of BBS level, it constitutes the following importance.
1. It will help to complete BBS level.
2. It will be useful for concerned company as the study has provided suggestions.
3. This study may serve as the guideline for future researchers.
4. It will also be useful for library use for general readers.
Nabil bank looks forward to emerging as a first rate bank across all strata of the
nation. We surge to turn our services and products into economic values for our treasured
customers, taking care of their financial needs. We know the world is changing and to
keep pace with that we customize our services and re-engineer our products in sync with
changing time and technology. We are always geared up for translating great aspirations
of our stakeholders into economic and social values. We know our customers expect
unparalleled service standards; our community looks forward to seeing the bank
emerging as responsible corporate entities that cherish social and economic harmonies in
the community. We go beyond just making profits
Review of literature
It would not be exaggeration to tell that the bank is the base of economic development of
a country. We can’t imagine the economic development of a country without development
of bank and any other financial institution. The profitability position of NABIL Bank is
comparatively better than other joint venture banks. Its profit is increasing steadily and
must maintain its high profit margin in future. Liquidity position measures the firm’s
ability to satisfy its short-term commitment out of current or liquid assets. Liquidity ratio
analysis employs financial data taken from the bank or firm’s balance sheet and income
statement. Thus, the ratio analysis helps in the accounting numbers. It helps in the
standardizing financial information and making meaning comparison of the firm’s
financial data at different points in time and over time with other firms.
This chapter highlights and deals with the literature relevant to this study. It comprises
review of book, previous studies received, article review and review of policy documents.
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Conceptual review
According to M. Pandey, ”Financial analysis is the process of identifying the financial

strengths and weaknesses of the firm by properly establishing relationship between the
items of the balance sheet and the profit and loss account. Management of the firm can
undertake it or by parties outside the firm.” The focus of the financial analysis is on the
key figure contained in the financial statement and significant relationship existed.
Management of the firm is generally interested in every aspect of the financial analysis;
they are responsible for the overall efficient and effective utilization of the available
resources and financial position of the firm. The vertical and horizontal analysis could be
done for the financial analysis. The vertical analysis consists of financial Balance sheet,
profit and loss Account of a certain period time only, which is known as static analysis.
Likewise, the horizontal analysis consists of a series of statement relating to the number
of years are reviewed and analyzed. It is also known as dynamic analysis that measures
the change of the position or trend of the business over the number of years. In this study,
the horizontal analysis has been adopted to find out the financial indicator of the NBL
and NABIL over the period of FY 1997/98 to 2001/02. The steps of analysis are as
follows:
1. Selection of the information relevant to the decision.
2. Arrangement or the selected information to highlight the significant relationship of
the financial yardsticks.
3. Interpretation and drawing of inferences and conclusions
To evaluate the financial performance of a firm, the analyst needs a certain parameters of
the company by which the quantitative relationship and its position come out. The most
widely and effective used tool of the financial analysis is the ratio analysis. The financial
ratio is the measurement of relationship between two accounting figures, expressed in
mathematical way or the numerical relationship between two variables expressed as (i)
percentage or, (ii) fraction or (iii) in proportion of numbers.
Review of journals and articles
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
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corporation (one depositor to another) giving bank deposits in exchange for bill of
exchange, government banks recurred and unsecured promises businessmen to repay.“
Erich A. H. in his book has described financial analysis as “analytic and judgmental
process that helps to answer the questions that have been properly posed to and therefore,
it is a mean to an end. We can stress enough that financial analysis is an aid that allows
those responsible for results to make sound decisions.”
I.M. Pandey says, "A firm should ensure that it does not suffer from lack of liquid. And
also 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 funds will be
unnecessarily tied up in current assets. Therefore, it is necessary to strike a proper
balance between liquidity and lack of liquid.
Liquidity is 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.
Review of thesis
Various thesis works have done in different aspects of commercial banks such as lending
policy, interest rate structure investment policy, resource mobilization, and capital
structure etc.
Mr. Pragun Shrestha in his study ,”A comparative Analysis of Financial performance
of the Selected commercial Banks”, Concluded that many of the banks are of the view
that political instability in the country is mainly responsible for the decline of the lending
opportunities. Few banks ascribed it to the economic crisis that occurred in Asia pacific
region .No one felt that higher rates on interest on lending to be a major factor. At one
time, it should target not only the urban sector, it should go to the rural sector also. They
have to explore all the potential sectors like tourism etc. in order to generate high rate of
profits.
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Mr. Gurung’s Study on “A Financial Study of Joint Venture Banks in Nepal” is a

comparative Study of NGBL and NIBL. In this study, he has analyzed financial position
of the banks by measuring various ratios to elaborate the financial performance. The
liquidity, profitability and dividend payout ratio of two banks are on favorable position.
But NIBL seems to be slightly better position in terms of liquidity, profitability and
capital structure compared to the NGBL. In this evidence he has concluded that the NIBL
promises a better future than NGBL. The present study tries to focus on financial
performance of NBL and NABIL Bank Limited, it is clear that there was no research
work on comparative study of these banks. This is the comparative study of commercial
banks which were not cleared in previous studies
Research Methodology
Research methodology refers to the different techniques and tools under to make the
study significant and efficient. There are verities of techniques and tools available to
accomplish the study. The financial analysis is useful to reflect the liquidity position of
the concerned bank.
Research Design
It is on descriptive research design with using secondary data’s which are available
through the annual report published by the concerned bank. So to get the desires result
efficiently, the interview and the questioners are most necessary another process like
calculating, tabulating and interpreting are also to the study.
Method of Analysis
Various financial analysis tools have used in this study. The analysis of the data will be
done according to pattern of data available. The relationship between figures related to
study topic will be drawn out using ratio analysis. The various calculated results are
tabulated in a chronological order under different headings, which are later on compared
with each other to interpret the result.
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Source of Data
The source of data means the place or materials from which the required data have been
found. There are mainly secondary data’s are available for study for student i.e. the main
source of data is Balance Sheet of the concerned bank. Beside this the sources from
where data can be found out one as follows:
Secondary Data
The source of secondary data is those, which has been collected by other people. Here the
secondary data include AGM’S report of NABIL Bank Ltd. Covering fiscal year 2013/14
to 2017/18.journal publish by various institutions.
Internal Source
1. Annual reports of NABIL
2. Interim performance report
External Source
1. Book publications
2. Journals
3. Articles from newspapers
Tools Used for Data Analysis
The collected and observed data is tabulated after adjusting necessarily amounts of each
overhead. However, for the analysis of the data, following financial tools were used.
Financial tools
Under financial tools, the study has used two different types of ratios in order to know
about liquidity situation and profitability situation of the institution. The two ratios and
further sub-divided into multiple branches. They are as presented below:
Liquidity Ratio
 Current Ratio
 Cash and Bank balance to current assets Ratio
 Cash and bank balance to total deposits Ratio
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Profitability Ratio
 Earning Per Share (EPS)

 Return on Assets (ROA)
 Return on Equity (ROE)
 Net profit to loan and advance ratio
Statistical Tools
 Mean
 Standard Deviation
 Coefficient of variation
Limitations of the Study
1. The study period will cover only from 2016/17 to 2020/21.

2. Because of the one- month time, it is different to make a study in depth.
3. The main focus is given to the quantitative aspect rather qualitative aspect.
4. The case study is confined to only on organization, which is NABIL Bank Ltd.
5. The case study is mainly based on secondary data through annual report of bank
brochure and newspaper. So, validity of the finding depends on the reliability of those
data.
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CHAPTER-II
RESULT & ANALYSIS
Presentation of Data
The main aim of this chapter is presentation and analyzing data according to research
methodology to attain the objective of this study. This chapter is basically concerned with
presentation and analysis of data and the effort had been made to analyze the liquidity
and profitability of five years of the NABIL Bank Ltd. The study has used various
financial tools to measure the liquidity position of commercial banks.
Liquidity ratio
The liquidity ratios are calculated from total deposits, total liquid fund cash in hand total
assets, cash and bank balance and current liabilities of the NABIL as well as using the
formula as given in the methodology. The liquidity of business firm is measured by its
ability to satisfy its short-term obligation as they come due. Liquidity refers to the
solvency of firm’s cover all liquidity position of NABIL Bank Ltd. with the help of
financial data of five years of the bank is as follows”
Current Ratio
The current ratio, one of the most commonly cited liquidity ratios, measures the firm’s
ability to meet its short-term obligations. . It tells investors and analysts how a company
can maximize the current assets on its balance sheet to satisfy its current debt and other
payables. The formula for current ratio is:
Current Ratio =
Table 2.1 Current Ratio Rs. in million
Year Current Assets Current Liabilities Current Ratio (%)

2016/17 2523.58 839.32 3.00
2017/18 2381.42 915.11 2.60
2018/19 1971.69 925.02 2.13
2019/20 2835.75 426.21 6.65
2020/21 3699.81 502.53 7.36
Noted from: Annual Report of Nabil Bank Ltd.
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Figure 2.1 Current Ratio
The above table and figure shows that the current ratio of the bank has the highest &
better current ratio of 7.36 in 2020/21 and the lowest & worse current ratio of 2.13 in
2018/19 and average ratio is 4.35. In general, it can be said that the bank is able to shore-
team obligate.
Cash and Bank Balance to Current Assets
Cash and bank balances are the most liquid form of the current assets. The cash and bank
balance ratio indicates the percentage of readily fund with in the bank. It can be
calculated by using following formula:
Cash and bank balance ratio =
Table 2.2 Cash and Bank Balance to Current Assets Ratio Rs. in million
Year Cash &Bank Balance Current Assets Current Ratio (%)

2016/17 318.16 2523.58 12.6
2017/18 187.77 2381.42 7.88
2018/19 286.89 1971.69 14.55
2019/20 630.24 2835.75 22.23
2020/21 1399.83 3699.81 37.83
Noted from : Annual Report of Nabil Bank Ltd.
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40
35
30
25
20
15
10
Figure 2.2 Cash and Bank Balance to Current Assets Ratio
The above table and figure shows that the cash and bank balance to current ratio of the
bank was maximum & better is 37.83 in the year 2020/21 and minimum is 7.88 in the
year 2017/18 and average is 19.02.
Cash and Bank Balance to Total Deposit
The cash reserve requirement in the most developed and developing countries have been
used extensively as a mean to control commercial bank credit. Especially in countries
where capital market is not well developed, cash reserve requirement can be used not
only to control the commercial bank credit but also to influence the investment portfolio
of the commercial bank.
Cash and Bank Balance to Total Deposit
Table 2.3 Cash and Bank Balance to Total Deposit Rs. in million
Year Cash & Bank Balance Total Deposit Ratio (%)

2016/17 318.16 13997.66 2.27
2017/18 187.77 14119.03 1.33
2018/19 286.89 14586.6 1.97
2019/20 630.24 19347.39 3.26
2020/21 1399.83 23342 5.99
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Figure 2.3 Cash and Bank balance to total deposit ratio
The above table and figure shows that cash and bank balance to total deposit ratio of the
bank varies from maximum 5.99 in year 2020/21 and minimum 1.33 in year 2017/18 and
average ratio is 2.96
Profitability Ratio
Profitability ratio measures the overall performance of the firm by determining the
effectiveness of the firm in generating profit. A company should earn profit to service and
grow over a long period of time. Beside management both creditor and owners are
interested in the profitability of the principal regularly while owners want to get a
reasonable return on their investment. The following ratios are used to measure the
profitability position of NABIL Bank Ltd. With the help of financial data of the past five
year of the bank are as follows.
Earning Per Share (EPS)

EPS simply shows the profitability of the firm on a per share basis. It is calculated from
the point of view of the ordinary shareholders.
Earnings per Share (EPS)X 100%
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Table 2.4 Earning per Share Rs. in million
Year Net Profit After Tax No. of Common Share EPS (%)
2016/17 416.24 491.654 84.66
2017/18 455.32 491.654 92.61
2018/19 520.11 491.654 105.49
2019/20 635.26 491.654 129.21
2020/21 674 491.654 137.09
Similarly, the figure for above data is presented as:
160
140
120
100
80
60
40
20
Figure 2.4 Earning Per Share
The above table and figure show that, EPS trend is fluctuating out, it is clear that the EPS
of NABIL Bank is substantially high than other competitions. The average EPS is
109.812. The highest and lowest EPS are 137.09 & 84.66 respectively in the fiscal year
2020/21 and 2016/17. Therefore, from the above analysis it can be said that the earning
power of NABIL Bank is in good condition.
Return on Assets (ROA)
It measure the firms return on investment of financial resources. It also helps us to

provide the information of proper utilization of the resources. It is the relation between
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profit and total assets. Lower ROA means lower profit and higher ROA means higher
profit.
Return on Assets (ROA) X 100%
Table 2.5 Return on Assets Rs. in million
Year Net Profit After Tax Total Assets Ratio

2016/17 416.24 16562.62 2.51
2017/18 455.32 16745.49 2.72
2018/19 520.11 17064.08 3.05
2019/20 635.26 22329.97 2.84
2020/21 674 27253 2.47
3.5
2.5
1.5
0.5
Figure 2.5 Return on Assets

The above table and figure show that, The trend of ROA is also fluctuation. The average
ratio is 2.72, the highest ROA is 3.05 in the year 2018/19 and the lowest ROA is 2.51 in
year 2016/17. However, the management of bank must keep their eyes towards situation
& mobilize their working assets more efficiently to earn more profit.
Return on Equity (ROE)
It is the measure of the profitability of a business in relation to its total equity. It can be
measured by the given formula below:
Return on Equity (ROE) X 100%
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Table 2.6 Return on Equity Rs. in million
Year Net Income Shareholder’s Equity Ratio

2016/17 245.83 491.654 50.00
2017/18 319.57 491.654 65.00
2018/19 344.16 491.654 70.00
2019/20 417.91 491.654 85.00
2020/21 442.49 491.654 90.00
100
90
80
70
60
50
40
30
20
10
0
Figure 2.6 Return on Equity
The above table and figure show that, The average ROE is 72.00. The lowest ROE value
is 50.00 per share in 2016/17 and the highest ROE value is 90.00 per share in year
2020/21. Therefore, higher ROE of NABIL Bank Ltd. shows its financial strength which
ultimately conclusion of the good financial position of it.
Net Profit to Loan and Advances Ratio
It can be measured by the given formula below:
NP to Loan and Advance:X 100
Table 2.7 NP to Loan and Advance Rs. in million
Year Net Profit After Tax Loan & Advance Ratio
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2016/17 416.24 8114 5.13

2017/18 455.32 8594 5.3
2018/19 520.11 10947 4.75
2019/20 635.26 13279 4.78
2020/21 674 15903 4.23
Similarly, the figure for above data is plotted as:
Figure 2.7 NP to Loan and Advance Ratio
The above table and figure show that, in the fiscal year 2016/17, the ratio of net profit to
loan and advance is 5.13 but has been decreasing since then, it reached 4.23 in the fiscal
year 2020/21.
Statistical Tools
Various statistical tools may be used for the evaluation of liquidity and profitability of the
banks such as Correlation Analysis, Measure of Central Tendency, Theory of Dispersion
and Estimation whatever is required.”Statistical analysis is one particular language which
describes the data and makes possible to talk about the relations and the difference of the
variables. These tools are used to calculate the mean, standard deviation, coefficient of
variation and Karl’s Pearson’s correlation coefficient between cash, bank balance and
total deposit.
Table 2.8 Calculation of Correlation Coefficient between Cash & Balance & Deposit
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Cash & Bank X'= Y'=

Year Total Deposit (Y) X'2 Y'2 X'Y'
Balance (X) A-X B-Y
2016/17 318.16 13997.66 246.42 60722.82 3080.88 9491796.93 759190.45
2017/18 187.77 14119.03 376.81 141985.78 2959.51 8758699.44 1115172.96
2018/19 286.89 14586.6 277.69 77111.74 2491.94 6209764.96 691986.82
2019/20 630.24 19347.39 (65.66) 4311.24 (2268.85) 5147680.32 148972.69
2020/21 1399.83 23342 (835.25) 697642.56 (6263.46) 39230931.17 5231554.97
ΣX'2 = ΣY'2 = ΣX'Y' =
Total Σ(X)=2822.89 Σ(Y)=85392.68
981774.14 68838872.82 7946877.89
Mean
Mean means the number of the value divide the sum of all the observation. In other
words, mean is the arithmetic average of total observation or values.
Mean (X')
Average CBB (A) = 564.578
Average TC (B) = 17078.54

Therefore the average of the CBB of NABIL Bank Ltd. for the last five years is Rs.
31213.70 million and the average of the TD of NABIL Bank Ltd. is Rs.15401.42 million.
Standard Deviation
Standard deviation is the measure of the amount of variation or dispersion of a set of

values. In other words, standard deviation is used to measure the risk of company.
SD = ΣX2
N
SD of CBB (σ) = 981774.14 =443.12
5
of TD (σ) = 68838872.82 = 3710.5

5
Therefore, the SD based on CBB of NABIL Bank Ltd. for last five year is Rs. 13267.47
million and SD of TD is Rs. 2083.61 million.
Coefficient of Variation (CV)
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The coefficient of dispersion based on standard deviation multiplied by 100 is known as

coefficient of variation. It is independent unit.
CV
CV of CBB X100%= 443.12X 100% = 78.49%
CV of TD X100% = 3710.5 X 100% =21.73%
The coefficient of variation measures that can sentiency (variability) of the observation
with reference to above calculations; there is uniformity in the changes of CBB as
compared to the total deposit because CV of CBB is greater then CV of TD i.e. 78.49%
>21.73%.
Major findings of the study
Going through the presentation and analysis of the information of NABIL BANK ltd, the
researcher has found the following things.
1. It is a joint venture bank adopting innovative & latest banking technology.

2. The bank provides different facilities like credit card facility, tele banking, any branch
banking, ATM (24 hour service). So it is called "Bank with difference".
3. The bank collects deposits in the form of current, saving, fixed, call & others, but the
majority of deposits are in the saving a/c.
4. This bank also able to collect sufficient foreign deposit in spite of economic crises.
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CHAPTER- III
SUMMARY AND CONCLUSION
Summary of the study
Nepal is one of the less developed countries of the world for most of the developing
process. It is financially depend on the foreign country. It is economically too weak in
Nepalese banking industries. At present, modern commercial banks made the economy
always alive and smart to run and maintain day to day commercial economic and banking
transactions. Commercial bank including joint venture bank is operating in Nepalese
industries. It is remarkable fact that any country cannot have a developed economy in the
absence of modern banking system because any development works a sufficient capital
and a lack of sufficient capital is also one of the main reasons as to why Nepal has been
backward for developing its economy.
So, it is utterly important to find out whether or not the banks are serving an importance
contribution to developed difference sector of the economy. In this record this study has
been based upon the objective to evade the liquidity and profitability position of NABIL
Bank Ltd.
Conclusion of the study
NABIL Bank has come out as a leading and the most profitable of Nepal among the joint
venture banks. Thus, banks play vital role for the country and its people in the proper way
by making all the policy properly. General activities and management of commercial
banks directly the economic development of Nepal. From the above finding, it has been
concluded that profitability position of NABIL Bank’s profit was increasing steadily and
must maintain its high profit margin in future. NABIL Bank has maintained more
liquidity this year as compare to previous year, which means NABIL Bank has more
chances to fulfill the demand of depositors. According to annual report published by
NABIL Bank, the deposition of NABIL was in increasing trend. It is a joint venture bank
adopting innovative & latest banking technology. The bank provides different facilities
like credit card facility, tele-banking, any branch banking, ATM (24 hour service). The
bank collects deposits in the form of current, saving, fixed, call & others, but the majority
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of deposits are in the saving a/c. This bank is also able to collect sufficient foreign deposit
despite of economic crises.
Basically, the data are of secondary nature. Time and resource are the constraints of the
study. Therefore the study may not be generalized in all cases. I have tried my best to
analyze and interpret the financial status of Nabil Bank Limited. However, this study
cannot be considered as a complete. Others may interpret it in different way since the
perspectives of analysis differ widely.
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33
References
BajracharyaB.C (2059) Business Statistic and Mathematics”, Kathmandu M.K
publishers and Distributors.
BatraPromad and Deepak Mahendra (1993) “Management Ideas in Action”, New Delhi:
Think Inc
Gitam L.J (2000) “Financial Management”, Prentice Hall, New Delhi, India.
Kreitner, Robert (1999) “Management”, Delhi; AITSB.
Pant, PR wolf HK (2005) “Social Science Research and Thesis Writing”, Buddha
Academic enterprises Pvt. Ltd.
Robbins, S.P (2006) “Organizational Behavior”, New Delhi; Prentice Hall.
ShresthaAlok Man (2006) “Public Youth Campus”, Dhobichaur, Kathmandu, Nepal.
Woodward, Joan (1995) “Industrial Organization”, Theory and Practice, London:
Oxford.
Other References
Annual report of Nabil Bank Ltd. ( From FY 2016/17 to 2020/21)
Websites
www.nabilbank.com
www.nabilbankltd.com

lOMoARcPSD|37618168
34
APPENDICES
Summary of the Financial Transactions of NABIL from FY 2016/17 to 2020/21 (Rs in
Millions)
Details 2016/17 2017/18 2018/19 2019/20 2020/21
Current Assets 2523.58 2381.42 1971.69 2835.75 3699.81
Current
839.32 915.11 925.02 426.21 502.53
liabilities
Cash &Bank
318.16 187.77 286.89 630.24 1399.83
Balance
Total Deposit 13997.66 14119.03 14586.6 19347.39 23342
Net Profit After
416.24 455.32 520.11 635.26 674
Tax
No. of Common
491.654 491.654 491.654 491.654 491.654
Share
Total Assets 16562.62 16745.49 17064.08 22329.97 27253
Net Income 245.83 319.57 344.16 417.91 442.49
Share holder
491.654 491.654 491.654 491.654 491.654
equity
Loan and
8114 8594 10947 13279 15903
advance
Details 2016/17 2017/18 2018/19 20219/20 2020/21

Current ratio 3.00 2.60 2.13 6.65 7.36
(%)
Cash & Bank 2.27 1.33 1.97 3.26 5.99
Balance Ratio
(%)
EPS (%) 84.66 92.61 105.49 129.21 137.09
Ratio (ROA) 2.51 2.72 3.05 2.84 2.47
Ratio (ROE) 50.00 65.00 70.00 85.00 90.00
Loan and 5.13 5.3 4.75 4.78 4.23
advance ratio

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LIQUIDITY AND PROFITABILITY ANALYSIS OF NABIL BANK

A project work report

In Partial Fulfillment of the Requirements for the Degree of

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

CHAPTER 2: RESULT AND FINDINGS ………………………………….. …..10

CHAPTER 3: SUMMARY AND CONCLUSION ………...………………… …..18

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REFERENCES ………………………………………………………………..….. ..20

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Table 1 Current ratio…………………………………………………………………...11

Table 2 Cash and bank balance to current assets ratio…………………………………12

Table 3 Cash and bank balance to total deposit ratio…………………………………..13

Table 4 Earning per share……………………………………………………………...15

Table 5 Return on Assets………………………………………………………………16

Table 6 Return on equity…………………………………………………………….…17

Table 7 Net profit to loan and advance ratio……………………………………….…..18

Table 8 Correlation coefficient between cash balance and deposit……………………19

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Figure 1 Current ratio……………………………………………………………….....12

Figure 2 Cash and bank balance to current assets ratio………………………………..13

Figure 3 Cash and bank balance to total deposit ratio…………………………………14

Figure 4 Earning per share……………………………………………………………..15

Figure 5 Return on Assets………………………………………………………...……16

Figure 6 Return on equity………………………………………………….…..………17

Figure 7 Net profit to loan and advance ratio………………………………..…….…..18

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AGM : Annual General Meeting

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Background of the study

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Profile of Nabil Bank

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Nabil as a pioneer in introducing many innovative products and marketing concepts in

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Nabil, as a pioneer in introducing many innovative products and marketing concepts in

Statement of the Problem

Objective of the Study

1. To examine the profitability position i.e. EPS, ROE and ROA.

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Rationale of the study

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According to M. Pandey, ”Financial analysis is the process of identifying the financial

Review of journals and articles

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Mr. Gurung’s Study on “A Financial Study of Joint Venture Banks in Nepal” is a

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Tools Used for Data Analysis

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 Earning Per Share (EPS)

Limitations of the Study

1. The study period will cover only from 2016/17 to 2020/21.

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