ANALYSIS OF FINANCIAL STATEMENTS OF NMB BANK LTD.

A Project Work Report

By
Pradeep Kc

Submitted To:
The Faculty of Management
Gorkha Secondary School

In partial fulfilment of the requirement for the

Class 11 ‘Management’
Tulsipur, Dang
October, 2023

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 Declaration

I hereby declare that the project work entitled ‘Analysis of financial statement of NMB Bank Limited’
submitted to the management faculty of management, Gorkha Secondary School is an original piece
of work under the supervision of MR. Dambar Dangi, faculty member, GORKHA SECONDARY SCHOOL
and it is submitted in partial fulfilment of the requirements for the Education of Accountancy. This
project work report has been submitted to any other university or institution for the award of any
degree or diploma.

Signature: ………………………………

Pradeep Kc

Date: 28, October 2023

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 Certificate of Approval

This is to certify that Pradeep Kc of Class XI of Gorkha Secondary School, Tulsipur-6, dang has
completed the Accountancy project (Analysis of Financial Statement of NMB Bank Limited) under my
guidance. It is further certified that this Project is the individual work of the student. She has taken
proper care and shown Utmost sincerity in completing the project. I certify that this project is up to
my expectations and as per my guidelines.

Signature: ………………………. ……………………………..

Dambar Dangi External

HOD Management

……………………………………………………

Vijay G.M

Principal

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 Supervisor’s Recommendation

The project work report entitled “Analysis of financial statement of NMB BANK LIMITED” submitted
by ‘Pradeep Kc’ Gorkha Secondary School Tulsipur, dang is prepared under my supervision as per the
procedure and format requirements of the Education of Accountancy. Therefore, I recommend the
project work report for evaluation.

Signature: …………………….

Dambar Dangi

HOD Management

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 Acknowledgment

Through this acknowledgement, I express my sincere gratitude towards all those people who helped
me in this project, which has been a learning experience. This space wouldn’t be enough to extend my
warm gratitude towards my project guider Mr. Dambar Dangi for efforts in coordinating with my work
and guiding in right direction. I escalate a heartfelt regards to our principal Mr. Vijaya G.M for giving
me the essential hand in concluding this work. It would be injustice to proceed without acknowledging
those vital supports I received from my beloved classmates and friends, without whom I would have
been half done. I also use this space to offer my sincere love to my parents and all others who had
been there, helping me walk through this work.

Name: Pradeep Kc

Date: October, 2023

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 Table of Content

Topic

Titlepage I

Declaration II

Certificate of Approval III

Supervisor’s Recommendation` IV

CHAPTER 2 : INTRODUCTION

Background of the study 1

Introduction 2

How Bank make money? 3

History of Banking Sector in Nepal 4

Introduction to NMB Bank Limited 5

Objectives and Limitation of the Study 6

Online Services offered by NMB Bank Limited 7

Some other Services provided by NMB Bank Limited 8

Featured Products of NMB Bank Limited 9

CHAPTER 2: DATA PRESENTATIONATION AND ANALYSIS

Consolidated Statement of Financial Positions of 2079/80 11-12

Consolidated Statement of Profit and Loss 2079/80 13-14

CHAPTER 3: CONCLUSION

Summary 15

Conclusion 16

Bibilography 17

Group Photo 18

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 CHAPTER-1
IINTRODUCTION
Background of the study

The banking sector in Nepal plays a crucial role in the country's economic development. It consists of
various types of financial institutions, including commercial banks, development banks, finance
companies, microfinance institutions, and cooperatives. Commercial banks are the largest and most
important financial institutions in Nepal. The central bank of Nepal, Nepal Rastra Bank, regulates the
banking sector and issues policies and guidelines to ensure the stability and soundness of the banking
system.

This study is based on descriptive casual research design. This report is based on secondary which was
extracted from various publications published by Nepal Rastra Bank. All commercial banks,
development banks, and finance companies are taken as population of study. The report deals with
financial performance analysis of entire population covering 2079/80. Various variables are used here
to analyze final account of NMB Bank Limited.

Banks are among the most important financial institution in the economy and essential business as it
serves in thousands of local towns and cities. It plays an importance role in the development of the
economic position of country. Bank is essential to make the financial position strong of all the financial
institution. It also plays vital role to develop the trading, commercial and industrial infrastructure of
the country.

Nepalisasmalllandlockedcountrywithapercapitaincomeoflessthan$650.Thereare so many Nepalese

people illiterate only few people know the significance of bank and banking activities. Bank makes a
better use of money and mobilizes the people‟s saving in productive sector. It helps in every aspects
of government.

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Introduction

The financial sector of Nepal plays acrucialrole in the country's economic development. It comprises
a wide range of financial institutions, including banks, insurance companies, stock exchanges, and
other financial intermediaries. Financial institutions especially depositary institutions like banks collect
saving from those who have saving and provide loan for those who need fund, NMB Bank Limited is
one of those depositary institutions. Hence, banking industry serves as the backbone of financial
sector.

Financial analysis is the process of evaluating financial statement of a firm through the application of
various techniques to detect financial strengths and weakness of a firm. It is the formal records of
financial activities and position of a business, person or other entity. Hence, financial performance is
also known as financial heath check-up of any concerns. Regular analysis of the financial statements
and condition of any bank is therefore very important for the betterment of any bank or institution. It
is also important to maintain and protect interest of depositors, leaders, shareholders, etc. In order
tore form financial sector, the World Bank is constantly providing technical and financial support to
reengineer Nepal Rastra Bank (NRB) and restructure the Nepal Bank Limited and Rastriya Banijya Bank
(RBB) [NRB, 2016]

Someofthebasicfinancialstatementsthatwewillhighlightonthisreportare:

1. BalanceSheet

2. Income Statement

Financial Statement analysis is an analysis which critically examines the relationship between various
elements of a financial statement to discover necessary information from them. The reported financial
statements for bank are somewhat different from most companies that investors analyze. For
example, there are no accounts receivables or inventory to gauge whether sales are rising or falling.
On top of that, there are several unique characteristics of bank financial statements that include how
balance sheet and income statement are laid out. However, once investors have a solid understanding
of how bank servey revnue and how to analyze what‟s driving that revenue, bank statements are
relatively easy to grasp.

Financial performance covers the financial analysis and other portfolios. Financial Analysis is the
process of determining the significant operating and financial characteristics of a firm from accounting
data and financial statements. The goal of financial analysis is to determine the efficiency and the
performance of the firm‟s management as reflected in the financial records and reports. Financial
Performance isthe picture of the organization that shows how the organization is doing. Profit is one
of the basic indicators of sound financial performance.

How Banks make money?

Banks take in deposits from consumers and businesses and pay interest on some of the accounts. In
turn, banks take the deposits and either invest those funds in securities or lend to companies and to
consumers. Since banks receive interest on their loans, their profits are derived from the spread
between the rate they pay for their deposits and the rate they earn or receive from borrowers. Banks
also earn interest income from investing their cash in short term securities.

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 History of Banking Sector in Nepali
This post is about banking in Nepal, the history of the banking system in Nepal. In the context of Nepal,
it is very difficult to trace the correct chronological history of the Banking systems in Nepal because
there are no sufficient historical records and data about Banking in Nepal.

A bank, also known as a credit institution or deposit entity is a financial company that is responsible
for raising funds in the form of deposits, lending money, as well as the provision of financial services.
Banking, or the banking system, is the set of entities or institutions that, within a given economy,
provide bank services.

Let‟s talk about Banking in Nepal. 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 modern banking in Nepal. This was establishedin 1937 A.D

Nepal Bank has been inaugurated by King Tribhuvan Bir Bikram Shah Dev on 30th Kartik 1994 B.S.
Nepal bank was established as a semi-government bank with the authorized capital of Rs.10 million
and the paid-up capital of Rs. 892 thousand. Until the mid-1940s, only metallic coins were used as a
medium of exchange.

So the Nepal Government (His Majesty Government at that time) felt the need for separate
institutions or bodies to issue national currencies and promote the financial organization in the
country and therefore several banks were established afterwards.

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 A Brief Introduction to NMBB Limited
NMB Bank is a leading commercial bank in Nepal that provides a wide range of financial products and
services to individuals, businesses, and institutions. The bank was established in 2008 as a result of
the merger between two leading financial institutions in Nepal - Nepal Merchant Bank and Pathibhara
Bank.

It was founded in May 2008 and is licensed as an "A" class financial institution. It was created as a
merger with four financial institutions, Bhrikuti Development Bank, Pathibhara Bikas Bank, Prudential
Finance Company, Clean Energy Development.

NMB is the brainchild of leading Nepali entrepreneurs with dream of framing the ultimate in Merchant
Banking and Financial Services. Harnessing from its strength on Merchant Banking the Bank has
decided to broaden its scope of services by building synergies to its current operations. This
unprecedented event has been possible by way of strong commitment and confidence of all the
stakeholders‟ viz. customers, promoters, shareholders, regulators, and employees.

NMB Bank was awarded 'Bank of the Year 2017', 'Bank of the Year 2018', 'Bank of the Year 2020', and
'Bank of the Year 2021' for its leading role in the country‟s financial sector by using new digital
technologies. In the same year, for the first time in the history of Nepal, the bank was awarded the
title of 'Bank of the Year 2021 Asia' by The Banker, Financial Times, London.

Functions of Commercial Banks:

Receiving deposits and giving loans are the two main functions of commercial bank.

Commercial Banks generally perform following functions:

a) Accepting deposit:

Accepting deposits by banks is the basic and most important function. A bank accept deposits in three
forms namely savings, current and fixed deposits. The bank is free to make use of fixed deposits for
granting loans and advances, as it is aware of the repayment of such fixed deposits.

b) Advancing loans:

After collecting money bywayof deposits, a bank invests it or lends it out. Moneyis lent to
businesspersons and traders usuallyfor short periods only. This is so because the bank must keep it-
self ready to meet the demand of depositors, who have deposited money for short period. Money is
advancing by the banks in the form of allowing on overdrafts creating a deposit of cash credit and
discounting bills.

c) Extension of Credits:

They are extending credits to the worthy borrowers. Bank lending contributes a lot to the economy in
terms of financing agriculture, commercial and industrial activities of the nation.

d) Facilities for financing of foreign trade:

The commercial banks arrange for foreign exchanges required by the business organizations and
travellers, moreover, foreign trade transaction have been facilitating by the insurance of the
commercial letter of credit.

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 Objectives of the Study
Commercial banks are established with intention of earning profit so that the wealth their
shareholder is maximized and earning depends upon efficient the mobilization of resources.
Financial analysis is tools for measuring the successes of any business performance. All the detail
financial information or bank is shown by the financial analysis. Therefore, the main objectives of
this study are to analyze, examine, and interpret the financial position of NMB Bank with the help of
ratio analysis and other tools. In addition, the study tries to evaluate the efficiency and progress of
the sample bankscomparatively.Thespecificobjectivesofthestudycanbepointedoutasfollow:

 To analyze the financial strengths & weakness of the sample Banks.

 To evaluate the liquidity, assets management efficiency, profitability and risk position of NMB
Bank.

 To analyze the efficiency of the bank‟s Management.

 To evaluate the Earning performance of the bank.

 To find out the Liquidity position of the bank.

Limitations of the Study

The study will have some limitations; basically the study is done for the partial fulfillment of the
requirements for the practical marks in Accountancy. The study is completely based on the secondary
data. Some limitations of the study are as follows:

 The study is mainly based on the secondary data which is derived from website.
 No comparision has been made with other commercial bank.
 Only one commercial bank is taken as the sample of the study among 27 commerical banks of
Nepal
 Time and resources lack are the main limitations on of the study.

ONLINE SERVICES OFFERED BY NMB BANK

1. Mobile Banking:

Committed to the vision of becoming the best financial institution in Nepal, we have been striving to
serve innovative products to delight our valued customers. NMB

Bank’s Mobile Banking Services is the latest addition to the Bank’s portfolio of innovative banking
products.

NMB Bank’s Mobile Banking Service Facilities you to access a range of services of round the clock by
using or application or SMS Keywords.

NMBMobileBankingensuresconveniencetoourcustomersasitallowstobankfrom anywhere without

having to visit the bank.

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2. NMB3DSecure:

We are proud tointroduce3D secure services for our Bank‟sDebit/Credit Cardholders to perform
online transactions. This service allows registered card holders to use their cards for online
transactions.

3. Apply for Credit Cards:

NMB Bank Credit Card (Nepalese Rupee) is a chip based credit card, featured with Verified By Visa
(VBV). With 3D Secure, you can render service for online payment to selected merchants with the
NMB Bank Credit Card.

Some Other Services Provided By NMB Bank Limited

1 Fly wire: Flywire is a secure, streamlined payment solution that saves international students time
and money when making tuition and fee payments. Fly wire's easy to navigate system enables
students to pay in their home currency, saving them a significant amount of money when doing so. It
is a leading provider of global payment and receivables solutions focused on making large-sum
payments borderless for their clients

NMB Bank has partnered with Flywire Corporation, MA, USA for processing international education
related payment from Nepal to various colleges and education institutions associated with Flywire all
across the world. Through this partnership with Flywire, NMB bank strives to provide unmatched
benefits to Students, parents and education consultancies a like with a process that is Simple,
Traceable, and Trans parent to all parties involved in the payment processing. Thus, with Flywire we
can have an option to pay the amount in Nepalese currency and also we can know the exact amount
that we have to pay.

2. Demat: A Demat Account or Dematerialised Account provides the facility of holding shares and
securities in an electronic format. It is an account opened by any investor with Depository Participant
(DP) who wishes to invest in various securities like share, debenture etc.

Demat account offered by NMB Bank is a safe and secure way to keep your stocks complimented with
the ease totrack your investments online. You can access your Demat account through Mobile Banking
and Internet Banking, a convenient way to view Demat account statement and track transactions. The
Bank provides Demat account services from its branches in partnership with Depository Participant.

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From the above Consolidated Statement of financial position of NMB Bank Limited 2079/80, we get
to know that the total amount of the assets of the bank is Rs. 260,465,972,511 as at 32 Asar 2080
which we far more greater than that ofprevious year‟s amount i.e. Rs.24,242,231,101. From this we
can tell that the bank is successfully able to grow itself and is more financially strong than the previous
year as the assets of bank has increased which is a very positive sign to the bank, the bank tend to
grow its assets more the coming year, it never stops to develop itself therefore always works actively
and provides good quality services and products to its customers which makes NMB Bank different
than other banks.

Similarly, the total liabilities of the bank as at 32 Asar 2080 were Rs.232,437,115,536. But the liabilities
of the bank current year has increased to Rs.21,101,410,083 which is not a good sign to the bank
because if the liabilities of the bank keep on increasing then the bank at last might not be at profit and
at some time god forbid bank may need to be closed, But NMB Bank is actively working to less its
liabilities and be liability free and provide even more service to its customers and work more freely.

Likewise the total equity attributable to equity holders as at 32 Asar 2080 is Rs. 28,465,972,511 and
non-controlling interest for the same year is Rs.538,470,376. Moreover the total liabilities and equity
of NMB Bank as at 32 Asar 2080 is Rs. 260,465,972,511. Last but not least if we talk about the net
assets value per share then itis 149.68 as at 32 Asar 2080 which is relatively good.

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From the above Consolidated Statement of Profit and Loss of NMB Bank Limited for the year ended
31 Asar 2078, we get to know that the total net interest income has increased from last year‟s Rs.
6,165,213,779 to Rs. 6,911,794,819 which is really good. At present the total operating income is Rs.
9,338,592,265 which has also increased from the last year and the total net operating income is Rs.
8,238,171,544 which has change drastically from last year andthe bank is ata good profit.But the
operating profit as at 32 Asar 2080 is Rs. 1,100,420,721 which again is more than that of previous year

Likewise the total profit for the period as at32 Asar is Rs.3,542,626,510 compared to last year‟s
3,019,356,613. We get to see that the bank has earned a lot profit this current year than previous year
which is a really good news for the bank as well as its customer because the bank can provide more
services at lower cost now as it is in much profit. We can say that the bank has not made many
expenses this year, therefore it is in profit. Also in this year only the bank has increased its assets too.
The bank is making a progressive and positive change in its each and every sector. So, we all, bank as
well as the customer can be happy as our bank is doing well.

In conclusion, the bank must continue its active and hard work to earn more profit, increase its assets
and decrease the liabilities and grow more to become a more successful bank the coming year. If it
happens so then the bank also can provide more services to its customers at lower prices. NMB Bank
is definitely one of the most successful banks in the context of Nepal and there is a reason that the
bank received the “Bank of the year” award several times and other banks are struggling to get the
award even one time.

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 CHAPTER 3
SUMMARYANDCONCLUSION
Summary
The economic development of a country cannot be 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.

Commercials banks of course contribute a lot to the development of the economy of the country.
Thus, to remain in the front line of the great contributor of the economy, the banks have sustainable
existence and growth themselves. For the sustainable existence and growth of a bank, it must have
reasonable profitability

Under this study, I have tried to cover the various aspects of NMB Bank covering the period of two
years from 2078/79 to 2079/80. In the first introduction chapter, the study report has tried to give
history& introduction of banking and its relation to the economy, brief profile of the concerned banks,
general concepts of financial statement and the statement of problem, objectives of the study and its
limitation. During there search work, extensive review of various literatue books, past thesis, journals
have been studied and consulted. In addition, as per requirement, internet materials from relevant
websites are searched.

For this study, I have gathered the required data from annual reports published by the concerned
joint venture bank for the last two years. In addition, internet website of Nepal Stock Exchange is
used for necessary data. The study is totally based on the secondary sources of data and required
have been collected by using various published sources.

Data relating to activities of the banks have been collected and presented in figures and tabular form
as far as possible are tried to einterpreted in the study report in logical ways. Data are then analyzed
applying various financial and statistical tools and findings of the study have been listed in a
systematic manner.

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 Conclusion

NMB Bank had shown consistent growth in profitability over the years and had made significant
investments in technology to enhance its operational efficiency and customer experience. The bank
also had a robust risk management framework, which helped it maintain a stable asset quality and
liquidity position.

With some commercial banks and development banks operating in Nepal, the market seems over
crowed 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. NABIL Bank has not maintained a balanced ratio among its deposit liabilities. Consequently,
the bank does not seem to be able to utilize its high cost resources in high yielding investment port
folio.The investment portfolio of the bank has not been managed so efficientlyas to maximize the
returns there from. The operational efficiency of the bank is found unsatisfactory because of the
series of operational loss over the period. Lower market value is a reflection of a weaker profitability
ratio of the bank.

NMB Bank comprises highly motivated staffs who are customer centered. Under the guidance of the
supervisor and staff members was able to experience various activities. I was able to know about the
basic functioning of bank like opening and closing of bank account, issuing of cheques and
statements, and clearing of cheques. This has enhanced the practical knowledge and developed
interpersonal skills, professional qualities, communication skills, team work and knows the ways to
deal with the bank staffs.

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 3.3. BIBILOGRAPHY:

 https://www.nmb.com.np

 https://www.nmb.com.np/report/annual-report

 https://www.wikipedia.org/

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 Group Photo

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