FINANCIAL PERFORMANCE ANALYSIS OF NMB BANK LIMITED

A Project work Proposal

Submitted By:
Susma Kumari Chaudhary
T.U. Regd. No.: 7-2-225-408-2020
J.S. Muraka Multiple Campus
Group: Finance

Submitted To
Faculty of Management Tribhuvan University
Kathmandu, Nepal

In Partial fulfillment of the requirements for the degree of

BACHELOR OF BUSINESS STUDIES (BBS)

SirahaNepal
May, 2025
 TABLE OF CONTENTS

Table of Contents i
Abbreviation ii
1 Background of the Study ……………………………………………….….1
2 Profile of the NMB Bank………………………………………………… ..2
3 Objectives of the Study ……………………………………………….……2
4 Rational of the study………………………………...……………...………3
5 Review of literature ………………………………………………………..3
6 Research Methodology …………………………………………………… 5
7 Limitation of the study …………………………………………………… 6
1 Background of the Study
Financial performance is a subjective measure of how well a firm can use assets from its
primary mode of business and generate revenues. The term is also used as a general measure
of a firm's overall financial health over a given period. Financial performance analysis is the
process of identifying the financial strength and weakness of the form by properly
establishing the relationship between the items of balance sheet and profit and loss account.
It also help in short term and long term forecasting and growth can be identified with the
helped of financial performance analysis. Financial performance analysis can be considered
as a heart of financial decision. Financial performance as a part of the financial management
is the main indicator of the success or failure of the firm. There are many ways to measure
financial performance, but all measure should be taken in aggregate. Line terms, such as
revenue from operating income. Furthermore, the analysis or investor may wish to look
deeper into financial statement and seek out margin growth rates.

In the banking industry, assessing financial performance is essential to understanding a

bank’s ability to generate profit, manage risks, and allocate resources effectively. The
financial health of a bank can be gauged using key financial metrics such as profitability,
liquidity, capital adequacy, and operational efficiency. For NMB Bank, which operates in a
competitive and dynamic environment, financial performance analysis is not just about
assessing current financial health but also understanding long-term sustainability and growth
potential.

The importance of studying NMB Bank’s financial performance lies in its ability to provide
valuable insights for various stakeholders. For investors, customers, and regulators, the
financial analysis serves as a key indicator of the bank’s profitability and stability. It also
highlights areas where the bank excels or requires improvement, such as managing non-
performing loans, optimizing operational efficiency, or improving capital structure.

2 Profile of NMB Bank Limited

NMB Bank Limited, established in 1996 as Nepal Merchant Banking and Finance Limited
and later transforming into NMB Bank in 2008, is one of the most well-established and

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trusted commercial banks in Nepal. Headquartered in Kathmandu, the capital city of Nepal,
NMB Bank has grown significantly over the years, establishing a strong presence in the
country’s banking sector. With over 150 branches across Nepal, NMB Bank provides a wide
range of financial services to individuals, businesses, and institutions, offering convenience
and accessibility to its ever-growing customer base. The bank’s retail banking services
include savings and current accounts, fixed deposits, loans (personal, home, vehicle, and
education), and debit and credit card services, all designed to meet the needs of its diverse
clientele. NMB Bank also provides an array of digital banking solutions, including mobile
banking, internet banking, and ATMs, allowing customers to conduct transactions
seamlessly from anywhere, anytime.

In addition to retail banking, NMB Bank offers a wide variety of corporate banking services,
which include business loans, trade finance, working capital management, and foreign
exchange services, catering to the financing needs of Nepal’s growing business community.
The bank also has a strong focus on Small and Medium Enterprises (SMEs) and offers
specialized banking products and services to support their growth and success. NMB Bank
has been at the forefront of digital banking in Nepal, continuously investing in technology to
enhance customer experience and meet the evolving demands of the market. The bank was
one of the early adopters of mobile banking and internet banking in Nepal, ensuring that its
customers have access to modern banking solutions that are convenient, secure, and user-
friendly.

Financially, NMB Bank has demonstrated consistent growth and stability, with strong asset
growth, increasing deposits, and a robust loan portfolio. The bank’s sound financial
management and strong capital base have earned it a solid reputation for reliability and
trustworthiness, both locally and internationally. NMB Bank has also garnered recognition
for its corporate governance practices and excellent customer service, which has helped the
bank build long-lasting relationships with its customers. Over the years, NMB Bank has
received multiple accolades for its contributions to the banking sector, particularly in areas
like financial innovation, digital transformation, and customer satisfaction.

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3 Objectives of the study
The basic objective of this study is the evaluation of the financial performance NMB. The
specific objectives of this study are as follows:
 To analyze the financial performance in terms of the liquidity, activity, profitability,
leverage of NMB
 To examine loan and advance, investment and total deposit of NMB

4 Rational of the study

This study mainly filling gap the study of financial performance of concerned banks.
Especially, this study deals with comparative study of investment policy of NMB of Nepal.
The NMB is mandated by Government of Nepal to provide financial services to the rural
population to stimulate income and generate employment in remote areas. This study will
find the strengths and weaknesses of the Bank by analyzing the opportunities and threats in
its overall conduct in the real ground. This study will also be an important support to the
management owner clients and other interest groups in analyzing the Bank's economic
strength and performance efficiency. As it is a well know fact that the Banks can affect the
economic condition of the whole country. It will be helpful to the policy makers while
formulating the policy regarding NMB and people can understand how benefit is taking by
them from the semi-government banks. The study is basically confined to review the
financial performance and investment policies of the banks during the five years period.
This study is expected to provide a useful feedback to the policy maker of banks and also to
the government and central bank (NRB) to formulate the appropriate strategies for
improvement in the performance of banks. Moreover, this study can also be used as
reference point by the international organization like NMB, World Bank etc.
5 Review of literature
The liquidity ratio is one of the most critical financial performance indicators used to assess
a company's ability to meet its short-term obligations without raising external capital. In the
banking sector, liquidity is a crucial aspect of a bank’s financial health, as it directly impacts
its ability to manage daily operations, respond to unexpected withdrawals, and meet
regulatory requirements. The liquidity ratio helps determine how well a bank can cover its
liabilities using its liquid assets, which are assets that can quickly be converted into cash.

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Poudel(2023) To evaluate the financial performance of NMB Bank from 2020 to 2025 using
key financial ratios, including liquidity, profitability, and leverage [Link]’s analysis
shows that NMB Bank demonstrates strong profitability, but there are concerns regarding
liquidity and operational efficiency. Liquidity ratios such as the current and quick ratios
highlight some vulnerabilities in meeting short-term obligations. Poudel recommends
improving liquidity management and enhancing operational efficiency. More effective
management of non-performing assets (NPAs) and optimizing cost structures could
contribute to better financial performance.

Khanal (2021) To examine NMB Bank’s financial performance focusing on risk

management and financial stability. The study reveals that NMB Bank effectively mitigates
risks related to credit, market fluctuations, and liquidity. The bank’s strategies, including
maintaining adequate reserves and hedging mechanisms, have helped ensure financial
[Link] suggests that NMB Bank should continue to refine its risk management
strategies, particularly in terms of market risk and credit risk, to ensure long-term financial
stability.

Shresthe (2018) To analyze the financial performance of Nepal Bangladesh Bank Ltd. using
ratio analysis for the fiscal year 2019 to 2024. Shrestha’s analysis identifies key financial
trends, including profitability, liquidity, and solvency. The bank shows solid profitability but
needs improvement in its liquidity position, especially concerning its quick ratio and current
[Link] study suggests that Nepal Bangladesh Bank should focus on improving liquidity
by reducing its dependency on illiquid assets and enhancing cash management practices.

6 Research methodology
This research methodology has done to fulfill the objective of comparative study of financial
performance of NMB. The research methodology adopted in this chapter follows some
limited but crucial steps aimed to achieve the objective of the research. This chapter looks
into the research design, nature and source of data, population and sample and technique of
analysis.

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6.1 Research design
Descriptive research aims to accuracy and systematically describe a population, situation.
Descriptive research design is used to describe characteristics of a population being studied.
It does not answer questions about how/ when/ why the characteristics occurred. Analytical
research focus on understanding the cause effect relationship between two or more variables,
for example, statistics showing the fluctuation of trade deficits between the united state and
the rest of the world during 2076/77-2080/81. Comprises describe research.
Since the main objectives of this study is to analysis financial performance of the banks, all
the indicators that shows the financial performance of the banks were calculated using data
obtained from the five year end internally generated accounting records maintained by
sampled Banks. The study depends on the secondary data. Various financial parameters and
effective research techniques are employed to evaluate the financial performance of the
banks. Furthermore, various descriptive as well as analytical techniques are used. The study
is designed as to give a clear picture of the Bank's financial circumstances with the help of
available data with useful suggestions and recommendation.
6.2 Population and sample
Purposive sampling is an acceptable kind of sampling for special situations. Purposive
sampling is used most often when a difficult to reach population needs to be measured.
Convenience sampling is a type of non probability sampling in which people are sampled
simplify because they are "convenient" sources of data for research. Twenty Commercial
banks are operating in Nepal. All the commercial banks that are operating in Nepal are
considered as the population. It is not possible the study all the data related with all banks
because of the limited time period and showed also taken in to consideration of the partial
fulfillment of the BBS. Thus her NMB has been selected for the present study.
6.3 Nature and sources of data
The study is mainly conducted on secondary data relating to the study of financial
performance of selected Banks, as they are available at concerned Banks. For the purpose of
the study to collect data from annual report of NMB Bank Limited. Besides, necessary
suggestions are taken from various experts both inside and outside the bank whenever
required.

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6.4 Analysis of financial rations
The techniques of ratio analysis in of considerable significance in studying the financial
liquidity, activity, profitability and leverage the quality of management of the business and
industrial concerns, the important ratios that are studied for this purpose are given below..

7 Limitations of the study

This study is about the financial performance of NMB. Every research has its own
limitation, which are as follows: this research done for Partial Fulfillment of the
Requirements for the Degree of Bachelor of Business Studies (B. B. S). The main
limitations are as follows:
1. The study is mainly based on secondary data collected from the banks. Research based on
secondary data may be far from accuracy due to inherent character.
2. A whole study is based on the data of five years period i.e. from year 2076/77 to 2080/81
and hence the conclusion drawn confines only to the above period.
3. This study concentrates on Deposit, Loan and Advances, Investment on Securities, Total
Assets, Equity Capital, Net Profit.
4. Due to the lack of time and financial resources only one NMB is selected as sample for
the study.
5. Source of data are mostly dependent on published annual report thus it is based on the
secondary data.

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 REFERENCES

Books

Adhikari, D., & Pande, D. L. (2017). Business research methods (2nd ed.). Asmita Publication.

Bhandari, B. P. (2017). Profit planning and controlling in NMB. Faculty of Management,

Tribhuvan University.

Gurung. (2022). To explore the impact of external economic factors like inflation, exchange
rates, and GDP growth on the financial performance of NMB Bank.

Khanal. (2021). To examine NMB Bank’s financial performance focusing on risk management
and financial stability.

Paudel, R. B., & Joshi, P. R. (2016). Fundamental of investment. Asmita Publication.

Pathak, S. (2014). Deposit analysis of Kumari Bank Ltd. Faculty of Management, Tribhuvan
University.

Shrestha, R. (2024). A comparative analysis of the financial performance of selected banks:

Focusing on NMB Bank using financial ratios. Nepal Financial Studies.
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