DEPOSIT AND LOAN PORTFOLIO OF

NMB BANK LIMITED

A Project Work Proposal

By

Priti Moktan Tamang

Symbol No: 702050049
T.U. Registration Number: 7-2-205-116-2020
Kankai Aadarsh Campus

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In the Partial Fulfillment for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Birtamod, Nepal
June, 2025

Table of Contents
Heading Page No

1. Background of the study. 1

2. Objectives of the study. 2
3. Statement of the problems. 2
4. Significance of the study. 3
5. Research Methodology. 4
1. Background of the Study
Banks are one of the profit oriented financial institutions that provide financial service to
their customers playing significant role in the development of the country. It helps in the
growth of trade, agriculture, commerce and industry of the national economy .They accept
deposit from public and provide loan to the borrower.

Deposit generally refers to the sum of money that is stored in virtually created account. It is
the primary source of fund of the banks. A deposit is money held in a bank account or with
another financial institution that requires a transfer from one party to another. Since deposit is
most important financial resource of any commercial banks to meet the financial needs so
proper accumulation and management of deposit is required. On the other hand loan is a sum
of money that is lent to another party with the agreement for future repayment with additional
interest along with the principal amount. The lending activities involve the depositor’s money
which is repayable on demand. Loan management is the process of analyzing and managing
the credit risks.

Credit risk is defined as the possibility that the borrower will fail to meet its obligations in
accordance with the agreed terms and conditions. The goal of the credit risk management is
to maximize a bank’s risk adjusted rate of return by maintaining the credit risk exposure
within acceptable parameters. For maintaining a proper deposit portfolio, banks provide and
manage various saving accounts which is mostly based on the time frame. Higher the time
frame higher the interest rate and vice versa. This creates a portfolio in deposit to properly
and systematically manage the overall risk factor the commercial banks.

Likewise, a loan portfolio is the totality of all loans issued by a bank or other financial
institution to its customers. The portfolio can consist of both safe and risky loans. Every issued
loans are not guaranteed to be repaid by the borrower so a diversified loan portfolio should
contain a mix of different borrowers and industries to minimize the risk of losses. It involves
assessing various factors such as credit history, income, employment, and collateral to
determine the likelihood of a borrower repaying their loan obligations. By analyzing the loan
of bank or financial institution, we can find out its assets quality as loan is the major assets in
banks and financial institutions. While evaluating loan of any bank or financial institution, we
should consider basically three elements namely risk, return and repayment. If risk is
minimized, there is the chance of getting safe return. If repayment of loan improves, a chance
of receiving secure return is also increased.

1.1 Profile of the Organization

NMB Bank was established in October [Link] was initially established as a class ‘C’
financial institution and is the first Class ‘C’ financial institution to upgrade as a Class ‘A’
Commercial Bank of the country in May 2008. The NMB Bank's head office, also known as
NMB Bhawan , is located in Babarmahal, Kathmandu, Nepal It has been operating in the
Nepalese Financial market for nearly thirty years and is one of the leading commercial banks
in the banking industry. 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. 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. Currently, it is providing its services with 202 branches, 11
extension counters and 187 ATMS over different parts of Nepal. NMB Bank's issued and
paid-up capital is NPR 18.37 Arab (18.37 billion). As a modern-day institution, the Bank
attempts to align its actions with Nepal’s vision of self-reliance focusing its investments on
sectors crucial to the country’s socio- economic development. The bank over the years,
through strategic acquisitions and mergers, has expanded its reach emerging as one of the key
players in the domestic banking landscape serving over 2 Million customers across the
country.

2. Objectives of the Study

The main objective of the study is to analyse the deposit and identify the loan portfolio of the
NMB bank. Some of the specific objectives of the study are listed as follows:

 To analyse the deposit position of the bank.

 To evaluate the loan portfolio of NMB bank.
 To examine the relationship between deposits and loan portfolio of NMB Bank Limited.

3. Statement of Problems

Through the financial inter-mediation role, the commercial banks reactivate the idle funds
borrowed from the lenders by investing such funds in different classes of portfolios. Such
business activity of the bank is not without problems since the deposits from these fund
savers which have been invested by the banks for profit maximization, can be recalled or
demanded when the later is not in position to meet their financial obligations. Considering the
public loss of confidence as a result of bank distress which has bedeviled the financial sector
in the last decade and the intensity of competition in the banking sector due to the emergence
of large number of new banks, every commercial bank should ensure that it operates on profit
and at the same time meets the financial demands of its depositors by maintaining adequate
liquidity along with its deposit and credit. After study the research can solve the following
questions answer:

 What are the historical trends in deposit amounts and growth rates at NMB Bank Ltd?
 What risk management strategies are currently in place for maintaining the quality of
the loan portfolio ?
 What best practices can be implemented to improve the banks performance ?

4. Significance of the study

Commercial banks are emerging as vital part of our economy and moreover, deposit
mobilization to loan management is one of the most essential and important function of any
financial institutions. Loan is a critical factor for the bank as it is a highest source of income
for bank and affects profit and performance. Banks get highest return in the form of interest
on loan. Growing competition and global financial crisis has had great impact in banking
business. The loan risk has risen substantially. This has increased the importance of loan
management .Thus, this study will help to understand thoroughly about deposit and loan
management practices of NMB bank to face the arising challenges .Also, findings of this
study will be beneficial to those who is interested in knowing about the bank. It is expected
that, by the help of this study, staffs and other stakeholders of the sample organization can get
some knowledge and feedback from the services they rendered to their clients. Further
students and researchers can use it as a literature. Student herself/himself can increase her
practical skill through this study. Thus, it will be beneficial not only for the staffs and other
stakeholders of the organization but it will also be useful for other interested parties.

6. Research Methodology

Research is a systematic effort to gain new knowledge. It is the systematic and objective
analysis and recording of controlled observations that may lead to the developments.
Research methodology involves the structured approach to gather, analyze and interpret the
collected data to answer the research objective or to test the hypothesis regarding the
research. They are the framework for performing research .They provide a series of tools and
technique in order to have a systematic collection and analyzing of information in order to get
the desired conclusions. It describes the methods and processes applied in an entire aspect of
the study. In fact, research methodology is a systematic way of solving the research problem.

5.1Research design

This describes the general plan for carrying out the study. The research design specifies
which approach and methods should be followed for gathering and analyzing the information.
Majority of data are collected in numerical value which including both of deposits and overall
types of loans. The research design is thus designed to support the efficient and smooth
analysis and interpretation of the findings. For this research quantitative approach is
followed.

5.2 Nature and source of data

The secondary data are those information which have previously collected, processed and
published by others. It is information that is gathered from already existing sources rather
than being directly gathered by the researcher for their particular study. This research
includes the study of actual performance and current standing of the bank so the findings
must have reliability, transparency and validity. For this research, data are collected from
secondary sources mainly comprising of financial statement of the bank and its annual report.

5.3 Population, sample and sampling methods

The study is focused with the commercial banks of Nepal. Currently there are 20 commercial
banks in Nepal. Collection of data from every bank and analyzing it is quite time consuming.
So, for this research NMB bank is selectively chosen as a sample from the available
population of the commercial banks. The data are collected from last five fiscal year and
there is use of stratified and purposeful sampling method.

5.4 Data collection procedure

This study is based on secondary data .All the commercial banks are obliged to publish their
annual report to the public. The banks publish their reports in their website accessible to the
general public. The necessary data are collected in a systematic process as follows:
 Identifying the need of the study.

 Personal approach to collect the only required information to meet the objective.

 Review of past data, evaluations and test conducting with the data collected from such
source to know the present status of the bank.

5.5 Methods of data analysis

For the purpose of the study of collected data, various financial tools have been used to
achieve the objective of the study. Data have been simplified and inserted into meaningful
tables and figures. Further the data are applied with various formulas to calculate the
theoretical performance of the bank.

5.6Financial Tools

The tools that are used to measure the financial performance of the concerned from short-
term as well as long-term solvency point of view. Following financial tools are used in this
study for measuring the efficiency of the bank.

 Growth Rate.

 Total deposit to total assets ratio.

 Deposit lending ratio.

 Loan to assets ratio.

 Non-performing loan ratio.

 Correlation analysis.