PROFITABILITY ANALYSIS OF SIDDHARTHA BANK

LIMITED

A Project Work Report

By:
Mamata Kumari Thapa Magar

T.U. Regd. No. 7-2-50-1575-2020

Symbol No. ……………….

Butwal Multiple Campus, Butwal
(Finance Group)

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Butwal, Rupandehi
May, 2025
 DECLARATION

I hereby declare that the project work entitled “PROFITABILITY ANALYSIS OF

SIDDHARTHA BANK LIMITED” submitted to the Faculty of Management,
Tribhuvan University, Kathmandu is an original piece of work under the supervision
of Mr. Sandip Paudel, faculty member and head of department of management and
marketing, Butwal Multiple Campus, Butwal, Rupandehi, 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.

………………..

Mamata Kumari Thapa Magar

Date:……………

ii
 SUPERVISOR’S RECOMMENDATION

The project work report entitled “PROFITABILITY ANALYSIS OF SIDDHARTHA

BANK LIMITED” submitted by Miss Mamata Kumari Thapa Magar of Butwal
Multiple Campus, Butwal, Rupandehi, 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.

………………

Mr. Bishnu

Date:

iii
 ENDORSEMENT

We hereby endorse the project work report entitled “PROFITABILITY ANALYSIS

OF SIDDHARTHA BANK LIMITED” submitted by Miss Mamata Kumari Thapa
Magar of Butwal Multiple Campus, Butwal, Rupandehi, in partial fulfillment of the
requirements for the degree of the Bachelor of Business Studies (BBS) for external
evaluation.

Asst. Prof. Pitambar Sapkota Prof. Dr. Tara Prasad Upadhaya

Chairman, Research Committee Campus Chief

Date: Date:

iv
 ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible without
the kind support and help of many individuals and organizations. Their contribution is
sincerely appreciated and gratefully acknowledged. At the very outset, I feel deeply
honored in expressing my heartfelt respect towards Tribhuvan University and Butwal
Multiple Campus for providing me this opportunity to conduct my project work as a
partial fulfillment of the requirement for the degree of Bachelor of Business Studies. I
take this opportunity to express my profound gratitude and deep regards to my
supervisor Mr. Sandip Paudel for his exemplary guidance monitoring and continuous
encouragement throughout this project report.

Similarly, I would like to express my gratitude towards our campus chief Prof. Dr.
Tara Prasad Upadhyaya sir for his kind co-operation and encouragement in
completion of this project report. Moreover, I am highly indebted to all my teachers of
Butwal Multiple Campus who has provided crucial information thorough orientation
class regarding preparation of my project report.

The experience I had with Lumbini Bibdha Sewa was a great chance for learning
and professional development. I consider myself very lucky to be provided with
opportunity to be part of it.

I place a deep sense of gratitude to my family members who have been invariable
source of inspiration during the preparation of this project work. I would also like to
thank my friends for their encouragement and motivation in preparing this report.

Submitted by:

Mamata Kumari Thapa Magar

BBS 4th year (Finance Group)

Butwal Multiple Campus

Butwal, Rupandehi

v
 TABLE OF CONTENTS

Title page i
Declaration ii
Supervisor’s Recommendation iii
Endorsement iv
Acknowledgement v
Table of Contents vi
List of Tables vii
List of Figures viii
Abbreviations ix
CHAPTER I: INTRODUCTION

1.1 Background 1
1.2 Profile of Selected Commercial Banks 2
1.3 Objectives 3
1.4 Rationale 3
1.5 Review of Literature 3
1.6 Methods 5
1.7 Limitations 7

CHAPTER II: RESULTS AND ANALYSIS

2.1 Data Presentation 8

2.2 Analysis of Results 17

2.3 Findings 17

CHAPTER III: SUMMARY AND CONCLUSION

3.1 Summary 19

3.2 Conclusion 20

BIBLIOGRAPHY 21

vi
 LIST OF TABLES

Table No. Titles Page No.

2.1.1 Net Profit Margin 8

2.1.2 Assets Utilization Ratio 9

2.1.3 Return on Assets 11

2.1.4 Return on Equity 12

2.1.5 Net Interest Margin 13

2.1.6 Earnings per Share 14

2.1.7 Dividend per Share 15

2.1.8 Net Operating Margin 16

vii
 LIST OF FIGURES

Figure No. Titles Page No.

2.1.1 Trend line on Net profit margin 9

2.1.2 Trend line on Assets Utilization ratio 10

2.1.3 Trend line on Return on Assets 11

2.1.4 Trend line on Return on Equity 12

2.1.5 Trend line on Net Interest Margin 13

2.1.6 Trend line on Earnings per share 14

2.1.7 Trend line on Dividend per share 15

2.1.8 Trend line on Net Operating Margin 16

viii
 ABBREVIATIONS

BBS: Bachelor of Business Studies

EPS: Earning Per Share

Exp: Expenses

i.e.: That is

Ltd: Limited

NIM: Net Interest Margin

NOM: Net Operating Margin

AUR: Assets Utilization Ratio

DPS: Dividend per Share

NIM: Net Interest Margin

Regd. No. : Registration Number

ROA: Return on Assets

ROE: Return on Equity

SBL: Siddhartha Bank Limited

T.U.: Tribhuvan University

ix
 1

CHAPTER – I

INTRODUCTION

1.1 Background of the Study

Profitability is the ability of a business to earn a profit. In other word, profitability is

the net result of a number of policies and decisions. Profitability is the factor that
measures how effectively the firm is being operated and managed. Profit is the
measuring rod of the bank’s long term sustainability and the survival. Only by being
profitable a bank can compete efficiently in the market to generate value and the
return to the investors. Besides creditors the owners and managers are also interested
in their operating efficiency. So, the calculated profitability ratios evaluate
expectations of both owners and managers in terms of profit earned by the firm. Firms
can determine profitability through a number of factors such as expenses, demand,
productivity, and competition. It is also used as a tool to evaluate different things.
First it is the indicator of customers’ acceptance to the product offered by the firms,
second profit can be used as a source of internal financing. Therefore the profitability
ratios are used to analyze the financial strength and weakness of the firm.

In modern economic system, banking is regarded as the backbone of economy. It is a

financial institution which acts as transaction of money by accepting various types of
deposit, disbursing loans and rendering other financial services. The importance of
financial sector in general and banking sector in particular cannot be undetermined.
Banking sector definitely plays a pivotal role in the overall developmental of any
economy. Commercial banks are one of the vital aspects of this sector which
channelizes the available resources in the needed sector. It is the intermediary
between the deficit and surplus of financial resources. All the economic activities are
directly or indirectly channeled through these banks. People keep their surplus money
as deposit in the banks and banks can provide such funds to finance the industrial
activities in the form of loans and advances.

Commercial banks come into existence mainly with the objective of collecting the
ideal funds, mobilizing them into the productive sector and causing overall economic
development. The bankers play the role of safeguarding the interest of the deposits
and at the same time take care of the shareholders and the society they are serving. A
 2

sound banking system is important because of the key role played in the economy,
intermediation, maturity transform, facilitating payments flows, and credit allocation
and maintaining financial discipline among borrowers. Bank does the work of saving,
gathering, resource allocation, liquidity supply and payment of services.

The stability of Commercial banks as a whole in the economy depends on better

financial performance. Better financial performance level has tendency to absorb risks
and shocks that commercial banks can face. Commercial banks in Nepal have
undergone immense regulatory and technological changes since financial sector
reforms in 1991. Nepal banks are faced with increasing competition and rising costs
as a result of regulatory requirements, financial and technological innovation, entry of
large foreign banks in the retail banking environment and challenges of the recent
financial crisis. These changes had a dramatic effect on the performanceof the
Commercial banks in Nepal. Studies on bank performance in Nepal had focused on
bank efficiency. This study compares and evaluates financial performance of small,
medium and large Commercial banks in Nepal.

1.2 Profile of the Bank

Siddhartha Bank Limited (SBL), establishedon December, 2002 and promoted by

prominent personalities of Nepal, today stands as one of the consistently growing
banks in Nepal. Within a short period of time, SBL has been able to come up with a
wide range of products and services that best suits its clients. Its objective is to
maintain healthy relationships with the customers and to be financially sound,
operationally efficient and keep abreast with technological developments. Siddhartha
Bank has been posting growth in its portfolio size and profitability consistently since
the beginning of its operations. The Bank has been able to gain significant trust of the
customers and all other stakeholders to become one of the most promising
commercial banks in the country in less than 15 years of its operation. The bank has
received several awards and recognitions for its performance and contribution to the
banking industry in Nepal. The bank is fully committed towards customer
satisfaction. And the bank wants to be a leader among the banks of its age in Nepal by
fulfilling the interest of the stakeholders and also aims to provide total customer
satisfaction by way of offering innovative product and by developing and retaining
highly motivated and committed staff. It directs all its efforts to move ahead with
 3

increased profits. The bank has been providing banking services through its branch
offices in the different geographical locations of the country. The paid up capital is
Rs.7.78 arba. The branch of SBL is 197.

1.3 Objectives of the Study

Once aims have been established, the next task is to formulate the objectives. The
main objectives of this study is to get entire knowledge related to financial analysis
and its chief features on regarding to Siddhartha Bank which can be summarized in
the following points:

 To analyze the profitability position of the bank.

 To identify the debt management ratio of the bank.

1.4 Rationale of the Study

The researcher hope that this report will be useful to various people, parties and to the
people who are interested in banking. The main importance of this study are sources
of financial performance of the bank. The purpose of this study is to explore the debt
management ratio of commercial bank activity captured in ratios and, examine the
stability of the financial characteristics over time.

1.5 Review of Literature

The literature review section of the study cover the overview of the Nepal banking
system and capital requirement, the theoretical and empirical studies review in the
areas of financial performance of Commercial banks of Nepal. Moreover, it presents
the variable summary and conceptual framework as well as the knowledge gap and
conclusion.

Conceptual Review

In this section provides a critical analysis of the most relevant theories, from the
classical to the modern approaches, also presenting the theoretical concepts of the
studied field, the definition of the main variables, as the main theories and researchers
relating to the financial performance of Commercial banks.

Nirmal (2004) performance’ is described as the efforts extended to achieve the targets
efficiently and effectively, the achievement of targets involves the integrated use of
 4

human, financial and natural resources. Financial performance is the process of

measuring the results of an organization policies and operations in terms of monetary
value. These results are reflected in the firm’s profitability, liquidity or leverage.
Evaluating the financial performance of a business allows decision makers to judge
the results of business strategies and activities in objective monetary terms. Normally
the ratios are used to determine the financial performance of an organization. A well
designed and implemented financial management is expected to contribute positively
to the creation of a firm’s value.

Rana (2061) states that financial management is the acquisition management and
financial of resources for firm by means money, with due regard for price in external
economic market. A ratio is an expression of the quantitative relationship between
two numbers.

The trend of Commercial banking is changing rapidly. Competition is getting stiffer

and, therefore, banks need to enhance their competitiveness and efficiency by
improving performance. Normally, the financial performance of Commercial banks
and other financial institutions has been measured using a combination of financial
ratios analysis, benchmarking, measuring performance against budget or a mix of
these methodologies (Avkiran, 1995).

Gopinathan (2009) has presented that the financial ratios analysis can spot better
investment options for investors as the ratio analysis measures various aspects of the
performance and analyzes fundamentals of a company or an institution. Furthermore,
Ho and Zhu (2004) have reported that the evaluation of a company’s performance has
been focusing the operational effectiveness and efficiency, which might influence the
company’s survival directly. The empirical results of the researchers (Raza et al,
2011. Tarwnch, 2006) explained that a company, which has better efficiency, it does
not mean that always it will show the better effectiveness. However, the literature
concerning the assets and liability management for bank strongly suggests that risk
management issues and its implications must be concentrated by the banking industry.

Review on Related Studies

Over the past several decades, corporate finance researchers have devoted
considerable efforts to transform rationalism of financial performance into
empiricism. The problem of developing a conclusive theory of financial performance
 5

and designing empirical tests those are powerful enough to provide a basis for
choosing among the various theories is still unresolved. The review of previous works
on financial performance of Commercial banks in Nepal has produced mixed results
are as presented.

Sharma (2013) stated that has studied the topic about financial analysis of Nabil Bank
Limited with the objective of analyzing the liquidity position and profitability position
of the bank and identified that the liquidity position of the bank is good because the
current ratio of the bank is equal to 2:1 and the firm is utilizing its assets in a better
way. This indicates that the bank is making plan and policy effectively.

Pandey (2015) stated that the financial performance of Nepal SBI Bank used multiple
regression analysis and correlations by employing ROA and interest income as
performance proxies which represented as the dependent variables, and bank size,
assets management and operational efficiency as independent variables. Found that,
there is strong positive correlation between financial performance and operational
efficiency and a moderate correlation between ROA and bank size, while, ANOVA
analysis; results indicated that, there exists an impact of those independent variables
on financial performance as the F-stat was significant and below the 5%.

Saru (2018) stated that have studied about the profitability analysis of Himalayan
Bank Limited with the objective of measuring the firm’s capacity in utilizing its assets
and identified that the firm is making a better portfolio asset in order to increase its
profitability. This indicates that the firm is improving its productive use of assets
because the return on assets for later year is greater than that in the earlier year.

1.6 Methods

Research methodology is the research method. It sequentially refers to the various

steps to be adopted by a researcher in studying a problem with certain objectives in
view. Generally, it refers to the numerous processes adopted by the researchers during
the research period. It is the technique to solve the research problem in systematic
manner. It includes many techniques i.e. classic technique, rational unified process,
agile project management, waterfall technique, and program evaluation and review
technique etc.
 6

Research Design

Research design is mainly done when a researcher wants to gain a better

understanding of a topic. Hence, in selecting an approach one should take in to
account the nature of the research problem, the personal experience of the researcher,
and the audience for whom the report is written. Analytical research design is used in
this research work.

Research Variables

This research has followed the descriptive research design. The main goal of this type
of research is to describe the data and characteristics about what is being studied. The
idea behind this type of research is to study frequencies, define, factors, relations,
averages, findings, and other statistical calculations.

Population and Sample

In this study, the researcher has selected accounting system of financial institution in
Commercial banks of Nepal. In line with balanced panel data approach, to meet the
desired objective of this study and to make generalization from sample to population,
the researcher used maximum combination of years and number of banks and
achieved the maximum number of observations through purposive sampling
technique. Thus, banks that operate less than five years were excluded from the
sample. There are 20 Commercial banks in Nepal but the researcher have selected
only one bank i.e. SBL. For the purpose of the study, it would not be possible to
collect information and data from all the organization during the short period. The
researcher has used convenience sampling method for selecting sample banks.

Data Collection and Technique

The data for this study has been taken from the secondary sources, thus the nature of
the data is secondary one. Mostly the data have been taken from the annual report of
SBL. Throughout this study since we have used the annual data, i.e. fiscal year ended
as of each year and necessary adjustments in the data have been made to evolve
continuous and comparable series. Among the primary and secondary sources of data,
this research is fully based on information obtained from the secondary once.
 7

A. Secondary Data

Secondary data is defined as data collected earlier for a purpose other than the one
currently being pursed. Secondary sources refer to those for already gathered by
others. They are referred to as coming from secondary sources such as

 Books, journals and articles

 Annual report
 Previous research report
 Websites

Data Analysis Tools

The quantitative method has been used to know the impact of independent variable in
the dependent variable. The followings are the date analysis techniques are used in
this study, which are as presented below

 Table
 Trend line
 Ratio
 Percentage

1.7 Limitations of the Study

The present study is tried to analyze and to examine the financial performance of
Commercial bank with reference to SBL. The main limitations of study are as
follows:

 This study is based on secondary data such as published financial

statement of SBL.
 The study has covered the period of five (5) financial year starting from
2018/19 to 2022/23.
 This research has been conducted to fulfill the requirement of BBS course
as prescribed by Tribhuvan University.
 This study is mainly based on debt management, profitability and liquidity
of the bank.
 8

 The source of data i.e. published annual report and internet web is assumed
to be correct.

CHAPTER – II

RESULT AND ANALYSIS

2.1 Data Presentation

The chapter deals with the analysis and interpretation of data following the researcher
methodology dealt in the chapter. In this course of analysis, data gathered from the
various sources have been inserted in the table. Using financial tools, the data have
been analyzed, the results and analysis have been interpreted. The conventional
standard with respect to ratio analysis, directives of NRB and other factors while
using tools.

Profitability Ratio’s in Relation to Operating Income

2.1.1. Net Profit Margin

This section attempts to analyze Net Profit Margin of Siddhartha Bank for five fiscal
years (2075/76 to 2079/80). The annual fiscal data has been shown on tables and
figures.

Net Profit Margin = (Net Income / Total Operating Income)*100%

Table 1: Calculation of Net Profit Margin

Year Net Income (Rs.) Total Operating Income NPM

2075/76 1592927079 4439342846 35.88%
2076/77 2143613715 7169975089 29.90%
2077/78 2836114147 8495122466 33.39%
2078/79 948731035 2579619786 36.78%
2079/80 498250316 2635676222 18.90%
Source: Annual report Siddhartha Bank
 9

Trend line on Net Profit Margin

40
35.88 36.78
35
33.39
30 29.9
25
Percentage

20 18.9
15

10

0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

NPM(%) Series2 Series3

Figure 1: Net Profit Margin of Siddhartha Bank

Figure 1 shows the Net profit margin for five fiscal years initiating from fiscal year
2075/76 to 2079/80. The NPM was fluctuated downward and upward every past fiscal
year. It seems that every year first the NPM decreased and after one year it started to
increase. The highest NPM (36.78%) was at fiscal year 2078/79 and the lowest NPM
(18.90%) at fiscal year 2079/80. Thus we can say that the bank was somehow able to
generate satisfactory revenue up to fiscal year 2078/79 then after the profitability of
bank seems decreased till the end of final survey fiscal year.

2.1.2. Assets Utilization Ratio

Assets Utilization Ratio can be calculated using the following relation:

Assets Utilization Ratio = (Total Operating Income / Total Assets)*100

Table 2: Calculation of Assets Utilization Ratio

Year Total Operating Income Total Assets AUR

2075/76 4439342846 135455107113 3.277%
2076/77 7169975089 182668807327 3.925%
2077/78 8495122466 245016688398 3.467%
2078/79 2579619786 264357998428 0.976%
2079/80 2635676222 258829833967 1.018%
Source: Annual report Siddhartha Bank
 10

Trend line on Assets Utilization Ratio

4.5
4
3.5
3
Percentage

2.5
2
1.5
1
0.5
0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

AUR Series2 Series3

Figure 2: Assets Utilization Ratio of Siddhartha Bank

Figure 2 shows the AUR for five fiscal years initiating from fiscal year 2075/76 to
2079/80. The AUR was increased from the initial survey period to fiscal year 2076/77
then after started decreasing to the end of survey period. The highest AUR (3.925%)
was at fiscal year 2076/77 and the lowest AUR (0.976%) at fiscal year 2078/79. Thus
we can say that the bank highly utilized its assets to generate revenue at the increasing
rate up to fiscal year 2076/77 then after, the bank decreased its utilization of assets to
generate revenue till the end of survey period. Moreover, it has been concluded that
the bank had not utilized its assets to generate revenue from it.

2.1.3. Return on Assets

This section attempts to analyze Return on Assets of Siddhartha Bank for past five
fiscal years (2075/76 to 2079/80). The annual fiscal data has been shown on tables
and figures.

Return on assets can be calculated using the following relation:

Return on Assets = (Net profit after tax / Total Assets)*100

 11

Table 3: Calculation of Return on Assets

Year Net Profit After Tax Total Assets ROA

2075/76 1592927079 135455107113 1.18%
2076/77 2143613715 182668807327 1.17%
2077/78 2836114147 245016688398 1.16%
2078/79 948731035 264357998428 0.36%
2079/80 498250316 258829833967 1.93%
Source: Annual report Siddhartha Bank

Trend line on Return on Assets

2.5

1.5
Percentage

0.5

0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

ROA Series2 Series3

Figure 3: Return on Assets of Siddhartha Bank

Figure 3 shows the ROA for five fiscal years initiating from fiscal year 2075/76 to
2079/80. The ROA was decreased from the initial survey period to fiscal year 2078/79
and it slightly increased in fiscal year 2079/80. The highest ROA (1.93%) was at
fiscal year 2079/80 and the lowest ROA (0.36%) was at fiscal year 2078/791.9

2.1.4 Return on Equity

This section attempts to analyze the Return on Equity of Siddhartha Bank for past five
fiscal years (2075/76 to 2079/80). The annual fiscal data has been shown on tables
and figures.

Return on Equity can be calculated using the following relation:

 12

Return on Equity = (Net profit after tax / Total Equity)*100

Table 4: Calculation of Return on Equity

Year Net profit after tax (Rs.) Total Equity(Rs.) ROE (%)
2075/76 1592927079 22186731105 7.18
2076/77 2143613715 21915473808 9.78
2077/78 2836114147 20264975589 14.00
2078/79 948731035 15975819065 5.94
2079/80 498250316 14464997360 3.44
Source: Annual report Siddhartha Bank

Trend line on Return on Equity

16

14

12

10
Percentage

0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

ROE Series2 Series3

Figure 4: Return on Equity of Siddhartha Bank

Figure 4 shows the computation of total equity and ROE as per the above formula for
the five fiscal years initiating from fiscal year 2075/76 to 2079/80. Higher ROE is in
the year 2077/78 i.e.14.00% which is fluctuating over the years. ROE is the lowest in
the year 2079/80 i.e. 3.44%. The overall pattern of ROE is fluctuating over the years.

2.1.5. Net Interest Margin

This section attempts to analyze Net Interest Margin of Siddhartha Bank for past five
fiscal years (2075/76 to 2079/80). The annual fiscal data has been shown on tables
and figures.
 13

Net Interest Margin can be calculated using the following relation:

Net Interest Margin= (Net Interest Income / Total Assets)*100

Table 5: Calculation of Net Interest Margin

Year Net Interest Income (Rs.) Total Assets (Rs.) NIM (%)
2075/76 2128577239 135455107113 1.57
2076/77 7038123370 182668807327 3.85
2077/78 5539851737 245016688398 2.26
2078/79 5587909877 264357998428 2.11
2079/80 3408402639 258829833967 1.32
Source: Annual report of Siddhartha Bank

Trend line on Net Interest Margin

4.5
4
3.5
3
Percentage

2.5
2
1.5
1
0.5
0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

NIM Series2 Series3

Figure 5: Net Interest Margin of Siddhartha Bank

Figure 5 shows Net Interest Margin for five fiscal years initiating from fiscal year
2075/76 to 2079/80. The NIM was increased from the initial survey period to fiscal
year 2076/77 then after started decreasing to the end of survey period. The highest
NIM (3.87%) was at fiscal year 2076/77 and the lowest NIM (1.32%) at fiscal year
2079/80. Thus we can say that the profitability of the bank was slowly increased at the
increasingrate up to fiscal year 2076/77 then after, the rate of profitability was
decreased till the end of survey period.
 14

2.1.6. Earnings per Share

This section attempts to analyze Earnings per share of Siddhartha Bank for past five
fiscal years (2075/76 to 2079/80). The annual fiscal data has been shown on tables
and figures.

Earnings per share can be calculated using the following relation:

Earnings per share = Net Income / No. of Common Shares Outstanding

Table 6: Calculation of Earnings per Share

Year Net Income (Rs.) No. of Shares Outstanding EPS (Rs.)

2075/76 1592927079 6446665 24.71
2076/77 2143613715 100252569 21.38
2077/78 2836114147 109269461 25.87
2078/79 948731035 36901246 25.71
2079/80 498250316 31918662 15.61
Source: Annual report Siddhartha Bank

Trend line on Earnings per Share

30

25

20
Rupees

15

10

0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

EPS Series2 Series3

Figure 6: Earnings per share of Siddhartha Bank

 15

Figure 6 shows EPS of five fiscal years with the help of trend line. The EPS seemed
downward till second fiscal year but in third fiscal year it increased at a higher pace.
Furthermore, the EPS again downward slightly in fourth fiscal year and then went
downward at a greater pace in the final survey period. The highest EPS (Rs.25.87)
was at fiscal year 2077/78 and the lowest EPS (Rs.15.61) was at fiscal year 2079/80.
Overall, the trend lines clarifies that the earnings per share was not satisfactory as it
decreased in the final years compared to initial survey period.

2.1.7. Dividend per Share

This section attempts to analyze Dividend per share of Siddhartha Bank for five fiscal
years (2075/76 to 2079/80). The annual fiscal data has been shown on tables and
figures.

Dividend per share can be calculated by using the following relations:

Dividend per share = Dividend / No. of Shares Outstanding

Table 7: Calculation of Dividend per share

Year Dividend (Rs.) No. of Shares Outstanding DPS (Rs.)

2075/76 139259175 6446665 21.60
2076/77 1858227389 100252569 18.54
2077/78 1808103054 109629461 16.49
2078/79 654561193 36901246 17.74
2079/80 212992086 31918662 6.67
Source: Annual report of Siddhartha Bank
 16

Trend line on Dividend per Share

25

20

15
Rupees

10

0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

DPS Series2 Series3

Figure 8: Dividend per share of Siddhartha Bank

Figure 8 shows the dividend for five fiscal years initiating from fiscal year 2075/76 to
2079/80. The DPS was fluctuated downward and upward every past fiscal year. It
seems that every year first the DPS decreased and then it started to increase. The
highest DPS (Rs.21.60) was at fiscal year 2075/76 and the lowest DPS (Rs.6.67) at
fiscal year 2079/80. Thus we can say that the bank was not able to generate
satisfactory revenue to their shareholders in the recent period. Moreover, DPS has
been shown by graph and table to the movement of different fiscal year.

2.1.8. Net Operating Margin

This attempts to analyze Net operating margin of Siddhartha bank for past five fiscal
years (2075/76 to 2079/80). The annual fiscal data has been shown on tables and
figures.

Operating Margin can be calculated using the following relations:

Net Operating Margin = Net Operating Income / Total Assets

Table 8: Calculation of Net Operating Margin

Year Net Operating Income (Rs.) Total Assets (Rs.) NOM (%)
2075/76 4055529253 135455107113 2.99
2076/77 6418654350 182668807327 3.51
2077/78 7635047190 245016688398 3.12
 17

2078/79 8781689710 264357998428 3.32

2079/80 1742610516 258829833967 0.673
Source: Annual report Siddhartha Bank

Trend line on Net Opearting Margin

4
3
Percentage

2
1
0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

NOM Series2 Series3

Figure 8: Net Operating Margin of Siddhartha Bank

Figure 8 shows the Net Operating Income for five fiscal years initiating from fiscal
year 2075/76 to 2079/80. The NOM was increased from the initial survey period to
fiscal year 2076/77 then after decreased in fiscal year 2077/78 and again increased in
2078/79 then after decreased drastically at the end of survey period. The highest
NOM (3.51%) was at fiscal year 2076/77 and the lowest NOM (0.673%) was at fiscal
year 2079/80. The NOM over the years is increasing and decreasing. This indicates
that the bank was efficient in the past to utilize its assets generated operating income.

2.2 Analysis of Data

This study is about the profitability analysis of Siddhartha Bank Limited, during
2075/76 to 2079/80. The descriptive and analytical research design are used in the
study. Hence, in selecting an approach one should take into account the nature of the
research problem, the personal experience of the researcher, and the audience for
whom the report is written. Considering the research problem and objective because
quantitative research is a systematic and scientific investigation of quantitative
properties and phenomena and their relationships along with the philosophy of the
different research approaches, the quantitative nature of the data collected,
quantitative research approach was found to be appropriate for this study.

2.3 Findings
 18

In this research work, all the data has been obtained from secondary sources. Data has
been analyzed by using financial as well as statistical tools. This topic focuses on the
major findings of the study, which are derived from various financial and ratio
analysis tools of SBL with comparatively applying five years data from fiscal year
2075/76 to 2079/80. The conditions of Siddhartha Bank Limited as depicted by
profitability ratios and assets utilization are as follows.

1. The NPM of Siddhartha Bank Limited is increasing and decreasing over the
period. NPM is highest in year 2078/79 i.e.36.78% and the lowest NPM is in
year 2079/80 i.e.18.90%. This shows that the bank was somehow able to
generate satisfactory revenue up to fiscal year 2078/79 then after the
profitability of bank seems decreased till the end of final survey fiscal year.
2. The AUR of the bank is increasing. The highest assets utilization ratio is 3.925
in the year 2076/77 and the lowest assets utilization is 0.976 in the year
2078/79 and others are fluctuating in the years. Thus we can say that the bank
highly utilized its assets to generate revenue at the increasing rate up to fiscal
year 2076/77 then after, the bank decreased its utilization of assets to generate
revenue till the end of survey period.
3. The highest ROA is 1.93 in the fiscal year 2079/80 and the lowest in the year
2078/79 i.e.0.36. Thus we can say that the bank has got effective return from
its assets compared to the initial survey period. The profitability of the bank
was quite effective considering return on assets. This shows that the firm
improve its productive use of assets in the recent year.
4. The overall pattern of ROE is increasing and decreasing in low profitability.
Highest ROE is in the year 2077/78 i.e.14.00 which is declining in the recent
period 2079/80 i.e.3.44.
5. The NIM of the bank is increasing over the first two years. In the year
2076/77, NIM is the highest i.e.3.85 and the lowest in the year 2079/80
i.e.1.32. The NIM over the years is fluctuating. Thus we can say that the
profitability of the bank was slowly increased at the increasing rate up to fiscal
year 2076/77 then after, the rate of profitability was decreased till the end of
survey period.
6. The EPS of the bank is also low in the recent year. The highest EPS of the
bank over the sample year is Rs.25.87 in the year 2077/78 and the lowest EPS
 19

in the year 2079/80 i.e. Rs.15.61. The EPS is seen to be increasing in the year
2076/77 to 2077/78 and decreasing then after. This indicates that EPS is
sufficiently increasing and decreasing in the coming years.
7. The DPS of the bank is fluctuating in the recent years. In the year 2075/76 i.e.
Rs.21.60 is the highest and lowest is Rs.6.67 in the year 2079/80. It is
continuously decreasing over the period.
8. The NOM of the bank is increasing and decreasing over the period. In the year
2076/77, NOM is the highest i.e.3.51% and the lowest in the year 2079/80
i.e.0.673%. This indicates that the firm was efficient in the past to utilize its
assets generated operating revenue.

CHAPTER- III
SUMMARY&CONCLUSION

3.1 Summary

The presentation, analysis and findings done in the preceding chapters, on the basis of
various types of data collected by applying different methods, summarizes that the
company is one of the successful institutions that has been successfully running since
last five years and also before that period even before the expectations of the owners.
The researcher has analyzed the data related to the profitability or assistant to the
analysis of profitability were collected by interview, questionnaire, etc. The bank’s
book of records, files, publications were used as secondary data sources. To make
better assessment of profitability and to achieve as far as real reflection of profitability
of the bank, the collected data were presented by ratio analysis.

Profitability and assets utilization of the firm should be assessed by concerned parties
to know the strengths and weaknesses of the firm. So, financial statement analysis is
important. The main goal of enterprise is to earn profit and proper assets utilization.
Profit is residual income after the payment to expenses. Profit is the pillar to
strengthen and expand business firm. Profitability is the key factor that measures how
 20

effectively a firm is being managed and operate. Assets utilization measure firms
capacity.

For the purpose of analyzing the profitability and assets utilization of Siddhartha
Bank, data are collected from secondary sources via internet and collected data were
analyzed using various statistical and financial tools. Various financial ratios are used
to determine the profitability of the firm like NPM, AUR, ROA, ROE, NIM, EPS,
DPS, NOM, etc. the data are presented in the table and graphs to ease the analysis. So,
financial statement analysis is important for the financial position of the firm.

3.2 Conclusion

This fieldwork report is prepared to analyze the profitability and assets utilization of
the Siddhartha Bank. For this purpose, information are referred and analyzed. After
the study of fieldwork, the following conclusion have been made about the
profitability and effective assets utilization of the firm.

The NPM of Siddhartha Bank Limited is increasing and decreasing over the period.
NPM is highest in year 2078/79 i.e.36.78% and the lowest NPM is in year 2079/80
i.e.18.90%. This shows that the bank was somehow able to generate satisfactory
revenue up to fiscal year 2078/79 then after the profitability of bank seems decreasing
till the end of final survey fiscal year. The AUR of the bank is increasing. The highest
assets utilization ratio is 3.925 in the year 2076/77 and the lowest assets utilization is
0.976 in the year 2078/79 and others are fluctuating in the years. Thus we can say that
the bank highly utilized its assets to generate revenue at the increasing rate up to fiscal
year 2076/77 then after, the

Bank decreased its utilization of assets to generate revenue till the end of survey
period. The highest ROA is 1.93 in the fiscal year 2079/80 and the lowest in the year
2078/79 i.e.0.36. Thus we can say that the bank has got effective return from its
assets compared to the initial survey period. The profitability of the bank was quite
effective considering return on assets. This shows that the firm improve its productive
use of assets in the recent year. The overall pattern of ROE is increasing and
decreasing in low profitability. Highest ROE is in the year 2077/78 i.e.14.00 which is
declining in the recent period 2079/80 i.e.3.44. The NIM of the bank is increasing
over the first two years. In the year 2076/77, NIM is the highest i.e.3.85 and the
lowest in the year 2079/80 i.e.1.32. The NIM over the years is fluctuating. Thus we
 21

can say that the profitability of the bank was slowly increased at the increasing rate up
to fiscal year 2076/77 then after, the rate of profitability was decreased till the end of
survey period. The EPS of the bank is also low in the recent year. The highest EPS of
the bank over the sample year is Rs.25.87 in the year 2077/78 and the lowest EPS in
the year 2079/80 i.e. Rs.15.61. The EPS is seen to be increasing in the year 2076/77 to
2077/78 and decreasing then after. This indicates that EPS is sufficiently increasing
and decreasing in the coming years. The DPS of the bank is fluctuating in the recent
years. In the year 2075/76 i.e. Rs.21.60 is the highest and lowest is Rs.6.67 in the year
2079/80. It is continuously decreasing over the period. The NOM of the bank is
increasing and decreasing over the period. In the year 2076/77, NOM is the highest
i.e.3.51% and the lowest in the year 2079/80 i.e.0.673%. This indicates that the firm
was efficient in the past to utilize its assets generated operating revenue.

BIBLIOGRAPHY

Annual report of SBL from Fiscal year 2075 to 2080

Nirmal, D. (2004). Financial Performance Analysis. Kathmandu: Education

Enterprises (P) Ltd.

Rana, S. (2061). Fundamental Corporate Finance. Kathmandu: Taleju Prakashan.

Avkiran, R. (1995). Analyzing Financial Performance of Development Banks. Delhi:

Application of CAMEL model.

Gopinathan, P. (2009). Financial Management. Kathmandu: Pearson Education

Pvt.Ltd.

Ho and Zhu (2004), Fieldwork Assignment & Report Writing. Japan: University of
Japan.

Sharma, S. (2013). Financial Analysis of Nabil Bank Limited. Butwal: Lumbini

Banijya Campus.

Pandey (2015). Financial Analysis of Nepal SBI Bank Limited. Butwal: Tinau
Development Gautam Buddha Campus.
 22

Saru, K. (2018). Profitability Analysis of Prabhu Bank Limited. Butwal: Lumbini

Banijya Campus.

Thapa (2012). Profitability in Nepal, Kathmandu: Tribhuvan University.

http://www.google.com