DIVIDEND POLICY

OF
NIC ASIA BANK LIMITED

A Project Work Report

By

Swikriti Bhandari
Exam Roll No: 707320009
T.U. Reg. No: 7-2-732-15-2019
Bhasha Campus, Dhankuta

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In partial of the requirements for the degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Dhankuta
Shrawan 2081

i
 DECLARATION

I hereby declare that the project work entitle "DIVIDEND POLICY OF NIC ASIA
BANK LIMITED" submitted to the Faculty of Management, Tribhuvan University,
Kathmandu is an original piece of work under the supervision of Mr. Indra Poudel
faculty member, Bhasha Campus Dhankuta, and is submitted in partial fulfillment
of the requirement for the award of 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.

............................
Swikriti Bhandari
Date: 2081/-----/----

ii
SUPERVISOR'S RECOMMENDATION

iii
ENDORSEMENT

iv
 ACKNOWLEDGEMENT
This project work report has been prepared and submitted to partial fulfillment for the
degree of Bachelor Of Business Studies as curriculum of T.U. Firstly, I would like to
express my sincere gratitude to Tribhuvan University, Faculty of management for
providing me the opportunity to carry out this research. This study report will help to
analyze Dividend policy of NIC Asia Bank Limited.

This project work reflects the effect of many great people. And to all I would like to
express sincere gratitude and the heartiest thank to lecturer of my Bhasha Campus, Mr.
Indra Poudel and my honorable Research Committee and guiding teacher MR. Keshav
Shrestha for excellent guidance and constant motivation during the course of my
project work.

I also wish my gratitude for all professors of Bhasha Campus for their precious. As well
as appreciation to the manager of NIC Asia Bank Limited for provide me the annual
reports and other required information of the bank.

I would like to thank my respected parents for the financial support and to all my dear
friends for their coordination at the time of preparing and finalizing this report.

At last, I am thankful to VDS Pointer, for computerizing this report at the limited time.

Thank you!

Swikriti Bhandari
BBS 4th year

v
 TABLE OF CONTENTS
DECLARATION ...................................................................................................................... i
SUPERVISOR'S RECOMMENDATION ............................................................................... iii
ENDORSEMENT ....................................................................................................................iv
ACKNOWLEDGEMENT ......................................................................................................... v
TABLE OF CONTENTS .........................................................................................................vi
LIST OF TABLES ..................................................................................................................vi
LIST OF FIGURES ............................................................................................................. viii
ABBREVIATIONS ................................................................................................................ix

CHAPTER -I ........................................................................................................................... 1
INTRODUCTION ................................................................................................................... 1
1.1 Background of the Study .................................................................................................1
1.2 Profile of Organizationa ..................................................................................................2
1.3 Statement of the Problem ................................................................................................2
1.4 Objective of the Study ..................................................................................................... 3
1.5 Rationale of the Study ..................................................................................................... 3
1.6 Review of Literature ....................................................................................................... 3
1.7 Research Methodology ....................................................................................................5
1.8 Limitations of the Study ..................................................................................................8

CHAPTER- II.......................................................................................................................... 9
RESULTS AND ANALYSIS ................................................................................................... 9
2.1 Presentation of Data ........................................................................................................ 9
2.2 Analysis of Results .........................................................................................................9
2.3 Major Findings.............................................................................................................. 16

CHAPTER- III ...................................................................................................................... 17

SUMMARY AND CONCLUSIONS ..................................................................................... 17
3.1 Summary ...................................................................................................................... 17
3.2 Conclusions .................................................................................................................. 18

REFERENCE.......................................................................................................................... 19
APPENDICES ........................................................................................................................ 20

vi
 LIST OF TABLES

Table No. Page No.

Table 1 Market Price Per Share 9

Table 2 Earning Per Share 10

Table 3 Dividend Per Share 11

Table 4 Dividend Payout Ratio 12

Table 5 Dividend Yield 13

Table 6 Book Value Per Share 14

Table 7 Price Earning Ratio 15

vii
 LIST OF FIGURES

Figure No. Page No.

Figure 1 Market Price Per Share 9

Figure 2 Earning Per Share 10

Figure 3 Dividend Per Share 11

Figure 4 Dividend Payout Ratio 12

Figure 5 Dividend Yield 13

Figure 6 Book Value Per Share 14

Figure 7 Price Earning Ratio 15

viii
 ABBREVIATIONS
A/C Account
BBS Bachelor of Business Studies
ATM Automated Teller Machine
EPS Earning Per Share
F/Y Fiscal Year
B.S. Bikram Sambat
B/S Balance Sheet.
i.e That Is
NRB Nepal Rastra Bank
P/L Profit & Loss
ROA Return on Assets
Rs Rupee
TU Trivuwan University
DPR Dividend Payout Ratio
BVPS Book Value per Share
MPS Market Price per Share
DPS Dividend per Share
DY Dividend Yield
EPS Earning Per Share
P/E Price Earning Ratio
MVPS Market Value per Share
& And
% Percentage

ix
 CHAPTER -I
INTRODUCTION
1.1 Background of the Study
Bank is a financial institution, which deposits from the public and in turn advances loan
by creating credit. Therefore, it is different from other financial institutions, as they
cannot create credit though they accept deposits. Bank is established for depositing,
withdrawing, and borrowing money. A bank collects scattered finance resources from
the masses and invests them in economic and commercial activities of country. Bank
plays a vital role in developing economic situation of the developing countries like
Nepal. A bank is an institution, which major function is to deal with money and credit.
The main task of a bank is to pool the scattered idle deposits of the public and channel
it for productive use. It collects deposits and invests or lends to those who need money.
Hence, its responsibility towards the public is different from those who are involved in
other types of trades and service. In modern days, banks exhibit a trait like a department
store with a wide range of financial products to offer.
For the entire development of any country, each sector should be strong and capable.
Among them, the economic sector is one of the major sectors. Banks and financial
institutions play a vital role in the economic development of the country. So, if there is
insufficiency of banking and financial facilities, the growth of economic development
will decrease. Banks and financial institutions assist in economic development by
mobilizing short term as well as long-term capital needed for the productive sectors.
Specially banks and finance companies provide various facilities to the people engaged
in trade, commerce and industry. Hence, they are the means to uplift society. Banking
institutions have many functions such as accepting deposit, providing interest,
culminating in the formulation of capital, granting loans that help to remove deficiency
of capital, performing agency functions, which make life easier and they play an
important role in credit creation.
Dividend policy is concerned with determining the proportion of firm’s earnings to be
distributed in the form of cash dividend and the proportion of earnings to be retained.
The dividend decision affects the value of the firm’s common stock in the marketplace.
The firm’s dividend policy is influenced by a large no. of factors such as legal
requirements, net profit rule, insolvency rule, access to the capital market expected rate
of return, etc. When establishing an optimal dividend policy, a firm considers

1
shareholders preference along with investment opportunities and relative cost of
retained equity versus externally raised equity. The dividend decision is regarded as a
financing decision since any cash dividend paid reduces the amount of cash available
for investment by the bank.

1.2 Profile of Organization

NIC ASIA Bank has its antecedents in NIC Bank, which was established on 21 st July
1998. The Bank was rechristened as NIC ASIA Bank after the merger of NIC Bank
with Bank of Asia Nepal on 30th June 2013. This was a historic merger in the annals of
Nepalese financial landscape as the first of its kind merger between two successful
commercial banks in the country. Today, NIC ASIA has established itself as one of the
most successful commercial banks in Nepal.
During the post-merger integration phase, NIC ASIA managed the transition very
smoothly receiving accolades from the regulators as well as the stakeholders, paving
the way for other mergers and consolidation in the Nepalese financial sector. After the
merger, NIC ASIA was recognized as “Bank of the Year 2013-Nepal” by The Banker,
Financial Times, UK. This is the second time that the Bank has been recognized with
this prestigious award, the previous occasion being in 2007.
NIC ASIA Bank is now one of the largest private sector commercial banks in the
country in terms of capital base, balance-sheet size, number of branches, ATM network
and customer base. The Bank has 360 branches, 110 extension counters, 61 branches
less banking and 638 ATMs across Nepal with a network covering all major financial
centers of the country. The Bank strongly believes in Meritocracy, Transparency,
Professionalism, Team spirit and Service Excellence. These core values are internalized
by all functions within the Bank and are reflected in all actions the Bank takes during
its business.

1.3 Statement of the Problem

To become a bank of choice in serving the nation, researchers would like to research
the Dividend policy of NIC ASIA Bank Limited because dividend policy is the most
important part of banking and helps to structure financial activity. The problem
statements are mentioned below:

 What are the MPS, BVPS, P/E Ratio, EPS and DPS of the bank?

 What is the ratio of DY and DPR of bank?

 What is the dividend policy of the bank?

2
1.4 Objective of the Study
The objective of the study is to evaluate the dividend payout scheme of NIC ASIA Bank
limited. The main objectives of this report are as follows:

 To explore the MPS, EPS, BVPS.P/E Ratio and DPS of the bank.

 To identify the ratio of DY and DPR.

 To explore the dividend policy of the bank.

1.5 Rationale of the Study

As the outcome of the research will help to know the factors or attributes that lead to
study of dividend policy of NIC ASIA. The outcomes will help the bank to understand
the factors that lead to the loan process and can take necessary actions accordingly with
loan distribution analysis. The bank can add to the loan once they know what exactly
the customer looks at in the loan product and gain an advantage on it from the rest of
the competitors.
Not only the company and the distributers are benefitted with the information, but the
outcomes can be useful to many stakeholders like individual and loan taker potential
customers who seek data and information before making the loan policy and
distribution channel and percentage of interest rate decision etc. It can be helpful to
those groups of people as well who endorse the NIC ASIA Bank. The outcome on the
other hand can be useful for future researchers for further study in the relevant topic.
1.6 Review of Literature
This topic is divided into three sections. The first section deals with conceptual
framework of profit. The second section deals with relevant journals, article review,
and the last section deals with the unpublished thesis review relating to the study.
1.6.1 Conceptual Framework

The modern financial evaluation has greatly affected the role and importance of
financial performance. Nowadays, finance is best characterized as ever changing with
new ideas and techniques. Only an efficient manager of the company can achieve the
set-up goals. If a bank does not maintain an adequate dividend policy, it makes the bank
riskier. If a bank has an inadequate dividend, it must use more shareholders that have a
high dividend gain. So, any firm must have an adequate dividend in their share
structure. The main objectives of the bank are to collect share as much as possible from
the customers and to mobilize them into the most profitable sector. If a bank fails to
utilize its collected resources, then it cannot generate revenue. Resource mobilization
management of bank includes resource collection, investment portfolio, loans and

3
advances, working capital, fixed assets management etc. It measures the extent to which
a bank is successful in utilizing its resources. To measure the bank’s performance in
many aspects, we should analyze its financial indicator with the help of financial
statements. Financial analysis is the process of identifying the financial strength and
weakness of the concerned bank. It is the process of finding the strengths and weakness
of the concerned bank. It is the process of finding details of accounting information
given in the financial statement.
It is performed to determine the dividend policy, solvency, efficiency and profitability
position of an organization. The function or the performance of finance can be broken
down into three major decisions i.e. the investment decision, the financing decision,
and the dividend decisions. An optional combination of the three decisions will
maximize the value of the firm.
1.6.2 Previous Study
In the past years, we can see much research has been conducted in the dividend policy
and financial performance analysis of the Nepalese commercial banks, but no study has
been made in dividend policy analysis of NIC ASIA Bank Ltd. So, these available
research works regarding dividend policy of another commercial bank have been
reviewed.
Baskin, J. (2015). analyses the dividend policy of selected steel companies in Nepal for
the period from 2010-11 to 2017-18. The main objective of the study is to measure the
effective utilization of dividend policy operating cycle and cash conversation cycle.
The study concludes with the observation that the size of a company plays a vital role
in determining the efficiency of its dividend policy.
In the book “Financial Management” I.M. Pandey (2017) has defined as “The finance
statement provides a summarized view of the financial operation of the firm. Therefore,
something can be learnt about a firm and careful examination of the financial statements
as invaluable documents or performance reports. Thus, the analysis of financial
statements is an important aid to financial analysis or ratio analysis is the main tool of
financial statement analysis.
Manandhar (2018) research of had published in Management Dynamics entitled to
“Preliminary test of Lagged structure of Dividend” Dr. Manandhar, had tried to test
whether Nepalese Corporate firms consider the lagged earnings and dividend paid to
pay the dividend in current year. To carry out the test he considered 17 corporate
companies as samples and set different hypotheses.

4
Katuwal (2019) conducted research entitled “A Comparative study of dividend Policy
in Commercial Bank”. The main objective of the study was to examine the impact of
dividend on share prices and find out the relationship between DPS, EPS, DPR, PE
ratio, Liquidity ratio and Profitability ratio on MVPS. Main conclusion of the study are
sample banks have got sufficient earning but some of the banks are paying high
dividend and other are paying low dividend, DPS is not relatively more stable then
DPR, MPS is attracted by dividend and dividend policy is not clearly defined.
Pandey (2020) the impact of cash dividend policy on the current prices of company
shares is considered very important, not only for policy makers, but also for investors,
portfolio managers, and economists interested in the performance of capital markets.
Sharma (2020) used earnings per share as a control variable in their study. Results of
their study showed that earnings per share significantly explain the variation in the stock
prices. This study used EPS as a profitability variable.
1.6.3 Research Gap
Research gap refers to the gap between previous research and this research. Many
research studies have been conducted by different students, experts and researchers
about dividend policy of commercial banks. Thus, the research study made on "A study
on dividend policy of NIC ASIA" is an effort to analyze in detail about dividend policy
of the NIC ASIA Banks. Furthermore, this study will be helpful to the interested groups.
Lastly, this study will be different from other research works in terms of sample banks,
data presentation as well as statistical tools used for interpretation and analysis of data.
This study tries to explore the determinants of dividend policy of NIC ASIA and
dividend policy pattern from Nepalese organizations with the data of four years. In the
present situation, with the help of financial as well as statistical tools and techniques,
the study can be beneficial to all the concerned parties and people as well.
1.7 Research Methodology
The method which is used in the research is called research methodology. How the data
is collected, and which source the research uses for getting the data come under the
research methodology. Research methodology covers data analysis tools as well.

1.7.1 Research Design

This study has followed descriptive and exploratory research methodology and to fulfil
the objective of the study.

5
1.7.2 Population and Sample

There are 20 commercial banks in Nepal. Among them NIC ASIA bank is selected as
sample to study for the present study. And only latest three years financial statements
are analyzed.

1.7.3 Types of Data

There are mainly two methods of collecting the data i.e. primary and secondary method.
a) Primary Data: It is also known as the original data. The data was collected
through interviews with different personnel working at various levels in the NIC
ASIA Bank Limited.
b) Secondary Data: Those types of data, which are originally collected, but
obtained from some published and unpublished sources are secondary data. This
type of data is not original in character. It can also be obtained from newspapers,
T.V., magazines, websites etc.
1.7.4 Data Collection Procedure
Researchers went to the Branch office of NIC ASIA Bank Limited, Dhankuta, and got
the important information. Researchers collected the main annual reports of this bank
directly from the web site. Moreover, other various articles and journals from various
publications and some others previous project reports are also considered.
1.7.5 Technique of Analysis
Data analysis tools mean which tools the research used for present and analyzed the
data. The main tools of analysis are mathematical and statistical tools. In this report
statistical and financial ratio tool is used for data analysis.
Financial Tools
The following financial ratios are going to be analyzed under dividend policy analysis
of the selected commercial bank.
Analysis of Dividend
Data collected from various sources and methods will not be measurable and
meaningful without its appropriate presentation and analysis. This study will be used
the following tools data presentation and analysis.

 Tables

6
  Bar graph
In this study, the researcher has used the following financial tools to analyze the data.

1. Market Price per Share (MPS):

The market price per share of stock usually termed simply "share price" is the rupee
amount that investors are willing to pay for one share of a company's stock.
2. Earnings per Share:
Earnings per Share means the profit available to the equity holders divided by no. of
share outstanding. Earnings per share (EPS) ratio measures how much net income has
been earned by each share of common stock. It is computed by dividing net income by
the number of shares of common stock outstanding during the period.
Earnings per share are calculated as follows:
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
EPS =
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
3. Dividend Per Share:
The whole amount of earnings may or may not be distributed to shareholders by a
company. How much per share the dividend is distributed to common shareholder can
be known from this ratio. The dividend distributed among the common shareholders on
a per share basis can be determined by this ratio.
Dividend per share is calculated as follows:

Amount of Dividend
DPS =
No of Share Outstanding

4. Dividend Payout Ratio:

The purpose of calculating this ratio is to know the portion of dividend distributed out
of total earning. This ratio shows the relation between the returns belonging to equity
shareholders and the dividend paid to them. Dividend Payout ratio is calculated as
follows:
DPS
Dividend Payout Ratio =
EPS

5. Dividend Yield (DY):

It defines the relationship between dividend per share and market value per share and
it is very useful for the investors. Dividend yield is calculated as follows:
DPS
Dividend Yield =
MPS

7
6. Book value per share (BVPS):
Book value per share (BVPS) takes the ratio of a firm's common equity divided by its
number of shares outstanding. BVPS is calculated as follows:

Amount of common equity

BVPS =
No of share outstanding

7. Price earnings ratio (P/E):

It defines the relationship between earnings per share and market value per share and it
is very useful for investors. P/E is calculated as follows:

MPS
P/E =
EPS

1.8 Limitations of the Study

The study and outcome of the study will be an individual effort. Therefore, management
and resource mobilization will limit the in-depth study of operating banking in the
country.
 Out of 20 commercial bank existence in Nepal.
 This study is fully based on the student’s financial resources and is to be
completed within a limited time.
 The report has taken only three-year data for study from the year 2077/78 to
2079/80 B.S.

8
 CHAPTER- II
RESULTS AND ANALYSIS
2.1 Presentation of Data
This chapter deals with the presentation, analysis and interpretation of statistical data
to carry out the research work. Data of the years 2077/078 to 2079/080 have been
presented and analyzed. With the help of different analyses, we can know the dividend
distribution policy of sample bank i.e. NIC ASIA Bank Limited.
2.2 Analysis of Results
2.2.1 Market Price per Share (MPS)
Market price per share tells you the latest price for which a single share of a company's
stock was sold. Forces of supply and demand push market prices up and down
throughout the trading day. Market price per share is used to determine a company's
market capitalization.
MPS = P/E Ratio × EPS
Table No. 2.1
Analysis of Market Price per Share
Fiscal Year P/E Ratio EPS MPS
2077/078 35.27 28.18 994
2078/079 19.10 36.45 696
2079/080 20.65 38.44 794

(Source: Annual Report of NIC ASIA Fiscal Year 2077/078 to 2079/080)

MPS
1200

1000

800
MPS in Rs.

600

400

200

0
2077/078 2078/079 2079/080
Fiscal Year

(Figure no. 2.1: Analysis of Market Price Per Share)

9
The above table & figure shows the MPS for the year 2077/078 to 2079/080 is in
fluctuating trend. Because during FY 2078/079 most Nepalese banks were facing
liquidity crises due to the pandemic long term effects but FY 2079/080 recover the
market. Therefore, NIC ASIA Bank Limited is not able to run in a better position.

2.2.2 Earnings per Share (EPS)

Earnings per share (EPS) is a company's net profit divided by the number of common
shares outstanding. EPS indicates how much money a company makes for each share
of its stock and is a widely used metric for estimating corporate value. It is calculated
by using the following formula.
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝐸𝑃𝑆 =
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒 𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

Table No. 2.2

Analysis of Earning Per Share
Fiscal year
Particulars 2077/078 2078/079 2079/080
Net Income 3,258,934,467 4,214,926,951 4,444,769,821
No. of share 115,640,054 115,640,054 115,640,054
EPS in Rs. 28.18 36.45 38.44

(Source: Annual Report of NIC ASIA Fiscal Year 2077/078 to 2079/080)

EPS
45
40
35
30
EPS in Rs.

25
20
15
10
5
0
2077/078 2078/079 2079/080
Fiscal Year

(Figure no. 2.2: Analysis of Earnings Per Share)

From the above table & figure, it is shown that EPS from FY 2077/078 to 2079/080 is
in increasing trend. Overall EPS is in an increasing trend. So, from the analysis we can
10
conclude that NIC ASIA Bank Limited is operating in a significant manner. It indicates
that the higher EPS gives higher return.
2.2.3 Dividend Per Share (DPS)
Dividend per share (DPS) is the sum of declared dividends issued by a company for
every ordinary share outstanding. DPS is calculated by dividing the total dividends paid
out by a business, including interim dividends, over a period, usually a year, by the
number of outstanding ordinary shares issued. It is calculated using the following
formula.
𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑
𝐷𝑃𝑆 =
𝑁𝑜 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒 𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

Table No.2.3
Analysis of Dividend Per Share
Fiscal year
Particulars 2077/078 2078/079 2079/080
Dividend in Rs. 0 0 1,418,658,236
No. of share 115,640,054 115,640,054 115,640,054
DPS in Rs. 0 0 12.33

(Source: Annual Report of NIC ASIA Fiscal Year 2077/078 to 2079/080)

DPS
14
12
10
DPS in Rs.

8
6
4
2
0
2077/078 2078/079 2079/080
Fiscal Year

(Figure no. 2.3: Analysis of Dividend Per Share)

The above table shows the dividend per share of NIC ASIA Bank Limited. DPS of NIC
ASIA Bank Limited is in an increasing trend. DPS from FY 2077/078 to 2079/080
shown above. Highest DPS of NIC ASIA Bank Limited is Rs.12.33 in FY 2079/080
and in other years banks haven't distributed cash and stock dividend. It indicates that
the bank was unable to maintain its good position.
11
2.2.4 Dividend Payout (D/P) Ratio

The dividend payout ratio for a bank is a financial metric that reveals the portion of its
earnings distributed to shareholders as dividends. It is calculated by dividing the total
dividends paid out by the bank to its shareholders by its net income, and then
multiplying by 100 to express the ratio as a percentage. A high dividend payout ratio
suggests that the bank is distributing a significant portion of its earnings to shareholders,
potentially indicating financial strength and shareholder focus. Conversely, a lower
ratio indicates the bank retains more earnings for reinvestment in operations or for
maintaining financial stability.
Investors often consider the dividend payout ratio when evaluating a bank's stock for
income potential. It is calculated by using the following formula:
𝐷𝑃𝑆
𝐷𝑃𝑅 =
𝐸𝑃𝑆

Table No.2.4
Analysis of Dividend Payout Ratio
Fiscal Year EPS in Rs. (a) DPS in Rs. (b) DPR (b/a)
2077/078 28.18 0 0%
2078/079 36.45 0 0%
2079/080 38.44 12.33 32.08%

(Source: Annual Report of NIC ASIA Fiscal Year 2077/078 to 2079/080)

Dividend Payout Ratio

40.00%
Dividend Payout Ratio in %

30.00%

20.00%

10.00%

0.00%
2077/78 2078/079 2079/080
Fiscal Year

(Figure no. 2.4: Analysis of Dividend)

In the year 2077/078 to 2079/080, DPR of NIC ASIA Bank Limited was 0%, 0% and
32.08%, respectively. The overall dividend payout ratio is in increasing trend of NIC
ASIA Bank Limited. The NIC ASIA Bank Limited follows aggressive dividend
policy nowadays.
12
2.2.5. Dividend Yield (DY)

The dividend yield is a financial ratio that tells you the percentage of a company's share
price that it pays out in dividends each year. It is calculated by using the following
formula.
𝐷𝑃𝑆
𝐷𝑌 =
𝑀𝑃𝑆

Table No.2.5
Analysis of Dividend Yield (DY)
Fiscal Year DPS in Rs. (b) MPS in Rs. (a) DY (b/a)
2077/078 0 994 0%
2078/079 0 696 0%
2079/080 12.33 794 1.55%

(Source: Annual Report of NIC ASIA Fiscal Year 2077/078 to 2079/080)

Dividend yield ratio

1.80%
Dividend Yield Ratio in %

1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
2077/78 2078/079 2079/080
Fiscal Year

(Figure no. 2.5: Analysis of Dividend Payout Ratio)

From the year 2077/078 to 2079/080, dividend yield of NIS ASIA Bank Limited was
0%, 0% and 1.55% respectively. The overall dividend yield is in an increasing trend. It
indicates that higher DY is more effective. It indicates that the bank has not distributed
the dividend in two years but in FY 2079/080 bank has distributed dividend. It is good
news for investors.
2.2.6. Book values per share (BVPS)
Book value per share (BVPS) takes the ratio of a firm's common equity divided by its
number of shares outstanding. Book value of equity per share effectively indicates a

13
firm's net asset value (total assets - total liabilities) on a per-share basis. Book value per
share is an important metric used by investors to gauge the intrinsic value of a
company's stock. It serves as a fundamental indicator of what shareholders would
receive if the company were to liquidate all its assets after paying off all liabilities.
Generally, a higher book value per share indicates that the stock may be undervalued,
especially when compared to the current market price per share. It is calculated as
follows.
𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑒𝑞𝑢𝑖𝑡𝑦
𝐵𝑉𝑃𝑆 =
𝑁𝑜 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

Table No. 2.6

Analysis of book value per share (BVPS)

Fiscal Year Common equity No. of share BVPS

2077/78 20,903,619,458 115,640,054 181

2078/79 24,843,146,779 115,640,054 215

2079/80 29,390,955,856 115,640,054 254.16

(Source: Annual Report of NIC ASIA Fiscal Year 2077/078 to 2079/080)

BVPS
300
250
200
BVPS in Rs.

150
100
50
0
2077/078 2078/079 2079/080
Fiscal Year

(Figure no. 2.6: Analysis of book value per share)

From the above table & figure, it is shown that BVPS from FY 2077/078 to 2079/080
is in an increasing trend. Overall BVPS is in an increasing trend. It indicates that the

14
bank per share book value is in a strong position. The bank increases the amount of
common stock.
2.2.7 Price earnings ratio (P/E)
Price to Earnings Ratio or Price to Earnings Multiple is the ratio of share price of a
stock to its earnings per share (EPS). PE ratio is one of the most popular valuation
metrics of stocks. It provides indication whether a stock at its current market price is
high or cheap. It is calculated using formula:

P/E Ratio =
𝐸𝑃𝑆

Table 2.7
Analysis of price earnings ratio
Fiscal Year EPS in Rs. (a) MPS in Rs. (b) P/E Ratio(b/a)
2077/078 28.18 994 35.27 times
2078/079 36.45 696 19.10 times
2079/080 38.44 794 20.65 times
(Source: Annual Report of NIC ASIA Fiscal Year 2077/078 to 2079/080)

P/E Ratio
40
35
30
P/E Ratio in times

25
20
15
10
5
0
2077/078 2078/079 2079/080
Fiscal Year

(Figure no. 2.7: Analysis of price earnings ratio)

From the above table & figure, it shows that P/E from FY 2077/078 to 2079/080 is
flaunting trend. The P/E ratio is higher in FY 2077/078. It indicates that the bank’s
market value is highly demanded, otherwise in FY 2078/079 the P/E ratio of the bank
is down it means the bank market value is not attractive, but next year the bank P/E
ratio increased. The bank recovers and it is good news for shareholders.

15
2.3 Major Findings
The main findings of research work obtained from the secondary data analysis are stated
as follows:

 The MPS for the year 2077/078 to 2079/080 is fluctuating trend. Therefore, NIC
ASIA Bank Limited is not able to run in a better position.
 EPS from FY 2077/078 to 2079/080 are in increasing trend. Overall EPS is in
an increasing trend. So, by seeing the analysis we can conclude that NIC ASIA
Bank Limited is operating significantly. It has indicated that the higher EPS
high return.
 DPS of NIC ASIA Bank Limited is in increasing trend, DPS from FY 2077/078
to 2079/080 is shown above. Highest DPS of NIC ASIA Bank Limited is
Rs.12.33 in FY 2079/080 and lowest in 2077/078 to 2078/079 i.e. Rs. 0. It
indicates that nowadays the bank has a better position.
 DPR of NIC ASIA Bank Limited was 0%,0% and 32.08% respectively. The
overall dividend payout ratio is in increasing trend of NIC ASIA Bank Limited.
The NIC ASIA Bank Limited is following a highly aggressive dividend policy
nowadays.
 The dividend yield of NIC ASIA Bank Limited was 0%, 0%, and 1.55%
respectively. The overall dividend yield is in an increasing trend for NIC ASIA
Bank Limited. It indicates that higher DY is more effective.
 The book value per share of NIC ASIA Bank Limited was Rs.181, Rs.215 and
Rs.254.16 respectively. The overall BVPS is in fluctuating trend. It indicates
that the bank has a good position because the price has increased in FY
2079/080.

 The price earnings ratio is fluctuating trend overall the fiscal year. In 2077/078
the P/E ratio is higher and in FY 2078/079 is lower than other years but in FY
2079/080 the P/E ratio increases. It is a good position for a bank.

16
 CHAPTER- III
SUMMARY AND CONCLUSIONS

3.1 Summary
Dividend refers to the proportion of net income paid out to the shareholders, often in
the form of cash or stock, as a reward for their investment and the risk they bear. The
amount of earnings distributed as dividends is typically determined by the Board of
Directors. Dividends exist to encourage investment in the company and to allow
shareholders, who are essentially co-owners, to participate in the company's profits.
Dividends can be in the form of cash, stock, or property, with most secure and stable
companies offering dividends to their stockholders.
Dividend decision is a crucial area of a firm's financing decision as it provides internal
financing. Dividend policy is concerned with determining the proportion of the firm's
earnings to be distributed in the form of cash dividends and the proportion of earnings
to be retained. The percentage of earnings paid out as cash dividends is known as the
dividend payout ratio, while the percentage of earnings retained in the firm is called the
retention ratio. A firm has three alternatives regarding the payment of cash dividends:
i. It can distribute all its earnings as cash dividends.
ii. It can retain all its earnings for investment.
iii. It can distribute a part of the earnings as dividends and retain the rest for
reinvestment purposes. The major objective of this study is to examine the EPS
(Earnings Per Share) over different time periods, analyze the DPR (Dividend Payout
Ratio), and identify different forms of dividends paid. However, this study has certain
limitations. It focuses exclusively on the dividend policy of NIC ASIA Bank and relies
solely on ratio analysis for data interpretation. The data presented in the study are
collected from secondary sources, employing various financial ratios for analysis.
Furthermore, the study seeks to understand how dividend policies affect the financial
stability and growth prospects of NIC ASIA Bank. By examining the trends in EPS and
DPR, the study aims to provide insights into the effectiveness of the bank's dividend
policy in balancing shareholder returns and reinvestment needs. Additionally, it
explores the impact of different forms of dividends, whether cash, stock, or property on
shareholder value and the overall financial health of the bank. The findings of this study
could be instrumental for the Board of Directors in making informed decisions about
future dividend policies, ensuring a strategic balance between rewarding shareholders
17
and fueling the bank's growth.
3.2 Conclusions
In recent years, the banking environment in the country has gone through a huge change
due to rapid growth and developments in the corporation. This has led to an
unpredictable level of competitive behavior resulting in continues erosion of margins,
high customer expectations, difficult in maintaining market share in an economy which
is virtually stagnant. Thus, to carry out the corporation activities smoothly, the
following conclusions are highlight for the better performance of the corporation.

 The average earnings per share of sample NIC ASIA Bank Limited seems
satisfactory.

 The average dividend per share of NIC ASIA Bank Limited seems not
satisfactory, the three-year dividend paid to shareholders is quite low.

 The dividend payout ratio of NIC ASIA Bank Limited is lower, which indicates
that NIC ASIA Bank Limited is following a low aggressive dividend policy, it
does not have the ability to pay dividends.

 The MPS for the year 2077/078 to 2079/080 are in fluctuating trend. Therefore,
NIC ASIA Bank Limited is not able to run in a better position .

 It is found from the study that there is no consistency found in dividend

distribution in all sample banks. The research shows that none of these banks
has a well-defined and appropriate policy regarding dividend payment.

 It is also found that there is positive and significant relationship between market
price per share and dividend price per share for all sample Bank. It means that
there is a positive effect of earnings on the market price of stock in NIC ASIA
Bank Limited.

 From the analysis, it is found that the market price of stock is affected by other
variables, which indicate the rational behavior of investors.

 The major findings have also led to the conclusion that the companies are
neglecting the major factors like the earning position of the firm and liquidity
position while paying dividends.

18
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Ahmed, H.J.A (2017). Fundamentals of banking and insurance. New York: the Dryden
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Baskin, J. (2014). “Corporate dividend practices in Nepal”. Kathmandu: Taleju
Prakashan.
Katuwal, P. (2019). “Commercial bank management”. Unpublished Thesis TU:
Kathamadu.
Mahandhar, R (2018). “Management policies for commercial banks”. New Jersey:
Prentice Hall Inc.
Pandey, I.M. (2021). “Basics of Financial Management”. Katmandu: Education
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 APPENDICES
Balance Sheet
Assets 2077/078 2078/079 2079/080

Cash and cash equivalent 23,902,662,784 27,813,319,163 20,245,563,442

Due from Nepal Rastra 9,072,897,671 12,654,486,629 20,443,340,655

Bank
Placement with Bank _ _ _
and Financial
Institutions
Derivative instruments 5,359,380,480 _ 2,965,528,168
Other trading assets 11,800,000 162,822,000 2,060,000
Loan and advances to 14,289,456,892 14,099,444,435 9,966,477,947
B/FIs
Loan advance customer 248,770,354,077 252,448,483,250 261,772,031,449
Investment securities 33,293,725,162 39,048,156,820 34,321,039,813
Current tax assets 297,107,341 140,559,743 192,105,650
Investment in 1,264,500,000 1,264,500,000 1,204,500,000
subsidiaries
Investment assets 1,275,463,444 722,531,322 2,718,429,789
property &equipment 3,038,162,554 3,093,072,139 5,279,760,580
Goodwill & Intangible 91,548,342 132,654,932 136,468,255
Deferred tax assets _ _ _
Other assets 5,480,462,976 6,989,807,914 4,841,979,715
Total assets 346,147,521,722 358,569,838,348 364,089,285,463
Liabilities
Due to Bank and 13,329,472,380 6,754,201,873 3,972,661,638
Financial institution
Due to NRB 3,238,618,707 19,727,764,978 _

Derivatives _ _ 2,962,156,296
Deposits from customers 287,024,798,908 289,903,959,721 311,367,922,421
Borrowing _ _ _

Current tax liabilities _ _ _

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Provisions _ _ _
Deferred tax liabilities 459,535,668 267,765,003 265,498,143
Other liabilities 4,884,182,481 6,346,643,319 5,398,514,132
Debt securities issued 10,969,374,120 10,726,356,675 10,731,576,978
Subordinated Liabilities _ _ _
Total liabilities 325,243,902,264 333,726,691,569 334,698,329,607
Equity
Equity Share capital 11,564,005,366 11,564,005,366 11,564,005,366
Share premium _ _
Retained earnings 1,599,552,618 3,427,074,085 3,534,225,906
Reserves 7,740,061474 9,852,067,328 14,292,724,584
Total equity attributable 20,903,619,458 24,843,146,779 29,390,955,856
to equity holders
Non-controlling interest _ _
Total liabilities & 346,147,521,722 358,569,838,348 364,089,285,463
equity

21
 Profit and Loss A/C
Particular 2077/078 2078/079 2079/080

Interest Income 23,562,128,326 32,771,914,410 38,372,715,652

Interest Expenses 14,334,625,495 21,482,312,140 26,113,904,428
Net Interest Income 9,227,502,831 11,289,602,271 12,258,811,224
Fee &comm. income 1,840,704,124 2,369,651,129 2,712,005,254
Fees & comm. expenses 216,898,083 347,075,989 389,527,602
Net fee and commission 1,623,806,040 13,312,177,410 14,581,288,876
income
Net trading income 10,851,308,871 200,929,858 147,037,615
Other operating income 277,780,325 304,409,423 298,385,661
Total operating income 11,354,374,181 13,817,516,691 15,026,712,152
Impairment charge 1,225,624,047 865,260,404 721,962,851
Net operating income 10,128,750,134 12,952,256,287 14,304,749,301
Operating expenses
Personnel expenses 3,347,937,058 4,500,746,350 4,961,096,840
Other operating expense 1,614,432,594 2,101,543,675 2,026,034,323
Dep. & Amortization 368,151,770 384,717,432 780,820,276
Operating Profit 4,798,228,712 5,965,248,830 6,536,797,861
Non-operating income 6,153,213 62,025,869 9,464,582
Non-operating expense 158,216,336 31,071,210 377,894,311
Profit before income 4,646,165,589 5,996,203,489 6,168,368,132
tax
Income tax expense
Current Tax 1,388,696,402 1,793,277,862 1,762,200,491
Deferred Tax (1,465,280) (12,001,324) (38,602,181)
Profit for the period 3,258,934,467 4,214,926,951 4,444,769,821
(Sources: Annual report)

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