A STUDY ON CAPITAL STRUCTURE OF CITIZENS BANK

INTERNATIONAL LIMITED

Submitted to:

Office of Examination

Faculty of Management

TRIBHUVAN University

Submitted by:

MANJU TAMANG

TU Regd. No:7-2-408-108-2019

KHWOPA COLLAGE

In partial fulfillment of the requirements for the BACHLEOR OF BUSINESS STUDIES

March, 2024
 DECLARATION

I hereby declare that the research work entitled, “A Study on capital structure of

Citizens Bank International Limited” submitted to Office of Examination Controller,

Tribhuvan University is entirely my own work in the form of partial fulfillment of the

requirement of bachelor in business studies under the supervision of my report

supervisor Mr. RAJAN PHAJU.

-------------------------------

MANJU TAMANG

TU registration No:7-2-408-108-2019
 SUPERVISOR’S RECOMMENDATION

The project work report entitled ‘CAPITAL STRUCTURE OF CITIZEN

INTERNATIONAL BANK.’ of KHWOPA COLLAGE, DEKOCHA, BHAKTAPUR, is

prepared under my supervisor as per the procedure and format requirement laid by the

faculty of management, T.U. as partial fulfillment of the requirement for the award of the

degree of bachelors of business studies. I, therefore recommend the project work report

for evaluation.

……………………………………

RAJAN PHAJU

KHWOPA COLLAGE

Endorsement

We hereby endorse the project work report entitled ‘CAPITAL STRUCTURE OF

CITIZEN INTERNATIONAL BANK’ by MANJU TAMANG of KHWOPA COLLAGE,

DEKOCHA, BHAKTAPUR, submitted in partial fulfillment of the requirements for award

for the Bachelor of Business Studies for external evaluation.

………………………….

MR. PRAKASH SHRESTHA

Chairman, Research Committee

April 15
 ACKNOWGEMENTS

I am pleased to take this opportunity to express my deep sense of gratitude to my

respected thesis supervisor Mr. RAJAN PHAJU of KHWOPA College, BHAKATAPUR

for his most competent guidance, encouragement and suggestion throughout my work.

I am equally grateful to my respected teacher Mr.PRAKASH SHRESTHA for his

valuable suggestion, inspiration and other kind of help. Without his great support this

thesis would not have complete. His intellectual guidance is immense inspiration for me.

I would like to thank to staff of Citizens Bank International Limited for providing data and

suggestion to conduct this thesis.

I would like to pay my gratitude to Mr. RAJANPHAJU AND MR. PRAKASH SHRESTHA

who provide valuable time in providing the valuable data and research work.

Last but not least; my superseding debt goes to my sister and brother-in-law for

providing the computer facility, khwopa collage for electricity facility during the period of

load shedding, Mr. RAJAN PHAJUfor providing internet facility for searching the data.

I am responsible for all the errors and omissions.

MANJU TAMANG

March, 2024
 TABLE OF CONTENTS

Supervisior’s Recommendation

Endorsement

Declaration

Acknowledgement

Table of Contents

List of Tables

List of Figure

Abbreviations

CHAPTER I

INTRODUCTION

1.1 Background of the Study...................................................................... 1-2

1.2 Focus of the Study…………………………………………………………………………. 2-3

1.3 Statement of the Problem.............................................................. 3-4

1.4 Significance of the Study ………………………………………….. 4-5

1.5 Objective of the Study………………………………………………… 5

1.6 Limitation of the Study………………………………………………… 6-7

1.7 Scheme of the Study…………………………………………………. 7

1.8 Literature of review……………………………………………………… 16

1.9 Research methodology…………………………………………………… 25

CHAPTER II

2.1 Presentation and analysis of data…………………………………….. 54

CHAPTER III

SUMMARY, CONCLUSION AND RECOMMENDATIONS

3.1 Summary………………………………………………………………….. 56

3.2 Conclusion……………………………………………………………….. 59

3.3 Recommendations……………………………………………………… 59

References………………………………………………………61
 LIST OF TABLE

Table

1. Current Ratio

2. Cash and Bank Balance to Current Assets Ratio

3. Fixed Deposit to Total Deposit Ratio

4. Saving Deposit to Total Deposit Ratio

5. Cash and Bank Balance to Total Deposit Ratio

6. Total Debt to Shareholder’s Equity Ratio

7. Total Debt to Total Assets Ratio

8. Total Shareholder’s Equity to Total Assets Ratio

9. Interest Earned to Total Assets Ratio

10. Net Profit to Total Deposit Ratio

11. Net Profit to Total Assets Ratio

12. Net Profit to Net Worth Ratio

13. Net Operating Profit to Total Assets Ratio

14. Earnings per Share (EPS)

15. Dividend per Share (DPS)

16. Dividend Payout Ratio (DPR)

17. Operating Income and Operating Expenses

 LIST OF FIGURE

Figure:

1. Current Ratio

2. Cash and Bank Balance to Current Assets Ratio

3. Fixed Deposit to Total Deposit Ratio

4. Saving Deposit to Total Deposit Ratio

5. Cash and Bank Balance to Total Deposit Ratio

6. Total Debt to Shareholder’s Equity Ratio

7. Total Debt to Total Assets Ratio

8. Total Shareholder’s Equity to Total Assets Ratio

9. Interest Earned to Total Assets Ratio

10. Net Profit to Total Deposit Ratio

11. Net Profit to Total Assets Ratio

12. Net Profit to Net Worth Ratio

13. Net Operating Profit to Total Assets Ratio

14. Earnings per Share (EPS)

15. Dividend per Share (DPS)

16. Dividend Payout Ratio (DPR)

17. Operating Income and Operating Expenses

 LIST OF ABBREVIATION

NRB = Nepal Rastra Bank

CRR = Cash Reserve Ratio

ROA = Return on Assets

ROE = Return on Equity

EBIT = Earnings before Interest and Tax

EPS = Earnings per Share

DPS = Dividend per Share

DPR = Dividend Payout Ratio

CSSA = Citizens Super Savings Account

CSBK = Citizens Sharedhani Bachat Khata

ATM = Automated Teller Machine

NTC = Nepal Telecom

PSTN = Public Switched Telephone Network

Ltd = Limited

US = United States

UK = United Kingdom

ICAI = Institute of Chartered Accountants of India

MA = Master in Arts

CHAPTER I
INTRODUCTION

1.1 Background of the Study

Nepal is landlocked country with agro-based economy. The country is divided into three
parts (I.e. mountains, hills, and Terai region) with its geographical natural. Nepal is one
of the least developed and very poor countries in the world. More than 90% of the people
are still in rural areas and most of them are deprived minimum physical facilities, which
is necessary for human being. The annual per capital income of Nepalese people is just
USS253 (According to Asian Development Bank Report 2004). Nepalese economy is
dependent on traditional agriculture agricultures sector contributes only 40% total GDP
and is main supplier of raw materials to industries. Development of agriculture sector
helps not only to solve the problem of unemployment but also help in the economic
development of country.
Agriculture is still the backbone of Nepalese economy. Economic development is not
possible without agricultural development. National Planning commission has given
more emphasis to this sector. But the real picture of this section is very poor. This is
because Nepal has not been able to provide basic facilities to the –farmers like irrigation,
electricity and transportation. Despite being second richest in water resources in the
world we are compelled to pay dear charges in the world. It provides employment
opportunities to more than 80% of labor forces however; it contributes just 40% of Gross
domestic product.

The government of Nepal formulated a policy to develop possible agro-based industries

for at least to substitute import of industrial and consumable goods. The basics goal of
government policy was self-sufficiency where saw other ware to generate revenue by
operating industrial unit and creation of employment opportunities through this sector.
Financial section is the lifeblood of the commercial and industrial activities. So
commercial bank and other financial institutions can play a vital role in giving a direction
to economy’s development by financing the requirement of trade and industry in country.
They collect the saving from community and transfer to the require section of trade and
industries, so that banking section development is necessary to economy development in
the overall development of the banking system in Nepal, the Tejarath Adda’ maybe
regarded as the father of modern banking institution and for a quite a long time. It
delivered as the father of modern banking institution and for a quite a long time. It
delivered a good service to government employees as well as to general public, however,
the concept of modern financial institutions in Nepal was introduced when late former
bank, Nepal Bank Limited in 1994 B.S. Before establishment of Nepal Bank Limited,
People fulfilled their credit needs from unorganized market of private money lenders.
Presently, there are seventeen commercial banks operating their financial activities in the
different part of country. They provide modern banking facilities like ATM Card, Debit
and Credit Card to their Valuable customers.
1.2 Focus of the Study
The focus of this study is “The Financial Performance of Citizens Bank International Limited.”
Financial performance covers the financial analysis and other portfolios and the Citizens Bank
International Limited. Financial analysis is the process of determining the significant operating
and financial characteristics of a firm from accounting data and financial statement. The goal of
financial analysis is to determining the efficiency and performance of the firm’s management as
reflected in financial record and reports (Hampton, 1983: 121). Beside the financial analysis, the
study is also focused on income and expenditure analysis and statistical analysis.
Financial ratio has helped the researcher to make a qualitative analysis about the financial
performance of the bank. The income and expenditure analysis is the percentage in relation to
total assets or total sales, which has helped the researcher to study trends in financial statement
over time. The statically analysis is refers either to quantitative information or to a method of
dealing with quantitative information.

1.3 Statement of the Problem

Financial management aspect is considered to be the vital and integral part of overall
management of any enterprise, ensuring financial strength adequate cash flow, liquidity and
utilization of assets. Commercial bank set up in Nepal seems to need greater funds in terms of
financing to the expansion of their assets because of growing new number of new establishment
of commercial bank in the country. These banks deal with other people’s deposits, most of which
are payable to on demand. There is no doubt that survival of commercial bank and other
financial institution depend upon how they manage their assets and liabilities to maximize their
profit with the minimum exposure of assets to risks, and guided by three important conflicting
criteria of solvency, liquidity, and profitability. Therefore, the financial management is the main
indicator of the success or failure of any business firm. Financial condition of the business firm
should be sound from the point of view of shareholders, debenture holders, financial institutions
and nation as a whole.
Citizens Bank International Limited has achieved a remarkable success in banking sector in
terms of market share and profitability compared to other commercial bank because of its
reliable and professional service. Since, this bank has been able maintain its position as one of
the market leader in the banking industry, it cannot be predicted that the bank would continue to
maintain its profitability and stability of earning because of the tough competition in this sector.
In the context of open market economy, the bank is to prone to both external and internal threats.
The economy of the country cannot be termed as bright in recent past years. Financial sector has
really suffered because of the continuous decline owing to the poor performance of industrial,
trading, tourism, and other forms of economy. The vicious circle of low income, low saving and
low investment, which is the key factor responsible for low growth rate of the country, enhances
the need for vigorous effort to increase the level of saving. Saving mobilization and effective
credit management system is must for economic development especially for a country like Nepal
where the economic growth rate is very low. In this regard, good banking system can play a vital
role in the accelerating the pace of economic development through the mobilization of scattered
saving and channeling it in the productive sector in the economy.
This study attempts to evaluate the financial performance of the bank with the help of various
financial and statically tools. This study also attempts to recommend some suggestion for
improvement in financial performance aspect.
The issues for this study are derived from some selected literatures containing financial analysis
of the business firm. It is focused on the financial performance of Citizens Bank International
Limited. Therefore this study has aimed in answering the following issues.
A. Has the bank been using its capital efficiently?
B. What is the liquidity position of the bank?
C. What are the financial performance trends of the bank during the study period?
D. What is level of profitability of the bank?
E. How effectively the bank has utilized its assets in generating interest earnings?

1.4 Significance of the Study

Banking sectors has been one of the major contributor’s national providing varieties of
disbursement to different sectors, enabling to boost the GDP. Hence, the performance of
this sector needs to be above the part to any other field. The financial performance of
commercial banking sector should be very much capable in enhancing the capital market
as well. This research is a conclusion-oriented research. This thesis will help to know the
financial performance Citizens Bank International Limited. This study will also helpful as
literature for the future study about the relating topics. Apart from this, the institution and
firm can allow the suggestion of this study to make their policy and strategy more
practical and scientific.

The accounting figures presented in the financial statements do not convey And
meaningful understanding, it need to be analyzed and interpreted to know the financial
position and performance of the banks. This study will be beneficial to different parties
concerned with this bank as well as other interested parties.
Especially it will be beneficial to,

 Management of bank.
 Lenders and borrowers of the bank.
 Policy maker of the bank.
 Concerned parties and general interested parties of the bank.
 Customer of the bank.

1.5 Objective of the Study
The objective of the study is to evaluate the financial performance of Citizens Bank International
Limited with the help of ratio analysis and other measuring tools. Besides, the following specific
objectives are to support the evaluation and comparison of efficiency and progress of this bank.
A. To analyze liquidity, leverage, profitability and ownership ratio of the bank
B. To examine the income and expenditure statement of the bank.
C. To identify the deposit loan and advance.
D. To provide suggestion and recommendations based on the finding of the analysis.

1.6 Limitation of the Study

This study has attempted to evaluate the financial performance of the Citizens Bank International
Limited. Every study has its own limitations. This study is also not an exception. The following
are the limitation.
1. This study has been carried out based on the published financial document such as balance
sheets, profit and loss accounts, related journals and books and website if this bank. These
published documents have their own limitation.
2. The study has been based on the secondary data only.
3. Study has been focused on the financial performance of Citizens Bank International
Limited with the help of financial tools.
4. It covers the financial performance of Citizens Bank International Limited for the period
from 2064/65 to 2067/68
5. No comparison has been made with other commercial bank.
6. The conclusion drawn up from this study may or may not be applicable to other
commercial bank in Nepal.

1.7 Scheme of the Study

The study has been organized into five chapters each devoted to some aspect of the study
on “Comparative Study of Financial Position of Nabil Bank and Himalayan Bank” the
titles of these chapters are as follows.
Chapter I : Introduction
Chapter II : Data Presentation and Analysis
Chapter III : Summary, Conversion & Recommendations
1.8 REVIEW OF LITERATURE

Review of literature means reviewing research studies or other relevant preposition in

related area of the study so that all past studies, their conclusions and deficiencies may be
known and further research can be conducted. It is secondary sources and such, and do
not report any new or original experimental work. Its ultimate goal is to bring the
researcher up to date with current literature on the topic and forms the basis or another
goal, such as further research that may be needed in the area. All those studies related to
this thesis works are categorized in to two parts: first conceptual framework and covers
the area of the research work and theoretical concepts developed by the various scholars
writers. The second part refers review of related studies. It includes review of articles and
review of thesis. All the reviewed literature has been presented orderly as follows:
1.8.1 Finance
Finance is the science of funds management. The general areas of finance are business
finance, personal finance, and public finance. Finance includes saving money and often
includes lending money. The field of finance deals with the concept of time, money and
risk and how they are interrelated. It also deals with how money is spent and budgeted.
Finance works must basically through individual and business organizations depositing
money in a bank. The bank then lends the money out to other individuals or corporations
or consumption or investment and charges interest on the loans.
Loans have become increasingly packaged or resale meaning that an investor buys the
loan (debts) and collect the interest or sell the debt on a secondary market. Banks are the
main facilitator of funding through the provision of credit, although private equity,
mutual funds hedge funds and other organization have become important as they invest in
various forms of debt. Financial assets known as investments are financially managed
with careful attention of financial risk. Financial instrument allow many forms of
securitized assets to be traded on securities exchanges such as stocks exchange, including
debt such as bonds as well as equity in publicly-related corporations.Central Banks act as
lender of last resort and control the money supply which affects the interest changes. As
money supply increases rates decreases.

1.8.2 Conceptual Framework

Conceptual framework is a type of intermediate theory that has the potential to connect to
all aspect of inquiry. Conceptual framework act like maps that give coherence to
empirical inquiry. The frameworks cover the area of research work and theoretical
concepts developed by various scholars. It is presented in details as follows:
1.8.2.1Financial Statement
Financial statements are annual report prepared by the organization. They are prepared
for period review on the progress made and results achieved during the period under
review. They generally refer the income statements, profit and loss account and
statements of affairs i.e. balance sheet, drawn at the end of each financial year. Financial
statements provides the information pertaining;

 The adequacy of earning to be able to attract potential investors,

 The profitability of the firm, company or institution,
 Liquidity position of the firm, company or institution,

Financial statements are prepared from the accounting records maintained by the firm.
The generally accepted accounting principles and procedures are followed to prepare
these statements. The basic objectives of financial statement are to assist in decision-
making process.

The definition of financial statements by American institute of public accounts will be

worthwhile to quote here: “financial statements are prepared for the purpose presenting a
periodical review or report on the progress by the management. They deal with the status
of investment in the business as also with the results achieved during the period. They
reflect a combination of recorded facts, accounting conventions and personal judgments.
And the judgments and conventions applied affect them materially. The soundness of the
Judgment necessarily depends upon their competence and integrity of those makes them
and on their adherence to generally accepted accounting principle and conventions”.
The definition presented above briefly explains the key contain and important feathers of
the financial statements.

1.8.2.2Financial Statements Analysis

Financial statement analysis involves a comparison of a firm’s performance with that of
other firms in the same line or business which often is identified by the firm’s industry
classification. Generally speaking, the analysis is used to determine the firm’s financial
position in order to identify its current strength and weakness and to suggest actions that
might enable the firm to take advantage of its strengths and correct its weaknesses.
Business enterprises communicate financial information to the users through financial
statements and reports. The financial statements contain systematically organized
summarized information of the enterprise’s financial information. However, the
information provided in financial statements doesn’t say anything itself. It needs to be
analysis is the process of identifying the financial strength and weaknesses of the firm by
properly establishing relationship between the items of financial statements. Financial
statements analysis is important not only for the firm’s managers but also for the firm’s
investors and creditors. Internally, financial managers use the information provided by
financial analysis to help make financing and investment decisions to maximize the
firm’s value. Externally, stockholders and creditors use financial statements analysis to
evaluate the attractiveness or the firm as an investment by examining its ability to meet
its current and expected financial obligations. As investors and financial analysis examine
the firm’s performance in order to make investment decisions based on these statements,
they should be carefully prepared and should be as much informative as possible.
“Financial statement analysis is largely a study of relationship among the various
financial factors in a business as disclosed by the single set of statement and a study of
the trend of these factors as shown in a series of statements”(Mayer, J.N., 1961:4).
Pradhan Surendra urged “Financial Analysis is to analyze the Achieved Statements to see
if the result meets the objective of the firm to identify problems if any, in the past or
presents and of likely to be in the future and to provide recommendations to solve the
problems” (Pradhan, 2000:120).

According to Hampton “Financial analysis is used primarily to gain insight in to

operating and financial problems conforming the firms, with respect to these problems
we must be careful to distinguish between the cause of problems and symptom of it.” It is
thus an attempt to direct the financial statements in to their components on the basis of
purpose in hand and establish relationship says between these components on the one
hand as between individual components and total of these items on the other. Along with
this, a study of various important factors over the past several years is also undertaken to
have clear understanding of changing profitability and financial condition of the business
organization.

Jain Says “Mush-can is learnt about business performance and financial position through
an appraisal of financial statement. The appraisal or analysis of financial statements
spotlights and significant facts and relationship concerning managerial performance
corporate efficient, financial strength and weakness and worthiness, that would have
otherwise been buries in a maze of details.

1.8.3. Review of articles

In addition to financial performance, there are various financial aspects which deal in the
context of Nepalese commercial and other financial banks. The major findings of the
approaches used in this study are reviewed briefly.
The article entitled “Capital adequacy of Bank- the Nepalese context” (Shrestha, 1990:
24-27) has suggested the banks that deal in highly risky to maintain strong capital base.
He concludes that the capital base should neither be too much leading to inefficient
allocation of scarce resources nor so weak so as to expose to extreme risk. The study
accepts that the operations of banks and the degree of risk associated with them are
subject to changes country, bank and time period wise.
Henceforth the study suggested preparing standard capital adequacy ratios for each
individual bank keeping in the mind the various reason factors.
Chopra Sunil in his article “Role of foreign banks in Nepal” undoubtedly conducted that
the Commercial Bank are playing an increasingly dynamic and vital role in the economic
development of the country (Chopra, 1990: 1-2).
Gilles Serra in his article” the role of commercial Banks in Nepalese Context” has
conducted that due to the pressure of competition for public welfare, five commercial
banks are improving their services” (Gilles, 1990: 31- 36).
Bodhi B. Bajaracharya in his article “Monetary policy and Deposit mobilization in
Nepal” concludes that the mobilization of domestic saving is one of the prime objective
of the monetary policy of Nepal and for this purpose commercial banks are the vital
active financial intermediary for generating resources in the form of deposit of the private
sector and providing credit to the investors in different sectors of the country
(Bajaracharya, 1991:93-97).
Dr. Manohor Krishna Shrestha on “Financial Management- theory Practice” has
concluded that the bank has sufficient liquidity to meet the claim of the depositors
9excluding fixed deposit). The bank has highly geared capital structure and is more
depending on borrower’s funds. The bank has been able to meet the interest on deposits
out of its profits. The rate of returns on ownership capital is favorable. He further
suggests that the operational efficiency should be enhanced to achieve its higher profit
goals for better performance. (Shrestha, 1980).
Another study conducted by Sunity Shrestha on “Portfolio of Commercial Bank in
Nepal” ha analyzed the financial performance of the commercial bank using both
descriptive and diagnostic approach. In her study she was concluded in following points.
Per capita deposit as well as per capita credit in commercial bank has increased
tremendously. The contribution in GDP has also been seen increasing. The assets holding
of commercial banks are growing with 42.12% rate that is supposed to be higher for
developing country. It can be concluded that the commercial bank in Nepal are
performing their function of collecting the domestic property.
The structural ratio of commercial bank shows that bank invest on average 75% of their
total deposit on government securities and shares.
The analysis of share of reserve position of commercial banks showed quite high
percentage of deposit as cash reserve.
Sharma (2005) in his paper on Capital Structure of Selected Commercial Banks of
Nepal concludes with following key points:
 Paid up Capital of Nepalese Commercial Banks is increasing indicating banks
maintain the capital standards set by NRB
 Total equity capital is growing as compared to total debt.
 The fluctuating interest coverage ratio of the Nepalese Commercial Banks
indicates the earnings stream and interest expenses are inconsistent over the period
of past five years. The debt servicing capacity of the Nepalese Banks is not highly
satisfactory but it is sufficient to meet the interest expenses in all years and is
continuously improving.
 The capital adequacy ratios of the banks are adequate against set norms of NRB
indicating sound financial health and sufficient to meet on banking operation.
 The total capital fund and capital adequacy ratios are fluctuating which indicate
fluctuating risk adjusted assets of the banks.
 Core Capital and supplementary capital ratios are in line with the NRB norms.

1.8.4 Review of Preview Thesis and Books

Various thesis work have been done in different aspects of commercial banks such as
lending policy, investment policy, financial performance analysis, resource mobilization
and capital structure. The review of some previous study, which is relating to the
Nepalese banking sector, is the most relevant and assistant for this research.
Mrs. Tamang (2006) in her thesis paper entitled “Lending Policy of Commercial Banks in
Nepal” had tried to examined to lending policy of the commercial bank and she had
concluded that efficient utilization of resource is more important than collection of the
same lower investment means lower capital formation that hamper economic
development than bank showed emphasis on utilization of resources (Tamang, 2006).
Mr. Shrestha S.L (2006), through his thesis “A study of Financial performance of
Commercial Banks” concluded that the liquidity position of commercial bank has found
relatively highly leveraged compared to the joint venture banks. Loan and advance have
been their main forms of the investment. Two third assets have been used for earning
purpose.
The review of the above mentioned research have definitely enrich many vision to
elaborate analysis to come to the meaningful conclusion in realistic term and few key
suggestion that help in improvement of commercial banks.
Sayers (1967) in his book ‘modern banking’ focuses in the economic importance of
commercial banks and their function of creation of money according to him the special
interest of economists in the bank because by their operations they can effect the
monetary situation in sense of the availability of the purchasing power. When a bank
makes an advance by allowing customers to overdraw his accounts the banks in effect
exchanges its own promise to pay off the immediately against the customer’s promise to
pay off the advance later on the economics importance of this exchange is that the bank’s
promise to pay immediately is absolutely effective purchasing power, when play’s and
instrumental role in increasing the total demand of the goods and services. Here people
use banks for the purpose of making payments and as sources of loans; the letter involves
society’s interest in the distribution between different used of the resources that can be
debuted to adding to the real capital of nature”
The book was written by Bhuman/Sharita (2056) in their ‘A hand of banking highlight in
function of credit creation, accepting various types of deposits and advancing loan in
different field. According to the authors, the various marketing concept by bank,
commercial-oriented concept of commercial banks following Nepal Rastra Bank
directives.
Pradhan (1980) conducted a study on investment policy of Nepal Bank Ltd. The objective
to that study was to evaluate the lending policy and to find out the ways to encourage the
bank lending. This study has covered only five fiscal years BS 2028/29 through BS
2033/34. He used Karl Pearson's coefficient of correlation, ratio analysis and percentage
analysis. He concluded with the positive relationship between deposits and loans and
advances. But the same was not in a proportionate manner, greater increase in deposits
led to little increase in the loans and advances. Increase in the interest rate was the main
factor for the decrease in loan demand. The bank had investment only 3 percent of its
total investment in the priority sector, which was lower than the percentage (7 percent)
imposed by NRB.
1.9 RESEARCH METHODOLOGY

The research methodology is systematic way of solving research problem. Research

methodology refers to the overall research process, which a researcher conducts during their
study. Research can be conducted on the basis of primary and secondary data. Here in the study
all the data and observed data are analyzed with using appropriate financial tools. To evaluate,
analyze and interpret on every subject and discipline a detailed research plan is required. Without
gathering detailed data and without applying different analytical tool it is impossible to confess
anything about the related subject.

It is the time of liberalization & globalization and it is being realized that the economic
growth/advancement of a country can be achieved only after the active involvement of banking
sector in economic activities. In Nepal, role of government owned bank is not that much of
effective what that was expected from them in the sector of economic development and at the
same time commercial banks are performing their role successfully and effectively. In order to
track out the reason behind the weak performance of government owned bank.
The present study has its objective to analyze the financial performance of commercial bank. I
have selected Citizens Bank International Limited for the purpose of my research work. The
basic objective of the study is to compare of financial performance of Citizens bank International
Limited. To achieve these objectives, the following metholodogy have been adopted which
includes the research design, period covered, the nature and sources of data, data collection, tools
used, analysis technique and so on.

1.9.1 Research Design

The main objective of this study is to analyze, examine and interpret the financial performance of
Citizens bank International Limited by analyzing the financial statements. The study is an
initiative study based on the analysis of past three year’s financial performance of Citizens bank
International Limited. Descriptive research design had been used to make the analysis more
conclusive.

1.9.2Nature and Sources of Data

The data of Citizens bank International Limited have been collected mainly from the secondary
sources. The secondary data are related publication of bank, central bank as well as other
financial institution. Beside this I have discussed informally with the staffs of Citizens bank
International Limited in order to get needed information. Along with different websites are
frequently visited for the purpose of data collection. The data and information are used for ratio
analysis. All these data were collected personally. In this way both primary and secondary data
are used in this study.

1.9.3 Data Collection, Processing and Tabulating Procedure

The required financial and information have been collected from the balance sheet and profit and
loss account of the bank. The collected data were complied and processed in order to achieve the
objective of the study. The data are tabulated on the following sequences:
 The financial data have presented according to time series, which are of four years
starting from the fiscal year 2064/65 to 2067/2068.
 The data were analyzed with the help of ratios, percentage, average and time change

1.9.4 Data Analysis Technique

The tabulated data are analyzed with the help of various fundamental financial tools. The
following financial ratios and tools have been used to analyze the data:
1.9.4.1 Financial Ratio Analysis
A. Liquidity Ratio
Liquidity ratio measure the firm’s ability to meet current obligations. In fact, analysis of liquidity
needs the preparation of cash budget and cash flow and funds flow statements; but liquidity ratio,
by establishing relationship between cash and other current assets to current obligation, provide a
guide measure of liquidity (Pandey; 1989: 103)
Bank can experience lack of liquidity when cash outflow (due to deposit, withdraws, loans etc)
exceed cash inflows (new deposit, loan repayment etc.). They can resolve any cash deficiency by
either creating additional liabilities or by selling assets. To analyze the ability of banks, the
following selected ratios are calculated.
I. Current Ratio
II. Cash and Bank Balance to Current Assets Ratio
III. Fixed Deposit to Total Deposit Ratio
IV. Saving Deposit to Total Deposit Ratio
V. Cash and Bank Balance to Total Deposit Ratio

I. Current Ratio
The current ratio is the ratio of total current assets to total current liabilities. It is calculating by
dividing current assets by current liabilities which are expressed as follows:
Current Assets
Current Ratio=
Current Liabilities

Current assets represent those assets which can be converted into cash and bank balance within
accounting period such as cash and bank balance, investment in treasure bills, money at call or
placement, loan and advances, bills purchased and discount, inter branch account, other short
term loans, receivable and prepaid expenses etc.
Current liability refers to short-maturing obligations. This include all deposit liabilities, inter-
bank reconciliation account, bills payable, tax provision, staff bonus, dividend payable, bank
overdrafts, provision and accrued expenses, etc.

II. Cash and Bank Balance to Current Asset Ratio

Cash and bank balance is the most liquid form of current assets. The cash and bank balance ratio
indicates the percentage of readily available fund with in the bank. The cash and bank balance to
current assets ratio is calculated by using the following formula:
Cash∧Bank Balance
Cash∧Bank Balance ¿ Current Assets Ratio=
Current Assets

III. Fixed Deposit to Total Deposit

Fixed deposit is the high interest bearing deposit, which can be withdrawn only after its maturity.
It is calculated by dividing the amount of fixed deposits by the amount of total deposit, which is
given below:
¿ Deposit
¿ Deposit ¿Total Deposit=
Total Deposit

IV. Saving Deposit to Total Deposit Ratio

Saving deposit is the low interest bearing deposit than the fixed deposit. These deposits are not
as freely withdrawal as current deposit. This ratio is calculated in order to find out the proportion
of total deposit which is interest bearing and short term; it can be calculated by dividing the
amount of saving deposits by the amount of total deposits. It is expressed as:
Saving Deposit
Saving Deposit ¿ Total Deposit=
Total Deposit

V. Cash and Bank Balance to Total Deposit (Cash Reserve ratio)

In country where capital market is not well developed, the cash reserve requirement can be used
not only to control the commercial bank credit but also to influence the investment portfolios of
the commercial banks.
Regarding cash reserve, Nepal Rastra Bank has guided all the commercial banks to maintain at
least 12% of their deposit of their liabilities as reserve (Vault cash is 4% and the central cash
balance is 8% of total deposits.

Cash Reserve Ratio (CRR) is calculated by dividing the cash and bank balance by the amount of
total deposit, which is presented below:
Cash∧Bank Balance
Cash Reserve Ratio=
Total Deposits
B. Leverage or Capital Structure Ratio
Leverage or capital structure ratio measures the outsider’s capital in financing the firm’s assets,
and is calculated by establishing relationship between borrowed capital and equity capital.
Higher leverage ratio indicates larger amount of borrowed funds used by the firms to finance its
assets and it also indicates increasing obligation and known as risky firm. A firm must have
sufficient margin of equity to pay the fixed charges and refund the borrowed funds in the
maturing date. The following ratios have been used to measure the long term solvency position
of Citizens Bank International Limited with the help of financial data of past three years of the
bank.

1. Total Debt to Shareholder’s Equity Ratio

Total debt-equity ratio indicates the relationship between the long term funds provided by the
creditors and those provided by the firm’s owners. It is commonly used to measure the degree of
financial leverage of the firm and is calculated as follows:
Total Shareholder ’ s Equity
Total Shareholder ’ s Equity ¿ Total Assets=
Total Assets

2. Total Debt to Total Assets Ratio

Total debt to total assets ratio is the relationship between creditors fund and owner’s capital.
These ratios shown the proportion of outsiders fund used in financing total assets. This ratio is
calculated is by dividing the total debt of the bank by its total assets, which are presented below.
Total Debt
Total Debt ¿ Total Assets Ratio=
Total Assets
3. Total Shareholder’s Equity to Total Assets Ratio
Shareholder’s equity to total assets ratio indicates the proportion of assets which is financed from
ownership capital of the firm. This ratio also exhibits the relationship between shareholder’s fund
and owner’s capital. This ratio shows the share of shareholders on the total assets. It can be
expressed as follows:
Total Shareholder ’ s Equity
Total Shareholder ’ s Equity ¿ Total Assets=
Total Assets

C. Profitability Ratio
Profit is the difference between total revenue and total expenses over a period of time. Profit is
unlimited of a commercial bank and it will have no future if it fails to make sufficient profits.
Therefore, the financial manager continuously evaluates the efficiency of the bank in terms of
profits. The profitability ratios in this study are calculated to measure the operating efficiency
and performance of Citizens Bank International Limited. Following are the measure profitability
ratios calculated in this study:

I. Interest Earned to Total Asset Ratio

Interest earning is the major sources of a commercial bank. This ratio is calculated to find out
percentage of the interest earned in comparison to total assets. The ratio can be calculated by
suing the following formula:
Interest Earned
Interest earned ¿ Total Assets=
Total Assets

II. Net Profit to Total Deposit Ratio

The collected deposits are mobilized in investment and loans to get profit. This ratio indicates the
percentage of profit earned by using the total deposit. It is calculated by dividing the amount of
net profit by the amount of total deposits which is presented below:
Net Profit
Net Profit ¿ Total Deposit=
Total Deposit
III. Net profit to Total Assets
The ratio is a useful measurement of the profitability of all financial resources invested in the
bank’s assets. The return on total assets (ROA) or profit to assets ratio is calculated by dividing
the amount of net profit by the amount of total assets.
Net Profit
Net Profit ¿ Total Assets=
Total Assets

IV. Net profit to Net Worth (Return on Equity)

Net Worth or shareholders equity refers to the owner’s claim on assets of the bank. The ROE
measures the earned on owner’s investment. This ratio indicates how well the banks have used
the resources of the owners. It is calculated by dividing net profit after tax by net worth.
Net Profit
Net Profit ¿ Net Worth=
Net Worth

V. Net Operating Profit to Total Asset

Net operating profits is the profit before interest and taxes (EBIT). When financial charges are
significant, then it is appropriate for the comparative study to compute the net operating profit to
total assets ratio rather than the return on assets ratio. This ratio is useful to measure the
profitability ratio before interest and taxes of all financial resources invested in the bank assets.
The following formula has been used to calculate the net operating profit to total assets ratio:
 Earnings Before Interest∧Taxes
Net operating profit ¿ Total Assets Ratio=
Total Assets

VI. Net profit To Risk Assets Ratio

Risk assets refer to those assets, which are invested in loans and advances and bill purchased and
discounted. The ratio is calculated by dividing the amount of net profit by the amount of risk
assets which is expressed as:
Earnings Before Interest ∧Taxes
Returnon risk assets=
Risk Assets

D. Ownership Ratio
The true owners of business firms are the common stockholders, who invest their money in the
firm because of their expectation of the future returns. The common stockholders are referred as
residual owner, who receives what is left after all other claims on the firm’s income and assets
have been satisfied. As a result of this generally uncertain position, the common stockholder
expected to be compensated with adequate dividends and ultimately capital gains. From the point
of view of the shareholder, the following financial ratios indicate the financial performance of
the firm in a given period of time.

I. Earnings Per Share (EPS)

II. Dividend Per Share (DPS)
III. Dividend Payout Ratio (DPR)

I. Earnings Per Share (EPS)

The EPS represents the amount earned on the behalf of each outstanding, share of common
stock. They are closely watched by the investing public and are considered an important
indicator of the firm’s success. EPS is calculated as follows:
Net Profit after Tax
EPS=
No . of Common Share Outstanding
II. Dividend Per Share (DPS)
Dividend per share is calculated to know proportion of the earning distributed to the shareholder
per share. DPS is calculated with the help of following formula:
DPS=Earning Paid ¿ Shareholders ¿
No . of Common Share Outstanding

III. Dividend Payout Ratio

This ratio represents the percentage of the profits distributed as dividend and the percentage
retained as revenue and surplus for the growth of the bank. It is determined by dividend per share
(DPS) by earning per share (EPS) as expressed below:
Dividend per Share
DPR= × 100
Total Dividend
 CHAPTER II

PRESENTATION AND ANALYSIS OF DATA

The main aim of this chapter is presentation and analysis of data according to research
methodology to attain the objective of this study. In this chapter, an attempt has been made to
analyze capital structure of Citizens Bank International Limited for its operational period of four
years that is 2075/76 to 2079/80. The data for this study are presented in tabular form and are
analyzed with the financial tools viz. ratio analysis, income and expenditure statement analysis
and statistical tools such as correlation.

2.1 Ratio analysis

Ratio analysis involves the method of calculating and interpreting financial ratios in order to
access the firm’s performance and status. The basic input of ratio analysis is the firm’s income
and expenditure statement and balance sheet for the period to be examined. The following ratios
are used to analyze the capital structure of Citizens Bank International Limited.

2.1.1Liquidity Ratio
The liquidity of a business firm is measured by its ability to satisfy its short term obligation as
they come due. Liquidity refers to the solvency of the firm’s overall financial position. The
following ratios are used to measure to measure liquidity position of Citizens Bank International
Limited with the help of financial data of past five years of the bank.
VI. Current Ratio
VII. Cash and Bank Balance to Current Assets Ratio
VIII. Fixed Deposit to Total Deposit Ratio
IX. Saving Deposit to Total Deposit Ratio
X. Cash and Bank Balance to Total Deposit Ratio

I. Current Ratio
The current ratio, one of the most commonly cited financial ratio, measure’s the firm’s ability
meet its short term obligations. Current Liabilities includes the Sum of Borrowings, current and
call deposit liability, Bills payables, proposed dividend and other liabilities. Current Assets
include the Cash balance, Balance with NRB, Money at Call and short Notice, Loans, Advances
and Bills Purchased and Other Assets. It is expressed as follows;
Current Assets
Current Ratio=
Current Liabilities

The current ratio of Citizens Bank International Limited is exhibited in table-1 below;

Table: 1

Current Ratio of Citizens Bank International Limited

Year Current Assets Current Liability Current Ratio
(Rs) (Rs) (In terms of times)
2075/76 1,363,292,347 1,532,899,101 0.89
2076/77 5,969,166,094 6,669,878,357 0.89
2077/78 10,817,077,832 4,608,220,131 2.35
2078/79 13,672,861,307 4,791,482,217 2.85
2079/80 1,133,292,231 2,135,22,712 1.88
Source: calculated by using the data from www.ctznbank.com
The above table shows that the current ratio of Citizens Bank International Limited has less than
1 in the year of 2075 and 2076. In later period it has more than one i.e. 2.35 times in the year
2077 and 2.85 times in the year of 2078. In the study period of the year 2076 and 2077 is
generally considered to have good short term financial strength. If the current liabilities exceed
current assets then the company may have problem meeting its short term obligations. In general,
the Citizens Bank International Limited is able to meet its short term obligation in later years.

Figure 2.1

2.5

2
East
1.5 West
1 North

0.5

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

II. Cash and Bank Balance to Current Asset Ratio

Cash and bank balance is the most liquid form of current assets. The cash and bank balance ratio
indicates the percentage of readily available fund with in the bank. The cash and bank balance to
current assets ratio is calculated by using the following formula:
Cash∧Bank Balance
Cash∧Bank Balance ¿ Current Assets Ratio=
Current Assets

The cash and bank balance to current ratio of Citizens Bank International Limited for the period
of 2054/65-2067/68 is presented in Table- 2 below;

Table: 2

Cash and Bank Balance to Current Assets Ratio

Year Cash and Bank Current Assets Ratio
 Balance(Rs) (Rs) (In terms of %)
2075/76 146,821,592 1,363,292,347 10.77
2076/77 732,482,003 5,969,166,094 12.27
2077/78 1,655,352,993 10,817,077,832 15.30
2078/79 2,445,617,795 13,672,861,307 17.89
2079/80 2.333.44,765 1,453,555,77 11.44
Source: calculated by using the data from www.ctznbank.com
Figure 2.2

0.18
0.16
0.14
0.12
East
0.1
0.08 West
0.06 North
0.04
0.02
0
2075/76 2076/77 2077/78 2078/79 2079/80

Cash and bank balance include the cash balance, Balance with NRB, Balance with
Banks/Financial Institutions. The above table shows that cash and bank balance to current assets
ratio of the bank was maximum (17.89%) in year 2079 and minimum (i.e. 10.77%) in year 2076.
It seems that the ratio in increasing trend in later years than in previous year.

III. Fixed Deposit to Total Deposit

Fixed deposit is the high interest bearing deposit and can be withdrawn only after its maturity.
This ratio is calculated in order to find out the proportion of fixed deposit with respect to total
deposit. It is calculated by dividing the amount of fixed deposits by the amount of total deposit,
which is given below:
¿ Deposit
¿ Deposit ¿Total Deposit=
Total Deposit

The fixed deposit to total deposit of Citizens Bank International Limited for the period of
2075/76-2079/80 is presented in Table- 3 below;
 Table: 3

Fixed Deposit to Total Deposit

Year Fixed Deposit Total Deposit Ratio
(Rs) (Rs) (In terms of %)
2075/76 987931041 1,553,169,924 63.61
2076/77 4,059,066,310 6,139,579,055 66.11
2077/78 3,713,589,712 11,524,425,599 32.22
2078/79 6,607,995,873 14,214,481,799 46.49
2079/80 2.333.345,512 11.418,502.316 51.88
Source: calculated by using the data from www.ctznbank.com

Fixed deposit includes the fixed deposit liabilities of a bank. It also include high interest bearing
deposit. It includes the interest bearing and non interest bearing deposit liabilities. Total deposit
includes the interest bearing total deposit and non interest bearing deposit. Total deposit is the
summation of current deposit, fixed deposit; call deposit, saving deposit, certificate of deposit
and other. The above data shows that fixed deposit to total deposit ratio of the bank varies from
maximum of 66.11% in the year of 2077 and minimum in the year of 2078 during the study
period of five year.

Figure 2.3
 70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2075/76 2076/77 2077/78 2078/79 2079/80

IV. Saving Deposit to Total Deposit Ratio

Saving deposit stand midway between current and fixed deposit. These deposits are not as freely
as current deposit. It can be calculated by dividing the amount of saving deposits by the amount
of total deposits. It is expressed as:
Saving Deposit
Saving Deposit ¿ Total Deposit=
Total Deposit
The Saving Deposit to Total Deposit of Citizens Bank International Limited for the period of
2054/65-2067/68 is presented in Table- 4 below;
Table: 4

Saving Deposit to Total Deposit Ratio

Year Saving Deposit Total Deposit Ratio
(Rs) (Rs) (In terms of %)
2075/76 97,726,192 1,553,169,924 6.29
2076/77 1,106,994,358 6,139,579,055 18.03
2077/78 3,610,190,585 11,524,425,599 31.33
2078/79 3,809,137,370 14,214,481,799 26.80
2079/80 2,812,295,777 15,167,381,921 30.88
Source: calculated by using the data from www.ctznbank.com
Saving deposit includes the interest bearing saving deposit. It consists of saving in local currency
and foreign currency by individual, institution and others. The above table shows that saving
deposit to total deposit ratio of the bank varies from maximum of 31.33% in year of 2077/78 to
the minimum of 6.29% in the year of 2075/76 during the study period of five years.

V. Cash and Bank Balance to Total Deposit (Cash Reserve Ratio)

The cash reserve requirement in the most developed and developed countries have been used
extensively as a means to control commercial bank’s credit. Especially in countries where capital
market is not well developed, cash reserve requirement can be used not only to control the
commercial bank credit but also to influence the investment portfolio of the commercial banks.
Cash Reserve Ratio (CRR) is calculated by dividing the cash and bank balance by the amount of
total deposit, which is presented below:
Cash∧Bank Balance
Cash Reserve Ratio=
Total Deposits

The cash reserve ratio of Citizens Bank International Limited for the period of 2075/76-2076/77
is presented in Table- 5 below;

Table: 5

Cash and Bank Balance to Total Deposit

Year Cash and Bank Total Deposit Ratio
Balance(Rs) (Rs) (In terms of %)
2075/76 148,821,592 1,553,169,924 9.58
2076/77 1,175,164,304 6,139,579,055 19.14
2077/78 2,555,752,993 11,524,425,599 22.18
2078/79 2,680,599,442 14,214,481,799 18.86
2079/80 1,721,447,816 12,519,530,519 19.56
Source: calculated by using the data from www.ctznbank.com

Cash and bank balance include the Cash balance, Deposit with NRB, deposit with bank and other
financial institution and money at call and short notice. The above table shows that CRR of the
bank varies from maximum of 22.18% in year 2077/78 to minimum of 9.58% in year 2075/76
during the study period of five years. Ratios are fluctuation may be the central bank has indicated
the higher CRR to all the banks or may be higher cash and bank balance of Citizens Bank
International Limited.

Figure 2.4/2.5

25

20
cash and bank balance to total
15 deposit

Saving deposit to total deposit

10 ratio

Series3
5

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

2.1.2 Leverage or Capital Structure Ratio

Leverage or capital structure ratio measures the outsider’s capital in financing the firm’s assets,
and is calculated by establishing relationship between borrowed capital and equity capital.
Higher leverage ratio indicates larger amount of borrowed funds used by the firms to finance its
assets and it also indicates increasing obligation and known as risky firm. A firm must have
sufficient margin of equity to pay the fixed charges and refund the borrowed funds in the
maturing date. The following ratios have been used to measure the long term solvency position
of Citizens Bank International Limited with the help of financial data of past four years of the
bank.
I. Total Debt to Shareholder’s Equity
II. Total Debt to Total Assets Ratio
III. Total shareholder’s Equity to Total Assets Ratio

4. Total Debt to Shareholder’s Equity Ratio

Total debt-equity ratio indicates the relationship between the long term funds provided by the
creditors and those provided by the firm’s owners. It is commonly used to measure the degree of
financial leverage of the firm and is calculated as follows:
Total Debt
Total Debt ¿ Shareholder ’ s Equity Ratio=
Shareholder ’ s Equity
The total debt to Shareholder’s Equity Ratio of Citizens Bank International Limited for the
period of 2075/76-2079/80 is presented in Table- 6 below;
Table: 6

Total Debt to Shareholder’s Equity Ratio

Year Total Debt Shareholder’s Equity Ratio
(Rs) (Rs) (In terms of %)
2075/76 1,372,569,467 544,579,962 252.04
2076/77 476,074,000 599,421,208 79.42
2077/78 250,000,000 1,034,073,481 24.18
2078/79 651,151,000 1,308,269,489 49.77
2079/80 359,194,152 2,331,381,251 48.22
Source: calculated by using the data from www.ctznbank.com

The above table shows that debt to equity ratio varies from maximum of 252.04% in year
2075/76 to minimum of 24.18% in year of 2077/78 during the study period of four years. This
analysis indicates that the there is highly fluctuation in the debt to equity ratios. It also indicates
that the creditor had invested in previous year than later. But after 2078/79, creditors are
interested to invest than in previous year.

Figure 2.6

300

250

200

150

100

50

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

II. Total Debt to Total Assets Ratio

This ratio exhibits the relationship between creditor’s funds and owner’s capital. This ratio
shows the proportion of outsider’s fund used in financing total assets. This ratio is calculated by
dividing the total debt of the bank by its total assets, which is presented below.
Total Debt
Total Debt ¿ Total Assets Ratio=
Total Assets
The total debt to total assets ratio of Citizens Bank International Limited for the period of
2075/76-2079/80 is presented in Table- 7 below;
Table: 7

Total Debt to Total Assets Ratio

Year Total Debt Total Assets Ratio
(Rs) (Rs) (In terms of %)
2075/76 1,372,569,467 3,487,296,143 39.36
2076/77 476,074,000 7,269,299,565 6.55
2077/78 250,000,000 1,2966,073,908 1.93
2078/79 651,151,000 16,516,884,949 3.94
2079/80 451,231,888 17,651,529,715 5.98
Source: calculated by using the data from www.ctznbank.com

Total debt includes the loan from Inter-bank and Financial Institutions and from NRB. The
above table shows that debt to total assets of the bank varies from maximum of 39.36% in year
2075/76 to the minimum of 1.93% in year 2077/78 during the study period of five year.
Figure 2.7

40
35
30
25 East
20 West
15 North
10
5
0
2075/76 2076/77 2077/78 2078/79 2079/80

III. Total Shareholder’s Equity to Total Assets Ratio

Shareholder’s equity to total assets ratio indicates the proportion of assets which is financed from
ownership capital of the firm. This ratio also exhibits the relationship between shareholder’s fund
and owner’s capital. This ratio shows the share of shareholders on the total assets. It can be
expressed as follows:
 Total Shareholder ’ s Equity
Total Shareholder ’ s Equity ¿ Total Assets=
Total Assets

The shareholder’s equity to total assets ratio of Citizens Bank International Limited for the
period of 2075/76-2079/80 is presented in Table- 8 below;

Table: 8

Total Shareholder’s Equity to Total Assets Ratio

Year Total shareholder’s Total Assets Ratio
Equity (Rs) (Rs) (In terms of %)
2075/76 544,579,962 3,487,296,143 15.62
2076/77 599,421,208 7,269,299,565 8.25
2077/78 1,034,073,481 1,2966,073,908 7.97
2078/79 1,308,269,489 16,516,884,949 7.92
2079/80 1.256,812,371 18,521,555,815 17.99
Source: calculated by using the data from www.ctznbank.com

Total shareholder’s equity is included Share Capital and Reserve and Funds. The above table
shows that the shareholder’s equity to total assets of the bank varies from maximum of 17.99%
in year 2079/80 to minimum of 7.92% in year 2078/79 during the study period of five year . The
ratio shows that the total asset of the bank is financed through equity capital and remaining from
debt capital.
Figure 2.8

18
16
14
12
10
8
6
4
2
0
2075/76 2076/77 2077/78 2078/79 2079/80
2.1.3 Profitability Ratio
There are many measure of profitability. Each relates the return of the firm to its sales, assets,
and equity or share value. As a group, these measures allow the analyst to evaluate firm’s
earning with respect to given level of sales, a certain level of assets, the owners investment or
share value.
Profit is the difference between total revenue and total expenses over a period of time. Profit is
unlimited of a commercial bank and it will have no future if it fails to make sufficient profits.
Therefore, the financial manager continuously evaluates the efficiency of the bank in terms of
profits. The profitability ratios in this study are calculated to measure the operating efficiency
and performance of Citizens Bank International Limited. Following are the measure profitability
ratios calculated in this study:
I. Interest Earned to Total Assets Ratio
II. Net Profit to Total Deposit Ratio
III. Net Profit to Total Assets Ratio
IV. Net Profit to Net Worth Ratio
V. Net Operating Profit to Total Assets Ratio

I. Interest Earned to Total Assets ratio

Interest earning is the major sources of a commercial bank. This ratio is calculated to find out
percentage of the interest earned in comparison to total assets. The ratio can be calculated by
suing the following formula:
Interest Earned
Interest earned ¿ Total Assets=
Total Assets

The interest earned to total assets ratio of Citizens Bank International Limited for the period of
2075/76-2079/80 is presented in Table- 10 below;
 Table: 10
Interest Earned to Total Assets ratio
Year Interest Earned Total Assets Ratio
(Rs) (Rs) (in terms of times)
2075/76 26,954,623 3,487,296,143 0.77
2076/77 396,842,474 7,269,299,565 5.46
2077/78 758,256,197 1,2966,073,908 5.85
2078/79 1,398,830,691 16,516,884,949 8.47
2079/80 1,421,651,715 17,691,661,571 10.88
Source: calculated by using the data from www.ctznbank.com

The above table shows the interest earned to total assets of the bank varies from maximum of
10.88% in year 2079/80 to the minimum of 0.77% in year 2075/76 during the study period of
five year. The analysis indicates that the ratio is in increasing trend in later period as compared to
previous year.
Figure 2.9

12

10

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

II. Net Profit to Total Deposit Ratio

The collected deposits are mobilized in investment and loans to get profit. This ratio indicates the
percentage of profit earned by using the total deposit. It is calculated by dividing the amount of
net profit by the amount of total deposits which is presented below:
Net Profit
Net Profit ¿ Total Deposit=
Total Deposit
The net profit to total deposit ratio of Citizens Bank International Limited for the period of
2054/65-2067/68 is presented in Table- 11 below;
Table: 11

Net Profit to Total Deposit Ratio

Year Net Profit Total Deposit Ratio
(Rs) (Rs) (In terms of %)
2075/76 (15420038) 1,553,169,924 -0.99
2076/77 54841245 6,139,579,055 0.89
2077/78 95809926 11,524,425,599 0.83
2078/79 193561798 14,214,481,799 1.36
2079/80 1,271,593,2 12,561,591,434 1.77
Source: www.ctznbank.com
Net profit to total deposit of the bank varies from 1.77% in the year 2079/80 and 2075/76
-0.99%.Although the period (1964/65) was initial phase of the bank so that it could not be in
positive return. This analysis shows that the calculated ratio shows the increasing trends.
Figure 2.10

1.5
1
East
0.5 West
0 North

-0.5

-1
2075/76 2076/77 2077/78 2078/79 2079/80

III. Net Profit to Total Assets Ratio

The ratio is a useful measurement of the profitability of all financial resources invested in the
bank’s assets. The return on total assets (ROA) or profit to assets ratio is calculated by dividing
the amount of net profit by the amount of total assets.
Net Profit
Net Profit ¿ Total Assets=
Total Assets
The net profit to total assets of Citizens Bank International Limited for the period of 2054/65-
2067/68 is presented in Table- 12 below;
 Table: 12

Net Profit to Total Assets Ratio

Year Net Profit Total Assets Ratio
(Rs) (Rs) (In terms of %)
2075/76 (15,420,038) 3,487,296,143 -0.44
2076/77 54,841,245 7,269,299,565 0.75
2077/78 95,809,926 1,2966,073,908 0.73
2078/79 193,561,798 16,516,884,949 1.17
2079/80 171,592,634 16,721,781,793 1.21
Source: calculated by using the data from www.ctznbank.com
The above table shows that net profit to total assets of the bank varies from -0.44% in year
2075/76 to maximum of 1.17 % in year 2079/80 during the study period of 5 years. The analysis
indicates that the net profit earned in comparison to total assets is in fluctuation or increasing
trend.
Figure 2.11

1.4
1.2
1
0.8
0.6
0.4
0.2
0
-0.2
-0.4
2075/76 2076/77 2077/78 2078/79 2079/80

IV. Net Profit to Net Worth(Return on Equity) Ratio

Net Worth or shareholders equity refers to the owner’s claim on assets of the bank. The ROE
measures the earned on owner’s investment. This ratio indicates how well the banks have used
the resources of the owners. It is calculated by dividing net profit after tax by net worth.
Net Profit
Net Profit ¿ Net Worth=
Net Worth
The net profit to net worth of Citizens Bank International Limited for the period of 2054/65-
2067/68 is presented in Table- 13 below;
Table: 13
Net Profit to Net Worth
Year Net Profit Net worth Ratio
(Rs) (Rs) (In terms of %)
2075/76 (15,420,038) 560,000,,000 -2.75
2076/77 54,841,245 560,000,000 9.79
2077/78 95,809,926 1,000,000,000 9.58
2078/79 193,561,798 1,206,950,000 16.04
2079/80 139,421,901 1,801.438,000 17.22
Source: calculated by using the data from www.ctznbank.com
Here net worth includes the Shareholder’s equity. The above table shows that return on equity of
the bank varies from maximum of 17.22% in year 2079/80 to the minimum of -2.75% in year
2075/76 during the study period of 5 year. The analysis indicates that ROE of Citizens Bank
International Limited is in better position as compared to previous years.
Figure 2.12

20

15

10

-5
2075/76 2076/77 2077/78 2078/79 2079/80

V. Net Operating Profit to Total Assets Ratio

Net operating profits is the profit before interest and taxes (EBIT). When financial charges are
significant, then it is appropriate for the comparative study to compute the net operating profit to
total assets ratio rather than the return on assets ratio. This ratio is useful to measure the
profitability ratio before interest and taxes of all financial resources invested in the bank assets.
The following formula has been used to calculate the net operating profit to total assets ratio:
Earnings Before Interest∧Taxes
Net operating profit ¿ Total Assets Ratio=
Total Assets

The net operating profit to total assets ratio of Citizens Bank International Limited for the period
of 2054/65-2067/68 is presented in Table- 14 below;
Table: 14

Net Operating Profit to Total Assets Ratio

Year Net Operating Profit Total Assets Ratio
(Rs) (Rs) (In terms of %)
2075/76 (10,674,000) 3,487,296,143 -0.31
2076/77 (1,479,000) 7,269,299,565 -0.02
2077/78 18,750,000 12,966,073,908 0.14
2078/79 165,995,000 16,516,884,949 1.01
2079/80 159,886,000 15,18,792,781 0.97
Source: calculated by using the data from www.ctznbank.com
The above table shows that net operating profit to total assets of the bank varies from -0.31% in
year 2075/76 to the maximum 1.01% in year 2078/79 during the study period of 5 years. This
analysis indicates that the net operating profit to total assets shows increasing trend in later
period.
Note: The bank’s annual report’s data and published data in the website are different.

Figure 2.13

1.2
1
0.8
0.6
0.4
0.2
0
-0.2
-0.4
2075/76 2076/77 2077/78 2078/79 2079/80
2.1.4 Ownership Ratio
Unlike creditor, the owners of business firms are the common stockholders, who invest their
money in the firm because of their expectation of the future returns. The common stockholders
are referred as residual owner, who receives what is left after all other claims on the firm’s
income and assets have been satisfied. As a result of this generally uncertain position, the
common stockholder expected to be compensated with adequate dividends and ultimately capital
gains. From the point of view of the shareholder, the following financial ratios indicate the
financial performance of the firm in a given period of time.
I Earnings per Share (EPS)
II. Dividend per Share (DPS)
III. Dividend Payout Ratio (DPR)
Therefore these financial ratios have been included in this study to make the research effective
and conclusive.

I. Earnings Per Share (EPS)

The firm’s earning per share is generally of interest to present or prospective stockholders and
management. The EPS represents the amount earned on the behalf of each outstanding share of
common stock. They are closely watched by investing public and are considered an important
indicator of the firm’s success. EPS is calculated as follows:
Net Profit after Tax
EPS=
No . of Common Share Outstanding
The following table shows the earning per share of Citizens Bank International Limited.
 Table: 15

Earnings per Share

Net Profit after EPS
Year Interest and Taxes No. of Share O/S (In Rs.)
(Rs)
2075/76 (15,420,038) 5,600,000 -2.75
2076/77 54,841,245 5,600,000 9.79
2077/78 95,809,926 10,000,000 9.58
2078/79 193,561,798 10,000,000 19.36
2079/80 182,571,631 10,000,000 18.25
Source: calculated by using the data from www.ctznbank.com

The above table shows that EPS of the bank varies from maximum of Rs. 19.36 in year 2078/79
to the minimum of -2.75 in the year 2075/76 during the study period of five year. The above
analysis indicates that EPS of Citizens Bank International Limited is improving.
Figure 2.14

20

15

10

-5
2075/76 2076/77 2077/78 2078/79 2079/80

II. Dividend Per Share (DPS)

Dividend per share is calculated to know proportion of the earning distributed to the shareholder
per share. DPS is calculated with the help of following formula:
DPS=Earning Paid ¿ Shareholders ¿
No . of Common Share Outstanding
The following table shows the dividend per share of Citizens Bank International Limited.
Table: 16

Dividend per Share

Year Earning paid to No. of Share O/S DPS
Shareholder (Rs) (In Rs.)
2075/76 0 5,600,000 0
2076/77 0 5,600,000 0
2077/78 100,000,000 10,000,000 10
2078/79 126,315,789 10,000,000 12.63
2079/80 142,512,567 10,000,000 14.25
Source: calculated by using the data from www.ctznbank.com

The above table shows DPS of the bank. in the initial period of two year of observation was not
distributed the dividend to its shareholders and in the remaining periods of two year has
distributed Rs. 10 as dividend.
Note: Rs. 10 was distributed as dividend which is mentioned in annual report of year 2079/80 but
the calculation shows Rs. 14.25 as dividend.
Figure 2.15

16
14
12
10
8
6
4
2
0
2075/76 2076/77 2077/78 2078/79 2079/80

III. Dividend Payout Ratio

This ratio represents the percentage of the profits distributed as dividend and the percentage
retained as revenue and surplus for the growth of the bank. It is determined by dividend per share
(DPS) by earning per share (EPS) as expressed below:
 Dividend per Share
DPR= × 100
Total Dividend
The following table shows the dividend payout ratio of Citizens Bank International Limited.

Table: 17

Dividend Payout Ratio

Year DPS EPS DPR

(in Rs) (In Rs.) (In %)

2075/76 0 -2.75 0

2076/77 0 9.79 0

2077/78 10 9.58 104.38

2078/79 12.63 19.36 65.24

2079/80 11.32 18.21 61.33

The above table shows that dividend payout ratio of the bank in initial period of two year was
zero during the observation period of five year years. It was because the bank was in loss in the
year 2075/76 and did not distribute in the year 2076/77 even if the bank was in profit. It was so
because the bank covered the loss of initial year’s loss. From the third year it started to distribute
the dividend. The dividend payout ratio is 104.38% in year of 2077/78 and 65.24% in year of
2078/79 and 61.33% in year of 2079/80.
 Figure 2.16

120
100
80
60
40
20
0
2075/76 2076/77 2077/78 2078/79 2079/80

2.3 Finding from the Ratio Analysis

Ratio analysis involves the method of calculating and interpreting financial ratios in order to
access the firm’s performance and status. The following are the finding from the ratio analysis:
1. Current ratio of Citizens Bank International Limited has less than 1 in the year of 2075/76
and 2077/78 In later period it has more than one i.e. 2.35 times in the year 2077 and 2.85
times in the year of 2078. In the study period of the year 2079 and 2080 is generally
considered to have good short term financial strength. If the current liabilities exceed current
assets then the company may have problem meeting its short term obligations The current
ratio analysis of the bank over the four year period indicates that the bank is able to meet its
short-term obligation and has sound liquidity position in later years.

2. Cash and bank balance to current assets ratio of the bank was maximum (17.89%) in year
2067 and minimum (i.e. 10.77%) in year 2076. It seems that the ratio in increasing trend in
later years than in previous year.

3. Fixed deposit includes the fixed deposit liabilities of a bank. It also includes high interest
bearing deposit. It includes the interest bearing and non interest bearing deposit liabilities.
Total deposit includes the interest bearing total deposit and non interest bearing deposit.
Total deposit is the summation of current deposit, fixed deposit; call deposit, saving deposit,
certificate of deposit and other fixed deposit to total deposit ratio of the bank varies from
 maximum of 66.11% in the year of 2077 and minimum in the year of 2079 during the study
period of five year.
4. Saving deposit stand midway between current and fixed deposit. Saving deposit to total
deposit ratio of the bank varies from maximum of 31.33% in year of 2079 to the minimum of
6.29% in the year of 2076 during the study period of five years.
5. The CRR in most of the developed and developing countries has been used extensively as a
means to control commercial bank credit. CRR of the bank varies from maximum of 22.18%
in year 2080 to minimum of 9.58% in year 2076 during the study period of five years. Ratios
are fluctuation may be the central bank has indicated the higher CRR to all the banks or may
be higher cash and bank balance of Citizens Bank International Limited.
6. Total debt-equity ratio indicates the relationship between the long term funds provided by the
creditors and those provided by the firm’s owners. Debt to equity ratio varies from
maximum of 252.04% in year 2064 to minimum of 24.18% in year of 2079 during the study
period of five years. This analysis indicates that the there is highly fluctuation in the debt to
equity ratios. It also indicates that the creditor had invested in previous year than later. But
after 2078, creditors are interested to invest than in previous year.
7. Total debt includes the loan from Inter-bank and Financial Institutions and from NRB. The
above table shows that debt to total assets of the bank varies from maximum of 39.36% in
year 2076 to the minimum of 1.93% in year 2079 during the study period of five year.
8. Shareholder’s equity to total assets ratio indicates the proportion of assets which is financed
from ownership capital of the firm. This ratio also exhibits the relationship between
shareholder’s fund and owner’s capital. This ratio shows the share of shareholders on the
total assets. Shareholder’s equity to total assets of the bank varies from maximum of 15.62%
in year 2077 to minimum of 8.25% in year 2078 during the study period of five year. The
ratio shows that the total asset of the bank is financed through equity capital and remaining
from debt capital.
9. The collected deposits are mobilized in investment and loans to get profit. This ratio
indicates the percentage of profit earned by using the total deposit. Interest earning is the
major sources of a commercial bank. Interest earned to total assets of the bank varies from
maximum of 8.47% in year 2079 to the minimum of 0.77% in year 2075 during the study
 period of five year. The analysis indicates that the ratio is in increasing trend in later period
as compared to previous year.
10. The ratio is a useful measurement of the profitability of all financial resources invested in the
bank’s assets. Net profit to total assets of the bank varies from -0.44% in year 2076/77 to
maximum of 1.17 % in year 2078/79 during the study period of 5 years. The analysis
indicates that the net profit earned in comparison to total assets is in fluctuation or increasing
trend.
11. Net Worth or shareholders equity refers to the owner’s claim on assets of the bank. The ROE
measures the earned on owner’s investment. This ratio indicates how well the banks have
used the resources of the owners. Return on equity of the bank varies from maximum of
16.04% in year 2078/79 to the minimum of -2.75% in year 2076/77 during the study period
of 5 year. The analysis indicates that ROE of Citizens Bank International Limited is in better
position as compared to previous years.
12. Net operating profits is the profit before interest and taxes (EBIT). When financial charges
are significant, then it is appropriate for the comparative study to compute the net operating
profit to total assets ratio rather than the return on assets ratio. This ratio is useful to measure
the profitability ratio before interest and taxes of all financial resources invested in the bank
assets Net operating profit to total assets of the bank varies from -0.31% in year 2075/76 to
the maximum 1.01% in year 2077/78 during the study period of 5 years. This analysis
indicates that the net operating profit to total assets shows increasing trend in later period.
13. The firm’s earning per share is generally of interest to present or prospective stockholders
and management. The EPS represents the amount earned on the behalf of each outstanding
share of common stock. They are closely watched by investing public and are considered an
important indicator of the firm’s success. EPS of the bank varies from maximum of Rs.
19.36 in year 2078/79 to the minimum of -2.75 in the year 2075/75 during the study period of
four year. The above analysis indicates that EPS of Citizens Bank International Limited is
improving.
14. The above table shows DPS of the bank. in the initial period of two year of observation was
not distributed the dividend to its shareholders and in the remaining periods of two year has
distributed Rs. 10 as dividend.
15. Percentage of the profits distributed as dividend and the percentage retained as revenue and
surplus for the growth of the bank. Dividend payout ratio of the bank in initial period of two
year was zero during the observation period of four year years. It was because the bank was
in loss in the year 2076 and did not distribute in the year 2077 even if the bank was in profit.
It was so because the bank covered the loss of initial year’s loss. From the third year it started
to distribute the dividend. The dividend payout ratio is 104.38% in year of 2078 and 65.24%
in year of 2079.
16. The sources of operating income are interest earnings, exchange earnings, and commission
earnings and other operating incomes. The expenditure heads of the bank are interest
expenses, personal expenses and other operating and non-operating expenses.
 CHAPTER V

SUMMARY, CONCLUSION AND RECOMMENDATION

3.1 Summary
The present study has been undertaken to examine and evaluate the financial performance of
Citizens Bank International Limited. The researcher has used financial tools and statistical tools
to make this study more effective and informative. This study has covered four year data from
2075/76 to 2079/80 of the bank. In this section, the researcher has tried to summarize the
financial performance of Citizens Bank International Limited.

Although the observed period includes the four year when the bank was in the initial phase
which shows the data fluctuation different in the initial period, it has tried to make adequate and
accurate picture of the financial position of the bank.

Apart from the initial year of the observation period of the bank, the bank has been able to
maintain its position in the country as one of the leading commercial banks. Moreover,
competition in the financial sector is getting tougher day by day. Instead of political instability,
domestic unrest and threats, the bank is making all possible efforts to consolidate its business
portfolio and cut down the cost in all operating areas to maintain the profitability.

The principle activities of the bank in past four years continued to be consumer and corporate
banking, trade finance, credit card service and foreign exchange dealing. The bank has
successfully installed and launched Automated Teller Machine (ATM). The number of card
issued by the bank is increasing and the bank now has critical mass in its account base.
The liquidity of a business firm is measured by its ability to satisfy its short term obligation as
they come due. Liquidity refers to the solvency of the firm’s overall financial position. The
following ratios are used to measure to measure liquidity position of Citizens Bank International
Limited with the help of financial data of past four years of the bank. Liquidity includes Current
Ratio, Cash and Bank Balance to Current Assets Ratio, Fixed Deposit to Total Deposit Ratio,
Saving Deposit to Total Deposit Ratio, Cash and Bank Balance to Total Deposit Ratio
Leverage or capital structure ratio measures the outsider’s capital in financing the firm’s assets,
and is calculated by establishing relationship between borrowed capital and equity capital.
Higher leverage ratio indicates larger amount of borrowed funds used by the firms to finance its
assets and it also indicates increasing obligation and known as risky firm. A firm must have
sufficient margin of equity to pay the fixed charges and refund the borrowed funds in the
maturing date.

The profitability of the bank has been good and increasing during the study period of four years.
However the grown rate is increasing. As per the data analysis deposit increased tremendously, it
is greater in latest year of observation in comparison to first year of observation. However the
rate of increment is positive and during the study period. The total investment of the bank has
been increasing over the year which is mainly due to the bank’s strategy of sate lending and also
as a result of increase in customer deposits and limited opportunity in present scenario with
increase in loans and advances; the bank has been holding adequate provision for loan loss.

Income and expenditure analysis shows that the bank’s main income source are interest income,
foreign exchange and commission earning where its main expenditure items are interest
expenses, office expenses and personnel expenses. Analyzing the credit sector and bank
guarantee, the bank is trying to avoid unnecessary risk, thus categories itself as a risk avert bank.
By mobilizing the fund more in loans and advances, the bank could have increased its profit.
Unlike creditor, the owners of business firms are the common stockholders, who invest their
money in the firm because of their expectation of the future returns. The common stockholders
are referred as residual owner, who receives what is left after all other claims on the firm’s
income and assets have been satisfied. As a result of this generally uncertain position, the
common stockholder expected to be compensated with adequate dividends and ultimately capital
gains.
3.2 Conclusion
During the study period of five years, that is 2075/76 to 2079/80 various ratio analyses have been
performed to find out the financial performance of Citizens Bank International Limited. The
major finding of the study are listed Chapter II, Section 2.3 of this report. Based on the finding
the conclusions have been drawn.
Current ratio of Citizens Bank International Limited has less than 1 in initial period of year. In
later period it has more than one i.e. 2.35 times in the year 2078 and 2.85 times in the year of
2079. In the study period of the year 2078 and 2079 is generally considered to have good short
term financial strength. The current ratio of 2.0 is occasionally cited as acceptable but
acceptability of the value depends on the industry in which a firm operates. If the current
liabilities exceed current assets then the company may have problem meeting its short term
obligations The current ratio analysis of the bank over the five year period indicates that the
bank is able to meet its short-term obligation and has sound liquidity position in later years.

Cash and bank balance to current assets ratio of the bank was maximum (17.89%) in year 2079
and minimum (i.e. 10.77%) in year 2076. It seems that the ratio in increasing trend in later years
than in previous year.

Fixed deposit includes the fixed deposit liabilities of a bank. It also includes high interest bearing
deposit. It includes the interest bearing and non interest bearing deposit liabilities. Total deposit
includes the interest bearing total deposit and non interest bearing deposit. Total deposit is the
summation of current deposit, fixed deposit; call deposit, saving deposit, certificate of deposit
and other fixed deposit. Saving deposit stand midway between current and fixed deposit. The
CRR in most of the developed and developing countries has been used extensively as a means to
control commercial bank credit.
Ratios are fluctuation may be the central bank has indicated the higher CRR to all the banks or
may be higher cash and bank balance of Citizens Bank International Limited.

Total debt-equity ratio indicates the relationship between the long term funds provided by the
creditors and those provided by the firm’s owners. The analysis indicates that the there is highly
fluctuation in the debt to equity ratios. It also indicates that the creditor had invested in previous
year than later. But after 2078, creditors are interested to invest than in previous year. Total debt
includes the loan from Inter-bank and Financial Institutions and from NRB.
Shareholder’s equity to total assets ratio indicates the proportion of assets which is financed from
ownership capital of the firm. This ratio also exhibits the relationship between shareholder’s fund
and owner’s capital. The ratio shows that the total asset of the bank is financed through equity
capital and remaining from debt capital.
The collected deposits are mobilized in investment and loans to get profit. This ratio indicates the
percentage of profit earned by using the total deposit. Interest earning is the major sources of a
commercial bank. The analysis indicates that the ratio is in increasing trend in later period as
compared to previous year. The analysis indicates that the net profit earned in comparison to
total assets is in fluctuation or increasing trend.
Net Worth or shareholders equity refers to the owner’s claim on assets of the bank. The ROE
measures the earned on owner’s investment. This ratio indicates how well the banks have used
the resources of the owners. Return on equity of the bank varies from maximum of Net operating
profits is the profit before interest and taxes (EBIT). When financial charges are significant, then
it is appropriate for the comparative study to compute the net operating profit to total assets ratio
rather than the return on assets ratio. This ratio is useful to measure the profitability ratio before
interest and taxes of all financial resources invested in the bank

The firm’s earning per share is generally of interest to present or prospective stockholders and
management. The EPS represents the amount earned on the behalf of each outstanding share of
common stock. They are closely watched by investing public and are considered an important
indicator of the firm’s success. Analysis indicates that EPS of Citizens Bank International
Limited is improving. In the initial period of two year of observation was not distributed the
dividend to its shareholders and in the remaining periods of two year has distributed Rs. 10 as
dividend. Percentage of the profits distributed as dividend and the percentage retained as revenue
and surplus for the growth of the bank. Dividend payout ratio of the bank in initial period of two
year was zero during the observation period of four year years. It was because the bank was in
loss in the year 2076 and did not distribute in the year 2077 even if the bank was in profit. It was
so because the bank covered the loss of initial year’s loss. The sources of operating income are
interest earnings, exchange earnings, and commission earnings and other operating incomes. The
expenditure heads of the bank are interest expenses, personal expenses and other operating and
non-operating expenses.

The income and expenditure statement provides a financial summary of the firm’s operating
result during the specified period. Operating income and expenditure analysis indicates that the
bank is reducing its operating expenditure and increasing profit year by year to maximize the
shareholder’s equity.

3.3 Recommendation
On the basis of various analyses, the researcher came out with the following recommendations:
 The bank should try to gain major share of public deposits.
 The bank should hold stars such as foreign exchange to preserve market-share.
 Focus on the business such as credit cards, debit cards, wealth managements, global market
and cash management. As these all are high return businessman. If possible, diversify
wealth management business to include a range of retailed foreign exchange products.
 Borden the range of product and service offered to the customers, at the same time
identifying those which can make a real contribution to profit.
 Lending contributes to be very important part of business but it is not the sole driver behind
a corporate relationship. Increase emphasis on cross selling and lending with higher value
products in order to increase the overall relationship.
 Focus more on non-risky lending such as mortgage, housing loan and personal loan.
 Focus more on INGO and new project accounts to generate non-interest bearing accounts.
 The bank has been maintaining excess liquid funds which should be reduced and invest in
earning assets.
 Focus on consortium financing.
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