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Report BBS 4th Year

business (St. Xavier's College, Nepal)

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FINANCIAL PERFORMANCES EVALUATION

OF NEPAL BANK LIMITED
A Project work Report

By
Ritesh Kumar Ray
T.U. Registered Number:7-2-920-221-2018
Exam Roll No.
Group: Finance
Danfe College

Submitted to:
Office Of Controller Of Examination
The Faculty of Management
Tribhuvan University
Kathmandu

In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Kathmandu, Nepal
Poush,2079
DECLARATION

I hereby declare that the project work entitled "FINANCIAL PERFORMANCE

EVALUATION OF NEPAL BANK LIMITED" submitted to the Faculty of
Management, Tribhuvan University, Kathmandu is an original piece of work under the
supervision of MR. GANESH KHADKA, faculty member, DANFE COLLEGE,

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PUTALISADAK, KATHMANDU, and is submitted in partial fulfillment of the
requirements 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.

Signature
RITESH KUMAR RAY
Date:
SUPERVISOR'S RECOMMENDATION

The project work report entitled FINANCIAL PERFORMANCE EVALUATION OF

NEPAL BANK LIMITED. Submitted by RITESH KUMAR RAY of DANFE
COLLEGE, PUTALISDAK, KATHMANDU is prepared under my supervision as per
the procedure and format requirements laid by the Faculty of Management, Tribhuvan
University, as partial fulfillment of the requirements for the award of the degree of
Bachelor of Business Studies (BBS). I, therefore, recommend the project work report
for evaluation.

Signature:
GANESH KHADKA
DANFE COLLEGE
Date:
ENDORSEMENT

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We hereby endorse the project work report entitled FINANCIAL PERFORMANCE
EVALUATION OF NEPAL BANK LIMITED submitted by RITESH KUMAR RAY
of DANFE COLLEGE, PUTALISDAK, KATHMANDU, in partial fulfillment of the
requirements forward of the Bachelor of Business Studies (BBS) for external
evaluation.

Signature: Signature:
SHISHI SHARMA NEUPANE MR.TEJ KRISHNA SHRESTHA
Chairman Principal
Management Research Committee DANFE COLLEGE
Date: Date:
ACKNOWLEDGEMENT

This project work report has been prepared as a partial fulfillment of the requirement
for degree of Bachelor in Business Studies program of Faculty of Management T.U.
Specially, it is meant for the paper of field work management within the elective
sector oral exam. I have chosen NEPAL BANK LIMITED to present the lending
effectiveness in Nepalese context.

I am very grateful to my supervisor Mr.GANESH KHADKA and College chief,

Mr.Tej Krishna Shrestha of Danfe College whose constant guidance, positive
response, supportive help, supervision and inspiration has helped me in preparing a
field work.

My heartiest gratitude goes to Mr. Sangam Neupane, branch manager of

NEPAL BANK LTD, KOTESHWOR,KATHMANDU Branch for his willful and

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heartiest co-operation and giving me the inspiration and suggestion to complete the
whole report in a constructive fashion.

RITESH KUMAR RAY

TABLE OF CONTENTS

Title page i

Declaration ii

Supervisor's Recommendation iii

Endorsement iv

Acknowledgement v

Table of Contents vi

List of Tables viii

List of Figures vii

Abbreviations ix

CHAPTER I: INTRODUCTION 1
Background 1
Profile of NBL 2
Objectives 3
Rationale 4
Review 4
Methods 6

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Limitations 7
CHAPTER II: RESULTS AND ANALYSIS 9
Data Presentation 9
Analysis of Results 15
Findings 19
CHAPTER III: SUMMARY AND CONCLUSION 20
Summary 20
Conclusion 20
BIBLIOGRAPHY 23
APPENDICES 25
LIST OF TABLES

Table No. Table Head Page no.

1. Comparative Income Statement of NEPAL Bank Ltd 10

2. Comparative Balance Sheet of NEPAL Bank Ltd 11

3. Deposit and Loan 13

4. Credit position 14

5. Loan to Total Deposit Ratio 15

6. Loan to Total Assets Ratio 16

7. Interest Payout Ratio 17

8. Loan to Total Profit Ratio 17

9. Loan to Interest income Ratio 18

10. Loan to Interest Expenses Ratio 18

LIST OF FIGURES

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Figure No. Table Head Page no.
1. Deposit and Loan 13

2. Total Credit 14
ABBREVIATIONS

ABBS Any Branch Banking Service

AD Anno Domini
Amt. Amount
ATM Automated Teller Machine
BS Bikram Sambat
Etc. Etcetera F.Y Fiscal Year

i.e. That is
Ltd. Limited
NBL Nepal Bank Limited
NRB Nepal Rastra Bank
Rs. Rupees
S.N Serial Number
UK United Kingdom
& And
% Percentge

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CHAPTER – I

INTRODUCTION

1.1 Background of the study

The word bank is derived from the Latin word "Banco” which means bench. Banks
are the most important financial institution in the economy, which proves to be very
helpful to the entrepreneurs as well as general public too. Nepal being a developing
country, a modern banking system is beginning to occupy a permanent place in a
growing financial need of the country. Banks act as a bridge between the user of
capital and those who save but can't use the fund themselves. Banks accept deposit
from the public and business firm and grant loan in commercial sector by creating
credit. Therefore bank is an essential part of modern economic age.

Banks plays the role between the surplus units and deficit units. Banks receive
funds from surplus unit providing attractive interest rate and mobilize into deficit unit
(i.e. Business houses, Industry, Agriculture and needy people) charging certain
percentage interest on borrowed amount. It directly and indirectly promotes the
economic growth of a nation. So, the main objective of a bank is to mobilize the ideal
resources unproductive area after collecting it from various sources. Banks are
rendering a wide range of services to help people in different field of life. So, they
have become an essential part of the modern society. We can say that bank is an
institution whose prime function is directed towards the acceptance of public deposits
and granting loan to the people.

According to Prof. Sayers, "Bank is an institutions whose debt (Bank deposits) are
widely accepted in settlement of other people to each other."

In the word of MR. Walter Leaf, "A bank is an institution or individual who is
always ready to receive money o deposits to be returned against the cheque of their
depositors."

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Hence from the above definitions we have come to know that banking is the
business providing financial services to customers and businesses. Therefore, we can
highlight the major characteristics of bank which are as follows :

• Bank accepts deposit and disburses loan.

• It creates and facilitates exchange.

While studying to the origin of modern banking, we came to know that bank of
Venice was established as the first commercial bank of the world in 1157 and in
Nepal, NEPAL BANK LTD, was established as the first commercial bank in 1994 BS.

The commercial bank act 1974 has, however made provision on permit foreign
banks to operate in the country by obtaining the approval of Nepal Rastra Bank and to
accelerate economic activities towards growth, encourages proficient banking service,
economic development industrialization and growth of nation.

1.2 Profile of Nepal Bank Ltd.

In true sense banking in Nepal started when Nepal Bank was established on 30th
Kartik, 1994 B.S. This is the first commercial bank established in Nepal. In 2010,
NRB was established as the central bank of Nepal. In the same way in 2022 B.S.
Rastriya Banijya Bank was established as second Commercial Bank under RBB Act
2021.Gradually, in 2016 B.S. Nepal Industrial Development Bank was established
under the Nepal Industrial Development Corporation Act, 2016 B.S. In 2024 B.S.
Agricultural Development Bank was established under Agriculture Bank Act, 2024.

Nepal Bank Limited is the first bank of Nepal which marked the beginning of
the era of formal banking in Nepal. Before the establishment of this bank, the
monetary transactions were all carried out by private dealers and trading center. To
provide the service to the people whether they are rich or poor and to contribute to the
nation’s development was and has always been the main objective of the bank. It was
established during the time when very few people understood and had confidence in
the new concept of formal banking which made raising equity shares and mobilization
of deposits difficult which is why the bank that floated equity shares worth Rs
2,500,000 could only raise Rs 842,000.

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The corporate vision of the bank is ‘pioneer bank with complete banking
solution’ and it has considered NEW as its mission statement. NEW stands for
Network of inclusion, Enhancing the value and World class banking services. It
believes in increasing its reach all over the country from urban to rural areas and
helping in improving the lifestyle of rural population and in turn become the bank of
choice of corporate, medium businesses and rural market.
The bank formed under the principle of joint venture between the government
and the general public with forty percent shares laying in the hands of the government
and sixty with the private sector, has the objectives of focusing on building the
positive net worth and meeting minimum capital requirement over the coming five
years, focusing on increasing the customer base and market share, maximizing the
potential/efficiency of bank’s staff, focusing on minimizing the risk associated with
the business, focusing on providing the world class business solutions and focusing on
increasing the sustainable profit.
The bank has been providing services through its 233 branches all over the
country making it the largest banking network in the country with its reach from the
urban area to rural.

1.3 Objective of the Study

This is well known fact that is doing any work, there is certain reason hidden behind
it. As this field report is concerned with the loan management system, the main
purpose of the study is to understand and evaluate the loan position of the
organization. So, the loan management system is important aspect of our study. The
main purpose of this field report is as follows:-

• To understand the types of loan provided by Nepal Bank Ltd.

• To analyze the factor related to loan management.
• To analyze the growth pattern of the loan with interest.
• To examine how far the deposit of the bank has been utilized and mobilized.
• To evaluate the various type of loan that is providing to different sector

1.4 Rationale

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This report is mainly focused on loan management of Nepal Bank Ltd. This study
helps us to understand in which sector of Nepal Bank Ltd provides different types of
loan to different type of customer such as; Auto loan, Home loan, Education loan, and
other different types of short term and long term loan. Here bank is more concern with
management of loan to serve customers. Hence, loan management of Nepal Bank Ltd
is discussed in study.

Loan management represent important liability of a bank. A bank collects loan

management in various forms. Commercial bank loan management plays vital role in
existence of commercial banks. Growth of the bank depends upon the growth of bank
loan management. The loan management of commercial bank largely determines the
volume of funds that management will use for creating income, through loan and
investments.

Besides that this study also evaluates the role of short term obligation and the
bank ability to pay the currently maturity obligation. Moreover, the study will check
the profitability of the bank. This will helps the bank to take the corrective actions if
there are any errors on the past performance and the study aims to recommend
correcting the division if the standard has not been met.

1.5 Review

1.5.1 Conceptual review

A literature review is a text written by someone to consider the critical points of
current knowledge including substantive findings, as well as theoretical and
methodological contributions to a particular topic. Literature reviews are secondary
sources and as such, do not report any new or original experimental work.

A bank is institutions which collects money from those who have spared or who are
saving it out of their income and lend this out to those require it (Crowther, 1985).

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1.5.2 Review of Previous Works
A bank is those institutions which are established under a certain act to perform
monetary and credit transaction. Therefore, it is very difficult to give a particular
meaning of bank. We can find different views and definitions about bank given by
different renowned scholars or economists, which are as follows.

Bhandari (2012) studied Loan management of Everest Bank ltd and found that
the loan mobilization of EBL was increasing in the year 2011 but decreasing in 2012.
He also found that the loan of the bank was in safe sectors though the amount of non
performing loan was increasing every year.

Karki (2013) studied Loan management of Kumari Bank Ltd. and he concluded
that a bank is in progressive phase in terms of its loan management. The loan of the
bank is in increasing trend.

The loan of Nepal Bank Ltd is in increasing trend in the study period. It is improving
its investment in agriculture sectors and also providing micro loans to small farmers
(Niraula, 2013).

Sapkota (2011) studied the Loan management of Standard Chartered Bank and
he concludes that the financial position of SCB is very sound due to its heavy
investment in safe lending schemes to very high profile customers and business
houses.

1.5.3 Research Gap

After going through the literature review, I found that previous report has not properly
analyzed the loan management of Nepal Bank Ltd and there is no proper definition of
factor related to loan management. Now I am going to cover those things in my report

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My report will help to analyze the factor related to loan management, analyze
the growth pattern of the loan with interest, provide the information about different
types of loan provided by Nepal Bank Ltd to different sector and helps to properly
analyze the loan management.

1.6 Methods

1.6.1Type of Research
Research is a careful investigation or enquiry for new facts in any branch of
knowledge. Research works are completed based on research design. It helps to
collect evidence in less time and cost. Research design depends on the objective of
research. It clarifies the way of collecting data, methods of analysis and bases of
research. Research design is prepared before initiating research.

Research design is the conceptual structure within which research is

conducted. It constitutes the blue print for the collection, measurement and qualities of
data (Kothari, 1989).

There are various types of research design. Among various types of research
design, descriptive research design is used in this report. Descriptive research design
aim of studying the subject of research in detail and explains the facts and
characteristics related to research problem.

1.6.2 Population and Sample

All the commercial banks of Nepal are the population for our research. Right now
there are 22 commercial banks in Nepal which are population of the study. Among
them only Nepal Bank Ltd is selected as a sample. And among the various years only
the recent 3 years data of Nepal Bank Ltd is taken as a sample.

1.6.3 Sources of Data

There are mainly two methods of collecting the data i.e. Primary and Secondary
method to collect the data. But, this research has only used secondary data for analysis
purpose. The data are taken from the annual report of NEPAL bank limited available
online.

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1.6.4 Data Collection Procedure

The report is prepared by using the data that is collected through the primary data,
secondary data, internet and branch visit. The data used in this study is extracted from
the income statements and balance sheet of the Nepal Bank Ltd database. The
scholarly articles from academic journals and relevant textbook were also used. The
other reliable information is used through the help of internet.

1.6.5 Techniques of Analysis

Researcher classifies all the collected data and information on the basis of their
feature and nature. Classified data are then codified, tabulated and presented in charts.
Such presented data are analyses using mathematical, statistical, financial and
accounting tools. Most of the researcher use statistical and financial tools for the
analysis of data like; mean median, standard deviation, correlation, ratio analysis etc.

In this report, ratio analysis and financial tools are used for analyzing the data
of Nepal Bank Ltd. I used ratio analysis because it is powerful tool of financial
analysis. It is a technique of establishing, determining and presenting the quantitative
relationship between two account figure to evaluate the strength and weakness of the
bank. Thus, ratio analysis and financial tools are used to present the report.

1.7Limitations
Every report has some assumption and limitations. This report includes secondary
data such as annual published by bank for study of the loan management. This study
might not be fully reliable because of the lack of researcher's experience. Due to time
constraint the research has not been done in depth. Some of the limitations of my
study are as follows:-

• This study is mainly based on secondary data.

• This report covers only three years data analysis.

• This report is concerned with only financial position of NEPAL Bank.
• The research is limited to the loan management of NEPAL Bank.
• The method of loan management may not be similar to other banks.
• Some of the information was not provided due to secrecy reason.
• The study has been limited to the information provided by the staffs of the
bank.

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CHAPTER- II

RESULTS AND ANALYSIS

The presentation of data is a basic organization and classification of data for further
study. After collecting the data through different techniques such as questionnaire,
interview, it is necessary to arrange. Before presenting the data different steps must be
followed by the researcher. The data are presented into tables and figures. The figure
includes graphs, drawings, charts, pie-charts, bar diagram, etc.

Data presentation and analysis is an important part of the study. The collected
data during the research period are presented with different facts and figures. The
presentation and analysis of data looks attractive and easy to understand by all people.

2.1 Data Presentation

NEPAL BANK LTD provides different types of loan to different sector. It provides
customers loan, education loan, fixed term loan, flexi term loan, hire purchase loan,
housing loan, gold loan, auto loan, personal loan, term loan, overdraft etc. to different
sector and outstanding amount of NEPAL BANK LTD.

Table: 1
Comparative Income Statement of NEPAL BANK LTD.

For the year ending 31, Ashad 2075/76 to 2077/78 (In ‘Rs’)
S. Particulars 2075/76 2076/77 2077/78
N
1 Interest income 9229436342 10375693239 11526970941
2 Interest expenses 2841690284 4186150559 5908023000
Net interest income 6387746058 6189542679 5618947941
3 Commission and discount 906260113 993977175 744555795
4 Other operating income 18892336 210783220 369984808
5 Net trading income 207280807 342412716 412559037
Total operating income 7520179314 7736715790 7146047581
6 Impairment charge (86340530) 477102823 545162536
Net operating income 7606519844 7259612967 6600885044
7 Operating expenses 2757737269 2749565001 3034452494
Operating profit 4848782576 4510047966 3566432550
8 Non-operating income 81894914 101607886 275810826

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9 Non – operating expenses 202257 - -

Profit before income tax 4930475233 4611655852 3842243376
10 Income tax expense
Current tax 1479489582 1080433282 877605998
Deferred tax 235303667 934486525 408197932
Profit for the period 3215681985 2596736045 2556439446
11 Profit attributable to:
12 Equity holders of the bank 3215681985 2596736045 2559439446
Non-controlling interests - - -
Profit for the period 3215681985 2596736045 2559439446
Earning Per Share(EPS)
Basic EPS 39.98 26.99 22.66
Diluted EPS 39.98 26.99 22.66

Net profit or loss 3215681985 2596736045 2559439446

Source: Annual Report of NEPAL BANK LTD.

Table: 2
Comparative Balance sheet of NEPAL BANK LTD

As on the fiscal year 2075/76, 2076/77 and 2077/78(in Rs).

S.N Particulars 2075/76 2076/77 2077/78

Assets
1 Cash and Cash 5780881927 10418969105 4965060653
Equivalent
2 Due from NRB 6283655201 10178321131 2472897959
3 Placement with bank 2965493254 5427675000 6117450000
and financial
institution

4 Derivative financial 18628000 5594624000 6526457551

instrument
5 Loan and advance to 2739470887 3303280250 3223295833

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B/FIs
6 Loan and advance to 75556510557 92421637259 104588242821
customers
7 Investment securities 16247773730 16425733171 32083785766
8 Current tax assets 521831458 991499066 1522344597
9 Investment property 87007182 113306614 103105851
10 Property and 11638330831 11828221794 12007753799
equipment
11 Goodwill and 14244254 25993659 39450687
intangible assets
12 Other assets 11613373760 14786384911 16776710136
Total Assets 133467201041 171515645958 190426555654

Liabilities
1 Due to Bank and 290652430 1074497374 874961738
Financial Institutions
2 Due to NRB 34524946 41843286 23920613
3 Derivative Financial - 5504430000 6419102503
Instruments
4 Deposits from 99540725763 117200788938 142114284983
Customers
5 Borrowings 109500000 950000000 1000000000
6 Provisions 63277906 131438580 123706937
7 Deferred Tax
Liabilities 3226453306 3650970495 3782498389

Other Liabilities 7230072524 13680340769 5906052426

8

Total Equity 22971994166 29281336515 30182028066

9
Total liabilities and 133467201041 171515645958 190426555654
Equity
Source: Annual report of NEPALBANK LTD.

2.1.1 Deposit and Loan Trend of Nepal Bank Ltd

Deposit is the main sources of bank operation. Deposit provides the bank with extra
capital which they further invest in other profitable sectors. While loan provided is
vital income from interest generated by lending amount to the customer. The

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following figure shows the trend of the deposit and loan that exist at NEPAL BANK
LTD.

Table: 3
Deposit and Loan
Fiscal year Total Deposit Total Loan
2075/76 99540725763 75556510557
2076/77 117200788938 92421637259
2077/78 142114284983 104588242821
Source: Appendix B
From the table, it shows that in the fiscal year 2075/76, 2076/77, and 2077/78 the total
deposit of NEPAL BANK LTD is Rs.99,540,725,763,Rs.117,200,788,938 and
Rs.142,114,284,983 respectively. And similarly the total loan of NEPAL BANK LTD
is Rs.75,556,510,557, Rs.92,421,637,259 and Rs.104,588,242,821 respectively. It
seems that the total deposit and total loan of the bank is in increasing trend.

Figure: 1 Deposit and Loan

160
Depsit and loan in billion
140 Total
Deposit
120 Total Loan

100

80

60

40

20

0
2075/76 2076/77 2077/78
Fiscal Years

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This figure shows that the deposit and loan of NEPALBANK LTD. In fiscal year
2077/78 is the highest position of deposit and loan but in year 2075/76 is the lowest.
They are respectively 142.11 and 104.58 billion.

2.1.2 Credit Position of NEPAL BANK LTD

Table- 4
Credit position
(Rs. In billions)

Fiscal year Total Credit Percentage change

2075/76 2.57 -
2076/77 2.60 1.15%
2077/78 2.56 -1.55%
Source: Appendix B
The table shows that the total credit and percentage change of NEPAL BANK LTD.
The total credit of fiscal year 2075/76, 2076/77 and 2077/78 are Rs 2.57, Rs 2.60 and
Rs 2.56 billions respectively.

Figure- 2
Total Credit

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Total Credit
2.61

2.6

Total2.59
Credit
2.58

2.57 Total Credit

2.56

2.55

2.54
2075/76 2076/77 2077/78
Fiscal Years

The figure shows that the total credit of different fiscal year. The highest total credit of
different fiscal year is in 2076/77 which is 2.6 billion and lowest is in 2077/78 which
is 2.56 billion.

2.2 Analysis of Result

Analysis of data is another function of research. Analysis of data helps to find out
effective conclusion. Correlation trend analysis, comparison between two variables
etc. helps in analysis of data. After collecting the data, analysis is done by
descriptively constructing the bar diagram, pie-chart etc. accounting and statistical
tools and techniques like ratio analysis are used for analysis of data.

Analysis of data means to change it from an unprocessed form to an

understandable presentation. The main purpose of such analysis is to obtain answer to
research question or test the hypothesis. Analysis means to find out something and
give opinion about the present data.

(a)Analysis as per Loan to Total Deposit Ratio

Loan is the major assets of financial institution or commercial bank. Loan is financial
assets which produces regular income to the financial institution. Loan management
refers to the process through which profitable loan alternative is selected. Loan to total
deposit ratio is computed by dividing loan by total deposit. In terms of liquidity ratio
it indicates poor liquidity and vice versa.

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Table- 5
Loan to Total Deposit Ratio
Fiscal year Loan to Total Deposit Percentage
2075/76 75.56/99.54 75.91%
2076/77 92.42/117.20 78.85 %
2077/78 104.59/142.11 73.60%
Source: Appendix B.
The above table shows that the loan to total deposit ratio percentage in different fiscal
year 2075/76, 2076/77 and 2077/78 are 79.91%, 78.85% and 73.60% respectively.

(b)Analysis as per Loan to Total Assets Ratio

Loan to total assets is another important ratio to determine the fiscal position of the
institution. Higher level of loan to total assets means liquid position. It is computed by
dividing total loan by total assets.

Table- 6
Loan to Total Assets Ratio
Fiscal year Loan to Total Assets Percentage
2075/76 75.56/133.46 56.62%
2076/77 92.42/171.51 53.88%
2077/78 104.59/190.43 54.92%
Source: Appendix B
The above table i.e. table 5 shows that the loan to total assets percentage in different
fiscal year 2075/76, 2076/77 and 2077/78 are 56.62 %, 53.88% and 54.92%
respectively.

(c)Analysis as per Interest Payout Ratio

Interest payment ratio is another important financial position of the institution. We can
obtain it by dividing interest income from interest expenses. Higher the ratio better
will be financial condition and vice-versa.

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Table-7
Interest Payout Ratio
Fiscal year Interest payment Ratio Ratio
2075/76 9.22/2.84 3.24:1
2076/77 10.37/4.18 2.48:1
2077/78 11.52/5.9 1.95:1
Source: Appendix A
The above table 6 shows interest payment ratio of different fiscal years. The interest
payout ratio of 2075/76, 2076/77 and 2077/78 are 3.24:1, 2.48:1, 1.95:1 respectively.

(d)Analysis as per Loan to Total Profit Ratio

Loan to total profit ratio also plays a major role in financial position. It can be
calculated by dividing total profit from total loan of respective fiscal year.

Table-8
Loan to Total Profit Ratio

Fiscal year Loan to Total Profit Ratio Percentage

2075/76 3.21/75.56 4.24%
2076/77 2.59/92.42 2.80%

2077/78 2.55/104.59 2.43%

Source: Appendix A,B
Table 7 shows that the loan to total profit ratio in percentage of different fiscal year
2075/76, 2076/77 and 2077/78 are 4.24%,2.80% and 2.43% respectively.

(e)Analysis as per Loan to Interest Income Ratio

Loan to interest ratio is also an important ratio to the financial institute. It can be
calculated by dividing interest income from total loan.

Table-9
Loan to Interest Income Ratio
Fiscal year Loan to Interest Income Percentage
2075/76 3.21/75.56 4.24%
2076/77 2.59/92.42 2.80%

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2077/78 2.55/104.5 2.44%

Source: Appendix A,B
The above table i.e. table 8 shows that, the loan to interest income percentage of
different fiscal years. The ratios of different years 2075/76, 2076/77 and 2077/78 are
4.24%, 2.80% and 2.44% respectively.

(f)Analysis of Loan to Total Interest Expenses

Here we analyze the loan to total interest expenses which plays an important role to
the loan institution. Loan to total interest expenses can be obtained by dividing
interest expenses by total loan.

Table-10
Loan to Interest Ratio

Fiscal year Loan to Interest Expenses Percentage

2075/76 2.84/75.56 3.75%
2076/77 4.18/92.42 4.52%
2077/78 5.9/104.59 5.64%

Source: Appendix A,B

The above table 9 shows the loan to interest expenses percentage during different
fiscal years. The ratios of different years 2075/76, 2076/77 and 2077/78 are 3.75%,
4.52% and 5.64% respectively.

2.3 Findings
The analysis of above calculated tables and constructed figures, different information
of various fiscal years some major findings are clearly presented and discussed
briefly:

• It has been observed that the total deposit trend of NEPAL BANK LTD. This
study shows the increasing trend in deposit of NEPAL BANK LTD. The
amount of deposit is Rs 99.54 billion, Rs 117.20 billion and Rs 142.11 billion
in 2075/76, 2076/77 and 2077/78 fiscal year respectively which is
economically good for the company.

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• The bank continue its effort to increase its risk assets volumes while
preserving credit quality and maintaining minimum levels of non-performing
assets. Loan and advancement of the bank is increasing in each year. The
amount of total loan in different fiscal year is Rs 75.56 billion, Rs 92.42
billion, and Rs 104.59 billion in fiscal year 2075/76, 2076/77 and 2077/78
respectively.
• The credit position of NEPAL BANK LTD has consequently increased in long
run and increase its customer over the year. The table 5 shows the loan to total
deposit ratio. Loan to total deposit ratio has fluctuating in recent years means
that the bank is not earning as much as they could be.
• It shows the percentage of a company's assets that are financed with loans and
other financial obligations that last over a year. As the loan to total assets has
increased in recent year, it shows that the bank is dependent on debts for
business need.

CHAPTER- III

SUMMARY AND CONCLUSION

3.1 Summary
Loan is the act of providing money property or other materials to another party in
exchange for future repayment of principal amount along with interest or other
financial charge .This report is basically concerned and focused on the loan
management of NEPAL BANK LTD. NEPAL BANK LTD provides different types of
loan with different interest rate such as home loan at 9.85% to 13.35%, Education
loan 9.35% to 10.85%, agriculture loan at 7% to 9% auto loan at 10.85% to 12.85% in
recent fiscal years. The monetary crises of recent period have increased the rate of
interest on loan to a higher level as compared to previous year.

This study shows the increasing trend in the deposit of NEPAL BANK LTD.
The bank recorded 99.54 billion, 117.20 billion and 142.11 billion in fiscal year
2075/76, 2075/77 and 2077/78 respectively. The trend of deposit seems to be
increasing each year which is economically good for the bank. The bank contains its
effort to increase it's risk assets volume while preserving credit quality and

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maintaining minimum levels of non-performing assets. Loan and advancement of the

bank is increasing in each year.

It has been formatted that the credit position of NEPAL BANK LTD has
consequently increased over the year which indicates that credit is in increasing trend.
This shows that NEPAL BANK LTD has increased it's credit position in long run and
increases it's customer over the year. Table 5 shows the loan to total deposit ratio.
Loan to total deposit has increased in recent year it means that the bank is not earning
as much as they could be. Similarly, table 6 shows the loan to total assets ratio. Loan
to total assets ratio has also increased during recent years which shows the bank is
dependent on debts for business need.

3.2 Conclusion and Implications

This study shows that a lot of things related to loan management. NEPAL BANK LTD
has been operating in Nepal since 30th kartik 1994 B.S. with the objective of extending
professional banking service to make the development need of people. During the
study period, it was found that NEPAL BANK LTD has been providing loan to
different sectors like agriculture, construction and production, education, vehicle, loan
against the share and other loans. The conclusion obtained from the analysis of this
report can be pointed as below:

• The amount of loan is Rs 75.56 billion, Rs 92.42 billion and Rs 104.59 billion
in F.Y. 2075/76, F.Y. 2076/77 and F.Y. 2077/78 respectively.
• The total amount of deposit is Rs. 99.54 billlion, Rs. 117.20 billion and Rs.
142.11 billon in F.Y. 2075/76, F.Y. 2076/77 and F.Y. 2077/78 respectively. The
total interest of NEPAL BANK LTD at the same fiscal years are Rs. 9.22
billion, Rs. 10.37 billion and Rs. 11.52 billion respectively.
• The ratio of loan to total deposit is 75.91%, 78.85% and 73.60% in F.Y.
2075/76, F.Y. 2076/77 and F.Y. 2077/78 respectively.
• .The ratio of loan to total assets is 56.62%, 53.88% and 54.92% in F.Y.
2075/76, F.Y. 2076/77 and F.Y. 2077/78 respectively.
• The interest payout ratio is 3.24:1, 2.48:1 and 1.95:1 in F.Y. 2075/76, F.Y.
2076/77 and F.Y. 2077/78 respectively.
• The ratio of loan to total profit is 4.24%, 2.80% and 2.43% in F.Y. 2075/76,
F.Y. 2076/77 and F.Y. 2077/78 respectively.

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• The ratio of loan to interest income is 4.24%, 2.80% and 2.44% in F.Y.
2075/76, F.Y. 2076/77 and F.Y. 2077/78 respectively.
• The ratio of loan to interest expenses is 3.75%, 4.52% and 5.64% in F.Y.
2075/76, F.Y. 2076/77 and F.Y. 2077/78 respectively.

In conclusion, NEPAL BANK LTD has been more focusing on the management of
loan and disbursements loan by managing it.

This report is about loan management of NEPAL BANK LTD. This report is
concerned with the various loan management activities of the bank. NEPAL BANK
LTD is performing it's best role in order to make its customer happy. But also
something is lacking in their performance. Some of the suggestions for the efficiency
and effectiveness in performance are:

• The bank should search the other more areas to invest it's fund because of
competition in the banking sector.
• NEPAL BANK LTD should focus its programs in the rural areas for achieving
its goal.
• The bank should implement marketing strategy for collecting deposits in large
volume by providing effective and efficient services to meet its customer's
needs and expectations.
• Bank should come up with innovative and better schemes so as to attract the
new corporate and business house.
• Customers should be informed timely about any amendment in the services
and its changes.
• The bank must provide ABBS facility to the customer from its any branches
without taking any charges.

BIBLIOGRAPHY

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Annual Report of NBL of F.Y. 2075/76, F.Y. 2076/77 and F.Y. 2077/78

retrieved from http://www.nepalbank.com.

Bajracharya, B.C. (2068). Business statistics. Kathmandu: M.K. Publishers and

Distributors.
Bhandari, S. (2012). Loan Management of Everest Bank Ltd. Unpublished

Bachelors degree thesis. Kathmandu, Shanker Dev Campus.

Crowther, H. (1985). International business. A Managerial Perspective. New York:

Reading MacAddision-Wesley.
Jhingan, M.L. (2006). Money Banking, International Trade and Public Finance. New

Delhi: Vrinda publications.

Karki, S. (2013). Loan Management of Kumari Bank Ltd . Unpublished Bachelors
degree thesis. PUTALISDAK,KATHMANDU, DANFE COLLEGE.
Kothari, C.R. (1989). Research Methodology, Method and Techniques, New Delhi:

Wiley Eastern Private Limited.

Mithani, D.M. (2002). Money Banking, International Trade and Public Finance.

Mumbai: Himalya Publishing House.

Niraula, A. (2013). Loan Management of Nepal Bank Ltd. Unpublished Bachelors
degree thesis. PUTALISDAK,KATHMANDU,DANFE COLLEGE
Pant, P.R. and Wolf, H.K. (2005). Social science research and thesis writing.

Kathmandu: Buddha Academic Publications and Distributors Pvt. Ltd.

Poudel, R. (2067). Loan Management of Nepal Investment Bank Ltd . Unpublished

Bachelors degree thesis , PUTALISDAK,KATHMANDU ,DANFE

COLLEGE.

Sapkota, G. (2011). Loan Management of Standard Chartered Bank Ltd .

Unpublished Bachelors degree thesis ,

PUTALISDAK,KATHMANDU ,DANFE COLLEGE.

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APPENDIX A

Comparative Income Statement of NEPAL BANK LTD.

For the year ending 31, Ashad 2075/76 to 2077/78 (In ‘Rs’)

S. Particulars 2075/76 2076/77 2077/78

N

1 Interest income 9229436342 10375693239 11526970941 2 Interest expenses

2841690284 4186150559 5908023000
Net interest income 6387746058 6189542679 5618947941
3 Commission and discount 906260113 993977175 744555795
4 Other operating income 18892336 210783220 369984808
5 Net trading income 207280807 342412716 412559037
Total operating income 7520179314 7736715790 7146047581
6 Impairment charge (86340530) 477102823 545162536
Net operating income 7606519844 7259612967 6600885044
7 Operating expenses 2757737269 2749565001 3034452494
Operating profit 4848782576 4510047966 3566432550
8 Non-operating income 81894914 101607886 275810826
9 Non – operating expenses 202257 - -
Profit before income tax 4930475233 4611655852 3842243376
10 Income tax expense
Current tax 1479489582 1080433282 877605998
Deferred tax 235303667 934486525 408197932
Profit for the period 3215681985 2596736045 2556439446
11 Profit attributable to:
12 Equity holders of the bank 3215681985 2596736045 2559439446
Non-controlling interests - - -
Profit for the period 3215681985 2596736045 2559439446
Earning Per Share(EPS)
Basic EPS 39.98 26.99 22.66
Diluted EPS 39.98 26.99 22.66

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Net profit or loss 3215681985 2596736045 2559439446

Source: Annual Report of NEPAL BANK LTD.

APPENDIX B

Comparative Balance sheet of NEPAL BANK LTD

As on the fiscal year 2075/76, 2076/77 and 2077/78(in Rs).

S.N Particulars 2075/76 2076/77 2077/78

Assets
1 Cash and Cash 5780881927 10418969105 4965060653
Equivalent
2 Due from NRB 6283655201 10178321131 2472897959
3 Placement with bank 2965493254 5427675000 6117450000
and financial
institution

4 Derivative financial 18628000 5594624000 6526457551

instrument
5 Loan and advance to 2739470887 3303280250 3223295833
B/FIs
6 Loan and advance to 75556510557 92421637259 104588242821
customers
7 Investment securities 16247773730 16425733171 32083785766
8 Current tax assets 521831458 991499066 1522344597
9 Investment property 87007182 113306614 103105851
10 Property and 11638330831 11828221794 12007753799
equipment
11 Goodwill and 14244254 25993659 39450687
intangible assets
12 Other assets 11613373760 14786384911 16776710136

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Total Assets 133467201041 171515645958 190426555654

Liabilities
1 Due to Bank and 290652430 1074497374 874961738
Financial Institutions
2 Due to NRB 34524946 41843286 23920613
3 Derivative Financial - 5504430000 6419102503
Instruments
4 Deposits from 99540725763 117200788938 142114284983
Customers
5 Borrowings 109500000 950000000 1000000000
6 Provisions 63277906 131438580 123706937

7 Deferred Tax
Liabilities 3226453306 3650970495 3782498389

8 Other Liabilities 7230072524 13680340769 5906052426

9 Total Equity 22971994166 29281336515 30182028066

Total liabilities and 133467201041 171515645958 190426555654

Equity
Source: Annual report of NEPAL BANK LTD.

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