BBS 4th year project report, Proposal

BBS 4th year project work report format

A FINANCIAL PERFORMANCEANALYSIS OF COMMERCIAL BANK IN NEPAL[WITH REFERNCE TO CENTURY COMMERCIAL BANK LIMITED AND NEPAL SBI BANK LIMITED]

BY

..........................

.................. CAMPUS

CAMPUS ROLL NO: 

T.U. REGISTRATION NUMBER:

A Proposal Submitted To:

...............Campus

Faculty of Management

Tribhuvan University

In partial fulfillment of the requirement for the Degree of Bachelor of

Business Studies (B.B.S)

Kathmandu, Nepal

2019

TABLE OF CONTENTS

1.     Introduction

2.     Statement of Problem

3.     Research Methodology

4.     Objective of the Study

5.     Rationale  of the Study

6.     Limitation of the Study

7.     Report Structure

Bibliography

1. Introduction

 Financial analysis is the process of analyzing various items of financial statement of a firm analyzing statement of a firm to ascertain information above the magnitude, timing and riskiness of future cash flows. Financial statement analysis involves in two types of comparison; one is to compare a firm’s performance with that of other firms in the same industry; and the other is to evaluate trends in the firm’s financial position over time. Financial analysis is essential to understand what the firm’s financial statement is conveying about financial performance of the firm.

Manager can identify deficiencies in financial performance of the firm and take its comparative strengths and weakness. In other words, financial analysis involves actions to improve the performance.

A simple answer to the question “what a bank is?” Bank is an institution which deals with money. Generally, “Bank” is financial institution that performs various monetary transactions by lending, borrowing and the exchanging money.  Nepal Bank Limited was established in 15^th November 1937 as the first commercial bank in Nepal. Rastriya Banijya bank is the second government owned commercial bank which was established in 23 January 1966.

In addition to accepting deposits and making loans, banks also provide other financial services like cash management services, credit and debit cards, electric cards, foreign exchanges, real estate loans and so on. In Nepal, the financial services that banks offer has changed in recent years as new technologies have emerged and the level of competition has increased in the market.

 The banking sector is mainly responsible for collecting household saving in terms of different types of deposit and regulating them in the society by lending in different sector of economy.  The banking sector is mirror of the large economy, the smooth and effective, monitoring; supervision and regulation of banking activities are required for the sustainable economic growth of country. Banking institutions are inevitable for the resources mobilization and all-round development of the economy. It is the resources of economic development and maintains economic confidence of various segments and extends credit to people.

Central Bank

 Central bank is the apex body of the banking system. It is the supreme monetary institution or the leader of money market that controls, regulates and supervises the activities of the bank and financial institutions operating in the country. Important functions of central bank are: note issue, banker, agent and financial adviser of the government.

Commercial Bank

Commercial banks perform all kinds of banking business. Commercial bank is collect idle funds (accepting deposits and advancing loans) mobilize them into productive sector and overall economic development. Functions of commercial banks are; accepting deposits, advancing loan, letter of credit, guarantee, remittance, e-banking, bills etc.

According to the Nepal Company Act 2031 “A commercial bank refer to such type of bank which deals in money exchange accepting deposit, advancing loan and commercial transactions except specific banking related to co-operative, agriculture industry and other objectives.” Other financial institutions are financial companies, insurance companies, employee providence fund, co-operative and NGO which are also taking up limited banking activities of credit where the bank charges interest.

 Century Commercial Bank Limited

Century Commercial Bank Limited (CCBL) is a National Level Commercial Bank established on January 23, 2011 with the objective of providing simplified banking service by taking advantage of innovations in information and communication technology.

 Nepal SBI Bank Limited

Nepal SBI Bank Limited (NSBL) is a subsidiary of State Bank of India (SBI) having 55 percent of ownership. NSBL was established in July, 1993 and has emerged as one of the leading banks of Nepal, with the objective of providing simplified banking service by taking advantage of innovations in information and communication technology.

 Statement of Problems

Establishment of commercial bank has continued in response to the economic liberalization policies of the government. They have tendency to concentrate only in urban areas. This tendency cannot contribute much to the socio-economic development of the country where around 83% of population lives in rural area and 74% of peoples depends on agriculture sector.

Commercial banks reluctant to extent operation in rural area despite the circular of NRB, which is compulsory investment of 10% of the investment in the rural area, the bank present there are 28 CBs operating its services in Nepal. However, some indicators show their performances are encouraging towards the services coverage.

In the changed scenario, these banks need to explore their strength and weakness and improve their performance to remain well competitive performance and yet profitable especially in the present state of Nepalese economy. Nepalese CBs haven’t formulated their investment policy in an organized manner they mainly relay upon the institutions, guidelines and direction of Nepal Rastra Bank. They do not have clear view towards investment policy. Furthermore, CBs are found to be making long loan on short term basis against movable merchandise (overdraft, trust loans and cash credits). There is a hesitation to invest long term projects as they are much more risks averse. So they follow conservative’s loan policy which is based in string security.

As every business is established with a view to maximize profits present competitive environment in banking and every section it is difficult to obtain expected profit. Every CB has a follow the regulation and provisions made by NRB. They have to maintain specific capital structure, infrastructure, credit creation limitation, liquidity ratio etc. Thus, this study attempts to answer following questions;

Ü  What is the overall position of this bank?

Ü  Is there any relationship between total investment, loan and advance and total deposit?

Ü  Is it maintaining the sufficient liquidity position, profitability position?

 Research Methodology

This study focused on a comparative study of financial performance Century Commercial Bank  Limited and Nepal SBI Bank Limited by using financial and statistical tools like ratio analysis, line graph, trend analysis, correlation coefficient analysis, and growth ratio etc. Analysis is focused on facts – findings, pinpointing problems and recommending correctives measures. When looking at specific company, the financial analysis will often focused on, income statement, balance sheet and cash flow statement. Financial ratio helps the researcher to make a qualitative analysis about banks. Financial covers the financial analysis and portfolios of bank. Some financial tools are as follows:

i.                    Current ratio = current assets  current liabilities

ii.                  Quick ratio    = Quick assets  current liabilities

iii.                Cash and Bank Balance to Current Assets Ratio = cash and bank balance  current assets

iv.                Cash and bank total deposit ratio = cash and bank balance  total deposits

   

Type of study

This is an analytical case study of CCBL and NSBL’s profitability and solvency.

Types of data used

A main source of data is the publication from Century Commercial Bank Limited and Nepal SBI Bank Limited which are secondary source, and some publications of NRB, annual reports etc.

Tools and techniques of analysis data

The collected and observed data is tabulated after adjusting necessarily amounts of each overhead. However, the analysis of data as follows:

i.                    Financial tools

ii.                  Statical  tools

i.                    Financial tools:

There are different types of financial tools that can be applied to the analysis the financial performance of Century Commercial Bank and Nepal SBI Bank for our fieldwork following portfolios analysis tools are used;

a.       Exchange gain to total income ratio

b.      Return on assets

c.       Overhead expenses ratio

d.      Return on equity

e.       Staff expenses, total income ratio

f.          Earning per share

ii.                  Statical  tools:

For our fieldwork study selected statical tools are taken to examine the economics data of Century Commercial Bank and Nepal SBI Bank.

a.       Mean

b.      Standard Deviation

c.       Coefficient of Variation

Objective of the Study

The main objective of this study is to analyze and evaluate the study of financial performance of commercial bank namely Century Commercial Bank Limited and Nepal SBI Bank Limited.

·        To examine the financial performance of Century Commercial Bank Limited and SBI Bank Limited.

·         To make comparative analysis of the relationship between total deposit and total investment, total deposit and loan and advance, total assets and net profit of Century Bank Limited and Nepal SBI Bank Limited.

·         To liquidity management, profitability position, assets management efficiency, investment practices of the Century Commercial Bank Limited and Nepal SBI Bank Limited.

Rationale of the study

All information regarding the banking sector is essential for the depositors, prospective customers and creditor etc. this study will be helpful to the different parties interested in the financial performance as well as helpful to the management to go deep into the matter as to why the performance to the bank.

This study will give the information about the joint venture bank by analyzing financial tools and will definitely contribute to increases the financial performance of the joint venture bank. Moreover, this study will enhance to help any persons and parties who are concerned with banking sectors such as shareholders, management of banks, financial institutions, stocks brokers, general public and others policies making bodies.

Commercial banks have the huge responsibility towards economic development of country which main goal to maximize the surplus by effective and efficient mobilization funds and resources. Commercial institutions have obligations to provide social services oriented contribution for the social economic uplift to the country by providing considerable loan and advanced towards less privileged sectors.

Limitation of the Study

However, there are 28 commercial banks are operating in Nepal. The research is only focused on study of financial performance. Nonetheless this research work covers only two commercial banks namely Century Commercial Bank Limited and Nepal SBI Bank Limited. Reliability of this study will depend upon the data and information of bank and conclusion drawn from this will not be applicable to similar other financial institutions. Besides this following are some limitations of the study are:

Ø  This study examines only financial performance of Century Commercial Bank Limited and Nepal SBI Bank Limited.

Ø  This study is based on secondary data and such as published financial statement of commercial bank along with other related journal, newspapers, magazines, and bulletins etc. which are also insufficient for completion of the study.

Ø  The study period will cover only five year fiscal years ......................

Ø  This research has been conducted to fulfill the requirement BBS course for a prescribe time.

This study is conducted in partial fulfillment of the requirement for the B.B.S. 4^th year. So it possesses some also limitation of its own.

One of the limitations of the study is with regard to term coverage of the study to arrive any meaningful conclusions regarding the trend in the pattern and structure of financial a time service of fairly a long period is needed. But this study has considered financial year.

Other limitations are as follows:

i.                    Though there are ............ commercial bank, this study covers only two Century Commercial Bank Limited and Nepal SBI Bank Limited.

ii.                  Limited variable has been used analysis.

iii.                Simple technique has been use analysis.

iv.                The qualitative factors such as growth and expansion policy of the bank quality and general economic condition have not been studied.

7. Report Structure

This study has been broadly divided into five chapters which are as follows:

 Chapter 1: Introduction

The first chapter includes background of the study, profile of selected commercial banks namely Century Commercial Bank Limited and Nepal SBI Bank Limited, focus of the study, statement of the problems, objective of the study, significance of the study and limitation of the study.

Chapter 2: Review of literature

It includes the theoretical review of financial analysis, techniques of financial analysis such as financial ratios of the bank.

 Chapter 3: Research Methodology

It includes the methodology used for the study, it consists of research design, population and sample size, sources of data, data collection, data collection procedure, tools and techniques used to analysis.

Chapter 4: Presentation and Analysis Data

This is the main part of research and it includes data presentations, interpretations and analysis. Various financial tools and techniques are used to analyze and interpret the data, it also includes the major finding of the study.

Chapter 5: Summary Conclusions and Recommendations

This is the final chapter of the present study give summaries and gives conclusions of the research and offers necessary recommendations for future improvement of the financial performance of Century Commercial Bank Limited and Nepal SBI Bank Limited.

At the end of the study, bibliography and appendices are also incorporate.

                                  

  

Bibliography

www.google.com

www.wikipedia.com

www.ekantipur.com

www.setopati.com

Previous thesis from library; Shankar Dev. Campus Faculty of Management.

Books:

Koirala, Y.R.&et al. (2013) Principle of Accounting, Kathmandu; Asmita Books publisher & Distributor P. Ltd.

Adhikari.PR (2015) Fundamental of Financial Management, Kathmandu; KEC books Publisher & Distributors Pvt. Ltd.