COMPARETIVE CAPITAL STRUCTURE ON RETURN OF

SUNRISE BANK LIMITED AND PRIME COMMECRIAL

BANK

A Research Project Proposal

Prepared By:
Srijana Lama Moktan
Asian College of higher studies
T.U Registration No:
BBS 4th year Exam Symbol No:

Submitted To:
Research Committee
Asian College of higher studies
Eakantakuna, Lalitpur

In partial fulfillment of the requirement for the degree of

Bachelors on Business Studies [BBS]

Lalitpur, Nepal
1. BACKGROUND

Bank is a financial institution licensed to receive deposits and make loans. Banks also provide
financial a services, such as wealth management, currency exchange and save deposit. Bank has
three source of collect capital such as deposit, non deposit, and capital market. Nepal Rastra
Bank was established as the nation’s central bank under the NRB act, 1995 April 26, as a non-
profit organization fully subscribed by the government. Key objectives of the bank are to achieve
price and balance of payments stability, manage liquidity and ensure financial stability, develop
a sound payments system and promote financial services. Therefore, Nepal Bank Limited is the
first commercial bank of Nepal. It was established in n 1937 which marked the beginning of an
era of formal banking in Nepal.1

Sunrise bank limited established on 25th of Ashwin 2064.this bank is the 23rd Commercial Bank
of Nepal ‘A’ categories by NRB .The bank have been paid-up capital is Rs 2.3billion.the bank
promoter shares is 51.10% and public shares is 48.90% of the paid up capital .The bank having
49 branches .The bank issued the Initial Public offering of Rs. 375 million only.2

Prime commercial bank limited is established in September 2007 as the 21st commercial bank in
Nepal ‘A’ class categories by NRB. The total paid-up capital is Rs.3.1billion.The bank having 51
branches in all over Nepal.3

A company needs financial capital order to operate its business. For most companies, financial
capital is raised by issuing debt securities and by selling common stock. The amount od debt and
equity that makes up a company’s capital structure has many risk and return implications.
Therefore, corporate management has an obligation to use a thorough and prudent process for
establishing a company’s target capital structure. The capital structure is how a firm finances its
operations and growth by using different sources of funds. Comparative study of return on
capital structure is the process of finding, identifying, evaluating that trend of return on
company’s capital structure. This process finding, evaluating identifying return portion of the
company’s financial strength and weakness of the company’s by properly establishing relation
between balance sheet, income statement, core capital, and equity share holders.4

1
Lamsal Rjendra ,Panday R.P ,Fundamentals of Investment(BBS 4 th year) Januka Book house pvt.ltd 2073 B.s
2
www.sunrisebank.com.np
3
www.primebank.com.np
4
www.investtopedia.com
2. Statement of problem

According to monetary policy act 2072/2073 all ‘A’ class commercial banks need to increase
their paid up capital by end of the ashad, 2074. They need to increase their paid up capital from 2
billion to 8 billion to fulfillment NRB’s recruitment. Both sunrise bank and prime commercial
bank have increased their paid in capital. Which brings significant changes in financial
performance? This study will attempt to explore those changes in financial performance of both
banks due to increments in paid in capital. The following are the research questions developed
for the study:

 What is the different in return from capital structure capital structure after fulfillment of
NRB’s recruitment?
 What are the trends of net profitability of both banks?
 What are the growth rate both banks with in last 5 year?
 What are the relations between return and capital structure?
 What are the relations between growth of return and capital structure?
3. Objectives of study

The objectives of this study are on comprising of return on capital structure. This study will focus on the
following objectives:

 To study growth, financial strengths and weakness of bath commercial banks.

 To evaluate net profit after tax, capital structure, capital adequacy, growth rate on net profit
and change in capital structure of Sunrise bank limited and Prime commercial bank limited.
 To make comparison between the net profit during different time/ period.
 To analysis the net profit trend and trend of capital structure

4. Significance of the study

The study will be helpful to understand the factors which return on capital structure of the SRBL
and PCBL. The present study of SRBL and PCBL will provide return. This study will also
helpful for investor, organization, directors. This study will help to understand the return and
capital structure. The study will help to understand the better performance of both commercial
banks.
5. Limitations of study

The limitations are as follow:

 This study partial fulfillment of 4th year BBS.

 The dividend structures of both commercial banks are on consider of last five year
only.
 This study only coverage of dividend structure of both commercial banks.
 This study has used limited analysis tools.
 This study is mainly based on secondary data.

6. Research Methodology

Descriptive research identifies problem or justify current conditions and practices to make
comparisons and evolutions in making future plans and decisions. Secondary data will be used in
this study. Data will be collected through the book, websites, official members of SRBL and
PCBL. This study will be analyzed net profit growth trends, capital structure of both banks,
return on equity etc. This study helps to investor, banks, but this study is descriptive in nature.

7. Organization and Timeline of the study

This study report will be organized in following structure:

Chapter 1: Introduction

Chapter 2: Result and Analysis

Chapter 3: Summary and Conclusion

References

Appendices

8. References

 Lamsal Rjendra ,Panday R.P ,Fundamentals of Investment(BBS 4 th year) Januka Book house pvt.ltd 2073
B.s
 www.sunrisebank.com.np
 www.primebank.com.np
 www.investopedia.com