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A RESEARCH REPORT ON FIANANCIAL PERFORMANCE

ANALYSIS OF NIC ASIA BANK LIMITED

Submitted by:
Sachana karki
BBS 4TH YEAR
T.U. Registration number:

A report submitted to
Office of Dean
Faculty of Management
Tribhuvan University

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


Business studies (BBS)

Kathmandu, Nepal
April, 2019

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RECOMMENDATION

This is to certify that the report


………….

Submitted by:
Sachana karki

Entitled

Financial performance analysis of NIC ASIA BANK Limited

has been prepared as approved by this Campus/Department in the prescribed


format of

Faculty of Management. This report is forwarded for

Examination

Signature: Signature: Signature:

Supervisor’s Name Head, Research Department Campus chief/H

Mr. Kabin shresth

Date:

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ACKNOWLEDGEMENT

At the beginning I am very much grateful to almighty for giving me strength and opportunity and
sound mind to complete the report. I am grateful to many individual for completing my report
successfully.

First of all I would like to thanks my supervisor, Mr. Kabin shresth. Associate professor for
guiding me and encouraging me to work on this exciting topic for my report .I strongly believe
that, these will assist me a lot to make me more professional and building my future professional.

This report might never have been completed without the necessary particle knowledge,
assistance of many books, articles, websites and secondary data. It enhanced my practical
knowledge in corporate culture.

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EXECUTIVE SUMMARY
Nic Asia Bank Limited carries banking activities through its 290 branches, 289 ATMs, 40
Extension counters and 23 branchless banking services in the country. The commercial banking
activities of the bank encompasses a wide range of services including mobilizing deposits,
providing investment facilities, discounting bills, conducting money transfer and foreign
exchange transactions, and performing other related services such as safe keeping, collections
and issuing guarantees, acceptance and letter of credit.

Nic Asia bank is now, one of the largest private sector commercial banks in the country in terms
of capital base, balance sheet size, number of branches, ATM network and customer base. This is
one of the most prominent banks in Nepal. It is well known organizational reputation, expertise,
professionalism. The report is analytical and descriptive in nature. The report was entitled
“Financial Performance Analysis of Nic Asia Bank Limited” .For preparing this report
researcher use secondary data. Qualitative and quantitative both data were analyze in this report
and data were presented by using the Microsoft word.

Financial analysis is structural and logical way to present overall financial performance of a
financial institution. It also helps in evaluating and decision making for business operation. In
financial analysis process ratio analysis is most logical and dominant structure to help business
related stakeholder. Under the financial ratio analysis process there are few categories to
identical area of financial institution. So business stakeholders try to concentrate to get overall
business overview from profitability, liquidity, assets management and solvency ratio analysis.
These ratios not only help to decision making process also emphasized on risk avoiding and
profit raising related factors. To calculate this ratio need to take quantitative data from bank
trading activity and other sources. Financial statement analysis involves a comparison of a firm
performance in a period of time with the performance of another period of time. Generally
speaking the analysis is used to determine the firm’s financial position. So as to identify its
current strengths and weakness and to suggest action the firm might pursue to take advantage of
the strength and correct any weakness.

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TABLE OF CONTENTS
Title Page

Declaration

Supervision’s Recommendation

Endorsement

Acknowledgement

Table of Contents

List of Tables

List of Figures

Abbreviation

CHAPTER I: Introduction
1.1 Origin of the study

1.2 Objective if the study 2

1.3 Statement of the problem 3

1.4 Significance of the study 4

1.5 Limitation of the study 5

1.6 Organization of the study 6

1.7 Literature Review 7


1.8 Method of Research

2 PRESENTATION AND ANALYSIS OF THE DATA


Data Presentation

Analysis of Results

Findings

3 SUMMARY And CONCLUSION


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Summary

Conclusion

References/Bibliography

Appendices

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CHAPTER I
1. INTRODUCTION

Generally by the word – Bank we can easily understand that the financial institution deals with the
money. But there are different types of banks like; central bank, commercial banks, saving banks,
investment banks, industrial banks, cooperative banks etc. But when use the term bank without any prefix
or qualification it refers to the commercial banks.

Commercial banks are primary contributors to the economy of a country. So we can say commercial
banks are a profit making institution that holds the deposits of individual and business in checking and
saving account and then uses these funds to make loans. As banks are profit earning concern; they collect
deposit at the lowest possible cost and provide loan and advanced at a higher cost. The differences
between two are the profit for the bank. As the demand for better service increases day by day, they are
coming with different innovative ideas and products. In order to survive in the competitive field of the
banking sector, all banking organization are looking for better service opportunity to provide their fellow
clients. As a result it has become essential for every person have some idea on the bank and banking
procedure.

Nic Asia Bank Limited comes out in reality through the initiatives of some dynamic people, who were
from different sectors of commerce, trade and industries. It was founded as Nepal Industrial and
Commercial Bank on 21 July 1998. It was renamed NIC ASIA Bank on 30 June 2013 after it merged with
banks of Asia. Nepal witnessed the first merger of two commercial banks in its history. Nic Asia
provides all conventional services to the clients. In addition it presents a good number of schemes and
products in deposit and credit forms. Such as cash management service, payments and clearings safe
deposit locker services. The bank offers corporate banking solutions, which consist of project finance,
including financing of capital, machinery for both new project and expansion of existing project; working
capital finance, including working capital modes, such as time loan and cash credit (hypothecation);
offers for importers, including loan against trust receipt and time loan, and offers for exporters including
over draft and packing credit. It offers contractors and suppliers with various supports including bid bond,
overdraft, and performance guarantee and security bond.

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Vision Statement

To ensure creation of optimum values for all the stakeholders .

Mission Statement

To be a Bank of 1st choice for all the stakeholder.

1.2 Origin of the study

Research report is designed to fulfill the requirement of course to complete the degree of Bachelor of
Business Studies (BBS). The study aims to analyze the financial performance of Nic Asia Bank. This
study is done using recent data which will be helpful not only to shareholders but also the customers and
management. The topic was selected with able guidance of the supervisor. The topic of the report is
“Financial performance analysis of Nic Asia Bank Limited”. Financial analysis is a structural and
logical way to present overall financial performance of a financial institution. Private sector and public
sector both can play vital role for the growth of the economy of any country. Commercial banks occupy
an important place in the framework of economy because they provide capital for the development of
industry, trade, business and other resources deficit sectors by investing the saving collects as deposits.

It is also help to evaluate and decision making for business operation. Business stakeholders try to
concentrate to get overall business overview from profitability, liquidity, assets management and solvency
ratio analysis.

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1.2 Objective of the study

1.2.1 General Objective

This report is prepared primarily to fulfill the partial requirement of obtaining post- graduation degree
under Tribhuvan University and to analyze the financial performance of Nic Asia Bank.

1.2.2 Specific Objective

 To find out the present performance of the Nic Asia bank.


 To gather knowledge about the profitability of the bank through profitability ratios.
 To know about the deposit and loan condition of Nic Asia bank.
 To suggest and recommend the measures on the basis of the study of profitability of Nic
Asia bank.

1.3 Statement of the problem

Nepal is a country which is made up of villages and rural areas mostly and where there is predominance
of agriculture sector. It is difficult to solve the credit problems of the country through commercial bank
and which are relevant to intramural and agriculture is to overcome these change. The researches are
made shortly to answer the following questions:-

 How have Nic Asia been managing their analysis of profitability?


 How sound are operational results in relation of their profitability?

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1.4 Significance of the study

This study will be useful to the following stakeholders of the Bank:

a. To the investors. i.e. shareholders


b. To the management of bank (management committee)
c. To the customers.
d. The study will give the clear picture of the performance and the financial position of the bank.

This study will be significant to the researcher also

 To get depth knowledge of bank.


 To get valuable findings of research.

1.5 Limitation of the study

As the above is being carried out in a partial fulfillment of the requirement for the degree, Bachelor of
Business Studies it possesses number of limitations of its own kind. Some of the limitations of the study
are as follow:

 This study has limited to the study of financial performance of Nic Asia Bank out of 28
commercial banks.

 This study is based on secondary data. so it may not be free from bias.

 Simple techniques had been used in analysis.

 The records of 5 years are used to analyze the performance.

 This study only focuses on profitability of the bank.

The study has been done according to the information provided by the bank. And bank and the
information provided by them had been believed to be true.

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1.6 Organization of the study

Research report can be prepared in different ways. The study has been organized in to five chapters. The
chapters are as follows:

CHAPTER I

Introduction: Under this it consists of background, objective, problem, significance, limitation and
organization of the study.

CHAPTER II

Literature Review: Under this it consists of conceptual review and review of previous studies.

CHAPTER III

Methodology: Under thus it consists of Research Design, Population and sample, types of data, data
collection procedure, methods of data collection and techniques of analysis.

CHAPTER IV

Result and Findings: Under this it consists of presentation of Data in Table and Figures and their
Analysis and major findings.

CHAPTER V

Summary and Conclusion: Under this it consists of Summary, Conclusion, implications.

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1.7 Literature Review

1.7.1 Conceptual Review

A company should earn profit to survive and grow over a long period of time. Profits are essentials, but it
would be wrong to assume every action initiated by management of a company should be aimed at
maximizing profit. Profitability ratio indicates the degree of succeed in achieving desired profits.

1.7.2 Review of Related Studies

Panday (1995), Ratios are used to measure profitability and these gives final answers about how
effectively the firm is being managed. Therefore, management, creditors, and owner of the company are
also interested in the profitability ratio of the firm.

Medhat Tarawneh (2006) Financial performance is a dependent variable and measured by Return on
Assets (ROA) and the intent income size. The independent variables are the size of banks as measured by
total assets of banks, assets management measured by assets utilization ratio (operating income divided
by total assets) operational efficiency measured by the operating efficiency ratio (total operating expenses
divided by net income).

Dangwal and kapoor (2010) also undertook the study on financial performance of nationalized bank in
india and assessed the growth index value of various parameters through overall profitability indices.
They found that out of 19 banks, four banks had excellent performance, five banks had good performance
and six banks had poor performance. Thus the performance of nationalized banks differ widely.

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Jha DK and D S Sarangi (2011) The financial performance of seven public sector and private sector banks
during the period 2009-10. They used three sets of ratio, operating performance ratio, financial ratio and
efficiency ratio. The study revealed that Axis bank was on the top of these banks, followed by ICICI,
BOT, PNB, SBI, IDBI and HDFC.

Ramchandan Azhagasahi and Sandanvn Gejalakshmi (2012), In their study found the impact of assets
management operational efficiency and bank size on the financial performance of the public sector and
private sector. The research revealed that bank with higher total capital deposits and total assets do not
always mean that they have better financial performance. The overall banking sector is strongly
influenced by assets utilization. Operational efficiency and interest income.

1.8 RESEARCH METODOLOGY

1.8.1 The research design

The major tool to analyze data is selected to commercial bank with the nature of data and meets the
Nepalese investors need. The tools and technique, which is suitable elsewhere, may not be appropriate in
our context. The information presented is represented with tables, charts and graphs. The tables, charts,
graphs will be helpful notice to notice the information at glance and also assist to predict the future level.

1.8.2 Types of Research

The main aim of research is to find out the truth which is hidden and which has not been discovered yet.
The types of Research are:-

i. Applied Research

Applied Research is concerned to current activity or immediate practical situation. Applied research is to
solve the current or immediate problem faced by a society. This type of research can be done at any time
wherever required to solve over the existing problem.

ii. Fundamental Research

A Research which is conducted for the depth knowledge about any issue or for the development of theory
is known an Fundamental Research.

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iii. Analytical Research

Analytical Research is defined as the research which has to use facts or information already available and
analyzed these to make a critical evaluation of the material.

iv. Descriptive Research

Descriptive Research is a survey and fact finding inquires of different kinds. The main purpose of this
research is to describe the state of affairs as it exists at present. It collects and presents the facts and
figures in a certain situation. Among various types of research, descriptive research is most appropriate
for the best result. Descriptive research helps to describe in detail. In this research Descriptive research is
used in order to identify the trend in ROA and ROE of Nic Asia Bank Limited.

1.8.3 Population and Sample

The study population includes the data only the period of five years from F/Y 20

In Nepal there are 28 commercial banks. There are many banks, which are actively operating their
activities in market. It is not possible to study all of them regarding the research topic. Therefore among
them, one reputed bank is taken as a sample bank i.e. NIC ASIA BANK LIMITED from population for
this research study.

1.8.4 Types of Data

Data collection is the most essential factors in report writing. Data collection is the most important for the
project work. There are two types of data which use in data collection. The types of data are:-

i. Primary Data

Primary Data are those type of data which is originally obtained through first- hand investigation. It
includes information collected from interview, observation, survey, questionnaire, focus group and
measurements.

ii. Secondary Data

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Secondary data are the data that is collected by someone other than user. The data collected by
government departments, organizations, semi-government and private publication are the sources of
secondary data.

In this research, secondary data are used. The data, which are originally collected but obtained from pre-
published or already listed sources.

1.8.5 Data Collection Procedure

In this preparation of project work report mainly I have used the secondary data about Nic Asia Bank
Limited. The annual report of Nic Asia Bank has used along with the information data taken from the
various books, articles, and research papers stated in footnotes and bibliography.

1.8.6 Techniques of Analysis

The collected and observed data is tabulated after adjusted necessarily amount of each overhead. The
statistical tools were used for analyzing the data collected so as to fulfill the objective of study. While
writing this report, collected data are presented by using trend lines, so that they can easily analyzed. In
technique of analysis there are two types of tools they are financial tools and statistical tool. In this study I
have use financial tools to analyze using profitability ratio. The profitability ratio includes the following:-

i. Return on Assets
ii. Return on Equity
iii. Price Earning Ratio
iv. Net profit to loan and Advances
v. Earning Per Share

2 PRESENTATION AND ANALYSIS OF THE DATA

2.1. Presentation of data

Profitability ratio:

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Profitability is the net result of large number of policies and decisions. The ratios examined thus provide
some information about the way the form of operating, but the profitability ratio shows the combined
effects of liquidity, assets management and depth management on operating results. In this field work
report the following profitability ratios are used.

i. Return on Assets:

It is the ratio of net income to total assets measure the Return On Total Assets (ROA) after interest and
taxes. It is measure by this formula:

Table- 4.1.1

Return on Assets of Nic Asia Bank Limited

For the F/Y 2070/71 to F/Y 2074/75

Fiscal Year Ratio


2070/71
2071/72
2072/73
2073/74
2074/75
Sources: Annual Reports of Nic Asia Bank Limited

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Figure no. 4.1.1

Return on Assets

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ii. Return on Equity:

It is the ratio of Net Income after tax to common equity measures the return on equity (ROE) or Rate of
Return on the stockholder investment.

Table: 4.1.2

Return on Equity of Nic Asia Bank Limited

For the F/Y 2070/71 to F/Y 2074/75

Fiscal Year Ratio


2070/71
2071/72
2072/73
2073/74
2074/75
Sources: Annual Report of Nic Asia Bank

Figure no. 4.1.2

Return On Equity

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iii. Price Earning Ratio (P/E ratio)

The price earning ratio shows how much investors are willing to pay per rupee of reported profits. It is
the relationship between the market price of a share and earning per share. It is computed as:

Table- 4.1.3

Price Earning Ratio of Nic Asia Bank Limited

For the F/Y 2070/71 to 2074/75

Fiscal Year Ratio


2070/71
2071/72
2072/73
2073/74
2074/75
Sources: Annual Report of Nic Asia Bank

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