A DISSERTATION ON THE SUSTAINABILITY OF THE FINANCIAL MODEL OF THE GLOBAL IME BANK LIMITED NEPAL

Sudeep Thapa MBA 4TH SEM REG:11M9CMA069 KOSHYS COLLEGE OF MANAGEMENT

STATEMENT OF PROBLEM

This Study is aimed at evaluating the financial sustainable of the bank over a long time horizon then the trends are the last 5 year. It should assist in finding a response to the research questions Are commercial bank in Nepal study in long run in financial stability. The major issue to be addressed the financial analysis of the Bank Limited are as follows:

What is the financial Statement analysis is done by? How Liquidity, Profitability, and leverage are maintained by?

OBJECTIVE

To have a clear picture of financial position of the Global IME Bank under study. To provide information to those who are planning to invest in Global IME.

To provide information to the general public regarding overall financial outlook of Global IME.
To measure the impact of organization growth, establishment towards general public. To conduct diagnostic tests of the financial statement of Global IME Bank

RESEARCH METHODOLOGY
Source of Data (Used secondary less Primary Data)

Annual reports of Global IME Bank Limited. Bulletin and reports of NRB. Others reports, journals and bulletin of the commercial banks. Different relevant web sides of the internet.

Methods of Data Analysis

Tables and figures are presented to analyze the facts and findings. Mathematical, financial and statistical tools have been used for analyzing the data wherever and whenever needed. After the data are tabulated, various tools are used to achieve the results, which are undertaken as follows: Trend analysis Ratio Analysis Correlation Analysis

MAJOR FINDINGS

Current ratio of Global IME seems to be satisfactory. The Net working capital was increased as 580.07 millions in the fiscal year 2008/09 to as 1187.69 millions in the fiscal year 2012/13 except as 542.8 millions in the fiscal year 2011/12, which shows the larger amount of net working capital, the higher will be the liquidity of Global IME Bank and it finances the current assets of working capital amt with the long term fund. Bank loan to total assets ratio was continuing increased as 7.01 % in the fiscal year 2008/09 to as 19.54 % in the fiscal year 2012/13 so increasing in loans as a percent of total assets would indicate generally contributes to profitability. The cash reserve of bank is good because it managed to fulfil the obligation of maintaining CRR prescribed by NRB. Initially Cash and bank balance ratio of bank is increasing as 12.33% in the fiscal year 2008/09 but finally it falls to as 9.11% in the fiscal year 2012/13 so this ratio indicate that banks have ability to meet immediate obligation, mainly cash withdrawal by depositors Except as 3.03% &3.08% in the fiscal year 2008/09 &2009/10 spread of bank is regularly climbed up to as 2.70 % in the fiscal year 2012/13 which means bank have in profitability position

MAJOR FINDINGS

Because of continually inclined of return on shareholders equity ratio as 10.05% in the fiscal year 2008/09 to as 20.68% in the fiscal year 2012/13 which determines shareholders are getting good return from bank. The return on total assets was slightly up as 0.73 % in the fiscal year 2008/09 to as 1.04 % in the fiscal year 2012/13 except as 0.82% in the fiscal year 2011/12 so the inclining the banks return on assets the better it is doing in operation and vice-versa. DPS, the dividend paid to shareholders on a per share basis was declined from as NPR 15.80 Millions in the fiscal year 2008/09 to as NPR 10.53 millions in the fiscal year 2010/11 and finally inclined to NPR 21.05 in the fiscal year 2012/13. MPS was continuously inclined as NPR 260 in the fiscal year 2008/09 to as NPR 1284 in the fiscal year 2012.13 which reflects sound picture of financial statement performance of Global IME Bank. The Debt to equity ratio was decreased as 3.74% in the fiscal year 2008/09 and increased from 4.82% to 14.03 % in the fiscal year 2009/10 to 2010/11 and remain 4.63% &4.23% in the fiscal year 2011/12 &2012/13 so decreasing debt-equity ratio provides a cushion of protection to the creditors against losses .

MAJOR FINDINGS

Decreasing in Net Credit Losses to Total Assets as 0.06 % in the fiscal year 2009/10 to as 0.04 % in the fiscal year 2012/12 would indicate increasing quality of the loan portfolio A management efficiency ratio was continuously inclined from as 0.37 times in the fiscal year 2008/09 to as 1.04 times in the fiscal year 2012/13 except 0.58 times in the fiscal year 2010/11 Bank manages to increased profit even number of staff increasing vice-versa. So it proved Global IME management is effective with prompt mind. There is a high degree positive correlation between deposit and loan of Global IME. It is nearly perfectly positive, such that with every change in deposit, the situation of loan is likely to effect. If there is increase in deposit, there will be positive increase in loan.

RECOMMENDATIONS

The Bank has issued loan and advance massively which may create problem to the company if it becomes failure to recover it timely. So, the Bank needs to implement effective panning while issuing loan term as well as short-term loans.

The company should mobilize its assets in the productive sector so that higher return could be yield.
It is noted that most of the loan and advance of the bank is stick into working capital and project loans. The company should divert its resource towards the other industrial and business sector. The EPS and DPS of the bank are somewhat constant over the four years periods. The company should implement plans and actions to increase the EPS and DPS. The liquidity position of the company is fluctuating during the four fiscal years. The company needs to maintain a reasonable liquidity position for the smooth operation. The bank should try to extend its branches across the Nepal and they should adapt different marketing strategy to promote their products. Exploring different research enhance them to know the clients interest and wants to understand changing trend , finally bank should always devoted for assuring higher customer satisfaction through its good services.

CONCLUSION

The Global IME Bank has been able to increase its benchmarking percentage of profit. The liquidity position of the company is act as satisfactory level. The leverage ratio of Global IME Bank is less volatile. It shows that bank can meet long-term obligations. Investments are being mobilized to satisfactory extend, which is very important for the survival of any firm.

It has been successful in attracting general public for depositing their savings in the company and also to take loan.
The company has managed its total assets soundly

LEARNING

The Sustainability of the Financial Model Able to know about Global IME bank Theoretical knowledge to practical knowledge Banking working procedure