A Project Work Proposal on

FINANCIAL PERFORMANCE ANALYSIS

OF

NABIL BANK LIMITED

Submitted by: Saurav Shrestha

T.U. Reg. No. 7-2-0424-0070-2019

Amity College

Submitted to

The Faculty of Management

Tribhuvan University

Kathmandu, Nepal

In Partial Fulfillment of the Requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Birtamode, Jhapa

Poush, 2024
Introduction

Financial performance analysis is the process of analyzing a company’s financial

statements for decision making and to understand the overall health of an organization. It is a
comprehensive and indispensable process for evaluating the fiscal health and operational
efficiency of a company. In simple terms, this analysis method means carefully looking at a
company’s papers like income statement, balance sheets, and cash flow statement. These papers
give a quick look at how the company is doing financially. Financial performance analysis is
required to evaluate the financial data recorded in the financial statements so that the investors,
shareholders, managers, and other interested parties can understand the information. It is the
method of evaluating the past, present, and future performance of a company. Financial
performance analysis techniques such as vertical, horizontal, and ratio analysis are used by
analysts to monitor performance metrics across financial statements. It helps to analyze whether
a company is stable, solvent, liquid or profitable enough to warrant a monetary investment.

A key way to analyze how a company is doing financially is by using ratios. These are
calculations that help us to understand different aspects of the company’s performance. There are
various types of ratios like ones that show how easily the company can pay its bills (liquidity
ratio), how much profit its making (profitability ratio), how much debt it has compared to
liquidity (leverage ratio), and how efficiently it is managing its resources (efficiency ratio).
These ratios are like signals that helps us to get a detailed picture of the company’s financial
performance.

Nabil Bank Limited is the prominent commercial bank of Nepal. It was established in
July 12, 1984 as the first private sector bank in the country. Previously, it was known as ‘Nepal
Arab Bank’. In 1995, Nepalese billionaire, Binod Chaudhary bought the majority share of Nabil
Bank, which was previously owned by the Dubai government. The bank’s main office is at Nabil
Center, Durbar Marg, Kathmandu. Nabil Bank has a big network with 248 branch offices, 271
ATMs, many point-of-sale terminals, and agents for the money transfers all around the country.

Objective of the study

It defines the purpose of this study. In short, it is helpful to find out the answers to the
questions stated above. The main objective of this study is to analyze the financial statements of
Nabil Bank Limited regarding the financial performance and position.

Other specific objectives are as follows:

i. To evaluate the financial position of Nabil Bank Limited.

ii. To analyze the financial performances through the use of appropriate financial
and analytical tools.
iii. To identify the profitability position i.e. Earning per share (EPS), Dividend per
share (DPS), and Return on Asset (ROA).
iv. To measure liquidity, solvency, and efficiency.
v. To determine the past, present, and projected performance of the company.

Rationale

The aim of this research is to gain insights into the bank’s overall economic health and
operational efficiency. By examining key financial indicators such as profitability, liquidity, and
solvency, the analysis provides a clear picture of the bank’s financial stability. This Information
is crucial for making informed strategic decisions, optimizing resource allocation, and ensuring
banks’ long term sustainability. Moreover, regular financial performance assessments aids in risk
management by identifying potential vulnerabilities and enabling proactive to mitigate risks.
Ultimately, the financial performance analysis serves as a valuable tool for Nabil Bank to
maintain a competitive edge, meet regulatory standards, foster trust among stakeholders.

i. This study is important to shareholders.

 ii. This study is important to management bodies of the bank for the evaluation of
performance of the bank.
iii. This study is important to “outsiders” which are mainly the customers, financing
agencies, stock exchanges.
iv. This study is important to the government bodies or the policy makers such as central
bank.

Literature Review

Review of literature is a way to discover what other research in the area of the problem
has uncovered. The main purpose of literature review is to find out what research studies have
been conducted in one’s chosen field of study and what remains to be done.

Mr. Shrestha in his study, “A Comparative Analysis of Financial Performance of the

Commercial Banks”, concluded that many of the banks are of the view that political instability in
the country is mainly responsible for the decline of the lending opportunities. Few banks
ascribed it to the economic crisis that occurred in Asia Pacific region. No one felt that higher
rates on interest on lending to be major factor. At one time, it should target not only the urban
sector, it should go to the rural sector as well. They have to explore all the potential sectors in
order to generate high rate of profit.

Mr. Gurung’s study on “A Financial Study of Joint Venture Banks in Nepal” is a

comparative study of NGBL and NIBL. In this study, he has analyzed financial position of the
banks by measuring various ratios to elaborate the financial performance. The liquidity,
profitability and dividend payout ratio of two banks are on favorable position. But NIBL seems
to be slightly better position in terms of liquidity, profitability and capital structure compared to
the NGBL. In this evidence he has concluded that NIBL promises a better future than NGBL.
The present study tries to focus on financial performance of Nabil Bank Limited, it is clear that
there was no research work on comparative study of commercial banks which were not cleared
in previous studies.
Research Methodology

The procedure for gathering data and information is known as the research methodology.
The methodology may include interviews, surveys, publications, research, and other research
techniques.

Research Design

A research design is a framework that has been created to find answers to research
questions. In this way a descriptive and analytical survey is done. According to Zikmund,
“Research design is a master plan specifying the methods and procedures for collecting and
analyzing the needed information”. The design used for the study are descriptive and analytical.
The justification for the choice of these methods is preferred because it concludes reliable data
and information covering a long time and avoids numerous complex variables. Some recent
financial tools along with statistical tools will be used to evaluate the financial performance of
Nabil Bank.

Population

There are altogether 20 commercial banks functioning all over the nation. Out of all the
commercial banks, Nabil Bank Limited has been selected as the sample of our study.

Sources of Data

Data can be collected from primary sources and secondary sources. Primary data are first-
hand data collected through the direct involvement of the researcher while secondary data is the
information collected by someone else and utilized by the researcher for their study. The
majority of the data used in this project work are collected through secondary sources.
 Secondary data are those data, that have previously been gathered and can be accessed by
researchers. Data in this project are collected from published as well as unpublished sources.
Secondary data used in this project are listed below:

i. Annual financial reports of Nabil Bank Limited.

ii. Official website of Nabil Bank Limited.
iii. Newspapers
iv. Books and articles

Data Presentation And Analysis Tool

To thoroughly examine the data collected during the research, a variety of statistical and
financial ratios are employed. This involves organizing, presenting in tables, and illustrating
through graphs, all aimed at carefully analyzing and accomplishing the objectives of the study.
The financial ratios we use for analyzing data include different number comparisons. They help
us get a complete understanding of what we found in the research. The financial ratios used for
data analysis are:

i. Profitability ratios
ii. Liquidity ratios
iii. Assets management ratio

Further, the following tools have been used for data presentation:

i. Tabulation
ii. Bar diagrams
iii. Pie-chart

Limitation of the study

 Limitations have the effect of narrowing down the scope of the study, and they arise from
various unavoidable circumstances. These circumstances are responsible for restricting or
constraining certain aspects of the research. The major limitations of this study are mentioned
below:

i. The Research is based on records of fiscal years’ analysis only i.e. from FY
2079/2080.
ii. The researcher has used only some statistical tools for the presentation and
analysis of data.
iii. Most of the data used in this study are based on secondary sources mainly the
official website of Nabil Bank Limited.
iv. The main focus is given to the quantitative aspect rather than the qualitative
aspect.
v. The study is based on Nabil Bank Limited only.
vi. It is only for partial fulfillment of Bachelor of Business Studies (BBS).