CHAPTER – I
INTRODUCTION
Background
In the economy life of every nation, Banking has
played a vital sale to develop national economic. Bank has very important for economic
development, capital formation, security of wealth, price stability, transfer of
funnels, monetization of economy etc.
The work “Bank” has come from Italian word “Bank”
which means the bench which was used for keeping records and exchanges the
money. Bank is the financial institution, which deals with money by accepting
various types of loans by creating credit. The Banking services are available
at different style of human progress.
The main objectives of the banks are development of
trade, commerce, industry and human economic conditions since trade; commerce
is the prime factor of the economic growth. There are different definitions
about the banks and some of the definitions are as follows:
“A bank is an organization whose principal operation
is concerned with accumulation of temporary idle money of the general public
for the purpose of advancing to other for expenditures.”[1]
“Any institution offering deposits subject to with draw
on demand and making loan of commercial or business nature is Bank.”[2]
“Banking is a manufacture of credit and machine for
facilitating exchange.”[3]
“A Bank is an institution which collects money from
there who have it spark or who’s saving it out of their income. It lends this
out to those who require it”[4]
Sources:
1.1.1
Origin and Growth of Bank In Nepal
In Nepalese context, “Tejarath Adda” was first step
toward banking at the time of Ranadip shah. Banking in the true sense was
introduced with the establishment of Nepal Bank ltd. In 1994 B.S. it becomes
single commercial bank for eighteen years. To develop the banking sector, Nepal
Rastra Bank was established as a central bank in 2013 B.S. under Nepal Rastra
Bank Act 2012 B.S. tough Nepal Rastra Bank formulates the monetary policy,
fiscal policy , It has some limitation on 2022 B.S. Rastra Banijya Bank was established
with funky Government owned commercial Bank .
In order to being the foreign investment bank in Nepal
has opened it door to all foreign commercial bank after the introduction of
“Liberal and market oriented policy” more need of competition was felt to
enhance the speed of development in banki9ng sectors which result to establish
the joint venture bank after 2040 B.S. The first joint venture bank was
established on 2041 B.S. similarly, Nepal grind lays Bank (2043B.S.) Himalayan
bank Ltd. (2049 B.S.) Nepal Bangladesh Bank ltd. (2051 B.S.) bank of Kathmandu (2052 B.S.) and many other commercial as well
as other development banks have been established. Due to various range of
functions by6 the bank; it has become an essential part of modern society.
1.1.2 Introduction
to Commercial Bank
Commercial Bank are the profit oriented institution
that gives lesbian rates of interest to its depositor and takes certain rate of
interest from loan and advances by mobilizing the deposits . So, commercial
bank pools together the saving of the community and arrange for their productive
use. Commercial banks are restricted. To invest their funds in corporate
securities. Their business is confined to finance the short term need to trade
and Industry such as working capital financing. A part from financing, they
also render other services like collection of bills and cheques, safe keeping
of valuable financial advising to their customer etc.
A commercial bank is an immediately which being the
gap between the depositor who have surplus money. The first commercial bank was
Nepal bank Ltd. Established in 1994 B.S.
Hence the main objectives of the commercial banks are
to be medium of economic and industrial development and assets in uplifting the
community.
1.1.3 Introduction
to joint Venture bank
By, Nepalese commercial bank can be classified into
categories i.e. domestic commercial bank and commercial bank with foreign
collaboration are also called joint venture bank. Joint venture means joining
of forces between two and more enterprises for the purpose of carrying out of
specific operation. Joint venture is the mode of trading through partnership
among the nation and is also term of notation between various groups and
traitors. If one talks about joint venture, there must be at least two parties
and counts of complimentary and synergy. JVB in Nepal refers to foreign joint
venture bank in which foreign parent bank purchases certain percentage of
shares ( not exceeding to 50%) apply their international management and network
.
The govt.’s policy allowing banks JVB to operate in
Nepal is basically targeted to encourage local traditionally run of commercial
bank to enhance their banking capacity through competition of JVB efficiently,
modernization, mechanization and prompt customer services. Act 2021 B.S. and
operated under the commercial bank Act 2031 B.S.
At present, there are various JVBs in Nepal and the
researcher has attempted to take only one i.e.. Standard has charter bank ltd.
For the purpose of project work research study.
Role of joint venture Bank in Nepal
· To increase the foreign healthy.
· To bring healthy import export trade.
· To promote and expand import export trade.
· To introduce modern and advance banking techniques.
1.1.4 Introduction
of standard charter Bank Ltd. Nepal
Standard Charter Bank ltd. Nepal
is a joint venture bank in the nation changes its name from Nepal
Nepal grindlays bank is the third joint venture bank
in the Nepal established in 2043 B.S. with a view to encourage banking service
and to utilize financial resources. It was established following a joint
venture government between Grindlays Bank PCL Landing London with the wholly
owned subsidiary of ANL Bank having 50% ordinary shares. Nepal Bank Ltd. having
35% ordinary shares.
In the establishment year 2043 B.S. the authorized
capital of the bank was only 100 Million and issued capital has reused to
439.549 Million and has fully paid up. The bank was registered on 4th
Poush 2049 B.S. with H.M.G. department of commerce. If obtained its license
from Nepal Rastra Bank on 18th Margh 2042 B.S. and.
It was formally regulated by ministry of state for
finance and industries on 16th Margh 2043 B.S.
The registered head office of Nepal SCBLN is in
Nayabaneshwor, Kathmandu. There are eleven branches of SCBLN in the Nepal
1.1.5 Functions of
commercial Bank
The main
functions f commercial banks are as follows:
1)
Acceptance of Deposits :-
· Fixed Deposit
· Current Deposit
· Call Deposit
2)
Advancing of Loan :-
· Cash credit
· Overdraft
· Demand / term Loan
· Bill / cheque purchases / Discounting
3)
Agency function
· Transfer to customers funds
· Purchase & sale of shores and securities for the
customers
· Paying the insurance premium
4)
Purchase and sale of foreign exchange
5)
Creation of credit
6)
General utility services
1.2 Literature survey (profitability Analysis ) :-
Profitability analysis indicates the degree of success
in a achieving derided profit. The profitability ratio gives answer to how
effectively the bank is being managed. The measurement of profit of JVBs
operating in Nepal
The main
definitions of the profitability analysis are as follows.
“The operating efficiency and its ability to ensure
adequate return its invertors ultimate depend upon the profit earned by it “[5]
“Profit earning is the main objectives to each
business concern. At the same time, it is the effort at every concern to earn
maximum profit only in absolute term but also in relative term”[6]
“Profitability is an indication of the efficiency with
which the operations of the business are carried on profitability analysis,
measure management and overall effectiveness as shown by the returns of enervated
on sales and investment”[7]
1.3 . Objectives of the
study
The purpose of the study is to analyze the firms
(Banks) actual profitability position. So the purposes of the study are as
follows:
1) To assess important characteristics of scbln like profitability.
2) To determine the financial state of scbln.
3) To point out the strength and weakness of scbln.
4) To introduce with the problems this may occurs in
future.
5) To offer information to manager shareholders and
public who would contract for the study f profitability of scbln.
Sources
1.4 Assumptions & Limitations of the study
There are some assumption & limitation
of the study. There are as follows:
I) This data is
mainly collected from annual report of bank i.e. secondary data, therefore, the
result of all analysis depend upon the information provided by the bank.
II) This study only covered 4 years from 2059/060 to
2062/063
III) This stud has been confirmed only a standard charter
bank Nepal ltd.
IV) Only limited financial tools i.e. ratios are used to analyze
the financial statement.
1.5 Project work procedures
Project work procedures are as fallows:
1) Selecting the topic in which the report is to be
prepared.
2) Selecting the bank in which analysis to be done.
3) Studying the procedure and process of report which is
written from different sources.
4) Presenting the report in prescribed style and for mate
and submitting the typed report to cortege.
5) Survey of the
bank in communicating with the branch manager and other staff bank and
collecting the data from bank.
1.6 Methods of data collection
Secondary
data
The study is based on secondary data . for this data,
annual report, journals, publications, library previous studies and the
information provided by the staff of
scbnl.
1.7
Chapter planning of Project work Study
The project work is prepared in the for mate as required
by the faculty of management entitled “Assessment of profitability analysis of scbnl” The study has been classified
into three chapters.
The first chapter is introduction which includes
background of banking, origin & growth of bank in Nepal
The second chapter is presentation and analysis of
data, which includes presentation of data and analysis of those data using
various tools and techniques of ratio.
The third chapter is summary, conclusion and
recommendation. In this way the chapters are planed for this project work
report.
CHAPTER
– TWO
PRESENTATION AND ANALYSIS OF
DATA
2.1 Presentation
of Data :
In order to evaluate the financial performance of scbnl four (4) years financial
statement i.e. Balance sheet (B/S) and profit and loss A/e are presented in
tabulation form as follows:
Table No.1
Standard
chartered Bank Nepal Ltd.
4
years comparatively Balance sheet
For
the financial year 2059/60, 2050/061, 2061/062, and 2062/063
(in thousand)
|
|
Particular
|
2059/60
|
2060/061
|
2061/062
|
2062/063
|
|
|
Fixed and
properties
|
|
|
|
|
|
|
Fixed Assets
|
1,91,710
|
136234
|
71412
|
101301
|
|
|
Investment
|
57,77,678
|
5229875
|
9702553
|
12935417
|
|
(A)
|
Total fixed Assets
|
59,69,389
|
5366109
|
9773965
|
13036718
|
|
|
Quick
Assets
|
|
|
|
|
|
|
Cash Balance
|
1,98,755
|
187704
|
195458
|
279511
|
|
|
Bank Balance
|
13,13,549
|
1835458
|
915658
|
996730
|
|
|
Investment in HMG T bill
|
44,38,520
|
6130452
|
-
|
7210500
|
|
|
Money at call
|
16,57,909
|
2218599
|
5089307
|
1977271
|
|
|
Loan Advanced and purchased bills
|
56,95,825
|
6410242
|
8143207
|
8935417
|
|
(B)
|
Total quick assets
|
1330455
|
16782458
|
16603381
|
19399429
|
|
(C)
|
other assets
|
1637022
|
1493492
|
493697
|
638564
|
|
(D)
|
total current assets (B+C)
|
14941580
|
18275950
|
17097078
|
20037993
|
|
(E)
|
total assets (A+D)
|
20910970
|
23642059
|
26871043
|
33074711
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Deposit liabilities
|
16807038
|
19732946
|
19363469
|
23061032
|
|
|
Bills payment
|
54841
|
59024
|
56297
|
55750
|
|
|
Proposed and unpaid liabilities
|
-
|
-
|
461337
|
499979
|
|
|
Other liabilities
|
436435
|
629984
|
290607
|
405430
|
|
(F)
|
total current liabilities
|
17298316
|
20421956
|
20171710
|
24022191
|
|
|
Loans and Borrowing
|
79163
|
78282
|
27551143
|
-
|
|
|
Debentures and Bonds( customer deposit)
|
1948596
|
1428495
|
-
|
-
|
|
(G)
|
Long term debt
|
2027759
|
1506778
|
27551
|
-
|
|
(H)
|
total debt (P+G)
|
19326075
|
21928734
|
20199261
|
24022191
|
|
|
Share capital @ Rs 100 each
|
339548
|
374640
|
374640
|
374640
|
|
|
Reserve & fund
|
1029357
|
112198
|
1207775
|
1379498
|
|
|
Maintained earning
|
215987
|
217586
|
217586
|
251335
|
|
(I)
|
total shareholders equity
|
158494
|
1713325
|
1800001
|
2005473
|
|
(J)
|
total investment / capital employed
|
361256
|
3220103
|
-
|
-
|
Sources. Appendix
Table No 2.
Standard Chartered Bank Nepal Ltd.
4
Years Comparatively P/L A/C
For
the F/Y 2059/060 to 2062/063
(In
thousand)
|
|
Particular
|
2059/60
|
2060/061
|
2061/062
|
2062/063
|
|
|
Income
|
|
|
|
|
|
|
Interest income
|
1001359
|
1042175
|
1058677
|
1189602
|
|
|
Commission & Discount earning
|
215200
|
198947
|
178651
|
222928
|
|
|
Exchange and fluctuation gain
|
232522
|
237050
|
273044
|
283471
|
|
|
Non operating income
|
-
|
-
|
2957
|
1432
|
|
|
Other operating income
|
55479
|
69894
|
29292
|
25442
|
|
|
Provision for possible loss written back
|
-
|
-
|
33685
|
53090
|
|
(A)
|
Total income
|
1504562
|
1584007
|
1576306
|
1175965
|
|
|
Expenses
|
|
|
|
|
|
|
Provision for staff bonus
|
76083
|
85954
|
88683
|
93937
|
|
|
Staff expenses
|
128327
|
134685
|
148585
|
168230
|
|
|
Other operating expenses
|
311972
|
279693
|
256648
|
221086
|
|
|
Non operating lost / expenses
|
15529
|
10755
|
-
|
-
|
|
|
Provision for possible lose
|
2339
|
-
|
27725
|
47729
|
|
|
Expenses from extra ordinary expenses
|
|
|
2589
|
2411
|
|
(B)
|
Total expenses
|
534253
|
511089
|
524030
|
533393
|
|
(C)
|
Net income before interest & taxes (CBIT) or
(A-B)
|
970308
|
1072918
|
1052276
|
1242572
|
|
|
Less interest expenses
|
255153
|
275809
|
|
|
|
(D)
|
Net profit before tax (EBT)
|
715154
|
797109
|
254126
|
303198
|
|
|
Less provision for income tax
|
-
|
|
798150
|
939374
|
|
|
Current year
|
20822
|
235792
|
258944
|
274504
|
|
|
Up to previous year
|
|
|
2959
|
6113
|
|
|
Net profit after tax
|
506933
|
537800
|
536244
|
658755
|
|
|
Proposed dividend
|
373503
|
412104
|
449568
|
487032
|
|
|
No. of shares outstanding (NOS)
|
3395488
|
3746404
|
3746404
|
3746404
|
Sources. Appendix
2.2 Analysis of Data
The
main purpose of this study is the assessment of the profitability of Standard
Chartered Bank Nepal Limited from 2059/063. Here various tools (including dome
ratios) are used to assessment of profitability. There are various tools that
can be used in the evaluation of the level of profitability of SCBNL.
2.2.1
Profitability Ratio
Profitability ratio is the indicators of degree of
managerial success in achieving the objective of profit maximization. If shows
the overall efficiency and earning capacity of the business concern.
Profitability is the final result and commercial bank.
(I) profit Margin (PM):-
This ratio shows the relationship between net profit
after tax (Net income) and Operating income profit margin means percentage of
net income on operating income. It is good to be greater profit margin for any
business concern.
Profit margin is calculated as follows:-
Profit margin = net profit / operating profit
Where, operating income = Net income + Interest oxp2 +
Tax amount
Table No. 3
Profit margin
|
Year
|
Net income
|
Operating
income
|
Profit
margin
|
|
2059/060
|
506,933
|
970,808
|
52.22%
|
|
2060/160
|
537,800
|
1,07,2918
|
50.12%
|
|
2061/062
|
536244
|
1052276
|
50.96%
|
|
2062/063
|
658755
|
1242572
|
53.02%
|
|
Average (mean)
|
|
|
51.58%
|
Sources Table No: 1
Higher
profit margin is better for any bank. The above table shows the profit margin
of SCBNL for 2059/60 to 2062/63 is 52.22% 50.12% 50.96% & 53.02%
respectively. In fiscal year 2060/61 & 2061/62 profit margins is to we
& than F/Y 2059/60. But In F/Y 2062/63 profit margin is in covered. It is
good far scbnl.
(II) Net Interest
Margin (NIM):-
NIM is another most popular tool of profitability
measurement. It shows the relationship between net interest income and interest
earning assets. It means the percentage of net interest income on interest
earning assets.
Net interest margin calculated as follows:-
Net interest margin = Net interest income / Interest
earning assets
Where,
NII = Interest income – interest expenses.
Interest earning assets = Investment + Loan, Advance
& bills purchased.
Table no. 4
NIM
|
Year
|
Net income
|
Interest
earning
|
NIM
|
|
2059/060
|
506993
|
11473503
|
4.42%
|
|
2060/061
|
537800
|
11640117
|
4.62%
|
|
2061/2062
|
536244
|
17845760
|
3.00%
|
|
2062/2063
|
658755
|
21870834
|
3.01%
|
|
Average
|
|
|
3.7625%
|
Sources Table No: 1& 2
Higher net interest margin is better for any book. The
above table shows the net interest margin for year 2059/60 to 2062/63 is 4.42%,
4.62%, 2.00%, & 2.01% respectively. In F/y 2060/61 NIM is income than F.Y.
2059/60 but the fiscal year 2061/62 & 2062/63 have been discovered And
2062/63 NIM is just greater than F.Y. 2061/62.
(III)
Interest spread
Interest spread is also popular tool to measure the
profitability of commercial bank. Interest spread is the difference between
coverage rate of return on interest earning assets and average rate of interest
paid on interest paying liabilities.
Interest spread is calculated as follows:
Interest spread = interest income /earning assets –
interest expenses / Interest paying liabilities
Where,
Interest paying liabilities = Loans & borrowing +
Deposit
Table no. 5
Interest Spread
|
Year
|
calculation
of spread
|
interest +
spread
|
|
2059/060
|
1,0001,859 – 255,153
11473503 18,884,770
|
7.37%
|
|
2060/061
|
1042,175 – 275,809
11473503 18,884,770
|
7.65%
|
|
2061/062
|
1058,677 – 254,126
17,845,760 19,391,020
|
4.62%
|
|
2062/063
|
1189,602 –
303,198
21,870,834 23,061,032
|
4.12%
|
|
Average (mean)
|
|
|
Source:
table = 1, table = 2
Higher interest spread is better for any bank because
it helps the bank to progress. The above table shows the interest spread for
year 2059/60 to 2062/063 it 7.37%, 7.65%, 4.62%, & 4.12% respectively. In f/y
2060/61 interest spread is greater than f/y. 2059/060 but in f/y 2061/62 &
2062/063 is decreasing trend. It is not good for the book. So, the bank
utilizes their assets effectively.
(IV) Return
on assets (ROA):-
This ratio shows the relationship between net profit
after tax and total assets. This ratio measures the profitability of all
financial resources invested in firms assets. It indicates capacity of the firm
in utilizing its assets to earn a maximum profit.
Calculation of ROA of
scbnl
Return on assets = NPAT / Total assets
Table No. 6
ROA
|
Year
|
NAPT
|
Total assets
|
ROA
|
|
2059/060
|
506993
|
20910970
|
2.24%
|
|
2060/61
|
537800
|
23624059
|
2.27%
|
|
2061/62
|
536244
|
26871043
|
2.00%
|
|
2062/63
|
658755
|
33074711
|
2.00%
|
|
Average
|
|
|
2.1275%
|
Sources Table 1 & 2
Highest the return on assets is better for any bank.
The above table shows the ROA for year 2059/60 to 2062/63 is 2.24%, 2.27%,
2.00% & 2.00% respectively. The ROA for year 2060/61 is increased and
therefore ROA for 2061/62 & 2062/63 are 2.00% constant.
(V) Return
on equity (ROE):-
Return on equity shows the relationship between net
profit after tax and shareholders equity. This ratio measures capacity of the
firm in utilizing the shareholders fund to cash maximum profit. It is good far
any institution to be higher.
ROE = NPAT / Equity
Table no. 7
ROE
|
Year
|
NAPT
|
Equity
|
ROE
|
|
2059/060
|
506993
|
1584894
|
31.98%
|
|
2060/061
|
537800
|
1713325
|
31.39%
|
|
2061/062
|
536244
|
1809001
|
29.79%
|
|
2062/063
|
658755
|
2005473
|
32.85%
|
|
Average (mean)
|
|
|
31.50%
|
Sources
Table No: 1& 2
The above table shows the return on equity for the
year 2059/060 to 2062/063 i.e. 31.98%, 31.39%, 29.79% & 32.85%
respectively. The position of return is good. The ROE is decreasing trend but
the ROE of fiscal year2062/063 has been increased.
2.2.2. Leverage
ratio
The leverage ratios are calculated to judge the long
term financial poison. These ratios are also called “capital structure of Bank.
(I) Debt to total asset ratio (D/A ratio):-
Debt to total asset ratio shows the relationship
between the total debt and total asset. It measures the proportion of total
assets financed by the debt.
Debt to total assets ratio calculates as follows:-
Debt to total assets = total debt / total assets
Table No. 8
Debt to
total assets ratio
|
Year
|
Total Dept
|
Total
assets
|
Debt to
total assets ratio
|
|
2059/060
|
19326075
|
20910970
|
92.42%
|
|
2060/061
|
21,928,734
|
23,642,059
|
92.75%
|
|
2061/062
|
20,199,261
|
26,871,043
|
75.17%
|
|
2062/063
|
24,022,191
|
33,074,711
|
72.63%
|
Sources
table no.1
The above table shows the debt to total assets ratio
of F.Y. 2059/060 i.e. 92.42%, 92.75%, 75.17 & 72.63% respectively low debt
ratio is relatively good. But in above table shows that the debt ratio of scbnl is very high. So, capital
structure of scbnl is not good.
Because more debt means more risk.
(II) Debt to equity ratio (D/E Ratio)
Debt to equity ratio shows the relationship between
total debt and equity. This ratio measures the relative interest of creditors and
owners. It depicts an arithmetical relation between debt fund and owner’s fund.
Debt to equity ratio calculates as follows:
Debt to equity ratio = total debt / equity
Table No.9
Debt to Equity
|
Year
|
Total debt
|
Equity
|
Debt to
equity ratio
|
|
2059/60
|
19326075
|
1584894
|
12.19 : 1
|
|
2060/061
|
21928734
|
1713325
|
12.80 : 1
|
|
2061/062
|
20199261
|
1800001
|
11.22 : 1
|
|
2060/063
|
24022191
|
2005473
|
11.98 : 1
|
|
Average
|
|
|
12.0475 : 1
|
Sources Table No.1
Above table shows that debt equity ratio far the year
2059/060 to 2060/063 i.e. 12.19:1, 12.80:1, 11.22:1 & 11.98:1 respectively.
In capital structure of scbnl,
debt portion is much more than owner’s equity. It is an unfavorable signal to
the creditors of scbnl. In fiscal
year’s 2062/063 debt ratio is more than the previous 2061/062.
(III) Equity
Multiplier:-
Equity multiplier shows the relationship between total
assets and equity. Equity multiplier ratio is amount of assets for each amount
of equity.
Equity multiplier of scbnl
Table No. 10
Equity multiplier
|
Year
|
Total
assets
|
Equity
|
Equity
multiplier
|
|
2059/060
|
20910970
|
1584894
|
13.19
|
|
2060/061
|
23642059
|
1713325
|
13.80
|
|
2061/062
|
26871043
|
1800001
|
14.93
|
|
2062/063
|
33074711
|
2005473
|
16.49
|
|
Average (mean)
|
|
|
14.6025
|
Sources Table No.1
The above table shows the equity multiplier of scbnl of the year 2059/060 to 2062/063
i.e. 13.19, 13.80, 14.93 and 16.49 respectively. The equity multiplier is
increasing trend.
2.2.3. Total
Assets turnover Ratio:-
The total assets turnover indicates the efficiency
with which the firm uses its assets to generate income. The most importance
turnover ratio for commercial banks i9s the total assets turnover.
Total assets turnover ratio calculates as follows.
Total assets turnover ratio = operating income / total assets
Where,
Operating income = net income + interest + tax
Table no.11
Total assets
turnover ratio
|
Year
|
Operating
|
Total
assets
|
Total
assets turnover ratio
|
|
2059/060
|
970308
|
2091097
|
4.47%
|
|
2060/061
|
1072918
|
23642059
|
3.92%
|
|
2061/062
|
1052276
|
26876043
|
3.92%
|
|
2062/2063
|
124272
|
33074711
|
3.76%
|
|
Average (X)
|
|
|
4.215%
|
Sources Table No. 1 & 2
The above table & figure shows the total assets
turnover ratio for the year 2059/060 to 2060/063 i.e. 4.64%, 4.54%, 3.92% and
3.76% respectively. The total assets turnover ratio but it is decreasing trend.
2.3 Study result
|
Particular
|
2059/060
|
2060/061
|
2061/062
|
2062/063
|
|
(A) Leverage ratio:
|
|
|
|
|
|
Debt to total asst ratio
|
92.42%
|
92.75%
|
75.17%
|
72.63%
|
|
Debt to equity
|
12.19:1
|
12.80:1
|
11.22:1
|
11.98:1
|
|
Equity multiplier
|
13.19:1
|
13.80:1
|
14.93:1
|
16.49:1
|
|
(B) Turnover ratio:
|
|
|
|
|
|
Total assets turnover ratio
|
4.64%
|
4.54%
|
3.92%
|
3.76%
|
|
(C) profitability ratio
|
|
|
|
|
|
Profit margin
|
52.22%
|
50.12%
|
50.96%
|
53.02%
|
|
Net interest margin
|
4.42%
|
4.62%
|
3.00%
|
3.01%
|
|
Interest spread
|
7.37%
|
7.65%
|
4.62%
|
4.12%
|
|
Return on assets
|
2.24%
|
2.27%
|
2.00%
|
2.00%
|
|
Return on equity
|
31.98%
|
31.39%
|
29.79%
|
32.85%
|
CHapter -THREE
SUMMARY, CONCLUSION AND
RECOMMENDATION
3.1 SUMMARY:
Scbnl is one of the major joint venture bank of Nepal is
playing a vital role in the economic growth of the nation. It is one of the
successful commercial bank of Nepal
This study has been undertaken to evaluate the
financial performance of assessment of profitability of analysis of scbnl. The financial statement of 4
years has been considered for the performance analysis of the bank. This
project work report has been divided into three main chapter in which first
chapter discussed about the background, origin and growth of bank in Nepal
The leverage ratio shows that the scbnl as has used more debt profit than
equity capital turnover ratio shows the good position of bank success to earn
profit to it god. At overall, the bank’s position is good and it is succeed to
get earn profit.
3.2
CONCLUSION
Establishment of the bank is very god sign for the
nation because it plays vital role in the development of nation. The banking
service provided by scbnl is very
effective, influence and broad. The bank had also been fulfilling the Nepal
Rastra Bank in investment to priority sector.
The major findings of this study which cover the
period of four years of scbnl are
listed below:
(a) Leverage ratios:-
The leverage ratios show that the debt financing of
scbnl is extremely high volume of capital, the high debt equity is the risk to
the creditors of scbnl and the firm itself.
(b)
Turnover ratio :-
The turnover ratio shows the position of bank is positive
but it is decreasing trend.
(c)
profitability ratios:
Profitability ratio show the profitability position of
scbnl is good because its profit
margin has increased in F.Y. 2062/063 and all ratios shows the positive
position of the scbnl so; the
investors of scbnl are receiving
higher return on their fund.
(d) Calculation of
the different ratios shows that the scbnl
has been mobilizing its resources very effectively.
3.3 RECOMMENDATION
At the end of the study of the following
recommendations are highlighted in this project work report, as a narrator I
recommend about the scbnl. There
are as follows:
(1) Capital structure shows that portion of
debt capital is more than equity capital. So, it should increase in equity
portion and reduce the debt capital far the stander.
(2) The bank should also maintain present
sound management and extend more facilities to its customers to increase its
customers to increase its transactions.
(3) The bank should keep eye as the factor
that is causing lens profit to the business.
(4) The management of scbnl should formulate proper plan and strategy and corrective
action by utilizing of financial resources effectively.
(5) Although it is a profit oriented bank, it
should not forget the social responsibility. So, the bank should render its
services in rural area to promote and mobilize small investors.
