1
CHAPTER - I
INTRODUCTION
Background of the Study
The mobilization of domestic resources, capital formation and its proper utilization plays
an important role in the economic development of a country. Every financial institution,
big or small, be it a commercial bank or a finance company or a cooperative bank, plays
an important role in the development of a country. Commercial banks are major financial
institutions, occupying an important place in the economy of a country because the
deposits collected by them provide much needed capital for the development of industry,
trade, and commerce and other sectors, thereby contributing to the economic growth.
Investment is the use of money to earn profit. It can be said that investment is the
concerned with the proper management of the investor’s wealth. Which is the sum is the
sum of the current income and the present value of all future income. Fund to be invested
come from assets already owned, borrowed money and saving or foregone consumption.
By foregoing today and investing the saving, visitors expect to enhance their future
consumption possibilities i.e. the fund is invested to increase wealth. Investors also seeks
to manage wealth effectively obtaining the most from it, while protecting it from
inflation, taxes and other possible harms. The policy of investment determines the
investor’s objective and the amount wealth. It is not appropriate foe a investors to say that
the objective is to make a lot of money. What is appropriate for a investors in this
situation is to state that objective to earn profit while recognizing that here exits some
chances of incurring large losses. Investment objective should be stated in terms of both
risk and return.
The primary goal of nation is rapid economic development to promote the welfare of the
people and the nation as well. Nepal being listed among the least developed countries, is
trying to embark upon the path of economic development by achieving a higher
economic growth rate and developing all sectors of economy. The proper mobilization
and utilization of domestic resource is one the key factors in the economic development
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of a country. Similarly, integrated and speedy development of the country is possible
only when the competitive and reliable banking services reached and carried to every
corner of the country. It has been well established that the economic activities of any
country can hardly be carried forward without the assistance and proper support of
financial institutions. Financial institutions have catalytic role in the process of economic
development. Successful formulation and effective implementation of investment policy
is prime requisite for the successful performance of banks and other financial institution.
Proper investment policy has a positive impact on economic development of the country.
Investment is always related with risks and return making money alone cannot be an
appropriate to state that objective is to make profit by recognizing the possible losses.
Therefore, investment objective should be stated in terms of both risk and returns. Setting
a clear investment policy also involves the identification of the potential categories of
financial asset for consideration institution the ultimate portfolio. The identification of
asset depends upon many things such as investment objectives, investable wealth, tax
consideration etc. The primary objectives, in priority order, of investment activities shall
be safety, liquidity, and yield. Safety of principal is the foremost objective of the
investment program. Investments shall be undertaken in a manner that seeks to ensure the
preservation of capital in the overall portfolio. The objective of investment policy is to
mitigate credit risk and interest rate risk.
The company minimizes the risk that the market value of securities in the portfolio will
fall due to changes in general interest rates, by structuring the investment portfolio so that
securities mature to meet cash requirements for ongoing operations, thereby avoiding the
need to sell securities on the open market prior to maturity. Investing operating funds
primarily in shorter-term securities.
The investment portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated. This is accomplished by structuring the
portfolio so that securities mature concurrent with cash needs to meet anticipated
demands (static liquidity). Furthermore, since all possible cash demands cannot be
anticipated, the portfolio should consist largely of securities with active secondary or
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resale markets (dynamic liquidity). A portion of the portfolio also may be placed in bank
deposits or repurchase agreements that offer same-day liquidity for short-term funds.
The investment portfolio shall be designed with the objective of attaining a market rate of
return throughout budgetary and economic cycles, taking into account the investment risk
constraints and liquidity needs. Return on investment is of secondary importance
compared to the safety and liquidity objectives described above. The core of investments
is limited to relatively low risk securities in anticipation of earning a fair return relative to
the risk being assumed. Securities shall not be sold prior to maturity with a security with
declining credit may be sold early to minimize loss of principal. A security swap would
improve the quality, yield, or target duration in the portfolio. Liquidity needs of the
portfolio require that the security be sold.
Commercial Bank are major financial institution, which occupy quite important place in
the framework of every economy. Commercial banks lender numerous services to their
customer with a view of facilitating their economic and social life. All the economic
activities of each and every country are greatly influenced by the commercial banking
business of that country. Commercial banks, by playing actives roles, have changed the
economic structure of the world. Thus commercial banks have become the heart of
financial system.
Commercial banks deal with other people’s money. They have to find the ways of
keeping their liquid so that they could meet the demand of their customer. In anxiety to
make profit, banks can’t afford to lock up their funds in institutions assets that are not
easily realizable. The depositor's confidence could be secured only if the bank able to
meet the cash promptly and fully. The banker has to keep adequate cash for this purpose.
Cash is an ideal asset and hence the banker can’t afford to keep a long portion of his
assets in the bank. Therefore, the banker has to distribute his assets in such a way that he
can have adequate profits without sacrificing liquidity.
Nepal Bank Limited (NBL)
The history of the banking development of Nepal is not very long. Nepal Bank Limited, The first
bank of Nepal was established in November 15, 1937 A.D (Kartik 30, 1994 B.S). It was formed
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under the principle of Joint venture (Joint venture between govt. & general public). NBL's
authorized capital was Rs. 10 million & issued capital Rs. 2.5 million of which paid-up capital
was Rs. 842 thousand with 10 shareholders. Now its authorized capital is Rs. 15 Billion of which
paid-up capital is Rs. 12 Billion with 8 Board of Directors.
Nepal SBI Bank Limited (NSBI)
Nepal SBI Bank limited is the fifth joint venture bank in Nepal. It was established on 24th Jestha
2050 B.S. under Nepal commercial Bank Act 2031. Nepal SBI Bank is established with the
assistance of state bank of India. It was established with the authorized capital of Rs. 240 million,
issued capital of Rs.120 million and paid up capital of Rs. 119.946 million.
Objectives of the Study
The objectives of the study are as follows.

To analyze the financial performance of Nepal Bank and Nepal SBI Bank in term of
liquidity, asset management, profitability and risk.

To examine the utilization of available fund of Nepal Bank and Nepal SBI Bank
Rationale of the Study
There is less availability of research and articles in investment policy of commercial
bank. As investment is the backbone of development of the country and commercial
banks have great contribution in the economic growth, this study will try to highlight
investment policy of commercial banks.
Every investor in the worlds invests their money in the hope of getting good return from
their investment. Some of them succeed while other become failure in their goal. Due to
many reasons they lose their hard earning just not by analyzing risk and return involved
in the investment. Thus recoverable investment is must because investment policy is the
proper management of wealth to generate income. Moreover, without sound investment
policy no banks and institutions can run or exits in the long run. Thus the main focus of
the study is to analyze the sound investment structure of NBL and NSBI. With the help of
financial and statistical analysis. Moreover, the study is focused on evaluating the
deposits utilization in terms of loans and advances and investment and its impact in the
profitability of the banks and the study is the portfolio behavior of the banks.
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This study will be summarizing, sensible and precious to the people having interest in the
investment structure of NBL and NSBI bank. This will be beneficial for bank
management, shareholders and customers. Furthermore, this will be useful for teacher
and students related to the accountancy and finance. In conclusion, the importance of the
study focuses at following points:

It will be helpful for commercial banks and financial institutions.

It will provide required information and data to required persons, readers,
shareholders, decision makers, traders, investors, general public, etc.

It will be valuable property for decision making.

This study can also be used as reference for future research.
Review of the Literature
Review of literature provides the foundation for developing a comprehensive theoretical
framework and knowledge of the status relevant to the field of research in order to
explore the relevant and true facts for the reporting purpose. Hence, in this chapter, the
focus has been made on the review of literature relevant to the investment policy of
commercial banks. For this study, different books, journals, articles, annual reports and
some research paper related with this topic has been reviewed. Therefore, this chapter is
arranged in the following order:
Theoretical review
Review of supportive text provides the fundamental theoretical framework and
foundation to the present study. For this, various books, research paper, article etc dealing
with theoretical aspect of investment policy analysis is taken into consideration.
Definition of investment
The term investment covers a wide range of activities. It is commonly known fact that an
investment is only possible when there is adequate saving. If all the income and saving
are consumed to solve the problem of hand to mouth and to the other basic needs, then
there is no existence of investment. Therefore, both investment and saving are
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interrelated. Different authors have tried to explain the meaning of investment in their
own way. Some of them are explained below.
Investment is the allocation of capital to investment proposal whose benefit are to be
received in the future. Because the future benefits are not known with certainty,
investment proposal necessarily involve risk. Consequently, they should be evaluated in
relation to their expected return and risk, for these is the factor that affects the firm’s
valuation in the marketplace. Moreover, investment in capital projects should provide
expected return in the excess of what financial market require (Van Horne, 2002).
Investment as the commitment of future one or more assets that will be held over some
future time period. Investment is concerned with the management of an investor’s wealth.
Which is the sum of current income and present value of all income (Charles 1991).
The investment objectives are to increases systematically the individual wealth, defined
as asset minus liabilities. Higher the level of desired wealth the higher must be received.
An investor seeking higher return must be willing to face the higher level of risk (Cheney
& Moses, 1998).
Investment are made in assets in all are two types, real assets (land, building, factories
etc) and financial assets (stocks, bond, T-bill etc.). These two investments are not
competitive but complementary. High developed institution for financial investment
greatly facilitates real investment.
From these definitions, it is clear that investment is simply the conversion of money into
claims on money and use of fund for productive and income earning assets. It is the
employment of funds with the target of achieving additional income or value in the
future. It involves saving of resources from current consumption in the hope that some
benefits will accrue in the future.
Investment policy
Investment policy can be defined as the action plan by which its funds are distribute on
different type of assets with good profitability on the one hand and provide maximum
safety and security on other hand. Investment policy is the cornerstone of the investment
process. Without it, investors have no appropriate context in which to make decisions.
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Investment policy fixes responsibilities for the investment disposition of the banks assets
in terms of allocating funds for investment and loan and establishing responsibility for
day to day management of those assets.
Commercial bank should consider the national interest followed by borrower’s interest
and the interest of the bank itself before investing to the borrowers. To further pursue his
view, bank lending must be for such purposes of the borrowers that are in keeping with
the national policy and bank’s overall investment policy. A bank’s overall investment
should be basically of short term characters, well spread, repayable on demand profitable
and well inadequate security.
Investment environment
The investment environment refers to all internal and external forces, which have a
bearing on the functioning of investment decisions. It encompasses the kinds of
marketable securities that exist and where and how they are bought and sold through the
broker’s network and financial intermediaries. Thus, the investment environment is a
combination of securities, markets and intermediaries. Any securities transaction
conducted without using broker is directly illegal in accordance with rules and regulation.
Security is a piece of paper representing the investor’s rights to certain prospects of
property and the conditions under which he or she may exercise those rights. It serves as
evidence of property rights. It may be transferred to another investor. The term “security”
refers to a claim to receive prospective future benefits under certain conditions.
Security markets are mechanisms created to facilitate the exchange of financial assets. It
brings the buyers and sellers together. On the basis of securities traded, security market
can be classified into primary and secondary market. On the basis of life-span of
securities, it can be divided into money market and capital market.
Financial intermediaries are organization that issue financial claims against themselves
and use the proceeds to purchase primarily the financial assets of others. They actively
participate as both suppliers and demanders of funs. They include savings and loan
associations, savings banks, credit unions, life insurance companies; mutual funds
pension funds (Charles, 1990).
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Loans and advance policy
This policy is also known as Credit Policy of the bank. Credit policy guides the bank’s
overall credit operation. The Credit policy is the primary means by which senior
management and the board guide lending activities. Although the policy primarily
imposes standards, it also is a statement of the bank’s basic credit philosophy. It provides
a framework for achieving asset quality and earnings objectives, sets risk tolerance levels,
and guides the bank’s lending activities in a manner consistent with the bank’s strategic
direction. Credit policy sets standards for portfolio composition, individual credit
decisions, fair lending, and compliance management (Pandey, 1992).
Credit policy should provide a realistic description of where the bank wants to position
itself on the risk/reward spectrum. It needs to provide sufficient latitude for a bank to
respond to good business opportunities while concurrently controlling credit risk. In
normal circumstances, a bank should be able to achieve portfolio objectives and respond
to changing market conditions without triggering a limit. Limits should not be so
conservative that insignificant changes breach them, nor should they be so liberal that
they have no practical effect. For the policy to be an effective risk management tool, it
must clearly establish the responsibilities of those involved in the lending process.
Policies should be periodically reviewed and revised to accommodate changes in the
bank’s strategic direction, risk tolerance, or market conditions. Policy review should
consider the organizational structure, breadth and complexity of lending activities,
capabilities and skills of lending personnel, and strategic portfolio quality and earnings
objectives. Changes in regulations and business conditions also need to be considered. In
addition to providing an opportunity for change, the review should evaluate how well the
policy has guided lending decisions. For example, a high volume of exceptions indicates
that many loan decisions are being made outside the policy. This could mean that the
bank is assuming more risk than is desirable or that the policy is too restrictive. If the
bank’s policy is too restrictive, easing it could increase business opportunities without
unduly increasing risk. Conversely, the absence of exceptions may indicate that the
policy is too vague, and a tightening of the policy could strengthen the controls on loan
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quality. All policy reviews should include the organizational unit responsible for
assessing compliance with policy (Pandey, 1992).
Since the largest proportion of a bank’s assets portfolio is taken by loans and advances,
healthy development of any bank depends heavily upon its Credit Policy. A sound and
viable Investment Policy can attract both borrowers and lenders, which helps to increase
the volume and quality of deposits, loans and investments. The loan provided by
Commercial Bank is guided by several principles such as length of time, their purpose,
profitability, safety, etc. These fundamental principles of commercial banks’ investment
are fully considered while making investment policy. Investment through loans and
advances to borrowers is risk inherent. For this, commercial banks have to pay due
consideration for risk management while formulating Investment Policy. "The
Investment Policy should be carefully analyzed". Commercial bank should be careful
while performing the credit creation function. Investment policy should ensure minimum
risk and maximum profit from lending. Modern portfolio management of bank assets has
fundamentally changed the requirements for individuals using this technique: their
backgrounds, their training, and their skills in using available resources. While traditional
credit training, remains necessary, today's portfolio manager augments this background
with knowledge of early-warning systems, alternative structures to better set risk/return
parameters, and more (Corrado and Jordan, 2002).
Traditional training focused on the individual loan. Traditional credit training focused on
the analysis of a firm's management, operations, and financial structure as the basis for
determining a borrower's creditworthiness; now training programs incorporate not only
these techniques, but also that elusive element called a bank's credit culture.
In essence, a bank's credit culture was a series of written and unwritten rules about which
types of customers, industries and credit profiles were acceptable. This culture ultimately
dictated the structure and composition of the bank's total portfolio.
Protection measures against portfolio losses focused on loan loss reserves based on
moving-average formulas. Concentration risk was to be avoided, but there were always
special customers for whom expectations could be made. If the formulas were correct,
then overall expected losses in the portfolio would be covered by reserves. But those
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formulas and expectations were not always so accommodative. As a result, certain
concentrations would invariably lead to extraordinary, or unexpected, losses that were
charged to income in the year of their incurrence.
Portfolio management looks at the impact of loans individually, collectively and
comparatively. Modern portfolio management techniques have supplemented those
unwritten rules with portfolio analysis and policies that establish limits on exposure by
country, by obligor, by industry and so on. These limits are derived from a specific focus
on the technical aspect of these assets class—a segmentation of the credit product and an
analysis of the effect of combining credits into portfolios. Credit portfolios can now be
evaluated on the basis fundamental as well as quantities portfolio analysis (This is now
being further institutionalized in terms of required capital as defined in the updated Basel
Capital Accords).
Empirical review
Investment means employing money to generate more money in the future. It is the use of
capital to create more money, through more risk-oriented ventures designed to result in
capital gains. Investment is the forfeit of current rupees for future rupees. The forfeit
takes place in the present, and is certain. The reward comes later and is uncertain. Hence
there are three elements in investment which are return, risk and time. An investment is a
commitment of funds made in the expectation of some positive rate of return (Francis and
Jack Clark, 1990). Likewise, an investment is simply deferred consumption: instead of
spending today, we choose to wait because we wish to have more to spend latter (Corrado
and Jordon, 2002).
Investment policy can be defined as the action plan by which its funds are distribute on
different type of assets with good profitability on the one hand and provide maximum
safety and security on other hand. Investment policy is the cornerstone of the investment
process. Without it, investors have no appropriate context in which to make decisions.
Bexley (1987), expresses his views as, investment policy fixes responsibilities for the
investment disposition of the bank’s assets in terms of allocating funds for investment
and loan and establishing responsibility for day to day management of those assets.
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Commercial bank should consider the national interest followed by borrower's interest
and the interest of the bank itself before investing to the borrowers (Clemens, 1963). To
further pursue his view, bank lending must be for such purposes of the borrowers that are
in keeping with the national policy and bank's overall investment policy. A bank's overall
investment should be basically of short term characters, well spread, repayable on
demand profitable and well inadequate security.
The investment environment refers to all internal and external forces, which have a
bearing on the functioning of investment decisions. It encompasses the kinds of
marketable securities that exist and where and how they are bought and sold through the
broker's network and financial intermediaries. Security markets are mechanisms created
to facilitate the exchange of financial assets. It brings the buyers and sellers together. On
the basis of securities traded, security market can be classified into primary and
secondary market. Financial intermediaries are organization that issue financial claims
against themselves and use the proceeds to purchase primarily the financial assets of
others.
Research Methodology
This part contains the discussion about the methods and processes that has been used for
the study and analysis of the investment structure of NBL and NSBI. It includes general
introduction, research design, and sources of data, population and sample and methods of
data analysis.
Research design
A research design is the arrangement of conditions for collection and analysis of data.
Moreover, the research design is the conceptual structure within which research is
conducted; it constitutes the blueprint for collection and analysis of data. This study
follows descriptive and analytical research designs. Some financial and statistical tools
have been applied to evaluate investment structure of NBL & NSBI.
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Sources of data
This study is conducted on the basis of secondary data. The data required for the analysis
are directly obtained from the Balance Sheet, Profit and Loss account, and annual reports
of concerned banks and publications of NRB. Supplementary data and information are
collected from number of institutions like SEBON, NEPSE, ministry of finance, budget
speech of different fiscal year, economic survey, etc. Likewise, various data and
information are collected from the economic journals, magazines and other published and
unpublished dissertations.
Population, sample, sampling
There are altogether 21 commercial banks functioning all over the Nepal. From these
populations, Nepal Bank Ltd. and Nepal SBI Bank Ltd. are selected for the study. Further
Purposive sampling method is used for the study.
Data collection procedure
As the study was based mainly on the secondary data, required fact and figures have been
obtained from the annual reports collected from the corporate office and from official
website of the respective banks. Official website of Nepal central bank called Nepal
Rastra Bank (NRB), security board of Nepal and Ministry of Finance (MOF). Other
references materials were collected from the central library of Tribhuvan University
(TU). During the visit in the bank, data were collected from the respective sample’s
banks using the structured data collection sheet.
Methods of data analysis
In this study, various financial and statistical tools have been used. The various tools are
presented as follows:
Financial tool
Financial tools are used to examine to examine the financial strength and weakness of
bank. The analysis of the financial position of any firm to examine its performance is
known as financial analysis. It is the process of evaluating the position of a firm by
establishing relationship with various components parts of the financial statements.
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Financial analysis is the process of identifying the financial strength and weakness of a
firm by properly establishing the relationship between the items of balance sheet and
profit and loss account (Pandey, 1999).
Ratio analysis
Ratio is the mathematical relationship between two accounting figures. Ratio analysis is
the main tools of financial statement analysis. Ratio means the numerical or quantitative
relationship between two items or variables. It can be expressed as percentage, fraction or
a stated comparison between two numbers (Pandey, 1999). Hence, ratio analysis is the
calculation and interpretation of financial ratios to assess the forms performance and
status. Qualitative judgment can be done with the help of ratio analysis. In this study,
some of the relevant financial ratios are used. They are presented into three broad
groupings.
Statistical tools
After the collection, organization and the presentation of data, the next step is to analyze
the data. On this study, various statistical tools like trend analysis, standard deviation,
coefficient of variance, coefficient of correlation analysis, etc. have been used to analyze
this data. Statistical tool or appropriate technique of analysis depends upon the nature of
the data and the purpose of the enquiry. The following tools are used in the analysis of
the financial position of the bank:
Arithmetic mean
It represents the entire data by a single value. It provides the gist and gives the bird's eye
view of the huge mass of unwieldy numerical data. It is calculated as:
Where:
N
∑X
=
Arithmetic mean
=
=
Number of observations
Sum of observations
Standard deviation
The measurement of the scatterings of the mass of figures in a series about an average is
known as dispersion. The standard deviation measures the absolute dispersion. Standard
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deviation, usually denoted by the letter σ (sigma: The Greek alphabet) was firs suggested
by Karl Pearson as a measure of dispersion. It is defined as the positive square root of the
arithmetic mean of the squares of the deviations of the given observations from
arithmetic mean as is given by:
Where,
=
is the arithmetic mean of the given values.
Coefficient of variance
Standard deviation is only an absolute measure of dispersion, depending upon the units of
measurement. The relative measure of dispersion based on standard deviation is called
the coefficient of standard (Gupta, 1993).
It is given by:
For comparing the variability of two distributions, CV is computed of each distribution.
A distribution with smaller CV is said to be less variable or more consistent or more
homogeneous or more uniform.
Limitations of the Study
The study has the following limitations:

The study deals with only two commercial banks (NBL and NSBI) and data
related to other commercial banks have not been accounted.

The study has covered only 5 years' data.

This is mostly based on secondary data (published annual reports of
commercial
banks), journals, newspapers, magazines etc. and unpublished thesis.

Out of the numerous affecting factors, this study concentrates only on those factors,
which are related with investment policy, and available in the form
required for
analyzing the different issues.

The study cannot cover all the dimensions of the subject and cannot penetrate the
depth because of the lack of sufficient time and other resources limitation.
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CHAPTER - II
RESULTS AND ANALYSIS
This chapter covers presentation and analysis of all related information about selected
banks which also covers presentation and analysis of secondary data, an attempt has been
made to analyze the financial performance of NBL and NSBI bank limited for its
operational period of five years that is from 2017/18 to 2021/22. This chapter of thesis
presents the data and facts relating to different aspects of NBL and NSBI bank limited.
These available data are tabulated, analyzed and interpreted so that financial forecast of
banks can be done easily. Hence, the financial ratios have been taken from this, only
selected ratios including liquidity ratios, assets management ratios and profitability ratios
been taken for analyzing the strength and weakness of the sample commercial banks.
Ratio analysis
Ratio analysis involves the method of calculating and interpreting financial ratios in order
to assets the firm’s performance and status. In order to analysis and interpret the tabulated
data the following measures have been used.

Liquidity Ratio

Assets Management Ratio

Profitability Ratio
Liquidity ratio
This ratio measures to evaluate the performance of the selected banks regarding their
strategies, operating and financing decisions. Under these following ratios have been
tested.
Current ratio
It is the ratio of total current assets to total current liabilities calculated by dividing the
company’s current assets by current liabilities.
Current Ratio = Current Assets
Current Liabilities
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Table No. 1:
Current Ratio Analysis
Bank
In times
NBL
NSBI
Year
Current
Current
Ratio
Current Current
Ratio
Assets
Liabilities (Times) Assets
Liabilities (Times)
2017/18
70443
62989
1.12
65288
59262
1.10
2018/19
89222
69338
1.29
64829
54835
1.18
2019/20
89095
78077
1.14
59830
51849
1.15
2020/21
102468
89446
1.15
77656
65534
1.18
2021/22
106509
93974
1.13
99140
81942
1.21
Mean
1.17
1.16
S.D.
0.07
0.044
5.98
3.793
C.V
Source: Annual Report
The table no. 1 shows that the current ratio of both banks has been below the standard 2:1.
The ratio of NBL over the study period of five years is 1.12, 1.29, 1.14, 1.15 and 1.13 times
and mean is 1.17 times whereas NSBI bank limited has ratio of low of 1.10 times in
2017/18 and high of 1.21 times in 2021/22 with mean of 1.16 times. NBL has S.D. of 0.07
times which is higher than that of NSBI bank limited i.e.0.044.The C.V of NBL is higher
than NSBI Bank so NBL is more variable but less stable than NSBI Bank. The NSBI bank is
more consistent than NBL. The current ratio can be shown with the following diagram.
Figure no. 1: Current Ratio Analysis
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The above figure shows that the current ratio of both banks has been below the standard 2:1.
The ratio of NBL over the study period of five years is 1.12, 1.29, 1.14, 1.15 and 1.13 times
and mean is 1.17 times whereas NSBI bank limited has ratio of low of 1.10 times in
2017/18 and high of 1.21 times in 2021/22 with mean of 1.16 times. NBL has S.D. of 0.07
times which is higher than that of NSBI bank limited i.e.0.044.The C.V of NBL is higher
than NSBI Bank so NBL is more variable but less stable than NSBI Bank. The NSBI bank is
more consistent than NBL.
Investment on government securities to current assets
Investment on government
Securities to current assets Ratio = Investment on Treasury bills
× 100
Current Assets
Table No. 2
Investment on Government Securities to Current Assets Ratio Analysis
Bank
NBL
NSBI
Current
Assets
Ratio
(%)
2017/18
Investment on
Government
Securities
7227
Current
Assets
Ratio
(%)
10.26
Investment on
Government
Securities
2742
70443
65288
4.20
2018/19
18680
89222
20.94
5172
64829
7.98
2019/20
11960
89095
13.42
2102
59830
3.51
2020/21
7860
102468
7.67
1000
77656
1.29
2021/22
Mean
4909
106509
4.61
11.38
1842
99140
1.86
3.77
Year
S.D
6.25
2.64
C.V
54.92
70.03
Source: Annual Report
The table no. 2 shows that ratio of NBL bank has ranged between low of 4.61% in 2021/22 to
high of 20.94% in 2018/19 while the ratio of NSBI bank limited has ranged between low of
1.29 % in 2020/21 to high of 7.98% in 2018/19. The mean ratio of NSBI bank is lesser than
NBL. Similarly, NBL has more consistency than NSBI bank with C.V. of 54.92% in
comparison to 70.03% of NSBI bank. NSBI bank is more efficient in using government
18
securities. But lower the investment on government securities means higher the risk and
higher the income and vice-versa. It can be shown with the help of following diagram.
Figure no. 2 Investment on Government Securities to Current Assets Ratio Analysis
The above figure shows that ratio of NBL bank has ranged between low of 4.61% in 2021/22
to high of 20.94% in 2018/19 while the ratio of NSBI bank limited has ranged between low of
1.29 % in 2020/21 to high of 7.98% in 2018/19. The mean ratio of NSBI bank is lesser than
NBL. Similarly, NBL has more consistency than NSBI bank with C.V. of 54.92% in
comparison to 70.03% of NSBI bank. NSBI bank is more efficient in using government
securities. But lower the investment on government securities means higher the risk and
higher the income and vice-versa.
Loan and advances to current assets ratio
This ratio is calculated by using the following formula:
Loan and advances to current assets = Loan and advances
×100
Current assets
Table No. 3
Loans and Advances to Current Assets Ratio Analysis
In Percentage
19
Bank
NBL
Year
Loan and
Advances
2017/18
37855
NSBI
Current Ratio (%)
Assets
70443
53.74
Loans and
Advances
28788
Current
Assets
65288
Ratio
(%)
44.09
2018/19
41218
89222
46.20
35280
64829
54.42
2019/20
50971
89095
57.21
39979
59830
66.82
2020/21
61250
102468
59.77
46976
77656
60.49
2021/22
71746
106509
67.36
63025
99140
63.57
Mean
56.86
57.88
S.D.
7.78
8.96
C.V
13.68
15.48
Source: Annual Report
The table no. 3 shows that the loan and advances to current assets ratio of NBL bank
ranges from low of 46.20% during 2018/19 to high of 67.36% during 2021/22 with mean
ratio of 56.86%. Similarly, the ratio of NSBI bank ranges from low of 44.09% during
2017/18 to high of 66.82% during 2019/20.The mean ratio is 57.88%. Similarly, NBL
bank has more consistency than NSBI bank with C.V. of 7.78 % compare to 8.96 %
respectively. It can be explained with the help of following diagram.
Figure no. 3 Loans and Advances to Current Assets Ratio Analysis
20
The figure no. 3 shows that the loan and advances to current assets ratio of NBL bank
ranges from low of 46.20% during 2018/19 to high of 67.36% during 2021/22 with mean
ratio of 56.86%. Similarly, the ratio of NSBI bank ranges from low of 44.09% during
2017/18 to high of 66.82% during 2019/20.The mean ratio is 57.88%. Similarly, NBL
bank has more consistency than NSBI bank with C.V. of 7.78 % compare to 8.96 %
respectively.
Cash and bank balance to total deposit
The ratio is calculated by following formula:
CRR =
Cash and Bank Balance
×100
Total Deposit
Table No. 4 Cash and Bank Balance to Total Deposit Ratio
Bank
Year
Cash and
Bank
Balance
NBL
Total
Ratio
Deposit (%)
In Percentage
Cash and
Bank
Balance
NSBI
Total
Deposit
Ratio
(%)
2017/18
14184
62989
22.52
7713
58920
13.09
2018/19
6660
69338
9.61
6655
54493
12.21
2019/20
9012
77999
11.55
8435
51628
16.34
2020/21
15615
89410
17.46
10389
65214
15.93
2021/22
17673
93944
18.81
13230
81665
16.20
Mean
15.99
14.75
S.D.
5.32
1.95
C.V
33.27
13.22
Source: Annual Report
The table no. 4 shows that the ratio of NBL over the study period has ranged between
low of 9.61% in 2018/19 to high of 22.52% in 2017/18 with the mean of 15.99%
whereas NSBI bank has ranged between low of 12.21% in 2018/19 to high of 16.34%
in 2020/21 with mean of 14.75%. However, NSBI is more consistent or more stable
21
than NBL because it’s C.V. is less than C.V of NBL i.e. 13.22% < 33.27%. It can be
explained briefly with the help of following diagram.
Figure no. 4 Cash and Bank Balance to Total Deposit Ratio Analysis
The figure no. 4 shows that the ratio of NBL over the study period has ranged between low
of 9.61% in 2018/19 to high of 22.52% in 2017/18 with the mean of 15.99% whereas NSBI
bank has ranged between low of 12.21% in 2018/19 to high of 16.34% in 2020/21 with
mean of 14.75%. However, NSBI is more consistent or more stable than NBL because it’s
C.V. is less than C.V of NBL i.e. 13.22% < 33.27%.
Cash and bank balance to current assets
This ratio is calculated by using following formula:
Cash and Bank Balance to Current Assets =
Cash and Bank Balance
×100
Current Assets
Table no. 5 Cash and Bank Balance to Current Assets Ratio
Bank
NBL
In percentage
NSBI
22
Cash and
Bank
Balance
2017/18
14184
Year
Current
Assets
Ratio
(%)
70443
20.14
Cash and
Bank
Balance
7713
Current
Assets
Ratio (%)
65288
11.81
2018/19
6660
89222
7.46
6655
64829
10.27
2019/20
9012
89095
10.12
8435
59830
14.10
2020/21
15615
102468
15.24
10389
77656
13.38
2021/22
17673
106509
16.59
13230
99140
13.34
Mean
13.91
12.58
S.D.
5.09
1.54
C.V
36.60
12.23
Source: Annual Report
The table no. 5 shows that the cash and bank balance to current assets ratio of NBL has
ranged between low of 7.46% in 2018/19 to high of 16.59% in 2021/22 and mean of
13.91% whereas the ratio of NSBI bank has ranged between low of 10.27% in 2018/19 to
high of 14.10% in 2019/20. Mean ratio is 13.91% in NBL which is more than that of NSBI
bank's 12.58%. The C.V. of NBL is higher than NSBI bank i.e. (36.60%>12.23%) which
suggest that NSBI bank is utilizing its cash balance better than NBL. So NSBI bank is
in better position regarding their cash and bank balances. It can be explained with the help
of following diagram.
Figure no. 5 Cash and Bank Balance to Current Assets Ratio Analysis
23
The figure no. 5 shows that the cash and bank balance to current assets ratio of NBL has
ranged between low of 7.46% in 2018/19 to high of 16.59% in 2021/22 and mean of
13.91% whereas the ratio of NSBI bank has ranged between low of 10.27% in 2018/19 to
high of 14.10% in 2019/20. Mean ratio is 13.91% in NBL which is more than that of NSBI
bank's 12.58%. The C.V. of NBL is higher than NSBI bank i.e. (36.60%>12.23%) which
suggest that NSBI bank is utilizing its cash balance better than NBL. So NSBI bank is
in better position regarding their cash and bank balances.
Assets Management Ratio
These ratios are used to measure the bank’s ability to utilize their available
resources. Some selected ratios for this research can be illustrated as follows:
 Loans and Advances to Total Deposit Ratio
 Loans and Advances to Fixed Deposit Ratio
 Loans and Advances to Saving Deposit Ratio
 Investment to Total Deposit Ratio
Loans and advances to total deposit ratio
This ratio is calculated by using the following formula:
Loans and Advance to Total Deposit Ratio=
Loans and Advances
×100
Total Deposit
Table no. 6 Loans and Advances to Total Deposit Ratio
Bank
In Percentage
NBL
NSBI
Total
Deposit
Ratio(%)
2017/18
Loans and
Advances
37855
60.10
Loans and
Advances
28788
Total
Ratio
Deposit (%)
58920 48.86
62989
2018/19
41218
69338
59.45
35280
54493 64.74
2019/20
50971
77999
65.35
39979
51628 77.44
2020/21
61250
89410
68.50
46976
65214 72.03
2021/22
71746
93944
76.37
63025
81665 77.18
Year
Mean
69.95
68.05
S.D.
6.93
11.90
C.V
10.51
17.49
Source: Annual Report
24
Table No. 6 shows that ratio of NBL has ranged between low of 59.45 % in 2018/19 to
high of 76.37% in 2021/22 with mean of 69.95% whereas ratio of NSBI bank has ranged
between low of 48.86% in 2017/18 to high of 77.44% in 2019/20 with mean of 68.05%
which is less than NBL. And, NBL bank has C.V. of 10.51% and NSBI bank with
C.V. of 17.49%. The following diagram explains loans and advances to total deposit
ratio.
Figure no. 6 Loans and Advances to Total Deposit Ratio
The above figure shows that ratio of NBL has ranged between low of 59.45 % in 2018/19 to
high of 76.37% in 2021/22 with mean of 69.95% whereas ratio of NSBI bank has ranged
between low of 48.86% in 2017/18 to high of 77.44% in 2019/20 with mean of 68.05% which
is less than NBL. And, NBL bank has C.V. of 10.51% and NSBI bank with C.V. of
17.49%.
Loans and advances to fixed deposit ratio
This ratio is calculated by dividing the amount of loans and advances by fixed
deposits that is calculated below:
Loan and Advances Fixed Deposit Ratio = Loan & Advances
Fixed Assets
25
Table no. 7 Loan and Advance to Fixed Deposit Ratio Analysis
Bank
In percentage
NBL
NSBI
Fixed
Ratio
Ratio
Loans and Fixed
Loans and
Deposit
(Times)
Advances Deposit (Times)
Advances
2017/18
37855
12651
2.99
28788
38179
0.75
Year
2018/19
41218
12123
3.40
35280
28569
1.23
2019/20
50971
11286
4.52
39979
19129
2.09
2020/21
61250
11731
5.22
46976
23019
2.04
2021/22
71746
21288
3.37
63025
41777
1.51
Mean
3.90
1.53
S.D.
0.93
0.56
C.V
23.90
36.80
Source: Annual Report
The table no. 7 shows that this ratio of both NBL and NSBI bank limited are in fluctuating
trend. The mean ratio of NBL has 3.90 times whereas NSBI bank has 3.65 times. The
C.V. of NBL is less than NSBI bank limited i.e. (23.90 %< 36.80%) according to calculated
C.V., it indicates that loan and advances to fixed deposit ratio are being efficiently and
properly utilized by NBL than NSBI bank limited. Further, Loans and advances to fixed
deposit ratio can be explained with the help of following diagram.
Figure no. 7 Loan and Advance to Fixed Deposit Ratio Analysis
26
The above figure shows that this ratio of both NBL and NSBI bank limited are in fluctuating
trend. The mean ratio of NBL has 3.90 times whereas NSBI bank has 3.65 times. The
C.V. of NBL is less than NSBI bank limited i.e. (23.90 %< 36.80%) according to calculated
C.V., it indicates that loan and advances to fixed deposit ratio are being efficiently and
properly utilized by NBL than NSBI bank limited.
Loans and advances to saving deposit ratio
This ratio can be calculated by dividing the amount of loans and advances by the
amountof saving deposits. The ratio is calculated as follows:
Loans and Advances to Saving Deposit = Loans and advances
Saving Deposit
Table no. 8 Loan and Advance to Saving Deposit Ratio Analysis
Bank
Year
NBL
Loans and Saving
advances Deposit
In Percentage
NSBI
Ratio Loans and Saving Ratio
(Times) Advances Deposit (Times)
2017/18
37855
28232
1.34
28788
12888
2.23
2018/19
41218
33349
1.24
35280
16611
2.12
2019/20
50971
40682
1.25
39979
21485
1.86
2020/21
61250
50894
1.20
46976
26832
1.75
2021/22
71746
44730
1.60
63025
28660
2.20
Mean
1.33
2.03
S.D.
0.16
0.22
C.V
12.30
10.60
Source: Annual Report
The table no. 8 shows that ratio of NBL has ranged between lowest of 1.20 times in
2020/21 to highest of 1.60 times in 2021/22 with mean ratio of 1.33 times. Similarly,
NSBI bank has ranged between lowest of 1.75 times in 2020/21 to highest of 2.23 times
in 2017/18 with mean ratio 2.03 times. In short the mean ratio of NSBI bank is more than
the mean ratio of NBL. NSBI bank has more consistency in this ratio with C.V. of
10.60% which is less than C.V. of NBL is 12.30%. It means that NSBI bank is utilizing
27
its saving deposits better than NBL. The following diagram explains the loans and
advances to saving deposit ratio.
Figure no. 8 Loan and Advance to Saving Deposit Ratio Analysis
The figure no. 8 shows that ratio of NBL has ranged between lowest of 1.20 times in 2020/21
to highest of 1.60 times in 2021/22 with mean ratio of 1.33 times. Similarly, NSBI bank has
ranged between lowest of 1.75 times in 2020/21 to highest of 2.23 times in 2017/18 with
mean ratio 2.03 times. In short the mean ratio of NSBI bank is more than the mean ratio of
NBL. NSBI bank has more consistency in this ratio with C.V. of 10.60% which is less
than C.V. of NBL is 12.30%. It means that NSBI bank is utilizing its saving deposits better
than NBL.
Investment to total deposit ratio
This ratio is derived by dividing investment by the amount of total deposits in the bank.
Investment to Total Deposit Ratio = Investment ×100
Total Deposit
28
Table no. 9 Investment to Total Deposit Ratio Analysis
Bank
Year
In Percentage
NBL
NSBI
Investment Total Deposit Ratio(%) Investment Total Deposit Ratio (%)
2017/18
10977
62989
17.43
25906
58920
43.97
2018/19
22664
69338
32.69
17722
54493
32.52
2019/20
16902
77999
21.67
9320
51628
18.05
2020/21
12843
89410
14.36
19291
65214
29.58
2021/22
12181
93944
12.97
21043
81665
25.77
Mean
19.82
29.98
S.D.
7.93
9.58
C.V
40
31.75
Source: Annual Report
The table n o . 9 shows that this ratio of NBL has ranged between 12.97% in
2021/22 to 32.69 % in 2018/19 with mean being 19.82%. Similarly, this ratio of
NSBI bank is fluctuating in between the range of 18.05% in 2018/19 to 43.97% in
2017/18 with mean being 29.98%. In brief both bank’s ratio is following fluctuating
trend. Remarkably, higher mean ratio of NSBI bank signifies that NSBI bank has prefers
utilizing its deposits in investment portfolio. Conversely, NBL has given less importance
in this issue and the bank is less stable as well. Invest to total deposit ratio can be
explained with the help of following diagram.
Figure no. 9 Investment to Total Deposit Ratio Analysis
29
The figure no. 9 shows that this ratio of NBL has ranged between 12.97% in 2021/22 to
32.69 % in 2018/19 with mean being 19.82%. Similarly, this ratio of NSBI bank is
fluctuating in between the range of 18.05% in 2018/19 to 43.97% in 2017/18 with mean being
29.98%. In brief both bank’s ratio is following fluctuating trend. Remarkably, higher mean
ratio of NSBI bank signifies that NSBI bank has prefers utilizing its deposits in investment
portfolio. Conversely, NBL has given less importance in this issue.
Profitability Ratio
There are many measures of profitability. Each relates the returns of the firm to its sales,
assets, equity, or share value. As a group, these measures allow the analyst to evaluate firm’s
earnings with respect to given level of sales, a certain level of assets, the owner’s investments,
or share value. The profitability ratios in this study are calculated to measure the operating
efficiency and performance of two banks comparatively. Some major profitability identifying
ratios used in this study are:
 Net profit to total deposit ratio
 Net profit to total asset ratio
 Return on net worth
Net profit to total deposit ratio
This ratio is calculated by following formula:
Net profit to total deposit = Net profit
×100
Total Deposit
Table no.10 Net profit to total deposit Ratio Analysis
Bank
Year
2017/18
In Percentage
NBL
Net profit
792
Total Deposit
NSBI
Ratio (%)
62989
1.26
Net profit
771
Total Deposit
Ratio (%)
58920
1.31
2018/19
717
69338
1.03
923
54493
1.69
2019/20
484
77999
0.62
1065
51628
2.06
2020/21
2883
89410
3.22
1332
65214
2.04
2021/22
3118
93944
3.32
1523
81665
1.86
Mean
1.89
1.79
S.D
1.28
0.31
C.V
67.8
17.3
Source: Annual Report
30
The table no. 10 shows that the ratio of NBL bank has ranged between lower of 0.62% in
2019/20 to higher of 3.32 % in 2021/22 with the mean being 1.89% whereas the ratio of NSBI
bank has ranged between lower of 1.31% in 2017/18 to higher of 2.06% in 2019/20with mean
of 1.79%. The mean ratio of NBL is higher than that of NSBI bank. However, the ratio of
NSBI bank is more consistent than that of NBL with C.V. of NSBI bank being 17.30% to
NBL‟s 67.80%. NSBI bank is well equipped than NBL with its profit is highly earned and
deposited amount is properly utilized. It can be further described with the following figure.
Figure no. 10 Net profit to total deposit Ratio Analysis
The above figure shows that the ratio of NBL bank has ranged between lower of 0.62% in
2019/20 to higher of 3.32 % in 2021/22 with the mean being 1.89% whereas the ratio of NSBI
bank has ranged between lower of 1.31% in 2017/18 to higher of 2.06% in 2019/20with mean
of 1.79%. The mean ratio of NBL is higher than that of NSBI bank. However, the ratio of
NSBI bank is more consistent than that of NBL with C.V. of NSBI bank being 17.30% to
NBL‟s 67.80%. NSBI bank is well equipped than NBL with its profit is highly earned and
deposited amount is properly utilized.
Net profit to total assets ratio
The ratio is calculated by following formula:
Net Profit toTotal assetsRatio 
Net Profit
 100
Total Assets
31
Table no. 11 Net profit to Total Assets Ratio Analysis
Bank
In Percentage
NBL
NSBI
Year
2017/18
Net Profit
792
Total assets Ratio (%) Net Profit Total Assets Ratio (%)
73782
1.07
771
64796
1.19
2018/19
717
80405
0.89
923
61083
1.51
2019/20
484
88211
0.55
1065
59277
1.80
2020/21
2883
103480
2.79
1332
78515
1.70
2021/22
3118
112057
2.78
1523
99829
1.53
Mean
1.62
1.54
S.D.
1.08
0.23
C.V
67
15
Source: Annual Report
The table no. 11 shows that the ratio of NBL bank has ranged between lower of 0.55% in
2019/20 to higher of 2.79% in 2020/21 with mean being 1.62% whereas the ratio of
NSBI bank has ranged between lower of 1.19% in 2017/18 to higher of 1.80% in 2019/20with
mean of 1.54%. The mean ratio of NBL is higher than that of NSBI bank but NSBI bank has
far more consistency than NBL with C.V. of 15% with C.V of NBL being 67%. so NSBI bank
has maintained its profitability and also is in better position where as NBL has fall down
quickly.
Return on net worth
The ratio is calculated by following formula:
Return on Net Worth ⁼ Net Profit
Net Worth
x 100
32
Table no. 12 Return on Net worth Ratio Analysis
Bank
Year
In Percentage
NBL
Net Profit
Net Worth
NSBI
Ratio (%) Net Profit
Net Worth Ratio (%)
2017/18
792
(173)
(457.80)
771
3799
20.29
2018/19
717
3347
21.42
923
4536
20.35
2019/20
484
3831
12.63
1065
5646
18.86
2020/21
2883
6714
42.94
1332
6920
19.25
2021/22
3118
11452
27.23
1523
10398
14.65
Mean
(70.72)
18.68
S.D.
216.67
2.35
C.V
(306.40)
12.56
Source: Annual Report
The table no. 12 shows that the ratio of NBL has ranged between lower to -457.80% in
2017/18 to higher to 42.94% in 2020/21 with mean being -70.72% whereas the ratio of NSBI
bank has ranged between lower to 14.65% in 2021/22 to higher to 20.35% in 2018/19 with
mean of 18.68%. The mean ratio of NSBI bank is higher than that of NBL (i.e. mean of NSBI
bank is 18.68% > NBL is (70.72) %. However, NBL bank has more consistency than NSBI
bank i.e. C.V. of NBL is (306.40) % while that of NSBI bank is 12.56%. The chart below
describes return on net worth of both banks.
Figure no. 12 Return on Net worth Ratio Analysis
33
The above diagram shows that the ratio of NBL has ranged between lower to -457.80% in
2017/18 to higher to 42.94% in 2020/21 with mean being -70.72% whereas the ratio of NSBI
bank has ranged between lower to 14.65% in 2021/22 to higher to 20.35% in 2018/19 with
mean of 18.68%. The mean ratio of NSBI bank is higher than that of NBL (i.e. mean of NSBI
bank is 18.68% > NBL is (70.72) %. However, NBL bank has more consistency than NSBI
bank i.e. C.V. of NBL is (306.40) % while that of NSBI bank is 12.56%.
Major Findings of the study

The average current ratios of NBL and NSBI are 1.17 times and 1.16 times
respectively. Whereas, coefficient of variation (CV) of NBL and NSBI are 5.98% and
3.79% respectively.

The average investment on government securities to current assets ratio of NBL and
NSBI are 11.38% and 3.77% respectively. Whereas, coefficient of variation (CV) of
NBL and NSBI are 6.25% and 2.64% respectively.
 The average loan and advances to current assets ratio of NBL and NSBI are 56.86% and
57.88% respectively. Whereas, coefficient of variation (CV) of NBL and NSBI are
13.68% and 15.48% respectively.
 The average cash and bank balance to total deposit ratio (cash reserve ratio) of NBL and
NSBI are 15.99% and 14.75% respectively. Whereas, coefficient of variation (CV) of
NBL and NSBI are 33.27% and 13.22% respectively.
 The average cash and bank balance to current assets of NBL and NSBI bank are 13.91%
and 12.58% respectively. Whereas, coefficient of variation (CV) of NBL and NSBI are
36.60% and 12.23% respectively.
 The average loan and advances to total deposit ratio of NBL and NSBI are 69.95

% and 68.05% respectively. Whereas, coefficient of variation (CV) of NBL andNSBI
are 10.51% and 17.49% respectively.
 The average loan and advances to fixed deposit ratio of NBL and NSBI are 3.90 times
and 1.53 times respectively. Whereas, coefficient of variation (CV) of NBL and NSBI
are 23.90% and 36.80% respectively.
 The average loan and advances to saving deposit ratio of NBL and NSBI are 1.33 times
and 2.03 times respectively. Whereas, coefficient of variation (CV) of NBL and NSBI
34
are 13.30% and 10.60% respectively.
 The average investment to total deposit ratio of NBL and NSBI are 19.82% and 29.98%
respectively. Whereas, coefficient of variation (CV) of NBL and NSBI are 40% and
31.75% respectively.
 The average of net profit to total deposit ratio of NBL and NSBI are 1.89 % and 1.79%
respectively. Whereas, coefficient of variation (CV) of NBL and NSBI are 67.80% and
17.30% respectively.
 The average of net profit to total assets ratio of NBL and NSBI are 1.62 % and 1.54%
respectively. Whereas, coefficient of variation (CV) of NBL and NSBI are 67% and
15% respectively.
 The average of net profit to net worth of NBL and NSBI are (70.72) % and 18.68%
respectively. Whereas, coefficient of variation (CV) of NBL and NSBI are (306.40) %
and 12.56% respectively.
35
CHAPTER-III
SUMMARY AND CONCLUSION
Summary
Economic development of a country cannot be imagined without the development of
commerce and industry. No doubt, banking promotes the development of commerce to its
extreme, as banking itself is the part of commerce. Though the economic growth was as
snail speed in earlier year, it had caught its full sailing with the restoration of democracy
in the country. These days Nepal has been facing severe economic problem due to the
unrest condition. At present, political instability is hampering the economic development
of Nepal.
In this study the objective, financial positions and strategies of commercial banks have
been emphasized and analyze of their financial performance. Here the main finding of the
study is the financial performance of these two sample banks NBL and NSBI bank
limited has been presented. The financial data, statement of five consecutive years i.e.
2017/18 to 2021/22 has been examined for the study. The study is mainly based on the
secondary data, which have been processed first and analyzed comparatively. From this
analysis of financial performance of both the banks the various findings are made.
Conclusions
In conclusion, NBL and NSBI Bank need to improve its solvency position and need to
capitalize on the cash and its better utilizations. Comparatively, NSBI bank has benefited
more than NBL while making investment in government securities. So NBL need to
make good investment decisions. Both banks have similar type of loan and advances so
both have to encourage more customers for better results. Cash reserve ratio (CRR) of
NBL is very low so bank needs more cash and bank balances to run smoothly. Loan and
Advances to total deposits and fixed deposits have better positioned for NBL in compare
to NSBI. So NSBI have to make better decisions regarding loan and advances to total and
fixed deposits. As for saving deposits loan and advances of NSBI are better placed.
Profitability ratio shows NSBI has better outcome and better profit margins than NBL. So
NBL have to make improvements by enhancing its financial activities efficiently.
36
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Websites
http://www.answers.com
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