COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Chapter -1
Introduction: General Background
Origin and evaluation of bank:
The word ‘Bank ‘derives from the Italian word ‘Banco’ which refers to the bench on which
the banker would keep its money & his records. The traces of rudimentary banking are found
in chalden Egyptian and Phoenician history.
According to Growth Crowther, there are three ancestors of banking who contributed in the
growth & development of banking. They are a) merchant b) money lenders c) Goldsmiths.
Bank of Venice was the first public institution, was established in Venice, Italy in 1157 A.D.
There after ‘Bank of Barcelona’ & ‘Bank of Genoa’ in 1401A.D&1407A.D. were established
for local citizens and foreigners with the target to exchange money, receive deposits &
discounts bills of exchange. Then after that bank of Amsterdam was established to meet the
needs of merchant of the city which created a campaign for depositors to receive a kind of
certificate entitling them to withdraw their deposits within six months, which later on
developed as cheque in the modern banking that started after united States of America
introduced banking act in1883A.D.So, this trend of banking began to increase and spread all
over the world.
In Nepal there was no organized banking system before 1994B.S. and few money lenders
carried out all the monetary transaction people had done their financial transaction with local
money lender or landlords who charged high interest rate. It was established as semi
government financial institution with the paid up capital 842000.Economic liberalization
policies of HMG led to a dozen of commercial banks actively playing in the financial market
of the kingdom.
In early India, the religious book namely ‘Manu’ contains references regarding deposits,
pledges, policy of loan and rates of interest. The banking service in those days largely meant
only money lending. The complicated mechanism of modern banking was not known to
them.
Meaning & definition of Bank
The word ‘bank’ is used in the sense of a commercial bank. A Bank is an institution which
deals with money and credit generally, bank accepts deposits from business institutions and
individuals, which is mobilized into productive sectors mainly business and consumer
lending. At present context, bank is not only confined to accepting deposits and disbursing
loan. Nowadays, most of the bank may be engaged in different types of functions such as
remittance, exchange currency, joint venture, underwriting, bank guarantee and discounting
bills etc.
Bank is a financial intermediary because of accepting deposits and granting loans. Banks are
the most important sources of short- term working capital for business. In modern banking
system, when businesses and consumers must make payments for purchases of goods and
services, more often they use bank provided cheques, credit or debit cards, or electronic
accounts connected to a computer network.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
1
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
In fact, a modern bank performs such a variety of functions that it is difficult to give a precise
and general definition of a bank. Some important definitions for the banks given by different
personalities are as follows.
As Per Kent –“A bank is an organization whose principle operations are concerned with
the accumulation of the temporarily idle money of the general public for the purpose of
advancing to other for expenditure.”
As per Banking resolution Act of India-“Banking means the accepting for the
purpose of lending or investment of deposit of money from the public repayable on demand
or otherwise and withdrawable by cheque, draft or otherwise.”
As per U.S.Law-“Any institution offering deposits subject to withdrawal on demand and
making loans of a commercial or business nature of the bank.”
As per Horace white White-“Bank is a manufacture of credit and machine for
facilitating exchange.”
Banks main purpose is to support the economic growth, agriculture growth, commercial
growth of the country. So we can say Bank is a financials institution offering deposits
subjects to withdrawal on demand and making loans of a commercial or business nature.
According to commercials Bank Act 2031,Acommercial bank means bank which deals in
exchanging currency, accepting deposit giving loans and doing commercial transactions.”
FINANCIAL SYSTEM
Banks are established with different purpose. There are different types of Bank specializing
in particular functional areas.
Organization
a)
b)
c)
d)
e)
f)
Central Bank
Commercials Banks
Development Banks
Finance companies
Co-operatives
Non- Government organizations
No. of Institutions
1
20
28
71
35
25
Origin of Bank in Nepal
In the Nepalese the context, it is very difficult to trace the correct chorological history of the
traditional Banking systems due to lack of historical records of Banking.
In Nepal, crude banking operations were in practice in ancient times between landlords, rich
merchants, shopkeepers and other individual money lenders. After Shankadhar introduced
Nepal Sambat, a Sudra merchant paid the outstanding debts of country. The historical records
show that Guna Kam Dev, king of Kathmandu borrowed money to rebuild his kingdom in
2
Prawin Kumar Malla
98 Batch of Banking Training, KFA
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
723A.D.Later, during the time of ‘Malla’ money lending business become more popular. The
people “Tankadhari” belongs in this class were engaged in money lendingbusiness.After
some years Ranadip Singh, a Rana Prime minister of eight year(1877-1885) got interest in
the problem and took concrete state by establishing a government financial institution, which
helps the public by supplying easy and cheap credit on the security of gold silver ornaments.
Tejarath Adda may and regarded as the father of modern banking institution and for quite
long time it rendered goods services to the government servants as well as to the general
people. ‘The Tejarath Adda’ was replaced by a commercial Bank, Nepal Bank Ltd, which
marked the beginning of a new era in the history of the modern banking in Nepal.
Nepal Bank has been inaugurated by King Tribhuvan Bir Bikram Shah Dev on 30th Kartik
1994B.S. It was established as a semi government bank with the authorized capital of Rs.10
million and the paid -up capital of Rs. 892 thousand. “ Nepal Bank Ltd, “ however was
controlled by the private shareholders till 1951A.D.During that period, HMG share in the
total share capital of this bank was not very significant.In1952, HMG had increased its
ownership in Nepal Bank Ltd. to 52% in total share capital of this bank in order to hold
control over its management.
Till the foundation of Nepal Rastra Bank is 1956 A.D. Nepal Bank Ltd. remained the only
financial institution of the country. Due to the absence of the central bank, it has to operate
the function of central bank. It has managed all the banking transactions of the government
along with the entire business of currency exchange on 26th April, 1956. The Nepal Rastra
Bank was founded under the Nepal Rastra Bank Act 1955 assuming the entire function of the
central bank. Then followed by, in 1963 AD Rastriya Banijya Bank was introduced. The
government gradually liberalized and opened up the financial sector, resulting in the rapid
entry of the foreign banks which lead to the grand opening of ‘Nabil Bank’ earlier called
Nepal Arab Bank in 1984 AD. Other commercial banks started emerging in the private
projects due to which opening of finance companies emerged in 1986 AD. At present, the
banking sector is more liberalized and there are various types of bank working in modern
banking system. This includes central, development and commercial banks. Evolution of the
information technology has revolutionized the banking sector in saving lots of time and
money by implementing IT. Technology has changed the traditional method of the service of
bank. Invention of different software and hardware, which are very essential and available
for functioning bank such as Banking software, ATM, E-banking, Mobile Banking and Card
like Debit Card, Credit Card, Prepaid Card etc. which helps the customer as well as banks to
operate and conduct their activities more efficiently and effectively. This helps bank to
generate more customers, goodwill and profit.
And today, there are 20 Commercial Bank, 9 Development Banks, 46 Financial Institute and
35 Co-operative Banks. Nepal Banking system is evolving itself as a powerful economic
sector.
Commercial Bank
Commercial bank is the term used for a normal bank to distinguish it form another bank these
institutions run to make a profit and owned by a group of individuals, they are primarily
concerned with receiving deposits and lending to businesses. It is the major component of the
financial system that acts as intermediary between depositors and lenders. It’s main objective
is to collect the idle scattered funds and mobilize them into productive sector for overall
Prawin Kumar Malla
98 Batch of Banking Training, KFA
3
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
economic development. Commercial bank is the heart of economic system that holds the
deposits of millions of people, government and business sectors. It exchanges money, accepts
deposits, grant loan and operates commercial transactions. Basically the functions of
commercial bank all over the world are the same. Basic functions are various types of deposit
facilities namely current, saving and fixed. Safety of public money, remittance of money,
letter of credit, guarantee, loans, lockers facility, foreign exchange, serving as agent of client
etc. The commercial Banks of Nepal also do all these functions.
Importance of Commercial Bank
A commercial bank refers very reliable services to the community by increasing the
productive capacity of the country and there by accelerating the pace of economic
development. The commercial bank therefore is of utmost important. It can be listed below.
a) Legal Entity and Freedom from Exploration
A Bank is registered under company act and thus has legal entity. It supports the public
from being exploited through money lenders, merchants and Goldsmith who changes
high interest rates on lending.
b) Financial Intermediaries
A bank acts as a financial intermediaries by mobilizing the saving of the society through
current account or time deposit account and then providing this money to those who are
in need of it by granting loan.
c) Transfer of fund
Physical transfer of cash involves many risks and costs but transfer of fund from one
place to another is the necessity of the day, be it for common people or business people.
Banks transfer funds to any corner of the world through their vast network by various
expedition modes.
d) Boost of Trade
Comparative cost and natural endowments have made trade imperative within the country
and around the glove. Since the buyers and seller live apart neither the sellers can
dispatch the goods without obtaining money nor can buyers remit money without receipt
of goods. All these difficulties and apprehensions hovering over the trade are removed by
banks by issuing letters of credit and guarantee. These instruments ensure the buyer that
he pays only for goods and services as per his need/contract.
e) Safety of Valuables
A bank offers services by keeping in safe custody of valuables such as negotiable
securities, jewellery, documents of title, wills, deed boxes etc.
f) Employment
Bank fosters agricultural, industrial and commercial activities in the nation. This, in turn,
helps to create employment opportunities.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
4
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Function
Although profit maximization is a mount objective of commercial bank, to achive this
objective, commercial bank performs various functions under mandatory rules and
regulations and directives of NRB and commercials bank Act,2031(1974).
Primary
a) Acceptance of Deposits:
 Current Account
 Saving Account
 Fixed Account
b) Advancing of Loan
 Over Draft
 Cash credit
 Direct loan with collateral
 Discounting bill of exchange
 Loans of money at call and notice

General Utility function






To issue letters of credit and travelers cheques
Collection and payment of cheques, bills, promissory note etc.
Remittance of money.
Keeping valuable things under safe custody.
Collection of trade information and banking statistics.
Dealing in foreign exchange.
Agency Function





Collection of customer’s money from other banks.
Receipt and payment of dividend, interest.
Security brokerage service.
Financial advisory service.
To underwrite the government and private securities.
Problems of Banking in Nepal
After the restoration of multiparty democracy in 2047, B.S.Nepalese economy has been
thoroughly overhauled with the policy of liberalized trade and finance. Export business is
very important for economic development. Export business is not actually promoted by the
banks. Instead banks are promoting more import business by providing enough loans.
There are lots of problems in our country are as follows:
Prawin Kumar Malla
98 Batch of Banking Training, KFA
5
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
a) Lack of investment in productive sectors:
The commercial banks are not providing adequate loan in the productive sector. Most
of the investment is centralized in the import business. Such reality shows banks are
promoting import business rather than industrialization
b) Lack of proper Banking policy:
In political environment is not favorable in Nepal. The governmental policies
including banking policy are also changed accordingly from time to time.
c) Traditional Banking service:
In our country most of the people live in rural areas. They have no option but to go to
landlords provide traditional banking services. Traditional Bankers (landlords,
goldsmiths and rich people) have covered more than 60% of the total banking market
in Nepal.
d) Lack of research and development:
Banks in Nepal are not serious towards research and development. Because of lack of
research and development, new profitable sector is not discovered as current
requirement.
e) Wrong policies of Banks:
Most of the banks are to make the profit maximization only. They have the neglected
the welfare of customers and nation. In the course of profit maximization, banks are
even manipulating the classification of credit and less provision is made. They
expand credit beyond the capacity of bank capital.
Commercial Banks in Nepal
S. NO.
Banks
1
Nepal Bank Ltd.
2
Rastriya Banijya Bank
3
Nabil Bank
4
Nepal Investment Bank
5
Standard Chartered Bank Ltd.
6
Himalayan Bank Ltd.
7
Nepal SBI Bank
8
Nepal Bangladesh Bank
9
Everest Bank Ltd.
10
Bank of Kathmandu
11
Nepal Credit and Commerce Bank
12
Nepal Industrial and Commercial Bank
13
Lumbini Bank
14
Machapuchhre Bank
15
Kumari Bank
16
Laxmi Bank
17
Siddhartha Bank
18
Agricultural Bank
19
Global Bank
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98 Batch of Banking Training, KFA
Head Office
Kathmandu
Kathmandu
Kathmandu
Kathmandu
Kathmandu
Kathmandu
Kathmandu
Kathmandu
Kathmandu
Kathmandu
Bhairawa
Biratnagar
Narayangrah
Phokara
Kathmandu
Birjung
Kathmandu
Kathmandu
Birgunj
Estd. Date (In
B.S.)
1994
2022
2041
2042
2043
2049
2050
2050
2051
2051
2053
2055
2055
2057
2057
2058
2059
2064
6
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
20
Citizen Bank International Ltd.
Kathmandu
2064
Objective of Study
 To know the historical background of the bank.
 To know the deposit mobilization process, criteria, problems facing by the bank
 To find out the interest rates charged by the bank in different sectors of loan
investment.




To analyze the financial strength, weakness.
To examine financial performance.
To compare the financial position of the same type of business.
To provide suggestion to improve based on the finding study.
Importance of the Study
MANAGEMENT
The management also wants to know the financial viability of the bank. This study will be
helpful to go deeply into the various matters as to why the performance of their bank is better
or worse than other joint Venture Banks. The management will know about their loose areas
and gaps, which can be corrected in future.
SHAREHOLDERS
Shareholders will also be benefited by this study. They want to know how their funds are
utilizing and to what extent they are gaining? The study will help them to identify the
productivity of their scarce sources.
OTHERS
Others refer to these all interested group except the management and the shareholders, such
as depositors, debtors, investors, competitors, stockbrokers, merchant bankers’ etc. these
groups will be interested in the performance of respective banks for their own way such as
whether to deposit or not? Invest or not? Finance or not? More, creditors are eager to know
the short-term solvency of the bank. The study will be helpful for all types of groups.
LIMITATION OF THE STUDY
 The study is based mainly on secondary data and to some extent on primary data too.
 The filed work should be completed within a certain period despite of great
desire the reporter can't contain all data and information's.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
7
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Introduction of Standard Chartered Bank Nepal Limited
The Bank earlier known as Grindlays Bank was established under a joint venture agreement
between ANZ Grindlays Bank p/c, London and Nepal Bank Limited, on 19th December1985
and was operated since 1987.After the acquisition of the Grinlays Banks operation by
standard Chartered Bank on 31 July 2000, it was considered appropriate to change the name
of the Bank into Standard Chartered Bank Nepal Ltd. effective from 10 July 2001. Today the
Bank is an integral part of Standard Chartered Group who has 75% ownership in the
company with 25% shares owned by the Nepalese public. The Bank enjoys the status the
largest international bank currently operating in Nepal. Standard Chartered Group employs
30,000 people in over 500 locations in more than 50 countries in the Asia Pacific Region,
South Asia, the Middle East, Africa, the United Kingdom and the Americas. It is one of the
world's most international banks, with a management team comprising 79 nationalities. The
Bank is trusted across its network for its standard of governance and its commitment to
making a difference in the communities in which it operates.
An integral part of the only international banking Group currently operating in Nepal, the
Bank enjoys an impeccable reputation of a leading financial institution in the country. With
11 points of representation (7 Branches) and 9 ATMs across the Kingdom and with over 300
local staff, Standard Chartered Bank Nepal Ltd. is in a position to service its customers
through a large domestic network. In addition to which the global network of Standard
Chartered Group gives the Bank the unique opportunity to provide truly international
banking in Nepal.
Standard Chartered Bank Nepal Limited offers a full range of banking products and services
in Wholesale and Consumer banking, catering to a wide range of customers from individuals,
to mid-market local corporate to multinationals and large public sector companies, as well as
embassies, aid agencies, airlines, hotels and government corporations.
The Bank has been the pioneer in introducing 'customer focused' products and services in the
country and aspires to continue to be a leader in introducing new products and highest level
of service delivery. It is the first Bank in Nepal that has implemented the Anti-Money
Laundering policy and applied the 'Know Your Customer' procedure on all the customer
accounts.
CAPITAL STRUCTURE
Capital Structure of SCB
Share Capital and ownership of SCB Bank Ltd.
Particular
Authorized Capital
Issued Capital
Paid-up Capital
Prawin Kumar Malla
98 Batch of Banking Training, KFA
Amount (NRs)
Rs. 1,000,000,000.00
Rs. 500,000,000.00
Rs. 374,640,400.00
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COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
EQUITY PARTICIPATION
Nepalese public Shareholders
Standard Chartered Gridley’s Bank Australia
Standard Chartered Bank USA
Total
25 %
50 %
25 %
100 %
PRODUCTS & SERVICES offered by the Bank are as follows:
Consumer Bank













Current, savings, call and term deposit accounts in Local & Foreign currency
Fund Transfer Services - Local & International - Drafts, SWIFT
Credit Card Services - Issuance & Acquiring
24 Hour ATM services - SCBNL debit card, VISA and Master Card
Safe Deposit lockers
Foreign Exchange Services - Issuance/purchase of Travelers Cheques
Extra Banking - 365 days banking from Kantipath and Lalitpur Branches
Priority Banking; Home Banking
Auto Loan
Home Loan; Home Advantage
Personal Loan
SMS Banking
Corporate Employee accounts
Wholesale Bank








Trade Finance
- Letters of credit: Issuance and acceptance
- Guarantees: Issuance and acceptance
Commercial Lending (Working Capital)
Term Lending
Loan Syndication
Forward Exchange Rates
Electronic Banking
Cash Management
- Operating Accounts
- Quick Collection Services
- Quick Payment Services
Cheque writer
Corporate Social Responsibility
Prawin Kumar Malla
98 Batch of Banking Training, KFA
9
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Standard Chartered Bank Nepal is a socially responsible corporate and recognizes its
responsibilities to its staff and to the communities in which it operates. The Bank
concentrates on projects that assist children, particularly in the areas of health and education
and it has taken up various initiatives to benefit the community. 2 major initiatives in the area
of health 'Living with HIV' and 'Seeing is Believing' have been undertaken by the Bank since
2003.
Awards & Achievements

July 2004 - Award for the Best Presented Accounts in the Financial Institutions
Category in Nepal for the Year 2002-2003 and 2002-2001awarded by Institute of
Chartered Accountants of Nepal (ICAN).

December 2003 - The Best Company, Financial Institutions from Top 10 awards
for Business Excellence awarded by 'The BOSS'

September 2002 "Bank of the Year 2002 Nepal" by 'The Banker' of the Financial
Times.

April 2002 - Commercially Important Person (CIP) awarded by His Majesty's
Government the Ministry of Finance

April 2002- National Excellence Award 2002" for significant achievement in
customers satisfaction and relationship" awarded by Federation of Nepalese Chamber
of Commerce & Industry (FNCCI)
Standard Chartered Nepal - awarded 'Best Commercial Bank' for the 2nd
successive Year
Specialty Media Pvt. Ltd. the publisher of a leading business magazine 'The boss' awarded
the 2nd boss Top 10 Business Excellence Awards for the year 03-04 at a special function
hosted in Kathmandu on 11 March 2005. These awards are a tribute to the passion for
business excellence and the spirit of entrepreneurship. It is a matter of great pride that
Standard Chartered Bank Nepal was adjudged the Best Commercial Bank in Nepal for the
second successive year. This is the result of dedicated teamwork, working cohesively as 'One
Bank.
Hon. Dr Bimal Prasad Koirala, Chief Secretary - Office of the PM and Council of Ministers
gave away these prizes to the winners at this large august gathering of distinguished
personalities from various walks of life.
Share Ownership:
Subscription
Percentage (%) Holding
Foreign ownership
Promoters’ Share (General Public)
75 %
25%
Capital Structure
NRs. Amount
Prawin Kumar Malla
98 Batch of Banking Training, KFA
10
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Authorized Capital
Issued Capital
Paid Up Capital
1,000,000,000.00
500,000,000.00
374,640,400.00
BRANCHES
BRANCEHS IN NEPAL
1. NEW BANESHWOR (HEAD OFFICE)
2. LAZIMPAT
3. LALITPUR
4. BIRATNAGAR
5. POKHARA
6. DHARAN
7. BUTWAL
8. HETAUDA
9. BHAIRAHAWA
10.NEPALGUNJ
The bank is giving the service of ATM (Automatic Teller Machine) from 10 different place
out of which 7 are from inside Kathmandu valley and 3 outside valley.
Inside Valley
1. Kathmandu Guest House, Thamel, Kathmandu
2. Bishal Bazar, New Road, kathmandu
3. Kasthamandap, Kamaladi, Kathmandu
4. SCBN, New Baneshwor, Kathmandu
5. SCBN, Lazimpat
6. SCBN, Lalitpur
7. UN Building, Lalitpur
Outside Valley
8. Hotel Snowland, Phokhara
9. Mahendra Pool, Phokhara
10. BP Koirala Institute, Dharan
Prawin Kumar Malla
98 Batch of Banking Training, KFA
11
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Introduction of Nepal Investment Bank Limited
Nepal Investment Bank ltd. (NIBL), previously Nepal Indosuez Bank ltd., was established in
1986 as a joint venture between Nepalese and French partners. the French partner (holding
50% of the capital) was Credit Agricole Indosuez, a subsidiary of one the largest banking
groups in the world.
With the decision of Credit Agricole Indosuez to divest, a group of companies comprising of
bankers, professionals, industrialists and businessmen, in April 2002, acquired 50% of the
holdings of Credit Agricole Indosuez in Nepal Indosuez Bank.
The name of the bank was changed to Nepal Investment Bank ltd. upon approval of the
Bank’s Annual General Meeting, Nepal Rastra Bank and Company Registrar’s office.
The shareholding structure comprises of:




A group of companies holding 50% of the Capital
Rastriya Banijya Bank holding 15% of the Capital.
Rastriya Beema Sansthan holding 15% of the Capital.
The general public holding 20% of the Capital.
Vision Statement:
“To be the most preferred provider of Financial Services in Nepal”
Mission Statement:
To be the leading Nepali bank, delivering world class service through a blend of technology
and visionary management in partnership with our committed staff, to achieve sound
financial health with sustainable value addition to our stakeholders. We are committed to this
mission while ensuring the highest levels of ethical standards, professional integrity,
corporate governance and regulatory compliance.
Strategic Objectives:

To develop a customer oriented service culture with special emphasis on customer
care and convenience.
 To increase our market share by following a disciplined growth strategy.
 To leverage our technology platform and open scalable systems to achieve costeffective operations, efficient MIS, improved delivery capability and high service
standards.
 To develop innovative products and services that attracts our targeted customers and
market segments.
12
Prawin Kumar Malla
98 Batch of Banking Training, KFA
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL



To continue to develop products and services that reduces our cost of funds.
To maintain a high quality asset portfolio to achieve strong and sustainable returns
and to continuously build shareholders’ value.
To explore new avenues for growth and profitability.
Core values and ethical principles:
1. Customer Focus: At NIBL, their prime focus is to perfect their customer service.
Customers are their first priority and driving force. They wish to gain customer
confidence and be their trusted partner.
2. Quality: They believe a quality service experience is paramount to their customers
and they are strongly committed in fulfilling this ideal.
3. Honesty and Integrity: They ensure the highest level of integrity to their customer,
creating an ongoing relationship of trust and confidence. They treat their customers
with honesty, fairness and respect.
4. Belief in our people: They recognize that employees are their most valuable asset and
their competitive strength. They respect the worth and dignity of individual
employees who devote their careers for the progress of the Bank.
5. Teamwork: They are a firm believer in teamwork and feel that loyal and motivated
teams can produce extraordinary results. They are drive by a performance culture
where recognition and rewards are based on individual merit and demonstrated track
record.
6. Good Corporate Governance: Effective Corporate Governance procedures are
essential to achieve and maintain public trust and confidence in any company, more
so in a banking company. At NIBL, they are committed in following best practices
resulting in good corporate governance.
7. Corporate Social Responsibility: As a responsible corporate citizen, they consider it
important to act in a responsible manner towards the environment and society. Their
commitment has always been to behave ethically and contribute towards the
improvement of quality of life of their people, the community and greatly the society,
of which they are an integral part.
Board of Directors:
Mr. Prithivi Bahadur Pandey
Mr.Prajanya Rajbhandari
Mr. Deepak Man Serchan
Prawin Kumar Malla
98 Batch of Banking Training, KFA
Chairman/Chief
Executive Director
Director
Director
Group "A
Group "A
Group "A
13
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Mr. Sanjeev Manandhar
Mr. Om Nidhi Tiwari
Mr. Surendra Bdr. Singh
Mr.Damodar Prasad Sharma Pandey
Director
Director
Director
Expert Director
Rastriya Banijya Bank
Rastriya Beema Sansthan
General Public
Under BFIA
Service Offered:
Deposits
Ezee Saving
EBanking
Premier Banking
ATM
NTC Mobile Bill Payment
Loans and Advances
Vehicle Loans
Debit/Credit Card
Safe Deposit Locker
365 Days Service
TRADE FINANCE
REMITTANCES
EXPORT CREDIT
BILLS PURCHASE
TELEBANKING SERVICE
ANY BRANCH BANKING
FUNDS TRANSFER
BANK GUARANTEES
CLEARING/COLLECTION
Management Team
S.N.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
Name of Management Team
Prithivi Bahadur Pandéy
Jitendra Basnyat
Jyoti Prakash Pandey
Maheshwor Prakash Shrestha
Rajan Amatya
Bijay Pant
Anuj Timilsina
Bijendra Suwal
Shobha Shrestha
Deepak Shrestha
Deepak K Shrestha
Rabin Sijapati
Sujan Subedi
Barun Shrestha
Sujan Pradhan
Bikash Thapa
Bandana Thapa
Suyog Shrestha
Sachin Tibrewal
Prabir SJB Rana
Tul Jung Pandey
Bikendra Thapa
Prawin Kumar Malla
98 Batch of Banking Training, KFA
Position
Chairman/Chief Executive Director
Senior General Manager/Company Secretary
General Manager
Deputy General Manager
Assistant General Manager, Putalisadak Branch
Assistant General Manager, Credit Quality Control
Head, Corporate Banking
Head, Information Technology
Head, Retail Banking
Head, Legal
Head, Trade & Finance
Head, Internal Audit
Head, Loan Administration
Head, Accounts & Budgets
Head, Cash & Remittance
Head, Cards & Remittance
Head, Treasury & Foreign Exchange
Head, Credit Administration
Head, Office of CED
Head, Human Resource
Head, Reconciliation
Acting Head, Research & Development
14
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
Pradeep Basnyat
Jhalak P. Khanal
Shreechandra Bhatta
Manju Basnet
Uttam B. K.C
Ajay K. Kafle
Dhiraj Thapa
Prakash Dungana
Pramod Uprety
Bishal Thapa
Kumar Thapa
Ashok Kumar Khadka
Gokarna P. Duwadi
Mantri Lal Gupta
Head, General Service
Branch Manager, Pulchowk Branch
Branch Manager, Birjung Branch
Branch Manager, Newroad Branch
Branch Manager, Seepadole Branch
Branch Manager, Butwal Branch
Branch Incharge, Pokhara Branch
Branch Incharge, Narayangarh
Branch Incharge, Jeetpur Branch
Branch Incharge, Biratnagar Branch
Branch Incharge, Banepa Branch
Branch Manager, Janakpur Branch
Branch Manager, Bhairahawa Branch
Branch Incharge, Nepalgunj Branch
Branch Network:
KATHMANDU HEAD OFFICE
Durbar Marg, P.O. Box 3412
Tel: 4228229, 4242530 (DISA)
Fax: 977-1-4226349, 4228927
Swift: NIBL NP KT
Telex: 2435, 2328 NIBL NP
PULCHOWK BRANCH
Pulchowk, Lalitpur
Tel: 5520346, 5547858
Fax: 977-1-5520342
BIRGUNJ BRANCH
Adarshanagar, P.O. Box 101
Tel (051) 523327, 525277
Fax: (051) 525297
SEEPADOLE BRANCH
Arniko Highway
Suryabinayak, Bhaktapur
Tel: 6615617, 6612832
Fax: 6616617
BANEPA BRANCH
Banepa, Kavre
Tel: (011) 664315,662401
Fax: (011) 662402
JEETPUR BRANCH
Jeetpur, Bara
Tel: (053) 520297
Fax: (053) 520877
NEWROAD BRANCH
Newroad, Kathmandu
Tel: 4242858, 4230374
Fax: 977-1-4227050
BIRATNAGAR BRANCH
Golcha Chowk, Biratnagar
Tel: (021) 534523, 534524,
534525
Fax: (021) 534526
BUTWAL BRANCH
Traffic Chowk, Butwal
Tel: (071) 549991, 549992,
549993
Fax: (071) 549888
BHAIRAHAWA BRANCH
Maitri Road, Bhairahawa
Tel: (071) 526991, 526992
Fax: (071) 526990
PUTALISADAK BRANCH
Putalisadak, Kathmandu
Tel: 4445302, 4445303
Fax: 977-1-4445304
POKHARA BRANCH
Chiple Dunga,Pokhara
Tel: (061) 538919, 539276
Fax: (061) 538920
NARAYANGARH BRANCH
Pulchowk, Narayangarh
Tel: (056) 532921,532922
Fax: (056) 532925
JANAKPUR BRANCH
Mills Area, Janakpur
Tel: (041) 527331
Fax: (041) 527332
NEPALGUNJ BRANCH
Dhamboji, Nepalgunj
Tel: (081) 525978,525682
Fax: (081) 521664
Prawin Kumar Malla
98 Batch of Banking Training, KFA
15
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Introduction of Nabil Bank Limited:
Since1984, Nabil Bank (also called Arab bank) is in a unique position in the banking
industry in Nepal, as the nation’s first joint venture bank it has an unmatched 22 years
of operational experience, giving it unparalleled insight into the market, risks,
opportunities and customer needs. It provides a full range of commercial banking
services through its 19 Branches of representation across the kingdom and over 170
reputed correspondent banks across the world. In conjunction to this, the Bank today
Surges Ahead in meeting its Mission to be the “Bank of 1st Choice” for all its
stakeholders; Customers, Shareholders, Regulators, Communities we work in and
Staff. Nabil’s values are Customer Focused, Result oriented, Innovative, Synergistic,
Professional or C.R.I.S.P., Everyday in everything we do. Nabil’s statement of
commitment to always be ‘Your Bank at Your Service’ which is a clear reflection
that the Bank’s stakeholders are at the core of everything it does.
As we all know, an economy of Nepal has not been performing well for the last few
years due to prevalence of political instability in the nation. Even Nabil maintained its
performance; that is why in the fiscal year 2005/06 deposits increased by 32.64% to
reach Rs. 19.35 billion, retail lending by 56.90% to reach Rs. 2.81 billion and
corporate lending by 14.35% to reach Rs.10.47 billion. Nabil truly humbled and proud
of the continued confidence and support of its customers, which is a prime source for
its constant commitment to provide even higher levels of service delivery and
financial solutions in the year ahead. Shareholders form its next group of stakeholders
and Nabil is pleased that in addition to the 85% dividend the market price of its shares
has also done consistently well.
Nabil is fully equipped with modern technology which includes ATMs, credit cards,
state-of-art, world-renowned software from InfoSys Technologies System, Bangalore,
India, Internet banking system and Telebanking system etc services.
The entire Nabil Team embraces a set of Values that acronym is referred to as
‘C.R.I.S.P.’ representing the fact that they consistently strive to be Customer
Focused, Result Oriented, Innovative, Synergistic and Professional. By living these
values, individually as professionals and collectively as a Team, Nabil Bank is
committed to Surge Ahead to be the Bank of 1st Choice in Nepal.
Focus:
Nabil Bank has focused on customer satisfaction by providing highly acclaimed services. It is
concerned to be "The Bank of the first choice" through its values of always being customer
focused, result oriented, innovative, synergetic and professional.
Awards and Recognition:
Prawin Kumar Malla
98 Batch of Banking Training, KFA
16
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
The bank operations where highly satisfactory even in the prevailing hard times in the
country. The bank received the "Bank of the year 2004", presented by the banker, a
publication of the financial times, London. It has completed its 2 decades of banking sector.
After 2 decades of operation the bank has maintained its image as good as loyal bank which
makes its customer even more loyal towards the bank and its services.
Values:





Customer focused
Result oriented
Innovative
Synergistic
Professional
Promise:
To always be "you're Bank at your service"
Products and services:
Working capital Loan
Fixed Capital Loan
Import Loan
Bills discounting facility under Suppliers Credit
Export Loan
Hire Purchase
Cards & ATMs:
E-Banking
Clean Bills
Project Finance
Consortium/Syndication Loan
U.S. Visa Fee
Safe Deposit Locker
Balance Certificate
Advance Payment Certificate
Mortgage Loan
Remittance
Trade Finance
Deposit
Board of Directors of Nabil Bank
Chairman
Mr. Satyandra Pyara Shrestha
Ex-Governor Nepal Rastra Bank
Directors
Mr. Mukunda Nath Dhungel
General Manager
Nepal Stock Exchange Ltd.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
Mr. Mohiuddin Ahmed
Ex-Ambassador of Bangladesh
To the kingdom of Nepal
17
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Mr. Supriya Gupta
Mr. Abdul Awal Mintoo
Ex-Chairman & Managing Director
President
UTI Bank Ltd. India
Federation of Bangladesh
Chamber of Commerce & Industry
Mr. Shambhu Prasad Poudyal
Mr. Dayaram Gopal Agrawal “Pappu”
Ex-Executive Chairman
Rastriya Beema Sansthan
Businessman
Lazimpat, Kathmandu
Share ownership
Local ownership
Financial Institution
Organized Institution
General Public
Foreign ownership
Total
50%
10%
10%
30%
50%
100%
Capital Structure:
Authorized Capital:
Issued Capital:
Paid up Capital:
Note: 491654400 shares of Rs 100 each paid up
NPR 500000000
NPR 491654400
NPR 491654400
Branches:
1. Kantipath Branch
2. New road Branch
3., Lalitpur Branch
4. Jorpati Branch
5. Maharajgunj Branch
6. Birjung Branch
7. Pokhara
8. Bhairahawa
Prawin Kumar Malla
98 Batch of Banking Training, KFA
10.Power House Chowk Branch
11.Biratnagar Branch
12.Itahari Branch
13.Sunsari
14.Butwal
15.Bhalwadi
16.Nepaljung
17.Lakeside
18
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
9. Dharan
18.Exchange Counter Airport
Chapter -2
Data Presentation & Analysis
The financial performances of the selected commercial banks have been carried in terms of
CAMEL approach
C
-
Capital Adequacy
A
-
Assets Quality
M
-
Management
E
-
Earnings
L
-
Liquidity
Capital Adequacy Ration (CAR): The capital accounts of a commercial bank play
several vital roles in supporting its daily operations and ensuring its long-run viability.
In the first place, capital provides a cushion against the risk of failure by absorbing financial
and operating losses until management can address the bank's problems and restore the
institution's profitability.
Second, capital provides the funds needed to bet the bank chartered, organized and operating
before deposits come flowing in. A new bank needs starting up funding to acquire land, build
a new structure or lease space, equip its facilities, and hire offers and staff even before
opening day.
Third, capital promotes public confidence in a bank and reassures its creditors (including the
depositors) of the bank's financial strength. Capital also must be strong enough to reassure
borrowers that the bank will be able to meet their credit needs even if the economy turns
down.
Fourth, capital provides funds for the organization's growth and the development of new
services, programs, and facilities. When a bank grows, it needs additional capital to support
that growth and to accept the risks that come with offering new services and building new
facilities. Most banks eventually outgrow the facilities they start with. An infusion of
additional capital will permit a bank to expand into larger quarters or building additional
branch offices in order to keep pace with its expanding market area and follow its customers
with convenient service offerings.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
19
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL

Capital adequacy ultimately determines how well financial institutions can cope with
shocks to their balance sheets. Thus, it is useful to track capital-adequacy ratios that
take into account the most important financial risks—foreign exchange, credit, and
interest rate risks—by assigning risk weightings to the institution's assets.
The Basel capital adequacy ratio was adopted in 1988 by the Basel Committee on
Banking Supervision as a benchmark to evaluate whether banks operating in the G-10
countries have sufficient capital to survive likely economic shocks. The ratio calls for
minimum levels of capital to (i) provide a cushion against losses due to default arising
from both on- and off-balance-sheet exposures; (ii) demonstrate that bank owners are
willing to put their own funds at risk; (iii) provide quickly available resources free of
transactions and liquidation costs; (iv) provide for normal expansion and business
finance; (v) level the playing field by requiring universal application of the standard
to internationally active banks; and (vi) encourage less risky lending.
The original Basel capital ratio, along with subsequent amendments, requires
international banks to have a specific measure of capital greater than or equal to 8
percent of a specific measure of assets weighted by their estimated risk. The ratio is
an analytical construct with complex definitions of the numerator (capital) and the
denominator (risk-weighted assets) that cannot be derived directly from standard
financial statements. The formula states that a banking enterprise must have capital
on a worldwide consolidated basis equal to 8 percent or more of its risk-weighted
assets, which includes off-balance-sheet positions.
Where: Capital = (tier 1 Capital - Goodwill) + (tier 2 Capital) + (tier 3 Capital) Adjustments.
Tier 1 capital, or "core capital," consists of equity capital and disclosed reserves that
are considered freely available to meet claims against the bank.
Tier 2 capital consists of financial instruments and reserves that are available to
absorb losses, but which might lack permanency, have uncertain values, might entail
costs if sold, or otherwise lack the full loss-absorption capacity of tier 1 capital items.
Tier 3 capital consists of subordinated debt with an original maturity of at least two
years for use, if needed, against market risk exposures associated with fluctuations in
the market value of assets held.
According to NRB directives, commercial bank should maintain their CAR 11%, core capital
5.5% supplementary capital 5.5%.
CAR =
Total Capital Fund
Total Risk Weighted Assets
X 100
Table 1
Name of Banks
2003/2004
NIBL
11.18%
NABIL
13.56%
Prawin Kumar Malla
98 Batch of Banking Training, KFA
2004/2005
11.58%
12.44%
2005/2006
11.97%
12.31%
20
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
SCB
15.57%
16.06%
14.91%
Percentage
Capital Adequacy Ratio
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
NIBL
NABIL
SCB
2003/2004
2004/2005
2005/2006
Years
Figure 1.1
Core Capital:
Table 2
Name of Banks
NIBL
NABIL
SCB
2003/2004
7.22%
12.12%
13.76%
2004/2005
8.52%
11.35%
13.99%
2005/2006
7.97%
10.78%
12.99%
Core Capital
Percentage
16.00%
14.00%
12.00%
10.00%
8.00%
NIBL
6.00%
4.00%
SCB
NABIL
2.00%
0.00%
2003/2004
2004/2005
2005/2006
Years
Figure 2.1
Prawin Kumar Malla
98 Batch of Banking Training, KFA
21
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Supplementary Capital:
Table 3
Name of Banks
NIBL
NABIL
SCB
2003/2004
3.96%
1.44%
1.81%
2004/2005
3.06%
1.09%
2.07%
2005/2006
4.01%
1.52%
1.92%
Percentage
Supplementary Capital
4.50%
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
NIBL
NABIL
SCB
2003/2004
2004/2005
2005/2006
Years
Figure 3.1
Data Interpretation
From the above bar chart here we can see that all the banks, either it is SCB, NIBL or
NABIL all has capital adequacy ratio as per NRB rules and regulations. As well as the core
capital is also as per NRB rules. From three banks SCB has higher capital adequacy ratio.
But the remaining two banks have also sufficient ratio. From the table we can interpret that
the people who deposits their amount in these banks are in safe position. From the lending
side it shows that banks are not good in lending. Specially SCB which has highest among
three shows that this bank is good for depositors but it is unable to lend its money. So it also
affects their interest income. While NIBL shows that it is efficiently lending its money to the
people.
Also we can calculate Activity ratio of these three banks:
Activity ratio= Total Lending
x
100
Total Deposit
Prawin Kumar Malla
98 Batch of Banking Training, KFA
22
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Here we include only local currency deposit and local currency lending.
Table 4
Name of Banks
NIBL
NABIL
SCB
2003/2004
63.68
60.55
31.63
2004/2005
73.33
75.05
43.55
2005/2006
69.63
68.63
39.92
Activity ratio
Percentage
80
70
60
50
40
NIBL
30
20
SCB
NABIL
10
0
2003/2004
2004/2005
2005/2006
years
Figure 4.1
Data Interpretation
From the chart we can assume that NIBL and NABIL are lending more money which means
their cash are not remaining idle in the bank but depositors are in safe position also as we see
from capital adequacy ratio. From this we can say that either there are getting higher interest
income or loosing it. Also they are taking more risk by lending that much higher i.e. risk of
loan loss provision. Here SCB has less lending that means their cash is remaining idle or they
are taking less risk. Either this bank is getting less interest income compare to other two
banks or this bank i.e. SCB has low loan loss provision. We can see more from assets and
liquidity.
Assets Quality:
Assets quality refers to the degree of financial strength and risks in a bank’s assets, loan and
advances, investment cash etc. are the focus of assets kept by the banks. Asset is the most
critical factor in determining the strength of any bank. Asset quality ratio is also known as
activity ratio and also called as turnover ratio because it indicates the speed with which assets
are being converted or turnover. Primary factors that can be considered are the quality of loan
risk associated with assets and credit administration system.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
23
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Through loan and advances bank guarantee a profit which is a significant part of its income.
Lending activities are highly risky activities. It is very important for the bank that most of the
loans perform well. These are basically two types of loans. They are performing loan and non
performing loan. Non-performing loans decrease the net profit of the bank.
 Performing loan to total loan
 Non-performing loan to total loan
 Total provision to total loan
Classification of loan and its provision
Classification of loan
Performing
Non-performing loan
a)
Category
Good
i) Sub-standard
ii) Doubtful debt
iii) Bad debt
Durations
Loan loss provision
1 to 3 months
1%
3 to 6 months
25%
6 months to1 Yr
50%
1 Yr or above
100%
Performing Loan Ratio
Loans which are recovered quickly and will be recovering within 9odays fall under
this category. This ratio shows how much the bank is successful in utilizing their
assets for the purpose of profit generation. Higher ratio indicates efficiency in
utilizing the good loans.
Performing Loan to total loan= Performing loan
Total loan
Table below shows performing Loan to Total Ratio of SCBN, Nabil and NIBL in %
Table 5
Name of the
Bank
SCBN
NABIL
NIBL
2003/04
2004/05
2005/06
96.23 %
96.12 %
97.53 %
97.31 %
98.68 %
97.93 %
97.87 %
98.63 %
97.31%
Prawin Kumar Malla
98 Batch of Banking Training, KFA
24
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Performing Loan to Total Loan Ratio
99.00%
98.50%
Percentage
98.00%
97.50%
SCBN
NABIL
NIBL
97.00%
96.50%
96.00%
95.50%
95.00%
2003/04
2004/05
2005/06
FiscalYear
Figure 5.1
Data Interpretation:
From the above bar diagram, it is clear that the ratio of performing loan is increasing. It is
96.23 % in Year 2003/04 and has been increased to 97.87 % in Year 2005/06. It is very
good performance and will be hard for other bank to catch them because of their high net
profit.
This bank leads the way in terms of performing loan ratio. In year 2003/04, it is 96.65%
but in Year 2005/06, it is 98.63%, which makes able to register huge profits and increase
their market share.
NIBL is also performing well in performing loan ratio. Its ratio is above 97 % over three
year’s period and has good market share.
b) Non-Performing Loan Ratio (NPL)
Loan is said to be non-performing with the due date of 3 months to 6 months and 6 to 12
months and more than 1 year. Non-performing loan consists of substandard loan,
doubtful loans and bad loans. Higher ratio indicates the higher risk associated with the
total loan and vice-versa.
NPL Ratio = Non-performing loan X 100
Total Loan
Table shows the classification of loans and required provisions:
Table 6
Classification of Loans
Substandard (3-6 Months)
Doubtful (6 months – 1 Year)
Bad Loans (more than 1 Year)
Prawin Kumar Malla
98 Batch of Banking Training, KFA
Provisions Required
25 %
50 %
100 %
25
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Table below shows a Non-performing Loan to Total Loan Ration of SCBN, Nabil and NIBL
in %.
Table 7
Name of the Bank
SCBN
NABIL
NIBL
2003/04
2004/05
2005/06
3.77%
3.88%
2.47%
2.69%
1.32%
2.07%
2.13%
1.37%
2.69%
Non-Performing Loan to Total Loan Ratio
4.00%
3.50%
3.00%
2.50%
SCBN
NABIL
NIBL
2.00%
1.50%
1.00%
0.50%
0.00%
2003/04
2004/05
2005/06
Fiscal Year
Figure 7.1
Data Interpretation
The above bar diagram shows that bank has the decreasing trend. In Year 2003/04, the ratio
is 3.77 % and in Year 2005/06, it has decreased to 2.13 % which help the bank to make good
position in the market.
This bank has the lowest NPL in the Year 2004/05 and 2005/06. Nabil has been doing very
well and their financial performance proves that it is one of best bank in Nepalese Bank.
NIBL has average performance among the three banks. The ratio has been lowest in Year
2003/04, medium in Year 2004/05 and highest in Year 2005/06. It indicates that it has not
been able to improve its non-performing ratio. But overall ratio is below 3 % which is not
bad.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
26
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
c) Total Loan Loss Provision
Under this category, Banks has to keep certain amount of capital as provision form Loan
Loss. Not all loans which banks provide are recoverable, so to compensate for the loss,
capital kept as provision will be used. Banks always look to maintain a lower Loan Loss
Provision ratio for high profitability.
Loan Loss Pr ovision to Total Loan 
Total loans loss provision
Total loan
Table below shows Loan Loss Provision to Total Loan Ratio of SCBN, Nabil and NIBL in %
Table 8:
Name of the Bank
2003/04
SCBN
NABIL
NIBL
2004/05
2005/06
4.24 %
4.19 %
3.30 %
3.29 %
2.94 %
2.68 %
2.84 %
3.13 %
3.05 %
Total Loan Loss Provision
4.50%
4.00%
Percentage
3.50%
3.00%
SCBN
2.50%
NABIL
NIBL
2.00%
1.50%
1.00%
0.50%
0.00%
2003/04
2004/05
2005/06
FiscalYear
Figure 8.1
Data Interpretation
From the above bar diagram, we can see that the ratios of SCBN are at a decreasing trend.
This shows that SCBN has written off their Loans.
Like SCBN, the ratio of NABIL is also at decreasing trend. This also shows that NABIL has
written off their Loans.
The ratio of NIBL is lowest among the banks for two first years but in Year 2005/06, it is
highest. It is also in increasing trend.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
27
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Management:
MANAGEMENT ANALYSIS.
There is a saying, ‘good mgmt can make and poor can break an organization.’ Banks are no
exception to this universal phenomenon. An institution can take a desire momentum only
when the mgmt is capable enough.
The success of any bank heavily relies upon the efficiency of its management to derive the
bank to earn good profit. Therefore the management of the bank must made careful focus in
its objective and dedicate its efforts to reach that objective. There are different types of risk
associated with banks operation and can be addressed only by adopting comprehensive
management system.
Management is a process of managing the institution by making suitable plans and policies
and implementing them to achieve the objectives of the institution. And the efficiency of
management is evaluated by considering the following factors The overall structure of bank
 Quality of human resource
 Technological adaptation
 Management information system
 Internal control system
 Working environment
 Decision making process
All the above factors are equally important for the evaluation of management efficiency. For
the effective management there should be perfect structure of institution, qualitative human
resource, superior technology, good mgmt information system, and good relation with its
customer. Similarly there should be fair decision-making and appropriate working condition.
To support our project work we personally visit the respective banks as their customer and
we have categorized them as per the information derived from there
Here we have rated the banks on a scale of 0-5 as
0 - poor
1 - below average
2 - average
3 - good
4 - very good
5 -excellent
Table 9:
Criteria of analysis
SCB
NIBL
NABIL
Location
5
5
5
Customer service
4
4
4.5
Prawin Kumar Malla
98 Batch of Banking Training, KFA
28
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Security
5
5
5
Space for consumer
5
5
5
Inquiry facility
4.5
4
4
Internal control system
4.5
4.5
4.5
Interior
5
4
4
Availability of parking space
5
4
4
The efficiency of banks can be analyzed by analyzing staff efficiency ratio by applying
following formulaStaff efficiency ratio (SER) = Net profit after tax
No of staff
Table 10:
Banks
SCB
NABIl
NIBL
2003/4
2.05
1.39
0.47
2004/5
1.77
1.22
0.66
Rs. in million
2005/6
1.91
1.44
0.90
Staff efficiency Ratio
2.5
Banks
2
SCB
1.5
NABIl
1
NIBL
0.5
0
2003/4
2004/5
2005/6
Years
Figure 10.1
Interpretation
In above table we can see that SCB has higher efficiency ratio than that of NIB and NABIL.
The quality of mgmt is also evaluated by considering the corporate governance factor. To
achieve the objective of the bank, there must be a clear line between mgmt and shareholders
or BOD in terms of authority, responsibility and accountability levels. Good corporate
governance requires policies, procedures and operating manuals to be supreme in any bank,
whereby only professional considerations should play a role in strategic decision-making.
Earning:
Prawin Kumar Malla
98 Batch of Banking Training, KFA
29
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Profit is oriented through the different operations by bank and its final goal is to
achieve the profit is earning. High level of shows the successfulness of any business.
Therefore, an analysis of the ratio helps the management, shareholders and its
customer to evaluate those performances of the bank sustainability of earnings and to
forecast growth of banks. Chronically unprofitable financial institutions risk
insolvency. Compared with most other indicators, trends in profitability can be more
difficult to interpret-for instance, unusually high profitability can reflect excessive
risk taking.
The following rations can be used to analyze the earning capacity of banks:
i) EPS
ii) ROA
iii) ROE
iv) P/E Ratio
Earning Per Share (EPS): Earning Per Share indicates after tax earnings for equity
shareholders on a per share basis. It reflects the earning power of the bank. High EPS
shows sound profitability.
EPS= Total Earning of a Company
No. of Outstanding Shares
Table below shows Earnings per Shares of SCBN, NIBL and NABIL in Rs.
Earning per Share (EPS)
Table 11
Name of Bank
SCB
NIBL
NABIL
2003/04
rs143.55
Rs. 51.70
Rs. 92.61
2004/05
Rs. 143.93
Rs. 39.50
Rs. 105.79
2005/06
Rs. 175.84
Rs. 59.35
Rs. 129.21
Earning Per Share
200
Rupees
150
SCB
100
NIBL
NABIL
50
0
2003/04
2004/05
2005/06
Years
Figure 11.1
Data Interpretation:
Prawin Kumar Malla
98 Batch of Banking Training, KFA
30
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
When Net Profit of Bank is high the EPS of the bank will also be high which shows the bank
is in good conditions. The above data shows SCB has the highest EPS and is increasing.
Nabil is in increasing order but NIBL’s EPS has decreased in the FY 2004/05 and goes up in
FY 2005/06.After comparing these three banks SCB has the highest profitability position,
then Nabil and NIBL respectively.
Return On Assets (ROA): This ratio depicts how efficiently a bank is utilizing and
mobilizing its assets to generate profit. Higher the ration the better it is as it shows high
turnover of assts.
ROA = Net Profit after Tax
Total Assets
The Table below shows ROA of SCB, NIBL, and Nabil in %
Table 12
Name of Bank
SCB
NIBL
NABIL
2003/04
2.27%
1.13%
2.72%
2004/05
2.46%
1.40%
1.40%
2005/06
2.56%
1.16%
2.85%
ROA
3.00%
Percent
2.50%
2.00%
SCB
1.50%
NIBL
1.00%
NABIL
0.50%
0.00%
2003/04
2004/05
2005/06
Years
Figure 12.1
Data Interpretation:
From the comparative table, we can find that there is a competition between SCB,
NIBL and Nabil. Nabil demonstrate the highest ROA in FY 2003/04 but decreases in
FY 2004/05 but again rises up in FY 2005/06. Each bank shows an increasing order.
Among the three Nabil’s ROA is more than the rest of the two banks. The NIBL has
the least ROA among the three banks. However, it is worthy to note that the purchase
of assets by the bank could affect this ratio in the immediately year could result in a
higher ROA ratio.
Return on Equity (ROE): It indicates the profit earned on total shareholders fund.
Higher the ratio in the better it is for the bank, as it indicates better utilization of
capital fund and total assets.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
31
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
ROE=
Net Profit after tax
Shareholder’s Equity
Table below shows ROE of SBN, NIBL and Nabil
Table 13
Name of Bank
2003/04
35.96%
14.70%
28.29%
SCB
NIBL
NABIL
2004/05
32.22%
19.09%
29.45%
2005/06
35.72%
18.15%
30.41%
ROE
40.00%
35.00%
Percent
30.00%
25.00%
SCB
20.00%
NIBL
15.00%
NABIL
10.00%
5.00%
0.00%
2003/04
2004/05
2005/06
Years
Figure 13.1
Data Interpretation:
The above graph shows that SCB has been successfully mobilizing its shareholder’s
fund and generating high profits. While comparing individually in three different
fiscal years NIBL has the lowest ROE.SCB has a decreasing trend in ROE in the FY
2004/05 and increase in the FY 2005/06.
Price Earnings Ratio (P/E Ratio): Price Earning Ratio is widely used to evaluate the
bank’s performance as expected by investor. It represents the investor’s judgment or
expatiators about growth in the banks earnings. In other words, it measures how the
net is responding towards the earning performance of the particular bank. Higher P/E
ratio indicates greater confidence in the bank’s future. Lower P/E ratio lids MPS to
decline.
P/E Ratio = MPS
EPS
Prawin Kumar Malla
98 Batch of Banking Training, KFA
32
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Table below shows P/E Ratio of SBN, NIBL and Nabil
Table 14:
Name of Bank
2003/04
SCB
NIBL
NABIL
2004/05
16.29
20.25
14.27
12.16
18.18
10.80
2005/06
21.46
21.23
17.34
P/E Ratio
25
Ratio
20
SCB
15
NIBL
10
NABIL
5
0
2003/04
2004/05
2005/06
Years
Figure 14.1
Data Interpretation:
The above table shows the increment of P/E Ratio of SCB, NIBL and Nabil banks
respectively. It increases the confidence of the shareholders and the credibility of the
bank. Higher the P/E ration better for the shareholders that is used to assess a bank’s
performance as expected.
Liquidity
Liquidity of the bank shows the ability to solve one's payment. It also shows the overall
financial position of the bank. The liquidity in term can be used as an ability to invest in a
sensitive sector like government securities, money at call etc. The limited portion of the
deposit received through the depositor can be easily converted into cash. Liquidity helps to
reduce the liquidity risk, which directly leads to bankruptcy. Liquidity is a bank ability to
generate cash quickly at a reasonable cost. The ratio is calculated by dividing current assets
by current liabilities, which test the short-term solvency of the firms.
Liquidity can be measured in three ways:
1. Cash Reserve Ratio
.2. Cash & Bank Balances to Total Deposit Ratio
.3. Government Securities to total deposit Ratio
Prawin Kumar Malla
98 Batch of Banking Training, KFA
33
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Cash Reserve Ratio:
The bank has required a certain percent of the total liquid able balance i.e. cash and bank
balance for quick accessibility. Therefore, Nepal Rastriya Bank has set a fixed CRR for all
the Commercial banks which bank has to comply. According to the directives of NRB all
Commercial bank should have CRR of 5%.
Mathematically,
Cash Reserve Ratio = Cash Balance / Total Deposit
The following table shows the Price earning ratio provided by the three commercial banks.
Cash Reserve Ratio
Table no: 15
Year
SCBNL
NABIL
NIBL
2003/04
2004/05
2005/06
9.46
8.77
6.86
6.87
3.83
3.26
9.19
9.78
13.61
Cash Reserve Ratio
14
12
10
8
SCBNL
6
NABIL
NIBL
4
2
0
2003/04
2004/05
2005/06
Figure 15.1
Interpretation:
This ratio is one of the credit ratios that show the credibility of any bank. In the above table,
NIBL has the highest ratios where as NABIL has the lowest ratios. This shows that NIBL
maintains a high cash balance with respect to the deposits and NABIL maintains the low cash
balance compared to its total deposit. The above table also shows that the liquidity of the
NIBL is also high due to its holding of cash with respects to its total deposits. SCBNL and
NIBL has maintained NRB standard for CRR whereas NABIL has not done so.
Cash and Bank Balance to Total Deposit
Mathematically,
Cash and Bank Balance to Total Deposit 
Prawin Kumar Malla
98 Batch of Banking Training, KFA
Cash and Bank Balance
Total Deposit
34
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Cash and Bank Balance to Total Deposit
Table 16
Year
SCBNL
NIBL
NABIL
2003/04
2004/05
2005/06
9.56
5.25
4.46
10.56
9.40
12.34
6.87
3.83
2.87
Cash and Bank balance to total Deposit
14
12
Percent
10
SCB
8
NIBL
6
NABIL
4
2
0
2003/04
2004/05
2005/06
Years
Figure 16.1
Interpretation:
This ratio is one of the credit ratios that show the credibility of any Bank. Looking at the
above table, NIBL has the highest ratio where as NABIL has the lowest ratios. This shows
that NIBL maintains a high cash balance with respect to its deposits and NABIL maintains a
low cash balance compare to its total deposits. It is better for the bank having adequate
balance so that bank can provide the cash easily to the depositors at any time.
Investment in Government Securities to Total Deposits
The bank can invest the amount from the total deposit in government securities such as
treasury bills and bond. The ratio can be calculated total Government investment dividend
from total deposits. This ratio shows us how much the bank has invested in government
securities. Investment in government securities is the safest investment sector and can be
liquidated at any time.
Mathematically,
GSTTD 
Investment in Government Securitie s
Total Deposits
Investment in Government Securities to Total Deposits
Table 17:
Prawin Kumar Malla
98 Batch of Banking Training, KFA
35
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Year
SCBNL
NABIL
NIBL
2003/04
2004/05
2005/06
37.56
37.25
37.49
26.01
16.51
11.81
17.36
13.67
13.33
Investment in Govt. Securities to Total Deposit
40
35
30
25
SCBNL
20
NABIL
15
NIBL
10
5
0
2003/04
2004/05
2005/06
Figure No: 17.1
Interpretation:
SCBNL has invested 37.56% of its total deposit during the F/Y 2003/2004, which is the
highest among these three banks. Government securities are considered safe zone but this
reduces their earning, as the government securities generally have low rate of return. And
NIBL has invested low amount of deposits in government.
It indicates that SCBNL has high liquidity and NIBL has lowest Liquidity position among
these banks.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
36
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
CHAPTER 3
Summary, conclusion and Recommendations:
Summary

All the three banks have maintained CAR as per Nepal Rastra Bank rules and
regulation. In the data analysis SCB has greater CAR compare to other two banks. It
shows that it has higher equity capital.

Activity ratio of SCB is lowest compare to NABIL and NIBL. Where as NABIL has
higher activity ratio.

Performing loan of NABIL is higher compare to SCB and NIBL. But in the table
SCB has able to increase its performing loan while NABIL shows little decrease in
2005/2006 and same as NIBL.

Regarding Non-performing loan SCB is able to decrease its NPL. The trend shows
decreasing pattern. Whereas NABIL has low Non-performing loan but in the year
2005/2006 the figure shows slight increase in its NPL. Among the three banks NIBL
has highest NPL but it is acceptable.

Overall total loan loss provision of NIBL is greater. Where as SCB and NABIL are
able to decrease its TLL but NIBL TLLP has been increased in 2004/2005 compare to
2003/2004.

From the question asked to the banks people and through observation management of
SCB and NABIL are good. But comparing these two banks the management of SCB
is good in overall. But the attitude of SCB employee is not good as compare to NIBL.
From the diagram staff efficiency ratio 0f SCB is very good which also shows overall
good management in the bank. Employees of SCB are hard working and productive.

EPS of SCB is greater compare to two banks. The EPS of SCB has been increasing
year to year whereas EPS of NIBL shows downward trend 2004/2005. Here NABIL
is also able to increase its EPS but not goods as SCB. SCB is able to earn high profit.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
37
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL

The trend of SCB shows increasing trend in ROA whereas, other banks’ ROA is
fluctuating. It means SCB is able to get higher profit every year. ROA of SCB has
increased in 2003/04, 2004/05 and 2005/06 respectively.

ROE of SCB is also greater compare other banks. The figure of SCB in 2003/2004 is
35.96%, in 2004/2005 it was 32.22% and in 2005/2006 it is 35.72%. Where as NIBL
has lowest ROE it is 18.15% only in year 2005/2006.

Regarding price earning ratio again SCB has higher ratio. It is 21.46% in 2005/2006
where as NIBL has 21.23%, here NABIL has lowest price earning ratio.

CRR of SCB is 6.86, but NABIL has 3.26 in 2005/2006. AS per NRB CRR should be
5% and it should not exceed that. In this case NABIL has good CRR while NIBL has
highest CRR.

Total Cash and Bank balance to total deposit ratio of SCB is 9.56, 5.25, and 4.46.
NIBL has 10.56, 9.40, and 12.34. Whereas NABIL has 6.87, 3.83 and 2.87. SCB and
NABIL are able to decrease whereas NIBL shows inefficient.

Investment in Government securities to total deposit of SCB is 37.56, 37.25 and
37.49. Nabil has 26.01, 16.51 and 11.81. Whereas NIBL has 17.36, 13.57 and 13.33.
NABIL has lowest percentage investment.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
38
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
Conclusion and Recommendation:
Capital adequacy and availability ultimately determine the robustness of financial institutions
to shocks to their balance sheet. Aggregate risk-based capital ratios (the ratio of regulatory
capital to risk weighted assets) are the most common indicators of capital adequacy, based on
the methodology agreed to by the Basel Committee on Banking Supervision in 1988. Simple
ratios of capital to assets without differential risk weights often complement this measure. An
adverse trend in these ratios may signal increased risk exposure and possible capital
adequacy problem. In addition to the amount of capital quality. In may countries, bank
capital consists of different elements that have varying availability and capability to absorb
losses, even within the broad categories of tier 1, tier 2, and tier 3 capital. If these capital
elements can be reported separately, they can serve as more reliable indicators of the ability
of banks to withstand losses, and help to put overall capital ratios.
The Basel Committee's minimum standards for risk-weighted capital adequacy were
originally intended to apply only to internationally active banks, but are now used in most
countries industrial, emerging and developing and for most banks. Recent proposals have
been put forward by the Basel Committee to update this standard to account for the rapid
development of new risk-management techniques and financial innovation. These proposals
introduce greater refinement into the existing system of risk weighting, to relate its categories
more accurately to the economic risks faced by banks-- including as measured by banks' own
internal ratings systems, or less elaborately, based on ratings from external rating agencies.
However, improved risk measurement comes at the expense of comparability. Under the new
proposal, each bank's way of estimating credit risk can differ, which being reflected in
different risk-weighted assets and capital ratios, would make aggregation of individual bank
ratios problematic. This issue has not so far been tackled explicitly in the Basel proposal.
Well designed loan classification and provisioning rules are key to obtaining a meaningful
capital ratio. Loan classification rules determine the level or provisioning, which affects
capital both indirectly (by reducing income) and directly (through inclusion of general
provisions, to some extent in regulatory capital. Moreover in most Group of Ten (G10)
countries, banks are required to deduct specific provisions (or loan-loss reserves) from loans
that is, credit is calculated on a net basis which reduces the value of total assets and hence of
capital .
Simple gearing ratios the ratios of capital to assets, without differential risk weights are also
meaningful indicators and are often used
Prawin Kumar Malla
98 Batch of Banking Training, KFA
39
COMPARTIVE ANALYSIS OF SCB, NIBL, NBL BANK OF NEPAL
To assess leveraged positions in off balance-sheet transactions resulting from a derivative
contract, the basic derivative instruments forwards and options can be replicated by holding
(and in the case of options, constantly adjusting) positions in the spot market of the
underlying security, and by borrowing or lending in the money market. This replication of
the contract maps the individual components into own-funds equivalent (equity) and
borrowed-funds equivalents (debt), which can be used to measure that leverage contained in
long and short forward positions and option contracts. This on-balance-sheet asset equivalent
of the exposure is also called the current notional amount. Overall leverage ratios, defined as
on balance-sheet asset plus off-balance-sheet exposures (gross or net), can be obtained
following this method.
Indicators covered in this section suggest that two main measures are important for tracking
capital adequacy:


the ratios of regulatory capital to risk weighted assets (the Basel capital
adequacy ratio), and
The ratio of capital to assets (the gearing ratios).
In countries where bank derivatives trading is considered of systemic importance, it is also
advisable, when monitoring capital ratios, to adjust for off-balance-sheet items.
From the analysis SCB and NABIL shows great performance compare to NIBL in all
department. NIBL need to issue more debentures to increase its CAR.
Non performing loan has to be decreased by SCB and NIBL. For this they have to do credit
appraisal of customer more strictly.
NIBL should be able to mobilize their asset. They have high liquidity they have to lend more
cash in effective way to the prominent customer.
Besides SCB other two banks have to try to invest in government securities. Because it is
more safe. NRB has imposed 0% risk in theses types of investment. So other bank should
able to invest which will generate high profit and it is also safe for them because risk is not
attached with it.
NIBL should able to increase its staff efficiency. They should provide good incentives,
opportunities and good working environment for the staff. As well as infrastructure should be
good, attractive.
Prawin Kumar Malla
98 Batch of Banking Training, KFA
40