Comparative Financial Performance of MBL,KBL,LBL & SBL

Comparative Financial Performance of MBL, KBL, LBL & SBL

TABLE OF CONTENTS

SIGNATURECOPYRIGHTDISCLAIMERACKNOWLEDGEMENTS

CHAPTER PAGE NO.1 INTRODUCTION TO BANKING...........................................................5

1.1 Introduction...............................................................................5

1.2 Origin of Modern Banking System.............................................6

1.3 Development of Banking in Nepal.............................................6

1.4 Purpose of the study................................................................10

1.5 Methodology............................................................................10

1.6 Scope of the study...................................................................10

1.7 Limitations of the study...........................................................10

1.8 INTRODUCTION TO MACHHAPUCHCHHRE BANK LIMITED........11

1.8.1 Introduction...........................................................................................11

1.8.2 Branches.................................................................................................12

1.8.3 Board of Directors...............................................................................12

1.8.4 Products and Services Offerings of MBL.....................................13

1.8.5 Financial Highlights............................................................................13

1.9 INTRODUCTION TO KUMARI BANK LIMITED..............................14

1.9.1 Introduction...........................................................................................14

1.9.2 Branches.................................................................................................15


1.9.4 Products and Services Offerings of KBL.....................................15


1.10 INTRODUCTION TO LAXMI BANK LIMITED................................17

1.10.1 Introduction...........................................................................................17

1.10.2 Branches.................................................................................................18


1Jointly Prepared By:


1.10.4 Products and Services Offerings of LBL......................................19


1.11 INTRODUCTION TO SIDDHARTHA BANK LIMITED.....................21

1.11.1 Introduction...........................................................................................21

1.11.2 Branches.................................................................................................22


1.11.4 Products and Services Offerings of SBL......................................22


2 COMPARATIVE FINANCIAL PERFORMANCE OF MBL, KBL, LBL & SBL24

2.1 CAMEL Analysis........................................................................24

2.1.1 Capital Adequacy................................................................................24

2.1.2 Asset Quality.........................................................................................26

2.1.3 Management.........................................................................................30

2.1.4 Earning....................................................................................................33

2.1.5 Liquidity..................................................................................................37

2.2 TREND ANALYSIS.....................................................................41

2.2.1 Total Deposit.........................................................................................41

2.2.2 Total Loans and Advances...............................................................42

2.2.3 Profit Analysis.......................................................................................44

2.2.4 Investment Analysis...........................................................................45

3 SUMMARY, CONCLUSION & RECOMMENDATION............................463.1 Summary & Conclusion...........................................................46

3.2 Recommendation.....................................................................48

Bibliography.....................................................................50

Abbreviations..................................................................51

LIST OF CHART, TABLES AND FIGURES



List of Tables Page No.Table 1: List of Commercial Banks.....................................................................................8

Table 2: Growth of Bank & Financial Institution................................................................9

Table 3: Capital Structure of KBL.....................................................................................11

Table 4: Financial Highlights............................................................................................13





Table 9: Capital Structure of SBL.....................................................................................21

Table 10: Financial Highlights..........................................................................................23

Table 11: Comparative CARS...........................................................................................25

Table 12: Classification of loan.........................................................................................27

Table 13: Loan loss provision to total loan.......................................................................27

Table 14: Performing loan to total loan.............................................................................28

Table 15: Non Performing loan to total loan.....................................................................29

Table 16: ROA of MBL, KBL, LBL & SBL.....................................................................34

Table 17: PE ratios of MBL, KBL, LBL & SBL...............................................................35

Table 18: ROE of MBL, KBL, LBL & SBL.....................................................................36

Table 19: EPS of MBL, KBL, LBL & SBL......................................................................37

Table 20: CRR of MBL, KBL, LBL & SBL.....................................................................38

Table 21: CBTTD of MBL, KBL, LBL & SBL................................................................39

Table 22: GSTTD of MBL, KBL, LBL & SBL................................................................40

Table 23: Total Deposit of MBL, KBL, LBL & SBL.......................................................41

Table 24: Loan & Advances of MBL, KBL, LBL & SBL................................................42

Table 25: CD Ratio of MBL, KBL, LBL & SBL..............................................................43

Table 26: Profit of MBL, KBL, LBL & SBL....................................................................44

Table 27: Investment of MBL, KBL, LBL, & SBL..........................................................45

List of Figures Page No.Figure 1: Comparative CAR..............................................................................................25



Figure 2: Comparative CRR..............................................................................................38

Figure 3: Comparative CBTTD.........................................................................................39

Figure 4: Comparative GBTTD.........................................................................................40

Figure 5: Comparative Total Deposit................................................................................42

Figure 6: Comparative Loan & Advances.........................................................................43

Figure 7: Comparative Net Profit......................................................................................44

Figure 8: Comparative Investment Analysis.....................................................................45

Chapter 1



1 INTRODUCTION TO BANKING

1.1 Introduction

In every nation, financial sector immensely contributes to

economic growth and prosperity. It provides platform to country for

capital formation by mobilizing the public deposits, which can be

invested in economic activities, thereby providing basis for credit

creation through multiplier effect. This phenomenon of multiplier effect

of credit creation within a country is strong foundation for central

banks to apply its monetary policy to guide the economy in proper

direction.

Bank constitutes an important segment of the financial infrastructure

of the country. Generally a bank does the business of money. It is a

financial organization whose principle operations are concerned with

the accumulation of the temporary idle money from the general public

by attracting them with sound interest rate and utilizing those funds by

providing loans to different sectors, e.g. business houses, industries,

firms, agriculture etc. Besides, banks also provide a number of agency

services like making payment of cheque, draft and bill of exchange;

money transfer from by means of draft, mail transfer or telegraphic

transfer; etc on behalf of its customers. Many scholars have defined

bank some of which are as follows:

According to Crowther “Bank is a financial institution that collects

the surplus funds of the people on terms acceptable to them and

makes them available to the needy for productive purposes.”

Professor Kinely says “ Bank is an establishment which makes to

individuals such as advances of money as may be required and safety

made to and to which individuals entrust money when they not

required by them for use.”

Therefore, Bank is a financial institution that collects idle funds,

mobilizing them into productive sector, which in return turns out to be



an overall development of the country depending on the performance

of the bank.

1.2 Origin of Modern Banking System

The word Bank developed from Italy. Bank was called BENKO in

Italian terms, which, later on, started to be called BANK by Englishmen,

and this spread all over the world. In Italian language BENKO means

BENCH. In ancient time, Sunar and Saraphi were exchanging money by

putting on the bench. For this reason, the banking carries out the work

of exchanging money, providing loans, accepting deposits and

transferring the money. Thus, Modern banking system originated in

Medieval Italy. The first bank called “Bank of Venice” which was

established in Venice in Italy in 1157 A.D. to finance the monarch in his

wars. Subsequently, Bank of Barcelona (1401) and Bank of Geneva

(1407) were established. The Lombard migrated to England and other

parts of Europe from Italy are regarded for the development and

expansion of the modern banking. Though, Bank of England was

established in 1694, the growth of banks accelerated only after the

introduction of Banking Act – 1833 in United Kingdom as it allowed

opening joint stock company banks.But the modern banking started

after the introduction of banking act 1883 A.D. at United States of

America. So, this trend of banking slowly began to increase and spread

initially all over the world.

1.3 Development of Banking in Nepal

Firstly, In Nepal Prime Minister Ranodip Singh has established

“Tezarath Adda” in 1877 A.D. in Kathmandu, which was fully

subscribed by the government and grant loan for government

employees. This establishment helped the general public to provide

credit facilities at very low interest rate but only the collateral of gold

and silver. Several branches were opened in different part of the

country. Tezarath Adda did not accept any deposit that may be the



main reason it faced many financial problem in absence of saving

mobilization.

Secondly, the need of banking institution was realized and in the year

1937 A.D. “Nepal Bank Limited” was established as the first banking

institution. Then the essentiality of another bank was realized to

control over all the financial aspect of the country and “Nepal Rastra

Bank” as the country’s central bank was established in 1956 and then

“Ratriya Banijya Bank” the second commercial bank was established in

1966. After 1984 the government gradually liberalized and opened up

the financial sector, resulting in the rapid entry of the foreign banks.

Later, with the grand opening of Nabil Bank Ltd. in 1984 other

commercial banks started emerging in the private sectors.

Thirdly, 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 is saving

lots of time and money by implementing IT. Technology has changed

the traditional method of the services 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.

Table 1: List of Commercial Banks

(Rs. In Million)

S.N

.Commercial Banks

Operation

Date

Paid up

Capital

1 Nepal Bank Ltd. 1994/07/30 380.4



2 Rastriya Banijya Bank 2022/10/10 1172.3

3 NABIL Bank Ltd. 2041/03/29 689.2

4 Nepal Investment Bank Ltd. 2042/11/16 1002.6

5 Standard Chartered Bank Ltd. 2043/10/16 620.8

6 Himalayan Bank Ltd. 2049/10/05 810.8

7 Nepal SBI Bank Ltd. 2050/03/23 647.8

8 Nepal Bangladesh Bank Ltd. 2050/02/23 744.1

9 Everest Bank Ltd. 2051/07/01 831.4

10 Bank of Kathmandu Ltd 2051/11/28 603.1

11Nepal Credit and Commerce Bank

Ltd.2053/06/28 1195.7

12 Lumbini Bank Ltd. 2055/04/01 750.0

13Nepal Industrial & Commercial

Bank Ltd.2055/04/05 792.0

14 Machhyapuchhre Bank Ltd. 2057/06/17 821.7

15 Kumari Bank Ltd. 2057/12/21 900.0

16 Laxmi Bank Ltd. 2058/12/21 732.0

17 Siddhartha Bank Ltd. 2059/09/09 690.0

18Agricultural Development Bank

Ltd.*2024/09/18 9278.0

19 Global Bank Limited 2063/09/18 700.0

20 Citizen International Bank Limited 2064/03/07 560.0

Source: www.nrb.com.np, List of Banks & Non-banks Financial Institution

Note: * Agricultural Development bank came into operation from 2024/09/18

with paid up capital 9278 millions and upgraded development banks into

commercial banks in 2006.

** Prime Commercial Bank, Bank of Asia Nepal & Sunrise Bank Ltd. Were

operated after mid July 2007.

Growth of Financial Institutions:


http://www.nrb.com.np/


During the last two and half decades the number of financial

institutions has grown significantly. At the beginning of the 1980s

there were only two commercial bank and development banks in the

country. After the induction of economic liberalization policy,

particularly the financial sector liberalization, that impetus in the

establishment of new bank and non-bank financial institutions.

Consequently, by the end of mid-July 2007 altogether 208 banks and

non-bank financial institutions licensed by NRB are in operation.

List of commercial banks in Nepal are as follows:Table 2: Growth of Bank & Financial Institution

Types of Financial Institution

Number of Institutions in Mid July1980 1985 1990 1995 2000 2005 2006 2007

Commercial Banks2 3 5 10 13 17 18 20

Development Banks 2 2 2 3 7 26 28 38

Finance Companies - - - 21 45 60 70 74

Micro Credit Development Banks

- - - 4 7 11 11 12

Saving & Credit Co-Operatives

- - - 6 19 20 19 17

NGO's (Performing Limited Banking Activities

- - - - 7 47 47 47

Total 4 5 7 44 98 181 193 208

Source: Banking & Financial Statistics Mid-July 2007

1.4 Purpose of the study

The major purpose of this study is to do the analysis of Financial

Performance through Camel analysis of four same generation

commercial banks namely Machhapuchre Bank Ltd., Kumari Bank Ltd,

Laxmi Bank Ltd., and Siddhartha Bank Ltd.



1.5 Methodology

The information for this study has been collected mainly through

secondary sources. The major source of secondary data is the annual

reports of relevant banks. Moreover, relevant articles from the Internet

and the magazines have also been consulted.

1.6 Scope of the study

This study is focused on the analysis of Financial Performance of banks

through CAMEL analysis. It deals with only balance sheet items.

1.7 Limitations of the study

Due to limited time we have focused only to the financial performance

through CAMEL analysis and we have not covered all the financial

indicators. The study is confined to MBL, KBL, LBL, and SBL. The study

covers the three fiscal years from FY 2061/62 to 63/ 64.

1.8 INTRODUCTION TO MACHHAPUCHCHHRE BANK LIMITED

1.8.1 Introduction

Machhapuchchhre Bank Limited was registered in 1998 as the first

regional commercial bank to start banking business from the western

region of Nepal with its head office in Pokhara. Today, with a paid up



capital of above 820 million rupees, it is one of the full-fledged

commercial bank operating in Nepal.

Machhapuchchhre Bank Limited is a pioneer in introducing the

latest technology in banking in the country. It is the first bank to

introduce centralized banking software named GLOBUS BANKING

SOFTWARE developed by Temenos NV, Switzerland. The bank provides

modern banking facilities such as Any Branch Banking, Internet

Banking and Mobile Banking to its valued customers.

The bank in the last few years have really opened up with

branches spread all around the country. At this stage, it has its

Corporate Office in Kathmandu and branch offices in other parts of

Kathmandu, Damauli, Bhairahawa, Birgunj, Banepa, and different parts

of Pokhara in addition to the Head Office in Naya Bazar, Pokhara. A full-

fledged banking branch is in operation in Jomsom located high up in

the mountains too. The bank aims to serve the people of both the

urban and rural areas.

The Capital Structure of MBL as on FY 2063/64 was as follows:

Table 3: Capital Structure of KBL

FY 2061/62

(NRs.)

Capital Structure FY 2062/63

(NRs.)

1,000,000,000 Authorized Capital 1,000,000,000

715,000,000 Issued Capital 821,651,300

715,000,000 Paid Up Capital 821,651,300

Source: 9th Annual Report of MBL & www.mbl.com.np

1.8.2 Branches

Naya Bazar, Pokhara Head Office

Chipledhunga,Mahendrapul,Pokhara Branch

Ram Bazar,Pokhara Branch

Naya Bazar,Prithivi Chowk Putalisadak,



Pokhara Branch Kathmandu Branch

New Road,Ktm Branch

Tribhuwan Chowk, Banepa,Kavre Branch

Link Road, GhantagharBirgunj Branch

Mainroad,Damauli Branch

Devkota ChowkBhairahawa Branch

Itahari Branch

Jomsom, Mustang Branch

Thapathali Extension Counter

Baluwatar Extension Counter Gwarko,Lalitpur Branch

1.8.3 Board of Directors

Mr. Surya Bahadur K.C. Chairman

Mrs. Geeta Shrestha Director

Mr. Kishor Kumar ShahDirector

Mr. Ajad Shrestha Director

Mr. Praneswor Pokharel Director

Mr. Prakash K.C.Director

1.8.4 Products and Services Offerings of MBL

Deposit Current Deposit Call Deposit Saving Deposit Pew Bachat Fixed/Term Deposit Share Holder’s Deposit Yuva Bachat Salary Management Scheme



Royale Saving Deposit

Loan (Term Loan, Working Capital Loan, Trust Receipt Loan, Packing Credit Loan, Home Loan, Hire Purchase Loan, Education Loan, Loan against Securities, Privilege Loan)

Other Services (Mobile Banking, MBL Debit Card, Internet Banking, ABBS, Trade Finance, Safe Deposit Locker, Money2Nepal, Remittance)

1.8.5 Financial Highlights

The financial highlights of MBL can depict as follows:Table 4: Financial Highlights

S.N. ParticularFY

2061/62(Rs.)

Growth (%)

FY 2062/63

(Rs.)

Growth(%)

FY 2063/64(Rs.)

1 Total Asset 6,445.42 41 9,069.83 19 10,807.62

2 Net Worth 637.74 46 931.09 7 1,000.26

3 Deposits 5,586.80 41 7,893.30 20 9,475.45

4Loans, Advances & Bills Purchase (Gross)

5,130.22 20 6,146.57 19 7,319.94

5 Investment 468.61 154 1,190.83 7 1,278.47

6 Net interest income 194.90 41 274.70 8 296.76

7 Operating Profit 128.40 50 192.91 -53 91.10

8 Net Profit 84.87 58 134.00 -45 74.09

Source: Annual Report of MBL

1.9 INTRODUCTION TO KUMARI BANK LIMITED

1.9.1 Introduction

Kumari Bank Limited, came into existence as the fifteenth commercial

bank of Nepal by starting its banking operations from Chaitra 21, 2057

B.S (April 03, 2001) with an objective of providing competitive and

modern banking services in the Nepalese financial market. The bank


In NRs. '000,000'


has paid up capital of Rs. 900 million, of which 70 % is contributed

from promoters and remaining from public.

Kumari Bank Ltd has been providing wide- range of modern banking

services through 10 points of representation across the country, 6

outside and 4 inside the valley. The bank is pioneer in providing some

of the latest / lucrative banking services like E-Banking and SMS

banking services in Nepal. The bank has adopted Globus Banking

Software, developed by Temenos NV, Switzerland, to provide

centralized data base system to all branches. Similarly the bank has

been providing 365 days banking facilities, extended banking hours till

7 PM in the evening, utility bill payment services, inward and outward

remittance services, and various other banking services. Visa Electron

Debit Card, which is accessible in entire VISA linked ATMs (including 11

own ATMs) and POS (Point of Sale) terminals both in Nepal and India,

has also added convenience to the customers.

The Capital Structure of KBL as on FY 2063/64 was as follows:


FY 2062/63

(NRs.)


(NRs.)


625,000,000 Issued Capital 750,000,000

625,000,000 Paid Up Capital 750,000,000

Source: 7th Annual Report – 2063/64 B.S. & www.kumaribank.com

1.9.2 Branches

Putalisadak, KathmanduHead Office

New Road,Pratap BhawanKathmandu Branch

Biratnagar BranchGoshwara Marg, Morang

Adarshanagar,Birgunj Branch

New Road, Pokhara Branch

Dharan Road, Kanipur Mall, Gongabu,14

Jointly Prepared By:

http://www.kumaribank.com/


Itahari Branch Kathmandu Branch

Kumaripati, Lalitpur Branch

Dry Port, SirsiyaBirgung Branch

Pulchowk, Narayanghat,Chitawan Branch


Noor Pratap JB RanaChairman

Amir Pratap JB RanaDirector

Shiva Ratan SharadaDirector

Shantoo ShresthaDirector

Samson J. B. RanaDirector

Lalit Jung ShahiDirector

Jagdish Prasad ChaudharyDirector

Surendra Bahadur K.C. (Khadka)Director

1.9.4 Products and Services Offerings of KBL

Deposit (Saving Deposit, Fixed Deposit, Liquid Deposit, Super Saving, Kumari Saving, Checking A/c, Business A/c, Time Deposit, Call Deposit)

Loan (Vehicle Loan, Home Loan, Hire Purchase, Consumer Product Financing, Educational Loans, Travel Loans, Working Capital Financing, Term Loan, Short Term Loan, Hire Purchase, Bills Discounting, Loan Syndication)

Safety Lockers Foreign Trade (Letter of Credit, Forward Contract, Bank

Guarantee, Cash Management, Clearing) Salary Management Bulk Cah Management Remittance (Demand Draft, Manger's Cheque, Travellers'

Cheque, Telex Transfer) Convenience Banking (Evening Banking, Weekend Banking) E-banking (Internet Banking, Mobil Banking, Utility Bill Payment)


The financial highlights of KBL can depict as follows:


In NRs. '000,000'


Table 6: Financial Highlights

S.N.

ParticularFY

2061/62(Rs.)

Variance (%)

FY 2062/63

(Rs.)

Variance

(%)

FY 2063/64

(Rs.)

1 Total Asset 7,428.30 21 9,010.28 32 11,918.31

2 Net Worth 645.44 34 863.51 20 1,038.60

3 Deposits 6,268.95 24 7,768.96 36 10,557.42

4Loans and advances

5,681.01 23 7007.79 29 9,062.43

5 Investment 1,190.27 17 1,394.95 47 2,050.63

6Net interest income

259.79 3 268.47 47 394.23

7Operating Profit

138.86 13 156.76 71 267.30

8 Net Profit 84.20 23 103.67 64 170.26

Source: 6th Annual Report – 2062/63 B.S. & 7th Annual Report – 2063/64 B.S.

1.10INTRODUCTION TO LAXMI BANK LIMITED

1.10.1 Introduction

Laxmi Bank was incorporated in April 2002 as a commercial bank. The

current shareholding constitutes of promoters holding 55.42 percent,

Citizen Investment Trust holding 9.02 percent and the general public

holding 35.56 percent. Promoters represent Nepal’s leading business

families with diversified business interests. The Bank’s shares are

listed and actively traded in the Nepalese Stock Exchange.



Laxmi Bank has grown with branches in Birgunj, Banepa, two in

Pokhara, Biratnagar, Narayanghat, Pulchowk, Lalitpur, Teku, New Road,

and more recently in Janakpur. Three more branches will soon be

operational from New Baneswor and Bhatbhatini in Kathmandu and

from Damak in outside the Valley.

With a view to providing safe, seamless, quick and advance

banking services, the bank has been heavily investing in contemporary

banking technologies. The Bank uses Flexcube as its main banking

platform. Flexcube incidentally has been ranked the number one

selling core banking solution globally, and has been embraced by over

500 financial institutions across over 90 countries. The Bank provides

its services through a host of delivery channels including cell phone,

Internet, ATM. The bank is the first in South Asia to have implemented

SWIFTNet, the advanced version of the SWIFT technology, which is

used for speedy and secure payment and messaging services.

Under a professional management team, the bank has

established itself as an emerging key player. Today the bank is

recognized as an innovative and progressive bank geared to providing

shareholders and customers with quality earnings and value-added

services. The bank has its own land and well-built three storied office

building with sufficient parking area and electronic surveillance

system.

The Capital Structure of LBL as on FY 2063/64 was as follows:


FY 2062/63

(NRs.)


(NRs.)


610,000,000 Issued Capital 800,000,000

609,917,300 Paid Up Capital 729,697,000

Source: Annual Report of LBL. 17



1.10.2 Branches

Hattisar,KathmanduHead Office

Birgung Branch NewroadPokhara Branch

Banepa BranchKavre Branch

Pulchowk,Lalitpur Branch

Narayanghat,Chitwan Branch

Teku,Kathmandu Branch

Pokhara Industrial District,Pokhara Branch

Biratnagar Branch

Janakpur Branch Newroad,Kathmandu Branch

New Baneshwor,Kathmandu Branch


Madhu Sudan Agrawal Director

Mr. C.P.KhetanDirector

Gopi Krishna SikariaDirector

Mr. Nandan Hari SharmaDirector(Representing CIT)

Mr. Bhola B. AdhikaryDirector(Representing Public Shareholders)

Mr. Suman JoshiChief Executive Officer

Mr. Shambhu Prasad AcharyaProfessional Director

Ratan Lal ShanghaiAdvisor

1.10.4 Products and Services Offerings of LBL

Deposit Saving A/c (Laxmi Saving Account, Orange Saving Account) Fixed Deposit Call Account Sweep Facility Current Account



Specialized Savings Account Gurkha Savings Student Savings USD Savings Junior Savings Samrakshan

Loan (Overdraft, Working Capital Loan/Demand Loan/Short-term, Supply Finance, Term Loan, SME Loan, Trust Receipt Loan/Importer’s Loan, Packing Credit/Export Loan, Letter of Credit, Bank Guarantee, Car Loan, Home Loan, Home equity Loan, Personal Loan)

Other Services (Demand Drafts, Lockers, Fund Transfers/Remittance, Clearing/Collection, Foreign Exchange, Financial Advisory, Internet Banking/Online Payment, Extended Banking, ATM/Debit Card, Payroll Management, NRN Cell)


The financial highlights of LBL can depict as follows:


S.N.

Particular

FY 2061/62

(Rs.)

Variance (%)

FY 2062/63

(Rs.)

Variance

(%)

FY 2063/64

(Rs.)

1 Total Asset 3,886.18 40 5,282.93 58 8,582.69

2 Net Worth 643.57 6 682.08 27 864.39

3 Deposits 3051.76 46 4444.35 71 7,611.65

4 Loans and advances

2726.14 57 4,280.11 53 6,529.24

5 Investment 421.46 21 509.81 184 1447.36

6 Net interest income

95.69 32 126.77 50 190.22

7 Operating Profit

49.56 20 59.53 80 106.90

8 Net Profit 26.47 34 35.39 85 65.58


In NRs. '000,000'


Source: Annual Report of LBL



1.11INTRODUCTION TO SIDDHARTHA BANK LIMITED

1.11.1 Introduction

Siddhartha Bank Limited (SBL) commenced operations in 2002. The

Bank was promoted by a group of highly reputed Nepalese dignitaries

having wide commercial experience. We provide a full range of

commercial banking services through our seven branches established

in Kathmandu ( 3 in Valley), Birgunj, Biratnagar, Pokhara and Damak.

The Vision statement of the Bank describes the core values and

purposes that guide the Bank as well as an envisioned future.

Fundamentally, in all dealings SBL earnestly believes in transparency,

financial soundness, efficiency and better technology.

During the short span of time, the bank has made tremendous

progress in banking and is getting more and more competitive. The

bank is currently focusing on enhancing its credit policies and

maintaining the sound and healthy asset portfolio.

SBL has been following the philosophy " Our Business is to

understand your business"

The Capital Structure of SBL as on FY 2063/64 was as follows:

Table 9: Capital Structure of SBL

In NRs. '000,000'

FY 2062/63

(NRs.)


(NRs.)

1,00,00,00,000 Authorized Capital 1,00,00,00,000

50,00,00,000 Issued Capital 80,00,00,000

50,00,00,000 Paid Up Capital 60,00,00,000

Source: 6th Annual Report – 2063/64 B.S



1.11.2 Branches

Kamaladi, Ktm Head Office

New RoadKtm Branch

Birgunj Branch

Pokhara Branch Biratnagar Branch

Tripureshwor Branch Damak Branch


Chiranjee Lal AgrawalChairman

Suresh Chandra AgrawalDirector

Tarachand KediaDirector

Ratan Lal KediaDirector

Biswo Nath ShahDirector

Mahesh Prasad PokhrelDirector

Hamenta GyawaliDirector

1.11.4 Products and Services Offerings of SBL

Deposit Saving Account (Siddahrtha Bachat, Siddhartha Bishesh

Bachat) Fixed Deposit Call Deposit Current Account Foreign Currency Deposit

Business Loan: Working Capital Loan, Term Loan, Import Loan, Bills Discounted under usuance L/c, Export Loan, Consortium Loan, Bills Purchase

Trade Finance: Advance Payment, Documetary Collection, Import L/c, Export L/c



Bank Guarantee: Forward Contract, Bid Bond, Performance Bond, Shipping Indemnity Bond, Advance Payment Guarantee

Personal Retail Banking Siddhartha Home Loan Siddhartha Vehicle Loan Siddhartha Education Loan Siddhartha Personal Loan Loan Against Fixed Deposit Receipt

Other Services Debit/ATM Card Safe Deposit Locker Evening Banking ABBS

Remittance (Demand Draft, Manger's Cheque, Travellers' Cheque, Telex Transfer)


The financial highlights of SBL can be analyzed as follows:


S.N.

Particular

FY 2061/62

(Rs.)

Variance (%)

FY 2062/63

(Rs.)

Variance

(%)

FY 2063/64

(Rs.)

1 Total Asset 3,091.10 54 4,756.94 67 7,954.66

2 Net Worth 387.89 55 603.14 32 793.71

3 Deposits 2,461.92 59 3918.08 69 6,625.08

4 Loans and advances

2,634.93 47 3,869.30 63 6,319.73

5 Investment 286.62 127 650.98 33 865.19

6 Net interest income

106.20 43 151.85 38 209.81

7 Operating Profit

77.70 30 100.69 52 153.05

8 Net Profit 70.28 -7 65.25 46 95.31

Source: Annual Report of SBL

Chapter 2


In NRs. '000,000'


2 COMPARATIVE FINANCIAL PERFORMANCE OF MBL, KBL, LBL & SBL

2.1 CAMEL AnalysisThe Financial performance of selected commercial banks (same

generation banks) MBL KBL, LBL and SBL has been carried out in terms

of CAMEL approach, which stands for:

C- Capital Adequacy

A- Assets Quality

M- Management

E- Earnings

L- Liquidity

2.1.1 Capital Adequacy

As per the directives, which have been maintained by Nepal Rastra

Bank, every commercial bank is required to maintain a minimum CAR.

Commercial bank should hold adequate capital depending on their

requirements. Capital fund is created to protect the interest of the

depositors. Holding an excess capital than requirements may have

higher holding cost and lower return from their investment. Where as,

holding too little capital may have inadequacy problem. Banks have

been directed to meet any shortfall adequacy ratio by transferring part

of profit to general reserve account or by increasing paid up capital.

Capital adequacy can be measured by using Capital Adequacy Ration

(CAR), which is calculated as follows:

According to NRB directives, commercial banks should maintain their

CAR more than 11%, core capital 5.5% and supplementary capital

5.5%.24



Table 11: Comparative CARS

Bank 2061/62 2062/63 2063/64

MBL 11.36 % 12.79% 11.97%

KBL 11.21 % 12.36% 11.22%

LBL 20.88 % 14.96 % 12.43%

SBL 13.64 % 14.16% 11.84%

Sources: Annual Reports of MBL, KBL, LBL & SBL (Ref. NRB Dir. Schedule 4.31)

Figure 1: Comparative CAR

Interpretation:If the CAR percentage is higher than the mandatory of minimum

capital fund, interests of depositor are is safe but in shareholders point

of view it is not better because of idle fund. The above data shows that

LBL has the highest CAR among MBL, KBL & SBL in the three

consecutive years, which shows the secure position for depositors and

creditors of Laxmi bank. CAR of LBL & SBL are more fluctuating than

MBL & KBL is stable. From the table it is seen that all the three banks

have maintained their CAR more than the requirement in the four fiscal

years. It indicates that all the four banks can increase their lending and

investment activities.In 2063/64, all the banks maintain CAR very near

to mandatory requirement.

LBL has higher percentage of 20.88% in 2061/2062, 14.96 in

2062/63 & 12.43% in 2063/64, which is more than required



percentage. From shareholders point of view its good and safe but the

bank isn’t investing its fund properly. But it is decreasing trend, it

shows that LBL has increased its credit exposure.

2.1.2 Asset Quality

Assets quality refers to the degree of financial strength and risk

in a bank's assets, typically loans & investments, cash and bank

balance money at call, investment, loan and advances, etc are the

forms of assets kept by the banks. Banks give loan and advance in

higher volume and from where interest income is generated. In this

sector there is high volume of risk as well. Banks lending policy and

other regulations adopted by bank determined the quality of assets.

Commercial banks collect funds in the form of capital, deposit etc. A

significant part of the banks income is through its lending activities.

There are basically two types of loans and advances and loss

provisions:

1. Performing loans: All good loans and overdue for below 90 days.

2. Non performing loans: Sub stand – loans overdue by more than 3 months up to 6

months Doubtful – loans overdue by more than 6 months up to 1 year Bad – loans overdue by more than 1 year

Table 12: Classification of loan

Classification of loans Provision required

Pass 1%

Substandard 25%

Doubtful 50%

Bad loans 100%

To determine the quality of assets the following ratios can be used:

Loan loss provision to total loan.

Performing loan to total loan.



Non-performing loan to total loan.Loan loss provision to total loan (LLP/TL)

This ratio depicts how much provision a bank has to create for its bad

loan out of the total loan provided. The lower the rate, the better is the

financial position. It is calculated as follows:

LLP/TL = Total Loan Loss Provision X 100

Total Loan

The following table shows the loan loss provision ratio of MBL, KBL, LBL

and SBL.

Table 13: Loan loss provision to total loan

Name of the bank

2061/62 2062/63 2063/64

MBL 1.34 % 1.27% 2.60%

KBL 1.70 % 1.65 % 1.47%

LBL 2.50% 1.82% 1.41%

SBL 2.43 % 2.07 % 1.54%Sources: Annual Reports of MBL, KBL, LBL & SBL (Ref. NRB Dir. Schedule 4.13)

Interpretation:

The above table shows that out of the three banks LBL has highest LLP

in 2061/62, SBL has the highest provision for loan loss in 2062/63 &

MBL has the highest LLP in 2063/64. KBL has shown a significant

stability since 2061/2062 to 2063/64 and dropping its ratio from 1.70

% to 1.47%.

Performing loan to total loan (PLTL)Performing loan is a loan which had due up to 9 days. This ratio

shows percentage of total loan that is performing. Higher ratio

indicates efficiency in utilizing the good loans. It is calculated as

follows:



The following table shows the Performing loan to total loan ratio of

MBL, KBL, LBL and SBL.

Table 14: Performing loan to total loan

Name of the bank

2061/62 2062/63 2063/64

MBL 99.61% 99.72 % 98.84%

KBL 99.05 % 99.08 % 99.27%

LBL 98.37% 99.22% 99.65%

SBL 97.42 % 99.13 % 99.66%Sources: Annual Reports of MBL, KBL, LBL & SBL (Ref. NRB Dir. Schedule 4.13)

Interpretation:

The above data shows that three banks has higher ratio indicating the

proper and systematic utilization of assets on good loans except MBL

because its good loan is in decreasing trend IN 2063/64. KBL has ratio

in increasing trend, which shows that it is trying to utilize its assets on

good loans. LBL & SBL had also increasing trend ratio.

Non-Performing loan to total loan (NPLTL)Loan is said to be non-performing with the due date ranging from

3 months to more than 1 year. Non-performing loan consists of

substandard loan, doubtful loans and bad loans. Higher non-performing

loan ratio indicates worse management of assets. This ration shows

percentage of total loan that is non-performing.



The following table shows Non Performing loan to total loan ratio of

MBL, KBL, LBL and SBL.

Table 15: Non Performing loan to total loan

Name of the bank

2061/62 2062/63 2063/64

MBL 0.39% 0.28% 1.16 %

KBL 0.95% 0.92% 0.73%

LBL 1.63% 0.78% 0.35%

SBL 2.58% 0.87% 0.34%Sources: Annual Reports of MBL, KBL, LBL & SBL (Ref. NRB Dir. Schedule 4.13)

Interpretation:Out of the four banks under study, three banks except MBL

demonstrated the increasing trend of non-performing loan at 2063/64.

And other three banks had also been able to show a declining trend in

its non-performing loan. In 2061/62 SBL has huge percentage and able

to decreased that ration to 0.87% in 2062/63 & 0.34% in 2063/64. And

the same LBL has also able to decrease their ratio of 1.63% in 2061/62

to 0.78% in 2062/63 and to 0.35% in 2063/64.

2.1.3 Management

An institution can take a desire momentum only when the

management is capable of strong and long-term vision. For the proper

and efficient management, the banks have to possesses the following

qualities:

Proper structure of management team should be perfect.

Qualitative Human Resource Management and its productivity.

Good relationship between customers and organization.

Adequate management expenses.

Internal management system should be perfect.

Fair decision making capability.



Use of modern Information Technology

Proper communication system.

Working environment should be perfect.

As we know no one in this world is full of perfection, but it can be

maximized to some extent. In case of management of banks it can be

seen that all four banks have a good management team backing the

bank and taking it forward. When we are went for the visited in the

concerning three banks for management analysis, we found the

concerned department was very cooperative. In spite of busy schedule

they provided us the information we required.

Management of MBLMBL, a bank with the motto “ Service with a personal touch” has

been expanding its branches very quickly as well as Collecting and

mobilizing a healthy sum of funds. The bank established back in 2057

having its head office in Nayabazar Pokhara, has been successful to

maintain the most of the criteria set by the Central bank of Nepal,

Nepal Rastra Bank.

The bank has though trained its staff to get friendlier with the clients

but the customer area is rather congested. Due to less counters, at the

time of busy hours, one can observe rushes in the customer area.

In spite of the tough competitions in the banking business in Nepal, the

bank has obtained noticeable success in its transactions.

The bank has designed its premises in a very attractive and sober way.

One can feel total comfort. As a whole the bank has a very efficient

management, which can assure a good future to the bank and an

enchanting career to the staffs and safer investment to the clients.

Management of KBLKBL is promised for a better banking service to its customers,

which they proved by introducing the first ever e-banking service in



Nepal. As per the performances, the management was found to be

very much capable of introducing new schemes to the customers. As a

result, the bank literally succeeded in raising good sum of deposits on

its very first year. Besides it also succeeded in ranging a large number

of customers. In the very first year, the bank took a strategy to collect

the deposit in the saving account with the minimum balance of just

NPR 1000.00, the balance which most of the commercial bank had put

out of practice. The result of this was very much encouraging. This

strategy enabled the bank to be efficient in the lending. As such it

became the only bank to report Net profit on its very first year of

establishment.

Even after the completion of its fifth year of establishment,

despite of tough banking competition the bank has extended only five

branches in the Kingdom being Putalisadak, Biratnagar, Birgunj,

Pokhara and New road which might portray that the bank has only

targeted its business in the major cities of the country being such two

of the five branches are situated in the capital itself and rest of them

are in the major industrial and tourist cities of Nepal. This step of the

bank helps us to percept that the bank is currently dedicated into

increasing its income before it finally goes into development and

remote sector. KBL management has introduced visa electron debit

card, Internet banking, SMS banking, e-pay service super savings and

retail loans. These new services enabled the Nepalese customers to

facilitate the most modernized banking system already in practice in

the developed country.

The bank has considered its human resource as its lifeblood and

is dedicated to produce more qualified and expertise staff for the

challenging task to be performed to meet the requirement of the

competitive market. Manpower ratio of the bank has increased by 28

staffs currently numbering to 143, which gives us the picture of the

bank’s progressive motive in the future.



Management of LBL

LBL, a bank with the motto “We are committed to excellence in

delivery of entire gamut of financial services in order to achieve sound

business growth and maximize stakeholder values by embracing team

spirit, progressive technology and good corporate governance”. LBL

has been expanding its branches very quickly as well as Collecting and

mobilizing deposits. Laxmi Bank has grown with branches in Birgunj,

Banepa, two in Pokhara, Biratnagar, Narayanghat, Pulchowk, Lalitpur,

Teku, New Road, and more recently in Janakpur. Three more branches

will soon be operational from New Baneswor and Bhatbhatini in

Kathmandu and from Damak in outside the Valley. Laxmi Bank was

incorporated in April 2002 as a commercial bank.

The bank has trained its staff to serve the clients with effective

way. Bank Provide training & development programmes to enhance

the staff’s confident, efficiency. In spite of the tough competitions in

the banking business in Nepal, the bank has obtained noticeable

success in its transactions.

The bank has designed its premises in a very attractive and

abstemious way. One can feel total comfort. As a whole the bank has a

very efficient management, which can assure a good future to the

bank and an enchanting career to the staffs and safer investment to

the clients.

Management of SBLBanking Sector has always been completive. To succeed they

must perform well and to perform well their management should be as

smooth as smooth as silk.

SBL highly concerns on its smooth management. They know how

to respond to a continuously changing consumer needs. They have

been practicing the art of market oriented strategic planning. They are



heavily commented to marketing management and strongly consumer

focused. They are dedicated to identify and satisfy consumer’s needs

and expectations. SBL is keeping on providing fabulous services and

facilities to its consumer. They have settled all their branch offices in

easily accessible locations and expanding business by establishing new

branches in different location for better access to customer on financial

support.

2.1.4 Earning

Earning is the ultimate result of any business. Generally, if the

earnings are good then that business is running well. Similarly the

aggregate performance of the bank reflects from its earnings. Earning

is analyzed by calculating return on Assets (ROA), Return Equity (ROE),

Price Earning Ratio (P/E Ratio), Earnings per share (EPS), Market price

per share (MPS), Dividend Per share (DPS), Book Value per Share

(BPS). Earning is the ultimate result of any business. Generally, higher

earning reflects better financial position. Similarly the aggregate

performance of the bank reflects from its earnings.

Following ratios depicts the earning position of MBL, KBL, LBL and SBL.

Return on Total Assts (ROA)The term ROA is return on total assets. Major assets of banks are

loan and advances, ROA reveals how efficiently the total recourses

have been utilized and measured the return on assets productive

sectors that can generate profit for the banks. Higher ROA shows the

better utilization and Management on the assets and extend profit

level. This ratio depicts how efficiently a bank is utilizing and mobilizing

its assets to generate profit. It is calculated as follow:

Following table shows the ROA of MBL, KBL, LBL and SBL.



Table 16: ROA of MBL, KBL, LBL & SBL

Name of the bank

2061/62 2062/63 2063/64

MBL 1.31% 1.48% 0.69%

KBL 0.0118% 1.15% 1.43%

LBL 0.83% 0.79% 0.95%

SBL 2.27% 1.37% 1.20%Source: Annual report of MBL, KBL, LBL & SBL

Interpretation:

KBL’s ROA is in increasing ratio and has the highest ROA in 2063/64

whereas MBL’s, LBL’s & SBL’s ROA gets on fluctuating and decreased

in 2063/64 compared to 2061/62 but LBL’s ROA climbing up in 2063/64

and MBL & SBL ROA decreasing in 2063/64

Price Earning Ratio (P/E Ratio)

This ratio assesses the market appraisal of the performance of

the firm. Market price of share is the key factor while making

assessment. Higher ratio would be better for the investors.

Table 17: PE ratios of MBL, KBL, LBL & SBL

Name of the bank

2061/62 2062/63 2063/64

MBL 16.59 17.08 68.74

KBL 20.99 26.71 36.56

LBL 65.69 63.44 64.14

SBL NA 27.59 48.98Source: Annual report of MBL, KBL, LBL & SBL

Interpretation:

Higher the P/E Ratio better for the shareholder that is used to

assess a bank’s performance as expected by the shareholders. We can

see LBL has the highest P/E ratio in 2061/62 & 2062/63 though



decreased in 2062/63.But increasing trend of PE ratio of MBL is

highest. If the PE ratio is high it shows that the company has not been

able to perform as per the market expectation.

Return on Equity (ROE)This ratio denotes how much of the shareholders’ fund is

mobilized towards earning profit. The higher the ratio the better it is

for the bank. It is calculated as follows:

Following table shows the ROE of MBL, KBL, LBL and SBL

Table 18: ROE of MBL, KBL, LBL & SBL

Name of the bank

2060/61 2061/62 2062/63

MBL 13.31% 14.39% 7.41%

KBL 12.23% 11.12% 15.27%

LBL 4.39% 5.45% 7.77%

SBL 18.12% 10.82% 12.01%Source: Annual report of MBL, KBL, LBL & SBL

Interpretation:The above table shows that KBL has been successfully mobilizing its

shareholder’s funds and is thus generating high profits. SBL has also

been showing an increasing trend in this ratio in 2063/64 but

decreased in 2061/62. LBL has increasing trend of ROE but in small

ratio. But MBL ROE is in decreasing trend in 2063/64.

Earning Per Share (EPS)



The earning per share (EPS) is the share of a stock on the

earning of the company. The EPS measures the profit available to the

equity shareholders in a per share basis. The increasing EPS indicates

the increase in the value of shares and goodwill of the bank. Higher

ratio earns the higher return to shareholders and vice-versa. It is

calculated as follows:

Following table shows the ROE of MBL, KBL, LBL and SBL

Table 19: EPS of MBL, KBL, LBL & SBL

Name of the bank

2061/62 2062/63 2063/64

MBL 15.43 18.74 9.02

KBL 17.58 16.59 22.70

LBL 4.34 5.80 10.75

SBL 20.08 13.05 15.88Source: Annual report of MBL, KBL, LBL & SBL

Interpretation:When Net profit of bank is high, the EPS of the bank will also be high

which shows the bank is in good conditions. From above table EPS of

KBL is high which shows that the bank is in best positions compare to

other banks this is the good sign to shareholders. LBL also has good

performance because of increasing trend of EPS though it is small ratio

of growth. SBL has also good ration of EPS but decreased in 2062/63

compared to 2061/62 but increased in 2063/64. MBL has decreased

trend of EPS in 2063/64.



2.1.5 Liquidity

Liquidity is a bank ability to meet short-term obligation or generate

cash quickly at a reasonable cost. It reflects the short-term financial

strength of a 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. The ratio is calculated

by dividing current assets by current liabilities, which test the short-

term solvency of the firms.

Cash Reserve Ratio (CRR)Every Commercial bank have to maintain a reserve with Nepal

Rastra Bank (NRB) equal to 5 % percentage of their total Local

Currency deposit liabilities to ensure sound solvency position.

Following table shows the CRR of MBL, KBL, LBL and SBL

Table 20: CRR of MBL, KBL, LBL & SBL

Name of the bank

2061/62 2062/63 2063/64

MBL 8.27% 5.18% 8.29%

KBL 3.44% 2.71% 3.65%

LBL 8.95% 5.67% 5.65%

SBL 5.21% 5.03% 5.07%Source: Annual report of MBL, KBL, LBL & SBL (Refer NRB Dir, Sech-4.31)



Figure 2: Comparative CRR

Interpretation:KBL has the lowest ratio in all fiscal year where as MBL has the highest

ratio. This shows that the bank has high liquidity and hence is safe, but

it also shows that the cash is remaining idle. All three banks are

success to maintain 5% CRR except KBL. SBL is very near to

mandatory percentage.

Cash and Bank Balance to Total Deposit (CBTTD):This ratio represents how much liquidity a bank maintains in the

form of cash and bank balance out of its total deposit. This ratio is to

be maintained to meet any unexpected demand made by the

depositors. A higher ratio represents a greater ability to meet the

depositors demand. However, too high of a ratio is undesirable as it

blocks the capital and will increase the opportunity cost.

Table 21: CBTTD of MBL, KBL, LBL & SBL

Name of the bank

2061/62 2062/63 2063/64

MBL 13.36% 19.41% 20.88%



KBL 8.51% 6.88% 9.89%LBL 17.27% 6.64% 6.34%SBL 6.22% 5.51% 11.27%Source: Annual report of MBL, KBL, LBL & SBL

Figure 3: Comparative CBTTD

Interpretation:

As seen in the Table above, MBL has the highest cash and bank

balance in the fiscal year 2062/63 & 2063/64 compared to the other

three banks which denotes its capacity to meet the depositor’s

demands. And it has increased trend of CBTTD. KBL & SBL had

decreased trend of CBTTD in 2062/63 compared to 2061/62 but

increased trend in 2063/64 compared to 2062/63. LBL has decreased

trend of CBTTD in all three fiscal year.

Investment in government securities to total deposit (GSTTD):Government security is a risk free security. The banks instead of

keeping their funds idle invest in various government securities, which

is liquid in nature as they can be traded any time. This ratio measures

how much of the total deposit is utilized in investing in government

securities.



Table 22: GSTTD of MBL, KBL, LBL & SBL

Name of the bank

2061/62 2062/63 2063/64

MBL 8.39% 15.09% 13.49%KBL 18.99% 17.96% 15.90%LBL 13.47% 11.23% 18.88%SBL 11.64% 16.61% 13.06%Source: Annual report of MBL, KBL, LBL & SBL

Figure 4: Comparative GBTTD

Interpretation:

KBL has huge portion of investment in government securities this

year 2061/62 & 2062/63 but LBL has huge portion in 2063/64 among

four banks. All the four banks maintained the reasonable investment in

these securities, which shows a safe banking approach and better

position in liquidity. Government securities are considered safe zone

but this reduces their earning, as the government securities generally

have low rate of return.

2.2 TREND ANALYSIS

Trend Analysis shows the recent position of the banks i.e. BOK, EBL

and NSBI. The major indicators that we have chosen for this analysis

are as follows:

a. Total Deposit40



b. Total Loan & Advance Analysis

c. Profit Analysis

d. Investment Analysis

2.2.1 Total DepositTable 23: Total Deposit of MBL, KBL, LBL & SBL

(Amt. in Million)Name of

The Bank2061/62

Growth

%2062/63

Growth

%2063/64

MBL 5,586.80 41 7,893.30 20 9,475.45

KBL 6,268.95 24 7,768.96 36 10,557.42

LBL 3,051.76 46 4,444.35 71 7,611.65

SBL 2,634.90 49 3,918.10 69 6,625.08Source: annual report of MBL, KBL, LBL & SBL

Figure 5: Comparative Total Deposit

Interpretation:The above table shows, total deposit of all four banks are increasing

trend of deposits. KBL has the highest deposit volume among the four

banks. Deposit increasing trend of all four banks are admirable. Growth

rate of LBL & SBL is praiseworthy.



2.2.2 Total Loans and AdvancesTable 24: Loan & Advances of MBL, KBL, LBL & SBL

(Amt. in Million)

Name of

The Bank2061/62

Growth

%2062/63

Growth

%2063/64

MBL 5,130.22 20 6,146.57 19 7,319.94

KBL 5,681.01 23 7,007.79 29 9,062.43

LBL 2,726.14 57 4,280.11 53 6,529.24

SBL 2634.90 47 3,869.27 63 6,319.73Source: annual report of MBL, KBL, LBL & SBL

Figure 6: Comparative Loan & Advances

Interpretation:

The above table shows that the trend of lending is increasing in all four

banks. But the MBL growth is decline in 2063/64 compare to 2061/62.

Comparing to other banks KBL has the highest trend of lending

advance, which shows that KBL takes higher risk in comparison to

others three banks. LBL & SBL have the praiseworthy growth rate in

loan & advance.

There is shown credit to deposit (CD) ratio of MBL, KBL, LBL, & SBL.

Table 25: CD Ratio of MBL, KBL, LBL & SBL

2061/62 2062/63 2063/64

MBL 91.83% 77.87% 77.25%



KBL 90.62% 90.20% 85.84%

LBL 89.33% 96.30% 85.78%

SBL 104.42% 98.75% 95.39%Sources: Annual Reports of MBL, KBL, LBL & SBL (Ref. NRB Dir. Schedule 4.31)

Interpretation:

All four banks had decreasing trend of CD ration. SBL has higher CD

Ratio in all fiscal year. But LBL CD ratio was increased in 2062/63

compared to 2061/62 but decreased in 2063/64 compared to 2062/63.

All four banks use their deposit fund to loan and advances.

2.2.3 Profit Analysis

There is shown net profit of MBL, KBL, LBL and SBL.

Table 26: Profit of MBL, KBL, LBL & SBL

(Amt. in Million)

Name of

The Bank2061/62

Growth

%2062/63

Growth

%2063/64

MBL 84.87 58 134.00 -45 74.09

KBL 84.20 23 103.67 64 170.26

LBL 26.47 34 35.39 85 65.58

SBL 65.25 8 70.28 36 95.31Source: annual report of MBL, KBL, LBL & SBL



Figure 7: Comparative Net Profit

Interpretation:

MBL has higher profit in F/Y 2061/62 & 2062/63, and KBL has higher

profit in F/Y 2063/64. But in F/Y 2063/64 MBL’s profit is decreased by

45% in F/Y 2063/64 but not in Loss. Three banks had increasing trend

of profit in all fiscal year but MBL has decreasing trend of net profit in

2063/64.

2.2.4 Investment Analysis

Investment includes Treasury Bills, Bonds, Saving Bonds, & Local & Foreign Investment.There is shown Investment of MBL, KBL, LBL and SBL.

Table 27: Investment of MBL, KBL, LBL, & SBL

(Amt. in Million)

Name of

The Bank2061/62

Growth

%2062/63

Growth

%2063/64

MBL 483.61 295 1,909.30 3 1,972.47

KBL 1,280.27 20 1,539.95 33 2,050.63

LBL 468.44 22 569.31 155 1,450.20

SBL 309.09 143 750.98 46 1,094.63Source: annual report of MBL, KBL, LBL & SBL



Figure 8: Comparative Investment Analysis

Interpretation:

KBL has the highest Investment Volume among four banks in 2061/62

& 2063/64 but MBL has the highest Investment volume in 2062/63.

Investment growth of LBL in 2063/64 is admirable & SBL’s growth in

2062/63 highest.

Chapter 3

3 SUMMARY, CONCLUSION & RECOMMENDATION

3.1 Summary & Conclusion

This fieldwork report has been prepared by studying the financial

performance analysis of MBL, KBL, LBL, & SBL based on the data of

three fiscal years (FY 2061/62 to FY 2063/64).

All the banks under study are able to maintain their CAR as per the

directives given by the NRB. LBL has the highest CAR among four

banks from 2061/62 to 2063/64. MBL & KBL are very near to maintain

CAR as per NRB directives. SBL’s CAR is fluctuating, in 2061/62 its CAR



is 13.64% & increased in 2062/63 to 14.16% but in 2063/64 decreased

to 11.84%

Analysis shows that SBL has the lowest Non-Performing Loan and its

provision for loan loss is also consistent, i.e. 100% in all the three

years. But the loan loss provision of KBL is low among four banks. It is

seen credit control mechanism in KBL is good as compared to others as

its performing category loan is higher. Three banks KBL, LBL & SBL NPL

is in decreasing trend, so it is going towards better result. But MBL NPL

in increasing trend which shows that its credit control mechanism is

failed in 2063/64 because MBL can able to decline NPL in 2062/63.

Return on Asset in 2063/2064 of KBL is higher which is 1.43%. SBL has

also good ROA than MBL & LBL but its decreasing trend.

LBL has highest Price Earning Ration, which is 64.14% in all three fiscal

year. Price Earning Ratio is the ratio of Market Price per share to

Earning Per Share.

Higher the earning per share better will be the appreciation to

shareholders. KBL has highest EPS in 2063/64, which is really good in

terms of shareholder. MBL has the lowest EPS among four banks. In

2061/62, SBL has highest EPS but decreased in 2062/63 and in

2063/64 its climb up and satisfactory. Earning per share is directly

related to the Net Profit (after tax) of the bank, so we can guess that

KBL must have good profit.

KBL has been successfully mobilizing its shareholder’s funds and is

thus generating high profits because its ROE is highest among four

banks.

If we talk about Net Profit after all the provision, KBL has highest profit

of Rs. 170.26 million in 2063/64.

Liquidity position of KBL is very low because it maintains low ratio of

CRR at Nepal Rastra Bank. Other banks are able to maintain CRR

requirements as per NRB directives. More CRR will definitely reduce

the yield (profit), which ultimately increases the cost of fund.



Cash & bank balance to total deposit of MBL is very high among four

banks, which shows that the bank is able to fulfill depositor’s demand

anytime in case of withdrawal but it not good for the bank because its

fund becomes idle and cannot generate income.

The total deposit of all four banks are increasing trend. If we compare

KBL has the highest deposit volume.

Loan & advances of all four banks are increasing trend. If we compare

KBL has the highest volume of loan and advances.

Credit to Deposit ratio of SBL is highest among four banks. In 2061/62

its CD ratio is 104.42% & in 2063/64 95.39%, which shows that SBL is

very aggressive than other banks but it is in decreasing trend as we

compare to 2061/62 to 2063/64.

At last we conclude that all the four banks performance is admirable.

Among four same generation banks, KBL’s performance is better.

Though LBL & SBL also performed well. But MBL had not performed

well in 2063/64 because its profit is dropped, NPL to Total loan is

increased, LLP is also increased, CD ratio is decreased, maintain higher

ratio of CRR.

3.2 Recommendation

The main source of fund of commercial banks is collecting

deposits from publics. Without enough deposits collection, bank cannot

operate smoothly. So it is recommended to collect more amounts as

deposits through large variety of schemes and facilities. Similarly,

customization of credit card, provide facility of transfer money to their

home who work/live in foreign country. The minimum amount needed

to open an account should be minimized so that it will attract other

smaller depositors and entrepreneurs for mobilizing their small

investment.



NRB has directed to commercial banks to invest their certain

percentage in deprived and priority sector. The study has found that

KBL has earned high profit because of its good performance at the

same time their services are limited only to profitable sectors. It

reveals that it has not granted loan on priority and deprived sector.

Portfolio management of the bank assets basically means

allocation of funds in different components of banking assets having

different degrees of risk and varying rate of return in such a way that

the conflicting goal of maximum heat and minimum risk can be

achieved. The banks should make continuous yield investment

portfolio.

Loans and advances are the main sources of income and also

means of utilization of resources of commercial banks. Negligence in

administrating these assets could be the cause of liquidity crisis in the

bank and one of the main reasons of the bank failure. Collection of loan

has been most challenging task for commercial banks these days,

increase on non- performing assets discloses the failure of commercial

banks in the recovery of loan.

In the light of growing competition in the banking sector the

business of the bank should be customer oriented. Marketing is an

effective to attract customers. Different marketing techniques like

advertisement through audiovisual published websites, documentary

etc. Similarly, draw attention of customers through new technologies

like E-banking and Internet banking service increase investment

through their wide range international banking method should be

introduced.

Banks face problems in recovering loans and Advances and their

larger amount of loan is blocked as non- performing assets and which

sometimes reduce income. To overcome problem, special loan

recovery act should be enacted to improve its profitability.



If the services of commercial banks expand all over the nation it

will collect ideal money from different areas and can be utilized for

income generation purpose. So the commercial banks should expand

its branches all over the rural and urban areas.



BibliographyAnnual Reports of MBL................................Machhapuchre Bank Limited

Annual Reports of KBL.............................................Kumari Bank Limited

Annual Reports of LBL...............................................Laxmi Bank Limited

Annual Reports of SBL.......................................Siddhartha Bank Limited

www.mbl.com.np.........................................Machhapuchre Bank Limited

www.kumaribank.com...........................................Kumari Bank Limited

www.laxmibank.com................................................Laxmi Bank Limited

www.siddharthabank.com.................................Siddhartha Bank Limited

www.nrb.org.np………………………………………………………….Nepal

Rastra Bank

Fieldwork Assignment and Report Writing...........................Prem R. Pant

Money and Banking...................................................Vaidya, Shakeseare

Financial Market and Institutions..............................Vaidya, Shakeseare

Principle and Practice of Banking and Insurance.........Bhandari, Dilli Ray



Abbreviations

A/C Account

ABBS Any Branch Banking System

AD After the Death of Christ

ANZ Austria New Zealand

ATM Automatic Teller Machine

B.S. Bikram Sambat

CBTTD Cash & Bank Balance to Total Deposit

CRR Cash Reserve Ratio

e.g. For example

FCY Foreign Currency

FY Fiscal Year

GSTTD Government Securities to Total Deposit

IT Information Technology

KBL Kumari Bank Limited

LBL Laxmi Bank Limited

L/C Letter of Credit

LCY Local Currency

Ltd. Limited

MBL Machhapuchre Bank Limited

No. Number

NRB Nepal Rastra Bank

NRs. Nepalese Rupees

p.a. Per Annum

POS Point of Sale

SBL Siddhartha Bank Limited

SWIFT Society for Worldwide Interbank Financial Telecom

TT Telegraphic Transfer

WAP Wireless Application Protocol

XML Extensible Markup Language


Comparative Financial Performance of MBL,KBL,LBL & SBL

Documents

obtained noticeable success

comparative financial performance

feel total comfort

modern banking system

generating high profits

machhapuchchhre bank limited

credit control mechanism

comparative net profit