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Financial Analysis of Nabil Bank Limited- A Proposal Report

1.0 Introduction

The financial statement analysis is concerned with collecting classifying and grouping of figures,
contained in the financial statement with specific tool and purpose so that a user can get the
required information such as survival, productivity, stability, profitability and growth prospect
of the company. It involves forming a meaningful relationship between two financial
statements that includes profit and loss account and balance sheet.
Financial analysis also involves the evaluation of viability, stability and profitability of a business
units and projects. An organization can also determine its financial strength and weakness by
establishing relationship between accounting items of the balance sheet and the profit and loss
account.

1.1 Background of the Study


The study aims to analyze the financial performance of the NBL . This study is done using
recent data’s which will be helpful not only to the shareholders but also to the customers and
management.
Private sector and public sector both can play the vital role for the growth of the economy of
any country. Integrated and speedily development of the country is possible only when
competitive banking service reaches nook and corners of the country. Commercial banks
occupy an important place in the framework of every economy because they provide capital for
the development of industry, trade, business and other resources deficit sectors by investing
the saving collected as deposits. All the economic activities of each and every country are
greatly influenced by the commercial banking business of the country. Thus this study attempts
to show the clear picture of the profitability, productivity , growth, etc

1.2 Background of the Company


27 years ago Nabil pioneered professionalism in the banking industry in Nepal giving it a drive.
Doubtless, there were banks in Nepal but a customer focused approach and philosophy
commenced with Nabil. It set up a marketing department establishing an example that it cares
for its customers. Till then the practice was that the customers had to satisfy bankers and with
Nabil’s advent in the industry it took a new turnaround. The banker has to delight the customer
first, not the other way around. That is how Nabil pillared its corporate culture over two and
half decades ago. Now it proceed with the same culture ,and now it is called as Nab Culture.
Nab Culture stands for Nabil’s core values. Nabil’s core values drive all its stakeholders to team
up and work to co-create values through collaborative endeavours in the common interests of
all. Nabil commenced operation in Nepal on the 12th of July 1984 partnering with Dubai Bank
Ltd., through a Technical Service Agreement. Looking back upon a long stretch of time it has
had a series of achievements to glory in. Difficulties and crises were there, unsurprisingly, yet
Nabil saw a sea of opportunities and worked to cash in on them. Our inexorable endeavours
and a clear vision seasoned and capacitated us to plough through some of the most testing
moments.
Vision Statement

At Nabil, “our Vision is to be a bank for all across all geopolitical zones and socioeconomic
stratums of the nation that can provide myriads of financial solutions and create values for all
our stakeholders, to stand in the community with our economic and civic roles. We look
forward to emerging as a first rate bank across all stratums of the nation”.

Mission Statement

We at Nabil work together up to our vision and to bring it into reality. Our mission is therefore
to prove that Nabil is driven by the spirit for realizing those visionary aspirations. With that end
in view, we work in partnership with our stakeholders and the community at large. Our
roadmap to reaching where we have set our mind on is by maneuvering our strategic action
plans through a well-teamed and synergistic workforce into industrial end products – our
customized services. Our approaches are to differentiate our products by reengineering them
with the best technologies and management philosophy keeping in focus our customers’
satisfaction over and above everything else at all times. We have set our goals and objectives to
hone the skills of inspired HR force and tailor our products and services to that end. With an all
inclusive approach Nabil engages in customizing ranges of products catering to the entire
gamut of society from financing megaprojects to underprivileged individuals and promoting
enterprises across all segments of society by adding values to nation building endeavours. We
are branching out on a national scale through our wide-ranging points of representation
representing different geographic and economic zones along with our broad global network as
a 1st Choice Provider of
Complete Financial Solutions .

1.3 Statement of the Problem


From the above background of the study, the following statement of problems can be stated
which are given below:-
 What is the financial status of NBL?
 What is the solvency position of NBL?

1.4 Theoretical Framework


It is a model or component which helps to analysis the financial performance of the NBL. The
model which are mention in the study are given below:-

1.5 Objective of the study


The basic objective of this research is to make analysis of financial performance of NBL by using
financial and statistical tools and to recommend the suitable suggestion for improvement of
those banks to the management team owners. Analysis of financial statements helps to
examine the efficiency and performance of an organization. Financial statements show the
financial strength and weakness of the firm.
Specific Objectives of the study:-
 To measure the profitability, liquidity and activity of NBL
 To measure the ability of an Org
 To measure the trend of achievements

1.6 Significance of the study

Earlier there are different financial study has been done by different people about NBL but this
is a totally different from others because it is simple and easy to understand. In this study there
are not use a vast language. It is very sweat and short. The tools which are used is very clearly
clarify the financial position of bank. So it is very useful to everyone who are related with this
bank. This study will be useful to the following stakeholders:
 To the investor i.e. Shareholders
 To the management of banks(Management Committee)
 To the customers

This study is also significant to the researcher:


 To get the depth knowledge of banks
 To get valuable findings of research

1.7 Literature review


The review of literature is divided into two parts: theory based and topic based. Different
authors have different views regarding financial performance analysis:-
“Financial statement analysis involves a comparison of a firms performance with that of others
firms n the same line of the business, which is often, identified by the firms industry
classification” (Weston, Besley and Brigham, 1996:78)
Traditional financial ratio analysis has mainly focus on the quantitative relation can be used to
diagnose strength and weakness in a firm’s performance. But the world is becoming more dynamic
and subject to rapid change. It is not enough to analyze operating performance. Financial
analysis also includes consideration of strategic and economic development to which the firm
must also relate for its long term success. In addition to the categories of stakeholders must be
bordered formally ratio analysis was performed from the point of view of the firms owners and
creditors in the present political and social environment the shareholders must expanded to
include-employees, customers, social environment consideration and other government
regulation interest(Weston and Copeland, 1992:97)
“Financial analysis involves the use of financial statement-the first is the balance sheet, which
represents a snapshot of the firm’s financial position at a movement in time and next as the income
statement that depicts a summary of the firm’s profitability over time” (Van Horne and Wachowicz,
1997:96)
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1.8 Research Methodology

1.8.1 Research Design


The design to be used for the study are descriptive and analytical .Financial statements of two
different time periods as well as the position and trend of achievement in these periods will be
analyzed.

1.8.2 Population and Sample


There are about 31 commercial banks in Nepal.But Nabil Bank is only considered in the
proposed study.So,it’s a case study and population and sample is not used.

1.8.3 Sources of data


 Primary data:-The data collected for the first time are said to be Primary data. Such data provide
accurate information. These types of data are obtained from different departments of the bank.
o Direct personal observations and involvement.
o Informal meeting with Bank’s members of NBl Brt. Branch.
o Informal interviews with NBL, Brt. Branch manager and staff members

 Secondary Data:-The primary data for one person can be the secondary data for some others.
So, data which are originally collected but obtained from either published sources or
unpublished sources are secondary data. These data are obtained from books and internet.
o Annual reports, newspaper declarations, advertisements, notices etc. of NBL
o Official websites of NBL and other different websites related to the topic.
o NRB directives and circular related to Development and Commercial Banks.
o Library of Birat College For Professional Studies (SMU), Brt. Nepal.

1.8.4 Data Collection Technique


The data collection technique used for the study is through field visits which means visiting
different department of the bank and through the use of internet.

1.8.5 Data Analysis Tools


For the performance analysis of the NBL,I have used financial tools like ratio
analysis, trend analysis ,horizontal analysis, vertical analysis.

1.9 Limitations of the study


The proposed study is not a free from limitations. It has also some limitations which are as
follows:-

 · The study is confined only to the financial performance analysis of citizen bank and
not of other banks.
 · The study is time bound.
 · Not free from biasness.
 · Lack of proper information

1.10 Organization of the study


The study has been organized into five parts. The title of these chapters as follows:

Chapter - I Introduction
The first chapter contains the introductory part of the study. As already mentioned, this chapter
describes the major issues to be investigated along with the general background and objective of
the study.

Chapter-II Review of Literature


The second chapter Confines the review of literature of related studies in journals (literature)
and review of related studies in Nepal with reference to previous thesis and policies of the
government.

Chapter-III Research Methodology


The chapter describes the research methodology employed in the study. It includes research
design, nature and sources of data, selection of enterprises, method of analysis, statistical and
financial tools used.

Chapter-IV Data Presentation and Analysis


The Fourth chapter presents the collected data will be tabulated and analyzed by using various
financial tools, mathematical and statistical tools under data presentation and analysis.

Chapter-V summary, conclusions and recommendation


The Fifth chapter presents of the brief summary of whole research report and conclusions. It also
provides some useful suggestion and recommendations to concerned parties.