Date:2076/11 /6

To,

The Chairperson,

Research Committee,

Rajarshi Janak Campus, Janakpur Dham

Subject: - To get acceptance of the project work Report writing

Respective sir,

Above mentioned, I want to get acceptance of the Project Work Report writing which is partial
fulfillment of 4-year Bachelor of Business Studies (B.B.S.). So, I request you to give me
permission of project work Report writing on the topic of

Applicant

Name:- Neeva Kumari Mishra

Exam Roll No:-

T.U Reg. No:-7-2-589-220-2016

Campus Roll No:- 105/073

Group:-Account

Mobile No:-
 A CASE STUDY OF FINANCIAL PERFORMANCE
OF
NEPAL BANK LTD
JANAKPUR

A Project Work Report

Submitted By
Neeva Kumari Mishra
TU Regd No.7-2-589-220-2016
Rajarshi Janak Campus, Janakpur

Submitted To
The Faculty of Management
Tribhuvan University
Kathmandu

In Partial Fulfillments of Requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Kathmandu, Nepal

February 2020

DECLARATION
I hereby declare the proposal entitled “A CASE STUDY OF FINANCIAL PERFORMANCE of
Nepal Bank Ltd” submitted to Tribhuvan University, is a record of original work done by me under
the guidance of Mr. Linkan Kumar Karn, Faculty Member, Rajarshi Janak Campus, and Janakpur.
The report is submitted in the partial fulfillment of the requirement of Degree of Bachelors in
Business Studies (BBS). The results mentioned in this proposal have not been submitted to any other
University or Institute for the award of any degree.

………………………..

Neeva Kumari Mishra

BBS 4th year

Rajarshi Janak Campus

Supervisor’s Recommendation
The project work report entitled “CASE STUDY OF FINANCIAL PERFORMANCE OF
NEPAL BANK LTD.” Submitted by Neeva Kumari Mishra of Rajarshi Janak Campus
Janakpur, is prepared under my supervision as per the procedure and formats requirements laid
by the Faculty of Management, Tribhuvan University, as partial fulfillment of the requirements
for the degree of Bachelor of Business Studies (BBS) .I, therefore , recommend the project work
report for evaluation.

…………………

Mr. Linkan Karn

(Project Work Supervisor)

Rajarshi Janak Campus

Date:

Endorsement
We hereby endorse that the project work report entitled “CASE STUDY OF FINANCIAL
PERFORMANCE OF NEPAL BANK LTD” submitted by Neeva Kumari Mishra of Rajarshi
Janak Campus, Janakpur in partial fulfillment of Rajarshi Janak Campus, Janakpur in Partial
fulfillment of the requirements of the degree of Bachelor of Business Studies (BBS) for external
evaluation.

Dr. Binod Lal Karn

(Chairman of Research Committee)

Mr. Neeraj Kumar

Assistant Campus Chief

 ACKNOWLEDGEMENTS

This project work report entitled “A Case Study of Financial Performances of Nepal Bank , Ltd.”
has been prepared in partial fulfillment for the degree of Bachelor of Business Studies (B.B.S)
under the supervision of Mr. Linkan Karn, Lecture, Rajarshi Janak Campus, Janakpur. It is my
privilege of getting helps and co-operation from different persons. It is not possible to enumerate
the names of all them. However, it will be matter of injustice if I forget the names of those
personalities whose valuable suggestions and co-operation escorted this project work report.

First and foremost, I would like to offer special thanks to Mr. Binod Lal Karn, Chairman,
Management Research Committee, Rajarshi Janak Campus, Janakpur, Mr. Neeraj Kumar Jha
and Mr. Sanjeev Thakur, Assistant Campus Chief (co-founder) of Rajarshi Janak Campus and
Mr. B.D. Jha, Founder of Rajarshi Janak Campus, Janakpur, Tribhuvan University and all the
professors, Lectures as well as staffs of Rajarshi Janak Campus whose suggestion made me able
to finalize the study.

I especially appreciate my parents and my entire family member who always gave their
continuous inspiration, support and help.

I am very thankful to the librarians of Rajarshi Janak Campus for their kind co-operation. I am
alone responsible for whatever weakness it may still contain.

Last but not the least; I would like to thank all helping hands that assigned me directly or
indirectly to complete this project work.

Neeva Kumari Mishra

Rajarshi Janak Campus, Janakpur

 TABLE OF CONTENTS

Contents

Declaration

Supervisor’s Recommendation

Endorsement

ACKNOWLEDGEMENT

List of Tables and Figures

List of Abbreviations & Acronyms

CHAPTER I

INTRODUCTION

1.1         Background of the study

1.2         Objectives of Study

1.3 Rational of the Study

1.4  Review of literature…………………………..….3

1.5 Research Method……… ………………………..6

1.6 Limitation of study………………………………7

1.7 Data collection……………………………………8

1.8 Data Processing and analysis……………………

1.9 Report Structure……………………………

Chapter-2

Result and Analysis

2.1 Introduction
2.2 Analysis of financials tools

2.3 Loan & Advance & Total deposit………………14

2.4 Net profit after tax and total assets…………….15

2.5 Net Profit after tax and Total Assets…………

2.6 Net Profit after tax and Net Worth……………

2.7 Interest Expenses on Total Deposit and Borrowing

2.8 Major finding of the study

SUMMARY AND CONCLUSION

3.1 Summary....................................................................

3.2         Conclusion

APPENDIX

Balance sheet

REFERENCE
List of Tables and Figures
 4.1 Current Ratio…………………………………………………………..22
4.2 Cash and Bank Balance to Total Deposit Ratio……………………….23
4.3 Loan and Advances to Total Deposit Ratio……………………………24
4.4 Return on Total Assets Ratio…………………………………………..25
4.5 Earnings per Share……………………………………………………..26
4.6 Return on Equity Ratio ………………………………………………..27
4.7 Interest expenses on total deposit and borrowing……………………..28

                                                                                                                                                    
List of Abbreviations & Acronyms
%                                 Percentage
&                                  An
AGM                           Annual General Meeting
ALC                            Asset liability Management
BS                               Bikram Sambat
CD                              Credit Deposit
e.g.                               Example
Etc                               Etcetera
Govt                            Government
i.e.                                That is  
NRB                            Nepal Rastra Bank
NRBL                         Nepal Rastra Bank Limited
Rs.                               Rupees
TU                               Tribhuvan University

                 

 
CHAPTER -1

INTRODUCTION
1.1            Background of the study
A bank is a financial institution licensed to receive deposits and make loans. Banks may also
provide financial services, such as wealth management, currency exchange and safe deposit
boxes. There are two types of banks: commercial/retail banks and investment banks. In most
countries, banks are regulated by the national government or central bank.
Financial analysis is the process of evaluating businesses, projects, budgets and other finance-
related entities to determine their performance and suitability. Typically, financial analysis is
used to analyze whether an entity is stable, solvent, liquid or profitable enough to warrant a
monetary investment. When looking at a specific company, a financial analyst conducts analysis
by focusing on the income statement, balance sheet and cash flow statement. Financial analysis
also helps to evaluate and decision making for business operation. In financial analysis process
ratio analysis is the most dominant and logical structure to help business related stakeholder.
Under the financial ratio analysis process there are few categories to identical area of financial
institution. So business stakeholders try to concentrate to get overall business overview from
profitability, liquidity, assets management and solvency ratio analysis. These ratios not only help
to decision making process also emphasized on risk avoiding and profit raising  related factors.
To calculate this ratio need to take quantitative data from bank trading activity and other sources.
Introduction of Kumari Bank Limited
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
has paid up capital of Rs. 2,699,166,532 of which 51percent is contributed.

Kumari Bank Limited has been providing wide - range of modern banking services through 38
points of representations located in various urban and semi urban part of the country, 36
branches outside and inside the valley; and 2 extension counters. The bank is pioneer in
providing some of the latest / lucrative banking services like E-Banking and SMS Banking
services in Nepal. The bank always focus on building sound technology driven internal system to
cater the changing needs of the customers that enhance high comfort and value. The adoption of
modern Globus Software, developed by Temenos NV, Switzerland and arrangement of
centralized data base system enables customer to make highly secured transactions in any branch
regardless of having account with particular branch. Similarly the bank has been providing 365
days banking facilities, extended banking hours till 7 PM in the evening.

Visa Electron Debit Card, which is accessible in entire VISA linked ATMs (including 46 own
ATMs) and POS (Point of Sale) terminals both in Nepal and India, has also added convenience
to the customers. The bank has been able to get recognition as an innovative and fast growing
institution striving to enhance customer value and satisfaction by backing transparent business
practice, professional management and corporate governance.
 The key focus of the bank is always center on serving unfulfilled needs of all classes customers
located in various parts of the country by offering modern and competitive banking products and
services in their door step. The bank always prioritizes the priorities of the valued customers.

Vision
To establish ourselves as a leader in banking by providing a range of financial services suitable
to the needs of the market with high priority on customer care while simultaneously embracing
the interests of all stakeholders and value of a good corporate citizen.
 Mission
         Leveraging and integrating the existing strengths of the institution.
         Reaching out and serving wide range of customers within and outside the country.
         Developing a culture of “Giving Extra Care to the Customers”.
         Being innovative in designing and delivering services.
         Adopting prudent investment practices for building up a sound assets base.
1.2             Objectives of Study

The main objective of this report is to measure the financial strength of Kumari Bank Limited
other specific objectives are as under.
         To determine liquidity positions of Kumari Bank Limited.
         To identify the efficiency of the bank.
         To measure the profitability of the bank.

1.3 Rational of the Study

In this changing pace of the time, most of the commercial banks are gaining a wide popularity
through their efficient management and professional services and playing a great role in the
economy. The main purpose of the commercial bank is to have effective financial management
so that stakeholders get satisfactory. This study adds new idea and findings about the concerned
bank.
This study is helpful for all the concerned parties which add new idea and findings about Kumari
Bank Limited.  The studies that will have importance to various groups but in particular is
directed to a certain groups of people/organizations are:
1.            To the investors
2.            To the creditors
3.            To management of the bank
4.            To the customers
5.            To the other parties
6.            And this study will be equally useful to the other readers, students of related subjects and
other people who are concern with banking field.
1.4 Review of Literature
Bhattarai (2009), in his article “something is rotten with the state of commercial banking in
Nepal” starts with words like NPA, conflict of interest, mercy offshore ownership, well
 connected defaulter loan swapping and political obstruction to describe the commercial banks in
Nepal. Bhattarai quoted the words of the Governor to describe the state of banking sector as
‘terrible’. Also, he quotes one of the donor representatives involved in financial reform as “Nepal
has weakest central bank in developing world”.  He quotes Mr. Investment SJBRana, the first
governor of NRB,”only 3 out of 12 Governors actually completed their five years terms in its
entire history because they were sacked for undefined exigencies”. He also quotes Mr. Shovan
Dev Pant, the then Executive Director of Nabil, “The financial sector is in appalling state”.
According to his findings the directives if not properly addressed have potential to wreck the
financial system of the country. The directives in themselves are not that important unless
properly implemented. The implementation part depends upon the commercial banks. In case
commercial banks are making such huge profit with full compliance of NRB directives, then the
commercial banks would deserve votes of praise because they would then be instrumental in the
economic development of the country. All the change in NRB directives made impacts on the
bank and the result are the followings:
1.      Increase in operational procedures of the bank, which increase the operational cost of the bank.
2.      A short term decreases in profitability, which result to fewer dividends to shareholders and less
bonus to the employees
3.      Reduction in the loan exposure of the bank, which decreases the interest income but increase
the protection of the depositor’s money.
4.      Increase protection to the money of the depositors through increased capital adequacy ratios
and more stringent loan related documents.
5.      Increase demand from shareholder’s contribution in the bank by foregoing dividends for loan
loss provisions and various reserves to increase core capital.
All the aforesaid result lead to one direction the bank will be financially healthy and stronger in
the future. Kumari bank limited will be able to withstand tougher economic situation in the
future with adequate capital and provision for losses. The quality of the asset of the banks will
become better as banks will be careful before creation credit. Ultimately, the changes in the
directives will bring prosperity not only to the shareholders but also to the depositors and the
employees and the economy of the country as a whole.
A study done by Mahendra (2012), entitle on “Comparative Financial Performance of MBL,
KBL, LBL & SBL”with the main purpose of analyzing financial performance trough Camel
analysis of four same generation commercial banks namely Kumari bank limited,  and
Sidhhartha bank limited.
To evaluate liquidity, activity & profitability ratio of Kumari bank limited in comparison with
different banks & industry average.
To examine the loan loss provision of different banks & Kumari bank limited.
To provide suggestion and recommendation on the basis of findings.
The findings of the researcher are as follows:
1.      Different banks have good deposit collection, enough loan and advances and small investment
in government securities.
2.      The assets management ratio of different banks is not better than that of Kumari bank limited.
3.      The profitability position of different banks is worse in comparison with Kumari bank limited
due to low return on working fund, loans and advances and outside assets.
4.      To fund collection and mobilization position of different banks is satisfactory in comparison to
Kumari bank limited while considering growing rate.
5.      In relation to fund flow analysis, the different banks have poor loans and advances issued.
6.      Different banks has better positive relationship between net profit, return on loans and
advances and return on investment but different banks has worse performance in income as
commission and discount and exchange income.
7.      There is significant relationship between deposit and loan and advances but there is no
significant relation between deposit and investment of both banks different banks and Kumari
bank limited. There is no relationship between outside assets and net profit.
The findings of the study are as follows:
1.      The liquidity position of Kumari bank limited is good than of other bank. Highly fluctuating
liquidity position shows that the bank has not formulated any stable policy.
2.      It can be concluded that Kumari bank limited have good profitability position.
3.      Total loans and advances to total saving deposits ration of Kumari bank limited is much better
than other bank.

1.5 Research Methods

Research methods help to find out accuracy, validity and suitability. The justification on the
present study cannot be obtained without help of proper research methodology. For the purpose
of achieving the objectives of the study, the descriptive methodology are be used.
Types of Research
Research method section describes the rational for the application of specific procedures or
techniques used to identify, select and analyze information applied to understanding the research
problem. It allows the reader to critically evaluate a study’s overall validity and reliability.
Financial ratios are important tools of financial analysis. It’s based on Quantitative data and
tools.
There are two types of research methods:
Quantitative research
Quantitative research is inquiry into an identified problem, based on testing a theory, measured
with numbers, and analyzed using statistical techniques. The goal of quantitative methods is to
determine whether the predictive generalizations of a theory hold true. We will explore some of
the issues and challenges associated with quantitative research in this section. Seek the advice of
faculty members who have conducted quantitative studies for advice, support and
encouragement.
Qualitative research
A study based upon a qualitative process of inquiry has the goal of understanding a social or
human problem from multiple perspectives. Qualitative research is conducted in a natural setting
and involves a process of building a complex and holistic picture of the phenomenon of interest. 
We will explore some of the issues and challenges associated with qualitative research in this
section. Look for colleagues who engage in qualitative research to serve as a sounding board for
procedures and processes you may use as a new faculty member.
This research is based on Quantitative research methods.
Population and Sampling
 A population is a complete enumeration of each and every unit of the universe as a whole. It is
related to the total study of material in detail. There are 28 A class licensed banks in Nepal but
this study considers only Kumari Bank Limited as a sample.
Sample is a small separated part showing the quality of the whole. In sample, only a part of the
universe is considered and conclusions about the entire universe are drawn on that basis. Here,
for the proposed study, I have taken Kumari Bank Limited as a sample.
Types of Data

The data used in this report are of secondary data.This research has been conducted in secondary
data basis, so the last five years data is collected from:
         Website of Kumari Bank Limited.
         Annual Report of Kumari Bank Limited
1.6 Limitations of the Study
Almost data are taken from the audited balance sheet from the head office of Kumari Bank
Limited, in order to draw a clear, true and suggestive financial analysis. However, limitations of
the study are as follows;
         The study is mainly based on secondary data.
         The study covers only five years period from F/Y 2069/70 to 2073/74.
         The data used on calculation will be rounded up.
         The data will be analyzed by comparing with the five years average data because of the
unavailability of the standard company average.
         This study will be carried out based on the published financial statements namely balance
sheets, profit and loss accounts, related schedules and published annual report. These published
documents have their own limitations.

1.7Data Collection Procedure

Data is a collection of related raw materials on which decision is based. There are mainly two
sources of data-primary data and secondary data. This study will be conducted mainly based on
secondary data. The major sources of secondary data for this study are as follows:
         Annual report of the bank
         Previous studies and reports.
         Unpublished official records.
         Published and unpublished bulletins and reports of the bank.
         Reports published by Nepal Stock Exchange.
         Reports of Nepal Rastra Bank Samachar and Banking and Financial statistics published by
Nepal Rastra Bank.
         Other materials published in daily, weekly, monthly newspapers and magazines.
1.8 Data Processing and Analysis
Presentation and analysis of collection data is the core part of the research work. The collected
raw data are first presented in systematic manner in tabular from and are then analyzed by
applying different financial and statistical tools to achieve the research objectives. To make the
study more specific and reliable, following tools are used for analysis:
         Financial Tools
         Statistical Tools

Financial Tools
For the sake of analysis, various financial tools are used. The basic tools used are ratio analysis.
Ratio analysis is used to compare firm’s financial performance and status to that of other firm’s
overtime. The financial tools used are listed below:

Ratio Analysis
Ratio Analysis is the calculation and interpretation of financial ration to assess the firm's
performance and status. It is the relationship between two accounting figures expressed
mathematically.
1.9 Report Structure
The whole study is divided into three different chapters.
Chapter-I: Introduction
This chapter describes the background of the study. It has served orientation for readers to know
about the basic information of the research area, various problems of the study, objectives of
study, scope of the study, and limitation of the study and chapter plan of the study..
Chapter – II: Results and Analysis
This chapter analyzes the data related with study and presents the findings of the study and also
commend briefly on them. Data processing, data analysis and interpretation are given in this
chapter and there is use of techniques relating to analysis such as ratio, descriptive expression,
diagrams and so forth.
Chapter:III: Summary and Conclusion
On the basis of the result from data analysis, the researcher concludes about the performance of
the concerned organization in terms of liquidity management. This chapter is devoted to the
summary of the research, conclusion derived on the basis of data analyzed and the
recommendations for improvement to the concerned organization.
 CHAPTER II

RESULT AND ANALYSIS

                                  
2.1 Introduction
This chapter deals with the presentation, analysis and implementation of relevant data of  Kumari
Bank Limited. I order to fulfill the objectives of this stud. Purpose of this chapter is to introduce
the mechanics of data analysis and interpretation .Calculated financial ratios are analyzed and
evaluated after their interpretation is made. The calculated secondary data have analyzed and
presented in table form. For this purpose, analysis and interpretation are categories into two
headings. They are analyzing financial and statistical tools.
2.2 Analysis of Financial Tools
Under this topic various financial ratios are calculated to evaluate and analyze the performance
ofKumari Bank Limited. Study of all type of ratios is not done. Only those ratios that are
important from the point of view of the fund mobilization and investment are calculated. The
important ratios that are studied for this purpose are given below.
2.2.1 Ratio Analysis
Ratio analysis is defined as the systematic use of ratio to interpret the financial statement so that
strength and weakness of a firm as well as its historical and current financial condition can be
determined. From an investor’s stand-point, predicting the future is what financial statement
analysis is useful both as a way to anticipate future conditions and more important as a starting
point for planning actions will influence the future course of events. Ratios are very useful and
powerful tools to interpret the financial performance of the firm.
A .Liquidity Ratios
This ratio indicated the case of turning assets into cash. Liquidity refers to the ability of a firm to
meet its short term or current obligation. So liquidity ratios are used to measure the ability of a
firm to meet its short term obligation. In the worst case, inadequate liquidity can lead to the
liquidity insolvency of the institution. To find out the ability of the bank, to meet their short term
obligations which are likely to mature in the short period, the following ratios are developed
under the liquidity ratios to identify the liquidity position.
2.1 Current ratio
Table 2.1
Current Assets and Current Liabilities
Fiscal Year Current Assets Current Ratio
Liabilities
2072/73 859703810 251458357 3.42

2073/74 868922458 235477249 3.69

2074/75 1066335927 241912804 4.41

 2075/76 1641973571 263205548 6.24

2076/77 1406711099 402601384 3.49

  Sources: Annual Report of Kumari Bank Limited

Figure 2.1
Current Assets and Current Liabilities

The main question current ratio addresses is "Does your business have enough current assets to
meet the payment schedule of current debts with a margin of safety for possible losses in current
assets, such as inventory shrinkage or collectable accounts?"
Table and figure 4.1 shows that the exhibit the current ratio of Kumari Bank Limited for the
study period of 2072/73 to 2076/77. The ratio were 3.42, 3.69, 4.41, 6.24, and 3.49
respectively.The standard value for the current ratio is 2 to 1 but in case of Kumari Bank, all
ratios are more than the standard.
2.2 Cash and Bank Balance and Total Deposit
Table 2.2
Cash & Bank Balance and Total Deposit
Sources: Annual report of Kumari Bank Limited
Table and Figure 2.2 shows that the cash and bank balance to total deposit ratio of Kumari Bank
Limited for the study period 2072/73 to 2076/77. Cash & Bank Balance to Total Deposit Ratio of
this bank has been observed as 0.039, 0.34, 0.039, 0.049 and 0.037 respectively throughout the
study period. The average ratio for the study period is 0.04. That means the bank has 0.04 off
cash and bank balance of the total deposit. Adequate cash and bank balance is necessary to
maintain the liquidity position. Too much of it can make the excess money useless and too less
will reduce the capacity of a bank to pay its customers principal and interest. In each year of the
study period, the ratio of cash and bank balance is will above the standard i.e. 5 to 10 percentage
of liquidity. From this, it is obvious that the bank has enough cash and bank balance to cover its
deposit demand.

Figure 2.2
Cash & Bank Balance and Total Deposit

2.3Loan & Advances and Total Deposit

Table 2.3
Loan & Advances and Total Deposit
Fiscal Year Ratios (%)
 2072/73 80

2073/74 77

2074/75 79

2075/75 79

2076/77 78

            Sources: Annual Report of Kumari Bank Limited

Figure 2.3
Loan & Advances and Total Deposit

Table and Figure 2.3 shows loan and advances to total deposit starting from 2072/73 to 2076/77,
the ratio goes from 80 %, 77%, 79%, 79% and 78% respectively. Total deposit is the main
sources of bank to provide loan and advances. Only small portion of deposit goes as loan and
advances.
2.4 Net Profit after Tax and Total Assets
 Table 2.4
Net Profit after Tax and Total Assets Source: Annual report of Kumari Bank Limited
Kumari Bank has good performance in term of profitability viewing the return on total assets
ratios for the study period 2072/73 to 2076/77. During the study period, the bank is able to earn
profit through and so that the ratio is positive trend. The average ratio of return on total assets for
the study period is 1.19% on average. This indicates that the bank is being able to manage the
assets in efficient way.

Figure 2.4
Net Profit after Tax and Total Assets
2.5 Net Profit after Tax and Number Of Share
Table 2.5

Earning per share

Table and Figure 2.5 shows that the earning per share of Kumari Bank Limited for the study
period is Rs 19.362. EPS in the last year of period is Rs 26.53. The ratio is higher than the
average in fiscal year 2072/73, 2073/74, 2074/75, 2075/76 and 2076/77. This indicates that the
bank has increases its earnings per share in recent years. This indicates that bank is improving its
performance.
2.6 Net Profit after Tax and Net Worth
Table: 2.6
Net Profit after Tax and Net Worth
Fiscal year Net profit Net worth Ratio
2072/73 275500000 1603800000 0.17
2073/74 291450000 1828332000 0.16
2074/75 341650000 2,431,681,560 0.14
2075/76 394790000 2699166532 0.15
2076/77 716060000 3265991503 0.22
Average 0.17

                                                Sources: Annual report of Kumari Bank Limited

Figure: 2.6
Net Profit after Tax and Net worth (ROE)
Table and Figure 2.6 shows that the ratio of net profit after tax and net worth as return on equity
of Kumar Bank Limited, for the financial year 2072/73 to 2076/77 shows that the situation of
return on equity is well.

2.7Interest Expenses on Total Deposit and Borrowing

Table 2.7
Interest Expenses On Total Deposit and Borrowing
Fiscal Year Ratio
2072/73 7.38%
2073/74 5.38%
2074/75 5.67%
2075/76 4.47%
2076/77 4%
Average 5.48%
Sources:Annual report of Kumari Bank Limited

Figure 2.7
Interest Exp. On Total Deposit and Borrowing
The average ratio of interest expenses on deposit and borrowing is 5.48%. period. The year wise
interest expenses on deposit and borrowing for the study period of 2072/73 to 2076/77 is 7.38%,
5.87%, 5.67%, 4.47% and 4% respectively. Viewing above ratios, the interest expenses on
deposite and borrowing ratios is in fluctuating process in recent year of study.
2.8Major Findings of the Study
1.      At the time of financial reengineering process of Kumari Bank Limited, Loan investment
policy has been brought. New policy of lending focuses on cash flow lending by passing out
collateral based lending.
2.      Liquidity position of Kumari Bank Limited seems weak. It is obvious that in the present
situation of the country, investment potential favorable, so the liquidity is insufficient in the
bank.
3.      Profitability Position of Kumari Bank Limited in term of Return On Equity(ROE) is well as it
is in increasing trend from 2072/73 to 2076/77.
4.      Efficiency Ratio of Kumari Bank Limited is good as it is well concerned on providing loan
with new rules and regulation,so it may be the reason behind decreasing the loan loss provision.
5.      Kumari Bank Limited Earning per share despite drawbacks, the positive earnings per share can
be regarded as an indication of good performance.
CHAPTER III

SUMMARY AND CONCLUSION

3.1SUMMARY
A Commercial Bank means the bank which deals with exchanging currency, accepting deposit,
giving, loans doing others various commercial transaction. Therefore, the major function of
Commercial Bank is to accept deposits and provide loans.
There is not so long history of commercial bank in Nepal. 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). But now there are twenty eight Commercial Banks all
over the country and they have been expanding their services by establishing branches in every
corner of the country.
The assets of Commercial Bank indicate the manner in which the funds entrusted to the bank are
employed. The successful working of the bank depends on ability of the management to
distribute the fund among the various kinds of investment known as assets outstanding loan
advance of the bank. These assets constitute primary source of income to the bank. As being a
business unit a bank aims at making huge profit since loan and advances are more profitable than
any other assets of the bank, it is willing to lend as much as its fund as possible. But the bank has
to be careful about the repayment of loan and interest giving loan. If the bank is too timid, it may
fail to obtain the adequate return on the fund, which is confined to it for use. Similarly, if the
bank is too liberal, it may easily impair its profits by bad debts. Therefore, bank should not forget
the reality that most of the bank failures in the world are due to shrinkage in the loan and
advance.
Despite of being loan and advance, more profitable than other assets, it creates risk of non
repayment for the bank. Such risk is known as credit risk or default risk. Therefore, like other
assets, the loan and advances are classified into performing and non performing assets are on the
basis of overdue aging schedule. If the dues in the firm of principal and the interest are not paid,
by borrower within a maturity period, that amount of principal and interest is called non
performing loan or assets. Performing assets have multiple benefits to the company as well as to
the society while non performing assets erode even existing capital of the bank. So, the proper
management of credit in commercial bank has been keys for the success.
Credit administration involves the creation and management of credit and advances. Portfolio
management helps to minimize or manage the credit risks by spreading over the risk to various
portfolios. Bank earns interest on credits and advances, which is one of the major sources of
income for bank.       
3.2CONCLUSION
Kumari Bank Limited has sufficient liquidity. It shows that bank has not got investment sector to
utilize their liquid money. Now, in Nepal, many banks and financial institution are functioning to
collect deposits and invest money somewhere in invest able sectors. Therefore, monetization
have been increased since liberalization policy taken by government. Heavy remittance has also
help to increase the amount of deposits in bank. On the other hand, due to political crisis,
economic sectors have been fully damaged. Most of the projects have been withdrawn due to
security problem. Therefore, bank has maximum liquidity due to lack of safety investment
sectors.
Due to economic crisis in the country, credit takers are not getting good return from their
investment sectors. On that situation, credit customers do not return money of the bank in the
stipulated time period, therefore, the non-performing credit of the bank increase its provision for
credit loss.
Credit related financial indicators demonstrate the quite poor situation in Kumari Bank Limited.

Therefore Financial sector reform program is below the level and still much needs to be done. It
can also be concluded that there has been almost similar procedures and policies while granting
the loan, not much change from its conventional methods.
Lack of proper financial analysis of the borrower by the banks, is one of the borrower by the
banks, is one of the major cause behind increasing NPA of Nepalese commercial banks.
Therefore, proper financial analysis should be performed before giving loan to the borrower.
Nepal Rastra Bank should regulate all the deposit accepting financial institution under the
supervision and regulatory activity so that general people can feel the security of their deposits.
Bank should regularly follow the credit customer to confirm that whether the customers have
utilized their credit for same purpose or not, committed at the time of taking credit from the
bank.
APPENDIX

Balance sheet
As on Ashar 2076

                                                                                                               

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