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Deposit Analysis of Commercial Bank

This document outlines a study on the dividend policies of Laxmi Bank and Everest Bank in Nepal. The study aims to analyze the dividend distribution practices of the two banks and examine the relationship between dividends, earnings per share, and retained earnings. It discusses the background of dividend policy and the two selected banks. The objectives are to analyze the dividend policies and practices of the banks and assess the relationship between dividends and financial metrics. The study uses secondary data from the banks and is limited to their practices. It will present the findings in chapters covering the methodology, analysis, and conclusions.

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Baburam Lama
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145 views5 pages

Deposit Analysis of Commercial Bank

This document outlines a study on the dividend policies of Laxmi Bank and Everest Bank in Nepal. The study aims to analyze the dividend distribution practices of the two banks and examine the relationship between dividends, earnings per share, and retained earnings. It discusses the background of dividend policy and the two selected banks. The objectives are to analyze the dividend policies and practices of the banks and assess the relationship between dividends and financial metrics. The study uses secondary data from the banks and is limited to their practices. It will present the findings in chapters covering the methodology, analysis, and conclusions.

Uploaded by

Baburam Lama
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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DIVIDEND POLICY IN COMMERCIAL BANKS IN NEPAL

(WITH REFERENCE TO LAXMI BANK LIMITED

AND EVEREST BANK LIMITED)

A Project Work for proposal

Submitted by:

BIBEK GHARTI MAGAR

Registration No.: 7-2--926-92-2016

TEXAS INTERNATIONAL COLLEGE

MITRAPARK, KATHMANDU

Submitted To:

FACULTY OF MANAGEMENT

TRIBHUWAN UNIVERSITY

In partial fulfillment of the requirements of the degree of

BACHELOR OF BUSINESS STUDIES (BBS)

January 12, 2021


Chapter I: Introduction

1.1 Background

Dividends are payment made to stockholders from a firm’s earning in return to their investment.
Dividend policy is to determine the amount of the earnings to be distributed to shareholders and
the amount to be retained or reinvestment in the firm. The objective of the divined should be to
maximize shareholders wealth position.

Dividend policy is defined as the policy of allocating the earning between the dividend and
retention. In practical dividend is payable whenever the board of directors declares to pay
whether it might be monthly, semi annually or annually. Banks have today, gained vital trust of
the public. Banking industry offers a wide range of services encompassing the needs of public in
different walks of life. At present a large number of banks are operating in Nepal.

Laxmi Bank was incorporated in April 2002 as the 17th commercial bank in Nepal. In 2004
Laxmi Bank merged with HISEF Finance Limited, a first generation finance company. This is
the first merger in the Nepali corporate history. In 2016, the Bank also acquired Professional
Diyalo Bikas Bank, a regional development Bank.Laxmi Bank is a Category ‘A’ Financial
Institution and re-registered in 2006 under the Banks and Financial Institutions Act of Nepal.
The Bank’s shares are listed and actively traded in the Exchange. The bank is primarily
recognized for its stringent credit policies, conservative approach to banking and pioneers in
technological innovations in the banking services

Everest Bank Limited is the Commercial Bank of Nepal. Which is joint venture of Punjab National Bank,
India? Punjab National Bank holds 20% equity shares of Bank. This is first Nepalese Bank which has
Representative Office in India
1.2 Statement of Problem

Dividend policy is an integral part of financial management decision of a business firm.


Dividend refers to that portion of a firm’s net earning which are paid out the shareholders.
Whether dividends have an influential on the value of firm is the most critical question in
dividend policy. If dividends are irrelevant, the firm should retain the earnings for investment
opportunities. If there are not sufficient investment opportunities providing expected returns in
excess of the required return, the unused funds should be paid out as dividends.

Dividend is the most inspiring factor of the investment on shares of the company is thus
desirable from the stockholder’s point of view. In one hand the payment of dividend makes the
investors happy. But in other hand the payment of dividend decreases internal financing required
for making investments in golden opportunities. This will hamper growth of the firm, which in
turn affects the value of the stock.

Thus this study deals with the following issues:

 What kind of dividend policy the selected banks have followed?


 Is there positive or negative relationship in between dividend and EPS, MPS?

1.3 Objectives of the study

The main objective of the study is to find out the appropriate dividend policy distribution
practices followed by selected banks. Specifically following objectives can be taken into
consideration.

 To analyze the dividend policy and distribution and practice followed by the selected
banks.
 To examine the relationship between dividend and EPS, MPS.
1.4 Rational of the study:
Data collection is the major function of all commercial banks, which help to all
transaction of a bank.
 To find out the how cash dividend is distributed in Laxmi Bank and Everest Bank.
 To find out the strength and weaknesses of Laxmi Bank and Everest Bank.
 To find out the marketing style and public relation of the bank.

1.5 Limitations of the study

The major limitations of the study are as follows:

 The study is mainly focus on the dividend practice and its influences in the
commercials banks in Nepal.
 The data being taken from secondary sources therefore authenticity of data is
dependent on the accuracy of the information used.
 The study involves analysis from the view point of limited respondents.
 Besides there are many banks and financial institutions only two banks are taken as
sample of the study.

1.5 Organization of the study

The study has been organized into four chapters:

Chapter 1: This contains the introduction which includes background of the study, statement of
problems, and importance of the study, limitations of the study and literature review.

Chapter2: It describes the research methodology employed in the study. This chapter deals with
the nature of data and its sources, list of the selected companies, the model of the analysis,
meaning and definition of statistical tools.

Chapter 3: It deals with the presentation and analysis of secondary data to indicate quantitative
facts on corporate dividend practices and an opinion survey to find out more qualitative facts on
corporate dividend policy.

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