1

CHAPTER I

INTRODUCTION

1.1 Background

The term bank supported to be derived from the legal definition of bank i.e. bank is an
institution which deals with money. However, the money academicians, practitioners,
Bank bankers and regulators define bank differently. The term "bank" in the modern
times refers to institutions having the different features like; it deals with money, it
accepts deposit and advance loan, it deals credit; It has ability to crate credit, the
ability to expand its liabilities. It is a unique financial institution that creates demand
deposit which serves as a median of exchange, and as a result the banks manage the
payment system of country. Bank crates fund from its clients saving and lend the
same to the needy person or business organization. (Bhandari D.R. 2003)

The bank is a profit making organization. Its main objective is to provide different
services to different people and even earn some profit from these services give. The
profitability of any organization depends on this services and facilities it is providing.
Customer satisfaction is the main objective any business organization in the
competitive business are. If the customers are satisfied they don't want to try other
alternatives. So, for the profitability of organization all the facilities should be focused
towards the customers. A company should earn profit to services and grow over long
period of time. Profit is essential, but it would be wrong to assume that every action
initiated by the management of a company should be aimed to maximizing profit. It is
fact that sufficient profits must be earned to sustain the operation of the business
towards the social overheads for the welfare of the society.

Garima Bikas Bank Ltd was established by a group of enthusiastic, dedicated and
successful professionals and entrepreneurs from different fields including business,
teaching, engineering, banking, accounting, management etc. The management team
also consists of experienced, qualified and devoted professional bank was
incorporated under Company Act on 2064.04.22 on 2064.06.24 it acquired license
from Nepal Rastra Bank to perform its financial transactions which was approved by
 2

the Company Register's office on 2064.05.09. The bank started is formal operations
on 2064.07.18 from Waling 3, Syangia. However in the third AGM it was decided to
shift the head office to Pokhara. (www.gbbl.com)

Loans are provided to people for such critical circumstances which may occur at any
time. In anyone's life a situation may come when all of sudden you require cash. A
moment when you do not want to borrow cash from your relatives. There may occur
any kind of emergency when you need huge amount of money. There are types of
loans like home loans, personal loans, student loan, business loan etc. You can take
any type of loan you need. For each and every kind of need, loans are available.

Home loans are available for general home purpose like buying a luxurious car, going
for a holiday trip, educational purpose, home improvement etc. Many of your desires
can be fulfilled by this loan. Personal loans are available for personal requirements
like wedding ceremony, purchasing a home etc. Student loans as it itself suggest is
that it is provided basically to students for higher education. Students who want to
study more but cannot afford can get apply for such loans and continue their studies.
(www.gbbl.com)

1.2 Profile of the Organization

The main purpose of this field is to know the rate of interest in different types of loan
to identify period the heading of loan during the study period to know about the
amount of Loan provided in different fiscal year by Garima Bikas Bank Limited,
Pokhara.

Vision, Mission, Objectives and Services

At Garima Bikas Bank Ltd., we are committed to offer the best of services to
customers and to be their first choice.

Vision: Our vision is to be the real bank for real people through quality services to the
real seekers of moderns banking.

Mission: Mission of Garima Bikas Bank Ltd., can be summarized as:

 Deliver wonderful baking service to its customers through state of the art
technology.
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 Satisfy all the stakeholders with healthy and sustainable value creation.
 Contribute in poverty alleviation providing financial services to the deprived
sector through micro finance programme.
 To make our vision come true through professional integrity, corporate
governance and regulating compliance.

Provide sustainable and quality financial service to the public upholding and
enhancing the interest of depositors and shareholders of the bank. To help in
development of industrial, commercial and agricultural sectors of the nation by
collecting and mobilizing financial resources from internal and external sources so as
to establish, develop and increase the overall productivity of the nation. Promote in
establishment, operation and expansion of employment generating businesses in rural
and urban areas by proper mobilization of available capital and labor. And to support
and help alleviate poverty by providing financial, technical and managerial supports
to the needy people and play a financial intermediary role through institutional
investment.

1.3 Objective of the Study

Every study has its own objectives. The main objectives of the study is to examine the
profitability of Garima Bikas Bank Limited over last 5 years. Profitability of any
organization is an indication of its efficiency with which the operation of business is
earned on. The main objectives of this study are:
 To analyze earning per share of the bank.
 To identify Return on total assets.
 To analyze the shareholder's equity.
 To analyze the Net profit margin.

1.4 Rationale of the Study

This research work will be supplementary unit to measure the Profitability Analysis of
Garima Bikas Bank. This research work will study the service in micro level. So the
required data and information concerns to its aspects can be acquired and studies by
its stakeholders, Publishers, School, colleges, Students etc. This study will be helpful
to everyone from every aspect. The businessmen, taxpayers, donor parties and central
 4

government can be benefited. The findings and the conclusions drawn from the study
will be helpful for the officials to take corrective measures.

1.5 Review of Literature

This chapter consists of the conceptual framework and research review and relevant
theories for the study. The former section presents the relevant aspects of the study
and latter on deal with research article in the related topics published in different
national and international journals and review of dissertations studies by different
authors.

1.5.1 Conceptual Review

The banks are presented here on alphabetical order stating their classification types.
Navigation links are gradually being developed for all banks and it is not given for the
development banks which are in merger processes. Types of Bank, concept of
performance analysis, description of GBBL and theoretical prescription, Review of
research article.

A. Concept of Profitability

Profit is an excess of revenues over associated expenses for an activity over a period
of time. Terms with similar meanings include ‘earnings’, ‘income’, and ‘margin’.
Lord Keynes remarked that ‘Profit is the engine that drives the business enterprise’.
Every business should earn sufficient profits to survive and grow over a long period
of time. It is the index to the economic progress, improved national income and rising
standard of living. No doubt, profit is the legitimate object, but it should not be over
emphasized. Management should try to maximize its profit keeping in mind the
welfare of the society. Thus, profit is not just the reward to owners but it is also
related with the interest of other segments of the society. Profit is the yardstick for
judging not just the economic, but the managerial efficiency and social objectives
also.
Profitability means ability to make profit from all the business activities of an
organization, company, firm, or an enterprise. It shows how efficiently the
management can make profit by using all the resources available in the market.
According to Hayward & Upton, “profitability is the ‘the ability of a given investment
to earn a return from its use.”
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However, the term ‘Profitability’ is not synonymous to the term ‘Efficiency’.

Profitability is an index of efficiency; and is regarded as a measure of efficiency and
management guide to greater efficiency. Though, profitability is an important
yardstick for measuring the efficiency, the extent of profitability cannot be taken as a
final proof of efficiency. Sometimes satisfactory profits can mark inefficiency and
conversely, a proper degree of efficiency can be accompanied by an absence of profit.
The net profit figure simply reveals a satisfactory balance between the values receive
and value given. The change in operational efficiency is mainly one of the factors on
which profitability of an enterprise largely depends. Moreover, there are many other
factors besides efficiency, which affect the profitability.

B. Profit & Profitability

Sometimes, the terms ‘Profit’ and ‘Profitability’ are used interchangeably. But in real
sense, there is a difference between the two. Profit is an absolute term, whereas, the
profitability is a relative concept. However, they are closely related and mutually
interdependent, having distinct roles in business.

Profit refers to the total income earned by the enterprise during the specified period of
time, while profitability refers to the operating efficiency of the enterprise. It is the
ability of the enterprise to make profit on sales. It is the ability of enterprise to get
sufficient return on the capital and employees used in the business operation.

As Weston and Brigham rightly notes “to the financial management profit is the test
of efficiency and a measure of control, to the owners a measure of the worth of their
investment, to the creditors the margin of safety, to the government a measure of
taxable capacity and a basis of legislative action and to the country profit is an index
of economic progress, national income generated and the rise in the standard of
living”, while profitability is an outcome of profit. In other words, no profit drives
towards profitability.

Firms having same amount of profit may vary in terms of profitability. That is why R.
S. Kul Shrestha has rightly stated, “Profit in two separate business concern may be
identical, yet, many a times, it usually happens that their profitability varies when
measured in terms of size of investment”.
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1.5.1.1 Functions of Development Bank

The main purpose of function of development banks is to keep the flow of money in
the economy. That is to transfer money from the ones that have surplus to the ones
that need it. Let me explain: The banks would accept deposits from customers and
using this money they would grant loans to peoples who need money. The customers
who got the loan pay an interest and the ones that deposited the money in turn get a
significant portion of this interest. This way, they promote business and keep the
economy running.

There is no precise definition of development bank. William Diamond and Shirley

Bosky consider industrial finance and development corporations as ‘development
banks’ Fundamentally a development bank is a term lending institution.
Development bank is essentially a multi-purpose financial institution with a broad
development outlook. A development bank may, thus, be defined as a financial
institution concerned with providing all types of financial assistance (medium as well
as long term) to business units, in the form of loans, underwriting, investment and
guarantee operations, and promotional activities- economic development in general,
and industrial development, in particular.

In short, a development bank is a development- oriented bank.

Main functions of Development banks would include:-
1. It Accept deposit from public, provide money lending, remittance and gold
loan.
2. It is not just a term-lending institution. It is a multi-purpose financial
institution.
3. It is essentially a development-oriented bank. Its primary object is to promote
economic development by promoting investment and entrepreneurial activity
in a developing economy. It encourages new and small entrepreneurs and
seeks balanced regional growth.
4. It provides financial assistance not only to the private sector but also to the
public sector undertakings.
5. It aims at promoting the saving and investment habit in the community.
6. It does not compete with the normal channels of finance, i.e., finance already
made available by the banks and other conventional financial institutions. Its
 7

major role is of a gap-filler, i.e., to fill up the deficiencies of the existing

financial facilities.
7. Its motive is to serve public interest rather than to make profits. It works in the
general interest of the nation. (https://edurev.in/studytube/Functions-and-Role-
of-Development-Banks-Development)

1.5.1.2 Bank and Financial Institution

Bank and financial activities are governed by rules and regulations which are
reviewed from time to time to reflect the changing economic environment. Bank and
financial institutions ordinance came into existence in February 4, 2004 governs rules
and regulations of all types of financial institutions. The ordinance is reviewed in
every six months. It aims to ensure reliable and quality banking and financial
intermediation services through healthy competition among bank and financial
institution, safeguards and promotes the interest of depositors and people at large in
the overall banking and financial system of the country. The ordinance repeals and
replaces all existing acts relating to development banks, Nepal Industrial development
bank, other development bank and finance companies and brings all such institution
under one single act which is known as umbrella act. As per umbrella act, bank and
financial institutions can be classified as A, B, C and D classes on the basis of
minimum paid of capital. Accordingly, development banks are class A and they are
labeled as banks. Similarly development banks, finance company, co-operative are
categorized into 'B', 'C' and 'D' class respectively. (NRB, 2072)

As per the fact, if the financial institution met capital requirement and has been in
profit for the last 5 years in a row, total nonperforming assets has remained within the
NRB prescribed limit and all the prescribed conditions have met then well performing
bank or financial institution can be upgraded. Similarly NRB can downgrade any
banks or financial institutions from 'A' to 'B', 'B' to 'C' class if its status performance is
found to have turned totally other way against as prescribed. Subject to this act, class
'B' licensed institution may conduct the following types of financial transactions.
 Subject to the limit prescribed by the Rastra Bank, accepting deposit with or
without interest and refund such deposit.
 Supplying credit, other than hypothecation credit as prescribed.
 8

 Dealing in foreign exchange, subject to the laws in force and the directives
given by Rastra Bank.
 Supplying credit for hire purchase, leasing, housing and service business.
 Engaging in Merchant Banking Business, subjective to the directives given by
the Rastra Bank.
 Making arrangement for jointly supplying credit on the basis of co-financing
in collaboration with other licensed institutions in accord once with mutual
agreement entered into for the division by the collateral.
 Supplying credit against the guarantee of any native banks or financial
institution.
 Issuing, accepting, paying, discounting or purchasing and selling bills of
exchange, promissory notes, cheques, traveler's cheque drafts.
 Accepting deposits making payments and supplying credit through automated
teller machine and cash dispensing machine.
 Providing overdraft to person whom it trusts.
 Obtaining credit against the security of its movable and immovable property.
 To issue and accept letter of credit subject to the conditions prescribed by the
Rastra Bank.
 Acting as a commission agent of its customer taking custody of and arranging
for the sale or purchase of shares, debenture or securities, collecting interests,
dividends, profit etc accruing from shares, debentures or security.
 Arranging for safe deposits vault.
 Carrying on off balance sheet transaction on such condition as may be
prescribed by Rastra Bank.
 Providing guarantee for the supply of credit to its customers by any other
licensed institutions.
 Functioning to turn household saving into profitable industry investments.
Business Investment makes profit. Banks generate their revenue from the
difference of the interest the business pay them and the interest they pay to
depositors.
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1.5.2 Review of Previous Research

Generally, this part of introduction deals with the literature review of the study. The
knowledge and understanding about the subject of the project. Literatures related with
the chosen topic were reviewed. Several fundamental concepts describing about the
subject has been found profitability ratio examines.

Literature related with the chosen topic was reviewed. Several fundamental concepts
described about the subject has been fund "The profitability ratio is a measure of the
present value of projects ratio is a measure of the present value of projects cash inflow
on each dollar invested or to be invested. It calculated as a ration of cash inflows.
Profitability is vitally more important than assuming that a bank stays in business
activity. Profitability is calculated to measure the operative efficiency to the company,
creditors and owner also interested in the profitability of firms.

1.5.3 Research Gap

Research, a quest of searching again and again is a never ending process. Each and
every research tries to add some new literature in the field of its study by giving new
findings and conclusions so that other researchers in the future could get new
paradigm and platform of exploration. A lot of researches have been conducted in the
field of banding sector by different scholars; however this research tries to analyze the
profitability of Garima Bikas Bank limited. In other word, it indicates a findings from
a research in which a key question has not be answered. It is difference between what
is existing and what should be done. It is done to analyze Earning per share, Return on
assets, analyze the shareholder's equity and Net profit margin. Thus, this research is
very specific and can draw some meaningful conclusions for the further improvement
in regarding to Profitability analyze of Garima Bikas Bank Limited.

1.6 Methods of the Study

This study has intense relation with satisfaction of customer regarding the objectives
to analyze, examine and interpret the profitability towards Garima Bikas Bank. The
methods of the study includes, research design, data collection procedures and
research variable and tools use. The following step provides useful procedural
guidelines so far as methods of the study is concerned.
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1.6.1 Research Design

A research design is a framework or plan for the activities to be undertaken during the
course of study. It describes the general plan for collecting, analyzing and evaluating
the data after identifying. The research mostly based on the secondary data and
information. It is a case study so descriptive research design is applied. According to
nature data can be of two types, they are :

Qualitative Research is primarily exploratory research. It is used to gain an

understanding of underlying reasons, opinions, and motivations. It provides insights
into the problem or helps to develop ideas or hypotheses for potential quantitative
research. Qualitative Research is also used to uncover trends in thought and opinions,
and dive deeper into the problem. This type of method is also used to analyze the data

Quantitative Research is used to quantify the problem by way of generating numerical

data or data that can be transformed into useable statistics. It is used to quantify
attitudes, opinions, behaviors, and other defined variables – and generalize results
from a larger sample population.

1.6.2 Nature and Sources of Data

This research mainly based on secondary sources. However, primary data will be
obtained as research requirement. The secondary data will be gathered from annual
reports, published documents, meeting minute of the board and website. Moreover,
other necessary data and information can be collected from news papers, related
publications and websites. Primary data are taken using will be use as per requirement
of the study. For this research purpose, following data collection procedures are used:
a. Primary Data
b. Secondary Data

a. Primary Data

Primary research involves the collection of original primary data. It is often

undertaken after researchers have gained some insight into an issue by reviewing
secondary research or by analyzing previously collected primary data. It can be
accomplished through various methods, including questionnaires and telephone
interviews in market research, or experiments and direct observations in the physical
 11

sciences, among others. Primary Source Consists of Annual budget report of GBBL,
Records of office, internally generated research reports of GBBL.

b. Secondary Data

Secondary data refers to data that was collected by someone other than the user.
Common sources of secondary data for social science include censuses, information
collected by government departments, organizational records and data that was
originally collected for other research purposes. Primary data, by contrast, are
collected by the investigator conducting the research. Secondary Sources Consists of
Books, Journals, periodicals, published reports concerned to the research topic.
Various dissertations concerned to the local government financial analysis. Websites
and Internet, Newspapers, magazines and so on.

1.6.3 Population and Sample

The objective of the study is to analyze the Profitability. There are 28 Development
Bank in Nepal. Out of them Garima Bikas Bank is taken as sample. Researcher would
like to select this Bank because the bank is earning high profit and providing services
to the public with lower interest rate. All development bank is the population for the
research works and convenience sampling method used.

1.6.4 Method of Data Collection

It is already mentioned that the secondary sources has been used. So the annual
budget reports of the co-operative have been acquired from its office. Similarly,
GBBL records, notices and publications .Some required data and information has
been collected from regional library of Pokhara. Moreover, the required information
has been gathered from different websites concerned to the topic. Reviewing
dissertations and other related books has been done using regional library of Pokhara.

1.6.5 Data Processing and Analysis Tools

Analysis is the careful study of available facts, so that one can understand and draw
conclusion. After collecting data from different sources, data were critically studies in
order to achieve objectives of the study. The analysis of data is done according to the
pattern of data available. The collected data are presented in systematic manner with
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the help of computer. Therefore, available data and information are analyzed on the
basic of different tools and techniques.

The tools that is used throughout the report is.

i. Financial Tools

Beside this tabulation percentage, minor mathematical tools and diagrams are also
used according to the need and appropriateness of the situation.

I) Financial Tools

Financial tools like the ratio analysis were used. Among them we have used some
ratio analysis tools like.

a. Earnings Per Share (EPS)

b. Return on Total Assets (ROA)
c. Return on Shareholder's Equity (ROE)
d. Net Profit Margin (NPM)

1.7 Limitation of the Study

Every study has its own limitations. This study is also not free from certain
limitations. The major limitations of the study are as follows:

 This study is a part of bachelor degree prepared with in a limited time frame.
 Basically shortage of reliability of statistical tools used and lack of research
experience.
 Only five continuous fiscal year is covered in this study. i.e. from fiscal year
2070/071 to 2074/075.
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CHAPTER II

RESULT AND ANALYSIS

This chapter deals with presentation and analysis of data collected from different
sources and component. The main purpose of this chapter is to convert all the raw
data into understandable form. It is process of collecting, organizing, summarizing,
tabulating and presenting data into various charts, table and other forms. Here the data
collected from various sources have been analyzed to meet the various dimensions of
the problems of study and major findings of the study are presented systematically.

2.1 Data Presentation and Analysis of Result

Mainly, the data for this research study is based on the annual report of banks and the
GBBL's annual bank supervision report. The data collected from different sources has
been refined and documented in excel tables which are further processed to analyze
and draw a conclusion at the findings on financial condition of GBBL.

2.1.1 Earning per Share (EPS)

This ratio is used to measure the earning available to equity shareholders on a per
share basis. The main purpose of computing this ratio is to measure the profitability of
the firm. The ratio is computed as:

NPAT - PREFERENCE DIVIDEND

Earnings per share = NO. OF COMMON STOCK
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Table 2.1
Earnings per Share (EPS)
(In Millions)
Fiscal Year NPAT Number of Share EPS(Rs)
2070/071 104.23 3.74 27.86
2071/072 144.21 7.09 20.33
2072/073 222.02 8.532 25.82
2073/074 349.01 22.042 15.53
2074/075 441.85 25.348 17.43
Source: Annual Report of GBBL

30

25 EPS(Rs)

20

15
EPS

10

0
2070/071 2071/072 2072/073 2073/074 2074/075
Fiscal Years

Figure 2.1 Bar Diagram Showing EPS

A figure 2.1 show that the earning per share in Fiscal Year 2070/071 is 27.86 in fiscal
year 2071/072 is 20.33 and in year 2072/073 is 25.82 but after that it starts to decrease
to 15.53 in the year 2073/074 and increase to 17.43 in the year 2074/075. After that
earnings per share is in fluctuate.
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2.1.2 Return on Total Assets (ROA)

This ratio measures the rate of return earned by the firm as a whole for all its
investors. That is why this equals net profit divided by total assets.

NPAT
Return on Assets = × 100
TOTAL ASSETS

Table 2.2
Return on Assets (ROA)

(Rs. in Millions)

Fiscal Year NPAT (Rs) Total Assets (Rs) ROA (%)

2070/071 104.23 4612.39 2.19
2071/072 144.21 7452.36 1.94
2072/073 222.02 10578.84 2.1
2073/074 349.01 17662.14 1.98
2074/075 441.85 25237.49 1.75
Source: Annual Report of GBBL

2.5
ROA (%)
2

1.5
ROA (%)

0.5

0
2070/071 2071/072 2072/073 2073/074 2074/075
Fiscal Years

Figure 2.2 Bar Diagram Showing ROA

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ROA measures the overall effectiveness of management in generating profit with the
available assets. Referring table 2.2 and figure no. 2.2 the return on assets of GBBL's
2.19, 1.94, 2.1, 1.98, and 1.75 respectively from FY 2070/071 to 2074/075 and the
average ROA is 1.96 percentages. In general it must be in decreasing and some year
increasing trend to see the best utilization of total assets.

2.1.3 Return on Shareholder's Equity (ROE)

This ratio judges the profitability of the firm with reference to ordinary shareholder's
or the real stakeholders fund and is computed as:

NPAT
Return on Equity = × 100
TOTALEQUITY

Table 2.3

Return on Shareholder's Equity (ROE)

(Rs. in Millions)

Fiscal Year NPAT (Rs) Total Shareholder's Equity ROE (%)

2070/071 104.23 448.8 23.24
2071/072 144.21 851.7 16.93
2072/073 222.02 1030.65 21.54
2073/074 349.01 2534.87 13.76
2074/075 441.85 2788.36 15.84
Source: Annual Report of GBBL
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25

ROE (%)
20

15
ROE (%)

10

0
2070/071 2071/072 2072/073 2073/074 2074/075
Fiscal Years

Figure 2.3 Bar Diagram Showing ROE

Table 2.3 and figure 2.3 show the ROE Ratio of GBBL from FY 2070/071 to
2074/075 the ratio is 23.24, 16.93, 21.54, 13.76 and 15.84 percentages. This increase
in ROE does not constant share fund does mean that the management of GBBL is
effective.

2.1.4 Net Profit Margin (NPM)

Net profit ratio expresses the relationship between net profit after tax and total
revenue. This ratio is a measure of the overall profitability net profit is arrived at after
taking into account both the operating and non-operating items of income and
expenses the ratio indicates. What portion of the total revenue is left for the owner's
after all expenses have been meet. Net profit ratio of GBBL for five year period is
presented as below.

NPAT
Net Profit Margin = × 100
TOTALORERATING REVENUE
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Table 2.4

Net Profit Margin (NPM)

(Rs. in Millions)

Fiscal Year NPAT (Rs) Total Operating Revenue NPM (%)

2070/071 104.23 269.994 38.6

2071/072 144.21 368.911 39.09

2072/073 222.02 552.53 40.18

2073/074 349.01 884.32 39.46

2074/075 441.85 1196.025 36.94

Source: Annual Report of GBBL

41

40 NPM (%)

39
NPM (%)

38

37

36

35
2070/071 2071/072 2072/073 2073/074 2074/075
Fiscal Years

Figure 2.4 Bar Diagram Showing NPM

After analysis of the table 2.4 and figure 2.4 of net profit margin Garima Bikas Bank
Ltd. from FY 2070/071 to FY 2074/075. The NPM of bank was 38.6% in FY
2070/071, 39.09% in FY 2071/072, 40.18% in FY 2072/073, 39.46% in FY 2073/074
and 36.94% in FY 2074/075.
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2.2 Analysis of the Result

After studying the various kinds of ratio of GBBL, we can analyze the financial
(profitability status)position of GBBL. At first, in the fiscal year 2070/71, ROE was
23.24 percent, but there after it declined sharply to reach 15.84 percent in the fiscal
year 2074/75. This is due to increase in share holder's equity. In case of ROA, for the
beginning fiscal year 2070/71 is 2.19 percent but after it declined to reach 1.75
percent. In overall ROA is not satisfactory.

2.3 Major Findings

Profitability plays a vital role in functioning of any organizations. Analyzing the

above data and figures, following things were traced:
 The earning per share in Fiscal Year 2070/071 is 27.86 in fiscal year 2071/072
is 20.33 and in year 2072/073 is 25.82 but after that it starts to decrease to
15.53 in the year 2073/074 and increase to 17.43 in the year 2074/075. After
that earnings per share is in fluctuate.
 ROA measures the overall effectiveness of management in generating profit
with the available assets. Referring table 2.2 and figure no. 2.2 the return on
assets of GBBL's 2.19, 1.94, 2.1, 1.98, and 1.75 respectively from FY
2070/071 to 2074/075 and the average ROA is 1.96 percentages. In general it
must be in decreasing and some year increasing trend to see the best utilization
of total assets.
 The ROE Ratio of GBBL from FY 2070/071 to 2074/075 the ratio is 23.24,
16.93, 21.54, 13.76 and 15.84 percentages. This increase in ROE does not
constant share fund does mean that the management of GBBL is effective.
 The net profit margin of Garima Bikas Bank Ltd. from FY 2070/071 to FY
2074/075. The NPM of bank was 38.6% in FY 2070/071, 39.09% in FY
2071/072, 40.18% in FY 2072/073, 39.46% in FY 2073/074 and 36.94% in
FY 2074/075.

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CHAPTER III

SUMMARY AND CONCLUSION

3.1 Summary

The main objectives of GBBL is to accepts the deposits from people and invest in
various productive sectors like share capital, debentures and in several productive
investments. In addition to this to provide several banking advisory services to its
clients and also, to provide more return to shareholders, are also important objectives
of bank. On course of providing facilities to its clients banks so has been providing
various facility. Garima Bikas Bank was established in 2064. GBBL has completed 10
successful years and is operating in 11th year now. The bank is continuously active to
provide other services including interest banking, mobile banking, SMS banking, 365
days banking ABBS banking Utility payment (Electricity Bill payment, Telephone
Bill payment, mobile Recharge),e-sewa and extended evening counter. Garima team
are always active and confident to provide services and satisfy their customers.

Higher interest rates in deposits and also, been providing many facilities to its clients.

The Bank facilitates its customer needs by delivering the best of services in
combination with the latest state of the art technologies and prudent international
practices. The Bank is the pioneer in introducing the latest technology in the banking
industry in the country. The bank provides modern banking facilities such as Any
Branch Banking, Internet Banking payment system, Mobile  Banking, Safe Deposit
Locker facilities, Utility Bill payment (Telephone & Mobile), ATM (VISA Debit
Cards ) to its valued customers. Besides these, the Bank is providing 365 Days
banking and Evening Counter services to the customers through many of its offices.

Probability is one of the major tools for determining the condition for any
organization whether it has been conducted at profit or at loss efficiency or
inefficiency. Each and every organizations need to be standing at profitable condition
for long term existence, regular loss in organization. Therefore, it is necessary to
know its probability for determining position for corrective actions (if any deviation
 21

of loss). As nowadays peoples are aware about security of their money, organization
should be able to convince them by showing their ability to pay their money back.
This study examines and evaluates the profitability of GBBL. Data are collected from
different sources. Financial data are collected through from annual audited report
where other data were collected through internet, interview and observations. EPS is
fluctuating over time which is not good, ROA, ROE and NPM are less fluctuating. In
some cases there is some decline as well but is normal. Therefore organization is at a
good position in the market.

3.2 Conclusion

After analyzing the different data of GBBL, we have reached to the final conclusion.
GBBL does such as providing loan to other invest in other securities pay salary to its
staff etc. All activities done through the deposit collection and loan mobilization by
it's from the public. Moreover the bank become able to collect deposit and disburse
the loan from the public there is more potential of earning more profit. Analyzing the
overall performance of the bank the Profitability of the bank is in sound position.
Hence, the bank will also perform better in coming year too. Public are more
interested to invest in the bank because of effective management, sound financial
position and good public relation. In this advance phase it will tries to provides more
facilities to the public with effective interest rate. The future of the bank is good. But
it is necessary to operate motive activities through training and seminar. Only with the
cushion available, the bank might be able to pay its debt on time even if that of the
current assets doesn’t convert into cash timely. There is inadequate liquid. Quick ratio
is able to meet its standard that is 1 time equal portion of liquid assets & current
liabilities is considered to measure of satisfactory position of the organization. There
is no effective cash management. A great fluctuation occurred during the study
period. Huge amount of cash is hold by the co-operative. There is sufficient amount of
cash to meet its short term obligation. The bank is able to pay its current liabilities.
Due to excess of current assets over current liabilities, the position of working capital
is positive or is favorable position.
By analyzing and studying probability of GBBL, we can conclude:

 Various profitability ratios are not stable. They are fluctuating over years.
 22

 It has earned satisfactory profit remaining in ethical standard.

 EPS, ROA, ROE and NPM maintained well.
 The overall profitability of GBBL is good.
 The bank is performing very well despite barriers.
 23

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