CHAPTER 4

DATA ANALYSIS AND PRESENTATION

This chapter deals with presentation, analysis and interpretation of the various aspects
relating to the reflection of ratio analysis of Nabil Bank Limited and Nepal Investment
Bank Limited. Data collected from various official secondary sources are subjected to
statistical tools under the reported research methodology of this study. The statistical
tools have been attempted to be complemented using graphical representations. This
chapter is also called the central nervous system, which helps to provide conclusion after
detailed analysis, so that proper recommendation can be given at the end of the study.
The gist of the research work presents in the form of major findings, vital issues and
recommendation in the fifth chapter. In this way this chapter makes proper linkage and
associates with every chapter.

4.1 Price to Earnings Ratio (P/E)

The price earnings ratio, often called the P/E ratio or price to earnings ratio, is a market
prospect ratio that calculates the market value of a stock relative to its earnings by
comparing the market price per share by the earnings per share. In other words, the price
earnings ratio shows what the market is willing to pay for a stock based on its current
earnings.

1
 Table No. 1

Price to Earnings Ratio

Year Nabil Bank Nepal Investment

MVPS EPS P/E Ratio MVPS EPS P/E Ratio
2007/08 5275 108.31 48.70 2450 57.87 42.33
2008/09 4899 106.76 45.88 1388 37.42 37.09
2009/10 2384 78.61 30.32 705 52.55 13.41
2010/11 1252 70.67 17.71 515 48.84 10.54
2011/12 1355 83.57 16.21 511 27.6 18.51
2012/13 1815 95.14 19.07 784 46.2 16.96
2013/14 2535 95.14 26.64 960 40.7 23.58
2014/15 1910 57.24 33.36 704 30.9 22.78
2015/16 2344 59.27 39.54 1040 29.3 35.49

Figure: 1

Price to Earnings Ratio

60

50

40

30 Nabil
NIBL
20

10

0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16

2
The above table shows the price to earnings ratio of Nabil and Nepal investment bank.
Both the banks have trend of decreasing P/E ratio and rising sharply till year 2010/11.
When compared head to head, Nabil bank has higher market value of share and also has
higher earnings per share. From 2007/8 to 2015/16 Nabil bank declined to 16.21 and then
recovered to 59.27. Likewise, the P/E ratio of Investment bank dropped down to 10.54
from 42.33 and then rise to 35.49 in 2015/2016. The main reason for this effect is due to
the decreased share price for both the banks.

4.2 Price-to-earnings growth (PEG) ratio

The price/earnings to growth ratio (PEG ratio) is a stock's price-to-earnings (P/E) ratio
divided by the growth rate of its earnings for a specified time period. The PEG ratio is
used to determine a stock's value while taking the company's earnings growth into
account, and is considered to provide a more complete picture than the P/E ratio. The
price/earnings to growth ratio (PEG ratio) is a stock's price-to-earnings (P/E) ratio
divided by the growth rate of its earnings for a specified time period. The PEG ratio is
used to determine a stock's value while taking the company's earnings growth into
account, and is considered to provide a more complete picture than the P/E ratio.

3
 Table No. 2

Price to Earnings Growth

Year Nabil Bank Nepal Investment

P/E Ratio EGR PEG P/E Ratio EGR PEG
2007/08 48.70 42.33
2008/09 45.88 5.77 7.93 37.09 12.38 2.99
2009/10 30.32 33.91 0.89 13.41 63.83 0.21
2010/11 17.71 41.58 0.42 10.54 21.40 0.49
2011/12 16.21 8.47 1.91 18.51 -75.58 -0.24
2012/13 19.07 -17.75 -1.08 16.96 8.34 2.03
2013/14 26.64 -39.66 -0.67 23.58 -38.99 -0.60
2014/15 33.36 -25.23 -1.32 22.78 3.40 6.68
2015/16 39.54 -18.51 -2.13 35.49 -55.79 -0.63

Figure: 2

Price to Earnings Growth

10

4
Nabil
NIBL
2

0
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
-2

-4

4
The PEG ratio seems to be ok for Nabil until 2011 and for Investment bank until 2010.
From then both the banks suffered the negative PEG ratio. From 2007 to 2015 PEG ratio
dropped down from 7.93 to -2.13 for Nabil bank and from 2.99 to -0.63 for Nepal
Investment Bank. This is because of the downfall of share prices for both of the banks.

4.3 Price to sales (P/S) Ratio

Price to Sales ratio is the perceived value of a stock by the market compared to the
revenues of the company. The price to sales ratio is calculated by dividing the stock price
by sales per share. Sales per share uses the weighted average of shares for the time period
evaluated, which is generally one year.

5
 Table No. 3

Price to Sales Ratio

Year Nabil Bank Nepal Investment

Stock Price Sales per Price Stock Price Sales per Loan
share to share to
Sales deposit
Ratio ratio
(%) (%)
2007/08 5275 3099.90 1.70 2450 2242.40 1.09

2008/09 4899 2856.84 1.71 1388 1505.61 0.92

2009/10 2384 2226.78 1.70 705 1673.58 0.42

2010/11 1252 1873.81 0.66 515 1705.84 0.30

2011/12 1355 2049.77 0.66 511 1381.94 0.36

2012/13 1815 1902.86 0.95 784 1231.42 0.63

2013/14 2535 1794.83 1.41 960 1254.48 0.76

2014/15 1910 1790.81 1.06 704 1387.89 0.50

2015/16 2344 1600.19 1.4 1040 1177.87 0.88

6
 Figure 3:

Price to Sales Ratio

2
1.8
1.6
1.4
1.2
1 Nabil
0.8 NIBL
0.6
0.4
0.2
0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16

The above data shows the price to sales ratio from year 2007/08 till 2015/16. Nabil bank
started its price to sales ratio with 1.7 for consecutive 3 years till 2009/10. The ratio
dropped to 0.66 in 2011/12 which slowly rose to 1.41 in 2013/14 which was about
consistent till 2015/16 to 1.4.

The loan to deposit ratio of NIBL started with 1.09 in 2007/08. There was a continuous
drop in the ratio till 2010/11 because of falling stock prices from 2450 to 515 in 2010/11.
The ratio again took the pace and increased the ratio up to 0.88 in 2015/16 as a result of
improving stock price yet there was a drop in 2014/15.

4.4 Price to Cash Flow (P/CF)

Cash flow per share is most commonly defined as operating cash flow per share for the
preceding period. However, it is sometimes approximated by adding non-cash items to
net income and dividing the sum by total number of shares. Although there is no single
figure to indicate an optimal price-to-cash-flow ratio, a ratio in the low single digits may

7
 indicate the stock is undervalued, while a higher ratio may suggest potential
overvaluation.

Table No. 4

Price to Cash Flow

Year Nabil Bank Nepal Investment

Stock Price Cash flow Price Stock Price Cash flow Price
per share to cash per share to Cash
flow Flow
(%) (%)
2007/08 5275 105.59 49.95 2450 109.09 22.45

2008/09 4899 29.13 168.13 1388 172.95 8.02

2009/10 2384 81.87 29.11 705 -45.74 -15.41

2010/11 1252 43.02 29.10 515 54.97 9.36

2011/12 1355 61.04 22.19 511 12.16 42.02

2012/13 1815 42.55 42.65 784 38.43 20.39

2013/14 2535 99.13 25.57 960 84.22 11.39

2014/15 1910 125.96 15.16 704 -50.92 -13.82

2015/16 2344 -31.36 -74.73 1040 -17.76 -58.52

8
 Figure 4:

Price to Cash Flow

200

150

100

Nabil
50
NIBL

0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16
-50

-100

The given table describes the price to cash flow ratio. There are many ups and downs
from 2007 to 2015. The ratio keeps fluctuating because of the increase and decrease in
cash flow of banks.

The ratio of Nabil bank moves sharply from 49.95 to 168.13 in 2008/09 and then drops
drastically to -29.11 in 2009/10 which later settles down to -29.62 in 2015/16. The reason
behind the sharp increase in the ratio was caused because of sharp increase in the interest
income i.e. about 3 times more than in 2007/08 and also decrease in the current asset of
the bank and one of the main reason is the that the number of share of the bank was
doubled which decreased the cash flow per share. The ratio dropped drastically in
2009/10 was because of negative cash flow caused by the negative cash flow from
operating activities, decrease in short term borrowings.

The ratio of NIBL is also quite fluctuating for 9 years. The ratio started from 22.45 in
2007/08 and dropped down to -58.52 in 2015/16. The ratio dropped 22.45 in 2007/08 to -
15.41 because of negative cash flow and increase in the number of share. The cash flow

9
was negative because of increased interest expenses and the bank did not invest in the
long term borrowings that year to be specific. It again increased to 42.02 in 2011/12
because of decreased market value of share and huge money deposited by the depositors.
The ratio dropped down to -58.52 because of huge loss from operating activities.

4.5 Price to Book Value

The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's market value to its
book value. It is calculated by dividing the current closing price of the stock by the latest
quarter's book value per share. A lower P/B ratio could mean that the stock is
undervalued. However, it could also mean that something is fundamentally wrong with
the company. As with most ratios, be aware that this varies by industry.

10
 Table No.5

Price to Book Value

Year Nabil Bank Nepal Investment

Market Book Value Price to Market Book Value Price
Value Book Value to
Value Book
(%) Value
(%)
2007/0 36356144000 2437198989 14.91 29495927300 2686786048 10.97
8
2008/0 47311945530 3130240637 15.11 33410116332 3907839708 8.54
9
2009/1 34547116160 3255104925 10.61 16984138785 4585393092 3.7
0
2010/1 25412712888 4566517021 5.56 12406853155 4557485272 2.72
1
2011/1 27503375370 5038047228 5.45 15396042662 5296710125 2.9
2
2012/1 44228671410 6079934161 7.27 29541180368 6643843327 4.44
3
2013/1 77245718940 7061805538 10.93 39808392000 7303472471 5.45
4
2014/1 69861191400 8422215194 8.29 33589272640 8232455424 4.08
5
2015/1 11149400000 10166088319 10.96 75457301920 14836649657 5.08
6
*Market Value = Number of shares outstanding multiplied by the price per share

11
 Figure: 5

Price to Book value

16

14

12

10

8 Nabil
NIBL
6

0
2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

The above table shows price to book value of the banks. Higher the price to book value
means the company is overvalued and vice versa. The value of Nabil bank was 14.91 in
2007/08 which decreased till 5.45 which is less than 50% from that of 2007/08 data. The
value increased from 2012/13 and finally reached 10.96 in 2015/16 with average of
around 8 for 4 years. The price to book value of NIBL was 10.97 in 2007/08. From then
onwards, the value was kept very consistent with average value of 4.

4.6 Debt to Equity Ratio

The debt-equity ratio is another leverage ratio that compares a company's liabilities to its
total shareholders' equity. This is a measurement of how much suppliers, lenders,
creditors and obligors have committed to the company versus what the shareholders have
committed.

12
 Table No. 6

Debt to Equity Ratio

Year Nabil Bank Nepal Investment

Liabilities Shareholder’s Debt to Liabiliti Shareholder’ Debt
Equity Equity es s Equity to
Ratio Equity
(%) Ratio
(%)
2007/0 334935864 2437198989 13.74 10628058 2686786048 39.55
93
8

2008/0 392996957 3130240637 12,55 10623526 3907839708 27.18

78
9

2009/1 390033208 3255104925 11.98 10622719 4585393092 23.16

71
0

2010/1 387626265 4566517021 8.48 10620074 4557485272 23.30

23
1

2011/1 378441012 5038047228 7.51 10620074 5296710125 20.05

23
2

2012/1 376931147 6079934161 6.19 80598220 6643843327 12.13

9
3

2013/1 369310823 7061805538 5.22 10551816 7303472471 14.44

81
4

2014/1 363141191 8422215194 4.31 15551816 8232455424 18.89

81
5

2015/1 361779668 10166088319 3.55 15539268 14836649657 10.47

50
6

13
 Figure No. 6

Debt to Equity Ratio

0.45
0.4
0.35
0.3
0.25
0.2
NAbil
0.15 NIBL
0.1
0.05
0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16

The above table describes the debt to equity ratio from 2007/08 to 2015/16. The liability
side includes the long term debt, unpaid leases and pension funds. From the above
figure, we can see that debt to equity ratio has been decreasing in both banks except in
NIBL where the ratio increases in 2013 and 2014 and again it drops. Nabil Banks ratio
has been quite consistent in decreasing the ratio where it drops from 0.13 to 0.03 from
2007.08 to 2015/16. One of the main reason behind higher debt to equity ratio of NIBL is
its higher long term debt investment.

4.7 Return on Equity

ROE measures a company's efficiency at generating profits from money invested in the
company, and it is derived by dividing by net income by shareholder's equity. It's a very
handy measure of management's effectiveness but it's not useful for ascertaining value of
early-stage companies that do not produce profits.

Table No. 7
14
 Return on Equity

Year Nabil Bank Nepal Investment

Net Income Shareholder’s Return on Net Shareholder’s Retu
Equity Equity Income Equity rn on
(%) Equit
y
(%)

2007/0 746468394 2437198989 30.62 6967315 2686786048 28.58

8 16
2008/0 1031053908 3130240637 32.93 9006190 3907839708 28.77
9 72
2009/1 1139099399 3255104925 34.99 1265949 4585393092 38.89
0 588
2010/1 1337745485 4566517021 29.29 1176641 4557485272 25.76
1 031
2011/1 1696276110 5038047228 33.69 1039275 5296710125 20.62
2 613
2012/1 2226942126 6079934161 36.62 1915027 6643843327 31.49
3 932
2013/1 2331446120 7061805538 33.01 1939612 7303472471 27.46
4 344
2014/1 2819333752 8422215194 33.47 1961852 8232455424 23.29
5 380
2015/1 2093813607 10166088319 20.59 2550883 14836649657 25.09
6 563

Figure No. 7

15
 Return on Equity

45
40
35
30
25
Nabil
20
NIBL
15
10
5
0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16

The above table shows the return on equity from 2007/08 to 2015/16.The average ROE
of Nabil bank is 31.69 and the average ROE of NIBL is 27.72. The ROE of both the
banks have been quite inconsistent over the years. The ROE of Nabil bank has dropped
down from 30.62 t0 20.59 from 2007/08 to 2015/16. Likewise, the ROE of NIBL has also
dropped down from 28.58 to 25.09 with 9 years of period. The lowest ROE of Nabil bank
is in 2015/16 and for NIBL is on 2011/12. The significant reason for such a low ROE of
Nabil bank in 2015/16 is the significant increase in Shareholder’s Equity and fall in Net
Income. The net income was low because of low operating income and increase in staff
bonus.

4.8 Return on Assets

Return on assets (ROA) is an indicator of how profitable a company is relative to its total
assets. ROA gives an idea as to how efficient management is at using its assets to
generate earnings. Calculated by dividing a company's annual earnings by its total assets,
ROA is displayed as a percentage. Sometimes this is referred to as "return on
investment".

16
 Table No.8

Year Nabil Bank Nepal Investment

Net Income Total Assets Return Net Income Total Assets Return
on on
Assets Assets

2007/08 746468394 37,132,759,149 2.01 696731516 38873306084 1.79

2008/09 1031053908 43867397504 2.35 900619072 53010803126 1.69

2009/10 1139099399 52,079,725,697 2.18 1265949588 57305413482 2.2

2010/11 1337745485 58141437401 2.30 1176641031 58356827501 2.01

2011/12 1696276110 63,200,298,255 2.68 1039275613 65756231954 1.5

2012/13 2226942126 73343593148 3.03 1915027932 73152154761 2.61

2013/14 2331446120 87,274,619,480 2.67 1939612344 86173927574 2.25

2014/15 2819333752 115985701411 2.43 1961852380 104345436413 1.88

2015/16 2093813607 127,300,195,373 1.64 2550883563 129782705314 1.96

Return on Assets

Figure: 8

Return on Assets

17
 3.5

2.5

2
Nabil
1.5 NIBL

0.5

0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16

The above figure shows the ROA of Nabil Bank and NIBL for 9 years from 2007/08 till
2015/16. ROE for Nabil bank has improved till 2012/13 but dropped down significantly
until 2015/16. The sudden drop in 2015/16 is caused because of decrease in Net Income
which was triggered by increase in staff bonus and drop down in operating income of the
bank. Likewise, the ROA for NIBL is very interesting with many ups and downs within
few years. There was a sharp increment on ROA in 2012/13. The reasons behind were
increment in net interest income and increase in loss provision written back. These were
the main reason for increasing the net income.

4.9 Profit Margin

Profit margin is part of a category of profitability ratios calculated as net income divided
by revenue, or net profits divided by sales. Net income or net profit may be determined
by subtracting all of a company’s expenses, including operating costs, material costs
(including raw materials) and tax costs, from its total revenue. Profit margins are
expressed as a percentage and, in effect, measure how much out of every dollar of sales a
company actually keeps in earnings. A 20% profit margin, then, means the company has
a net income of $0.20 for each dollar of total revenue earned.

Table No. 9

18
 Profit Margin

Year Nabil Bank Nepal Investment

Net Income Sales Profit Net Sales(‘000) Profit
Margin( Income Margin(%)
%
2007/08 746468394 15657100 4.76 696731516 174820 3.98

2008/09 1031053908 21514600 4.79 900619072 27145500 3.31

2009/10 1139099399 27816000 4.09 126594958 36250400 3.49

8
2010/11 1337745485 32902800 4.06 117664103 40689600 2.89
1
2011/12 1696276110 38765600 4.37 103927561 41665200 2.49
3
2012/13 2226942126 42731700 5.2 191502793 42510400 4.5
2
2013/14 2331446120 47522900 4.9 193961234 47369200 4.09
4
2014/15 2819333752 55829600 5.04 196185238 53092900 3.69
0
2015/16 2093813607 66995800 3.12 255088356 67033400 3.8
3

Figure: 9

Profit Margin

19
 6

3 Nabil
NIBL
2

0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16

The above table shows the Profit Margin from 2007 till 2015. The profit margin of both
the bank seems to be inconsistent for 9 years. The Profit margin of Nabil bank started
from 4.76% in 2007/08 and ended up in 3.12% in 2015/16 which in about 34% drop from
where it started. Likewise NIBL started its profit margin from 3.98% and ended in 3.8
which is somehow close to each other. The average profit margin of Nabil bank is 4.48%
and that of NIBL is 3.56%. It is seen from the above figure that there are some significant
changes for both banks i.e. in 2012/13 for NIBL and 2015/16 for Nabil bank. The reason
behind increase in profit margin for NIBL was increase in loss provision written bank and
also the net interest income was hugely increased that year. The reason for fall in profit
margin of Nabil bank was the significant decrease in net income due to increase in staff
bonus and the bank could not produce operating income than the previous year.

20
 4.10 Dividend Payout Ratio

The dividend payout ratio is the percentage of earnings paid to shareholders in dividends.
The dividend payout ratio provides an indication of how much money a company is
returning to shareholders, versus how much money it is keeping on hand to reinvest in
growth, pay off debt or add to cash reserves. This latter portion is known as retained
earnings.

Table No. 10

Dividend Payout Ratio

Year Nabil Bank Nepal Investment

Dividend Earnings per Dividend Dividend Earnings per Dividend
per share share Payout per share share Payout
Ratio Ratio
(%) (%)
2007/08 60 108.31 0.55 57.87 7.5 0.12

2008/09 35 106.76 0.32 37.42 20 0.53

2009/10 30 78.61 0.38 52.55 25 0.47

2010/11 30 70.67 0.42 48.84 25 0.51

2011/12 40 83.57 0.47 27.6 5 0.18

2012/13 40 95.14 0.42 46.2 25 0.54

2013/14 45 95.14 0.47 40.7 25 0.61

2014/15 6.84 57.24 0.11 30.9 1.7 0.05

2015/16 15 59.27 0.25 29.3 21 0.71

21
 Figure: 10

Dividend Payout Ratio

0.8
0.7
0.6
0.5
0.4
Nabil
0.3 NIBL

0.2
0.1
0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16

The above table is showing the dividend payout ratio of Nabil Bank and NIBL. The
dividend payout ratio is between 0 and 1.The dividend payout ratio has been almost
consistent for the Nabil Bank until 2013/14 whereas in 2014/15 the dividend payout ratio
drops more than 50%. The latest payout ratio of Nabil bank is 0.25 in 2015/16. The
dividend payout ratio of NIBL is fluctuating over 9 years. It starts with 0.12 where it
increases to 0.53 next year. Again in 2011, the dividend ratio drops sharply from 0.51 to
0.18 which seems to be just opposite in Nabil Bank. The examples continue in 2014 as
well, when the dividend payout ratio drops to 0.05 from 0.61 which again increased to
0.71 in 2015/16.

22
 4.11 Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year
relative to its share price. Dividend yield is represented as a percentage and can be
calculated by dividing the dollar value of dividends paid in a given year per share of
stock held by the dollar value of one share of stock.

Table No. 11

Dividend Yield

Year Nabil Bank Nepal Investment

Dividend Price per Dividend Dividend Price per Dividend
per share Share Yield per share Share Yield
(%) (%)
2007/08 60 5275 1.13 57.87 2450 0.30

2008/09 35 4899 0.71 37.42 1388 1.44

2009/10 30 2384 1.25 52.55 705 3.54

2010/11 30 1252 2.39 48.84 515 4.85

2011/12 40 1355 2.95 27.6 511 0.97

2012/13 40 1815 2.2 46.2 784 3.18

2013/14 45 2535 1.77 40.7 960 2.60

2014/15 6.84 1910 0.35 30.9 704 0.24

2015/16 15 2344 0.63 29.3 1040 2.01

Figure No. 11

23
 Dividend Yield

3 Nabil
NIBL
2

0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16

The above table shows the dividend yield of Nabil and Nepal Investment Bank for 9
years of period from 2007/08 to 2015/16. The dividend yield of Nabil bank seems to be
tentatively around 1 till 2009/10. The yield increased to average of 2.5 for following next
3 years till 2012/13. The yield dropped down to less than 1 from 2014/15 to 2015/16. The
main reason behind this is the increase in dividend per share.

The dividend yield of NIBL starts with 0.3 in 2007/08 which rises up to 4.85 which is
about more than 15 times from the beginning. The yield again drops more than 70% and
rises to 3.18. 2015/15 is again seen with the drop in yield mainly because of drop in share
price. The latest dividend yield of the bank is 2.01.

24
 4.12 Loan to Deposit Ratio

The loan-to-deposit ratio (LTD) is a commonly used statistic for assessing a bank's
liquidity by dividing the bank's total loans by its total deposits. This number is expressed
as a percentage. If the ratio is too high, it means that the bank may not have enough
liquidity to cover any unforeseen fund requirements, and conversely, if the ratio is too
low, the bank may not be earning as much as it could be.

Table No. 12

Loan To Deposit Ratio

Year Nabil Bank Nepal Investment

Deposit Sales Loan Deposit Sales Loan
to to
deposi depos
t ratio it
(%) ratio

2007/0 31915047467 2136505331 0.66 34451726191 2699665225 0.78

8 8 8
2008/0 37348255840 2758993304 0.73 46698100065 3624120655 0.77
9 1 8
2009/1 46410700628 3226887328 0.69 50094725497 4031830806 0.80
0 3 2
2010/1 43239393871 3803409755 0.87 50138122242 4109551451 0.81
1 4 9
2011/1 55023695253 4160568263 0.72 57010603789 4163699881 0.73
2 4 7
2012/1 63609808199 4636983457 0.72 62428845372 4640005369 0.74
3 1 3
2013/1 75388790862 5469164819 0.72 73831375915 5201976510 0.70
4 4 3

25
2014/1 10423791008 6550192516 0.62 90641486765 6621923201 0.73
5 3 4 5

2015/1 11026727174 7610601688 0.69 10862664199 8546105097 0.78

6 9 1 4 6

Figure No. 12

Loan To Deposit Ratio

1
0.9
0.8
0.7
0.6
0.5 NIBL
0.4 NIBL
0.3
0.2
0.1
0
2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/
08 09 10 11 12 13 14 15 16

The above table shows the loan to deposit ratio of Nabil Bank and NIBL from 2007/08
till 2015/16. The loan to deposit ratio of Nabil bank has been maintained between 0.62
and 0.87 fluctuating over 9 years of period. The average loan to deposit ratio of Nabil
Bank is 0.72 for 9 years. Likewise the trend of NIBL is almost the same. It has
maintained its loan to deposit ratio between 0.7 and 0.81. The average ratio of NIBL bank
is 0.76 between 2007/08 and 2015/16.

4.13 Regression

26
In statistical modeling, regression analysis is a statistical process for estimating the
relationships among variables. It includes many techniques for modeling and analyzing
several variables, when the focus is on the relationship between a dependent variable and
one or more independent variables (or predictors). More specifically, regression analysis
helps on understand how the typical value of the dependent variable changes when any
one of the independent variables is varied, while the other independent variables are held
fixed. Most commonly, regression analysis estimates the conditional expectation of the
dependent variable given in the independent variables- that is, the average value of the
dependent variable when the independent variables are fixed. Less commonly, the focus
is on the quantile, or other location parameter of the conditional distribution of the
dependent variable given the independent variables. In regression analysis, it is also of
interest to characterize the variation of the dependent variable around the regression
function which can be described by a probability distribution. A related but distinct
approach is necessary condition analysis, which estimates the maximum value of the
dependent variable for a given value of the independent variable in order to identify what
value of the independent variable is necessary but not sufficient for a given value of the
dependent variable.

Regression analysis is widely used for prediction for forecasting, where its use has
substantial overlap with the field of machine learning. Regression analysis is also used to
understand which among the independent variables are related to the dependent variable,
and to explore the forms of these relationships.

4.13.1 Regression between Loan, EPS and Number of Share

A. For Nabil Bank

Table No: 13

Year Loan ('000) No. of Share EPS

2007/08 156571 12039154 108.31
2008/09 215146 24070689 106.76
2009/10 278166 24090977 78.61
2010/11 329028 24090977 70.67

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 2011/12 387656 30129242 83.57
2012/13 423717 37680077 95.14
2013/14 475229 41467075 95.14
2014/15 558296 47712035 57.24
2015/16 669958 72555098 59.27

Regression Statistics
Multiple R 0.755109
R Square 0.57019
Adjusted R
Square 0.42692
Standard Error 14.39237
Observations 9

ANOVA
df SS MS F Significance F
Regression 2 1648.763 824.3815 3.979823 0.079401837
Residual 6 1242.841 207.1402
Total 8 2891.604

Standard Upper Lower Upper

Coefficients Error t Stat P-value Lower 95% 95% 95.0% 95.0%
Intercept 120.5039 14.0761 8.560889 0.000139 86.06096166 154.9469 86.06096 154.9469
Loan ('000) -0.00016 0.000111 -1.41231 0.207565 -0.000427062 0.000114 -0.00043 0.000114
No. of
Share 6.89E-07 1.02E-06 0.673082 0.525957 -1.81553E-06 3.19E-06 -1.8E-06 3.19E-06

The adjusted R square calculated above is 0.4269 which informs us that in total variations
in dependent variables, about 42.69% is caused by the independent variables. If there is
1% change in the independent variable, dependent variable will vary by about 42.69%.

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The significance of this regression is 0.0794. Less the significance, better the regression.
It shows us that the regression is 7.9% insignificant.

It shows that loan has negative relation with EPS and number of share has positive
relation with the EPS. If the loan increases by 1 then EPS decreases by -0.00156286 and
if number of share increases by 1, EPS will decrease by 6.89E-07. The p-value of loan
and no of share shows us the percentage of insignificance in coefficient. It shows that
loan is 20.75% insignificant and number of share is 52.95% insignificant. Lower p-value
is considered the best for the regression.

B. For NIBL Bank

Table: 14

Year Loan ('000) No. of Share EPS

2007/08 174820 6892160 57.87
2008/09 271455 9657470 37.42
2009/10 362504 14491240 52.55
2010/11 406896 20297694 48.84
2011/12 416652 20297694 27.6
2012/13 425104 24368414 46.2
2013/14 473692 30471684 40.7
2014/15 530929 36576540 30.9
2015/16 670334 47565690 29.3

Regression Statistics
Multiple R 0.678043128
R Square 0.459742484
Adjusted R
Square 0.279656645
Standard Error 9.186512279
Observations 9

ANOVA
Significance
df SS MS F F
Regression 2 430.8899751 215.445 2.552907 0.157689

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 Residual 6 506.3520471 84.39201
Total 8 937.2420222

Lower Upper Lower Upper

Coefficients Standard Error t Stat P-value 95% 95% 95.0% 95.0%
Intercept 65.51839706 17.65974122 3.710043 0.009969 22.30657 108.7302 22.30657 108.7302
Loan -7.11569E-
('000) 05 9.87877E-05 -0.7203 0.498427 -0.00031 0.000171 -0.00031 0.000171
No. of
Share 2.24575E-07 1.07911E-06 0.208111 0.842026 -2.4E-06 2.87E-06 -2.4E-06 2.87E-06

The adjusted R square calculated above is 0.2796 which means that in total variations
caused in dependent variables, independent variable is responsible for 27.96%. If there is
1% change in the independent variable, dependent variable will vary by about 27.96%.
The significance of this regression is 0.1576. Less the significance, better the regression.
It shows us that the regression is 15.76% insignificant.

It shows that loan has negative relation with EPS and number of share has positive
relation with the EPS. If the loan increases by 1 then EPS decreases by -7.11569E-05 and
if number of share increases by 1, EPS will decrease by 2.24575E-07. The p-value of
loan and no of share shows us the percentage of insignificance in coefficient. It shows
that loan is 49.84% insignificant and number of share is 84.20% insignificant. Lower p-
value is considered the best for the regression.

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 4.13.2 Regression between Share price, Earnings Growth and Earnings per share

A. For Nabil Bank

Table:15

Price
of
Year Share PEG EPS
2007/0
8 5275 0 108.31
2008/0
9 4899 7.93 106.76
2009/1
0 2384 0.89 78.61
2010/1
1 1252 0.42 70.67
2011/1
2 1355 1.91 83.57
2012/1
3 1815 -1.08 95.14
2013/1
4 2535 -0.67 95.14
2014/1
5 1910 -1.32 57.24
2015/1
6 2344 -2.13 59.27

Regression Statistics
Multiple R 0.719774
R Square 0.518075
Adjusted R
Square 0.357433
Standard Error 15.23996
Observations 9

ANOVA
Significance
df SS MS F F
Regressio
n 2 1498.067 749.0335 3.22503 0.111928
Residual 6 1393.537 232.2562
Total 8 2891.604

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 Standard Lower Upper Lower Upper
Coefficients Error t Stat P-value 95% 95% 95.0% 95.0%
Intercept 63.32372 11.7665 5.381695 0.001693 34.53213 92.11532 34.53213 92.11532
Price of
Share 0.007384 0.004249 1.737617 0.132948 -0.00301 0.017781 -0.00301 0.017781
PEG 1.562229 2.072637 0.75374 0.479529 -3.50933 6.633789 -3.50933 6.633789
The adjusted R square calculated above is 0.0.3574 which informs us that in total
variations in dependent variables, about 35.74% is caused by the independent variables.
Price of share and Price Earnings growth has only 35.74% effect on the change in
Earnings Per share. If there is 1% change in the independent variable, dependent variable
will vary by about 35.74%. The significance of this regression is 0.1119. Less the
significance, better the regression. It shows us that the regression is 11.19% insignificant
i.e. the regression is 88.81% significant.

It shows that price of share has positive relation with EPS and price earnings growth also
has positive relation with the EPS. If the Price of share increases by 1 then EPS also
increases by 0.00738 and if price earnings growth increases by 1, EPS will increase by
1.5622. The p-value of loan and no of share shows us the percentage of insignificance in
coefficient. It shows that price of share is 13.29% insignificant and price earnings growth
is 47.95% insignificant. Lower p-value is considered the best for the regression.

B. For NIBL Bank

Table: 16

Year Price of Share PEG EPS

2007/08 2450 0 57.87
2008/09 1388 2.99 37.42
2009/10 705 0.21 52.55
2010/11 515 0.49 48.84
2011/12 511 -0.24 27.6
2012/13 784 2.03 46.2
2013/14 960 -0.6 40.7
2014/15 704 6.68 30.9
2015/16 1040 -0.63 29.3

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 Regression Statistics
0.49561
Multiple R 9
0.24563
R Square 8
Adjusted R -
Square 0.00582
10.8552
Standard Error 6
Observations 9

ANOVA
Significanc
df SS MS F eF
Regressio 230.222 115.111 0.97687
n 2 6 3 3 0.429278
707.019 117.836
Residual 6 4 6
Total 8 937.242

Standard Lower Upper Lower Upper

Coefficients Error t Stat P-value 95% 95% 95.0% 95.0%
Intercept 34.74215 7.835534 4.433922 0.004404 15.56929 53.91501 15.56929 53.91501
Price of
Share 0.007595 0.006373 1.191866 0.278313 -0.008 0.023189 -0.008 0.023189
PEG -0.92327 1.622947 -0.56888 0.590079 -4.89448 3.047943 -4.89448 3.047943

The adjusted R square calculated above is 0.00582 which informs us that in total
variations in dependent variables, about 0.582% is caused by the independent variables.
Price of share and Price Earnings growth has only 0.582% effect on the change in
Earnings Per share. If there is 1% change in the independent variable, dependent variable
will vary by about 0.582%. The significance of this regression is 0.4292. Less the
significance, better the regression. It shows us that the regression is 42.92% insignificant
i.e. the regression is 57.08% significant.

It shows that price of share has positive relation with EPS and price earnings growth has
negative relation with the EPS. If the Price of share increases by 1 then EPS also
increases by 0.00738 and if price earnings growth increases by 1, EPS will decrease by -
0.9232. The p-value of loan and no of share shows us the percentage of insignificance in

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coefficient. It shows that price of share is 2.3% insignificant and price earnings growth is
59% insignificant. Lower p-value is considered the best for the regression.

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