FINANCIAL POSITION ANALYSIS OF

GLOBAL IME BANK LIMITED

Project Work Report Proposal

By
Ram
Symbol No. :
TU Reg No. :
Mahakavi Devkota Campus

Submitted to
Research Management Cell
Mahakavi Devkota Campus

In Partial Fulfillment of the Requirement of the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

April, 2023
1. Introduction

1.1.Background of the Study

To depict the performance of any firm financial analysis is essential. Past performance is often a
good indicator of future performance. Therefore, all parties are interested to know the trend of
past variable, such as sales, expenses, net income, cash flow and return on investment and so on.
Financial analysis is the process of critical judgment of detail accounting information given in
the financial statements.

Financial analysis is the process of determining the significant operation and financial
characteristics of a firm from accounting data .It shows the relationship between the various
components, which can be finding in the balance sheet, and profit &loss statement (Gautam,
2020).

Simply, financial analysis is an act of interpreting financial statement with specific tools and
purposes. It is also a study of relationship among the various financial factors in business as
disclosed by a single set of statements and a study of the trends of these factors as shown in a
series of statements of the firm on which the investment decision is going to be made. Basically,
this analysis is to be made for a good investment decision. Financial analysis provides insight
about what company has done in terms of different financial indicators like liquidity,
profitability, turnover, assets growth, capital structure, earnings and dividend and so on. This
analysis provides much information regarding to individual assets as well as group of financial
assets and market (Maharjan, 2016).

Financial statement report is a portion of the Bank/Company both at a point in a time and its
operation over some past period. However, the real value of financial statements lies in the fact
that they can be used to help others to predict the banks future earnings and dividends. From an
investor‟s standpoint, predicting the future is what financial statement‟s analysis all about. While
from management‟s point standpoint, financial statement is used both as way to anticipate future
condition, and more important as a starting point for planning action that will determine the
future course of action.
“Financial analysis is the process of identifying the financial strength and weakness of the firm
by properly establishing relationship between the items of balance sheet and profit and loss
account.”

“Financial analysis is the process of preparing financial statement in accordance with generally
accepted principal to ascertain information concerning the magnitude, timing and risking of
future cash flow.”

1.2 Profile of Global IME Bank Limited.

Global IME Bank Ltd. (GIBL) emerged after successful merger of Global Bank Ltd (an “A”
class commercial bank), IME Financial Institution (a “C” class finance company) and Lord
Buddha Finance Ltd. (a “C” class finance company) in year 2012. Two more “B” class
development banks (Social Development Bank and Gulmi Bikas Bank) merged with Global IME
Bank Ltd in year 2013. Later, in the year 2014, Global IME Bank made another merger with
Commerz and Trust Bank Nepal Ltd. (an “A” class commercial bank). During 2015-16, Global
IME Bank Limited acquired Pacific Development Bank Limited (a "B" Class Development
Bank) and Reliable Development Bank Limited (a "B" Class Development Bank). During 2019-
20, Global IME Bank Limited acquired Hathway Finance Limited (a “C” class finance company)
and merged with Janata Bank Nepal Limited (an “A” class commercial bank).

Global Bank Limited (GBL) was established in 2007 as an „A‟ class commercial bank in Nepal
which provided entire commercial banking services. The bank was established with the largest
capital base at the time with paid up capital of NPR 1.0 billion. The paid up capital of the bank
has since been increased to NPR 23.79 billion. The bank's shares are publicly traded as an 'A'
category company in the Nepal Stock Exchange.

It is in line with the aim of the bank to be “The Bank for All” by giving necessary impetus to the
economy through world class banking service.

For the day to day operations, the bank has been using the world renowned FINACLE software
that provides real time access to customer database across all branches and corporate locations of
the bank. This state of the art customer database has also been linked to a Management
Information System that provides easy reach to all possible database information for balanced
and informed decision making. A disaster recovery system (DRS) of the Bank has also been
established in the Western Region of Nepal (200 kms west of Kathmandu).

The bank has been able to achieve excellent diversification of its assets. A well balanced
distribution of exposure in areas of national interest has been possible through long term
forecasting and timely strategic planning. The bank has diversified interests in hydro power,
manufacturing, textiles, services industry, aviation, exports, trading and microfinance projects,
just to mention a few.

The exemplary performance of the bank in these last sixteen years has elevated it to a premier
status in the industry. The bank has been handling government transactions and is officially
among one of the few commercial banks trusted by the Government in handing Government
revenue transactions of various offices. The bank has been able to earn the trust and confidence
of the public, which is reflected in the large and ever expanding customer base with more than
2,600,000 number of accounts in deposit base and above 50,000 in credit. Through all this the
bank has been able to truly achieve its vision of being “The Bank for All”. Even with all this
success, the bank remains internally focused towards manpower development, product
innovation and process innovation etc., to have a strong and solid foundation, which are ongoing
and continuous improvement initiatives undertaken by the management and staff alike..

1.3 Objective of the Study

General Objective

The main objective of the study is to analyze the Global IME Bank Limited‟s financial position.
Based on the analyze liquidity position, the study will suggest the liquidity need and its
management for the current year.

Specific Objectives

i) To find out the financial performance of the bank.

ii) To evaluate the profitability and use of found sources of the Global IME Bank Limited.
1.4 Rationale of the Study

This report will be prepared to analyze the financial position of Global IME Bank Limited. The
analysis will encompass the period from 2017/18 to 2021/22. This study will help the bank to
observe the trend of the financial position held during those periods. Moreover, this study will
evaluate the role of short-term obligations and the bank's ability to pay the currently maturing
obligations.

The study will elaborate and analyze the financial position of Global IME Bank Limited. This
study will assist and help other researchers who are willing to write similar research reports.
Furthermore, the study will analyze and provide constructive solutions to the bank, which will
make better use of the bank's resources.

1.5 Review of Literature

Financial Analysis is an evaluation of both a firm‟s past financial performance and its prospectus
for the future. Financial statement analysis involves the calculation of various ratios. In
mathematics, a ratio is the relationship between two quantitative figures. The ratio analysis is the
financial tool by which the financial strength and weakness are measured by relating two
accounting data. Financial statement analysis is helpful to the decision maker for finding out
favorable or unfavorable situation of a business concern. Therefore, financial analysis reflects the
financial position of a firm, which is the process of determine the operational and financial
characteristics of a firm. Different types of financial statement analysis can be used on the basis
of our objectives.

The main function of financial analysis is the pinpointing of the strengths and weaknesses of a
business undertaking by regrouping and analysis of figures contained in financial statements, by
making comparison of various components and by examining their content. This can be used by
financial managers as the basis to plan future financial requirements by means of forecasting and
budgeting procedures.

Financial analysis is process of identifying the financial strength & weakness of the firm by
properly establishing relationship between the items of the B/S, which represents analysis
snapshot of the firm‟s financial position analysis at analysis moment in time and next income
statement, that depots analysis summary of the firm‟s profitability overtime.

Significance of analysis lies on the objectives of financial analysis of any firm. Different group
associated with the concern perceive the facts discovered by the analysis differently. The facts
and the relationships concerning managerial performance, corporate efficiency, financial
strengths & weaknesses and credit worthiness are interpreted based on objective in the hand.
Such an analysis leads mgmt of an enterprise to take crucial decisions regarding operative
policies, investment value of the firm inter-financial control system & bargaining strategy for
funds from external sources.

The users of financial statements of a bank require relevant, reliable, and comparative
information to evaluate the financial performance and position and hence make economic
decision regarding the bank.

B/S, P/L and the accompanying notes are the most widely aspects of financial statements of the
bank. The bank‟s B/S includes financial claims as liabilities in the form of deposit and as assets
in the form of loans. Fixed assets appear in small portion out of the total assets. Financial
innovations, which are generally contingent in nature, are considered as off B/S items. Interest
received on loans, advances & investment and paid on deposit liabilities are major components
of P&L a/c. The other sources of income are fee, commission and discounts, foreign exchange
income, dividend on investment, other service charge etc.

The fundamental of the analytical technique is to simplify or reduce the data under review to the
understandable terms. There are various tools and technique of financial statement analysis, each
of which is used according to purpose for which the analysis is carried out.

1.5.1 Review of books

In this section, effort has been made to examine and review of some related books. Various
studies have been conducted on the financial performance of commercial bank and few are in
joint venture banks.

According to the Surendra Pradhan, in his book entitled “Basics of Financial Management”
financial analysis is to analyze the achieved statements to see if the results meet the objectives to
identify the problems, if any in the past or present and likely to be in the future, and to provide
recommendation to solve the problems (Pradhan, 1996).

E.A. Helfert has stated in his book “Technique of Financial Analysis” that, it is both an
analytical and judgmental process that helps answer questions that have been posed. Therefore, it
means to end, apart from the specific analytical answer, the solutions to financial problems and
issues depend significantly on the views of the parties involved in the related importance of the
issue and on the nature and reliability of the information available (Helfert E. , 1992)

1.5.2 Review of journal and articles

Narayan Prasad Poudel has said that the users of the financial statements of bank need relevant,
reliable comparable information, which assists them in evaluating the financial position, and
performance of the bank and which is useful to them in making economic decisions. Bank
regulating bodies, stock analysis banks, shareholders, directors, and government have needs of
different users of financial statements. The purpose of the analysis of financial statements
depends on the needs of the user. The bank regulators seek to analyze the financial statements
from safety and stability point of view and thereby protecting the interest of depositors and
public whereas the bank analyses from shareholders point of view (Poudel, 2053).

1.5.3 Review of Thesis

A study has considered by Sangita Shakya entitled Analysis of financial performance of Everest
Bank Limited, for the period from the year 2010 to 2015, the finding drawn from the study are
Everest Bank limited is more efficient in case of liquidity as well as it is more levered. EBL is in
condition from the aspect of capital adequacy, activity and profitability ratios. Study showed
positive correlation between loans and advances to total debts of EBL. According to the trend
analysis, profit before tax of EBL has been increasing at the higher rate (Sangita, 2016). Shrestha
has conducted thesis entitled “Financial performance analysis of Commercial banks of SCB and
EBL. The main objective was to study and compare of the financial performance of SCB and
EBL by using various techniques of financial analysis, to evaluate the liquidity, assets
management efficiency, profitability and risk position of SCBNL and EBL, to determine the
growth rate of both the bank in terms of deposit, loan and advances, investment and profitability
and to analyze the financial strengths and weakness of the sample banks. It found that Bank can
earn more by adding debt in its capital structure, EPS and DPS should increase by increasing
MPS, CRR are below the standard of NRB directives and Unsatisfactory liquidity level.

1.6. Research Methodology

For preparing this project, I will research the official page of Global IME Bank Limited.
Investigating Global IME Bank Limited's audit reports various data from the balance sheet,
profit and loss account and financial statement of Global IME Bank Limited provided by NRB.
After this financial tool will be used to perform and explain various aspects of Global IME Bank
Limited.

1.6.1. Research Design

Research design indicates a plan action to be carried out in connection with proposed research
work. The research design will be less descriptive but more prescriptive in this study because the
historical secondary will be mainly used for analysis. For the analytical purpose, secondary data
extracted from the annual report published by the related bank, financial statements of the bank
by Nepal Rastra Bank, review materials etc will be used. Such data‟s, information will be
processed through various processes like editing, tabulating, calculating and result will be
interpreted in the form of ratios, percentages and figures for clear view.

1.6.2. Sources of Data

Mainly the study will conducted on the basis of secondary data. The data related to the trend
analysis of ratios of Global IME Bank Limited will be obtained with the help of Global IME
Bank Limited balance sheets from 2017/18 to 2021/22. The supplement data and information eill
be acquired from journals published from various institutions. The sources of data are elaborated
as below.

 Secondary data collection

The data which are originally collected but obtained from some published or unpublished
sources are secondary data. This type of data is not original in character. The secondary data are
collected from secondary sources. These secondary sources consist of two sources.

a) Internal Sources
 Annual general meeting of Global IME Bank Limited of year 2074/75 to 2078/79.
 Interest chart rate
 Brochure
 Booklets etc.

b) External Sources

 Books and publications.

 Journal article, articles from newspaper
 Local newspaper
 Previous fieldwork report etc.

1.6.3. Data processing

The collected data will be processed for analysis. Various table and calculation will be shown in
the study in order to come to reliable conclusions. Finding and results will be compared and
interpreted.

While processing data in the table and charts following tools will be used

A. Liquidity Ratio

Liquidity ratio measures the ability of the firm to meet its current obligations. A commercial
bank must maintain its satisfactory liquidity position to meet the credit need of the community.
Liquidity provides honor strength health and prosperity to an organization. It is extremely
essential for an organization to meet its obligations as they become due. A firm should ensure
that it has not lack of liquidity and also that it is not too much highly liquid.

i Current Ratio: This ratio shows the bank‟s short-term solvency. It shows the ratio of
current assets over the current liabilities. This ratio can be computed by dividing the total current
assets by total current liabilities which can be presented as:

Current Assets
Current Ratio =
Current Liabilitie s
Higher ratio indicates the strong short-term solvency position and vice-versa.
ii Cash and Bank Balance to Total Deposits Ratio: Cash and bank balance is said to be
first line defense of every bank. The ratio between the cash and bank balance and total deposit
measures the ability of a bank to meet the unanticipated call on all types of deposit. Higher the
ratio greater is the ability to meet the sudden demand of deposit. But every ratio is not desirable
since bank has to pay interest on deposit. This also maximizes the cost of fund to the bank.
Cash & bank balance
Cash and bank balance to total deposit ratio =
Total deposits

Where,
Cash and bank balance is composed up of cash on hand including foreign cheques and other cash
item; balance with domestic banks and aboard. Deposits include current, saving, fixed money at
short call notice and other types of deposits.

iii Cash and Bank Balance to Current Assets Ratio: This ratio shows the bank's liquidity
capacity on the basis of cash and bank balance that is the most liquid assets. High the ratio
indicates the bank's ability to meet the daily cash requirements of their customer deposits and
vice versa. But the high ratio is not preferred as the bank has to pay more interest on deposit and
will increase the cost of fund. Low ratio is also very dangerous, as the bank may not be able to
make the payment against the cheques presented by the customers. We have,
Cash & bank balance
Cash and bank balance to current assets ratio =
Current assets
B. Assets Management Ratio

A set of ratio which measure how efficiently a firm is managing its assets and whether or not the
level of those assets is properly related to the level of operation. In this study this ratio is used to
indicate how effectively the selected banks have arranged and invest their limited resources. The
assets management ratios measure how effectively the firm is managing its assets. These ratios
are designed to answer this question; does the total amount of each type of assets as reported on
the balance sheet seem reasonable or not. If a firm has excessive investments in assets, then its
capital cost is unduly high and its stock price is suffer.
i Loan and Advances to Total Deposits Ratio: This ratio is calculated to find out how
successfully the selected banks are utilizing their collections or deposits on loan and advances for
the purpose of earning profit. We have,

Loan and Advances to Total Deposits Ratio  Loan and Advances

Total Deposits

ii Total Investment to Total Deposits Ratio: Investment is one of the major sources of
earning profit. It shows how properly firm's deposit has been invested on government securities
and shares and debentures of other companies.

Total Investment to Total Deposits Ratio  Total Investment

Total Deposits

iii Return on Assets: Return on total assets ratio measures the profit earning capacity of the
banks by utilizing available resources i.e. total assets. If the bank‟s well managed and efficiently
utilized its assets, it will get higher return. Maximizing taxes, this in the legal options available
will also improve the return. It is computed as:

Return on Assets =

iv. Return on Loan and Advances Ratio: Return on loan and advances ratio shows how
efficiently the banks have utilized their resources to earn good return from provided loan and
advances. This ratio is computed dividing net profit (loss) by the total amount of loan and
advances and can be mentioned as,

Return on Loan and Advances Ratio =

v. Return on Equity(ROE): The return on equity ratio or ROE is a profitability ratio that
measures the ability of a firm to generate profits from its shareholders investments in the
company. In other words, ROA shows how much profit each dollar of common stockholder‟
equity generates.

ROE=

C. Average Mean
An average is a single value related from a group of values to represent them in someway, a
value, which is supposed to stand for whole group of which it is a part, as typical of all the values
in the group. There are various types of averages. Arithmetic mean (AM, Simple & Weighted),
median, mode, geometric mean, harmonic mean are the major types of averages.

Mathematically:

Arithmetic Mean (AM) is given by,

X 
X
n

Where, X = Arithmetic mean

∑x = Sum of all the values of the variable X

n = Number of observations

D. Standard deviation

The standard deviation measures the absolute dispersion. It is said that higher value of standard
deviation the higher the variability and vice versa. Karl Pearson introduced the concept of
standard deviation in 1823 A. D. and this is denoted by the small Greek letter (pronounced
sigma) the formula to calculate the standard deviation is given below:

 x2

N

Where, x = X  X 
Research Tool used:

Simple research tools have used to measure the financial status of the Global IME Bank Limited.
Data used in the study had been analyzed by using financial and statistical tools to achieve the
objective of the study.

Following tools were used for the analysis of the overall financial tools to achieve the objective
of the study.
i) Bar diagram
ii) Line diagram
iii) Percentage

1.7. Limitations of the study

This study will simply be conducted for the partial fulfillment of the requirement for the degree
of the bachelor in business studies (BBS). And only the secondary data will be used. The report
can have some mistakes which may cause misunderstanding of the results.

The other limitation of the study is listed below:

a. It cannot be compared with the ratios of other banks.

b. The results of the study will depend upon the validity of the data.
c. Financial ratio analysis will only be used to analyze quantitatively.
d. The study will cover the data of the annuals reports of the bank of only 5 years 2074/75-
2078/79.
e. The study will mainly be based on the secondary data, which will be derived from the
website.
f. The study will only fulfill the requirement for the degree of BBS, which can't cover all
the dimension of the subjects‟ matter, resources and time period which is also limited.

1.8. Organization of the Study

The study will be divided into three chapters

Chapter I: Introduction: This chapter will consist of background of the study, profile of the
organization, objectives of the study. Further various previous literatures on the similar topics
will be reviewed within this chapter. The methodology adopted to conduct the research will also
be mentioned. It will also include limitations of the study.

Chapter II: Result and Analysis: The results and analysis chapter will consist of various table
and figures representing the profitability of the bank and their interpretation will be done.
Chapter III: Summary and Conclusion: The final chapter will consist of the concluding
remarks and summary of the whole project.

Reference
Annex
 Refrences

Gautam, K. (2020). Financial Performance Analysis of Nepalese Financial Institutions in the

Framework of CAMEL. Janapriya Journal of Interdisciplinary Studies, 57-76.

Global IME Bank (2023). Annual Return of Global IME Bank.

https://globalimebank.com/reports/annual-report.html

Helfert, E. (1992). Technique of Financial Analysis. Jaico Publishing House.

Joshi, P. (2004). Fundamentals of Financial Management. Kathmandu: Asmita Publication.

Maharjan, P. (2016). Determinants of profitability of Nepalese commercial banks. Nepalese

Journal of Management, 35-59.

Myer, J.N. (1961), Financial statement Analysis, Prentice Hall: Englewood clifs.

Pant, P. (2017). Business Research Methods. Kathmandu: Buddha Academic Enterprise Pvt.Ltd.
Second Edition.

Poudel, N. (2053). Fianancial Statement Analysis: An approach to evaluate banks performance.

Kathmandu: NRB Samachar.

Pradhan, S. (1996). Basics of Financial Management. Educational Enterprises Pvt. ltd.

Sapkota, C. (2017). COMMERCIAL BANK MANAGEMENT . Kathmandu: Samjhana Publiaction

Pvt.Ltd.

Shrestha, Manohar Krishna (1980), Financial Management: Theory and Practice, Curriculum
Development Center, T.U.

Thapa, K. (2016). COMMERCIAL BANK MANAGEMENT. Kathmandu: Januka Book House

Pvt.Ltd.