A STUDY ON PROFITABILITY AND SOLVENCY

POSITION OF NABIL BANK LTD.

A Project Work Report

By

Kusum K.C.

TU Registered Number:7-2-402-62-2016
BBS 4th Year Symbol No: 4020002

SUNKOSHI CAMPUS

Submitted to:
The Faculty of Management
Tribhuvan University
Kathmandu

In the Partial Fulfillment of the Requirements for the Degree of

Sunkoshi, Sindhupalchok
January-2021
 DECLARATION

I hereby declare that the project work entitled “A study on profitability and solvency position
of Nabil Bank Limited” submitted to the Faculty of Management, Tribhuvan University,
Kathmandu is an original piece of work under the supervision of Mohan Prasad Subedi
faculty member, Sunkoshi Campus, Sunkoshi, Sindhupalchok, and is submitted in partial
fulfillment of the requirements for the award of the degree of Bachelor’s of Business Studies
(BBS). This project work report has not been submitted to any other university or institution
for the award of any Degree or Diploma.

………………………..

Kusum K.C.

Date: January 2021

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 Supervisor’s Recommendation

The project work report entitled “A study on profitability and solvency position of Nabil
Bank Limited” of Sunkoshi Campus, Sunkoshi, Sindhupalchok, is prepared under my
supervision as per the procedure and format requirements laid by the Faculty of Management,
Tribhuvan University, as partial fulfillment of the requirements for the award of the degree of
Bachelor’s of Business Studies (BBS). I, therefore, recommend the project work report for
evaluation.

……………………..

Sunkoshi Campus

Date: January 2021

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 Endorsement

We hereby endorse the project work report entitled “A study on profitability and solvency
position of Nabil Bank Limited” by Kusum K.C. of Sunkoshi Campus, Sunkoshi,
Sindhupalchok, submitted in partial fulfillment of the requirements for award of the Bachelor
of Business Studies (BBS) for external evaluation.

……………….….. ……………………..

Research Committee Campus Chief

Sunkoshi Campus Sunkoshi Campus

Date: January 2021 Date: January 2021

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 ABSTRACT

Financial position are widely used for modeling purposes both by practitioners and
researchers. The firm involves many interested parties, like the owners, management,
personnel, customers, suppliers, competitors, regulatory agencies, and academics, each
having their views in applying financial statement analysis in their evaluations. Practitioners
use financial ratios, for instance, to forecast the future success of companies, while the
researchers' main interest has been to develop models exploiting this ratio. Financial
statements are those statements which provide information about profitability and solvency
position of a business. It includes two statements, i.e., profit & loss a/c or income statement
and balance sheet or position statement. The income statement presents the summary of the
income earned and the expenses incurred during a financial year. Position statement
presents the financial position of the business at the end of the year. The income statement
presents the summary of the income earned and the expenses incurred during a financial
year. Position statement presents the financial position of the business at the end of the year.
This study will help in ascertaining whether adequate profits are being earned on the capital
invested in the business or not. It will also help in knowing the capacity to pay the interest
and dividend. To help the management to make a comparative study of the profitability of
various firms engaged in similar business.

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 ACKNOWLEDGEMENT

In the partial fulfillment of Bachelor of Business Studies as per the requirement of faculty of
management of the Tribhuvan University have prepare this fieldwork report on the A study
on profitability and solvency position of Nabil Bank Limited.

First and foremost, a lot of individual owe my sincere thanks that have helped me directly
and indirectly. I wish to express my sincere gratitude and heartily thank to teacher of
“Financial Institution and Markets”. I am also very much thankful for the team of Nabil Bank
Limited for their various support, valuable suggestion and active co-operation to complete
this report.

It is my pleasure to present this field work and study on profitability and solvency position of
Nabil bank. To present this true picture, statistical tools and diagram have been massively
used, based on its significance and just to meet for the purpose. All three parts of the study
have been arranged in sequence as require. I wish to my sincere appreciation and profound
gratitude to all who is one or another assisted me in the successful pursuit of the study.

I would like to express my sincere gratitude to all my teachers for their guidance, cooperation
and contribution of their valuable time in order to complete this report. Similarly, I would
like to extend my sincere thanks to our Campus Chief Krishna Prasad Acharya for their
cooperation in writing this report

Thank you,
Sincerely Yours,
Kusum K.C.

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 TABLE OF CONTENTS
Title Page i
Declaration ii
Supervisor’s Recommendation iii
Endorsement iv
Abstract v
Acknowledgement vi
Table of Contents vii-viii
List of Tables ix
List of Figures x
Abbreviations xi

CHAPTER I: INTRODUCTION
1.1 Background of the study 1-2
1.1.1 Introduction of Nabil Bank Limited 2-5
1.2 Problem Statement 5-6
1.3 Objectives of the Study 6
1.4 Rationale of the Study 6-7
1.5 Conceptual Review 7
1.5.1 Concept of Commercial Bank 7-9
1.5.2 Roles of Commercial Banks 9-10
1.5.3 Functions of Commercial Banks 10-11
1.6 Review of Previous Works 11
1.7 Research Gap 11-12
1.8 Research Methodology 12
1.8.1 Types of Research 13
1.8.2 Population and Sample 13-14
1.8.3 Types of Data 14
1.8.4 Data Collection Procedure 14-15
1.8.5 Instruments 15
1.8.6 Techniques of Analysis 15
1.8.7 Limitations 15-16

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CHAPTER II: RESULTS AND FINDINGS
2.1 Presentation of Data in Tables and Figures and Their Analysis 17
2.2 Financial analysis 17
2.2.1 Ratio Analysis 17
2.2.2 Return on Equity 18-19
2.2.3 Return on Total Assets 19-20
2.2.4 Earnings per Share 21-22
2.2.5 Profit Margin 22-23
2.2.6 Price Earnings Ratio 24-25
2.2.7 Operating Margin 25-26
2.2.8 NPL to Total Loans 27-28
2.2.9 Cost of Income Ratio 29
2.2.10 Loan to Total Deposit 30-31
2.2.11 Total Assets to Equity Ratio 32-33
2.3 Major Findings 39-40

CHAPTER III: DISCUSSION AND CONCLUSION

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 LIST OF TABLES
S.N Table Title Table Contents Page No.

1. Table no. 1 Particulars of 4-5

2 Table no. 2 Particulars of 5

3 Table no-2.1 Return on equity 18

4 Table no-2.2 Return on Total Assets 19-20

5 Table no-2.3 Earnings per Share 21

6 Table no-2.4 Profit Margin 22

7 Table no-2.5 Price Earnings Ratio 24

8 Table no-2.6 Operating Margin 26

9 Table no-2.7 NPL to Total Loans 28

10 Table no 2.8 Cost to Income Ratio 29

11 Table no 2.9 Loan to Total Deposit 31

12 Table no 2.10 Total Assets to Equity Ratio 32

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 List of Figures
S.N Figure Contents Page No.
Numbers

1 Figure no-2.1 Return on equity 19

2 Figure no-2.2 Return on Total Assets 20

3 Figure no-2.3 Earnings per Share 22

4 Figure no-2.4 Profit Margin 23

5 Figure no-2.5 Price Earnings Ratio 24

6 Figure no-2.6 Operating Margin 26

7 Figure no-2.7 NPL to Total Loans 28

8 Figure no 2.8 Cost to Income Ratio 29

9 Figure no 2.9 Loan to Total Deposit 31

10 Figure no 2.10 Total Assets to Equity Ratio 32

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 List of Abbreviations & Acronyms

% Percentage
& And
BS Bikramsambat
HBL Himalayan Bank Limited
NBL Nabil Bank Limited
NSBI Nepal State Bank of India
NBBL Nepal Bangladesh Bank Limited
EBL Everest Bank Limited
Ltd. Limited
NEPSE Nepal Stock Exchange
NG Nepal Government
No. Number
NRB Nepal Rastra Bank
P/L Profit and Loss
Pvt. Private
RBB RastriyaBanijya Bank
T.U Tribhuvan University
F/Y Fiscal Year
e.g. Example
Etc Etcetera
i.e. That is
Rs. Rupees

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