Comparative profitability analysis of commercial banks in nepal PDF
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A COMPARATIVE PROFITABILITY ANALYSIS OF
COMMERCIAL BANKS IN NEPAL
(With Reference to Everest Bank and Himalayan Bank Limited)
Submitted By:
KULESH PANTHI
Goldengate Int'l College
T.U. Regd. No: 7-2-725-20-2008
Exam Roll No: 4530004
A Thesis Submitted To:
Office of Dean
Faculty of Management
Tribhuvan University
In partial fulfillment of the Requirements for the Degree of
Masters of Business Studies (MBS)
Kathmandu, Nepal
2016
COMMERCIAL BANKS IN NEPAL
(With Reference to Everest Bank and Himalayan Bank Limited)
Submitted By:
KULESH PANTHI
Goldengate Int'l College
T.U. Regd. No: 7-2-725-20-2008
Exam Roll No: 4530004
A Thesis Submitted To:
Office of Dean
Faculty of Management
Tribhuvan University
In partial fulfillment of the Requirements for the Degree of
Masters of Business Studies (MBS)
Kathmandu, Nepal
2016
RECOMMENDATION
VIVA-VOCE SHEET
v
DECLARATION
I, hereby declared that the work reported in this thesis entitled "A Comparative
Profitability Analysis of Commercial Banks in Nepal (With Reference to Everest Bank
Limited and Himalayan Bank Limited)" submitted to office of the Dean, Faculty of
Management, Tribhuvan University, is my original work done in the form of partial
fulfillment of the requirement for the degree of master of business studies (MBS) under
the supervision of Research committee.............. ......................... ................ of Golden
Gate International College, T.U.
................................................
KULESH PANTHI
Golden Gate International College
Campus Roll No:.............
Exam Roll No: 4530004
T.U. Regd. No.: 7-2-725-20-2008
DECLARATION
I, hereby declared that the work reported in this thesis entitled "A Comparative
Profitability Analysis of Commercial Banks in Nepal (With Reference to Everest Bank
Limited and Himalayan Bank Limited)" submitted to office of the Dean, Faculty of
Management, Tribhuvan University, is my original work done in the form of partial
fulfillment of the requirement for the degree of master of business studies (MBS) under
the supervision of Research committee.............. ......................... ................ of Golden
Gate International College, T.U.
................................................
KULESH PANTHI
Golden Gate International College
Campus Roll No:.............
Exam Roll No: 4530004
T.U. Regd. No.: 7-2-725-20-2008
vi
ACKNOWLEDGEMENT
This Dissertation entailed “A Comparative Profitability Analysis of Commercial Banks in
Nepal (With Reference to Everest Bank Limited and Himalayan Bank Limited)” has been
prepared in partial fulfillment for the Masters of Business Administration (MBS) under
the Faculty of management, Tribhuvan university.
It is my privilege of getting helps and co-operation from different persons. It is not
possible to enumerate the names of all of them. However, it will be matter of injustice if I
forget the names of those personalities whose valuable suggestions and co-operation
motivated to complete this thesis.
First and foremost, I would like to offer special thank to my all teachers, who taught me
up to now. I would like to pay my sincere thanks to my thesis supervisor Mr. BIHAV
NEUPANE for incessant suggestion and guidance from the beginning to the end is really
appreciable effort. Their valuable support for the preparation of proposal to completion of
thesis is really praise worthy thing. I am extremely indebted to their valuable contribution
despite of their busy schedule.
Finally, I would like to extend thanks to my family members, my relatives and friends
who assisted me in different ways with their unconditional consistent support and
encouragement in every step of my thesis work.
Kulesh Panthi
Researcher
2016
ACKNOWLEDGEMENT
This Dissertation entailed “A Comparative Profitability Analysis of Commercial Banks in
Nepal (With Reference to Everest Bank Limited and Himalayan Bank Limited)” has been
prepared in partial fulfillment for the Masters of Business Administration (MBS) under
the Faculty of management, Tribhuvan university.
It is my privilege of getting helps and co-operation from different persons. It is not
possible to enumerate the names of all of them. However, it will be matter of injustice if I
forget the names of those personalities whose valuable suggestions and co-operation
motivated to complete this thesis.
First and foremost, I would like to offer special thank to my all teachers, who taught me
up to now. I would like to pay my sincere thanks to my thesis supervisor Mr. BIHAV
NEUPANE for incessant suggestion and guidance from the beginning to the end is really
appreciable effort. Their valuable support for the preparation of proposal to completion of
thesis is really praise worthy thing. I am extremely indebted to their valuable contribution
despite of their busy schedule.
Finally, I would like to extend thanks to my family members, my relatives and friends
who assisted me in different ways with their unconditional consistent support and
encouragement in every step of my thesis work.
Kulesh Panthi
Researcher
2016
vii
TABLE OF CONTENTS
Recommendation
Viva-Voce Sheet
Declaration
Acknowledgement
Table of Contents
List of Tables
List of Figures
Abbreviations
Page No.
CHAPTER-I INTRODUCTION ........................................................................................ 1
1.1 Background of the Study........................................................................................... 1
1.2 Focus of the Study..................................................................................................... 4
1.3 Brief History of Banking........................................................................................... 5
1.4 Brief Profile of Selected Banks................................................................................. 7
1.4.1 Everest Bank limited (EBL) ............................................................................... 7
1.4.2 Himalayan Bank Limited (HBL) ........................................................................ 8
1.5 Statements of the Problems ....................................................................................... 8
1.6 Objectives of the study............................................................................................ 10
1.7 Hypothesis Statements ............................................................................................ 10
1.8 Significance of the study ......................................................................................... 12
1.9 Limitations of the study........................................................................................... 13
1.10 Organization of the study ...................................................................................... 13
CHAPTER-II REVIEW OF LITERATURE .................................................................... 16
2.1 Conceptual Framework ........................................................................................... 16
2.1.1 Profitability Analysis........................................................................................ 16
2.1.2 Financial Statements......................................................................................... 20
TABLE OF CONTENTS
Recommendation
Viva-Voce Sheet
Declaration
Acknowledgement
Table of Contents
List of Tables
List of Figures
Abbreviations
Page No.
CHAPTER-I INTRODUCTION ........................................................................................ 1
1.1 Background of the Study........................................................................................... 1
1.2 Focus of the Study..................................................................................................... 4
1.3 Brief History of Banking........................................................................................... 5
1.4 Brief Profile of Selected Banks................................................................................. 7
1.4.1 Everest Bank limited (EBL) ............................................................................... 7
1.4.2 Himalayan Bank Limited (HBL) ........................................................................ 8
1.5 Statements of the Problems ....................................................................................... 8
1.6 Objectives of the study............................................................................................ 10
1.7 Hypothesis Statements ............................................................................................ 10
1.8 Significance of the study ......................................................................................... 12
1.9 Limitations of the study........................................................................................... 13
1.10 Organization of the study ...................................................................................... 13
CHAPTER-II REVIEW OF LITERATURE .................................................................... 16
2.1 Conceptual Framework ........................................................................................... 16
2.1.1 Profitability Analysis........................................................................................ 16
2.1.2 Financial Statements......................................................................................... 20
viii
2.1.3 Need of Financial Statement analysis............................................................... 22
2.1.4 Significance of profitability analysis ................................................................ 23
2.2 Review of Related Studies ...................................................................................... 24
2.2.1 Review of Books .............................................................................................. 24
2.2.2 Review of Journal Articles ............................................................................... 27
2.2.2 Review of Thesis .............................................................................................. 29
2.3 Research Gap........................................................................................................... 31
CHAPTER-III RESEARCH METHODOLOGY ............................................................. 32
3.1 Research Design...................................................................................................... 32
3.2 Population and Sample............................................................................................ 33
3.3 Variable Specification ............................................................................................. 33
3.4 Source of Data......................................................................................................... 35
3.5 Methodology of Data Analysis ............................................................................... 36
3.5.1 Financial Tools ................................................................................................. 36
3.5.2 Statistical Tools ................................................................................................ 41
CHAPTER-IV PRRESENTATION AND ANALYSIS OF DATA................................. 47
4.1 Analysis of Ratios ................................................................................................... 48
4.1.1Bank Profitability Ratios....................................................................................... 48
4.1.1.1 Analysis of return on assets ........................................................................... 49
4.1.1.2 Analyses of Return on Equity (ROE) ............................................................ 51
4.1.2 Analysis of other Ratios ....................................................................................... 53
4.1.2.1 Analyses of Average Net Profit per Branch .................................................. 53
4.1.2.2 Analysis of Average Net Profit per employees ............................................. 55
4.1.2.3 Analyses of Net Profit to Total Deposits Ratio ............................................. 57
4.1.2.4 Analyses of Net Profit to Loan and Advance ................................................ 59
4.1.2.5 Analysis of Profit Margin of Bank ................................................................ 61
4.1.3 Trend Analysis ..................................................................................................... 63
4.1.3.1 Trend Analysis of Net Profit ......................................................................... 63
4.2 Correlation Analysis................................................................................................ 65
2.1.3 Need of Financial Statement analysis............................................................... 22
2.1.4 Significance of profitability analysis ................................................................ 23
2.2 Review of Related Studies ...................................................................................... 24
2.2.1 Review of Books .............................................................................................. 24
2.2.2 Review of Journal Articles ............................................................................... 27
2.2.2 Review of Thesis .............................................................................................. 29
2.3 Research Gap........................................................................................................... 31
CHAPTER-III RESEARCH METHODOLOGY ............................................................. 32
3.1 Research Design...................................................................................................... 32
3.2 Population and Sample............................................................................................ 33
3.3 Variable Specification ............................................................................................. 33
3.4 Source of Data......................................................................................................... 35
3.5 Methodology of Data Analysis ............................................................................... 36
3.5.1 Financial Tools ................................................................................................. 36
3.5.2 Statistical Tools ................................................................................................ 41
CHAPTER-IV PRRESENTATION AND ANALYSIS OF DATA................................. 47
4.1 Analysis of Ratios ................................................................................................... 48
4.1.1Bank Profitability Ratios....................................................................................... 48
4.1.1.1 Analysis of return on assets ........................................................................... 49
4.1.1.2 Analyses of Return on Equity (ROE) ............................................................ 51
4.1.2 Analysis of other Ratios ....................................................................................... 53
4.1.2.1 Analyses of Average Net Profit per Branch .................................................. 53
4.1.2.2 Analysis of Average Net Profit per employees ............................................. 55
4.1.2.3 Analyses of Net Profit to Total Deposits Ratio ............................................. 57
4.1.2.4 Analyses of Net Profit to Loan and Advance ................................................ 59
4.1.2.5 Analysis of Profit Margin of Bank ................................................................ 61
4.1.3 Trend Analysis ..................................................................................................... 63
4.1.3.1 Trend Analysis of Net Profit ......................................................................... 63
4.2 Correlation Analysis................................................................................................ 65
ix
4.3 Tests of Hypothesis ................................................................................................. 69
CHAPTER-V SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ............. 81
5.1 Summary ................................................................................................................. 81
5.2 Major Finding.......................................................................................................... 82
5.3 Conclusion............................................................................................................... 84
5.4 Recommendations ................................................................................................... 86
Bibliography
Appendices
4.3 Tests of Hypothesis ................................................................................................. 69
CHAPTER-V SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ............. 81
5.1 Summary ................................................................................................................. 81
5.2 Major Finding.......................................................................................................... 82
5.3 Conclusion............................................................................................................... 84
5.4 Recommendations ................................................................................................... 86
Bibliography
Appendices
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