CHAPTER 1

INTRODUCTION

1.1 Background of study

The establishment of Purbanchal University in 1993 was visualized as an extraordinary

endeavor by the Government of Nepal to create an academic centre of excellence in the Eastern
Development Region of Nepal. Its prime role was outlined to act as a catalytic agent for the
promotion of socio-economic transformation in Nepal through quality education appropriate for
quality life and sustainable future. Since its establishment, the university is motivated by its
fundamental objective of preserving, refining, inventing, adopting, extending and transmitting
knowledge in an environment that fosters free enquiry and open scholarly debate, leading to all-
encompassing development of the rural people and their economies and environment.

Teaching
The university uses a semester system. All Bachelors degrees are of four years (delivered
over eight semesters) and Masters Degrees are of two years (delivered over four semesters).

White House International College was established in 2009 has been located at Baneshwor.
White House International College has currently offers a unique four year undergraduate
programs: BBA and BHM affiliated to Purbanchal university which has adopted a semester
system .In near future, White House International College will launch many bachelor’s level and
master levels programs .It has been envisioned to remain as the center for academic excellence in
management education with sound knowledge and skills relevant to the modern organization.
The faculty and staff at White House International College work in a way so, that the students
are competitive and provided with the opportunities to enrich confidence and motivation on them

1
to come to solution of the problem associated with modern day corporate world . White House
aims at producing future businessmen, top level executives, bankers, hoteliers and leaders in the
broad range of management .It helps students to enhance their individual capability in different
sector. Its main objectives are to impart the quality education by focusing on a rapport among the
students, teachers and parents. It helps to promote the essence of self confidence, self
dependence, moral behavior and dedication to duty. White House aims to prepare students for
the future challenges of business. To develop leadership skills, creativity and entrepreneurship
in each individual.

Summer project

Purbanchal University has prescribed Summer Project as a compulsory course in the 8th
semester of BBA program for the partial fulfillment of Bachelor’s in Business Administration
degree. It enhances the academic and professionalism in the individual students. This course
helps students to increase their creativity power and to build up their self confidence. It helps to
gain more practical experiences. Since, theoretical knowledge is not sufficient in this competitive
business world .By the help of this course every individuals can tackle their problem in future
with their practical knowledge. This project concentrates only on financial analysis and its
comparative study.

1.2 Objective of Study

Every subject has its own objectives in their own field .The study first aims to trace how
the Premium Product of Nepal has evolved over the years and tries to examine the volume of
market for premium bank product. Based on the project work assigned, the objectives of the
summer project are as follows:

General Objectives:

 For the partial fulfillment of the requirement for the degree of BBA
 To access the information as much as possible

2
  To become familiar about working environment of the organization
 To enhance our interpersonal and communication skill by interacting with senior
Executive of the organization
 To build up confidence level in an individual.
 To amend the attitudes of the students.
 To check out financial transaction and managerial activities of the organization.

Specific objectives:

 To analyze the services provided by company

 To understand the organizational structure
 To extract the Strength Weakness opportunity and Threats an RATIO analysis of the
organization
 To compare the financial statements of current year and previous years.
 To analyze the possible marketing strategies that can be beneficial for the
organization.
 To assets the information as much as possible and also make myself able to face major
life challenges and practical situation.
 To grab the adequate knowledge of working with the various annual reports.

1.3 Significance of Study

Development of project report writing skill is the important quality of student very
significance also. It helps the student to broaden their mind by studying directly without other’s
proper guide. The project report is related in financial and marketing department of EBL bank.
Among the services introduced by modern commercial banks during the quarter of a century
credit care deserves special mention of marketing system.

3
1.4 Limitations of study
`
 The first and the major limitation of this study is that it is not only as approximate
estimation. We are not provides with the qualified data since they are unpublished
data, so the exact true picture cannot by depicted.
 Due to time factor we are not able gather whole matter.
 This study is mostly depends on secondary data rather than primary data.
 The financial success will highlight with the use of graph.bar diagram, pie chart,
trend- and financial ratios
 The study has been confined to EBL .which operates commercial banking only
 The study is done mostly on the basis of published documents like: Balance Sheet,
Profit and Loss a/c and other related journals

4
 CHAPTER 2

Introduction of the Banking Industry

2.1 History of Banking Sector

The history of banking is closely related to the history of bank but banking transactions
probably predate the invention of money the term “bank” was originated from the Latin word
“bancus”, Italian word “banca” and French word “banque” which all man “bench”. The “Banks
of Venice” of Italy established in 1157 A.D. is the first bank of world. Ancient Rome perfected
the administrative aspect of banking and saw greater regulation of financial institutions and
financial practices.
The second banking institutions namely the “Bank of Barcelona” of Spain was
established in 1401 A.D. and “Bank of Geneva” in 1907. Lot of banks in different parts of the
world cane into existence after the establishment of “the Bank of Venice” three came a
remarkable change in the process of establishing the banking institution after the evolution of
“Bank of England” in 1694 A.D. as joint stock bank and later on it became the first central bank
in the world. The “Bank of Hindustan” was established in 1770 is the first bank of India.
The origin of banking can be traceable in the early times of human history. In the ancient
Rome and Greece, the practice of storing precious metals and coins at safe places and loaning
out money for public and private purpose on interest was prevalent. In England, banking and its
origin with the London Goldsmith, who is the 17 th century, began to accept deposit from
merchants and other safekeeping money.

5
 2.2 History of Banking in Nepal

The history of banking system in Nepal is very new as compared to the history of the
modern banking system of the world although the system of granting loan was prevent from
ancient times and can be traced back in the reign GunkamDev, the king of Kathmandu towards
the end of 8th century, who had borrowed money to rebuild and rule Kathmandu. In the year of
1879/80 A.D. We came across the term debt in Nepal when Sankhadhar(a low cast merchant)
introduced the new era, after having paid off all the debt then existing by the time of money
leading operation on a wide scale in the country.
The history of banking in Nepal is believed to be started from the time of Prime Minister
Ranoddip Singh in 1877 A.D. he introduced many financial and economic reforms. The
TejarathaAdda was established at that time and its basic purpose was to provide credit facilities
to the general public at a very concessional interest rate. The Tejarath Adda disbursed credit to
the people on the basis of collateral of gold and silver. All employees of government were also
eligible for this type of loan, which was settled by deducting from their salary. Tejaratha Adda
extended credit only; it did not accept deposits from the public.
But the real banking started with the establishment of Nepal bank limited in 1994 B.S
which was founded by Judda Samsher. It was the first bank of Nepal. Its main function was to
provide loans and accept deposits. Later Nepal Rastra Bank was established as a central bank in
2013 B.S. The bank was completely government ownership bank and it also started to issues
notes since 2016 B.S. Then after, several commercial banks have been established in the recent
years.
In 1984, Government of Nepal permitted to established joint venture bank in Nepal under
commercial bank Act 2031. As the result, Nepal Arab Bank Limited established as the first joint
venture bank of Nepal. Subsequently, Nepal Investment Bank Limited and Standard Chartered
Bank Limited were established as a joint venture banks. It was only after the reinstate of
democracy the kingdom witness the major establishment of joint venture banks i.e. Himalayan
Bank Ltd, Nepal SBI Ltd, Nepal Bangladesh Bank Ltd, Kumari Bank Ltd, Siddharatha Bank Ltd
and Laxmi Bank Ltd were established as a joint venture banks. Other than commercial banks,
Nepal Development Bank Ltd, Entrepreneurs Development Bank, Nepal Merchant Bank, Nepal
Industrial and Commercial Bank Ltd have started their transaction in other sectors. Nepal Bank

6
Ltd, the first commercial bank of Nepal was established in 1933 B.S. with the objectives of
extending banking sector in Nepal. This bank also works as the banker to the government.
Nepal Rastra Bank, the central bank of Nepal, came into existence in 1956 B.S. under
Nepal Rastra Bank Act 2012. Since the inception, Nepal Rastra Bank monitors and regulates
commercial banks. RastriyaBanijya Bank was established in 2022 B.S. It was totally owned by
the government. Nepal Industrial DevelopmentCorporation(earlier as Industrial Development
Center in 2013 was later converted into NIDC in 2016) and Agricultural Development
Bank(2012 B.S.) was established to facilitate development activities. Nepal Arab Bank
established in 1984(renamed) as Nabil Bank (2002 B.S) is the first joint venture bank
incorporated in Nepal.
List of Grade ‘A’ commercial banks in Nepal. Currently, there are more than 28 Grade ‘A’
commercial banks operating in Nepal, below is the list of all these banks:

Table No.1
S.N Name of the banks
1. Nepal Bank Limited
2 RastriyaBanijya Bank Limited
3. Agriculture Development Bank Limited
4. Nabil Bank Limited
5.. Nepal Investment Bank Limited
6. Standard Chartered Bank Nepal Lmited
7. Himalayan Bank Limited
8. Nepal SBI Bank Limited
9. Nepal Bangladesh Bank Limited
10. Everest Bank Limited
11. Bank of Kathmandu Limited
12.. Nepal Credit and Commerce Bank Limited
13. Lumbini Bank Limited
14. Nepal Industrial & Commercial Bank Limited

7
 15. Machhapuchhre Bank Limited
16. Kumari Bank Limited
17. Laxmi Bank Limited
18. Siddhartha Bank Limited
19. Global IMEBank Limited
20. Citizens Bank International Limited
21. Prime Commercial Bank Ltd
22. Sunrise Bank Limited
23. Bank of Asia Nepal Limited
24. Grand Bank Nepal Limited
25. NMB Bank Limited
26. Kist Bank Limited
27. Janata Bank Nepal Limited
28. Mega Bank Nepal Limited
29. Civil Bank Ltd.
30. Century Commercial Bank Limited
31. Sanima Bank Limited
32. Commerce & Trust Bank Nepal Limited

2.3 Everest Bank Limited

2.3.1 Brief profile

Catering to more than 5.5 laces customers today, Everest Bank Limited (EBL) is a name
you can depend on for professionalized and efficient banking services. Founded in 1994, the
bank has been one of the leading banks of the country and has been catering its services to

8
 various segments of the society since then. With clients from all walks of life, the bank has
helped develop the nation corporately, agriculturally and industrially.

2.3.2 Joint Venture Partner

Punjab National Bank (PNB), our joint venture partner (holding 20% equity in the bank)
is the largest nationalized bank in India. With its presence virtually in all the important centers at
India and over 6050 ATM counters, Punjab National Bank offers a wide variety of banking
services which include corporate and personal banking, industrial finance, agricultural finance,
financing of trade and international banking. For its excellence in banking services, it was
recently awarded the "Best Bank Award 2011"amongst all banks in India by the leading
corporate magazine, Business India.

2.3.3 Networks
Everest Bank Limited (EBL) provides customer-friendly services through its Branch
Network and all its branches are connected through Anywhere Branch Banking System (ABBS),
which enables customers for operational transactions from any branches. The bank has 50
Branches, 68 ATM Counters, 5 extension counter & 20 Revenue Collection across the country
making it a very efficient and accessible bank for its customers, anytime, anywhere.

2.3.4 Performance
Table No.2

Key Financial Highlights

Ashadh End Ashadh End Ashadh End
Particular Ashadh End 2069 Ashadh End 2070
2066 2067 2068
Total Business. (Rs in Ten Million) 5,720.76 6,448.87 7,278.97 8662.29 10191.82

Operating Profit. (Rs in Million) 1,066.04 1,349.10 1,516.69 1,790.39 2401.55

9
Dividend/Bonus Payments. (In %)

Cash Dividend 30 30 50 1.58* 50

Bonus 30 30 10 30 10

2.3.5 Awards

*The bank has been conferred with “Bank of the Year 2006, Nepal” by the Banker, a publication
of financial times, London.
*The bank was bestowed with the “NICCI Excellence award” by Nepal India chamber of
commerce for its spectacular performance under finance sector.
*The bank has been conferred with the "Best Managed Commercial Bank" by ASIAN PAINT
NEWBIZ Award 2013.

2.3.6 Pioneering achievements

*EBL was one of the first banks to introduce Any Branch Banking System (ABBS) in Nepal.
*EBL has introduced branchless banking system first time in Nepal to cover unbanked sector of
Nepalese society.
*EBL is first bank that has launched e-ticketing system in Nepal. EBL customer can buy Yeti
airlines ticket through internet.
*EBL is first bank that has launched e-ticketing system in Nepal where customers can buy yeti
airlines ticket through internet.
*EBL introduced online payment of Mobile/PSTN/ADSL/NCELL bill or from the counter as
well.

2.3.7 Shareholding Composition

Table No.3
S.N Ownership Percent

1. Punjab National Bank 50

10
 2. Local Promoters 20

3. General Public 30

Shareholding Composition (Pie-Chart View)

Fig. No.1

11
12
2.4 Objectives

 To provide quality service to its customers

 To become the bank of first choice is the main objectives of the bank
 To maintain a high quality rate portfolio
 To provide banking service all over the county


2.4.1Vision

 To position it as a progressive & customer friendly bank providing financial and other
related services.
 To cater to various segments of society using advanced technology.
 To be committed to excellence in corporate values.

2.4.2 Mission

 To provide excellent professional services & improve its position as a leader in the field
of financial related services.
13
  To build & maintain a team of motivated and committed workforce with high work ethos.
 To use the latest technology aimed at customer satisfaction & act as an effective catalyst
for socio-economic developments.

2.5 Board of Director

The name of the board members and their designation are listed in the following table:

Table No.4

Mr.B.K Shrestha
Chairman

Mr. Ved K Shrestha

Promoter Director

Mr. Arun Man Sherchan

Promoter Director

Mr. Bal Gopal Baidhya Director PNB(Nominee)

Mr. Rakesh Gupta

Director PNB(Nominee)

Mr. Nabin Bhakta Shrestha

Public Director
14

Mr. Shiva Sharan K.C

Public Director
2.6 Organization structure
Organization structure involves, in additional to task organizational boundary considerations of
jobs within an organization and the relationship among those jobs. There are numerous ways to
structure jobs within the organization, but the most basic form includes simple line line-and-
staff organization.
EBL follows the line and staff organization structure. The line-and-staff organization with staff
departments supports and advises line departments. Several advantages and disadvantages are
present within a line and staff organization. Advantages of a line staff is the availability of
technical specialists. Staffs experts in specific areas are incorporated into the formal chain of
command. A disadvantage of a line and staff organization is conflict between line and staff
personnel. Likewise there is functional organization which shows the hierarchical model in the
form as the functions of the departments.
In the given below the organization structure the line and staff organization is used as the model.

15
 CHAPTER 3

STUDY OF DEPARTMENT

Department refers to organizational structure in which jobs are grouped according to

some logical arrangement. Here the group of people works together so that common task can be
coordinated. In other words, a department is a part of a larger organization with a specific
responsibility the entities organizations form to organize people, reporting relationships, and
work in a way that best supports the accomplishment of the organization's goals.

16
3.1 Finance Department:

The finance department is one of the administrative departments at the institute reporting
directly. The financial manager has overall responsibility for the financial affairs of the institute.
The term finance should be understood in two perspective finance as a resource and finance as
discipline. Finance as resources, refers to monitory means of financing assets of equity. Finance
as discipline or subject of study. Describes how individuals, governments and corporate
organizations manage the flow of money through an organization. The financial department aims
to provide accurate and effective financial information, improve financial awareness, ensure
compliance with appropriate regulations, and reduce complexity. Speed up collections and
provide general support on finance-related matters. Therefore it is importance for all, individuals,
business, government and non government organizations to appreciate the significance of finance
in their day-to -day businesses. Mr. Vijay Kr. Sing is the manager of finance department of
EBL. Some basis objectives of finance department are as follows:

 To record financial transactions

 To ascertain profit and loss
 To show financial department
 To communicate financial information

3.2 Credit Department:

Credit department is the main revenue centre for any business financial company. This
department accepts the proposal of the proposed clients which includes financial statement,
firm/company registration firm and other related document. It has to maintain good relationship
with clients. The department is required to analyze the past, present record of the clients. Details
analysis of the clients and other firms is done through four Pillars Model. The four Pillars model
analysis is done by credit manager which includes analyzing four risks such as industry

17
environment, financial condition, and management quality and security realization, after analysis
of these four risks. Those risks are rated in terms of high, medium and low.

Some basis objectives of credit department are as follows:

 Accelerating cash inflow,
 Minimizing bad debt losses,
 Reviewing and approving new accounts,
 Maintaining current information in the credit file on each active customers,
 Documenting credit decisions and actions,

3.3 Human resource department:

Human resource department is a term used to describe the individuals who make up the
workforce of an organization, although this department is devoted to providing effective policies,
procedures, and people-friendly guidelines and support within companies. Additionally, the
human resource function serves to make sure that the company mission, vision, values or guiding
principles, the company metrics, and the factors that keep the company guided toward success
are optimized.
This department is involved in managing the people and aims in achieving the
organizational objectives although productive contribution of people. It provides opportunities
for educated workforce. It deals with staff recruitment, training, benefits, career development,
performance evaluation, and human resource department. It also conduct the survey to know
about the satisfaction of employees, human resource manager control the overall function of
organization. Followings are the basis work performed by HR department:
 Maintaining the awareness of and compliance with local, state and federal labor
laws
 Employee record Keeping and confidentiality
 Organizational design and development

18
  Business transformation and change management

3.4 Treasury department:

The treasury Department is responsible for the economic, financial, tax, and fiscal policies, and
also manufactures coins and currency. The treasury Department is separated into department
offices and bureaus that handle a wide variety of activities and work with other federal agencies.
A treasury department constitutes the part of a business or other organization responsible for
monitoring and maintaining all of the organization’s capital or treasury — it holds the purse
strings, so to speak. The treasury department creates projected cash flow, ensures that a company
holds enough capital to continue to operate at optimum levels and monitors all decisions
regarding the expenditure of capital. Treasury departments must balance the needs of a company
with needs of its investors and holders of debt. Accountants work directly with the treasury
department of a company on financial matters.

Following are the basic objectives of Treasury department:

 Enhanced Economic Policy, Investment Policy and Financial Advice,
 Strengthened Governance and Accountabilities,
 Improved Management of the Budget,
 Improved Operational Performance,

3.5 Corresponding Banking and Remittance:

A financial institution that provides services on behalf of another, equal or unequal, financial

institution. A correspondent bank can conduct business transactions, accept deposits and gather
documents on behalf of the other financial institution. Correspondent banks are more likely to be
used to conduct business in foreign countries, and act as a domestic bank's agent abroad.
Correspondent banks are used by domestic banks in order to service transactions originating in

19
foreign countries, and act as a domestic bank's agent abroad. This is done because the domestic
bank may have limited access to foreign financial markets, and cannot service its client accounts
without opening up a branch in another country.
A remittance is a transfer of money by foreign workers to his home country. Remittance can be
also refer to the accounting concept of a monetary payment transferred by a customers to a
business the oldest. Biggest and most trusted by a customer to EBL has largest network of
branches in the country and very big network of correspondence and agency relationship all over the
world.
There are two types of remittance done by banks:
a) Inward Remittance (receiving of money in Nepal)
b) Outward remittance (receiving/sending money outside of Nepal)
EBL offer you good remittance facilities to send money in Nepal or outside of Nepal to your
friends, family, relatives, etc. you can also do Telegraphic transfer for remittance of money
through our correspondent banks, now, EBL offer you very fast and reliable money transfer
facilities through SWIFT.

3.6 Information Technology Department:

Information technology lays down the scientific plans and mechanism as well as all that
is related to information technology in the bank and its department. This includes following-up
the maintenance and upgrading of the systems and procedures pertaining to information
technology as well as supervising and financial works and the communication networks in line
with state-of-the-art technology.
As the use of electronic communication has become more common for businesses of all sizes, so
has the need for the creation and staffing of IT departments in any company that
employs telephony and Internet devices to conduct business. Information technology is all about
allowing for the most effective and competent forms of electronic communication to take place.
These communications may come in the form of telephony, such as point to point phone calls or
audio conference calls. They may also be provided as video and web conferences, internal
communications such as common network drives or server access, and external devices such as

20
electronic mail that is sent through a secure server. Obviously, there has to be someone within
the organization that understands how these forms of communication work, and can ensure they
remain in proper working order at all times. So IT department is most important and useful
technology for any business sector.

 To develop application
 To make network and securities
 To operate and provide technical support
 To provide internet facilities
 To keep backup files

3.7 Legal Department

The primary role of the Legal Department is to provide legal advice to the High
Representative and to the departments and units within the (Office of Human Resources) OHR.
One of the most important roles of the legal department is as legal advisers. Before marketing a
new product, staff members will often discuss it with the legal department. Members of the legal
department are typically trained and qualified lawyers, along with a support staff of legal
assistants and other law professionals. Ideally, the legal department focuses only on tasks which
require a trained lawyer; in other words, the legal department may look over a letter from an
executive to ensure that it will not cause problems in the future, but they will not draft letters for
members of the company, unless the letters pertain to legal matters.

 Train and produce competent Judges, public Prosecutors, attorneys, legal

advisors, etc.
 To continuously review and develop the curriculum in order to keep in pace with
changing principles and\or rules of Law.
 Establishing contact with prospective employers and professional Associations.


21
3.8 Inspection Department:

The inspections Departments’ responsibilities include enforcement of uniform building

construction codes and minimum housing standards. The department provides a code
enforcement program within the framework of applicable policies, procedures, instructions and
state and local laws to protect the health, safety, and general welfare of the citizens within the
jurisdictional area of the city of Raleigh.

3.9 General Administrative Department:

The General Services Administration is responsible for budgeting, accounting, finance,

correspondence, human resources and will continually strive for excellence in its efficient
delivery of service and utilize training, technology, innovation and industry best practices
whenever possible to achieve that goal.
Some basic objectives of General Administrative department are as follows:
 General office management and running,
 Provide employees with a work environment where teamwork is paramount, ideas
are rewarded, creativity and risk-taking are encouraged, and successes are
celebrated,
 Increase employees' awareness and understanding of their individual safety
responsibilities,

CHAPTER 4

DATA ANALYSIS AND PRESENTATION

Financial analysis refers to an assessment of the viability, stability and profitability of a

business sub business or project. The true position of an organization is its past data, which is
most valuable and crucial too. By analyzing the data one can find out the problems and limitation

22
of the organization. To achieve the objective of the study various financial accounting and
administration tools have sue in this study, the analysis of is done according to the pattern of
data.

4.1 Data analysis

Analysis of data is a process of inspecting, cleaning, transforming, and modeling data

with the goal of highlighting useful information, suggesting, conclusion, and supporting decision
making. The data analysis part consists of the financial structure and SWOT analysis of EBL
bank, which is one of the major parts of the banking sector in Nepal. It gives the whole
summarized picture of the EBL bank and analyses the financial position.

Purpose of the data analysis

 to associate the variables
 to ascertain the truth
 to predict the relationship
 to extract as much information as possible

4.1.1 Profitability Ratios

Profitability ratio measures how effectively the firm is being operated and managed.
Owners, managers, creditors are eager to know their return whereas manager are interested in
their operating efficiency. It is evaluated in terms of profit earned by the firm and has been
classified into different types on the basis of sales and investment:

4.1.2 Return on Assets [ROA]

23
 ROA measure the overall effectiveness of management in generating profit with its
available assets. ROA gives an idea as to how efficient management is at using its assets to
generate earnings. .Higher operating profit ratio is preferred because it is a good sign of
operating efficiency of a firm.
Net profit after tax
ROA=
Total Assets

RETURN ON ASSETS Table No. 5

Year Net Profit Total Assets Return On Assets

2064/65 451218613 27149342884 1.66%

2065/66 638732757 36916848654 1.73%

2066/67 831765632 41382760711 2.00%

2067/68 931303628 46236212262 2.01%

2068/69 1090564222 55813129057 1.95%

Source: Annual Report of EBL

Figure 2

24
 ROA
2.50%

2.00%

1.50% ROA

1.00%

0.50%

0.00%
2064/65 2065/66 2066/67 2067/68 2068/69

The table reveals that ROA for the current five year. It clearly shows that the company is in
profit to all its phases. We can see ROA is decreasing from 2.01% to 1.95% in year 2067/68 to
2068/69 because of decrease in net income and increase in assets.

4.1.3 Returns on Equity (ROE)

ROE measure the return on the owner’s investment in the firm. Higher ratio of return on
equity is better for owner. Return on equity measures the company’s profitability by revealing
how much profit a company generates with the money shareholders have invested. It is
calculated as following formula:

Net Income
ROE =
Total Equity

RETURN ON EQUITY Table No. 6

Year Net Profit Equity Capital Return On Equity

2064/65 451218613 1921237580 23.48%

2065/66 638732757 2203625055 28.98%

2066/67 831765632 2759137855 30.14%

25
 2067/68 931303628 3113546056 29.91%

2068/69 1090564222 4177302887 26.10%

Source: Annual Report of EBL

ROE
Figure No.3
35.00%
30.00%
25.00%
20.00% ROE
15.00%
10.00%
5.00% we know that ,
0.00% higher ROE is
2064/65 2065/66 2066/67 2067/68 2068/69
preferred, as
higher ROE
measures high profitability. The table shows that the ROE is little bit fluctuating over time, at first four
year is in progressive trend but in last year it has little bit decreases.

4.1.4 Equity Ratio

The Equity Ratio is a good indicator of the level of leverage used by a company. The Equity
Ratio measures the proportion of the total assets that are financed by stockholders, and not creditors. It is
calculated as following formula:

Owne r ' sEquity

Equity Ratio=
Total assets

Equity Ratio Table No. 7

26
 Year Owner’s Equity Total Assets Equity Ratio

2064/65 1921237580 27149342884 7.07%

2065/66 2203625055 36916848654 5.96%

2066/67 2759137855 41382760711 6.66%

2067/68 3113546056 46236212262 6.73%

2068/69 4177302887 55813129057 7.48%

Source: Annual Report of EBL

Figure No.4

27
 Equity Ratio
8.00%
7.00%
6.00%
5.00% Equity Ratio
4.00%
3.00%
2.00%
1.00%
0.00%
2064/65 2065/66 2066/67 2067/68 2068/69

The standard of the ER is “Higher the equity capital ratio lower will be the risk and lower will be the
return”. Here we can see that the ER is fluctuating over time but in progressive trend.

4.1.5 Interest Spread Ratio (ISR)

This ratio represents the interest and earning distributed by the banks. It is the net interest
income divided by the total assets. Higher the interest spread ratio higher will be the profit of the
organization. It is calculated as following formula:

Interest income –Interest expenses

ISR =
Total Asset
INTEREST SPREAD RATIO Table No. 8

Interest Interest Interest Spread

28
 Year Income Expenses Total Assets Ratio

2064/65 1548657132 1144408308 27149342884 1.48%

2065/66 2186814992 1012874353 36916848654 3.17%

2066/67 3102451484 1572790306 41382760711 3.69%

2067/68 4331026087 2535875552 46236212262 3.88%

2068/69 4959998415 2873334682 55813129057 3.73%

Source: Annual Report of EBL

Figure No.5

ISR
4.50%
4.00%
3.50%
3.00%
2.50% ISR
2.00%
1.50%
1.00%
0.50%
0.00%
2064/65 2065/66 2066/67 2067/68 2068/69

Higher spread is a measure of higher profitability. Here over a time there are increases the ISR.

4.1.6 Liquidity Ratio

29
Liquidity Ratio measures the firm’s ability to satisfy its short – term commitments out of current
or liquid assets. These ratios focus on current assets and liabilities and are used to ascertain the
short – term solvency position of a firm.

4.1.7 Current Ratio

Current ratios are the quantitative relationship between the current assets (CA) and
current liabilities (CL). Here current assets are those which can be converted in cash within a
year. They include cash, inventories, account receivables, marketable securities and prepaid
expenses. Current liabilities are to that obligation, which must to be paid within a year. It
includes a/c payables, bank overdraft, accruals and out standings. The ratio 2:1 is employed as a
standard for comparison.
Current assets
CR=
Current Liabilities

CA=cash+ Bank + money at call & short notice +loan ,advance & bill purchase + sundry debtors
+ employee borrowing & advance + advance + investment

CL=deposit (saving+ current) +bill payable +other liabilities + proposed & dividend

CURRENT RATIO OF EBL Table No. 9

Year Current Assets Current Liabilities Current Ratio(times)

2064/65 26788830404 24928105304 1.07

2065/66 36489691202 34101223599 1.07

2066/67 40919666320 37919022956 1.08

2067/68 45775953527 42340666206 1.08

30
 2068/69 55265203378 51635816170 1.07

Figure No.6

31
 1.09
1.08
CR
1.08
1.07
1.07 CR
1.06
2064/65 2065/66 2066/67 2067/68 2068/69

4.1.8 Quick Ratio

The quick ratio measures a company's ability to meet its short-term obligations with its most

liquid assets. It shows the relationship between quick assets & current liabilities. Quick assets are
such assets which can be easily convert into cash.1:1 is regarded as standard quick ratio. The
higher the quick ratio, the better the position of the company. It is calculated as following
formula:

Quick assets
QR =
Current liabilities

QUICK RATIO OF EBL Table No. 10

Year Quick Assets Current Liabilities Quick Ratio(times)

2064/65 26788830404 24928105304 1.07

2065/66 36489691202 34101223599 1.07

32
 2066/67 40919666320 37919022956 1.08

2067/68 45775953527 42340666206 1.08

2068/69 55265203378 51635816170 1.07

Figure No.7

QR
1.08
1.08
1.08
1.08
1.07 QR
1.07
1.07
1.07
1.07
1.06
2064/65 2065/66 2066/67 2067/68 2068/69

4.1.9 Cash Reserve Ratio (CRR)

Cash reserve ratio refers to that part of the depositor’s balance that the commercial banks should
necessarily hold in their hands in form of cash. Higher Ratio is better for the bank. It is
calculated as following formula:

Cash Reserve Amount

33
CRR =
Total Deposits

CASH RESERVE RATIO

Table No. 11

Year Cash Reserve Total Deposits CRR(times)

2064/65 2667971830 23976298535 0.11

2065/66 6164371163 33322946246 0.18

2066/67 7818815003 36932310008 0.21

2067/68 6122862952 41127914339 0.14

2068/69 10363306307 50006100272 0.20

Figure No.8

CRR
0.25

0.2

0.15
CRR

0.1

0.05

0
2064/65 2065/66 2066/67 2067/68 2068/69

34
 The table reveals that ROA for the current five year. It clearly shows that the company is in
profit to all its phases. We can see ROA is decreasing from to 2.01% to 1.95% in year 2067/68 to
2068/69 because of decrease in net income and increase in assets.

4.2 SWOT Analysis

SWOT is a way of evaluating the strengths, weaknesses, opportunities, and threats that affect something.
It helps to carve a sustainable niche in our market. The basic purpose of SWOT analysis is to promote the
strengths, reduce the weakness, grab the opportunity and neutralize the threats. It helps us to focus on our
strengths, minimize threats, and take the greatest possible advantages of opportunities available to us.
SWOT analysis can be used to “kick off” strategy formulation, or in a more sophisticated way as a serious
strategy tools. We can use it to get an understanding of our competitors which can give the insights need
to craft a coherent and successful competitive position. Strength and weakness are often internal to our
organization whereas opportunities and threats generally relate to external factors. For this reason SWOT
analysis is sometimes called as internal external analysis and the SWOT matrix is sometimes called as IE
matrix.

35
 Fig (9)

4.2.1 Strengths

Organizational strengths are usually derived from its financial, human and other resources
that enable an organization to conceive and implement its strengths.

 Bank is able to establish many branches in various part of Nepal in short period of time.
 Sufficient ATM facilities, Credit Card, Safe Deposit Locker.
 Strong public image and marketing share of the company.
 A user friendly website.
 Well established goodwill in the market.
 Strong top managerial team.

 Low staff turnover and low overheads.

 Good working environment for the employees
 Quick and effective services to the customers
36
  Very effective management
 Employees are treated equitably with respect and faith
 Use of new technology
 They have highly skilled, efficient and effective manpower

4.2.2 Weaknesses

The weakness in a bank’s SWOT analysis should list the areas where the bank is falling short
of reaching its goals or is non-competitive. These areas of improvement should also be internal
components reflective of the bank’s physical and human resources.

 High loan rates

 Less contribution in agriculture sector.
 Slow customer’s complains response.

 Weak document management.

 Less promotion(advertisement) activities
 Lack of new services
 Employees are not well trained to operate modern technology

4.2.3 Opportunities

This opportunities section in bank’s SWOT analysis should list the areas where the bank has
room for growth or could take advantages of opportunities in the market place. These areas ripe
for the development should be external components reflective of the current business
environment.

 The business sector is expanding, with many future opportunities for success
 Local government wants to encourage the local businesses

37
  Competitors are slow in adopting the newer technologies
 Growth of the stock markets
 Liberalization of commercial banking sectors.
 Increasing the services provided to the customers
 Introduce services like debit card, credit card, e-banking etc
 The establishment of other branches
 Good financial position creating a good reputation for future bank loans and borrowing
 Starting of internet and Tele-banking

4.2.4 Threats

This threats section in bank’s SWOT analysis should list the areas where the bank has the
potential to decline or to be harmed by other factors in the market place. These factors should
also be external components reflective of the current business environment.

 Political instability
 Competitive pressure due to increasing banking sector and open policy of government.
 Constants changes in polices and rules by the local government and NRB.
 Lack of investing opportunities due to shrinking markets.
 The threats of bank loans and investments being bad and changes in the exchange rate of
foreign currencies. High competitions with other commercial banks

38
 CHAPTER 5

FINDINGS AND RECOMMENDATIONS

5.1 Summary
A field work has been undertaken to make a thorough study and analysis on the performance of
Everest Bank was established on 1st katik 2051 B.S by issuing 30% share to general public. Later
on, it was collaborated with Punjab National bank Limited, India in 1995, which hold 20% share
of Everest Bank.EBL runs 50 branches all over the country. EBL has well managed internet
facilities and well managed network operation facility inside the organization for the purpose of
communication among different department as it also involved in e-business where business are
done through internet.

For the purpose of the study the annual report of 5 years from the fiscal year 2007/2008 to
2011/2012 has been analyzed .The necessary adjustment, wherever it is necessary has been
undertaken with consolation of management personnel of Everest Bank. In this study, different
financial as well as statistical tools are used to analyze on the performance of Everest Bank. The
main concentration area of the study is only on current deposit.

5.2 Findings
At, the time of study I have found many things during this report. This report has been prepared
as a summary of my order to fulfill partial fulfillment of the course of the BBA. We are
committed to do the mission while ensuring the highest levels of ethical standards, professional
integrity, corporate governance and regulatory compliance.

Financial Highlights

 EBL is well capable to generate earning by utilizing its total assets.

 ROE of EBL shows that the investment in shareholder equity is gradually increasing.
Which explain investors are satisfied with the performance of Bank.

39
  Since CRR measures the reserve fund that bank deposit for liquidity purpose. Regarding
EBL has more than normal percentage of reserve fund.
 ISR is increasing slightly, which indicates bank in generating some profit from interest
income as compare to interest expenses. But earning of interest is not increasing high as it
should be.

5.3 Recommendation

Even though the bank has been awarded as the bank of the year of the year 2002, it has to
improve on certain things. On the basis of the above recommend few things for future growth,
betterment and smooth functioning.
 The main concentration area EBL is limited to Kathmandu Valley and the major other
cities of Nepal. The Major parts of Nepalese people are living in the rural areas.
Therefore, it is suggested to EBL to expand its branches in rural areas for the economic
upliftment of the poor people who lives in the rural areas.
 The services provided by EB L are similar to those provided by other commercial banks.
Therefore, it is recommended to EBL to formulate different new schemes through make
which it can serve more people as well as to generate profit to survive in highly
competitive market.
 Because of tough competition in financial market it is recommended to invest in selected
promotional activities to make aware of product and service of bank to targeted
customer.
 To encourage employees to perform better, it is recommended to increase benefit and
salaries of the employees .Human resource should be properly managed i.e. regular
training to key employees ,reward should be connected with the performance and the
efforts of individual employees to motivate them to perform their full potential
 Being a part of society, it has great responsibility in e social development; therefore it is
recommended to EBL to participate in the social such as in education, health program,
environment protection etc.

40
BIBLIOGRAPHY

A. Books:-
 Agrawal,G.R.”Principle of Management”M.K. publication,2005
 Shiva p.”Management Accounting”,kathamandu:Buddha Academic Publisher &
Distributer PVT.ltd,2003
B. Reports:-
 Annual report of Everest Bank limited(14th)i.e. 2064/65
 Annual report of Everest Bank limited(15th)i.e. 2065/66
 Annual report of Everest Bank limited(16th)i.e. 2066/67
 Annual report of Everest Bank limited(17th)i.e. 2067/68
 Annual report of Everest Bank limited(18th)i.e. 2068/69
 Reference Report on “A study on financial performance Analysis of
Machhapuchchhre Bank Limited”.
C. Website:-

www.Everestbank.com

www.nepalstock.com.np
www.wikipedia.com.np

41