PROFITABILITY ANALYSIS OF MACHHAPUCHCHHRE BANK LIMITED
A PROJECT WORK PROPOSAL
Submitted By
Binita Adhikari
Exam Roll No:
TU Reg. No.: 7-2-927-165-2020
Swoyambhu International College
Group: Finance
Submitted To:
The Faculty of Management
Tribhuvan University
Kathmandu
In partial fulfillment of the requirements for the degree of
BACHELOR OF BUSINESS STUDIES (BBS)
Kathmandu, Nepal
February, 2025
CONTENTS
1. Background of the Study
2. Profile of the Organization
3. Statements of the Problem
4. Objectives of the Study
5. Significance of Study
6. Theoretical Framework and Literature Review
7. Research Methodology
➢ Research Design
➢ Population and Sample
➢ Data Collection Procedure
➢ Nature and Sources of Data
8. Limitation of the Study
9. Organization of the Study
10. References
Chapter 1
INTRODUCTION
1. Background of the Study
In the field of business, the concept of profit defines the objective of economic
activity, that’s why the key motive of any business organization is to maximize and
make profit. Banking system and financial institutions play very significant role in the
economic development of the nation. With increasing globalization, knowing the
different aspects of bank profitability is essential for countries financial stability and
economic growth.
Profitability is the situation in which an entity is generating a profit. It is ability of a
company to use its resources to generate revenues in excess of its expenses.
Profitability is a key indicator of financial health and is often measured using various
profitability ratios which help assess how efficiently a company earns profits from its
sales or operations.
Profitability represents final performance of company i.e. how profitable company is.
It also represents how profitable owner’s funds have been utilized in the company.
Various types of profitability ratios are:
• Return on equity
• Earnings per share
• Dividend per share
• Price earning ratio
• Return on capital employed
• Return on assets
• Gross profit
• Net profit
2. Profile of the Organization
Machhapuchchhre Bank Limited was registered in 1998 as the first regional
commercial bank from the western region of Nepal and started its banking
operations from Pokhara since year 2000.
The Bank facilitates it's customers' need by delivering the best of services in
combination with the latest state of the art technologies and prudent international
practices. The bank provides modern banking facilities.
The Bank has been promoted by highly renowned Non-Residential Nepalese,
prominent businessman and industrialists with a vision and dedication to provide the
best financial products and services in the most efficient and professional manner.
Now with a paid up capital of over 11.62 billion rupees, 165 Branch Offices, 99
Branchless Banking Units, 11 Extension Counters and 204 ATMs spread all across
the country, it is one of the full fledged national level commercial banks operating in
Nepal.
3. Statement of the Problem
With existence of 26 commercial banks in Nepal, Machhapuchchhre Bank Limited
has to face immense competition for attracting depositors and borrowers,
maintaining capital, generating profit and ultimately surviving and growing in the
competitive banking world. Sometimes the bank may not work properly which harms
the interest of customers, investors and shareholders. Hence, measuring the
profitability helps to analyze the current industry position of the bank, direction of
future strategies and tracking the financial performance for informing general public.
4. Objectives of the Study
This portion of report attempts to answer the statement of problem. It provides the
idea of output of the study. The main objective of this research is to analyze the
profitability of the Machhapuchchhre Bank Limited and other specific objectives are
as follows:
a) To study the operational result of Machhapuchchhre Bank.
b) To understand and evaluate the financial health of the Machhapuchchhre
Bank.
c) To know the growth and decline in the profitability of Machhapuchchhre Bank.
d) To study the growth in net- worth of Machhapuchchhre Bank.
5. Significance of the Study
The significance of the study is that, this piece of study may prove important in the
accounting and financial fields of Banking and financial sector as this may be taken
as reference by various groups and researchers. Further it might prove its importance
to following stakeholders:
• Investors
• Management of the bank
• Customers of the bank
• Creditors
• Debtors
• Other personnel who wants to know about Machhapuchchhre Bank’s
performance.
6. Theoretical Framework and Literature Review
The project report will consist of various terms which are necessary to describe the
obtained information about profitability analysis of Machhapuchchhre Bank Limited,
some of them are as follows:
• Profit
Profit is a financial benefit that is realized when the amount of revenue gained
from a business activity exceeds the expenses, costs and taxes needed to
sustain the activity. Any profit that is gained goes to the business's owners,
who may or may not decide to spend it on the business. Profit is calculated as
total revenue less total expenses.
• Return on Assets
The return on total assets (ROTA) is a ratio that measures a company's
Earnings Before Interest and Taxes (EBIT) relative to its total net assets. The
ratio is considered to be an indicator of how effectively a company is using its
assets to generate earnings before contractual obligations must be paid.
ROA= NPAT / Total Assets
• Return on Deposit
One of the major financial sources is deposit collection and deposit is
mobilized for loans and advances and is used in other investments to earn
profit. This return ratio is used to find out the profit earned using total deposit.
This ratio is calculated in order to diagnose whether the banks are well
efficient or not in mobilizing its total deposits. So, corrective action can be
taken by the bank.
ROD= Net profit / Total deposit
• Earning per share (EPS)
The profitability of a bank from the point of view of the ordinary shareholders
is earning per share. The ratio explains net income for each unit of shares.
Thus, it only shows how much is the earning of an organization and how much
does theoretically belong to the shareholder.
EPS= NPAT / Shares Outstanding
7. Research Methodology
In research, we use various methods to collect, compile, present and interpret the
data and information. It explains the research methodology used in the study. It deals
with the type of data being collected and the types of services that are being used for
the purpose of data collection. It explains how data are processed.
7.1. Research design
This study is focused to evaluate the profitability of Machhapuchchhre Bank. For
the research work analytical and descriptive research design has been applied.
7.2. Population and Sample
There are various banks and financial institutions in Nepal. At the same time there
are total of 27 commercial banks in Nepal at present. Among them
Machhapuchchhre Bank is taken as the base of study.
7.3. Data Collection Procedure
The sources of data would be secondary sources. All the required data
information would be collected from IT magazines, publication houses, and
Machhapuchchhre Bank Ltd. The study would follow description and analytical
research to analyze the company’s performance. A simple interview procedure
would be adopted and other data would be extracted from the financial reports of
the company.
7.4. Nature and Sources of Data
The major sources of information taken for the reference are detailed as follows :
• Annual reports of Machhapuchchhre Bank.
• Websites of Machhapuchchhre Bank.
• Bulletins and reports of NRB.
• Various information from Nepal Stock Exchange.
8. Limitation of Study
a) Coordination with bank was difficult.
b) Five years data are only presented for study.
c) The research is concerned with Machhapuchchhre Bank Ltd only.
d) Lack of time to collect the depth information.
e) No availability of the sufficient data.
9. Organization of Study
The report is divided into three main chapters. They are: Introduction, results and
analysis, and summary and conclusions.
The first chapter will be the introduction which contains general background of the
study, definition & function, introduction to the sample, statement of problems,
objectives of the study, research questions, theoretical framework, and limitations of
the study.
The second chapter will be the Results and analysis. In this chapter the researcher
will review the past study and the implementation of models in different times and
economy. It includes the conceptual framework, review of articles and dissertations
done in the past.
The third chapter will be summary and conclusions, which states about the brief
summary of the whole research report and conclusions. It also provides some useful
suggestions and recommendations to the concerned parties. Similarly, at the front
part table of content, list of table and figures whereas at the end part abbreviation
and bibliography will also be attached along with this report. And all the information
contained will be factual.
References
www.machbank.com
www.google.com
www.investopedia.com
www.accountingtools.com
www.corporatefinanceinstitute.com
Souvenir published at IV Conference of Asia and Pacific Accountants, New Delhi
1965 P-143
J.F. Weston and E.F. Brigham “Managerial Finance” Illionis Rryden Press 1978 P-
150
Upton “Introduction to Business Finance” MC Graw Hill Book Co. 1961 P-150
Gibson and Boyer “Financial Management Analysis” CBI Publishing Co. inc.
Boston 1979 P-189
