1

CHAPTER-I
INTRODUCTION

1.1. BACKGROUND
A Bank is an organization whose primary functions are concentrated with accumulation
of idle money from General public and advancing loan to individuals, traders industries
and business houses for expenditure. Generally the bank collects money from those who
have spare of it from their income on which it pays interest regularly. (Shrestha, 2003)

Everest Bank Limited (EBL) started its operations in 1994 with a view and objective of
extending professionalized and efficient banking services to various segments of the
society. The bank is providing customer-friendly services through its Branch Network.
All the branches of the bank are connected through Anywhere Branch Banking System
(ABBS), which enables customers for operational transactions from any branches.
With an aim to help Nepalese citizens working abroad, the bank has entered into
arrangements with banks and finance companies in different countries, which enable
quick remittance of funds by the Nepalese citizens in countries like UAE, Kuwait,
Bahrain, Qatar, Saudi Arabia, Malaysia, Singapore and UK. Bank has set up its
representative offices at New Delhi (India) to support Nepalese citizen remitting money
and advising banking related services. 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, 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. Among the
clients of the Bank are Indian conglomerates, medium and small industrial units,
exporters, non-resident Indians and multinational companies. The large presence and vast
resource base have helped the Bank to build strong links with trade and industry.
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
 2

under finance sector Recognizing the value of offerings a complete range of services, it
has extended various customer friendly products such as Home Loan, Education Loan,
EBL Flexi Loan, EBL Property Plus (Future Lease Rental), Home Equity Loan, Vehicle
Loan, Loan Against Share, Loan Against Life Insurance Policy and Loan for
Professionals. EBL was one of the first bank to introduce Any Branch Banking System
(ABBS) in Nepal.
To know the precise and clear meaning of bank, some expert’s definition can be given.
Chamber’s twentieth century dictionary defines a bank as an “Institutions for keeping,
lending and exchanging of money.”

According to Crothers “A banker is a dealer in debts. The bankers business is then to take
the debts of other to people, to offer his own in exchange and thereby to create money.”

According to World Bank, “Banks are the financial institutions that accept funds in the
form of deposit repayable on demand or short notice.”

Therefore a bank is a financial institution, which collects deposits and in turn provides
loans by creating credit. Today banking is such a vague tern, it does a lot more then
deposits and credit like remitting money, issue of money guarantee, letter of credit,
controlling, payment, other agency functions, monetary activity of country etc. are also
the major function of bank. This multiplicity of bank service and function has led to a
bank being labeled “financial supermarket.

1.2. PROFILE, EVENTS AND ACTIVITIES

Everest Bank Limited has more than 7.5 lacs customers, Everest Bank (EB) is a name
you can depend on for professionalized & 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 various segments of the society. With clients from all walks of life, the Bank
has helped develop the nation corporately, agriculturally & industrially.

Everest Bank (EB) provides customer-friendly services through its wide Network
connected through ABBS system, which enables customers for operational transactions
from any branches.
 3

EBL’s strategies and future plans:

 To develop a customer oriented service culture with special emphasis on customer
care and convenience
 To increase its market share by following a disciplined growth strategy.
 To develop innovative products and service that attracts its targets customer and
market segments also explore new avenues for growth and profitability.
 To continue to develop products and service that reduces its cost of funds.
 To maintain a high quality assets portfolio to achieve strong and sustainable returns
and to continuously build shareholders value.

1.3 STATEMENT OF THE PROBLEMS:

The gap between actual and desired state of study is simply known as research problem.
It focuses on finding the right answers to the certain issue or event. It helps to give the
solution to the problem through detailed investigation. It presents the relationship among
the variables to give answers to the problem. There are many problems that are bugging
the Nepalese banking Industry. On the basis of above definition, the research problems or
issues of my study are as follows:
 How to find the percentage change in different types of ratios?
 What is the financial performance of the organization?
 What is the importance of financial evaluation or assessment of the organization?

1.4 OBJECTIVES THE STUDY:

Nepal is a developing country. The economic condition of the country depends on the
active participation of banks and other financial institution in different development
activities. The development of banks depends on the banking habit of the people.
Therefore, the primary objectives of this report are to gain the practical knowledge of
banking sectors. The secondary objectives of this report are as follows:

 To analyze the liquidity of EBL.

 To find the percentage change in different types of ratios of Everest Bank LTD.
 To gain the practical knowledge of banking sector in eyes of stakeholder.
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1.5 RATIONAL OF THE STUDY

The study is expected to fill the research gap to input to improve and enhance the
involved parties (bank and stakeholders) for the benefit of concerned society. The study
helps on total performance, which enabled the organization and stakeholders for making
appropriate decisions and strategies. From which the researcher believed that the findings
of the study would be useful and valuable to the organization as well as to the concerned
society. Moreover, the study will check the profitability of the bank. This will help the
bank to take the corrective actions if there are any errors on the past performance and the
study aims to recommend correcting the division if the standard has not been met.

In Nepal due to various difficulties or even ignorance of the people of under-developed

countries such resources have not been utilized such as by hoarding. Hoarding, the bad
habit of the society, is one of the main problems. So, bank like Everest Bank Ltd. plays
vital role for accepting and, in turn, mobilizing the resources and removing the habit of
hoarding in pursue of rapid economic growth, and make them habit of banking. The
scattered resources are collected in one bulk and mobilizing them in production purpose
and even for providing other services to its members and to the society.

1.6 RESEARCH METHODOLOGY

It refers to the various sequential steps adopted by researcher in studying a problem with
certain objectives in view. For preparing this report, the annual general meeting report of
Everest Bank and Banking few books and publications, various data from the balance
sheet, profit and loss account and financial statement of Everest Bank provided by NRB
required for this report were sorted out. After sorting the required data, financial and
statistical tools were used to analyze and interpret the various financial aspect of Everest
Bank. This is how the report has been prepared.

1.6.1. Research Design:

A research design is the arrangement conditions, for the collection and analysis of
data in a manner that aims to combined relevance to the research purpose with economy
in procedures. This study aims is to find out liquidity position of the Everest bank Ltd.
 5

This study is mainly based on primary data and secondary data. The primary data, which
are collected directly from the question answer, direct interview with customer and office
staffs. The secondary data are collected from respective annual reports especially from
the Everest bank’s web sites and various other journals and from securities Board of
Nepal (SEBON) and Nepal stock exchange (NEPSE). This study is mainly collected to
find out the liquidity position of Everest Bank Limited in detail that include following
steps.

1.6.2. Types of Data

The main tools and techniques of data information is based on two types :

1. Primary data collection

The data which are originally collected by an investigator or an agent for the first
time for the purpose of statistically enquiry are known as primary data collected
personally through questionnaire, observation and interviewing method. These data
highlight the real fact information of Everest Bank. In this report, structured review and
unstructured observation method was used. The questions that were asked are included in
appendix.

2. 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 :

1.6.3. Data Collection Techniques:

I went to the branch office of Everest Bank Ltd. Hetauda, Makawanpur and get the
important information. I collected the main annual reports of this bank directly from the
website. And other various articles and journals from various publication and some others
from the SEBON, NEPSE and previous field reports are also taken in to accounts.
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1.6.4. Data Analysis Tools:

Data analysis tools means which tools the research used for present and analyzed the
data. The main tools of analysis are mathematical and statistical tools. In this reports
statistical and financial ratio tools is used for data analysis. Mean and correlation is
calculated for analysis the data as statistical tools.

1.6.5 Ratios
An arithmetical relationship between two figures is called ratio. It is the most useful and
analytical tools to evaluate in respect to one variable over another. Here, for our purpose,
only the liquidity related ratios are calculated.
Liquidity Ratio
 Cash and bank balance to current deposit ratio
 Saving deposit to total deposit ratio
 Cash and bank to total deposit ratio
 Fixed deposit to total deposit ratio
 Cash and bank balance to total deposit ratio (excluding fixed deposit)
 NRB balance to total deposit (excluding fixed deposit)
 NRB balance to fixed deposit ratio
 Deposit to investment ratio
1.7. LITERATURE REVIEW
This chapter deals with the theoretical aspects of the topic of financial analysis of Everest
bank Ltd. in more detail and descriptive manner. For this study, journals, articles, and
some research reports related with this topic have been reviewed. This study has to refer
almost all books related with this topic published. Some of the prior reports by students
of BBS regarding this topic have also been reviewed.

1.7.1. Conceptual framework:

One of the sensitive factor or element in the bank is liquidity. Liquidity refers to the
convertibility assets into cash. It means how fast the assets can be change into cash.
There are many assets which are easily converted into cash by the bank. Such as cash in
hand, cash at bank, cash at central bank, investment in government securities. But some
assets are difficult to get converted into cash such as loan and fixed assets.
 7

Liquidity is also defined as the position or capability of a bank to meet the current
obligation of customers such as payment of cheque. Payment of demand drafts,
disbursement of approved loan etc. Bank needs to maintain some reasonable level of
liquidity to fulfill different commitments such as provide money to depositors when they
demand for administrative expenses, for maintaining cash bank’s capacity to pay cash in
exchange of deposits. Liquidity is crucial in the business like banking. Because if the
bank has high liquidity, it can no earn a desire profit and if the bank has the shortfall of
the liquidity it cannot satisfy its customers. Inadequate liquidity may lead to collapse of
the banks while excess liquidity is detrimental to bank’s profitability. In order to remove
demerits associated with maintaining inadequate and excess liquidity, banks should
maintain an optimum level of liquidity. This possible only when bank’s liquidity needs is
correctly predicted. Prediction covers in present outflows of liquidity. If prediction shows
more outflows, bank should be prepared to cover the shortfall by borrowing or by
liquidating assets. If inflow greater than outflow, bank should plan where to invest so that
income can be increase. Banks attach great importance short term and long term
predictions. Prediction of liquidity need should be in the firm of primary and secondary
reserves so that bank generates income and at the same time does not compromise to
liquidity.
1.7.2. Review from related studies:
Bank needs to maintain some reasonable amount of liquidity to fulfill different
commitments. Such as provide money to depositors when they demand for administrative
expenses, for maintaining cash reserve ratio in the central bank etc. so, liquidity is define
bank’s capacity to pay cash in exchange of deposits. Liquidity needs of commercial
banks are unique because in no other types of business there will be such large portion of
deposits payable on demand. Inadequate liquidity does damage credits standing of other
organization as well but a banks fails to pay the deposits on demands, the bank loose the
faith of the public. Bank may maintain the liquidity in the form of:
 Cash and bank balance
 Placement money at short calls or short notice
 Investments in government securities and other securities convertible into cash
 8

1.8. LIMITATION OF THE STUDY

This study is simply conducted for the partial fulfillment of the requirement for the
degree of the bachelor in business studies (BBS). And only the secondary data is used
and analyzed which could not disclose the actual result. And being the first endeavor, the
report can comprise some mistakes which may cause to misinterpretation of the results.
The other limitation of the study is listed below:
i. Only five years observation covering mostly of the annuals reports of the bank
from fiscal year 2018/19 to 2022/23 is analyzed.
ii. Analysis is based on the ratio and trend lines of the corresponding ratios only.
iii. Only the secondary data is used.
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CHAPTER-II
RESULTS AND ANALYSIS

2.1. DATA PRESENTATION

Presentation means the presentation of the collected data through table; figure etc.
presentation is the process of understanding the study or the report and calculating the
opinion. An analysis of a data means the process where the statement or the report gets
resolve by breaking them into simple statement. Analysis means to find out something
and give opinion about the presented data.

2.2. PARTCIPATION OF THE ALL THE DEPOSIT IN THE TOTAL DEPOSIT

LIABILITY:

Table No.-1

Fiscal year Current Saving deposit Fixed deposit Total deposit

deposit
2018/19 6098254263 17269289330 13007478505 363752022098
2019/20 8099050980 21067485936 14104779337 43271316253
2020/21 6490122477 26489444928 14528858311 47508425716
2021/22 7081260955 32604288885 19784889538 59470439378
2022/23 8629903086 38649605885 25999038315 73278547286
Source: - “Annual report of Everest bank ltd.”
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Figure No. 1

Chart Title
60

50

40
Saving Deposit
Fixed Deposit
30 Current Deposit

20

10

0
2018/19 2019/20 2020/21 2021/22 2022/23

In the above table and column chart, we see that, in fiscal year 2018/19, the current
deposit account occupied 17%, saving deposit account 47%, fixed deposit account
35%.in fiscal year 2019/20 the current deposit account occupied 18%, saving deposit
account 48%, fixed deposit account 32% occupied. In fiscal year 2020/21 the current
deposit account occupied 13%, saving deposit account 55%, fixed deposit account 30%
occupied. In fiscal year 2021/22 the current deposit account occupied 12% saving deposit
account 54%, fixed deposit account33% occupied. In fiscal year 2022/23 the current
deposit account occupied 11%, saving deposit account 52%, fixed deposit account
occupied 35%.
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2.3. SAVING DEPOSIT TO TOTAL DEPOSIT RATIO:

Table No.2
Fiscal year Saving deposit Total deposit Ratio
2018/19 17269289330 363752022098 0.047
2019/20 21067485936 43271316253 0.48
2020/21 26489444928 47508425716 0.55
2021/22 32604288885 59470439378 0.54
2022/23 38649605885 73278547286 0.52
Source: - “annual report of Everest bank ltd.”

Figure No 2
0.6

0.5

0.4

0.3 Saving Deposit

Total Deposit

0.2

0.1

0
2018/19 2019/20 2020/21 2021/22 2022/23

From the above table and trend column chart, the ratio is fluctuating state. In the fiscal
year 2018/19, the bank has the saving deposit of 0.34 times of total deposit liability. And
0.36, 0.42, 0.39, 0.41 times of total deposit liability in fiscal year 2019/20, 2020/21,
2021/22, 2022/23 respectively.
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2.4. FIXED DEPOSIT TO TOTAL DEPOSIT RATIO:

Table No. 3
Fiscal year Fixed deposit Total deposit Ratio
2018/19 13007478505 363752022098 0.035
2019/20 14104779337 43271316253 0.32
2020/21 14528858311 47508425716 0.30
2021/22 19784889538 59470439378 0.33
2022/23 25999038315 73278547286 0.35
Source: - “annual report of Everest bank ltd.”

Figure No. 3
0.8

0.7

0.6

0.5

0.4 Fixed Deposit

Total Deposit
0.3

0.2

0.1

0
2018/19 2019/20 2020/21 2021/22 2022/23

From the above table and trend column chart, the ratio is fluctuating in increasing and
decreasing trend. The highest ratio is 0.35 times in year 2022/23 and lowest ratio is 0.035
times in fiscal year 2018/19. And 0.32 times, 0.30 times and 0.33 times in year 2019/20,
2020/21, and 2022/23 respectively.
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2.5. CASH AND BANK BALANCE TO CURRENT DEPOSIT RATIO:

Table No. 4
Fiscal year Cash and bank Current deposit Ratio
balance
2018/19 1700991770 6098254263 0.28
2019/20 1723208985 8099050980 0.21
2020/21 2050029487 6490122477 0.31
2021/22 2065607611 7081260955 0.29
2022/23 2514947575 8629903086 0.29
Source: - “annual report of Everest bank ltd.”

Figure No. 4
0.9

0.8

0.7

0.6

0.5
Cash & Bank Balance
0.4 Current Deposit
0.3

0.2

0.1

0
2018/19 2019/20 2020/21 2021/22 2022/23

From the above table and trend column chart, the ratio is fluctuating in not normally. In
fiscal year 2018/19, the bank has the liquidity against current deposit is 0.28 times. And
the bank has the liquidity against current deposit are 0.21, 0.31, 0.29, 0.29 times in year
2019/20, 2020/21, 2021/22, 2022/23 respectively.
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2.6. CASH AND BANK BALANCE TO TOTAL DEPOSIT RATIO:

Table No. 5

Fiscal year Cash and bank balance Total deposit Ratio

2018/19 1700991770 363752022098 0.004
2019/20 1723208985 43271316253 0.04
2020/21 2050029487 47508425716 0.04
2021/22 2065607611 59470439378 0.03
2022/23 2514947575 73278547286 0.03
Source: - “annual report of Everest bank ltd.”

Figure No. 5
1.2

0.8

0.6 Cash & Bank Balance

Total Deposit

0.4

0.2

0
2018/19 2019/20 2020/21 2021/22 2022/23

From the above table and trend column chart, the ratio is fluctuating. In fiscal year
2018/19, the bank has the liquidity for total deposit in the ratio of 0.004 times. And in
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fiscal year 2019/20, 2020/21, 2021/22, 2022/23 the bank has the liquidity for the total
deposit in ratio of 0.04, 0.04, 0.03, 0.03 times respectively.

2.7. CASH AND BANK BALANCE TO TOTAL DEPOSIT (EXCLUDING FIXED

DEPOSIT) RATIO:
Table No. 6

Fiscal year Cash and bank balance Total deposit Ratio

2018/19 1700991770 23991143262 0.070
2019/20 1723208985 29510905958 0.058
2020/21 2050029487 33050419132 0.062
2021/22 2065607611 43524010881 0.047
2022/23 2514947575 41737404078 0.060
Source: - “annual report of Everest bank ltd.”

Figure No. 6
0.08

0.07

0.06

0.05

0.04 Cash & Bank Balance

Total Deposit
0.03

0.02

0.01

0
2018/19 2019/20 2020/21 2021/22 2022/23
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From the above table and trend column chart, the ratio has been maintained in fiscal year
2018/19 by 0.070 times. And the bank has been maintained its ratio in fiscal year
2019/20, 2020/21, 2021/22, 2022/23 by 0.058 times, 0.062 times, 0.47 times and 0.060
times respectively.

2.8. BALANCE WITH NRB TO CURRENT AND SAVING DEPOSIT RATIO:

Table No. 7

Fiscal year Balance with NRB Current + saving Ratio

2018/19 8159753523 23367543593 0.35

2019/20 8205090428 29166536916 0.28
2020/21 9446921621 32979567405 0.29
2021/22 17126155823 39685549840 0.43
2022/23 13356018269 47279508971 0.28
Source: - “annual report of Everest bank ltd.”

Figure No. 7
0.8

0.7

0.6

0.5

0.4 Balance with NRB

Current + Saving Deposit
0.3

0.2

0.1

0
2018/19 2019/20 2020/21 2021/22 2022/23
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From the above table and trend column chart, the ratio is fluctuating in increasing state.
In fiscal year 2018/19, the bank has the liquidity against current and saving deposit
account deposit account liability in the ratio of 0.35 times. And in fiscal year 2019/20,
2020/21, 2021/22, 2022/23 the bank has the liquidity against current and saving deposit
account liability in the ratio of 0.28 times, 0.29 times, 0.43 times and 0.28 times
respectively.

2.9. BALANCE WITH NRB TO FIXED DEPOSIT RATIO:

Table No. 8

Fiscal year Balance with NRB Fixed deposit Ratio

2018/19 8159753523 13007478505 0.63
2019/20 8205090428 14104779337 0.58
2020/21 9446921621 14528858311 0.65
2021/22 17126155823 19784889538 0.87
2022/23 13356018269 25999038315 0.51
Source: - “annual report of Everest bank ltd.”

Figure No. 8

1
0.9
0.8
0.7
0.6
0.5 Balance with NRB
Fixed Deposit
0.4
0.3
0.2
0.1
0
2018/19 2019/20 2020/21 2021/22 2022/23
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From the above table and trend column chart, the ratio is fluctuating. In fiscal year
2018/19, the bank has the balance with NRB against fixed deposit liability in the ratio of
0.63 times. And in fiscal year 2019/20, 2020/21, 2021/22, 2022/23 the bank has the
balance with NRB against fixed deposit liability in the ratio of 0.58 times, 0.65 times,
0.87 times and 0.51 times respectively.

2.10. TOTAL INVESTMENT TO TOTAL DEPOSIT RATIO:

Table No. 9

Fiscal year Total investment Total deposit Ratio

2018/19 7865227165 363752022098 0.02
2019/20 9263858419 43271316253 0.21
2020/21 6504185769 47508425716 0.14
2021/22 15102674197 59470439378 0.25
2022/23 18198739944 73278547286 0.25
Source: - “annual report of Everest bank ltd.”

Figure No. 9
120

100

80

60 Total Investment
Total Deposit

40

20

0
2018/19 2019/20 2020/21 2021/22 2022/23

From the above table and trend column chart, the ratio is fluctuating. In fiscal year
2018/19, the bank has invested 2% of the deposit in investment. In fiscal years 2019/20,
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2020/21, 2021/22, 2022/23 the bank has invested 21%, 14%, 25% and 25% of the deposit
in investment respectively.

Stakeholder response on Liquidity Position of EB

From above of analysis of data we have to conclude that the response of stakeholder on
liquidity analysis of EB is very important for encourage the industrial and commercial
activities eventually learning to better economic condition growth and socio economic
development.

2.11 MAJOR FINDING:-

The fieldwork examines the position of investment in Nepal Govt. Securities and Shares
of Everest Bank Ltd. The bank has successfully maintained their shares & securities.
Analyzing from the balance sheet of five consecutive years, we will be able to portrait the
position of Investment in Nepal Govt. securities and shares of Everest Bank Ltd. It can
be clearly seen, that the investment in Nepal Govt. securities.

The response of stakeholders on liquidity analysis of EBL is very good and they always
thing positively towards there bank.

CHAPTER – III
SUMMARY AND CONCLUSION
 20

3.1. SUMMARY
Nepal is one of the least developed countries of the world. For most of the developing
process, it is financially depending upon the foreign countries. It is economically too
weak. Thus, the economic condition of the people is weak. In Nepal 85% of the people
are depended upon agricultural sector which is unable to provide full employment to the
people. Nepal government has to activate people in the nation’s development through
overall industrialization of nation. For this purpose, development of sound banking
system is essential.

In Nepalese banking sector, commercial banks including ventures banks are operating at
present. In the absences of modern banking any country cannot develop the economic
activity. Therefore, it is essential to find out whether or not the banks are serving an
important contribution to develop sectors of economy. Liquidity is said to be general
business of fund, which shows the bank ability to meet cash requirement. In this record,
this study has been based upon the objective to evaluate the liquidity position of Everest
bank ltd.

3.2. CONCLUSION AND RECOMMENDATION

a. The saving deposit account is fluctuated. The highest ratio is 0.55 times in fiscal
year 2020/21 and the lowest ratio is 0.047 times in fiscal year 2018/19. The ratio
is also not satisfactory due to decline in current year ratio.
b. Fixed deposit is fluctuated. The lowest ratio is 0.035 times and highest ratio is
0.35 times. It is rises in fiscal year 2018/19 and then decline by 0.30 times on
2019/20. It is satisfactory. Bank made good ratio after 2019/20.
c. From the cash and bank balance to current deposit liability is nearly constant
trend. The ratio is moving around between 0.21 times to 0.31 times. It is
satisfactory.
d. Cash and bank balance to total deposit ratio is fluctuating. But the ratio is
somehow satisfactory. The ratio is moving around the between 0.004 times to
0.04 times.
 21

e. Cash and bank balance to total deposit (excluding fixed deposit) ratio is
fluctuating in alternative state. The ratio is satisfactory. It is moving around
between 0.047 times to 0.070 times.
f. The ratio of balance with the NRB to current and saving deposit has been
fluctuating. The ratio is declined in year 2018/19 and then it is grow up. So, the
ratio is satisfactory.
g. The balance with the NRB to fixed deposit ratio is fluctuating. It is moving
around between 0.51 times to 0.87 times.
h. The investment to total deposit ratio is fluctuating adversely. Since the ratio is
fluctuating the bank has unsatisfactory result. However the investment from
source of deposit is higher. It will give a higher return without risk only if the
ratio is stabilized.

REFERENCES
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Adhikari, D.R. & Pandey, D.L. (2067). Anusandhan paddati, Kathmandu: sunrise
publications (P) Ltd.

Poudel, R.B., Baral, K.J., Gautam, its all (2007) Corporate Financial Management.
Kathmandu: Asmita Books Publishers and Distributors (P) Ltd.