MARKET VALUE RATIO OF NIC ASIA BANK LIMITED

A Project Work Proposal

Submitted By:

Sunny Tamang Moktan

T.U. Regd. No.: 7-2-1130-35-2020
Bagmati College
Group: Finance

Submitted To

Bagmati College
Faculty of Management Tribhuvan University
Kathmandu, Nepal

In Partial fulfillment of the requirements for the degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Sukedhara,Kathmandu
March, 2025
 TABLE OF CONTENTS

Background of the Study ………………………………………………1

Profile of the organization Limited…………………………………….2
Statement of Problems ………………………………………………..3
Objectives of the Study ……………………………………………..…4
Rationale of the study…………………………………………….…….4
Review of literature …………………………………………………...6
Research Method ………………………………………………………8
Data Analysis tolls & Technique………………………………………9
Organization of the study………………………………………………10
Bibliography
Background of the Study
The Market Value Ratio (MVR) serves as an essential financial indicator that reflects how the
market values a company based on its stock price relative to its fundamental financial metrics.
By comparing the market value of a company's stock to its intrinsic financial worth, MVR
provides investors with insights into whether a company is undervalued, overvalued, or fairly
priced. Key ratios like the Price-to-Earnings (P/E) ratio, Price-to-Book (P/B) ratio, and other
market-based indicators play a central role in the evaluation of the company's performance and
the investor's perception of its future growth potential. These ratios are especially crucial for
publicly traded companiessss, as they are not only an indication of past performance but also
provide a glimpse into how the market expects the company to perform in the future.
NIC Asia Bank Limited, one of the leading and most recognized commercial banks in Nepal,
operates in an increasingly competitive and regulated banking environment. Established with the
goal of offering comprehensive banking services, NIC Asia has grown to become one of Nepal’s
most prominent players in the financial sector. As a publicly listed company, NIC Asia Bank’s
market value is heavily influenced by its financial performance, corporate strategy, and external
macroeconomic conditions. Investors and financial analysts closely monitor the bank’s market
value ratios to assess how well the bank is performing in comparison to its competitors and to
understand how market trends, investor sentiments, and economic conditions shape its stock
price and overall market valuation.Koirala and Sharma(2021)
The study of NIC Asia Bank’s market value ratios is crucial for gaining a deeper understanding
of the bank’s standing in the financial markets and its relationship with other financial
institutions. In Nepal’s rapidly evolving banking sector, where regulatory reforms, technological
advancements, and market dynamics significantly impact financial performance, the bank’s
market value ratios can help in identifying its competitive edge or areas for improvement. By
assessing the trends of these ratios over a period of time, one can derive meaningful conclusions
about the bank’s financial health, growth trajectory, and its resilience in navigating the
challenges of the banking sector.Pradhan and Joshi(2022)
Furthermore, external factors such as inflation rates, interest rates, economic growth, and the
overall macroeconomic environment play a significant role in influencing a bank's market value.
For instance, changes in interest rates can directly affect the profitability of financial institutions
like NIC Asia Bank, while inflationary trends can influence customer behavior and loan demand.

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Understanding how these factors interact with the bank's internal financial performance allows
investors and analysts to better predict the future outlook of NIC Asia Bank. By looking at how
the bank’s market value ratios change in response to these external factors, one can assess the
stability and growth potential of the bank in an ever-changing market landscape.
This study aims to analyze the market value ratios of NIC Asia Bank over a defined time period,
focusing on key metrics such as the Price-to-Earnings (P/E) ratio and the Price-to-Book (P/B)
ratio, among others. The research will provide an in-depth examination of how these ratios have
evolved, what external and internal factors have driven changes, and how they compare with
industry benchmarks and other competitors within the Nepalese banking sector. Additionally, the
study will explore how macroeconomic conditions and regulatory changes have impacted the
market perception of the bank’s performance.Adhikari,(2019)
Through a detailed comparative analysis, the research will highlight the strengths and
weaknesses of NIC Asia Bank’s market performance, offering valuable insights for investors,
shareholders, and other stakeholders in understanding the bank's position within the market. By
drawing these insights, the study will contribute to a better understanding of how financial ratios
can be used to assess a bank's market valuation and the overall health of the financial system in
Nepal. It will also guide future investment decisions and provide a foundation for assessing the
bank's strategy and market positioning in a competitive financial landscape. Ultimately, this
study will serve as a crucial resource for evaluating the market value and the future growth
potential of NIC Asia Bank, both from a financial and strategic perspective.

Profile of the NIC AISA Bank

NIC Asia Bank Limited, established in 1998, is one of Nepal’s leading commercial banks with a
strong reputation for providing comprehensive financial services to individuals, businesses, and
institutions. Originally formed as Nepal Industrial Credit and Investment Corporation (NIC), it
underwent a transformative merger in 2012 with Asia Capital Finance Limited, which
significantly expanded its services, market presence, and operational capabilities. This merger
positioned NIC Asia Bank as one of the largest private sector banks in Nepal, giving it the ability
to offer a wider range of banking solutions to meet the needs of a diverse customer base. Over
the years, the bank has demonstrated consistent growth, robust financial performance, and a
commitment to providing innovative and reliable financial services.

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With a customer-centric approach, NIC Asia Bank offers a broad spectrum of products and
services, including retail banking, corporate banking, investment solutions, foreign exchange,
and digital banking. Retail banking services encompass savings and current accounts, fixed
deposits, personal loans, home loans, vehicle loans, and credit cards, aimed at catering to the
personal financial needs of individuals. Corporate banking services include trade finance,
business loans, working capital solutions, and other financial products designed to support
businesses’ growth and operations. Furthermore, NIC Asia Bank’s treasury and foreign exchange
services help meet the currency exchange needs of individuals and businesses engaged in
international trade.
In response to the growing demand for digital banking solutions, NIC Asia Bank has made
significant strides in digital transformation. The bank has embraced technology with services
such as mobile banking, internet banking, and ATMs, which allow customers to carry out
transactions conveniently and securely. These technological advancements not only enhance
customer experience but also improve accessibility, making banking services available to people
in both urban and remote rural areas of Nepal. The bank's focus on innovation has earned it
recognition for being one of the leaders in digital banking in Nepal.
With over 200 branches across Nepal, NIC Asia Bank has built an extensive physical and digital
presence that ensures accessibility to banking services for customers nationwide. Its wide
network of branches and ATMs strategically located in various regions of Nepal allows it to
serve a broad demographic, from urban professionals to rural communities. The bank’s strategic
expansion and geographical reach have been key to its growth, providing it with the capacity to
cater to a diverse set of financial needs and contribute to financial inclusion in Nepal.
The financial stability and success of NIC Asia Bank are underpinned by its strong asset base,
high-quality portfolio, and sound risk management practices. Over the years, the bank has
maintained robust capital adequacy ratios, solid asset quality, and a strong liquidity position, all
of which contribute to its financial strength. These attributes, combined with a focus on cost
management, have enabled NIC Asia Bank to navigate the challenges of the ever-changing
financial landscape and position itself as one of the leading financial institutions in Nepal. The
bank's ability to maintain profitability and deliver sustainable growth has earned it the trust of its
customers and investors alike.

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In addition to its financial services, NIC Asia Bank is dedicated to corporate social responsibility
(CSR) initiatives that focus on community development, education, healthcare, and
environmental sustainability. The bank actively engages in programs that help uplift
underprivileged communities, contribute to the country’s development goals, and promote
sustainable practices. Through its CSR activities, NIC Asia Bank seeks to make a positive impact
on the social and economic development of Nepal, reinforcing its role as a responsible corporate
citizen.
The leadership of NIC Asia Bank is composed of a skilled and experienced team of professionals
who are dedicated to ensuring the bank's long-term success. The Board of Directors, along with
senior management, provides strategic guidance to the bank, ensuring that it adheres to high
standards of corporate governance, ethical business practices, and customer-focused service. The
management team’s commitment to innovation and continuous improvement ensures that NIC
Asia Bank remains competitive in the dynamic Nepalese banking sector.
In conclusion, NIC Asia Bank Limited has proven to be a dynamic and forward-thinking
institution, playing a significant role in Nepal’s financial sector. Its wide range of banking
services, commitment to technological innovation, extensive branch network, and strong
financial performance position it as a market leader. Furthermore, the bank’s focus on corporate
social responsibility and community development demonstrates its dedication to making a
positive impact on Nepal’s socio-economic growth. As the bank continues to evolve and grow, it
remains focused on providing high-quality banking services while contributing to the broader
development of Nepal's economy. Through its innovation, financial strength, and customer-
centric approach, NIC Asia Bank is well-poised for continued growth and success in Nepal's
increasingly competitive banking industry.

Statement of The Problem

NIC Asia Bank Limited is one of the prominent financial institutions in Nepal, offering a wide
range of banking products and services. However, despite its growth and market presence, there
is a gap in understanding the relationship between the bank's market value ratios and its financial
performance. Market value ratios, such as the Price-to-Earnings (P/E) ratio and Price-to-Book
(P/B) ratio, are critical in assessing the bank's valuation in the eyes of investors and the broader

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market. These ratios can provide valuable insights into how the bank is perceived by investors,
and how effectively it is managing its assets, earnings, and overall financial health.
The problem lies in the insufficient exploration of how market value ratios reflect the bank’s
financial stability, growth prospects, and investor confidence. While the bank's financial health
can be assessed through profitability, liquidity, and capital adequacy, the market value ratios
offer a different perspective on how external factors, such as macroeconomic conditions,
industry trends, and competitive pressures, impact the bank’s valuation. This lack of
comprehensive analysis leaves a gap in understanding the dynamics between NIC Asia Bank’s
internal performance and its market standing.
The basic Statement The Problem of this study is the evaluation of the specific of this study are
as follows:

 How do financial ratios, particularly market value ratios, influence investor perceptions of
NIC Asia Bank?
 How do changes in the market value ratios of NIC Asia Bank correlate with its overall
financial performance and growth over the past decade?

Objectives of the Study

The basic objective of this study is the evaluation of the specific objectives of this study are as
follows:

 To analyze the market value ratios of NIC Asia Bank Limited.

 To Identified implaceent of market value of NIC ASIA Bank.

Rationale of the Study

This study is crucial because it aims to explore the market value ratios of NIC Asia Bank
Limited, which serve as key indicators of the bank's financial health and investor perception.
Understanding these ratios is important for assessing how the market values the bank in
comparison to its competitors and how various internal and external factors impact its stock
performance. With the banking industry in Nepal becoming more competitive, it is essential to
evaluate NIC Asia Bank's market standing, especially in relation to economic fluctuations and
market sentiment.

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The findings of this study will provide valuable insights for investors, financial analysts, and the
bank's management. By examining the bank's market value ratios, the study will offer a clearer
picture of how effectively the bank is being valued in the market, the factors driving its stock
price, and how its performance compares with other leading banks in Nepal. This knowledge is
vital for making informed decisions about investment strategies, business growth, and financial
planning. Ultimately, this study aims to enhance the understanding of the market value ratios and
contribute to better financial decision-making in Nepal’s banking sector.

Review of Literature

Sharma(2014) The Impact of Financial Ratios on the Stock Price of Listed Commercial Banks in
Nepal. Journal of Business and Social Sciences, 5(1), 45-60. This article explores the
relationship between various financial ratios (including market value ratios) and stock prices of
commercial banks listed on the Nepal Stock Exchange. It highlights how certain ratios, like P/E
and P/B, affect investors' perceptions of stock value and ultimately influence stock price
movements in the Nepalese banking sector.

Pandit (2016) An Analysis of Market Value Ratios of Nepalese Commercial Banks. Journal of
Nepalese Business Studies, This study specifically focuses on the market value ratios (P/E, P/B,
and dividend yield) of Nepalese commercial banks. It compares these ratios across leading banks
like NIC Asia and examines how these ratios reflect investor confidence and the banks' market
positioning in the competitive banking landscape.

Koirala and Bhandari(2017) Market Value Ratios and Performance of Banks: A Study of
Commercial Banks in Nepal. Nepalese Journal of Management. This paper discusses how market
value ratios like P/E and P/B ratio correlate with the performance of Nepalese commercial banks.
The study investigates the link between stock performance and profitability, as well as how
market ratios can serve as an indicator for future growth potential of the banks.

Joshi(2018) Determinants of Stock Price in Nepalese Banks: An Empirical Analysis.Nepalese

Financial Review. This research delves into the key factors that determine stock prices in the
Nepalese banking sector. It looks at financial metrics like market value ratios, profitability ratios,

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and economic conditions to assess how these affect stock prices of banks such as NIC Asia. The
study highlights the importance of market value ratios in stock price prediction.

Adhikari(2019) The Effect of Market Value Ratios on the Stock Price Movement of Commercial
Banks in Nepal. South Asian Journal of Financial Studies.This article analyzes the effect of
market value ratios on stock price movements, specifically within the Nepalese banking industry.
It focuses on how market value ratios like P/E and P/B are closely linked with stock market
volatility and investor confidence, offering a comprehensive understanding of how these ratios
influence stock price movements of commercial banks.

Acharya and Shrestha(2020) Comparative Analysis of Price-to-Earnings Ratio of Leading

Commercial Banks in Nepal. Journal of Economic Studies, This paper compares the P/E ratio of
major commercial banks in Nepal, including NIC Asia, Nabil Bank, and others. The study
provides insight into how the P/E ratio is used by investors to assess the relative value of banks’
stocks and how it reflects market expectations about future earnings growth.

Research Methods
The research methodology for analyzing the Market Value Ratios (MVR) of NIC Asia Bank
Limited will rely exclusively on secondary data. This secondary data will be collected from
publicly available sources such as NIC Asia Bank’s annual reports, Nepal Stock Exchange
(NEPSE) listings, and other financial databases like Bloomberg and Reuters. The key market
value ratios to be analyzed include the Price-to-Earnings (P/E) Ratio, Price-to-Book (P/B) Ratio,
Dividend Yield the study will include correlation analysis to explore relationships between
market value ratios and other financial variables. Since the research is based solely on secondary
data, the methodology will rely heavily on the accuracy and reliability of the data provided in the
annual reports and stock market listings. This approach will provide valuable insights into NIC
Asia Bank's market performance and its standing in the banking sector.

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Research Design
The research design for analyzing the Market Value Ratios (MVR) of NIC Asia Bank Limited
will adopt a quantitative approach using secondary data analysis.This analysis will help
understand the bank’s position in the Nepalese banking sector and its attractiveness to investors.
Data will be collected from the bank's annual reports, financial statements Overall, the research
will provide an in-depth understanding of the bank’s market value dynamics, aiding informed
decision-making for potential investors and market analysts.

Population and Sample

The population refers to the total group of commercial banks that are relevant to your study. For
instance, if we are analyzing banks in Nepal, the population would include all commercial banks
operating in the country, both public and private. Now, if you're working with a sample of 20
commercial banks, this means you are selecting a smaller, manageable group from the larger
population. By studying this sample of 20 banks, you can draw conclusions that reflect trends or
behaviors that might be present across the entire population of commercial banks, without
needing to study each individual bank in the population. The goal is to gain insights into the
industry as a whole by examining a representative subset of banks.

Nature and Sources of data

The nature of the data for this research on the Market Value Ratios of NIC Asia Bank is
secondary, meaning it will be gathered from existing publicly available sources. Over the past 10
years, NIC Asia Bank Limited's market value ratio has fluctuated, reflecting changes in its
financial performance and market conditions. Key data sources include the bank's annual and
quarterly financial reports, along with stock price information from the Nepal Stock Exchange
(NEPSE). These factors, combined with economic conditions, regulatory changes, and strategic
decisions like expansion and digital transformation, have influenced investor sentiment and the
bank's stock valuation. As a result, the market value ratio has served as an important indicator of
NIC Asia's market position and growth prospects in the Nepali banking sector.

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 Data Analysis and Tolls Technique
Data analysis of market value ratios and bank performance involves several key steps, utilizing a
variety of tools and techniques. First, data collection is essential, gathering financial statements
(balance sheets, income statements) from sources like annual reports, along with stock market
data such as stock prices and trading volumes. Relevant financial metrics, such asPrice-to-
Earnings (P/E) and Price-to-Book (P/B) ratios, earnings per share (EPS), and dividends, are
calculated to assess the bank's stock valuation. After cleaning and transforming the data,
descriptive statistics like mean, median, and standard deviation are calculated to summarize the
data and understand the central tendency and volatility of these ratios. Visual tools like line
charts and scatter plots are used to identify trends and correlations between market value ratios
and performance indicators like return on equity (ROE).

Financial Tolls
Financial ratios are essential tools used to evaluate a bank's financial performance, operational
efficiency, and market valuation. Key categories of these ratios include liquidity ratios,
profitability ratios, efficiency ratios, leverage ratios, and market value ratios. Liquidity ratios,
such as the current ratio and quick ratio, assess a bank's ability to meet short-term obligations by
comparing its current assets to current liabilities. Profitability ratios like return on assets (ROA)
and return on equity (ROE) measure a bank's ability to generate profits relative to its total assets
and equity, respectively, while the net interest margin (NIM) evaluates how efficiently a bank
generates income from its interest-bearing assets.

Efficiency ratios, including the cost-to-income ratio and asset utilization ratio, provide insights
into how effectively a bank manages its resources to generate income and control costs.
Leverage ratios, such as the debt-to-equity ratio and equity multiplier, help assess the bank's
reliance on debt to finance its operations compared to equity, indicating its financial risk and
capital structure. Finally, market value ratios like the price-to-earnings (P/E) ratio, price-to-book
(P/B) ratio, and dividend yield measure how the market values a bank's stock, reflecting investor
sentiment, growth expectations, and dividend returns. Together, these ratios offer a
comprehensive picture of a bank's financial health, enabling stakeholders to make informed
investment and management decisions.

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Organization of the Study
The organization of the study on the Market Value Ratios of NIC Asia Bank will begin with an
introduction, providing background information on the bank, the importance of market value
ratios, the objectives of the study, and the research questions. It will also highlight the scope and
limitations of the research. Following this, a literature review will be presented, discussing
previous research related to market value ratios, the financial performance of banks, and how
these ratios are used to assess a bank's market standing. The research methodology section will
detail the approach used to collect secondary data, including the sources of data, sampling
techniques, and the tools for analysis. In the data analysis and interpretation section, the collected
data will be analyzed to evaluate the key market value ratios of NIC Asia Bank over a specified
period. The findings and discussion section will present the results from the analysis, providing
insights into NIC Asia Bank’s market value and comparing its performance to industry averages.
The conclusion will summarize the key findings and offer recommendations for future research
or decisions for investors. Lastly, the references section will list all sources used throughout the
study, and any additional material, such as raw data or supplementary information, will be
included in the appendices.

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 BIBLIOGRAPHY

 Bhatta (2020). Investor Behavior and Stock Market Dynamics: A Study of NIC Asia Bank’s

Stock Performance. Financial Markets Review, 14(3), pp. 60-73.

 Koirala and Sharma(2021). Impact of Economic Cycles on the Stock Market: A Case Study

of NIC Asia Bank. Journal of South Asian Economics, 7(1), pp. 88-101.

 Khadka(2022) . The Financial Performance of NIC Asia Bank: A Comprehensive Market

Analysis. Journal of Nepalese Financial Studies, 34(2), pp. 115-130.

 Pradhan and Joshi(2022).Stock Market Performance and Economic Factors Influencing NIC

Asia Bank. Journal of Economic Research in Nepal, 5(3), pp. 98-110.

 Shrestha(2019). Banking Sector Trends and Stock Market Performance in Nepal: A Case

Study of NIC Asia Bank. Nepal Journal of Economics, 12(1), pp. 90-105.

 Shrestha(2018). Assessing the Impact of Regulatory Changes on the Market Value of

Nepalese Banks: A Case Study of NIC Asia Bank. Journal of Financial Regulation and

Compliance, 13(4), pp. 212-225.

 Rai .(2024) Financial Ratios and Their Application in Nepalese Banks: A Case of NIC Asia

Bank. Journal of Banking and Finance Studies, 10(2), pp. 134-148.,

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