BBS 4th yr Proposal

Bachelors of Business Administration (Tribhuvan

Vishwavidalaya)

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 A PROPOSAL ON ANALYSIS OF FINANCIAL
PERFORMANCE OF NEPAL INVESTMENT BANK
LIMITED
(“A” CLASS FINANCIAL INSTITUTION)

A Project Proposal

By
Name of Student: Prasiddha Bikram Shah
T.U. Regd. No.: 7-2-920-178-2018
Danfe College
Concentration (Group): “Finance”

Submitted To
The Faculty of Management
Tribhuwan University
Kathmandu
In Partial fulfillment of the requirements for the degree of
BACHELOR OF BUSINESS STUDIES (BBS)

Putalisadak, Kathmandu
January 2023

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 Background of Study
Financial performance is a subjective measure of how well a firm can use assets from its
primary mode of business and generate revenues. The term is also used as a general measure
of a firm’s overall financial health over a given period. Financial performance in broader
sense refers to the degree to which financial objectives being or has been accomplished and is
an important aspect of finance risk management.
Financial Analysis is an evaluation of both a firm’s past financial performance and its
prospectus for the future. Financial statement analysis involves the calculation of various
ratios. In mathematics a ratio is the relationship between two quantitative figures. In financial
management the ratio is the relationship of two accounting figures. The ratio analysis is the
financial tool by which the financial strength and weakness are measured by relating two
accounting data.
Bank is a financial institution, and the backbone of a country for the economic development.
Bank constitutes the important segment of the financial infrastructure of any country. In
broad sense, bank can be said as important financial institution, which collects and safeguards
the public money, disburses the collected money for the productive purposes, transfer funds,
guarantees the credit worthiness and exchange of money.
The study aims to analyze the financial performance of Nepal Investment Bank Limited. This
study is done using recent data which will be helpful not only to the shareholders but also to
the customers and management. Private sector and public sector both can play the vital role
for the growth of the economy of any country. Integrated and speedy development of the
country is possible only when competitive banking service reaches nook and corners of the
country.
1. History of Banking Institutions in Nepal
The history of banking in Nepal dates back to the year 1937 AD with the establishment
of Nepal Bank Limited as the first commercial bank in Nepal. It was established as a semi-
government bank with METALLIC COINS worth NRs 10 million as the authorized capital.
Banknotes in Nepal weren’t introduced up until the mid-1940s. It was in the year 1945 that
the earliest banknotes were issued by the treasury “Sadar Muluki Khana”.
Later in the year 1955, the Nepal Rastra Bank Act was formulated for a better banking system
and Nepal Rastra Bank was established in 1956 as the Central Bank of Nepal accordingly.
After this date, the banknotes were issued by the Central Bank with the signatures of the
governors of the institution. Till the 1980s, the banking sector was wholly owned by the
government, with Agriculture Development Bank, Rastriya Banijya Bank,
NBL, and NRB being the pillars of a financial institution in Nepal.
The banking sector in Nepal has faced many hurdles and hindrances. It has undergone various
political conflicts and instability. But today, it stands more liberalized and modernized. There
are various types of banks working in the modern banking system in Nepal.

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2. General Introduction
2.1. Commercial Banks in Nepal
Further, as per the Bank and Financial Institutions Act, 2073 B.S. “Bank or financial
institution" means a bank or financial institution which has obtained a license pursuant to this
Act for carrying on banking or financial transaction.” Commercial Bank is a “A” Class
Financial Institution licensed by Nepal Rastra Bank.
Until Mid-July 2022 (Ashad End, 2079), there are 26 “A” Class Commercial Banks operating
Nepal.

2.2. Nepal Investment Bank Limited

Background
[

Nepal Investment Bank Limited herein after referred as NIBL previously Nepal Indosuez
Bank Ltd., now Nepal Investment Mega Bank Limited after recent merger with Mega Bank
Limited was established in 1986 as a joint venture between Nepalese and French partners.
The French partner (holding 50% of the capital of NIBL) was Credit Agricole Indosuez, a
subsidiary of one of the largest banking group in the world. Later in 2002, a group of
Nepalese companies comprising of bankers, professionals, industrialists and businessmen
acquired the 50% shareholding of Credit Agricole Indosuez in Nepal Indosuez Bank Ltd., and
accordingly the name of the Bank also changed to Nepal Investment Bank Ltd.
The mission of the bank is to be the most preferred provider of Financial Services of Nepal.
NIBL aims to be the leading Nepali bank, delivering world class service through the blending
of state-of-the-art technology and visionary management in partnership with competent and
committed staff, to achieve sound financial health with sustainable value addition to all our
stakeholders. We are committed to do this mission while ensuring the highest levels of ethical
standards, professional integrity, corporate governance and regulatory compliance.
3. Statement of Problem
As we know that the main objective of any business organization e.g. Bank is profit
maximization. Analysis of financial statement helps to attain this objective as it gives the
information about the different activities inside the organization. A bank has to make
decisions with a framework of statutory requirements of regulation by central banks, as well
as the national objectives that are determined in the matter of the provisions from time to
time.
Though the banking system is making much progress, the progress has been set up with the
problem and hindrances. Another pressing problem is under developed country, lack of
banking habit in people. Many people are under the poverty line. Many people are not literate
so people are not conscious about the banking system and don’t know the importance of
bank. Bank concentrates only in the city so village have to take a loan from money lender at a
high rate of interest. Most of the people keep their saving idle or give it to others to use it in
greed of more interest.

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 The main problem of the study is to inquire into the financial performance of Nepal
Investment Bank Limited.

Thus, this study will help to find out the answer of the following questions:
• What is the overall financial position of NIBL?
• What is the position of the NIBL in terms of liquidity and profitability?
In this context, the main purpose of the study is analyzing the financial performance of Nepal
Investment Bank Limited in terms of profitability, liquidity, turnover, and efficiency in
operation as well as other related dimensions.
4. Objectives of the Study
The major purpose of this project work study is to know the financial position of the
organization. It helps to get the information about various ratios in order to interpret the
financial statement so that the strength and weakness of the firm as well as its historical
performance and current financial condition can be determined. Analysis of financial
statements helps to examine efficiency and performance of an organization. Some specific
objectives in our topic are listed below:
a) To analyze the financial performances through the use of appropriate financial and
analytical tools.
b) To evaluate the financial position of Nepal Investment Bank Limited
c) To identify the profitability position i.e. EPS, DPS and ROA.
d) To analyze the growth rate trend of profitability position.
e) To identify the liquidity turnover efficiency of assets management.
5. Statement of hypothesis
• Alternative hypothesis (H1):
There is significance relationship between profitability and financial performance of
Nepal Investment Bank Limited in past fiscal years.
• Alternative hypothesis (H2):
There is a significant relationship between the efficiency and financial position of
Nepal Investment Bank Limited.
6. Research Methodology
Research methodology simply refers to the process that is used to collect information and
data, which helps to collect reliable data and information from various sources in order to
prepare report writing.

6.1. Research design

The research design will consist of descriptive research designs to deal with the various
aspects. The descriptive research design will be developed with the aim of studying the
subject of research in detail.

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 6.2. Sources of Data Collection
There are various data collection sources are available i.e. primary sources and secondary
sources. The major data used in this project report are collected from secondary sources.
The sources of detailed data are as follows.
6.2.1. Secondary Data:
The data are collected from the published and unpublished sources. Secondary data are
those data which are already available and have been collected for some other purpose.
• Annual financial reports of Nepal Investment Bank Limited
• Official website of Nepal Investment Bank Limited
• News paper
• Various research papers
• Books and articles
6.3. Data Presentation and Analysis Tool
Various statistical as well as financial ratios are used in analysis of data obtained in the
due course of research. The obtained data is presented, tabulated and graphed and
subsequently done the same to the results computed to analyze and achieve the goal of the
study. The following tools which are used for data analysis are:
• Liquidity ratios
• Profitability ratios
• Assets management ratio
• And other financial ratios
Further, following tools have been used for data presentation:
• Tabulation
• Bar diagrams
7. Chapter Plan
i) Chapter one - Introduction:
The first chapter includes general background, statement of the problem, objective of the
study, significance of the study, limitations of the study, organization of the study and also
the conceptual frameworks along with review of published and unpublished reports, booklets,
journals, magazines, research works and thesis and useful website relating to liquidity.
This chapter also describes the various sequential steps that were strictly followed in
conducting this research. Different financial as well as statistical tools have been used to find
out the actual performance of the banks. The main financial tool adapted to analyze the data
is accounting ratio. Other simple statistical analysis such as standard deviation, coefficient of
variance, etc. will be calculated where necessary. Moreover, the forecasting of the next five
years’ data will be done with the help of regression.
ii) Chapter two – Result and Analysis:
This chapter deals with the static evidence and facts to clarify the research work. Here, the
study presents the collected data for various purpose of analysis to obtain the answer to the

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 research question. Here, the calculation of different accounting ratios and their applications
will be presented.
iii) Chapter three – Summary, Conclusion and Recommendation:
Finally, the third chapter is the conclusion of the research. On the basis of the data analyzed
the research will reach in final phase to conclude the analysis of this chapter. This chapter
further deals with the major findings, prevailing issues and gaps of the concerned banks. The
suggestions to the related bank will also be given which will help the bank to improve the
company in many ways.
8. Limitation of the study
Limitation is the boundary line of the study which narrows the area of study into a specific
circumstance. The major limitations of this study are mentioned below:
• The Research is based on records of five years’ fiscal years’ analysis only i.e. from
FY 2074/2075 to FY 2078/79.
• The researcher has used only some statistical tools for presentation and analysis of
data.
• Most of the data used in this study are based on secondary sources mainly official
website of Nepal Investment Bank Limited.
• The main focus is given to the quantitative aspect rather than qualitative aspect.
• The study based on only Nepal Investment Bank Limited. However, comparison with
other banks will be done wherever necessary.
• It is only for partial fulfillment of Bachelor of Business Studies (BBS).

Submitted by:

Prasiddha Bikram Shah

BBS 4th year
Danfe College
Kathmandu, Nepal

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