FINANCIAL PERFORMANCE ANALYSIS OF

STANDARD CHARTERED BANK NEPAL LIMITED

A Project Work Report

By

Subin Prajapati
T.U.Reg no: 7-2-789-72-2014
Jubilant College

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In Partial Fulfillment of the Requirements of the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Kathmandu, Nepal
June 2025
 DECLARATION

I hereby declare that the project work entitled “FINANCIAL PERFORMANCE

ANALYSIS OF STANDARD CHARTERED BANK NEPAL LIMITED submitted to the
faculty of management, Tribhuvan University, Kathmandu is an original piece of work
under the supervision of Mr. Mohani Prasad Bhattarai, faculty member, Jubilant College,
Kathmandu, and is submitted in partial fulfillment of requirements for the award of the
degree of Bachelor of Business Studies (BBS). This project work report has not been
submitted to any other university or institution for the award of any degree.

……………………….

Subin Prajapati
Date:

ii
 ACKNOWLEDGEMENT

This project is based on analysis of FINANCIAL PERFORMANCE ANALYSIS OF

STANDARD CHARTERED BANK NEPAL LIMITED. For this report, secondary data are
used to study through annual report of the bank. I sincerely thank Tribhuvan University and
Jubilant College for providing the opportunity. Your valuable input and encouragement
have greatly contributed to the success of this project.

I extend my heartfelt appreciation to Mr. Mohani Prasad Bhattarai and the entire staff for
their invaluable guidance and suggestions throughout my study. I am grateful to my teachers
and friends at Jubilant College, whose direct and indirect assistance greatly contributed to
the completion of this work. Their support in providing information about the bank and
assisting with report writing has been instrumental.

Finally, I would like to thank my parents and family, for whose cooperation, help and
motivation in managing fund contributed to the completion of this project.

Subin Prajapati
Symbol Number: 707610016

v
 TABLE OF CONTENTS

Title Page… .......................................................................................................................... .i

Declaration ........................................................................................................................... ii
Supervisor’s Recommendation ............................................................................................ iii
Endorsement ........................................................................................................................ iv
Acknowledgement ................................................................................................................. v
Table of Contents ................................................................................................................. vi
List of Tables....................................................................................................................... vii
List of Figures .................................................................................................................... viii
Abbreviations ....................................................................................................................... ix

CHAPTER I: INTRODUCTION ..................................................................................... 1

1.1 Background of the study ............................................................................................. 1
1.2 Profile of Standard Chartered Bank ............................................................................ 2
1.3 Objectives.................................................................................................................... 3
1.4 Rationale of the Study ................................................................................................. 4
1.5 Review of literature ..................................................................................................... 5
1.6 Methods of the Study .................................................................................................. 6
1.6.1 Research Design ................................................................................................. 7
1.6.2 Population and Sample ....................................................................................... 7
1.6.3 Source os Data .................................................................................................... 7
1.6.4 Data Collection Strategy ..................................................................................... 8
1.6.5 Tools of Data Analysis ....................................................................................... 8
1.7 Limitations of the study ............................................................................................ 12
1.8 Organization of the study .......................................................................................... 12

CHAPTER II: RESULT AND ANALYSIS .................................................................. 12

2.1 Data Presentation ...................................................................................................... 13
2.2 Major Findings .......................................................................................................... 28

CHAPTER III: SUMMARY AND CONCLUSION ..................................................... 31

3.1 Summary ................................................................................................................... 31
3.2 Conclusion ................................................................................................................ 31

BIBLIOGRAPHY ............................................................................................................ 33
APPENDICES ................................................................................................................... 34

vi
 LIST OF TABLES

Table No. Title Page No.

1 Current Ratio of Standard Chartered Bank Nepal Limited 14

2 Cash and Bank Balance to Total Deposit Ratio 15

3 Net Working Capital 17

4 Return on Assets 18
5 Return on Equity 20
6 Net Profit Margin 22
7 Gross Profit Margin 23
8 Capital Adequacy Ratio 24
9 Earning Per Share 26
10 Price-Earning Ratio 27

vii
 LIST OF FIGURES

Figure No. Title Page No.

1 Current Ratio of Standard Chartered Bank Nepal Limited 14

2 Cash and Bank Balance to Total Deposit 16

3 Net Working Capital 17

4 Return on Assets 19
5 Return on Equity 21
6 Net Profit Margin 23
7 Gross Profit Margin 24
8 Capital Adequacy Ratio 25
9 Earning Per Share 27
10 Price-Earning Ratio 28

viii
 ABBREVIATIONS

BBS = Bachelor of Business Studies

AD = Anno Domini

BS = Bikram Sambat

SCB = Standard Chartered Bank Nepal Limited

FY = Fiscal Year

LTD = Limited

EPS = Earnings Per share

P/E = Price Earnings Ratio

ROA = Return on Assets

ROE = Return on Equity

NRB = Nepal Rastra Bank

I.E = Id Este (Therefore)

ETC = Etcetera

T.U = Tribhuvan University

Rs = Rupees

CAR = Capital Adequacy Ratio

ix
 CHAPTER I
INTRODUCTION

1.1 Background of the study

Financial performance measures how effectively a company uses its resources to earn
income from its main business activities. It is a key way to check the overall health and
efficiency of a business. Important measures like revenue, profit, cash flow, return on
assets, and return on equity are used to evaluate financial performance. Tracking these
measures over time helps understand a company’s financial condition, how well it
operates, and its position in the market. Good financial performance shows that a company
is managed well, financially strong, and able to grow and maintain its operations. On the
other hand, poor financial performance may point to problems like inefficiencies, losing
market share, or bad management choices, which may need strategic changes to fix
(Fatihudin & Mochklas, 2018).

Studying financial performance is important for different groups, such as investors,

company leaders, lenders, and regulators. Investors use it to decide whether to buy, keep,
or sell shares in a company. Company leaders rely on it to make strategic plans,
improve operations, and increase profits. Lenders check financial performance to see if a
company can repay its debts and meet financial commitments. Regulators also use this
data to make sure companies follow industry rules and financial laws. In short,
analyzing financial performance helps identify strengths and weaknesses, set financial
targets, and support long-term growth. This makes it a vital tool for maintaining and
improving a company’s financial well-being (Osadchy et al., 2018).

Evaluating the financial performance of banks is crucial for stakeholders such as investors,
regulators, and policymakers, as it provides insights into their stability, profitability, and
long-term sustainability. A thorough financial analysis helps assess whether a bank can
withstand economic shocks, meet its obligations, and continue operations without
disruptions. This study examines the financial health of Standard Chartered Bank Nepal
Limited (SCB), one of Nepal’s leading commercial banks with a strong market presence
since its establishment in 1987. Over the years, SCB has expanded its operations, offering
a wide range of services, including corporate banking, retail banking, and digital financial
 2

solutions, catering to diverse customer needs. As a systemically important bank, SCB’s

performance significantly influences Nepal’s banking sector, making its financial
evaluation essential for economic stability. By analyzing key financial indicators, this
research aims to determine SCB’s operational efficiency, risk management capabilities, and
competitive positioning in Nepal’s evolving financial landscape. The findings will provide
valuable insights for stakeholders to make informed decisions regarding investments,
regulatory policies, and strategic growth opportunities in the banking industry.

To understand SCB's financial performance, the study examines its financial reports,
including the balance sheet, income statement, and cash flow statement. These documents
provide a comprehensive view of the bank’s financial health by detailing its assets,
liabilities, revenues, expenses, and cash movements over a given period. Additionally, the
research employs key financial ratios—such as profitability ratios (e.g., Return on Assets
and Net Interest Margin), liquidity ratios (e.g., Current Ratio and Loan-to-Deposit Ratio),
efficiency ratios (e.g., Cost-to-Income Ratio), and solvency ratios (e.g., Capital Adequacy
Ratio). These metrics help assess how effectively the bank generates profits, manages short-
term obligations, utilizes its resources, and maintains long-term financial stability.

Furthermore, this study examines SCB's performance relative to Nepal's broader banking
industry through a three-dimensional analysis of economic conditions, regulatory
compliance, and competitive positioning. It evaluates how macroeconomic factors like GDP
growth, inflation trends, and remittance flows impact SCB's operations compared to
industry peers, while assessing the bank's adherence to evolving regulatory requirements
including Basel III standards and Nepal Rastra Bank directives. The competitive analysis
benchmarks SCB against key rivals across critical metrics such as market share, asset
quality, digital transformation progress, and cost efficiency ratios. This comparative
approach reveals whether SCB maintains leadership, follows industry trends, or occupies
specialized niches, providing stakeholders with actionable insights into the bank's relative
strengths, adaptation strategies, and potential improvement areas within Nepal's dynamic
financial landscape. The findings will illuminate SCB's capacity to navigate sector-wide
challenges while capitalizing on emerging opportunities in an increasingly competitive and
regulated market environment.
 3

1.2 Profile of Standard Chartered Bank Nepal Limited

Standard Chartered Bank Nepal Limited (SCB) commenced operations in Nepal in 1987 as
a joint-venture institution. Today, it remains a vital component of the Standard Chartered
Group, which holds a 70.21% majority stake, while the remaining 29.79% is publicly owned
by Nepalese shareholders. Notably, SCB maintains the distinction of being the sole
international bank operating in Nepal.

As part of a leading global banking network with a 160-year legacy across dynamic markets
worldwide, SCB embodies its parent group's brand promise: "Here for good." The bank
operationalizes its purpose of "driving commerce and prosperity through unique diversity"
across its Nepalese operations. With its global presence spanning 60 markets and serving
clients in an additional 85 countries, Standard Chartered brings international banking
expertise while maintaining strong local relevance in Nepal.

Standard Chartered Bank serves four client segments across four regions: Europe &
Americas, Africa & Middle East, Asia & South Asia, and Greater China & North Asia. Its
parent company, Standard Chartered PLC, is listed on the London, Hong Kong, Bombay,
and National Stock Exchanges. In Nepal, the bank operates through 15 service points, 26
ATMs nationwide, and employs over 531 local staff, combining this strong domestic
presence with its global network to deliver comprehensive international banking services.
This unique structure enables Standard Chartered Bank Nepal Limited to offer clients both
local market expertise and global financial capabilities.

Standard Chartered Bank Nepal Limited provides comprehensive banking solutions to

diverse client segments, ranging from individual customers and mid-market local corporates
to multinational corporations, large public-sector entities, government corporations,
airlines, and hotels. The bank also serves the development sector, including embassies, aid
agencies, bilateral and multilateral organizations, as well as local and international NGOs.
As a market leader, SCB Nepal has consistently pioneered client-centric products and
services, maintaining its position as an innovator in Nepal's banking industry. Notably, it
was the first bank in Nepal to implement both an Anti-Money Laundering policy and
rigorous 'Know Your Customer' procedures across all customer accounts, demonstrating its
commitment to regulatory compliance and international banking standards. This progressive
approach has solidified SCB's reputation as a trusted financial partner for both domestic and
international clients operating in Nepal.
 4

1.3 Objectives of the Study

Nepal, as a developing country, relies heavily on its banking and financial sector to drive
economic growth and development. The stability and expansion of financial institutions,
including commercial banks, play a crucial role in supporting various sectors such as
agriculture, trade, and infrastructure. The success of these banks is intrinsically linked to the
financial literacy and banking habits of the population, which influence savings patterns,
credit accessibility, and investment flows. The main objective of this study is to analyze the
performance of Standard Chartered Bank Nepal Limited. A study based on a successful
business analysis will reveal the needs of the current year and their management.

The principal objective of this study is to identify the determinants of financial performance
of Standard Chartered Bank Nepal Limited. There are some intentions to achieve the basic
objective.

Other specific objectives of the study are:

i. To analyze the financial performance of Standard Chartered Bank Nepal Ltd.

ii. To evaluate the financial position in terms of profitability, activity, and earnings
ratios.

iii. To measure how effectively the organization utilizes its resources (e.g., assets,
capital, and labor).

1.4 Rationale of the Study

Writing reports is very useful for students because it helps them learn on their own and think
carefully about problems. This study will examine the financial performance of Standard
Chartered Bank Nepal Limited to understand how strong the bank is financially. By studying
the bank’s financial records, the research will find important details that can help make
better business decisions and improve the bank’s success in the future. Additionally, the
findings of this study will add useful information to banking and finance research, which
can help other researchers in the future.

The purpose of this report is to analyze the financial position of Standard Chartered Bank
Nepal Limited. The study thoroughly examined the financial appraisal analysis of SCB over
five years, i.e., from 2019-2020 to 2023-2024 AD. This report is a secondary resource for
researchers and expands business knowledge among students in related disciplines.
 5

The study was believed to have been beneficial for several groups and individuals:

i. This study helps examine financial positions in order to know the financial strength
of SCB.

ii. It helps evaluate the financial position through key ratios such as profitability,
activity, and earnings, making this analysis beneficial for decision-makers, creditors,
businesses, and the public.

iii. It helps measure how productively the organization utilizes its resources —including
assets, capital, and labor.

1.5 Review of Literature

A literature review examines prior research, its findings, and limitations to contextualize
current studies and guide future work. It ensures scientific continuity by building on existing
knowledge while identifying gaps for further exploration. This process also assesses the
replicability of studies and enables comparisons between past and present research.

The 2007 financial crisis underscored the critical role of financial risk management,
prompting new studies and methodologies. Research highlights credit risk and exposure risk
as key factors influencing market liquidity, with equity exposures playing a significant role
in asset pricing.

Reviewing relevant literature demonstrates comprehension of the field and supports

research findings. In banking, financial analysis—evaluating performance, asset quality,
and capital adequacy—provides stakeholders insights into financial health and improvement
areas. Future research should prioritize advanced analytical tools to enhance risk
management and financial analysis.

1.5.1 Conceptual Review

"Ahuja (1998) defines financial performance analysis as examining how different financial
factors in a business relate to each other, using information from financial statements. It
involves comparing items in the balance sheet, income statement, and other operational data
to understand trends and their significance. This analysis helps reveal the meaning behind
financial numbers by showing connections between them."

Pandey (1997) explains that financial statements give a summary of a company's money-
related activities. By studying these reports carefully, we can understand how well a
 6

business is doing. This makes financial statements very useful for checking performance.
Looking at these statements helps with financial analysis, especially when using ratio
analysis, which is a key way to examine financial information.

Metcalf and Tatar (1996) describe financial performance analysis as a way to look at how
different parts of financial statements connect to each other. This helps us better understand
a company's financial situation and how it's performing.

Horne (1994) states that financial ratios are calculated using numbers from a company's
balance sheet and income statement. These ratios only become meaningful when compared
- either with the company's own past performance, with competitors in the same industry,
or with industry averages. Such comparisons help predict future performance. A
comparative financial performance study gives essential information about a company's
profitability, ability to pay debts, earning power, operational efficiency, capital sources and
uses, and overall financial condition. This analysis reveals how effectively a company
manages its finances to generate profits.

1.5.2 Review of Previous Work

Before this study, several researchers have examined the financial performance of
commercial and joint venture banks. This review focuses only on relevant subject matter.

Oberholzer & Van der Westhuizen (2004) analyzed the efficiency and profitability across
ten regional offices of a major South African bank. Their research showed how traditional
profitability and efficiency measures can be combined with Data Envelopment Analysis
(DEA). While focused on banking regions, their results supported Yeh's (1996) finding that
DEA efficiency scores correlate with both profitability and efficiency ratios. The study
found significant relationships between conventional financial measures and allocative,
cost, and scale efficiency, but no meaningful connection with technical efficiency.

Cronje (2007) used Data Envelopment Analysis (DEA) to evaluate the efficiency of 13
South African banks. The study found that three largest banks operated efficiently, serving
as benchmarks for the others. While the fourth largest bank showed minor inefficiencies,
seven banks were classified as inefficient. The research provided specific improvement
guidelines to help these less efficient banks enhance their sustainable profitability.
 7

1.6 Methods of the Study

To conduct this study, I began by examining the official website of Standard Chartered Bank
Nepal Limited (SCB) to gather foundational information. I then analyzed the bank’s audited
financial reports, including its balance sheet, profit and loss statement, and other disclosures
filed with the Nepal Rastra Bank (NRB). Using key financial analysis tools—such as ratio
analysis, trend evaluation, and benchmarking—I interpreted the data to assess SCB’s
performance across critical metrics. This structured methodology ensured a comprehensive
and evidence-based approach to the report’s preparation.

1.6.1 Research Design

Research design involves systematically planning how to investigate a defined research
problem. As articulated by scholars, it refers to "the structured arrangement of conditions
for collecting and analyzing data in a way that balances relevance to the research objectives
with procedural efficiency." Essentially, it provides the conceptual framework guiding the
entire research process.

The primary objective of this study is to examine and evaluate the financial performance of
joint-venture banks, with a specific focus on Standard Chartered Bank Nepal Limited
(SCB). To achieve this goal, the study adopts a descriptive research design, which facilitates
the systematic interpretation of existing financial data. Additionally, a historical research
design is employed, utilizing historical financial data (e.g., balance sheets, income
statements) to analyze trends and performance metrics over time.

1.6.2 Population and Sample

The study population consists of all 20 commercial banks currently operating in Nepal.
Using judgmental sampling methodology, Standard Chartered Bank Nepal Limited (SCB)
was selected as the study unit, representing 5% of the total banking population. This
purposive selection was made based on SCB's position as a leading joint-venture bank with
international operational standards, making it particularly relevant for financial performance
analysis.

1.6.3 Sources of Data

This study is based entirely on secondary data collected from various reliable sources. The
primary data was extracted from the published annual reports of Standard Chartered Bank
Nepal Limited (SCB), including the Statement of Financial Position, Statement of
Comprehensive Income, and other related financial statements. Additional supporting
 8

information was gathered from reputable business publications, financial journals, industry
reports, and newspapers. All collected data were systematically organized into time series
format to enable comprehensive analysis. To ensure data reliability, the information
obtained from secondary sources was carefully cross-verified with SCB's official annual
reports. The study primarily focuses on SCBNL's annual reports from 2020 to 2024 as the
core dataset, supplemented by other relevant sources for contextual and comparative
analysis. This rigorous approach to data collection and verification helps maintain the
accuracy and validity of the research findings.

1.6.4 Data Collection Strategy

This research utilizes secondary data derived from Standard Chartered Bank Nepal
Limited's (SCB) annual financial reports, encompassing both published and unpublished
financial documentation relevant to the study. The analysis and subsequent conclusions are
principally grounded in SCB's audited financial statements, including the balance sheet,
income statement, and cash flow statements, which provide comprehensive insights into the
bank's financial performance.

1.6.5 Tools of Data Analysis

Financial analysis tools are essential instruments for evaluating and interpreting financial
data. These analytical techniques enable researchers to assess the effectiveness of financial
policies and strategies by identifying organizational strengths and weaknesses. For this
study, the following key financial analysis tools were employed:

❖ Liquidity Ratios

Liquidity ratios assess a company's ability to meet short-term obligations. Proper liquidity
management ensures financial stability, maintains reputation, and supports growth, while
avoiding both cash shortages (risking insolvency) and excess idle funds (reducing returns).
Balancing these factors is key to sustainable operations.

i. Current ratio: The current ratio is a fundamental liquidity metric that assesses a
company’s short-term financial health by comparing its current assets to current
liabilities. It helps investors, creditors, and management evaluate whether a business
can cover its upcoming obligations without resorting to external financing.

𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔
Formula: Current ratio=
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
 9

The current ratio measures short-term financial health. Below 1.0 indicates liquidity
risk; 1.0-1.5 shows minimal buffer; 1.5-2.0 is ideal. Above 2.0 may suggest
inefficient asset use. Retailers typically maintain 1.0-1.5 (fast turnover), while
manufacturers need 1.5-2.5 (slower cycles). Always compare to industry peers and
historical trends.

ii. Net Working Capital: Net Working Capital (NWC) measures a company's short-
term liquidity by subtracting current liabilities from current assets. A positive NWC
indicates the firm can cover its short-term obligations, while a negative NWC signals
potential liquidity issues. It reflects operational efficiency and financial health, with
excessive NWC possibly implying idle resources, and too little suggesting over-
leverage.

Formula: NWC = Current Assets – Current Liabilities

iii. Cash and Bank Balance to Total Deposits Ratio: It is a financial metric used
primarily by banks and financial institutions to assess their liquidity position. It
measures the proportion of a bank's total deposits that is held in cash or bank
balances (highly liquid assets).

𝑪𝒂𝒔𝒉 + 𝑩𝒂𝒏𝒌 𝑩𝒂𝒍𝒂𝒏𝒄𝒆𝒔

Formula: × 𝟏𝟎𝟎
𝑻𝒐𝒕𝒂𝒍 𝑫𝒆𝒑𝒐𝒔𝒊𝒕𝒔

It measures a bank's liquidity by comparing its cash reserves to total deposits. A

higher ratio indicates strong liquidity but lower profitability, while a lower ratio
suggests aggressive lending with potential liquidity risks. Regulators often mandate
minimum levels (like CRR) to ensure banks can meet withdrawal demands.

❖ Profitability Ratios: Profitability ratios show how well a company makes money from
its sales, assets, or investments. They answer:

• Is the business earning enough profit?

• Is it using its resources efficiently?

Key Profitability Ratios & Formulas

i. Return on Assets: ROA shows how efficiently a company uses its assets (like cash,
inventory, equipment) to generate profit. A high ROA means efficient use of
resources, while a low ROA indicates poor asset utilization. Generally, ROA above
 10

5% is good, while below 2% suggests inefficiency. Investors use ROA to compare

companies' performance within the same industry.

𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
Formula: ROA= × 𝟏𝟎𝟎
𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔

ii. Return of Equity: ROE shows how well a company uses shareholders' money to
generate profit. It answers: “Is the business giving good returns to its owners?”

𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
Formula: ROE= × 𝟏𝟎𝟎
𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓𝒔′ 𝑬𝒒𝒖𝒊𝒕𝒚

For investors, a higher ROE means better returns on their capital. For companies, it
reflects management's skill in utilizing equity to drive growth. However, an unusually
high ROE can be a red flag, indicating excessive reliance on debt rather than
operational efficiency, which increases financial risk.

iii. Gross Profit Margin: It measures the difference between interest earned on
loans/investments and interest paid on deposits, expressed as a percentage of total
interest income. A higher margin indicates efficient fund management and strong
pricing power, while a lower margin suggests competitive pressure or higher funding
costs.

𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕
Formula: Gross Profit Margin= × 𝟏𝟎𝟎
𝑻𝒐𝒕𝒂𝒍 𝑹𝒆𝒗𝒆𝒏𝒖𝒆

The ideal gross profit margin (GPM), or net interest margin (NIM), typically ranges
between 3.5% to 4.5%. This reflects a healthy balance between interest earned on
loans and paid on deposits, considering Nepal's regulated and competitive banking
sector. Margins below 3% may signal inefficiency or high funding costs, while those
above 5% could indicate excessive risk-taking.

iv. Net Profit Margin: Net Profit Margin shows how much profit a company keeps after
paying ALL expenses (production, salaries, taxes, interest, etc.). It answers: "Is the
business actually making money after all costs?"

𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
Formula: Net Profit Margin =
𝑻𝒐𝒕𝒂𝒍 𝑹𝒆𝒗𝒆𝒏𝒖𝒆
× 𝟏𝟎𝟎
 11

❖ Other Ratios:

i. Capital Adequacy Ratio: CAR (also called CRAR) checks if a bank has
enough capital to absorb losses and protect depositors during financial stress. It
answers: "Can this bank survive unexpected losses without collapsing?"

𝑻𝒊𝒆𝒓 𝟏 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 + 𝑻𝒊𝒆𝒓 𝟐 𝑪𝒂𝒑𝒊𝒕𝒂𝒍

Formula: CAR= × 𝟏𝟎𝟎
𝑹𝒊𝒔𝒌−𝑾𝒆𝒊𝒈𝒉𝒕𝒆𝒅 𝑨𝒔𝒔𝒆𝒕𝒔

Key Terms:

• Tier 1 Capital: Core funds (equity, retained earnings).

• Tier 2 Capital: Backup funds (subordinated debt, reserves).

• Risk-Weighted Assets: Loans/investments adjusted for risk (e.g., mortgages = safer than
personal loans).

The Capital Adequacy Ratio (CAR) matters because it ensures banks have enough
capital to absorb losses and protect depositors during financial stress, maintaining
financial stability. The ideal CAR range is 10.5–15%, meeting global Basel III
standards, while a ratio below 10.5% signals higher risk. However, CAR has
limitations—it doesn’t predict sudden crises like bank runs, and requirements may
vary across countries.

ii. Earning Per Share: EPS shows how much profit a company makes for each share of
its stock. It shows how profitable is this company per share owned by investors.

𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕−𝑷𝒓𝒆𝒇𝒆𝒓𝒓𝒆𝒅 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅𝒔

Formula: EPS=
𝑻𝒐𝒕𝒂𝒍 𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏𝒈 𝑺𝒉𝒂𝒓𝒆𝒔

Earnings Per Share (EPS) shows how much profit each common
shareholder earns per share. It helps track if per-share earnings are
growing over time. Investors prefer higher EPS, as it indicates stronger
bank profitability.

iii. Price-to-Earning Ratio: The P/E Ratio compares a company’s stock price to
its earnings per share (EPS). It answers:
"Is this stock overpriced or a bargain based on its earnings?"

𝑴𝒂𝒓𝒌𝒆𝒕 𝑷𝒓𝒊𝒄𝒆 𝒑𝒆𝒓 𝑺𝒉𝒂𝒓𝒆

Formula: P/E Ratio=
𝑬𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝒑𝒆𝒓 𝑺𝒉𝒂𝒓𝒆 (𝑬𝑷𝑺)
 12

The P/E ratio helps investors judge a bank's stock price relative to its earnings. A high
P/E means the market expects strong future growth, while a low P/E suggests weaker
expectations. It shows how investors view the bank's profit potential.

1.7 Limitations of the study

The major limitations of the study are as follows:

• Limited scope – Only a few financial variables were analyzed, ignoring qualitative
factors.

• Reliance on past data – Uses only secondary data from the last 5 years, not current
trends. It cannot be compared with the ratios of other banks.

• Simplified analysis – Selected financial tools were used, possibly missing deeper
insights.

• No primary research – Depends on existing reports, not direct surveys or

interviews.

1.8 Organization of the study

This study is organized as below:

Chapter I includes;

o Background of the Study

o Profile of Standard Chartered Bank
o Objectives of the Study
o Rationale of the Study
o Review of Literature
o Methods of the Study
o Limitation of the Study
Chapter II includes;
o Data Presentation
o Major Findings
Chapter III includes;
o Summary
o Conclusion
 13

CHAPTER II
RESULTS AND ANALYSIS

Data analysis is a crucial research step that examines collected information to answer key
questions. Its main goal is to transform raw numbers into understandable formats that
support good decisions. Following the methods described earlier, this chapter analyzes
banking data from multiple sources. The information is organized into comparison tables
and studied using financial tools and statistical techniques, including standard analysis
approaches and regulatory requirements. By applying these methods, we evaluate different
banks' performance across several financial areas. This comprehensive approach allows us
to compare institutions effectively, identifying which banks perform well and where others
may need improvement. The process turns complex financial data into practical insights
about strengths, weaknesses, and overall banking sector performance.

This section details how data is organized into tables and converted into visual formats like
charts and graphs. These visual presentations help stakeholders quickly grasp complex
information, supporting better decision-making. By applying appropriate analytical tools,
researchers gain clearer insights from the data, leading to more reliable conclusions and
practical recommendations. The chapter demonstrates how strong data analysis benefits all
users - from policymakers needing actionable insights to stakeholders requiring
understandable reports. Ultimately, this process transforms raw numbers into valuable
knowledge that can guide important financial decisions and strategies.

The study examines key financial indicators like profitability (ROE, ROA), liquidity,
turnover, capital adequacy, and P/E ratios to assess financial health. It also evaluates
competitive factors including market share and customer base to understand market
position. Compliance with regulations and effective risk management are analyzed,
particularly how they adapt to changing laws and economic conditions. Together, these
measures provide a complete picture of financial stability and market competitiveness.

2.1 Data Presentation

Data presentation involves organizing and displaying information in a clear, structured

format to facilitate understanding and analysis. It uses tables, charts, graphs, and other visual
tools to simplify complex data, making it easier to interpret and use for decision-making.
 14

Effective presentation ensures key insights are quickly accessible to stakeholders,

supporting better conclusions and actions.

2.1.1 Current ratio

Current ratio is a financial indicator used to measure a company's short-term liquidity,
measuring its ability to pay short-term debts with short-term assets. It is calculated by
dividing a company's total current assets by its total short-term liabilities.

Table 1

Current Ratio

Year Current Assets Current Liabilities Ratio (%)

2019/20 116,214,635,474 101,335,778,246 1.15
2020/21 30,046,397,507 98,456,176,887 0.31
2021/22 24,087,498,428 105,220,608,102 0.23
2022/23 27,934,057,697 126,022,001,858 0.22
2023/24 115,308,726,443 118,146,309,741 1.04
(Source: Annual Report, Standard Chartered Bank Nepal Limited)

The above table illustrates the bank's liquidity position over five fiscal years, as measured
by the current ratio, which compares current assets to current liabilities. In 2076/77, the
company maintained a healthy ratio of 1.15, indicating that its current assets sufficiently
covered short-term obligations. However, a sharp decline occurred in 2077/78, with the ratio
dropping to 0.31, signaling severe liquidity strain—current assets could only cover 31% of
liabilities. This trend worsened in 2078/79 (0.23) and 2079/80 (0.22), suggesting mounting
financial stress, possibly due to excessive debt accumulation, declining sales, or poor
working capital management. By 2080/81, the company staged a remarkable recovery, with
the ratio rebounding to 1.04, implying restored liquidity, likely through debt restructuring,
asset sales, or improved operational efficiency. Despite this improvement, the drastic
fluctuations highlight underlying volatility, necessitating closer examination of cash flow
management and long-term financial stability to prevent future liquidity crises.

Current Ratio
2 1.15 1.04
1 0.31 0.23 0.22
0
2076/77 2077/78 2078/79 2079/80 2080/81

Figure 1. Current Ratio of Standard Chartered Bank Nepal Limited

 15

The current ratio represents the relationship between a company's current assets and short-
term liabilities and is often used to measure profitability. A current ratio of 2:1 indicates that
the company has twice as many current assets as short-term liabilities, indicating a potential
position. However, if the bank's current ratio is lower than this ratio, it means that the bank
will not have enough capital to meet its short-term liabilities.

In this case, the actual liquidity ratio is lower than 2:1, which indicates that the bank's
liquidity position is weaker than the ideal ratio. Liquidity can create problems for banks to
meet short-term obligations such as repayments or operating costs. An in-depth
understanding of the reasons behind inequality is needed, which may arise from factors that
affect banks' ability to generate sufficient assets, such as ineffective asset management,
rising liabilities or economic crises. By recognizing the difference between current rates and
benchmarks, stakeholders can better assess a company's financial risk and implement
strategies to improve its financial health.

2.1.2 Cash and bank balance to total deposit ratio

Cash and Bank Balance to Total Deposits Ratio measures a bank's assets (including cash
and other bank balances) relative to its customers, full deposit. This ratio is important in
assessing a bank's capacity and ability to meet depositors' withdrawal needs. A higher
ratio means the bank holds more liquid assets, providing a negative buffer against shocks.
Conversely, a low ratio may mean greater reliance on loans or non-performing assets,
which can expose the bank to financial risk. Monitoring this ratio is
important from the perspective of maintaining financial stability and ensuring that
banks are meeting their obligations to depositors.

Table 2

Cash and Bank Balance to Total Deposits Ratio

FY Cash and Bank Balance Total Deposit Ratio

2019/20 45,439,999,358 95,020,841,249 (%)
47.82
2020/21 29,093,457,350 87,564,219,683 33.23
2021/22 21,520,125,975 93,721,916,376 22.96
2022/23 27,934,057,697 117,500,977,420 23.77
2023/24 32,253,162,544 112,483,886,727 28.67
(Source: Annual Report, Standard Chartered Bank Nepal Limited)

This table shows the Cash and Bank Balance to Total Deposits Ratio over five years,
indicating how much ready cash the bank had compared to customer deposits. In 2076/77,
the ratio was 47.82%, meaning the bank held nearly half of its deposits as liquid cash—a
 16

strong position for handling withdrawals. However, the ratio dropped sharply in 2077/78
(33.23%) and further in 2078/79 (22.96%), suggesting the bank had less cash available,
possibly due to increased lending or investments. The ratio stayed low in 2079/80 (23.77%)
but improved slightly in 2080/81 (28.67%), showing some recovery in liquidity. Overall,
the declining trend from 47.82% to 22.96% raises concerns about the bank’s ability to
handle sudden withdrawals, though the recent uptick is a positive sign. The bank may need
to balance lending and cash reserves better to ensure stability.

Cash & Bank Balance to Total deposit Ratio

60.00% 47.82%
33.23% 28.67%
40.00% 22.96% 23.77%
20.00%

0.00%
2076/77 2077/78 2078/79 2079/80 2080/81

Figure 2. Cash and Bank Balance to Total Deposits Ratio

A company needs to balance its income and investments for long-term growth. If it holds
too much cash compared to deposits (high ratio), it may miss out on profitable
opportunities—putting that money to work could generate better returns. On the other hand,
if the ratio is too low, the company might struggle to cover short-term expenses, creating
financial risks. The key is finding the right balance—keeping enough cash for stability while
investing wisely for growth. This approach helps the company stay secure, take advantage
of new opportunities, and deliver strong results over time. Smart cash management is crucial
for sustainable success and increasing shareholder value.

2.1.3 Net Working Capital

It is a measure of a company's short-term financial health, showing whether it has enough
liquid assets (like cash, inventory, and receivables) to cover its immediate debts (like
payables and short-term loans). A positive NWC means the business can comfortably meet
its day-to-day expenses and invest in growth, while a negative NWC signals potential cash
flow problems, making it harder to pay suppliers or handle unexpected costs. It acts like a
safety cushion—too much idle cash may indicate wasted opportunities, while too little can
lead to financial strain. By maintaining a balanced NWC, companies ensure smooth
operations, build trust with creditors, and stay ready to seize new opportunities without
risking insolvency.

Table 3
 17

Net Working capital

Fiscal Year Current Assets Current Liabilities NWC

2019/20 116,214,635,474 101,335,778,246 14,878,857,228
2020/21 30,046,397,507 98,456,176,887 -68,409,779,380
2021/22 24,087,498,428 105,220,608,102 -81,133,109,674
2022/23 27,934,057,697 27,934,057,697 -98,087,944,161
2023/24 115,308,726,443 118,146,309,741 -2,837,583,298
(Source: Annual Report, Standard Chartered Bank Nepal Limited)

This table shows a company's Net Working Capital (NWC) over five years, revealing its
ability to cover short-term debts with available assets.

In 2076/77, NWC was positive (14.9B), meaning the company had enough liquid resources
to pay its bills and invest in growth. However, from 2077/78 to 2079/80, NWC
turned sharply negative, hitting -98.1B in 2079/80—a serious liquidity crisis where debts
far exceeded available funds, risking defaults or emergency borrowing. By 2080/81, the
situation improved slightly (NWC: -2.8B), but the company still owed more than it could
quickly pay.

Net Working Capital

50,000,000,000
0
-50,000,000,000
-100,000,000,000
-150,000,000,000
2076/77 2077/78 2078/79 2079/80 2080/81
NWC 14,878,857,228 -68,409,779,38 -81,133,109,67 -98,087,944,16 -2,837,583,298

Figure 3. Cash and Bank Balance to Current Assets

The figure reveals a dramatic turnaround in the bank's liquidity position. To maintain Net
Working Capital (NWC) based on the bank's financial trends, the bank must focus on
boosting current assets while controlling short-term liabilities. The bank's history of volatile
liquidity (from Rs 14.9B surplus in 2076/77 to Rs -98.1B deficit in 2079/80), prioritize
converting deposits into income-generating assets (like loans) without overextending
liabilities. Strengthen cash reserves to avoid sudden shortfalls, monitor deposit withdrawals
closely, and align lending policies with liquidity buffers. Regularly stress-test the balance
sheet against potential cash crunches, and maintain a buffer (e.g., 10–15% of deposits as
liquid cash) to ensure stability while maximizing returns.
 18

2.1.4 Return on Assets

Return on assets (ROA) is a financial ratio that measures how well a company generates
profit from its assets. It is calculated by dividing a company's net income by
its average assets. ROA shows how well the company uses its assets to generate revenue. A
higher ROA indicates better and more efficient use of assets, while a lower ROA may
indicate that profits cannot be fully managed or reduced rather than the size of assets. ROA
is an important metric used by investors and analysts to evaluate a company's financial
performance and efficiency in allocating resources.

Table 4

Return on Assets
Fiscal Year Net Profit Total Assets Ratio
2076/77 1,987,390,942 116,438,273,521 1.71
2077/78 1,398,835,199 114,738,762,936 1.22
2078/79 2,255,934,327 123,355,710,487 1.83
2079/80 3,465,329,975 151,378,009,400 2.29
2080/81 3,275,268,409 141,189,071,323 2.32
(Source: Annual Report, Standard Chartered Bank Nepal Limited)

The table shows the SCBs Return on Assets (ROA) performance over five fiscal years,
revealing an overall positive trend in profitability and asset efficiency. Starting at 1.71% in
2076/77, the ROA dipped to 1.22% in 2077/78, indicating a temporary setback in earnings
relative to its asset base. However, the bank demonstrated impressive recovery and growth
in subsequent years, with ROA climbing to 1.83% in 2078/79 before achieving its best
performance in the last two years - reaching 2.29% in 2079/80 and peaking at 2.32% in
2080/81. This consistent improvement suggests the bank became progressively more
effective at generating profits from its assets, even as its total asset base expanded
significantly from Rs 116.4 billion to Rs 141.2 billion over the period. The particularly
strong performance in 2079/80 and 2080/81, where ROA exceeded 2.2%, reflects excellent
operational efficiency and prudent asset management. While the 2077/78 dip warrants
attention to understand its causes, the overall trajectory shows a financial institution that has
successfully enhanced its profitability and optimized its use of assets over time. The
maintenance of high ROA in 2080/81 despite a slight contraction in total assets further
demonstrates the bank's ability to sustain its improved performance levels.
 19

Overall, the ROA of Standard Chartered Bank Limited was not perfectly consistent,
however it shows improvement during the given period. The fluctuation in ROA could be
attributed to changes in the company's asset allocation strategy, such as increased
investments in assets that do not generate much profit.

In order to improve ROA, the company may consider divesting from underperforming assets
or investing in more profitable ventures. It is important for the company to maintain a
balance between generating profits and efficiently utilizing its assets. Additionally,
comparing the company's ROA with industry benchmarks can provide valuable insights into
the company's performance and potential areas for improvement.

Return on Assets
2.29 2.32
2.5
1.71 1.83
2
1.5 1.22

1
0.5
0
2076/77 2077/78 2078/79 2079/80 2080/81

Figure 4. Return on Assets

This figure shows that the ROA serves as a critical benchmark for assessing a company's
financial performance relative to its asset base. A higher ROA indicates that the company is
utilizing its assets efficiently to generate profits, while a lower ROA suggests inefficiency
in asset utilization. . On the contrary, a lower ROA signals potential inefficiencies in asset
management, where the company may struggle to generate significant profits relative to the
assets at its disposal. Comparing its figures across different time periods or against industry
peers can provide valuable insights into a company's operational efficiency, profitability,
and overall financial health.

2.1.5 Return on Equity

Return on equity (ROE) is an important indicator of a bank's profitability relative to
shareholders' investment. ROE indicates how effectively a bank uses equity capital to
generate income. The higher the ROE, this means that shareholders' money can be used to
generate profits. This indicates good management and high performance. ROE with industry
benchmarks or historical performance can provide further context and help assess the bank's
relative performance and competitiveness within the Nepalese banking sector. Additionally,
 20

trends in ROE over time can highlight improvements or deterioration in the bank's
profitability and efficiency.

Table 5
Return on Equity

Fiscal Year Net Profit Total Equity Ratio

2076/77 1,987,390,942 15,102,495,274 13.16
2077/78 1,398,835,199 16,222,118,151 8.62
2078/79 2,255,934,327 18,135,102,385 12.44
2079/80 3,465,329,975 20,142,690,811 17.20
2080/81 3,275,268,409 20,518,822,952 15.96
(Source: Annual Report, Standard Chartered Bank Nepal Limited)

The table presents the SCB's financial performance over five fiscal years, showing notable
fluctuations in profitability relative to its asset base. In 2076/77, the bank started strong with
a 13.16% return, indicating efficient use of its Rs15.1 billion assets to generate Rs1.99
billion in net profit. However, 2077/78 saw a significant decline to 8.62% return, suggesting
potential challenges in asset utilization or increased costs, as profits dropped to Rs1.4 billion
despite asset growth to Rs16.2 billion.

The bank recovered impressively in 2078/79 with a 12.44% return, earning Rs2.26 billion
from Rs18.1 billion assets, demonstrating restored operational efficiency. This recovery
momentum accelerated in 2079/80, achieving a peak 17.20% return with Rs 3.47 billion
profits from Rs 20.1 billion assets, reflecting excellent management and possibly strategic
investments. While slightly moderating to 15.96% in 2080/81, the bank maintained strong
performance with Rs3.28 billion profits from Rs 20.5 billion assets, showing consistent
ability to generate high returns.

The overall trend reveals the bank's resilience, overcoming an intermediate dip to ultimately
deliver superior and sustained profitability, with returns consistently above 12% in four of
the five years. The expansion in both asset base and absolute profits, coupled with generally
increasing returns, indicates successful scaling of operations and effective asset
management strategies. The temporary 2077/78 setback may represent a strategic
investment period or external economic factors, from which the bank recovered robustly in
subsequent years.
 21

Return on Equity
20
17.2
18 15.96
16
13.16
14 12.44
12
10 8.62
8
6
4
2
0
2076/77 2077/78 2078/79 2079/80 2080/81

Figure 5. Return on Equity

The bank's performance shows mostly positive trends with room for improvement. Over
five years, it demonstrated strong recovery from an 8.62% ROA dip in 2077/78 to achieve
impressive returns of 15-17% in subsequent years, alongside steady growth in both net
profits (Rs 1.99B to Rs 3.28B) and assets (Rs 15.1B to Rs 20.5B). This indicates generally
good asset utilization and profitability, though the temporary slump in 2077/78 and slight
decline in 2080/81 suggest some vulnerability to external shocks or internal inefficiencies.

To strengthen performance, the bank should focus on maintaining asset quality through
stricter loan assessments and diversifying revenue beyond interest income. Cost
optimization measures and regular stress testing would help sustain ROA above 15%, while
analysis of the 2077/78 downturn could provide valuable lessons for risk management. With
its current strong foundation, the bank is well-positioned but must ensure profit growth
keeps pace with any future asset expansion.

2.1.6 Net Profit Margin

Net Profit Margin (NPM) measures how much profit a company earns from its total revenue
after deducting all expenses, expressed as a percentage. It reveals the efficiency of
converting sales into actual profit. A high NPM indicates strong cost control and pricing
power, while a low NPM may signal high expenses or competitive pressures. Consistent
NPM growth reflects sustainable financial health, while sudden drops may warn of
operational issues.
 22

Table 6

Net Profit Margin

Fiscal Year Net Profit Total Operating Income Net Profit Margin
2076/77 1,987,390,942 8,127,224,001 24.45
2077/78 1,398,835,199 4,063,662,364 34.42
2078/79 2,255,934,327 5,333,466,204 42.30
2079/80 3,465,329,975 7,842,554,524 44.19
2080/81 3,275,268,409 7,230,975,093 45.29
(Source: Annual Report, Standard Chartered Bank Nepal Limited)

The table reveals an impressive and consistent improvement in the bank's profitability over
the five-year period, as measured by Net Profit Margin (NPM). Starting strong in 2076/77,
they made a hefty profit of nearly 1.99 billion rupees from a large total income of about 8.13
billion. However, the next year (2077/78) was much tougher. Both their total income
(dropping sharply to roughly 4.06 billion) and their net profit (falling to about 1.4 billion)
took a significant hit. The good news is that things turned around strongly after that dip. For
the next three years (2078/79 to 2080/81), both their total income and their net profit grew
steadily. Income climbed back up from 5.33 billion to 7.23 billion, and profits rose even
more impressively, from 2.26 billion to 3.27 billion by 2080/81 – almost reaching the peak
level seen back in 2076/77, but this time from a smaller income base.

The most impressive and consistent trend is how much more efficient the bank became at
turning its income into profit, shown by the rising Net Profit Margin. Even in the difficult
year (2077/78) when both income and profit fell, the bank managed to squeeze out a
higher percentage of profit (34.42%) from each rupee it earned compared to the previous
year (24.45%). This focus on efficiency became their strength. Every single year after the
initial drop, the bank improved its profit margin significantly. It jumped from 34.42% in
2077/78 to 42.30% in 2078/79, then 44.19% in 2079/80, and reached an impressive 45.29%
in 2080/81. This means that by the last year, for every 100 rupees of total operating income
the bank generated, it kept 45.29 rupees as pure profit – a massive improvement from
keeping only 24.45 rupees per 100 rupees just four years earlier. The bank clearly became
much leaner and more profitable over this period.
 23

Net Profit Margin

50 44.19 45.29
42.3
45
40 34.42
35
30 24.45
25
20
15
10
5
0
2076/77 2077/78 2078/79 2079/80 2080/81

Figure 6. Net Profit Margin

The figure demonstrates an exceptionally strong and improving profitability trend, with net
profit margins rising consistently from 24.45% to 45.29% over five years - a remarkable
achievement that suggests excellent cost management and operational efficiency. However,
the bank should carefully examine whether such high margins are sustainable long-term or
if they come at the expense of future growth opportunities.

2.1.7 Gross Profit Margin

Gross Profit Margin for Banks (often called Net Interest Margin) measures the difference
between interest earned on loans/investments and interest paid on deposits, expressed as a
percentage of total interest income. It reflects the bank's core profitability from lending
activities before operating expenses. A higher margin indicates efficient fund management
and strong pricing power, while a lower margin suggests competitive pressure or higher
funding costs.

Table 7
Gross Profit Margin
Fiscal Year Gross Profit Total Operating Income Gross Profit Margin
2076/77 4,212,794,731 8,127,224,001 51.84 %
2077/78 3,294,095,258 4,063,662,364 81.06 %
2078/79 4,673,107,040 5,333,466,204 87.62 %
2079/80 7,239,958,769 7,842,554,524 92.32 %
2080/81 6,549,075,541 7,230,975,093 90.57 %
(Source: Annual Report, Standard Chartered Bank Nepal Limited)

The table reveals extraordinarily high and improving gross profit margins (GPM) for the
SCB over five fiscal years, far exceeding typical banking standards. In 2076/77, the bank
started with a strong 51.84% GPM, indicating it retained over half of its operating income
 24

after direct costs. This surged dramatically to 81.06% in 2077/78, despite a 49% drop in
operating income, suggesting aggressive cost-cutting or a strategic shift toward higher-
margin products. The trend continued upward, peaking at 92.32% in 2079/80, meaning the
bank retained 92.32% of every rupee earned as gross profit—an almost unheard-of
efficiency in banking. Even in 2080/81, the margin remained stellar at 90.57%,
demonstrating sustained operational excellence.

Gross Profit Margin

100.00% 92.32% 90.57%
87.62%
90.00% 81.06%
80.00%
70.00%
60.00% 51.84%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2076/77 2077/78 2078/79 2079/80 2080/81

Figure 7. Gross Profit Margin

The bank's extremely high profits show it runs very efficiently. But to keep this success, it
must balance strong profits with steady income growth.

2.1.8 Capital Adequacy Ratio

The capital adequacy ratio (CAR) is a measurement of a bank's available capital expressed
as a percentage of a bank's risk-weighted credit exposures. It can be shown with the help of
table below:

Table 8
Capital Adequacy Ratio
Fiscal Year Total Capital (T1 + T2) Risk-Weighted Assets (RWA) CAR Ratio
2076/77 15,421,934,740 83,299,485,901 18.51
2077/78 16,728,668,237 96,530,753,692 17.33
2078/79 18,681,116,662 117,113,349,276 15.9
2079/80 22,363,716,960 130,889,949,203 17.09
2080/81 22,736,204,268 142,126,148,599 16.00
Source: (Annual Report, Standard Chartered Bank Nepal Limited)

The table shows the Capital Adequacy Ratio (CAR) of a bank or financial institution over
five fiscal years, from 2076/77 to 2080/81. The CAR is a measure of the bank's financial
strength, indicating how much capital it has to cover its risks.
 25

Over these years, the bank's Total Capital (T1 + T2) which includes core and supplementary
capital—has been increasing steadily, from around 15.42 billion in 2076/77 to 22.74
billion in 2080/81. However, the Risk-Weighted Assets (RWA) which represent the bank’s
loans and investments adjusted for risk—have also grown significantly, from 83.30
billion to 142.13 billion in the same period.

The CAR Ratio, which is calculated as (Total Capital ÷ RWA) × 100, shows how well the
bank can handle potential losses. A higher ratio means better safety. Here, the ratio has
fluctuated:

• It started at 18.51% in 2076/77, which was strong.

• Then, it declined over the next two years to 17.33% (2077/78) and 15.9% (2078/79),
meaning the bank’s risk exposure grew faster than its capital.

• In 2079/80, the ratio improved slightly to 17.09%, likely because the bank increased
its capital.

• However, in 2080/81, it dropped again to 16.00%, suggesting that risk-weighted

assets grew more than capital.

Overall, the bank has maintained a healthy CAR (above 15%), meaning it has enough
capital to absorb losses. However, the declining trend in some years indicates that the bank
needs to manage its risk exposure or raise more capital to stay stable.

Cap i tal ad eq u acy rati o

19 18.51

18 17.33 17.09
17
15.9 16
16
15
14
2076/77 2077/78 2078/79 2079/80 2080/81

Figure 8. Capital Adequacy Ratio

2.1.9 Earning Per Share (EPS)

It is obtained by dividing earnings available to common shareholders by number of equities
shares outstanding. It can be shown with the help of the table below:

Table 9
 26

Earning Per Share

Fiscal Year Net Profit Attributable to No. of Shares Outstanding EPS
Shareholders
2076/77 1,987,390,942 80,114,307 Rs 24.81
2077/78 1,398,835,199 85,722,308 Rs 16.32
2078/79 2,255,934,327 94,294,539 Rs 23.9
2079/80 3,465,329,975 94,294,539 Rs 36.75
2080/81 3,275,268,409 94,294,539 Rs 34.73
(Source: Annual Report, Standard Chartered Bank Nepal Limited)

The table presents the company's net profit attributable to shareholders, number of shares
outstanding, and earnings per share (EPS) over five fiscal years from 2076/77 to 2080/81.
In the first year (2076/77), the company reported a strong net profit of Rs 1.99 billion with
80.1 million shares outstanding, resulting in an EPS of Rs 24.81, indicating that each share
earned nearly Rs 25. However, the following year (2077/78) saw a sharp decline in profit to
Rs 1.40 billion, coupled with an increase in shares to 85.7 million, which significantly
reduced the EPS to Rs 16.32.

The company's performance improved in 2078/79, with profits recovering to Rs 2.26 billion,
but since the number of shares also rose to 94.3 million, the EPS increased only to Rs 23.9,
still below the first year's level. The most impressive growth came in 2079/80, when profits
surged to Rs 3.47 billion—the highest in five years—while the number of shares remained
stable, pushing EPS to Rs 36.75. In the final year (2080/81), profits dipped slightly to Rs
3.28 billion, but with no change in outstanding shares, EPS settled at Rs 34.73, which was
still strong compared to earlier years.

Overall, the company experienced fluctuations in profitability, with the peak performance
occurring in 2079/80. EPS reached its highest point that year (Rs 36.75) and its lowest in
2077/78 (Rs 16.32). The increase in shares in 2077/78 and 2078/79 diluted EPS, but as
profits grew in subsequent years, EPS improved significantly. Despite these variations, the
company remained profitable throughout the period, though shareholders saw noticeable
changes in earnings per share overtime.
 27

Earning Per Share

40 36.75
34.73
35
30 24.81 23.9
25
20 16.32
15
10
5
0
2076/77 2077/78 2078/79 2079/80 2080/81

Figure 9: Earning Per Share

2.1.10 Price-Earning Ratio (P/E Ratio)

It is computed by dividing market price per share by earnings per share. It can be shown
with the help of table below:

Table 10
Price-Earning Ratio
Fiscal Year EPS MPS P/E Ratio
2076/77 24.81 645 26
2077/78 16.32 590 36.16
2078/79 23.92 396 16.55
2079/80 36.75 530 14.42
2080/81 34.73 602 17.33
(Source: Annual Report, Standard Chartered Bank Nepal Limited)

This table shows the relationship between a company's Earnings Per Share (EPS), Market
Price Per Share (MPS), and Price-to-Earnings (P/E) ratio over five years (2076/77 to
2080/81). Here's what the trends tell us:

In 2076/77, the stock traded at Rs 645 with an EPS of Rs 24.81, giving a P/E of 26 - meaning
investors paid Rs 26 for every Re 1 of earnings. The next year saw worrying signs: EPS
dropped sharply to Rs 16.32, yet the P/E jumped to 36.16 despite the MPS falling to Rs 590,
suggesting investors were still optimistic about future growth.

A dramatic change came in 2078/79 when the MPS crashed to Rs 396 while EPS improved
to Rs 23.92, causing the P/E to drop to 16.55 - this likely reflected reduced market
confidence. The company's strongest year was 2079/80 with record EPS of Rs 36.75, yet
the P/E of 14.42 was the lowest in this period, indicating the stock may have been
undervalued despite excellent earnings.
 28

By 2080/81, while EPS dipped slightly to Rs 34.73, the MPS recovered to Rs 602 and the
P/E rose to 17.33, showing renewed investor confidence. The fluctuating P/E ratios over
these years suggest changing market perceptions - from optimism (high P/E) during weaker
earnings years to relative undervaluation (low P/E) during the company's most profitable
year. This inverse relationship between earnings strength and valuation multiples often
indicates that the market was anticipating future performance rather than reacting to current
results.

Price-Earning Ratio
40 36.16
35
30 26
25
16.55 17.33
20 14.42
15
10
5
0
2076/77 2077/78 2078/79 2079/80 2080/81

Figure 10. Price-Earning Ratio

2.2 Major Findings

The Major Findings of this report are as follow:

a. Standard Chartered Bank's Liquidity appears to have been affected as the current ratio
is still below 2:1. A current ratio below 2:1 indicates that the bank has unstable liquidity
position over five years. The bank maintained a healthy current ratio of 1.15 in 2076/77,
but then faced a severe liquidity crunch from 2077/78 to 2079/80 with ratios between
0.22-0.31, indicating current assets couldn't cover even one-third of liabilities at worst.
Surprisingly, the ratio rebounded to 1.04 in 2080/81, suggesting either a major financial
restructuring or possible data reporting differences. These wild fluctuations raise serious
concerns about the bank's consistent ability to meet short-term obligations during the
crisis years.

b. SCB's cash coverage of deposits dropped sharply from 47.8% in 2076/77 to just 23% by
2078/79, leaving only about a fourth of deposits backed by cash. Though it slightly
recovered to 28.7% by 2080/81, the bank maintained much lower reserves after 2076/77,
signaling either aggressive lending or liquidity pressures. This steep decline suggests a
major shift in SCB's cash management strategy.
 29

c. SCB faced severe working capital stress from FY 2077/78 to 2080/81. After maintaining
a healthy positive net working capital (NWC) of Rs 14.88 billion in 2076/77, the bank
jump into deep negative territory (-Rs 68.4 billion) the next year, worsening to -Rs 98
billion by 2079/80. While there was some recovery to -Rs 2.84 billion in 2080/81, the
prolonged negative NWC indicates the bank struggled to cover short-term obligations
with current assets for four consecutive years, suggesting serious liquidity challenges
during this period. The dramatic reversal from 2076/77's strong position raises questions
about what caused this financial deterioration.

d. SCB's Return on Assets showed gradual improvement over these five years, indicating
better profitability relative to its asset base. While the bank started with a modest 1.71%
ROA in 2076/77, it dipped to 1.22% in 2077/78 before recovering strongly. The most
significant gains came in 2079/80 (2.29%) and 2080/81 (2.32%), suggesting the bank
became more efficient at generating profits from its assets in later years. This upward
trend in ROA reflects improved financial performance and asset utilization, despite the
temporary setback in 2077/78. The consistent growth from 1.71% to 2.32% shows the
bank successfully enhanced its earning capacity over time.

e. Return on Equity (ROE) showed fluctuating but generally improving performance over
these five years. After starting strong at 13.16% in 2076/77, ROE dropped sharply to
8.62% in 2077/78, likely due to lower profits. However, the bank rebounded
impressively, reaching its peak at 17.20% in 2079/80 before settling at 15.96% in
2080/81. This upward trend after the dip demonstrates the bank's ability to generate
better returns for shareholders, with the last three years showing particularly strong
performance above 12%, indicating effective use of equity capital to create profits. The
2079/80 figure stands out as the most profitable year for investors relative to their equity
investment.

f. SCB demonstrated remarkable improvement in its Net Profit Margin (NPM) over these
five years, showing increasing efficiency in converting income to profits. Despite lower
profits in 2077/78, the margin rose to 34%, showing better cost control. By 2080/81, the
bank kept nearly half its income as profit, reaching peak efficiency. This consistent
improvement highlights SCB's success in managing expenses and boosting profitability
year after year.
 30

g. SCB’s gross profit margin nearly doubled from 52% to over 90% in five years, showing
remarkable improvement. After jumping to 81% in 2077/78, it peaked at 92% in
2079/80 before settling at 91% in 2080/81. This sustained high margin demonstrates
excellent cost control and core business profitability. The consistent growth reflects
strong financial management and an increasingly efficient operation.

h. The capital strength (CAR) gradually declined from 18.5% to 15.9% over five years
but stayed safely above requirements (10-12%). While growing loans faster than capital
pushed ratios down, the bank maintained a healthy 15-18.5% buffer throughout,
proving it kept proper safeguards despite expanding riskier assets.

i. SCB's EPS fluctuated but showed overall growth, rebounding from a low of Rs 16.32
(2077/78) to peak at Rs 36.75 (2079/80). Despite a slight dip to Rs 34.73 (2080/81),
EPS more than doubled from its lowest point, demonstrating improved profitability per
share. The stabilization of outstanding shares after 2078/79 helped convert profit
growth directly into higher shareholder earnings.

j. SCB's P/E ratio fluctuated significantly, peaking at 36.16 during its worst EPS year (2077/78)
and dropping to 14.42 in its most profitable year (2079/80). These swings show investor
expectations often diverged from current earnings, with the highest valuation coming during
poor performance. The inconsistent ratios suggest the market priced shares based more on
future growth prospects than present profitability.
 31

CHAPTER III
SUMMARY AND CONCLUSION

3.1 Summary

This study examines Standard Chartered Bank Nepal's (SCB) financial performance over
five years. The bank has shown strength in attracting and keeping customer deposits, which
is crucial for stable lending operations. By studying deposit patterns and key ratios like the
current ratio and cash-to-deposits ratio, we can see how well the bank manages its short-
term finances. These numbers help identify areas where SCB can better use its money and
reduce risks.
SCB has generally performed well in making profits, as shown by its ROA and ROE
numbers. The bank earns good returns from its assets and shareholders' investments. While
profit margins (both gross and net) remain strong, some changes in these numbers over the
years suggest the bank faces competition or other challenges that affect its earnings. These
profit measures help investors understand how efficiently the bank runs its main business
activities like loans and services.
The bank has maintained enough safety capital (CAR), though it decreased slightly from
18.51% to 16% over five years. While SCB increased its capital from Rs 15.42 billion to Rs
22.74 billion, its risky loans and investments grew even faster. For shareholders, the bank's
stock performance was mixed - share prices moved between Rs 396-645, and earnings per
share (EPS) ranged from Rs 16-37, showing some ups and downs in investor confidence.

This research analyzed SCB's financial health using five years of data (2019/20-2023/24).
By looking at all these different financial measures together, we can understand both what
the bank does well and where it needs improvement. The findings should help SCB's
management make better decisions about deposits, loans, costs and risks to keep the bank
strong and profitable in the future.

3.2 Conclusion

Standard Chartered Bank Nepal Limited (SCB) demonstrates strong financial fundamentals,
particularly in customer deposits and market competitiveness. The bank's ability to attract
and retain customers provides a stable base for lending operations, while its improved cash
management ensures reliable handling of short-term obligations. Notably, SCB has
maintained impressive profitability with net margins rising from 24.45% to 45.29% and
healthy ROE/ROA figures, making it an attractive option for investors. These strengths are
 32

further supported by capital adequacy ratios that consistently exceed regulatory

requirements, reflecting sound financial stability.

The analysis reveals concerning liquidity pressures during 2077/78-2079/80, when current
ratios dropped below 1.0 and working capital turned negative, indicating temporary
solvency risks. While the 2080/81 recovery (current ratio 1.04) shows corrective action, the
gradual decline in capital adequacy from 18.51% to 16% suggests growing risk exposure.
Shareholder metrics show volatility too - though EPS grew to Rs 36.75, P/E ratios fluctuated
significantly (14-36), reflecting market uncertainty about the bank's risk-reward balance
during challenging periods.

For investors, these findings provide actionable insights: liquidity ratios help assess short-
term risks, profitability trends indicate growth potential, and capital metrics evaluate
financial health. Researchers gain valuable case studies on how banks maintain profitability
amid liquidity crunches. The detailed performance data - from 90%+ gross margins to
deposit ratios - offers tools for both investment analysis and academic studies on banking
sector resilience.

To sustain growth, SCB should prioritize three areas: (1) strengthening liquidity buffers to
prevent future crunches, (2) optimizing deposit strategies and digital banking to improve
operational efficiency, and (3) enhancing risk management frameworks to address capital
adequacy trends. Investments in employee training and customer service innovation will
complement these financial measures. By balancing these improvements with disciplined
financial management, SCB can consolidate its market leadership while delivering
consistent value to customers and shareholders alike.
 33

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APPENDICES

Appendix I

Consolidated Statement of Financial Position From 2077 – 2081

 35

Appendix II

Capital Adequacy Report from 2077 - 2081

 36

Appendix III

Consolidated Statement of Profit or Loss From 2077 - 2081

Appendix IV
Calculation of Cash and Bank Balance

FY cash and cash Balance with NRB Balance with BFI Cash and
equivalent bank Balance

2076/77 39,244,049,170 1,985,450,188 4,210,500,000 45,439,999,358

2077/78 26,856,975,057 2,236,482,293 29,093,457,350
2078/79 19,139,900,106 2,380,225,869 21,520,125,975
2079/80 16,961,548,093 4,032,144,427 6,940,365,177 27,934,057,697
2080/81 28,499,220,367 3,750,850,621 3,091,556 32,253,162,544