CHAPTER-I: INTRODUCTION

1.1 Context Information

Loan management affects company's profitability and liquidity. The banks take care
in analyzing creditworthiness of borrowing customer to ensure that the interest and
principal amount on loan are timely recovered without any problem and liquidity. In
short, loan mobilization and recovery are too important aspect of loan management
but it also includes all the activities related with loan such as loan processing,
marketing, monitoring, concentrating risk, hedging risk, and credit reporting
(Bhattacharya, 2018).

Commercial banks faces as lending risk, liquidity risk, interest risk, market risk and
foreign exchange risk. All those many risks faced by bank, credit risk plays
significant role on its financial performance as a large chunk of bank income is earned
form loan provided to their customers in the form of interest income. Lending is
defined as possibility that a contractual party will fail to meet its obligation in
accordance with the agreed terms. Credit risk is the potential that debtor or counter
party default in satisfying contractually predetermined obligation according to the
agreed upon terms. Credit risk is a significant risk faced by bank by the nature of their
activity and success of bank intern of financial performance depends on efficient
management of its any other type of risk that bank faces (Giesecke, 2016).

Loan management is the essence of the commercial banking; consequently the

formulation and implementation of lending policies are among the most important
responsibilities of the directors and management. Well conceived lending policies
and careful lending practices are essential if a bank is to perform its credit (Robert,
2019).
Lending effects on the company’s profitability and liquidity so it is one of the
crucial decisions for the commercial banks. The banks take almost care in analyzing
the creditworthiness of the borrowing customer to ensure that the interest and the
principal amount on loans are timely recovered without much trouble and process
for the recovery (Khatiwada, 2019).
Lending is a core function of a bank which contributes significantly to its profit.
Banks lending activities are generally governed by certain principals. Since the
lending activities involve the depositors money which is repayable on demand. Bank
adheres to principal of safety and security, risk diversification, liquidity,
profitability and loan purpose. Loan management is simply management of loan and
advances. Success of banking business depends on the efficient and effective
management of loan. Poor loan management has proved to be one of the major
causes of bank failure throughout the world. Thus loan management is always a
challenging task in banking since it involves risk linked with credit operations. Loan
management deals with minimizing those risks which are directly or indirectly
involved in lending process (Beck, 2018).

Lending is most simply defined as the potential loan of bank that will fail to meet its
obligations in accordance with agreed terms. If both principal and interest payments
are received on agreed time with agreed term is known as performing loan while the
loan payment is not received on agreed time with agreed term is known as non-
performing loan. In order to minimize credit risk, there is essential of financial
systems that have a wellcapitalized bank, provide service to wide range of customers,
share information regarding borrowers, have a stable interest rate, increase bank
deposit and credit to borrowers, and reduce non-performing loan (Laker, 2017).

Credit risk is the risk of default on a debt that may arise from a borrower failing to
make required payments. In the first resort, the risk is that of the lender and includes
lost principal and interest, disruption to cash flows, and increased collection costs.
The loss may be complete or partial. In an efficient market, higher levels of credit risk
will be associated with higher borrowing costs. Because of this, measures of
borrowing costs such as yield spreads can be used to infer credit risk levels based on
assessments by market participants (Chhabra and Taneja, 2018).

Due to loan management is not satisfactory and its being national issue and to
contribute towards the topic through the study among the lot of topics, the loan
management topic is selected.
The loan management policy of a firm provides the framework to determine whether
or not to extend credit and how much credit to extend. The loan management policy

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decision of a bank has two broad dimension; credit standard and credit analysis. A
firm has to establish and use standards in making credit decisions, develop
appropriate sources of credit information and methods of credit analysis.

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1.2 Purpose of the Study
The main purpose of the summer project report is to analyze the lending policy of
Nepal Bank Limited. However the specific objectives are as follows:
i. To examine the loan, liquidity, assets and profitability of Nepal Bank
Limited.
ii. To evaluate the trend of deposit, loan and advances, total assets and net
profit of Nepal Bank Limited.
1.3 Significance of the Study

Loan is one of most important aspect of the bank. The report of lending policy of
Nepal Bank Limited would be beneficial to the shareholders, banking professionals,
investors, teachers and students of banking management. This project report focuses
in the qualitative measurement of the NBL. Similarly, the finding of the report will
equally important to other who is interested in knowing about this particular bank.
Last but not the least, it will provide relevant and pertinent literature for the future
research on the area of loan management of the banks. Important to know how well
the bank is utilizing its deposits. Important to policy formulator and also be useful for
academic professionals, students particularly those involves in commerce, CA and
financial institutions to formulate policies and plans on the basis of the performance
of the bank.

1.4 Literature Survey

Kharel (2021) entitled on Loan management of Nirdhan Utthan Bank Limited. The
main objectives of the study are: To analyze the effectiveness of assets and loan
management of the Nirdhan Utthan Bank Limited. To analyze the relationships of
loan and advances with other related variables such as investment & total income of
Nirdhan Utthan Bank Limited. To examine trend of the loans, investment and net
profit of Nirdhan Utthan Bank Limited. The liquid assets and current liabilities ratio
has ranged from 14.71% to 166.36% of Nirdhan Utthan Bank Limited. The trend of
this ratio has not deviated from liquid assets to current liability ratio and the up and
down in this ratio has caused by the some reason. The relation between a unit of
deposit with the value of loans and advances of Nirdhan Utthan Bank Limited in
given years. The ratios have been ranged from 71.12 to 102.36 of Nirdhan Utthan

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Bank Limited. The overall performance of Nirdhan Utthan Bank Limited seems the
best with mean ratio is 88.04 percent. The relation between a unit of deposit with the
tabulated value in investment of concerning banks in given years. The ratios have
been ranged from 4.35 to 16.52 of Nirdhan Utthan Bank Limited. The overall ratio of
loan and advance and shareholder equity have ranged from 43.45 percent to 749.70
percent of Nirdhan Utthan Bank Limited. The ratio is in increasing trend over the
study period. The interest income to operating income ratio is in increasing trend over
the study periods of NUBL. The growth of total deposit by analysis of five years
period of Nirdhan Utthan Bank Limited. The growth rate of this bank is in decreasing
trend over the study periods. The growth of loans and advances of Nirdhan Utthan
Bank Limited has decreasing trend. The growth of investment is decreasing trend of
Nirdhan Utthan Bank Limited over the study period. The growth rate of net profit of
Nirdhan Utthan Bank Limited five years the study period. There is a low degree
positive relationship of total deposit and net profit of Nirdhan Utthan Bank Limited.
The correlation of the bank has 0.3017. Correlation between them is insignificant as
the correlation (r) of Nirdhan Utthan Bank Limited is less than the 6PE value. Total
deposit of Nirdhan Utthan Bank Limited is in increasing trend by Rs. 4521.85
millions every year during the study periods. Loan & advance of Nirdhan Utthan
Bank Limited is in increasing trend by Rs. 3838.04 millions every year during the
study periods.

Regmi (2021) entitled on "Loan management of Nepalese Commercial Banks". The

main objectives of the study are: To analyze the non-performing loan and ratio of
NPL and LLP of commercial banks. To analyze the relationship of loan loss provision
with loan & advances and non-performing loan in the commercial banks. To analyze
the trend of the non-performing loan, loan and advances, loan loss provision and net
profit of commercial banks. HBL has higher proportion of its investment in risk free
or nominally risky asset like treasury bills; National saving bonds etc. Here the ratio is
the highest of NIBL but issued loans and advances are not generating the desired
income. NCC shows the highest degree of deviation and variation while Everest has
the most consistent ratio through out the study. HBL is moderate in terms of the ratio,
its deviation and variability. The average ratio of Provision held to Non-performing
loan of HBL, NIBL, Everest and NCC is 198.81%, 188.34%, 100% and 120.96%
respectively. Hence HBL has significantly higher ratio in comparison to NCC,

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Everest and NIBL, which portrays that the bank has adequate provision against non
performing loan. NIBL shows the highest deviation and variability in this ratio than
the NCC, Everest and HBL. Trend analysis has done based on the data of past five
years and forecast has made for next five years. The trend analysis of loans and
advances shows increasing trend in all four sampled bank. The loans and advances of
HBL, NIBL, Everest and NCC is expected to increase at the rate of Rs.5119.1 million,
Rs.3366.36 million, Rs.4637.2 million and Rs.700.83 million respectively every year.
It is found that Net profit is expected to increase in coming year in all sample banks.
The net profit of HBL, NIBL, Everest and NCC is increasing Rs.275.69 million,
Rs.38.94 million 304.22 million and Rs.274.84 million respectively every year.

Dhakal (2021) focused on "Lending Policy of Nepalese Commercial Banks". The

main objectives of the study are: To analyze the sartorial loans of sample commercial
banks. To examine the growth rate of deposit, loan & advance, investment and net
profit of sample commercial banks. To examine the trend of deposit, loan & advance,
investment and net profit of sample commercial banks. The performance of HBL and
NIBL has maintained good liquid assets. The mean current ratio of HBL is 1.09 and
NIBL is 1.08 which is lowest than HBL. Liquid assets to current liability ratio of HBL
and NIBL in fluctuating trend. After analyzing the ratio we can conclude that both the
sample banks do not differ significant with respect to this ratio. Liquid assets to total
deposit ratio of banks. HBL and NIBL are in fluctuating trend. Mean ratio appeared
marginally greater in NIBL. Loans and advances to total deposit ratio of HBL and
NIBL is in fluctuating trend. The mean ratio of HBL is higher than that of NBIL. The
overall performance of HBL seems the best with the higher mean ratio. Loans and
Advances and investment to total deposit ratio of appeared significantly higher in
HBL. It indicates the better utilization of loans and advances and investment in HBL
than NIBL. The ratio remained more uniform in HBL. The analysis explain that the
ratio of NIBL the highest than HBL. The ratio of loans and advances to shareholders
equity has gained the significant importance in measuring the capital fund and
contribution in loans and advances. Interest income to total income ratio of HBL is
greater than NIBL over the study periods. Which reveals the HBL invested the fund
rose from more successfully to earn the interest. Growth ratio of total deposit of NIBL
is higher that of HBL by analysis over the study period, so it seems better
performance of NIBL in total deposit. Both banks is in increasing trend of total

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deposits. The rate of increment of total deposit for HBL seems to be lower than that of
NIBL. The increasing trend of total deposit of NIBL is more aggressive and high
rather than HBL. Loan & advances of HBL and NIBL has in increasing trend. The
increasing trend of NIBL is higher than HBL. The actual value of loan & advances for
HBL is quite fluctuating in relation to NIBL.

Bhusal (2021) entitled "Lending risk of Vyccu Saving and Credit Co-operative
Limited". The main objectives of the study are: To examine liquidity risk of Vyccu
Saving and Credit Co-operative Limited. To analyse the relation between deposit,
loan & advance, assets and net profit of VYCCU. To describe the trend of deposit,
loan & advance, assets and net profit of VYCCU. The current ratio has been ranged
from 1.88 to 3.06 of Vyccu Saving and Credit Co-operative Limited. The ratio is in
fluctuating trend all over the study period. The mean ratio of Vyccu Saving and Credit
Co-operative Limited is 2.32 times. The liquid assets to total deposit ratio has ranged
from 16 percent to 23.07 percent of Vyccu Saving and Credit Co-operative Limited.
The SD is 3.42 and CV is 17.96 percent. The relation between a unit of deposit with
the value of loans and advances of Vyccu Saving and Credit Co-operative Limited in
given years. The ratios have been ranged from 83.91 percent to 99.81 percent of
Vyccu Saving and Credit Co-operative Limited. The SD is 6.01 and CV is 6.58
percent. Interest income to operating income ratio is in fluctuating trend over the
study periods. The growth of total deposit by analysis of five years period of Vyccu
Saving and Credit Co-operative Limited. The growth rate of this co-operative is in
fluctuating trend over the study periods. The highest growth rate is 73 percent and
lowest growth rate is 13.75 percent. The growth of loans and advances of Vyccu
Saving and Credit Co-operative Limited has decreasing trend. The highest growth rate
is 79.65 percent in FY 2015/16 and lowest growth rate is 22.44 percent in FY
2017/18. Growth is 51.82 percent. There is decreasing trend of investment over the
study period. During the study period the highest growth of investment is 18.04
percent and lowest growth is -22.94 percent. The growth rate of net profit of Vyccu
Saving and Credit Co-operative Limited five years the study period. During the study
period the highest growth of net profit is 121.78 percent and lowest growth is -5.01
percent. There is a high degree positive of relationship between Interest Income and
Loan and Advance of Vyccu Saving and Credit Co-operative Limited. The correlation
value has 0.97. Correlation between two variables is highly significant as the

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correlation is greater than 6PE. Total deposit of Vyccu Saving and Credit Co-
operative Limited increasing trend by Rs. 462.27millions every year during the study
periods and loan & advance is also increasing trend by Rs. 464.69 millions every year
during the study periods. The trend of investment of Vyccu Saving and Credit Co-
operative Limited is in low increasing trend by Rs. 0.10 millions every year during the
study periods. Net profit of Vyccu Saving and Credit Co-operative Limited is in
increasing trend by Rs. 12.72 millions every year during the study periods.

Poudel (2022) has conducted on "Lending Practices of Nepal Bank Limited and Mega
Bank Nepal Limited". The objectives of the research study: To evaluate the lending
and risk position. To analyze the relationship between loan and advances and
investment with other financial variables and to examine the lending and investment
policy of sample banks. NBL has good deposit collections, it has better liquidity
position, it has made enough loan and advances but it has made the negligible amount
of investment in government securities. The profitability position of NBL is
comparatively worse than that of MBNL. The credit risk ratio, interest risk ratio and
capital risk ratio are worse than MBNL. The growth ratio of total deposit, loan and
advances and net profit of NBL is higher than MBNL while growth ratio of total
investment of NBL is comparatively worse than MBNL. There is significant
relationship between deposit and loan and advance, outside assets and net profit on
NBL but there is no significant relationship between deposit and investment of NBL.
The position of NBL regard to utilization of fund to earn profit is not better in
comparison to MBNL.
Pyakurel (2023) has conducted on "A study on Investment Practices of Nepalese
Commercial Bank". The main objectives of the research were: To evaluate the
liquidity and profitability position in related fund mobilization of Nabil in comparison
to other JVBs. To evaluate the growth ratios of loan and advances and total
investment with respective growth rate of total deposits and net profit of Nabil in
comparison to other JVBs. The liquidity position of Nabil is comparatively better than
other JVBs; Nabil has utilized more portions of current assets as loan and advances
and less portion as investment on government securities. Nabil is comparatively
higher successful in utilization of assets than that of JVBs. There is significant
relationship between deposit and loan and advances as well as outside assets and net

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profit whereas there is no significant relationship between deposit and total
investment increase of Nabil and other JVBs too.
1.5 Research Methods Used for Data Collection and Analysis
Research methodology refers to the overall research process, which a researcher
conducts during his study. The purpose of research is to discover answers to questions
through the application of scientific procedures. The main aim of research is to find
the truth which is hidden and which has not been discovered at yet (Kothari, 2010).
i) Research Design
Research design is the plan, structure and strategy of investigation concerned so as to
obtain answers to research questions and to control variance. A research design is
purely and simply the framework or plan for a study that guides the collection and
analysis of data. A true research design is basically concerned with various steps to
collect the data for analysis and draw a relevant conclusion. To achieve the objective
of this study descriptive research design has been used. This study is based on past
data of the bank. The research data were based on the secondary data. To identify the
qualitative factors affecting liquidity and descriptive research design is adopted.
ii) Population and Sample
Now there were 20 commercial banks in operation throughout the country end of
2023 (www.nrb.org.np). In this project only one sample bank was taken into
consideration, among those 20 commercial banks, Nepal Bank Limited was chosen
for sample by using convenience sampling methods.
iii) Types of Data
The research consists of secondary data. To collect the secondary data, published
materials are viewed in various sports. Books by different authors, previous reports,
journals, magazines, internet websites, AGM reports, bulletins published by NRB are
the major sources of secondary data.
iv) Data Collection Procedures
The study based on secondary data. Secondary data were collected from official
publication of the commercial bank. In addition to above, supplementary data and
information are collected from relevant institutions and authorities such as Nepal
Rastra Bank and prospective publications and also from journals, websites, previous
reports, newspapers etc. Secondary data are used to analyze the past trend in loan
management.

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v) Tools for Analysis

Financial and statistical tools are used to analyze the data. Mean, Standard Deviation,
Trend Analysis and Financial ratios are used in the study. Results are listed and
tabulated under various headings. The results are compared with the corresponding
results of the past in order to interpret them in a meaningful way.

1) Non-Performing Loan (NPL) to Loans & Advances Ratio

This ratio determines the proportion of non-performing loans (NPL) in the total loan
portfolio. As per Nepal Rastra Bank directives the loans falling under category of
substandard, doubtful and bad loan are regarded as non-performing loan.

NPL to Loans & Advances Ratio =

2) Loan Loss Provision (LLP) to Non-Performing Loan Ratio

This ratio determines the proportion of provision held to non-performing loan of

bank. This ratio measures up to what extent of risk innate in NPL is covered by total
loan loss provision. Following formula has been used:

LLP to NPL Ratio =

3) Loan Loss Provision to Loans and Advances Ratio

This ratio indicates the amount of Loan Loss Provision, a cushion for the possibility
of default, to loans and advances of a bank. Following formula has been used:

LLP to Loan & Advance Ratio =

4) Current Ratio
Current ratio shows the relationship between current assets and current liabilities. It
indicates the banks short term solvency. It is calculated dividing the current assets by
current liabilities. Thus;

Current Ratio=

Current assets are those assets, which are cash or can be converted into cash within a
year. It includes cash and bank balance, money at call or short notice, investment in
government securities, bills purchased and discounted etc. Similarly current liabilities

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are those obligation, which are payable within a year. It includes short term loan and
borrowing, bills payable, provision for tax and staff bonus and dividend payable etc.

5) Cash and Bank Balance to Total Deposit

Cash and bank balance are the most liquid current assets of a firm, cash and bank
balance to total deposit ratio measures the percentage of most liquid assets to pay
depositors immediately. This ratio is computed dividing the amount of cash and bank
balance by the total deposits. It can be presented as,

Cash and Bank Balance

Cash and Bank Balance to Total Deposit Ratio =
Total Deposits
Where, cash and bank balance includes cash on hand, foreign cash on hand, cheques
and other cash items, balance held abroad. Total deposits consist of deposits on
current account, saving account, fixed account, money at call and short notice and
other deposits.

6) Cash and Bank Balance to Current Assets Ratio

This ratio measures the percentage of liquid assets i.e. cash and bank balance among
the current assets of a firm. Higher ratio shows the higher capacity of firms to meet
the cash demand. This ratio is calculated dividing cash and bank balance by total
current assets and can be calculated as,

Cash and Bank Balance

Cash and Bank Balance to Current Assets Ratio =
Current Assets
Hence, cash and bank balance includes cash in hand, foreign cash and foreign banks.

7) Loan and Advances to Total Deposit Ratio

This ratio is calculated to find out how successfully the selected banks are utilizing
their total collections or deposits on loan and advances for the purpose of earning
profit. Greater ratio shows the better utilization of total deposits. This ratio can be
obtained dividing loan and advances by total deposits, which can be shown as,

Total loan and Advances

Loan and Advances to Total Deposit Ratio =
Total Deposit

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8) Loan and Advances to Total Assets Ratio

The main element of total assets is loan and advances. This ratio indicates the ability
of selected banks in terms of earning high profit from loan and advances. Loan and
advances to assets ratio can be obtained dividing loan and advances amount by total
assets.

Total Loan & Advances

Loan & Advances to Total Assets Ratio =
Total Assets
Where, total working fund includes total amount of assets given in balance sheet
which refers to current assets, net fixed assets, total loans for commercial banks and
other sundry assets except off balance sheet items i.e. letter of credit, letter of
guarantee etc.

9) Return on Loan and Advances Ratio

Return on loan and advances ratio shows how efficiently the banks have utilized their
resources to earn good return from provided loan and advances. This ratio is
computed dividing net profit (loss) by the total amount of loan and advances and can
be mentioned as,

Net Profit
Return on Loan and Advances Ratio =
Loan and Advances
10) Return on Total Assets Ratio

Return on total assets ratio measures the profit earning capacity of the banks by
utilizing available resources i.e. total assets. If the bank’s well managed and
efficiently utilized its assets, it will get higher return. Maximizing taxes, this in the
legal options available will also improve the return. It is computed as:

Net Profit
Return on Total Assets Ratio =
Total Assets
11) Return on Equity

Equity capital of any bank is its owned capital. The prime objective of any bank is
wealth maximization or in other words to earn high profit and thereby, maximizing
return on its equity capital. Return on equity plays the measuring role of profitability
of bank. It reflects the extent to which the bank has been successful to mobilize or

12
utilize its equity capital. A high ratio indicates higher successful to mobilize its owned
capital and vice-versa. This is found by using the following formula:

Net Profit to Shareholder Equity =

Statistical Tools

For supporting the study, statistical tool such as mean, standard deviation, coefficient
of variation, correlation, tools have been used under it.

1. Arithmetic Mean:

Average is statistical constants, which enable us to comprehend in a single effort of

the whole. It represents the entire data by a single value. It provides the gist and gives
the bird’s eye view of the huge mass of unwieldy numerical data. It is calculated as:

Where,
= Arithmetic Mean

N = Numbers of observation

∑x = Sum of observation

2. Standard Deviation (S.D.)

The standard deviation is the square root of mean squared deviations from the
arithmetic mean and is denoted by S.D. or σ. It is used as absolute measure of
dispersion or variability. It is calculated as:

Where,

σ = Standard Deviation

3. Coefficient of Variation (C.V.)

The co-efficient of variation (C.V.) is the relative measure based on the standard
deviation and is defined as the ratio of the standard deviation to the mean expressed in
percentage it is independent of units. Hence, it is a suitable measure for comparing

13
variability of two series with same or different units. A series with smaller C.V. is
said to be less variable or more consistent or more homogeneous or more uniform or
more stable than the other and vice versa. It is calculated as:

Where,

σ = Standard deviation

= Mean

5. Trend Analysis

Time series analysis enables us to forecast the future behavior of the variables under
study, changes in the values of different variables and past behavior of a variable. In
the data related to time span, there are three components of time series like secular
trend or long term fluctuation, short term or periodic variations and random or
irregular fluctuation, in this study, time series of loan disbursement and collection are
shown in the figures.

Y = a + bx

The above trend equation can be calculated using following two normal equations:

∑ Y = na + b∑X……………………… (i)

∑ XY = a ∑X + b∑X2…………........... (ii)

Where,

Y = Variable

X = Time span

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 CHAPTER-II: DATA PRESENTATION AND ANALYSIS

2.1 Organization Profile

Nepal Bank Limited (NBL) is the first bank of Nepal proudly holds the glory of
marking the formal beginning of banking system in Nepal. Nepal Bank Limited was
established as first bank of Nepal on Kartik 30, 1994 (November 15, 1937 A.D.)
under Nepal Bank Act 1937. The bank was established with an authorized capital of
Rs.10 million, issued capital of Rs. 2.5 million and paid up capital of Rs. 0.842
million. The share held by government and private sector was 60% and 40%
respectively.

Nepal Bank Limited was inaugurated by King Tribhuvan with supportive vision of
Prime Minister Juddha Shumsher Jung Bahadur Rana to institutionalize formal
banking system in Nepal. Before the establishment of NBL, all monetary transactions
were carried out by private dealers and trading centers. It was the time when there was
no trust for such formal banking system. This reflected in under subscription of
shares. Raising deposit and mobilizing the collected deposit was even more difficult.

Absence of any bank in Nepal was hampering the economic progress of the country.
This was taken into consideration by Nepal Bank Limited with key focus on
overcoming such economic hamper and difficulties of general public. This was
initiated by providing banking services to people removing their inconvenience. This
objective got better and bigger with the time. Nepal Bank Limited has so far adopted
according to the technological changes, national economic welfare, customer
preferences in services, market competition and global financial scenarios to become
a leading, glorious and highly reputed bank of Nepal.

2.2 Data Presentation

Financial analysis is the act of identifying the financial strength and weakness
of the organization presenting the relationship between the items of balance sheet. For
the purpose of this study, ratio analysis has been mainly used and with the help of it
data have been analyzed. Various financial ratios related to the loan management
were presented to evaluate and analyze the performance of commercial bank i.e.
Nepal Bank Limited.

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2.1.1 Financial Analysis
Financial analysis shows the mathematical relationship between two accounting
figures. It helps to analyze the financial strengths and weaknesses of the banks. It is
also inevitable for the quantitative judgment with which the loan management of bank
can be presented properly.
I) Ratio Analysis
Ratio analysis shows the mathematical relationship between two accounting figures. It
helps to analyze the financial strengths and weaknesses of the banks.
A) Non Performing Loan to Total Loan Ratio
The nonperforming loan ratio, better known as the NPL ratio, is the ratio of the
amount of nonperforming loans in a bank's loan portfolio to the total amount of
outstanding loans the bank holds. The NPL ratio measures the effectiveness of a bank
in receiving repayments on its loans. It examine the relationship between NPL and
total loan.
Table 2.1: Non Performing Loan to Total Loan Ratio
(Rs. in Millions & Ratio in %)
FY NPL L&A Ratio
2018/19 2527.14 95724.92 2.64
2019/20 2638.58 106824.94 2.47
2020/21 2910.18 141960.06 2.05
2021/22 3250.81 177640.12 1.83
2022/23 5246.60 184056.23 2.85
Mean 3314.66 141241.25 2.37
SD 1115.50 40046.02 0.42
CV 33.65 28.35 17.76
Source: Annual Report of NBL FY 2018/19 to 2022/23
Table 2.1 shows that NPL to total loan and advances of NBL is fluctuating trend.
Decreasing trend is the good sign of the efficient credit management. From mean
point of view, non-performing loan to total loan and advances ratio of NBL is 2.37
percent during the study period. The higher ratio of NBL is 2.85 percent in FY
2022/23 and lower ratio is 1.83 percent in FY 2021/22.
B) Non-Performing Loan to Loan Loss Provision Ratio
This ratio determines the proportion of provision held to non-performing loan of
bank.

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 Table 2.2: Non-Performing Loan to Loan Loss Provision Ratio
(Rs. in Millions, Ratio in %)
FY NPL LLP Ratio
2018/19 2527.14 2871.42 88.01
2019/20 2638.58 3126.91 84.38
2020/21 2910.18 3428.41 84.88
2021/22 3250.81 4412.10 73.68
2022/23 5246.60 6241.12 84.07
Mean 3314.66 4015.99 83.00
SD 1115.50 1374.21 5.44
CV 33.65 34.22 6.56
Source: Annual Report of NBL FY 2018/19 to 2022/23
Table 2.2 illustrates the ratio of NPL to LLP of NBL has the highest ratio of 88.01
percent in the fiscal year 2018/19 and lowest ratio is 73.68 percent in FY 2021/22.
The average ratio of NBL is 83.00 percent.
C) Loan Loss Provision to Total Loans and Advances Ratio
This ratio indicates the amount of Loan Loss Provision, a cushion for the possibility
of default, to total loans and advances of a bank. Higher provision for non performing
loan reflects increasing non-performing loan in volume of total loans and advances.
Table 2.3: Loan Loss Provision to Total Loans and Advances Ratio
(Rs. in Millions, Ratio in %)
FY LLP Total Loan Ratio
2018/19 2871.42 95724.92 3.00
2019/20 3126.91 106824.94 2.93
2020/21 3428.41 141960.06 2.42
2021/22 4412.10 177640.12 2.48
2022/23 6241.12 184056.23 3.39
Mean 4015.99 141241.25 2.84
SD 1374.21 40046.02 0.40
CV 34.22 28.35 14.11
Source: Annual Report of NBL FY 2018/19 to 2022/23
Table 2.3 shows the ratio of LLP to total loan of NBL is fluctuating trend. NBL has
the highest ratio of 3.39 percent in the FY 2022/23 and lowest ratio is 2.42 percent in
FY 2020/21. The average ratio of NBL is 2.84 percent.

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D) Current Ratio:
Current ratio is relationship between current assets and current liabilities. This
indicates the bank ability to pay the short term obligation. It is useful to measure the
strength and weakness of the bank. It can be calculated dividing the current assets by
current liabilities. The following table represents the relationship between CA and
CL.
Table 2.4: Current Ratio
(Rs. in million and ratios in times)
FY Current Assets Current Liabilities Ratio
2018/19 47423.46 21382.55 2.22
2019/20 39630.66 15775.69 2.51
2020/21 38325.00 18687.83 2.05
2021/22 26299.14 20775.16 1.27
2022/23 39613.62 8103.00 4.89
Mean 38258.38 16944.85 2.59
SD 7595.17 5407.12 1.37
CV 19.85 31.91 52.83
Source: Annual Report of NBL from FY 2018/19 to FY 2022/23
Table 2.4 represent the current ratio of the NBL. The bank maintained highest ratio in
FY 2022/23 i.e. 4.89 times and the lowest ratio in FY 2021/22 i.e. 1.27 times. The
mean current ratio is 2.59 times.
E) Cash and Bank Balance to Total Deposit Ratio
Cash and Bank Balance to Total Deposit Ratio indicates the bank ability to meet their
daily requirement of depositors. Higher ratio shows the greater ability of the firms to
meet customer demands on their deposits. The Cash and Bank Balance to Total
Deposit Ratio is a financial metric that indicates the proportion of a bank's total
deposits that are held as cash or in the bank's account with other financial institutions.
This ratio reflects the liquidity position of the bank, showing its ability to meet
immediate withdrawal demands from depositors. A higher ratio suggests better
liquidity, while a lower ratio might indicate potential liquidity risks.

18
 Table 2.5: Cash & Bank Balance to Total Deposit Ratio
(Rs. in Millions & Ratio in %)
Rati
FY Cash and Bank Balance Total Deposit o
22.2
2018/19 26024.97 117200.79 1
12.1
2019/20 17214.37 141530.38 6
10.8
2020/21 17651.68 162813.38 4
2021/22 13723.88 196076.15 7.00
11.8
2022/23 28987.88 244514.00 6
12.8
Mean 20720.56 172426.94 1
SD 6464.33 49630.57 5.64
44.0
CV 31.20 28.78 2
Source: Annual Report of NBL from FY 2018/19 to FY 2022/23
Table 2.5 revels that the cash and bank balance to total deposit ratio of NBL is in
fluctuating trend. The bank maintains highest ratio i.e. 22.21 percent in FY 2018/19
and lowest is 7.00 percent in FY 2021/22. Mean ratio is 12.81 percent. According to
the above analysis the bank should improve in its cash balance to the daily
requirement of the customer. The highest percentage indicates the higher ability to
meet its daily requirement.
F) Cash and Bank Balance to Current Assets Ratio
Cash and Bank Balance are the most liquid or quick assets. Cash and bank balance to
current assets ratio represents the liquidity capacity of the firms as per cash and bank
balance. Higher the ratios, better the ability of the firms to meet the daily cash
requirement of their customers. But high ratio is not so preferred to the firms because
firms have to manage the cash and bank balance to current asset ratio in such manner
that firm may not be paid interest on deposits and may not have liquidity crisis.
Following are the states the cash and bank balance to current assets of NBL during the
study period.

19
 Table 2.6: Cash & Bank Balance to Current Asset Ratio
(Rs. in Millions & Ratio in %)
FY Cash and Bank
Current Assets Ratio
Balance
2018/19 26024.97 47423.46 54.88
2019/20 17214.37 39630.66 43.44
2020/21 17651.68 38325.00 46.06
2021/22 13723.88 26299.14 52.18
2022/23 28987.88 39613.62 73.18
Mean 20720.56 38258.38 53.95
SD 6464.33 7595.17 11.69
CV 31.20 19.85 21.67
Source: Annual Report of NBL from FY 2018/19 to FY 2022/23
Table 2.6 reveals that cash and bank balance to current assets ratio of NBL is in
fluctuating trend. The mean ratio of NBL is 53.95 percent. The higher mean ratio
shows NBL liquidity position is good. The highest ratio is in the FY 2022/23 is 73.18
percent and the lowest ratio is in the FY 2019/20 is 43.44 percent. The lower CV of
NBL indicates that it has more consistency in the ratios.
G) Loan and Advances to Total Deposit Ratio
This ratio actually measures the extent to which the banks are successful to mobilize
the total deposit on loan & advances for the purpose of profit generation. A higher
ratio of loan & advances indicates better mobilization of collection deposit.
Table 2.7: Loan and Advances to Total Deposit Ratio
(Rs. in Millions & Ratio in %)
FY L&A TD Ratio
2018/19 95724.92 117200.79 81.68
2019/20 106824.94 141530.38 75.48
2020/21 141960.06 162813.38 87.19
2021/22 177640.12 196076.15 90.60
2022/23 184056.23 244514.00 75.27
Mean 141241.25 172426.94 82.04
SD 40046.02 49630.57 6.87
CV 28.35 28.78 8.37
Source: Annual Report of NBL FY 2018/19 to 2022/23

20
Table 2.7 shows that the loan & advances to total deposit ratio of NBL is fluctuating
trends. The highest ratio is 90.60 percent in FY 2021/22 and the lowest ratio is 75.27
percent in FY 2022/23. The SD and CV on NBL is 6.87 and 8.37 percent respectively.
H) Loan & Advances to Total Assets Ratio
A commercial bank’s working fund plays very active role in profit generation through
fund mobilization.
Table 2.8: Loan & Advances to Total Assets Ratio
(Rs. in Millions & Ratio in %)
FY L&A TA Ratio
2018/19 95724.92 171515.64 55.81
2019/20 106824.94 191162.82 55.88
2020/21 141960.06 222645.48 63.76
2021/22 177640.12 260077.88 68.30
2022/23 184056.23 296716.60 62.03
Mean 141241.25 228423.68 61.16
SD 40046.02 50808.95 5.36
CV 28.35 22.24 8.77
Source: Annual Report of NBL FY 2018/19 to 2022/23
Table 2.8 shows the loan & advances to total assets ratio of NBL is fluctuating trend
during the study period. The highest ratio of NBL is 68.30 percent in FY 2021/22 and
lowest ratio of NBL is 55.81 percent in FY 2018/19. The mean of NBL is 61.16
percent.
I) Return on Loan & Advances
Return on Loan and Advances is a financial metric that measures the profitability of a
bank's lending activities. It is calculated by dividing the income generated from loans
and advances by the total amount of loans and advances extended by the bank. This
ratio indicates how efficiently the bank is utilizing its loan portfolio to generate
income. A higher ROLA signifies that the bank is earning more from its lending
activities, indicating better performance in terms of interest and fee income relative to
the loan amounts extended. Every financial institution tries to mobilize their deposits
on loan & advances properly. So this ratio helps to measure the earning capacity of
selected banks. Returns on loan & advances ratio of bank is presented as follows.

21
 Table 2.9: Return on Loan and Advances
(Rs. in Millions & Ratio in %)
FY NP L&A Ratio
2018/19 2596.74 95724.92 2.71
2019/20 2332.89 106824.94 2.18
2020/21 2961.23 141960.06 2.09
2021/22 2923.28 177640.12 1.65
2022/23 3437.58 184056.23 1.87
Mean 2850.34 141241.25 2.10
SD 416.69 40046.02 0.40
CV 14.62 28.35 19.10
Source: Annual Report of NBL FY 2018/19 to 2022/23
Table 2.9 shows that return on loan and advances ratio of NBL is decreasing trend.
The highest ratio of NBL is 2.71 percent in the year 2018/19 and lowest ratio 1.65
percent in year 2021/22. The mean ratio is 2.10 percent. The highest ratio indicates
that bank able to generate the high profit in invested loan and advances and the lowest
ratio indicates the lower earning capacity in invested loan and advances.
J) Return on Total Assets
This ratio measures the overall profitability of all working fund i.e. Total assets. A
firm has to earn satisfactory return on working funds for its survival. The following
table shows return on total assets ratio of sample bank.
Table 2.10: Return on Total Assets Ratio
(Rs. in Millions & Ratio in %)
FY NP TA Ratio
2018/19 2596.74 171515.64 1.51
2019/20 2332.89 191162.82 1.22
2020/21 2961.23 222645.48 1.33
2021/22 2923.28 260077.88 1.12
2022/23 3437.58 296716.60 1.16
Mean 2850.34 228423.68 1.27
SD 416.69 50808.95 0.16
CV 14.62 22.24 12.41
Source: Annual Report of NBL FY 2018/19 to 2022/23

22
Table 2.10 shows the return on total assets of NBL is fluctuating trend. The highest
ratio of NBL is 1.51 percent in FY 2018/19 and lowest ratio is 1.12 percent in FY
2021/22. The mean ratio of NBL is 1.27 percent.
K) Return on Equity
Return on equity plays the measuring role of profitability of bank. It reflects the
extent to which the bank has been successful to mobilize or utilize its equity capital.
Table 2.11: Return on Equity Ratio
(Rs. in Millions & Ratio in %)
FY NP SHE Ratio
2018/19 2596.74 29281.33 8.87
2019/20 2332.89 30031.00 7.77
2020/21 2961.23 33215.14 8.92
2021/22 2923.28 35463.61 8.24
2022/23 3437.58 36522.67 9.41
Mean 2850.34 32902.75 8.64
SD 416.69 3206.28 0.64
CV 14.62 9.74 7.41
Source: Annual Report of NBL FY 2018/19 to 2022/23
Table 2.11 shows return on equity ratio of NBL is fluctuating trend. The highest ratio
of NBL is 9.41 percent in FY 2022/23 and lowest ratio of NBL is 7.77 percent in FY
2019/20. The mean ratio of NBL is 8.64 percent.
2.2.1 Trend Analysis
Trend analysis plays an important role in the analysis and interpretation of financial
statement. Trend in general terms, signifies a tendency. It helps in forecasting and
planning future operation. Trend analysis is a statistical tool, which shows the
previous trend and forecasts the future financial results of the firms.
A) Trend Analysis of Total Deposit
Deposits are the important part in banking sector hence its trend for next five years
will be forecasted for future analysis.
Y= a + bx
Where as
Yc = 172426.94 + 30917.22 x

23
 Table 2.12: Trend Line of Total Deposit of NBL
(Rs. in Millions)
Year(x) Actual Value Trend Value
2018/19 117200.79 110592.50
2019/20 141530.38 141509.72
2020/21 162813.38 172426.94
2021/22 196076.15 203344.16
2022/23 244514.00 234261.38
2023/24 265178.60
2024/25 296095.82
2025/26 327013.04
2026/27 357930.25
2027/28 388847.47
Source: Appendix I
Figure 2.1: Trend Line of Total Deposit of NBL
450000 Actual Value Trend Value
400000

350000

300000
Rs. in Millions

250000

200000

150000

100000

50000

0
2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28

Fiscal Years

Source: Table 2.12

Table 2.12 and Figure 2.1 shows that total deposit of NBL. Actual values and
forecasted value of total deposit of the bank is in the increasing trend. The rate of
increment of actual value of the total deposit is Rs. 30917.22 millions every year.
B) Trend Analysis of Loan & Advances
Here, the trend values of loan & advances between actual and forecasted value have
been calculated for further five year. The following Table shows the actual and trend
values of NBL.

24
Y= a + bx
Where as,
Yc = 141241.25 + 24747.78 x
Table 2.13: Trend Line of Loan and Advances of NBL
(Rs. in Millions)
Year(x) Actual Value Trend Value
2018/19 95724.92 91745.69
2019/20 106824.94 116493.47
2020/21 141960.06 141241.25
2021/22 177640.12 165989.03
2022/23 184056.23 190736.81
2023/24 215484.59
2024/25 240232.37
2025/26 264980.15
2026/27 289727.93
2027/28 314475.71
Source: Appendix II
Figure 2.2 : Trend Line of Loan and Advances of NBL
Actual Value Trend Value
350000

300000

250000
Rs. in Millions

200000

150000

100000

50000

0
2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28

Fiscal Years

Source: Table 2.13

Table 2.13 and Figure 2.2 depict that loan & advances of NBL actual value and the
forecasted value are increasing trend. NBL loan & advances is increasing by Rs.
24747.78 millions every year.
C) Trend Analysis of Total Assets

25
Under this topic, an attempt has been made to analyze trend analysis total assets of
NBL for further five years.
Y= a + bx
Where as
Yc = 228423.68 + 31931.70 x
Table 2.14: Trend Line of Total Assets of NBL
(Rs. in Millions)
Year (x) Actual Value Trend Value
2018/19 171515.64 164560.29
2019/20 191162.82 196491.99
2020/21 222645.48 228423.68
2021/22 260077.88 260355.38
2022/23 296716.60 292287.08
2023/24 324218.78
2024/25 356150.48
2025/26 388082.17
2026/27 420013.87
2027/28 451945.57
Source: Appendix III
Figure 2.3: Trend Line of Total Assets of NBL
Actual Value Trend Value
500000
450000
400000
350000
Rs. in Millions

300000
250000
200000
150000
100000
50000
0
2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28

Fiscal Years

Source: Table 2.14

Table 2.14 and Figure 2.3 shows the NBL trend between actual and the forecasted
value of total assets is increasing. Total assets value is increase by Rs. 31931.70
millions every year.

26
D) Trend Analysis of Net Profit
Here, the trend values of net profit of NBL have been calculated for five years and
forecasting for the next five years.
Y= a + bx
Where as
Yc = 2850.34 + 227.21 x
Table 2.15: Trend Line of Net Profit of NBL
(Rs. in Millions)
Year (x) Actual Value Trend Value
2018/19 2596.74 2395.93
2019/20 2332.89 2623.14
2020/21 2961.23 2850.34
2021/22 2923.28 3077.55
2022/23 3437.58 3304.76
2023/24 3531.97
2024/25 3759.17
2025/26 3986.38
2026/27 4213.59
2027/28 4440.79
Source: Appendix IV
Figure 2.4: Trend Line of Net Profit of NBL
Actual Value Trend Value
5000

4500
4000

3500
Rs. in Millions

3000

2500
2000

1500

1000
500

0
2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28

Fiscal Years

Source: Table 2.15

27
Table 2.15 and Figure 2.4 reveal NBL trend of actual net profit is fluctuating trend
and forecasted value is increasing by Rs. 227.21 millions every year.
2.2 Major Findings of the Study
Following findings are drawn on the loan management of the Nepal Bank Limited.
Following major findings has been drawn in this study:
i. NPL to total loan and advances of NBL is fluctuating trend. Decreasing trend
is the good sign of the efficient credit management. From mean point of view,
non-performing loan to total loan and advances ratio of NBL is 2.37 percent
during the study period. The higher ratio of NBL is 2.85 percent in FY
2022/23 and lower ratio is 1.83 percent in FY 2021/22.
ii. The ratio of NPL to LLP of NBL has the highest ratio of 88.01 percent in the
fiscal year 2018/19 and lowest ratio is 73.68 percent in FY 2021/22. The
average ratio of NBL is 83.00 percent.
iii. The ratio of LLP to total loan of NBL is fluctuating trend. NBL has the highest
ratio of 3.39 percent in the FY 2022/23 and lowest ratio is 2.42 percent in FY
2020/21. The average ratio of NBL is 2.84 percent.
iv. Current ratio of the NBL. The bank maintained highest ratio in FY 2022/23
i.e. 4.89 times and the lowest ratio in FY 2021/22 i.e. 1.27 times. The mean
current ratio is 2.59 times.
v. Cash and bank balance to total deposit ratio of NBL is in fluctuating trend.
The bank maintains highest ratio i.e. 22.21 percent in FY 2018/19 and lowest
is 7.00 percent in FY 2021/22. Mean ratio is 12.81 percent. According to the
above analysis the bank should improve in its cash balance to the daily
requirement of the customer. The highest percentage indicates the higher
ability to meet its daily requirement.
vi. Cash and bank balance to current assets ratio of NBL is in fluctuating trend.
The mean ratio of NBL is 53.95 percent. The higher mean ratio shows NBL
liquidity position is good. The highest ratio is in the FY 2022/23 is 73.18
percent and the lowest ratio is in the FY 2019/20 is 43.44 percent. The lower
CV of NBL indicates that it has more consistency in the ratios.
vii. Loan & advances to total deposit ratio of NBL is fluctuating trends. The
highest ratio is 90.60 percent in FY 2021/22 and the lowest ratio is 75.27
percent in FY 2022/23. The SD and CV on NBL is 6.87 and 8.37 percent
respectively.

28
viii. The loan & advances to total assets ratio of NBL is fluctuating trend during
the study period. The highest ratio of NBL is 68.30 percent in FY 2021/22 and
lowest ratio of NBL is 55.81 percent in FY 2018/19. The mean of NBL is
61.16 percent.
ix. Return on loan and advances ratio of NBL is decreasing trend. The highest
ratio of NBL is 2.71 percent in the year 2018/19 and lowest ratio 1.65 percent
in year 2021/22. The mean ratio is 2.10 percent. The highest ratio indicates
that bank able to generate the high profit in invested loan and advances and the
lowest ratio indicates the lower earning capacity in invested loan and
advances.
x. Return on total assets of NBL is fluctuating trend. The highest ratio of NBL is
1.51 percent in FY 2018/19 and lowest ratio is 1.12 percent in FY 2021/22.
The mean ratio of NBL is 1.27 percent.
xi. Return on equity ratio of NBL is fluctuating trend. The highest ratio of NBL is
9.41 percent in FY 2022/23 and lowest ratio of NBL is 7.77 percent in FY
2019/20. The mean ratio of NBL is 8.64 percent.
xii. The trend of total deposit of NBL actual value is fluctuating trend and trend
value have in increasing trend.
xiii. The trend of loan and advance of NBL actual value is fluctuating trend and
trend value have in increasing trend.
xiv. The trend of total assets of NBL actual value is fluctuating trend and trend
value have in increasing trend.
xv. The trend of net profit of NBL actual value is fluctuating trend and trend value
have in increasing trend.

29
 CHAPTER-III

CONCLUSION AND ACTION IMPLICATION

3.1 Conclusion
The researcher has identified that research problem and set objectives to solve
research problems loan management of Nepal Bank Limited. The main objective of
the study is to loan status of Nepal Bank Limited. To examine the NPL and LLP of
Nepal Bank Limited. To analyze the trend of deposit, loan & advance, investment and
net profit of Nepal Bank Limited. This project work report has been used in
descriptive research design. The convenience sampling methods has been used in
sample collection. All data has been used in secondary sources through five years data
from balance sheet and profit and loss account of Nepal Bank Limited. The current
ratio of NBL is fluctuating trend over the study periods. CBB to current assets ratio of
NBL is fluctuating trend. Loan & advances to total deposit ratio of NBL is fluctuating
trend. Non performing loan to total loan and advances of NBL is fluctuating trend.
The NPL ratio of NBL is fluctuating trend. The current ratio of NBL is fluctuating
trend over the study periods. The cash and bank balance to total deposit ratio of NBL
is fluctuating trend. Cash and bank balance to current assets ratio of NBL is
fluctuating trend. Loan & advances to total deposit ratio of NBL is fluctuating trend.
The loan & advances to total assets ratio of NBL is fluctuating trend during the study
period. Return on loan and advances ratio of NBL is fluctuating trend. Return on total
assets of NBL is fluctuating trend. Return on equity ratio of NBL is fluctuating trend.
The trend of total deposit of NBL actual value is fluctuating trend and trend value
have in increasing trend. The trend of loan and advance of NBL actual value is
fluctuating trend and trend value have in increasing trend. The trend of investment of
NBL actual value is fluctuating trend and trend value have in increasing trend. The
trend of net profit of NBL actual value is fluctuating trend and trend value have in
increasing trend.
3.2 Action Implication
Based on the findings from your study on the lending policy of Nepalese commercial
banks, specifically focusing on Nepal Bank Limited (NBL), the following action
implications can be drawn:

30
NPL to Total Loan and Advances:
The fluctuating trend of NPL (Non-Performing Loans) suggests that while credit
management has improved in some years, further measures are needed to ensure a
consistent reduction in NPLs. NBL should continue to strengthen its credit risk
management practices, possibly by tightening credit standards and improving loan
monitoring systems, especially after FY 2021/22 when the NPL ratio increased.
NPL to Loan Loss Provision (LLP):
With a high NPL to LLP ratio, particularly in FY 2018/19, NBL should consider
reassessing its loan provisioning policies. The bank needs to ensure that provisions
are sufficient to cover potential losses, especially during economic downturns, to
maintain financial stability.
LLP to Total Loan:
The fluctuating LLP to Total Loan ratio indicates that NBL should refine its loan
provisioning strategy to stabilize this ratio. This could involve implementing more
dynamic and predictive models for assessing loan risk and ensuring provisions align
with the expected credit losses.
Loan & Advances to Total Deposit Ratio:
The fluctuations in this ratio suggest that NBL should closely monitor its loan-to-
deposit ratio to avoid over-lending or under-utilizing deposits. A balanced approach is
needed to optimize returns while maintaining sufficient liquidity.
Loan & Advances to Total Assets Ratio:
The fluctuating trend in this ratio indicates that NBL should ensure a consistent
allocation of assets towards loans, optimizing its asset utilization while managing
risks associated with over-concentration in loans.

31
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Chhabra, T. N. and Taneja, P. L. (2018). Law and Practice of Banking. New Delhi:
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32
 Appendix-I
Trend Analysis of Total Deposit of NBL
FY (X) X x = X- Deposit (Y) x2 xy
2018/19 1 -2 117200.79 4 -234401.58
2019/20 2 -1 141530.38 1 -141530.38
2020/21 3 0 162813.38 0 0.00
2021/22 4 1 196076.15 1 196076.15
2022/23 5 2 244514.00 4 489028.00
N =5 X =15 Y=862134.70 x2 =10 xy=309172.19
Let trend line be
Y = a + bx……………………. (I)
Where x = X - Middle year
Here,

= 862134.70/5 = 172426.94

= 309172.19/10 = 30917.22

Substituting the values of ‘a’ and ‘b’, the equation of the trend line is
Yc = 172426.94 + 30917.22 x
For Trend Values
Year x = X-3 Trend Values
2018/19 -2 y = a + bx 110592.50
2019/20 -1 y = a + bx1 141509.72
2020/21 0 y = a + bx2 172426.94
2021/22 1 y = a + bx3 203344.16
2022/23 2 y = a + bx4 234261.38
2023/24 3 y = a + bx5 265178.60
2024/25 4 y = a + bx6 296095.82
2025/26 5 y = a + bx7 327013.04
2026/27 6 y = a + bx8 357930.25
2027/28 7 y = a + bx9 388847.47

33
 Appendix-II
Trend Analysis of Loan & Advances of NBL
FY (X) X x = X- L&A (Y) x2 xy
2018/19 1 -2 95724.92 4 -191449.84
2019/20 2 -1 106824.94 1 -106824.94
2020/21 3 0 141960.06 0 0.00
2021/22 4 1 177640.12 1 177640.12
2022/23 5 2 184056.23 4 368112.46
N =5 X =15 Y=706206.27 x2 =10 xy=247477.80
Let trend line be
Y = a + bx……………………. (I)
Where x = X - Middle year
Here,

= 706206.27/5 = 141241.25

= 247477.80/10 = 24747.78

Substituting the values of ‘a’ and ‘b’, the equation of the trend line is
Yc = 141241.25 + 24747.78 x
For Trend Values
Year x = X-3 Trend Values
2018/19 -2 y = a + bx 91745.69
2019/20 -1 y = a + bx1 116493.47
2020/21 0 y = a + bx2 141241.25
2021/22 1 y = a + bx3 165989.03
2022/23 2 y = a + bx4 190736.81
2023/24 3 y = a + bx5 215484.59
2024/25 4 y = a + bx6 240232.37
2025/26 5 y = a + bx7 264980.15
2026/27 6 y = a + bx8 289727.93
2027/28 7 y = a + bx9 314475.71

Appendix-III

34
 Trend Analysis of Total Assets of NBL
FY (X) X x = X- TA (Y) x2 xy
2018/19 1 -2 171515.64 4 -343031.28
2019/20 2 -1 191162.82 1 -191162.82
2020/21 3 0 222645.48 0 0.00
2021/22 4 1 260077.88 1 260077.88
2022/23 5 2 296716.60 4 593433.20
N =5 X =15 Y=1142118.42 x2 =10 xy =319316.98
Let trend line be
Y = a + bx……………………. (I)
Where x = X - Middle year
Here,

= 1142118.42/5 = 228423.68

= 319316.98/10 = 31931.70

Substituting the values of ‘a’ and ‘b’, the equation of the trend line is
Yc = 228423.68 + 31931.70 x
For Trend Values
Year x = X-3 Trend Values
2018/19 -2 y = a + bx 164560.29
2019/20 -1 y = a + bx1 196491.99
2020/21 0 y = a + bx2 228423.68
2021/22 1 y = a + bx3 260355.38
2022/23 2 y = a + bx4 292287.08
2023/24 3 y = a + bx5 324218.78
2024/25 4 y = a + bx6 356150.48
2025/26 5 y = a + bx7 388082.17
2026/27 6 y = a + bx8 420013.87
2027/28 7 y = a + bx9 451945.57

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 Appendix-IV
Trend Analysis of Net Profit of NBL
FY (X) X x = X- Net Profit (Y) x2 xy
2018/19 1 -2 2596.74 4 -5193.48
2019/20 2 -1 2332.89 1 -2332.89
2020/21 3 0 2961.23 0 0.00
2021/22 4 1 2923.28 1 2923.28
2022/23 5 2 3437.58 4 6875.16
N =5 X =15 Y=14251.72 x2 =10 xy = 2272.07
Let trend line be
Y = a + bx……………………. (I)
Where x = X - Middle year
Here,

= 14251.72/5 = 2850.34

= 2272.07/10 = 227.21

Substituting the values of ‘a’ and ‘b’, the equation of the trend line is
Yc = 2850.34 + 227.21 x
For Trend Values
Year x = X-3 Trend Values
2018/19 -2 y = a + bx 2395.93
2019/20 -1 y = a + bx1 2623.14
2020/21 0 y = a + bx2 2850.34
2021/22 1 y = a + bx3 3077.55
2022/23 2 y = a + bx4 3304.76
2023/24 3 y = a + bx5 3531.97
2024/25 4 y = a + bx6 3759.17
2025/26 5 y = a + bx7 3986.38
2026/27 6 y = a + bx8 4213.59
2027/28 7 y = a + bx9 4440.79

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