investment portfolio analysis
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PRESENTATION ON
INVESTMENT PORTFOLIO ANALYSIS OF COMMERCIAL BANKS
PRESENTED BY:PAWAN KAWAN
ROLL No: 14MBA- III
UNIGLOBE COLLEGE
CHAPTER IINTRODUCTION
BACKGROUND
• Commercial banks are organizations which normally perform financial transactions.
• The banks are mobilizing the savings of the people for the investment purposes.
• The investment portfolio should be carefully analyzed so that the investment should ensure minimum risk and maximum profit.
STATEMENT OF PROBLEM
• What is the relationship of investment with total deposit, loan and advances and total profit?
• What is the proportion of investment of different commercial banks?
• How much risk commercial banks are facing while investing in different assets?
• Which bank has higher investment in five years?
OBJECTIVES OF THE STUDY
• To evaluate and analyze the variation in investment structure.
• To analyze risk and return on investment portfolio of different commercial banks.
• To analyze the relationship of investment with other variables like deposit, loan and advance, net profit and size of the firm.
• To find out the proportion of investment of commercial banks.
• The present study will be of substantial importance for:
o investors, planners, researchers, students, and policy makers to meet their personal and organizational objectives by identifying the various weaknesses prevailing in the investment.
• It is expected that this work will be helpful to decision makers to maximize the values of their organization.
RESEARCH HYPOTHESIS
• H1: Investment is positively related to Size of the firm, Profitability and Deposits
• H2: Investment is negatively related with Loan and advances
LIMITATION OF THE STUDY
• Only five commercial banks are selected.
• The study covers only five years period.
• The validity and confidence of the data depends on their faith and trustworthiness of the published data.
CHAPTER IIREVIEW OF LITERATURE
• Gitman and Joehnk, “ Investment is any vehicle into which funds can be placed with the expectation that will preserve or increases in value and generated positive returns.”
• Weston & Brigham, “A portfolio simply represents practice among investor of having their funds in more than one asset. The combination of investment asset is called a portfolio”.
• Makowitz showed that the variance of the rate of return was a meaningful measure of portfolio risk under a reasonable set of assumptions, this theory indicated the importance of diversifying the investments to reduce the total risk of the portfolio.
• CAPM which was developed by Sharpe and Litner, this model will allow investors to determine the required rate of return for any risky assets.
• The study of Edward J. Kane and Stephen A. Buser’s in title” portfolio diversification at commercial banks” deals how a firm perform a useful function by holding a portfolio of efficiently price securities. According to them, it is rational for a firm to engage in prior round of asset diversification on behalf of its shareholder’s even when all assets are priced efficiently and available for direct purchase by shareholders.
CHAPTER IIIMETHODOLOGY
• Research methodology refers to the various sequential steps to adopt by a researcher in studying a problem with certain objective in view.
POPULATION AND SAMPLE
S.N Name of Banks Observations
1 Global Bank Ltd. 5
2 Kumari Bank Ltd. 5
3 Nepal Investment Bank Ltd. 5
4 Nepal SBI Bank Ltd. 5
5 Standard Charter Bank Nepal Ltd. 5
Total observations 25
Population Size = 32
Sample Size = 5
Sample Percentage = 15.62%
Cont…
NATURE AND SOURCES OF DATA COLLECTION
• The main source of secondary data comprises annual reports of concerned banks, related journals, newspapers, Internet, official publication, related studies and thesis etc.
Model 1:• Inv= a + β1 X1 + β2 X2 + β3X3 + β4X4 + ei Where,• a = Constant variable• Inv = Log of Investment amount• X1= Log of Deposit• X2 = Log of net profit• X3= Log of Loan and Advances (loan)• X4 = Log of Size of bank (total assets)
CHAPTER IV DATA ANALYSIS AND FINDING
Proportion of Investment in percentage
Proportion of Investment (Mean)
Global Kumari Nepal SBI NIBL SCB
13.61% 12.98%
32.79%
16.60%
45.54%
Proportion of Investment
Proportion of Investment (Standard Deviation)
Global Kumari Nepal SBI
NIBL SCB0
2
4
6
8
10
12
14
Proportion of Investment (Standard Deviation)
Proportion of Investment (Standard Deviation)
MULTIVARIATE ANALYSIS
• Multivariate analysis (MVA) is based on the statistical principle of multivariate statistics, which involves observation and analysis of more than one statistical outcome variable at a time.
Summary of model 1
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .985a .970 .964 .08896
a. Predictors: (Constant), Deposits, Profit, loan, Size
ANOVAa
Model Sum of Squares
df Mean Square F Sig.
1
Regression 5.083 4 1.271 160.583 .000b
Residual .158 20 .008
Total 5.242 24
a. Dependent Variable: Investment
b. Predictors: (Constant), Deposits, Profit, loan, Size
Cont…
Coefficientsa
Model Unstandardized Coefficients Standardized Coefficients
t Sig.
B Std. Error Beta
1
(Constant) -1.298 .782 -1.660 .113
Size 2.420 1.639 1.511 1.477 .155
Profit .016 .026 .041 .612 .547
loan -1.924 .190 -1.072 -10.143 .000
Deposits .521 1.529 .332 .341 .737a. Dependent Variable: Investment
Cont…
CHAPTER VCONCLUSION AND RECOMMENDATION
CONCLUSION
• Commercial Banks play very important role in the economic life of the nation.
• Standard Charter Bank has high proportion of investment than other banks with less variation.
• There is positive relationship of Investment with Size of the firm, Net profit and Deposit but statistically insignificant.
• There is negative relation of investment with Loan and advance and is statistically significant.
RECOMMENDATION
• The commercial banks must have clear investment policy on different securities.
• SCB must maintain present variation in investment which is less than other banks.
• It is recommended that Nepal SBI bank must control its variation which is very high than other banks.
• Commercial banks must increase its net profit and deposit in order to increase its investment.
THANK YOU
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