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CHAPTER 1
INTRODUCTION
1.1 Background of the Bank
The commercial bank is the oldest form of bank. There is considerable change in the
original form of commercial bank. In general, bank means the commercial bank. Hence, the
definitions of bank are also equally applicable to commercial banks. The profit
maximization is the main objective of this bank. In the present context, the term
commercial bank itself is a misnomer. It does not separate bank from other financial
institutions. This name as an ! bank is an institution, hich deals ith money and credit.
It accepts deposit from the public, creates credit, exchanges loan transmits fund from one
place to another. "hen a ban performs multiple tasks, the efficiency and effectiveness of
ork becomes eak. Hence, different banks are established for different purposes.
!ppropriate at the time hen the banks used to grant the commercial loans to the
traders for production, transport and storage of commodities.
#ertainly, no comparison can be made beteen ancient and modern banks. In the
ancient time, merchants, moneylender and gold smiths used to perform the ork of banking
in every country. The merchants used to exchange the gold, silver and gems. The
moneylenders ere found lending and borroing money even in quite primitive
communities hereas, goldsmiths become the precursor of the modern bank note and the
forerunners of the modern banking institutions. Hence, the banks started to carry out the
orks of creating credit, issuing the notes, depositing, lending, transacting the bills of
exchange and promissory note etc.
In conclusion, e can say that banking is not static but dynamic concept. It is a
product of centuries and the development hich has taken place is the product of a method
of trial and error and experiences hich ere made and the results that folloed relating to
the acceptance of money and valuables as deposits, keeping them as such, lending them,
hether to private individuals, to states of other bodies and for controlling the multifarious
and multi$dimensional activities hich, in the beginning ere only trivial and could be
ignored but ith the groth of time, become international in character and multi$
dimensional in nature calling for actions on the part of the states as the actions on the part of
the individuals failed and state control become eminent.
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1.2 Prof!e of NIC Bank
%epal Industrial & #ommercial 'ank (imited )%I# 'ank* is the first bank of its
kind established under the #ommercial 'ank !ct, +-. The bank has been registered on/estha 0, +12 in the #ompany 3egister 4ffice as (imited #ompany. The bank as
licensed by %epal 3astra 'ank to handle all commercial bank transactions and commenced
operation on +st/uly, 556 from its Head 4ffice and main branch situated at 'iratnagar, the
7#ommercial #apital8 of %epal. %I# 'ank as the first commercial bank in %epal to have
received I94 5:+ certification for its ;uality s ;uality 9ystem on #ommercial 'anking !ctivities for the first time in %epal.
?urthermore, %I# 'ank became the first 'ank in %epal to be provided ith a line of credit
by International ?inance #orporation )I?#*, an arm of "orld 'ank @roup under its @lobal
Trade ?inance Arogram, enabling the 'ank>s (etters of #redit and @uarantees to be
acceptedB confirmed by banks orldide.
%I# 'ank has been promoted by a group of prominent %epali Cntrepreneurs and
leading industrial houses$ Dishal @roup, @olchha 4rganization, 9hah Edyog )@olyan*
@roup, Triveni )9anghai* @roup and 3astrya 'anijya 'ank, the largest commercial bank of
the kingdom.
The current shareholding pattern of the bank constitutes of promoters holding =1F
and general public holding -1F. %I# 'ank is one of the most idely held banking
companies in %epal ith close to -1, shareholders. The shares of the bank are actively
traded in %epal 9tock Cxchange ith current market capitalization of about %A3 +,50=
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patrons through efficient and cost effective service delivery through its consumer, business
banking and treasury divisions.
1." #terature $ur%e&This fieldork project is aimed at making survey on liquidity and profitability
analysis ith reference to %epal Industrial and #ommercial 'ank (imited. The purpose of
the study is to discuss that liquidity and profitability analysis, contained in the 'alance
9heet and A&( aBc, for a more meaningful understanding of the financial position and
performance of a firm. ?inancial statements may be defined as the reports prepared for the
purpose of presenting a periodical revie of the performance and the financial position of a
business enterprise. !nalysis of financial statements helps to kno the strength and
eakness of a business undertaking. The analysis of financial statements requires a
comprehensive and intelligent understanding of their nature and limitations as ell as
determination of the monetary valuation of the items.
?inancial statement analysis means a process of studying relationship among the
various financial factors in a business as disclosed by financial statements, so as to interpret
the financial statements correctly. To basic financial statements prepared for the purpose of
external reporting to oners, investors and creditors are 'alance 9heet and A&( aBc. These
statements are contained in a company>s annual report.
1.".1 #'udt& Rato
'ank is an institution, hich deals on money. #ash is the most liquid fund and it is
considered as the defense of banks. The bank should maintain certain amount of cash in
order to meet its cash requirements of the depositors. The structure of the cash ill be in the
form of cash in its vault, cash kept in central bank of the country. %A' has directed all the
commercial banks to maintain certain percentage of cash and bank balance for the purpose
of maintenance of liquidity.
1.".2 Profta(!t& Rato
Arofitability ratio indicates the degree of success in achieving desired profit. ! bank
should earn profit to survive and gro over a long period of time and contribute to the social
overheads for the elfare of the society. Arofit is the major aspect, hich influences entire
decision$making process. The profitability ratio furnishes ansers to ho efficiently the
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bank is being managed. !lthough profitability ratio mainly studies the earning poer of the
firm )bank*, it depicts almost entire performance of the bank.
1.) O(*ect%e+ of the $tud&
Cvery report is prepared ith certain objectives in mind. In the absence of specific
objective, the study loses its value. Thus, this study has been conducted for the folloing
objectives:
)a* To examine the relationship beteen liquidity and profitability.
)b* To determine the operational efficiency of the management.
)c* To kno ho efficiently the management has used the total assets.
)d* To identify the specific problem faced by the bank.
)e* To provide constructive suggestion to overcome the problem.
1., #-taton+ of the +tud&
In the context of %epal problem of reliable data is the major problem for research
study. There is considerable place for arguing about its accuracy and reliability. Cvery study
has limitations due to different factors of institutions, time$period taken, reliability of
statistical data, tools and variances.
The folloing limitations are pointed out this study of liquidity and profitability position of
%I# 'ank:
The study ill be done according to the information provided by the banks and not
ith the help of experience gained on actual orking environment.
9econdary data ill occupy its significant position in the study: research based on
secondary data is not far from limitations.
This study covers the analysis of only five years data from ?G +=B0 to ?G
+B hence, the conclusion dran confirms to the above periods only.
This study is limited to the study of %I# 'ank only.
The only major financial statements like 'alance 9heet, Income 9tatement, Arofit &
(oss aBc, #ash ?lo 9tatement has been taken for the analysis.
The study focuses only on the liquidity and profitability analysis and does not cover
other aspect of activities.
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The ratio and tools that is used in the study may vary due to different definition of
terms given by different authors.
1. Re+earch /ethodo!og&3esearch methodology is a sequential procedure and method to be adopted in a
systematic study. The main purpose of this study is to analyses the liquidity and profitability
of %I# 'ank. 9o, it outlines the entire research methodology used and folloed in the study.
It describes research design, data gathering and processing procedures, nature and sources of
data collection, and financial tools and techniques used. 3esearch design refers to the
conceptual structure ithin hich the research is conducted. It is the plan, structure and
strategy of investigation conceived so as to obtain a number of research questions and to
control variance. It is essential for the hole study and helps in finding out deficiency in
expectation of the starting of ork. 'asically, the research design has research hypothesis.
The second purpose of research design is to control variance.
Thus, a research design is a plan for the collection and analysis of data. 3esearch
design is the main part of any research ork. It presents a series of guideposts to enable the
researcher to progress in the right direction in order to achieve the goal. This study tries to
evaluate the liquidity and profitability position if the %I# 'ank. To accomplish the
objectives, it has adopted the descriptive analytical type of research design. It tries to
describe and analyze all these facts that have been collected for the purpose of the study.
9ome financial tools have also been applied to examine the facts and descriptive techniques
have been adopted to evaluate the structure of selected nature of operations.
1..1 /ethod+ of Data Co!!ecton
In regard to data collection, basically secondary data is conducted for the study. It is
collection from %I# 'ank. The published financial data are mostly used in this study to
analyze the liquidity and profitability analysis for %I# 'ank, visibly 'alance 9heet and
A&( aBc are the only base of this study hich are secondary in nature. The basic secondary
data in the form of published annual report of different years are collected. Thus, study
basically uses the secondary data, hich ere firstly collected and tabulated into separate
form systematically. 9imple statistical analysis, such as percentage is calculated here
necessary and these are presented and analyzed in descriptive ay.
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1..2 Po0u!aton and $a-0!e
The term 7population8 used in statistics denotes the aggregate from hich the
sample is to be taken and the term 7sample8 is that part of the population, hich e select
for the purpose of investigation. Aopulation refers not only to people but totality of all
observations that have been selected for the study. Aopulation is also knon as universe.
9ample refers to a part chosen from the population. Thus, in statistics, population means
hole and the sample means the part of the hole.
9ince, this study is focused on the banks, thus, here the population encompasses all
the commercial banks functioning its operations ithin the country. 9ince, study of hole
population may not be effective due to several factors, thus, sampling becomes essential to
inference for the population. 9o, among all the commercial banks, %I# 'ank has been
selected randomly as sample.
1.." $ource+ of Data
!nalysis of data means to study the tabulation material in order to determine
inherent facts or meanings. It involves breaking don the existing complex factors into
simpler part and putting them together in ne arrangements for interpretation. ! plan of
analysis should be prepared in advance before the actual collection of the material. !
preliminary analysis plan for investigation process requires detailed information about
similarities, differences, trends, outstanding factors etc.
ata can be classified into + groups namely, primary and secondary data. ata
collected by researcher or through agent for the first time from related field and possessing
original character are knon as primary data. Arimary data are also called first source. 4n
the other hand, data collected by someone else, used already and are made available to
others in the form of published statistics are knon as secondary data. 4nce primary data
have been used, it loses its primary characteristics and become secondary. The difference
beteen primary and secondary data is a matter of relativity. Arimary data are generally used
in those cases here the secondary data do not provide an adequate basis for analysis. In
certain cases, both data may be employed.
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CHAPTER 2
DATA PRE$ENTATION AND ANA#$I$
2.1 Introducton
This chapter entitled 7Aresentation and !nalysis of ata8 is a crucial chapter and has
been organized to present the result and analyze them accordingly. The basic objective of
this study is to observe and analyze the liquidity and profitability position if %I# 'ank. The
presentation and analysis of data in this study have been done through the help of financial
statements of the year from ?G +=B0 to ?G +B.
ata collected for the analysis of liquidity and profitability position of %I# 'ank are
presented in the form of tabular form and are analyzed ith the help of idely accepted
tools of ratio analysis i.e. liquidity and profitability ratios.
2.2 #'udt& Rato
The liquidity ratio shos the relationship of a firm>s cash and current assets to its
current liabilities. This ratio measures the liquidity position of the enterprise, i.e. the ability
of the firm to meet its short$term obligation out of its short$term resources. (iquidity ratios
are calculated to assess the capital of the company to meet immediately maturing liabilities.
The most common ratios under this group comprise:
2.2.1 Current Rato
#urrent ratio establishes the relationship beteen current assets and current
liabilities. It includes all those assets, hich are in the form of cash or can be converted into
cash in the normal course of usual business not exceeding a period of one year. (ikeise
current liabilities include all the obligations maturing ithin a year. #urrent ratio is
computed by:
Current Rato 3 #urrent !ssets
#urrent (iabilities
"here,
#urrent !ssets J #ash in Hand K 'ank 'alance K
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Ta(!e No. 1
Current Rato
ear Current A++et+ Current #a(!te+ Current Rato
+=B0 22,1+,=5 ==,-20,= =.+1F
+0B6 102,++=,+6- -,=6,6=0 1.10F
+6B5 ,51,2-,-6= -+,+2,012 6.+5F
+5B ,+0,6=,- 5-,26-,1- =.+2F
+B 56-,=6,55 +6,=55,+20 0.=2F
Source: Annual Report of NIC Bank,2011
4gure No. 1
+=B0 +0B6 +6B5 +5B +B.F
.F
+.F
-.F
2.F
1.F
=.F
0.F
6.F
5.F
Current Rato
#urrent 3atio
The current ratio of the %I# 'ank in the ?G +=B0, +0B6, +6B5, +5B
and +B are =.+1F, 1.10F, 6.+5F, =.+2F and 0.=2F respectively. It shos that the
current ratio has been fluctuating in the fiscal years.
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2.2.2 5uck Rato
;uick ratio expresses the relationship beteen quick assets and current liabilities. In
the quick ratio, the assets, hich have the nature of immediate conversion into cash as per
the company>s need, are used and are said to be the quick assets. 9tock or inventories and
prepaid expenses )if any* are usually excluded from the list of current assets to determine
the quick assets. It is so because they take time to convert themselves into cash. ;uick ratio
is computed by:
5uck RatoJ ;uick !ssets
#urrent (iabilities
"here,
;uick !ssets J #urrent !ssets L Arepaid Cxpenses
Ta(!e No. 2
5uck Rato
ear Current A++et+ Current #a(!te+ 5uck Rato
+=B0 22,1+,=5 ==,-20,= =.+1F
+0B6 102,++=,+6- -,=6,6=0 1.10F
+6B5 ,51,2-,-6= -+,+2,012 6.+5F
+5B ,+0,6=,- 5-,26-,1- =.+2F
+B 56-,=6,55 +6,=55,+20 0.=2F
Source: Annual Report of NIC Bank,2011
4gure No. 2
+=B0 +0B6 +6B5 +5B +B
.F
.F
+.F
-.F
2.F
1.F
=.F
0.F6.F
5.F
5uck Rato
;uick 3atio
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The quick ratio of the %I# 'ank in the ?BG +=B0, +0B6, +6B5, +5B and
+B are =.+F, 1.12F, 6.+0F,=.+-F and0.=2F respectively. It shos that the quick
ratio has been fluctuating in the fiscal years.
2." Profta(!t& Rato
Cvery person starts the business ith the prime motive to earn. The efficiency or
capability of a business and businessman is measured by the ay of profitability. If firm is
continuously facing loss, its financial condition ill definitely be bent don.
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+=B0 +0B6 +6B5 +5B +B
.F
1.F
.F
1.F
+.F
+1.F
-.F
-1.F
2.F
21.F
Net Proft Rato
%et Arofit 3atio
The net profit ratio of %I# 'ank in the ?BG +=B0, +0B6, +6B5, +5B and
+B are 0.56F, =.=F, ++.--F, 1.++F and -6.10F respectively. It shos that net
profit ratio has increased from ?G +=B0 to ?G +6B5 hereas, in the ?G +5B, it has
declined as compared to the previous year. 'ut in the ?G +B, the net profit ratio has
tremendously increased to -6.10F.
2.".2 Return on E'ut& 6ROE7
Cquity shareholders are the real oner of a company and are the risk$bearers and are
entitled to total profits earned by the company after preference dividend. 3eturn on equity
relates the profitability of a company to equity shareholders> equity. 34C measures the
company>s profitability in terms of return to equity shareholders. It is calculated as under:
ROEJ %et Arofit after Tax
9hareholder>s Cquity
"here,
9hareholder>s Cquity J 9hare #apital K 3eserve & 9urplus
Ta(!e No. )
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Return on E'ut&
In NRs.
ear Net Proft after Ta8 $hareho!der9+ E'ut& ROE
+=B0 +,15,2+,+6 11+,,522 2.0F
+0B6 =,6+,=,6=0 =+,-50,0+2 .F
+6B5 ,-0,11,0-2 =62,5-,516 =.=-F
+5B 5,=1,60,=02 0==,2=+,205 +.=F
+B 15,84,75,051 56,215,50+ 0.+=F
Source: Annual Report of NIC Bank,2011
4gure No. )
+=B0 +0B6 +6B5 +5B +B
.F
+.F
2.F
=.F
6.F
.F
+.F
2.F
=.F
6.F
+.F
Return on E'ut&
34C
The return on equity of the %I# 'ank in the ?BG +=B0, +0B6, +6B5,
+5B and +B are 2.0F, .F, =.=-F, +.=F and 0.=F respectively. It
shos that 34C has increased from 2.0F to =.=-F in the successive fiscal years,
hereas, in the ?G +5B, it has declined to +.=F and then again increased to 0.+=F.
2."." Return on Tota! A++et+ 6ROA7
3eturn on total assets or simply return on assets, measures the productivity of the
assets. It is measured in terms of relationship beteen net profit and assets. These ratios
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judge the effectiveness in using the total fund supplied by the oners and creditors. Higher
ratio shos the higher return on the assets used in the business thereby, indicating effective
use of the resources available and vice$versa. 34! is calculated as under
ROAJ %et Arofit after Tax
Total !ssets
Ta(!e No. ,
Return on Tota! A++et+
In NRs.
ear Net Proft after Ta8 Tota! A++et+ ROA
+=B0 +,15,2+,+6 2,-,01,5,2+0 .=2F
+0B6 =,6+,=,6=0 1,5-,5-,02,+1 .1F+6B5 ,-0,11,0-2 0,1,-,5=,1=1 .1F
+5B 5,=1,60,=02 ,-6,-=,,06 .5-F
+B 1,62,01,1 ,=05,--5,6=1 .-=F
Source: Annual Report of NIC Bank,2011
4gure No. ,
+=B0 +0B6 +6B5 +5B +B
.F
.+F
.2F
.=F
.6F
.F
.+F
.2F
.=F
Return on Tota! A++et+
34C
The return on assets of the %ic bank in the ?BG +=+B=-, +=-B=2,
+=2B=1,+=1B==,+==B=0 and +=0B=6 are .=2F, .1F, .1F , .5-F,.-=F and .1=F
respectively. It shos that 34! has increased from .=2F to .1F in the successive fiscal
years, hereas in the ?G +=1B==, it has declined to .5-F.
2.".) Return on Ca0ta! E-0!o&ed 6ROCE7
3eturn on capital employed is an overall profitability ratio. This ratio establishes
relationship beteen profit earned and capital employed. 34#C indicates the overall return
on the capital employed in the business. It points out hether the capital employed is being
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profitably and efficiently used in the business or not. Higher the ratio, better is the profit
earning capacity of the enterprise. 34#C is calculated as under:
ROCEJ %et Arofit after Tax
#apital Cmployed
"here,
#apital Cmployed J 9hareholder>s Cquity K ebenture & 'onds K (oan & 'orroings
Ta(!e No.
Return on Ca0ta! E-0!o&ed
ear Net Proft after Ta8 Ca0ta! E-0!o&ed ROCE
+=B
0+,15,2+,+6 6+=,61,522 -.2F
+0B
6=,6+,=,6=0 =65,0++,+56 5.5F
+6B
5,-0,11,0-2 ,-2,1=1,2 .-F
+5B
5,=1,60,=02 ,2+2,=0,1-5 =.06F
+B 15,84,75,051 ,++,+6,02 -.6F
Source: Annual Report of NIC Bank,2011
4gure No.
+=B0 +0B6 +6B5 +5B +B
.F
+.F
2.F
=.F
6.F
.F
+.F
2.F
Return on Ca0ta! E-0!o&ed
34#C
The return on #apital Cmployed of the %I# 'ank in the ?BG +=B0, +0B6,
+6B5,+5B and +B are -.2F, 5.5F, .-F, =.06F and -.6F respectively.
It shos that 34#C has increased from -.2F to .-F in the successive fiscal yearshereas, in the ?G +5B, it has decreased to =.06F.
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2."., Earnng Per $hare 6EP$7
Carnings per share are the ratio, hich is calculated to assess the availability of total
profits per share. It is a very important ratio for equity shareholders to assess the return on
equity share.
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4gure No. :
Earnng0er$hare
The earnings per share of the %I# 'ank in the ?BG +=B0, +0B6, +6B5,+5B and +B are 1.5, -.=1, ++.01, =., +2. and +1.01 respectively. It shos
that CA9 has increased from 3s 1.5 to 3s ++.01 in the successive fiscal years, hereas, in
the ?G +=1B==, it has declined to 3s =..
2.". D%dend Per $hare 6DP$7
ividend per share measures the dividend distributed among the equity shareholders on a
per share basis. The objective of computing this ratio is to kno hat an equity shareholder
byay of dividend receives. There are to components of this ratio !mount of earning
distributed as dividend as dividend and, number of equity shares. A9 is calculated as
under:
DP$J ividend paid to 9hareholders
%umber of Cquity 9hares
Ta(!e No. ;
DP$ In R+
ear
D%dend 0ad to
$hareho!der
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%I# 'ank has declared dividend to its shareholders in the ?BG +=1B==. 'ut in the
?G +=1B==, +==B=0 and +=0B=6 the dividend per share of the %I# 'ank are 3s , 3s
.1-, 3s .1 and .1 respectively.
2.".: D%dend Pa&out Rato
ividend pay$out ratio measures the profit distributed beteen dividends per share
and earning per share. The main purpose to calculate this ratio is to find out the amount of
ividend paid out of CA9. It is calculated as under:
ividend Aay$out 3atio J A9
CA9
Ta(!e No. =
D%dend Pa&out Rato In R+
earDP$ EP$ D%dend Pa&out
Rato
+=B0 MMMMMM.. 3s -.=1 MM..
+0B6 3s 3s ++.01 2-.5=F
+6B5 3s .1- 3s =. -.+5F
+5B 3s .1 3s +2. 2.-0F
+B 3s .1 3s +1.01 4.08%
4gure No. =
D%dend Pa&out Rato
Dividend Pay-out Rato
%I# 'ank has declared dividend to its shareholders in the ?BG +=2B=1, thus,
dividend pay$out ratio is %il in such period but in the ?BG +=1B==, +==B=0, +=0B=6 and
+=6B=5 the dividend has been declared by the bank. 9o, dividend pay$out ratio in such
periods are 2-.5=F , -.+5F, 2.-0F and 2.6F respectively.
2.".; D%dend e!d Rato
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ividend yield ratio shos the relationship beteen ividend Aer 9hare )A9* and
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2.".= Earnng e!d Rato
Carning yield ratio shos the relationship beteen earning per share and market
value of share. It is calculated as under:
Earnng e!d RatoJ CA9
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Carning yield 3atio
+=+B=- +=-B=2 +=2B=1 +=1B== +==B=0 +=0B=6
?iscal Gear
The earning yield ratio of %I# 'ank in the ?B+=+B=-, +=-B=2,
+=2B=1,+=1B==,+==B=0 and +=0B=6 are +.-=F, =.+=F, =.++1, -.+1F,+.1-F and +.F
respectively. It shos that earning yield ratio has been fluctuating in these periods.
2.) $tud& Re+u!t
The data from the published financial statements of %I# 'ank have been adapted to
analyses its financial soundness. To accomplish the basic objective of this study, tools of
financial management have been used to analyze and present the data. ata require to
prepare financial ratios are shon in !ppendix.
Ta(!e No. 12
Rato+ of NIC Bank
3atio +=B=+ +=+B=- +=-B=2 +=2B=1 +=1B== +==B=0
#urrent
3atio
=.+1F 1.10F 6.+5F =.+2F 7.64% 4.68%
;uick 3atio =.+F 1.12F 6.+0F =.+-F 0.=2F 2.=6F
%et Arofit
3atio0.56F =.=F ++.--F 1.++F -6.10F 22.25F
34C 2.0F F =.=-F +.=F 0.+=F 6.=1F
34! .=2F .1F .1F .5-F .-=F .1=F
34#C -.2F 5.5F .-F =.06F -.6F =.22F
CA9 3s 1.5 3s -.=1 3s ++.01 3s =. +2. +1.01
A9 %il %il 3s 3s .1- 3s .1 3s .1
ividend
Aay$4ut
%il %il 2-.5=F -.+5F 4.37% 4.08%
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3atio
ividend
Gield 3atio%il %il +.0-F .F 0.11% 0.08%
Carning
Gield 3atio+.-=F =.+=F =.++F -.+1F 2.53% 2.01%
The table shos that the #urrent 3atio and ;uick 3atio are quite fluctuating in the
fiscal years. 9imilarly, %et Arofit 3atio, 34C, 34!, 34#C, CA9 and Carning Gield 3atio of
the %I# 'ank are in the increasing trend in the successive fiscal years. 'ut in the ?G
+=1B==, the ratios have declined as compared to the previous year. Te bank did not
distribute any dividend up to the ?G +=-B=2 hereas a dividend of 3s , 3s .1-, 3s .1
and 3s.1 as distributed in the ?G +=2B=1, ?G +=1B==,?G +==B=0 and +=0B=6
respectively. Thus, ividend pays out ratio and ividend yield ratio is %il in the ?iscal Gear
+=+B=- and +=-B=2.
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CHAPTER "
$U//AR? CONC#U$ION AND RECO//ENDATION
-. 9ummary
?ield ork is being considered as the heart of
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could get it is knon that more profit by investing some more from liquidity and
profitability funds because it is knon that investment give returns.
The analysis of data in previous chapter shos that the relationship beteen net
profits and saving deposits are direct and positive. The profit from the investment of the
saving deposit contributes to total net profit as ell. Therefore liquidity and profitability
indirectly %I# to achieve profit. Though there is a positive relation beteen deposits and
profit of the bank, the profit has not increased as compared to the deposits. Cither %I#, is
not investing in profitable sectors or %I# is not providing loans and investments by fully
utilizing its funds. Therefore, %I# should try harder to utilize its deposits on best possible
ay.
?rom the ata interpretation of the saving deposit facility of %I#, the conclusion can
be dran that %I#, is doing a reasonably good job regarding it. %I#>s liquidity and
profitability trends are very good and the return regarding it, is also reasonable. The bank
likely to increase its profit by increasing the investments and loan facilities from funds of
saving deposits and by decreasing its cash and bank balance to minimum requirement. ?rom
the deposit trends of %I#, it shos that the customers are loyal to bank. 9o, %I# is doing
good job regarding liquidity and profitability and it can go a long ay if a fe changes
mentioned belo are applied.
"." Reco--endaton+
There should be sound co$ordination beteen %3' and %I# 'ank and other #ommercial
banks.
The bank should attract more customers by providing different services and facilities to
collect more negotiations.
The bank should focus on the development of modern technology and study the problems
and obstacles of customers it should care to solve the problems by the management and
personals.
The bank should also open its branches in rural areas, to promote and mobilize small
investors.
The bank has been maintaining high liquidity so, it is suggested that the bank should
decrease the liquidity amount and invests such amount in the productive and profitable
sectors.
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BIB#O@RAPH
!nnual 3eport of %I# 'ank
'handari, illi 3aj )+5*, 'anking and Insurance, Nathmandu: !ayush Aublication.
angol, 3.< )+=0*, !ccounting for ?inancial !nalysis and Alanning Teleju Aublication
/oshi, r. 9hyam )+*, 'anking and Insurance, Nathmandu: Taleju Arakashan.
/oshi, r. 9hyam )+*, !n Introduction To Cconomic Theory, Nathmandu: Arakashan
'hotahity.
Nhadka, 9erjung )+*, 'anking and Insurance, Nathmandu: !sia Arakashasn.