Comparative Financial Performance of MBL, KBL, LBL & SBL

Comparative Financial Performance of MBL, KBL, LBL & SBL
TABLE OF CONTENTS
SIGNATURE
COPYRIGHT
DISCLAIMER
ACKNOWLEDGEMENTS
CHAPTER PAGE NO.

1 INTRODUCTION TO BANKING............................................ .........4
1.1 Introduction.............................................................................................................4
1.2 Origin of Modern Banking System......................................................................5
1.3 Development of Banking in Nepal.......................................................................6
1.4 Purpose of the study...............................................................................................9
1.5 Methodology...........................................................................................................9
1.6 Scope of the study...................................................................................................9
1.7 Limitations of the study.........................................................................................9
1.8 INTRODUCTION TO MACHHAPUCHCHHRE BANK LIMITED.............10
1.8.1 Introduction ....................................................................................................10
1.8.2 Branches..........................................................................................................11
1.8.3 Board of Directors...........................................................................................11
1.8.4 Products and Services Offerings of MBL.......................................................12
1.8.5 Financial Highlights .......................................................................................12
1.9 INTRODUCTION TO KUMARI BANK LIMITED..........................................13
1.9.1 Introduction ....................................................................................................13
1.9.2 Branches..........................................................................................................14
1.9.3 Board of Directors...........................................................................................14
1.9.4 Products and Services Offerings of KBL........................................................15
1.9.5 Financial Highlights .......................................................................................15
1.10 INTRODUCTION TO LAXMI BANK LIMITED...........................................16
1.10.1 Introduction ..................................................................................................16
1.10.2 Branches........................................................................................................17
1
Jointly Prepared By:
1.10.3 Board of Directors.........................................................................................18

1.10.4 Products and Services Offerings of LBL......................................................18
1.10.5 Financial Highlights .....................................................................................19
1.11 INTRODUCTION TO SIDDHARTHA BANK LIMITED.............................20
1.11.1 Introduction ..................................................................................................20
1.11.2 Branches........................................................................................................21
1.11.3 Board of Directors.........................................................................................21
1.11.4 Products and Services Offerings of SBL.......................................................21
1.11.5 Financial Highlights .....................................................................................22
2 COMPARATIVE FINANCIAL PERFORMANCE OF MBL, KBL, LBL & SBL
23
2.1 CAMEL Analysis..................................................................................................23
2.1.1 Capital Adequacy............................................................................................23
2.1.2 Asset Quality...................................................................................................25
2.1.3 Management....................................................................................................28
2.1.4 Earning............................................................................................................32
2.1.5 Liquidity..........................................................................................................36
2.2 TREND ANALYSIS..............................................................................................40
2.2.1 Total Deposit...................................................................................................40
2.2.2 Total Loans and Advances...............................................................................41
2.2.3 Profit Analysis.................................................................................................43
2.2.4 Investment Analysis........................................................................................44
3 SUMMARY, CONCLUSION & RECOMMENDATION...........................45
3.1 Summary & Conclusion.......................................................................................45
3.2 Recommendation..................................................................................................47
Bibliography....................................... .....................................49
Abbreviations....................................................................... ....50
LIST OF CHART, TABLES AND FIGURES
2
List of Tables Page No.

Table 1: List of Commercial Banks.................................................7
Table 2: Growth of Bank & Financial Institution................................8
Table 3: Capital Structure of KBL.................................................11
Table 4: Financial Highlights.............................................. ..........12
Table 9: Capital Structure of SBL.................................................20
Table 10: Financial Highlights................................. .....................22
Table 11: Comparative CARS.............................................. .........24
Table 12: Classification of loan....................................................25
Table 13: Loan loss provision to total loan.....................................26
Table 14: Performing loan to total loan.........................................27
Table 15: Non Performing loan to total loan...................................28
Table 16: ROA of MBL, KBL, LBL & SBL.........................................33
Table 17: PE ratios of MBL, KBL, LBL & SBL...................................34
Table 18: ROE of MBL, KBL, LBL & SBL.........................................35
Table 19: EPS of MBL, KBL, LBL & SBL........................... ...............36
Table 20: CRR of MBL, KBL, LBL & SBL.........................................37
Table 21: CBTTD of MBL, KBL, LBL & SBL......................................38
Table 22: GSTTD of MBL, KBL, LBL & SBL............................ ..........39
Table 23: Total Deposit of MBL, KBL, LBL & SBL.............................40
Table 24: Loan & Advances of MBL, KBL, LBL & SBL........................41
Table 25: CD Ratio of MBL, KBL, LBL & SBL...................................42
Table 26: Profit of MBL, KBL, LBL & SBL......................... ...............43
Table 27: Investment of MBL, KBL, LBL, & SBL..............................44
List of Figures Page No.
Figure 1: Comparative CAR.......................................... ...............24
Figure 2: Comparative CRR........................................... ..............37
Figure 3: Comparative CBTTD.....................................................38
Figure 4: Comparative GBTTD.....................................................39
Figure 5: Comparative Total Deposit................................... ..........41
Figure 6: Comparative Loan & Advances.......................................42
Figure 7: Comparative Net Profit............................................... ...43
Figure 8: Comparative Investment Analysis...................................44
3
Chapter 1
1 INTRODUCTION TO BANKING
1.1 Introduction
In every nation, financial sector immensely contributes to
economic growth and prosperity. It provides platform to country for
capital formation by mobilizing the public deposits, which can be
invested in economic activities, thereby providing basis for credit
creation through multiplier effect. This phenomenon of multiplier effect
of credit creation within a country is strong foundation for central
banks to apply its monetary policy to guide the economy in proper
direction.
4
Bank constitutes an important segment of the financial infrastructure

of the country. Generally a bank does the business of money. It is a
financial organization whose principle operations are concerned with
the accumulation of the temporary idle money from the general public
by attracting them with sound interest rate and utilizing those funds by
providing loans to different sectors, e.g. business houses, industries,
firms, agriculture etc. Besides, banks also provide a number of agency
services like making payment of cheque, draft and bill of exchange;
money transfer from by means of draft, mail transfer or telegraphic
transfer; etc on behalf of its customers. Many scholars have defined
bank some of which are as follows:
According to Crowther “Bank is a financial institution that collects
the surplus funds of the people on terms acceptable to them and
makes them available to the needy for productive purposes.”
Professor Kinely says “ Bank is an establishment which makes to
individuals such as advances of money as may be required and safety
made to and to which individuals entrust money when they not
required by them for use.”
Therefore, Bank is a financial institution that collects idle funds,
mobilizing them into productive sector, which in return turns out to be
an overall development of the country depending on the performance
of the bank.
1.2 Origin of Modern Banking System

The word Bank developed from Italy. Bank was called BENKO in
Italian terms, which, later on, started to be called BANK by
Englishmen, and this spread all over the world. In Italian language
BENKO means BENCH. In ancient time, Sunar and Saraphi were
exchanging money by putting on the bench. For this reason, the
banking carries out the work of exchanging money, providing loans,
5
accepting deposits and transferring the money. Thus, Modern banking

system originated in Medieval Italy. The first bank called “Bank of
Venice” which was established in Venice in Italy in 1157 A.D. to finance
the monarch in his wars. Subsequently, Bank of Barcelona (1401) and
Bank of Geneva (1407) were established. The Lombard migrated to
England and other parts of Europe from Italy are regarded for the
development and expansion of the modern banking. Though, Bank of
England was established in 1694, the growth of banks accelerated only
after the introduction of Banking Act – 1833 in United Kingdom as it
allowed opening joint stock company banks.But the modern banking
started after the introduction of banking act 1883 A.D. at United
States of America. So, this trend of banking slowly began to increase
and spread initially all over the world.
1.3 Development of Banking in Nepal

Firstly, In Nepal Prime Minister Ranodip Singh has established
“Tezarath Adda” in 1877 A.D. in Kathmandu, which was fully
subscribed by the government and grant loan for government
employees. This establishment helped the general public to provide
credit facilities at very low interest rate but only the collateral of gold
and silver. Several branches were opened in different part of the
country. Tezarath Adda did not accept any deposit that may be the
main reason it faced many financial problem in absence of saving
mobilization.
Secondly, the need of banking institution was realized and in the year
1937 A.D. “Nepal Bank Limited” was established as the first banking
institution. Then the essentiality of another bank was realized to
control over all the financial aspect of the country and “Nepal Rastra
Bank” as the country’s central bank was established in 1956 and then
“Ratriya Banijya Bank” the second commercial bank was established in
6
1966. After 1984 the government gradually liberalized and opened up

the financial sector, resulting in the rapid entry of the foreign banks.
Later, with the grand opening of Nabil Bank Ltd. in 1984 other
commercial banks started emerging in the private sectors.
Thirdly, the banking sector is more liberalized and there are various
types of bank working in modern banking system. This includes
central, development and commercial banks. Evolution of the
information technology has revolutionized the banking sector is saving
lots of time and money by implementing IT. Technology has changed
the traditional method of the services of bank. Invention of different
software and hardware, which are very essential and available for
functioning bank such as Banking software, ATM, E-banking, Mobile
Banking and card like Debit card, Credit card, Prepaid card etc which
helps the customer as well as banks to operate and conduct their
activities more efficiently and effectively.
Table 1: List of Commercial Banks

(Rs. In Million)
Paid up
Operation Capital
S.N. Commercial Banks
Date
1 Nepal Bank Ltd. 1994/07/30 380.4

2 Rastriya Banijya Bank 2022/10/10 1172.3
3 NABIL Bank Ltd. 2041/03/29 689.2
4 Nepal Investment Bank Ltd. 2042/11/16 1002.6
5 Standard Chartered Bank Ltd. 2043/10/16 620.8
6 Himalayan Bank Ltd. 2049/10/05 810.8
7 Nepal SBI Bank Ltd. 2050/03/23 647.8
8 Nepal Bangladesh Bank Ltd. 2050/02/23 744.1
9 Everest Bank Ltd. 2051/07/01 831.4
10 Bank of Kathmandu Ltd 2051/11/28 603.1
Nepal Credit and Commerce Bank
11 2053/06/28 1195.7
Ltd.
7
12 Lumbini Bank Ltd. 2055/04/01 750.0

Nepal Industrial & Commercial Bank
13 2055/04/05 792.0
Ltd.
14 Machhyapuchhre Bank Ltd. 2057/06/17 821.7
15 Kumari Bank Ltd. 2057/12/21 900.0
16 Laxmi Bank Ltd. 2058/12/21 732.0
17 Siddhartha Bank Ltd. 2059/09/09 690.0
Agricultural Development Bank
18 2024/09/18 9278.0
Ltd.*
19 Global Bank Limited 2063/09/18 700.0
20 Citizen International Bank Limited 2064/03/07 560.0
Source: www.nrb.com.np, List of Banks & Non-banks Financial Institution
Note: * Agricultural Development bank came into operation from 2024/09/18

with paid up capital 9278 millions and upgraded development banks into
commercial banks in 2006.
** Prime Commercial Bank, Bank of Asia Nepal & Sunrise Bank Ltd. Were
operated after mid July 2007.
Growth of Financial Institutions:

During the last two and half decades the number of financial
institutions has grown significantly. At the beginning of the 1980s
there were only two commercial bank and development banks in the
country. After the induction of economic liberalization policy,
particularly the financial sector liberalization, that impetus in the
establishment of new bank and non-bank financial institutions.
Consequently, by the end of mid-July 2007 altogether 208 banks and
non-bank financial institutions licensed by NRB are in operation.
List of commercial banks in Nepal are as follows:
Table 2: Growth of Bank & Financial Institution
Types of Financial Number of Institutions in Mid July

Institution 1980 1985 1990 1995 2000 2005 2006 2007
Commercial Banks
2 3 5 10 13 17 18 20
Development Banks 2 2 2 3 7 26 28 38
8
Finance Companies - - - 21 45 60 70 74
Micro Credit
- - - 4 7 11 11 12
Development Banks
Saving & Credit Co-
- - - 6 19 20 19 17
Operatives
NGO's (Performing
Limited Banking - - - - 7 47 47 47
Activities
Total 4 5 7 44 98 181 193 208
Source: Banking & Financial Statistics Mid-July 2007
1.4 Purpose of the study
The major purpose of this study is to do the analysis of Financial

Performance through Camel analysis of four same generation
commercial banks namely Machhapuchre Bank Ltd., Kumari Bank Ltd,
Laxmi Bank Ltd., and Siddhartha Bank Ltd.
1.5 Methodology
The information for this study has been collected mainly through
secondary sources. The major source of secondary data is the annual
reports of relevant banks. Moreover, relevant articles from the Internet
and the magazines have also been consulted.
1.6 Scope of the study
This study is focused on the analysis of Financial Performance of banks

through CAMEL analysis. It deals with only balance sheet items.
1.7 Limitations of the study
Due to limited time we have focused only to the financial performance

through CAMEL analysis and we have not covered all the financial
9
indicators. The study is confined to MBL, KBL, LBL, and SBL. The study
covers the three fiscal years from FY 2061/62 to 63/ 64.
1.8 INTRODUCTION TO MACHHAPUCHCHHRE BANK LIMITED
1.8.1Introduction
Machhapuchchhre Bank Limited was registered in 1998 as the first
regional commercial bank to start banking business from the western
region of Nepal with its head office in Pokhara. Today, with a paid up
capital of above 820 million rupees, it is one of the full-fledged
commercial bank operating in Nepal.
Machhapuchchhre Bank Limited is a pioneer in introducing the
latest technology in banking in the country. It is the first bank to
introduce centralized banking software named GLOBUS BANKING
SOFTWARE developed by Temenos NV, Switzerland. The bank provides
modern banking facilities such as Any Branch Banking, Internet
Banking and Mobile Banking to its valued customers.
The bank in the last few years have really opened up with
branches spread all around the country. At this stage, it has its
Corporate Office in Kathmandu and branch offices in other parts of
Kathmandu, Damauli, Bhairahawa, Birgunj, Banepa, and different
parts of Pokhara in addition to the Head Office in Naya Bazar, Pokhara.
A full-fledged banking branch is in operation in Jomsom located high
10
up in the mountains too. The bank aims to serve the people of both
the urban and rural areas.
The Capital Structure of MBL as on FY 2063/64 was as follows:
Table 3: Capital Structure of KBL
FY 2061/62 Capital Structure FY 2062/63

(NRs.) (NRs.)
1,000,000,000 Authorized Capital 1,000,000,000
715,000,000 Issued Capital 821,651,300
715,000,000 Paid Up Capital 821,651,300
Source: 9th Annual Report of MBL & www.mbl.com.np
1.8.2Branches
Naya Bazar, Pokhara
Head Office
Chipledhunga,Mahendrapul, Ram Bazar,

Pokhara Branch Pokhara Branch
Naya Bazar,Prithivi Chowk Putalisadak,
Pokhara Branch Kathmandu Branch
New Road, Tribhuwan Chowk, Banepa,
Ktm Branch Kavre Branch
Link Road, Ghantaghar Mainroad,
Birgunj Branch Damauli Branch
Devkota Chowk Itahari Branch
Bhairahawa Branch
Jomsom, Thapathali Extension Counter
Mustang Branch
Baluwatar Extension Counter Gwarko,
Lalitpur Branch
1.8.3Board of Directors
Mr. Surya Bahadur K.C.

Chairman
11
Mrs. Geeta Shrestha Mr. Kishor Kumar Shah

Director Director
Mr. Ajad Shrestha Mr. Praneswor Pokharel
Director Director
Mr. Prakash K.C.
Director
1.8.4Products and Services Offerings of MBL

 Deposit
 Current Deposit
 Call Deposit
 Saving Deposit
 Pew Bachat
 Fixed/Term Deposit
 Share Holder’s Deposit
 Yuva Bachat
 Salary Management Scheme
 Royale Saving Deposit
 Loan (Term Loan, Working Capital Loan, Trust Receipt Loan,

Packing Credit Loan, Home Loan, Hire Purchase Loan, Education
Loan, Loan against Securities, Privilege Loan)
 Other Services (Mobile Banking, MBL Debit Card, Internet
Banking, ABBS, Trade Finance, Safe Deposit Locker,
Money2Nepal, Remittance)
1.8.5Financial Highlights
The financial highlights of MBL can depict as follows:
Table 4: Financial Highlights
In NRs. '000,000'
FY FY
Growth Growth FY 2063/64
S.N. Particular 2061/62 2062/63
(%) (%) (Rs.)
(Rs.) (Rs.)
1 Total Asset 6,445.42 41 9,069.83 19 10,807.62
2 Net Worth 637.74 46 931.09 7 1,000.26
12
3 Deposits 5,586.80 41 7,893.30 20 9,475.45

Loans, Advances &
4 Bills Purchase 5,130.22 20 6,146.57 19 7,319.94
(Gross)
5 Investment 468.61 154 1,190.83 7 1,278.47
6 Net interest income 194.90 41 274.70 8 296.76
7 Operating Profit 128.40 50 192.91 -53 91.10
8 Net Profit 84.87 58 134.00 -45 74.09

Source: Annual Report of MBL
1.9 INTRODUCTION TO KUMARI BANK LIMITED
1.9.1Introduction
Kumari Bank Limited, came into existence as the fifteenth commercial
bank of Nepal by starting its banking operations from Chaitra 21, 2057
B.S (April 03, 2001) with an objective of providing competitive and
modern banking services in the Nepalese financial market. The bank
has paid up capital of Rs. 900 million, of which 70 % is contributed
from promoters and remaining from public.
Kumari Bank Ltd has been providing wide- range of modern banking
services through 10 points of representation across the country, 6
outside and 4 inside the valley. The bank is pioneer in providing some
of the latest / lucrative banking services like E-Banking and SMS
banking services in Nepal. The bank has adopted Globus Banking
Software, developed by Temenos NV, Switzerland, to provide
centralized data base system to all branches. Similarly the bank has
been providing 365 days banking facilities, extended banking hours till
7 PM in the evening, utility bill payment services, inward and outward
remittance services, and various other banking services. Visa Electron
13
Debit Card, which is accessible in entire VISA linked ATMs (including

11 own ATMs) and POS (Point of Sale) terminals both in Nepal and
India, has also added convenience to the customers.
The Capital Structure of KBL as on FY 2063/64 was as follows:

(NRs.) (NRs.)
625,000,000 Issued Capital 750,000,000
625,000,000 Paid Up Capital 750,000,000
Source: 7th Annual Report – 2063/64 B.S. & www.kumaribank.com
1.9.2Branches
Putalisadak, Kathmandu
Head Office
New Road,Pratap Bhawan Biratnagar Branch

Kathmandu Branch Goshwara Marg, Morang
Adarshanagar, New Road, Pokhara Branch
Birgunj Branch
Dharan Road, Kanipur Mall, Gongabu,

Itahari Branch Kathmandu Branch
Kumaripati, Dry Port, Sirsiya

Lalitpur Branch Birgung Branch
Pulchowk, Narayanghat,
Chitawan Branch
Noor Pratap JB Rana
Chairman
Amir Pratap JB Rana Shiva Ratan Sharada

Director Director
Shantoo Shrestha Samson J. B. Rana
Director Director
14
Lalit Jung Shahi Jagdish Prasad Chaudhary

Director Director
Surendra Bahadur K.C. (Khadka)
Director
1.9.4Products and Services Offerings of KBL

• Deposit (Saving Deposit, Fixed Deposit, Liquid Deposit, Super
Saving, Kumari Saving, Checking A/c, Business A/c, Time
Deposit, Call Deposit)
• Loan (Vehicle Loan, Home Loan, Hire Purchase, Consumer
Product Financing, Educational Loans, Travel Loans, Working
Capital Financing, Term Loan, Short Term Loan, Hire Purchase,
Bills Discounting, Loan Syndication)
• Safety Lockers
• Foreign Trade (Letter of Credit, Forward Contract, Bank
Guarantee, Cash Management, Clearing)
• Salary Management
• Bulk Cah Management
• Remittance (Demand Draft, Manger's Cheque, Travellers'
Cheque, Telex Transfer)
• Convenience Banking (Evening Banking, Weekend Banking)
• E-banking (Internet Banking, Mobil Banking, Utility Bill Payment)
1.9.5 Financial Highlights

The financial highlights of KBL can depict as follows:
In NRs. '000,000'
FY FY FY
Variance Variance
S.N. Particular 2061/62 2062/63 2063/64
(%) (%)
(Rs.) (Rs.) (Rs.)
1 Total Asset 7,428.30 21 9,010.28 32 11,918.31
2 Net Worth 645.44 34 863.51 20 1,038.60
3 Deposits 6,268.95 24 7,768.96 36 10,557.42

Loans and
4 5,681.01 23 7007.79 29 9,062.43
advances
5 Investment 1,190.27 17 1,394.95 47 2,050.63
15
Net interest
6 259.79 3 268.47 47 394.23
income
Operating
7 138.86 13 156.76 71 267.30
Profit
8 Net Profit 84.20 23 103.67 64 170.26
Source: 6th Annual Report – 2062/63 B.S. & 7th Annual Report – 2063/64 B.S.
1.10INTRODUCTION TO LAXMI BANK LIMITED
1.10.1Introduction
Laxmi Bank was incorporated in April 2002 as a commercial bank. The
current shareholding constitutes of promoters holding 55.42 percent,
Citizen Investment Trust holding 9.02 percent and the general public
holding 35.56 percent. Promoters represent Nepal’s leading business
families with diversified business interests. The Bank’s shares are
listed and actively traded in the Nepalese Stock Exchange.
Laxmi Bank has grown with branches in Birgunj, Banepa, two in
Pokhara, Biratnagar, Narayanghat, Pulchowk, Lalitpur, Teku, New Road,
and more recently in Janakpur. Three more branches will soon be
operational from New Baneswor and Bhatbhatini in Kathmandu and
from Damak in outside the Valley.
With a view to providing safe, seamless, quick and advance
banking services, the bank has been heavily investing in contemporary
banking technologies. The Bank uses Flexcube as its main banking
16
platform. Flexcube incidentally has been ranked the number one

selling core banking solution globally, and has been embraced by over
500 financial institutions across over 90 countries. The Bank provides
its services through a host of delivery channels including cell phone,
Internet, ATM. The bank is the first in South Asia to have implemented
SWIFTNet, the advanced version of the SWIFT technology, which is
used for speedy and secure payment and messaging services.
Under a professional management team, the bank has
established itself as an emerging key player. Today the bank is
recognized as an innovative and progressive bank geared to providing
shareholders and customers with quality earnings and value-added
services. The bank has its own land and well-built three storied office
building with sufficient parking area and electronic surveillance
system.
The Capital Structure of LBL as on FY 2063/64 was as follows:

(NRs.) (NRs.)
610,000,000 Issued Capital 800,000,000
609,917,300 Paid Up Capital 729,697,000
Source: Annual Report of LBL.
1.10.2Branches
Hattisar,Kathmandu
Head Office
Birgung Branch Newroad

Pokhara Branch
17
Banepa Branch Pulchowk,

Kavre Branch Lalitpur Branch
Narayanghat, Teku,
Chitwan Branch Kathmandu Branch
Pokhara Industrial District, Biratnagar Branch
Pokhara Branch
Janakpur Branch Newroad,
Kathmandu Branch
New Baneshwor,
Kathmandu Branch
Madhu Sudan Agrawal Mr. C.P.Khetan

Director Director
Gopi Krishna Sikaria Mr. Nandan Hari Sharma
Director Director
(Representing CIT)
Mr. Bhola B. Adhikary Mr. Suman Joshi
Director Chief Executive Officer
(Representing Public Shareholders)
Mr. Shambhu Prasad Acharya Ratan Lal Shanghai
Professional Director Advisor
1.10.4Products and Services Offerings of LBL

 Deposit
 Saving A/c (Laxmi Saving Account, Orange Saving Account)
 Fixed Deposit
 Call Account
 Sweep Facility
 Current Account
 Specialized Savings Account
• Gurkha Savings
• Student Savings
• USD Savings
• Junior Savings Samrakshan
 Loan (Overdraft, Working Capital Loan/Demand Loan/Short-

term, Supply Finance, Term Loan, SME Loan, Trust Receipt
18
Loan/Importer’s Loan, Packing Credit/Export Loan, Letter of

Credit, Bank Guarantee, Car Loan, Home Loan, Home equity
Loan, Personal Loan)
 Other Services (Demand Drafts, Lockers, Fund
Transfers/Remittance, Clearing/Collection, Foreign Exchange,
Financial Advisory, Internet Banking/Online Payment, Extended
Banking, ATM/Debit Card, Payroll Management, NRN Cell)
The financial highlights of LBL can depict as follows:

In NRs. '000,000'
FY FY FY
S. Variance Variance
Particular 2061/62 2062/63 2063/64
N. (%) (%)
(Rs.) (Rs.) (Rs.)
1 Total Asset 3,886.18 40 5,282.93 58 8,582.69
2 Net Worth 643.57 6 682.08 27 864.39
3 Deposits 3051.76 46 4444.35 71 7,611.65

Loans and
4 2726.14 57 4,280.11 53 6,529.24
advances
5 Investment 421.46 21 509.81 184 1447.36
Net interest
6 95.69 32 126.77 50 190.22
income
Operating
7 49.56 20 59.53 80 106.90
Profit
8 Net Profit 26.47 34 35.39 85 65.58
Source: Annual Report of LBL
19
1.11INTRODUCTION TO SIDDHARTHA BANK LIMITED
1.11.1Introduction
Siddhartha Bank Limited (SBL) commenced operations in 2002. The
Bank was promoted by a group of highly reputed Nepalese dignitaries
having wide commercial experience. We provide a full range of
commercial banking services through our seven branches established
in Kathmandu ( 3 in Valley), Birgunj, Biratnagar, Pokhara and Damak.
The Vision statement of the Bank describes the core values and
purposes that guide the Bank as well as an envisioned future.
Fundamentally, in all dealings SBL earnestly believes in transparency,
financial soundness, efficiency and better technology.
During the short span of time, the bank has made tremendous
progress in banking and is getting more and more competitive. The
bank is currently focusing on enhancing its credit policies and
maintaining the sound and healthy asset portfolio.
SBL has been following the philosophy " Our Business is to
understand your business"
The Capital Structure of SBL as on FY 2063/64 was as follows:
Table 9: Capital Structure of SBL

In NRs. '000,000'
(NRs.) (NRs.)
1,00,00,00,000 Authorized Capital 1,00,00,00,000
50,00,00,000 Issued Capital 80,00,00,000
50,00,00,000 Paid Up Capital 60,00,00,000
Source: 6th Annual Report – 2063/64 B.S
20
1.11.2Branches
Kamaladi, Ktm
Head Office
New Road Birgunj Branch

Ktm Branch
Pokhara Branch Biratnagar Branch
Tripureshwor Branch Damak Branch
Chiranjee Lal Agrawal

Chairman
Suresh Chandra Agrawal Tarachand Kedia

Director Director
Ratan Lal Kedia Biswo Nath Shah
Director Director
Mahesh Prasad Pokhrel Hamenta Gyawali
Director Director
1.11.4Products and Services Offerings of SBL

 Deposit
 Saving Account (Siddahrtha Bachat, Siddhartha Bishesh
Bachat)
 Fixed Deposit
 Call Deposit
 Current Account
 Foreign Currency Deposit
 Business Loan: Working Capital Loan, Term Loan, Import Loan,
Bills Discounted under usuance L/c, Export Loan, Consortium
Loan, Bills Purchase
21
 Trade Finance: Advance Payment, Documetary Collection, Import

L/c, Export L/c
 Bank Guarantee: Forward Contract, Bid Bond, Performance
Bond, Shipping Indemnity Bond, Advance Payment Guarantee
 Personal Retail Banking
 Siddhartha Home Loan
 Siddhartha Vehicle Loan
 Siddhartha Education Loan
 Siddhartha Personal Loan
 Loan Against Fixed Deposit Receipt
 Other Services
 Debit/ATM Card
 Safe Deposit Locker
 Evening Banking
 ABBS
• Remittance (Demand Draft, Manger's Cheque, Travellers'
Cheque, Telex Transfer)
The financial highlights of SBL can be analyzed as follows:
Table 10: Financial Highlights In NRs. '000,000'

FY FY FY
Variance Variance
S.N. Particular 2061/62 2062/63 2063/64
(%) (%)
(Rs.) (Rs.) (Rs.)
1 Total Asset 3,091.10 54 4,756.94 67 7,954.66
2 Net Worth 387.89 55 603.14 32 793.71
3 Deposits 2,461.92 59 3918.08 69 6,625.08

Loans and
4 2,634.93 47 3,869.30 63 6,319.73
advances
5 Investment 286.62 127 650.98 33 865.19
Net interest
6 106.20 43 151.85 38 209.81
income
Operating
7 77.70 30 100.69 52 153.05
Profit
8 Net Profit 70.28 -7 65.25 46 95.31
Source: Annual Report of SBL
22
Chapter 2
2 COMPARATIVE FINANCIAL PERFORMANCE OF

MBL, KBL, LBL & SBL
2.1 CAMEL Analysis
The Financial performance of selected commercial banks (same
generation banks) MBL KBL, LBL and SBL has been carried out in
terms of CAMEL approach, which stands for:
C- Capital Adequacy
A- Assets Quality
M- Management
E- Earnings
L- Liquidity
2.1.1Capital Adequacy
As per the directives, which have been maintained by Nepal Rastra
Bank, every commercial bank is required to maintain a minimum CAR.
Commercial bank should hold adequate capital depending on their
requirements. Capital fund is created to protect the interest of the
depositors. Holding an excess capital than requirements may have
higher holding cost and lower return from their investment. Where as,
holding too little capital may have inadequacy problem. Banks have
been directed to meet any shortfall adequacy ratio by transferring part
of profit to general reserve account or by increasing paid up capital.
Capital adequacy can be measured by using Capital Adequacy Ration

(CAR), which is calculated as follows:
23
Total Capital Fund

Total Capital Adequacy Ratio =
Risk Weighted Assets
According to NRB directives, commercial banks should maintain their

CAR more than 11%, core capital 5.5% and supplementary capital
5.5%.
Table 11: Comparative CARS
Bank 2061/62 2062/63 2063/64

MBL 11.36 % 12.79% 11.97%
KBL 11.21 % 12.36% 11.22%
LBL 20.88 % 14.96 % 12.43%
SBL 13.64 % 14.16% 11.84%
Sources: Annual Reports of MBL, KBL, LBL & SBL (Ref. NRB Dir. Schedule 4.31)
Figure 1: Comparative CAR
25
20
MBL
15
KBL
10 LBL
SBL
5
0
2061/62 2062/63 2063/64
Interpretation:
If the CAR percentage is higher than the mandatory of minimum
capital fund, interests of depositor are is safe but in shareholders point
of view it is not better because of idle fund. The above data shows that
LBL has the highest CAR among MBL, KBL & SBL in the three
consecutive years, which shows the secure position for depositors and
creditors of Laxmi bank. CAR of LBL & SBL are more fluctuating than
MBL & KBL is stable. From the table it is seen that all the three banks
have maintained their CAR more than the requirement in the four
24
fiscal years. It indicates that all the four banks can increase their
lending and investment activities.In 2063/64, all the banks maintain
CAR very near to mandatory requirement.
LBL has higher percentage of 20.88% in 2061/2062, 14.96 in
2062/63 & 12.43% in 2063/64, which is more than required
percentage. From shareholders point of view its good and safe but the
bank isn’t investing its fund properly. But it is decreasing trend, it
shows that LBL has increased its credit exposure.
2.1.2Asset Quality
Assets quality refers to the degree of financial strength and risk
in a bank's assets, typically loans & investments, cash and bank
balance money at call, investment, loan and advances, etc are the
forms of assets kept by the banks. Banks give loan and advance in
higher volume and from where interest income is generated. In this
sector there is high volume of risk as well. Banks lending policy and
other regulations adopted by bank determined the quality of assets.
Commercial banks collect funds in the form of capital, deposit etc. A
significant part of the banks income is through its lending activities.
There are basically two types of loans and advances and loss
provisions:
1. Performing loans:
 All good loans and overdue for below 90 days.
2. Non performing loans:
 Sub stand – loans overdue by more than 3 months up to 6
months
 Doubtful – loans overdue by more than 6 months up to 1 year
 Bad – loans overdue by more than 1 year
Table 12: Classification of loan
Classification of loans Provision required
25
Pass 1%
Substandard 25%
Doubtful 50%
Bad loans 100%
To determine the quality of assets the following ratios can be used:

 Loan loss provision to total loan.
 Performing loan to total loan.
 Non-performing loan to total loan.
Loan loss provision to total loan (LLP/TL)
This ratio depicts how much provision a bank has to create for its bad
loan out of the total loan provided. The lower the rate, the better is the
financial position. It is calculated as follows:
LLP/TL = Total Loan Loss Provision X 100

Total Loan
The following table shows the loan loss provision ratio of MBL, KBL,
LBL and SBL.
Table 13: Loan loss provision to total loan

Name of the
2061/62 2062/63 2063/64
bank
MBL 1.34 % 1.27% 2.60%
KBL 1.70 % 1.65 % 1.47%
LBL 2.50% 1.82% 1.41%
SBL 2.43 % 2.07 % 1.54%
Interpretation:
The above table shows that out of the three banks LBL has highest LLP
in 2061/62, SBL has the highest provision for loan loss in 2062/63 &
MBL has the highest LLP in 2063/64. KBL has shown a significant
stability since 2061/2062 to 2063/64 and dropping its ratio from 1.70
% to 1.47%.
26
Performing loan to total loan (PLTL)

Performing loan is a loan which had due up to 9 days. This ratio
shows percentage of total loan that is performing. Higher ratio
indicates efficiency in utilizing the good loans. It is calculated as
follows:
Performing loan
Performing Loan to total Loan =
Total loan
The following table shows the Performing loan to total loan ratio of
MBL, KBL, LBL and SBL.
Table 14: Performing loan to total loan
Name of the
2061/62 2062/63 2063/64
bank
MBL 99.61% 99.72 % 98.84%
KBL 99.05 % 99.08 % 99.27%
LBL 98.37% 99.22% 99.65%
SBL 97.42 % 99.13 % 99.66%
Interpretation:
The above data shows that three banks has higher ratio indicating the
proper and systematic utilization of assets on good loans except MBL
because its good loan is in decreasing trend IN 2063/64. KBL has ratio
in increasing trend, which shows that it is trying to utilize its assets on
good loans. LBL & SBL had also increasing trend ratio.
Non-Performing loan to total loan (NPLTL)

Loan is said to be non-performing with the due date ranging
from 3 months to more than 1 year. Non-performing loan consists of
27
substandard loan, doubtful loans and bad loans. Higher non-

performing loan ratio indicates worse management of assets. This
ration shows percentage of total loan that is non-performing.
Non - Performing loan

NPLTL =
Total loan
The following table shows Non Performing loan to total loan ratio of
MBL, KBL, LBL and SBL.
Table 15: Non Performing loan to total loan
Name of the
2061/62 2062/63 2063/64
bank
MBL 0.39% 0.28% 1.16 %
KBL 0.95% 0.92% 0.73%
LBL 1.63% 0.78% 0.35%
SBL 2.58% 0.87% 0.34%
Interpretation:
Out of the four banks under study, three banks except MBL
demonstrated the increasing trend of non-performing loan at 2063/64.
And other three banks had also been able to show a declining trend in
its non-performing loan. In 2061/62 SBL has huge percentage and
able to decreased that ration to 0.87% in 2062/63 & 0.34% in
2063/64. And the same LBL has also able to decrease their ratio of
1.63% in 2061/62 to 0.78% in 2062/63 and to 0.35% in 2063/64.
2.1.3Management
An institution can take a desire momentum only when the
management is capable of strong and long-term vision. For the proper
28
and efficient management, the banks have to possesses the following

qualities:
 Proper structure of management team should be perfect.
 Qualitative Human Resource Management and its productivity.
 Good relationship between customers and organization.
 Adequate management expenses.
 Internal management system should be perfect.
 Fair decision making capability.
 Use of modern Information Technology
 Proper communication system.
 Working environment should be perfect.
As we know no one in this world is full of perfection, but it can be
maximized to some extent. In case of management of banks it can be
seen that all four banks have a good management team backing the
bank and taking it forward. When we are went for the visited in the
concerning three banks for management analysis, we found the
concerned department was very cooperative. In spite of busy schedule
they provided us the information we required.
Management of MBL
MBL, a bank with the motto “ Service with a personal touch” has
been expanding its branches very quickly as well as Collecting and
mobilizing a healthy sum of funds. The bank established back in 2057
having its head office in Nayabazar Pokhara, has been successful to
maintain the most of the criteria set by the Central bank of Nepal,
Nepal Rastra Bank.
The bank has though trained its staff to get friendlier with the clients
but the customer area is rather congested. Due to less counters, at the
time of busy hours, one can observe rushes in the customer area.
29
In spite of the tough competitions in the banking business in Nepal,

the bank has obtained noticeable success in its transactions.
The bank has designed its premises in a very attractive and sober way.
One can feel total comfort. As a whole the bank has a very efficient
management, which can assure a good future to the bank and an
enchanting career to the staffs and safer investment to the clients.
Management of KBL
KBL is promised for a better banking service to its customers,
which they proved by introducing the first ever e-banking service in
Nepal. As per the performances, the management was found to be
very much capable of introducing new schemes to the customers. As a
result, the bank literally succeeded in raising good sum of deposits on
its very first year. Besides it also succeeded in ranging a large number
of customers. In the very first year, the bank took a strategy to collect
the deposit in the saving account with the minimum balance of just
NPR 1000.00, the balance which most of the commercial bank had put
out of practice. The result of this was very much encouraging. This
strategy enabled the bank to be efficient in the lending. As such it
became the only bank to report Net profit on its very first year of
establishment.
Even after the completion of its fifth year of establishment,
despite of tough banking competition the bank has extended only five
branches in the Kingdom being Putalisadak, Biratnagar, Birgunj,
Pokhara and New road which might portray that the bank has only
targeted its business in the major cities of the country being such two
of the five branches are situated in the capital itself and rest of them
are in the major industrial and tourist cities of Nepal. This step of the
bank helps us to percept that the bank is currently dedicated into
increasing its income before it finally goes into development and
30
remote sector. KBL management has introduced visa electron debit

card, Internet banking, SMS banking, e-pay service super savings and
retail loans. These new services enabled the Nepalese customers to
facilitate the most modernized banking system already in practice in
the developed country.
The bank has considered its human resource as its lifeblood and
is dedicated to produce more qualified and expertise staff for the
challenging task to be performed to meet the requirement of the
competitive market. Manpower ratio of the bank has increased by 28
staffs currently numbering to 143, which gives us the picture of the
bank’s progressive motive in the future.
Management of LBL
LBL, a bank with the motto “We are committed to excellence in
delivery of entire gamut of financial services in order to achieve sound
business growth and maximize stakeholder values by embracing team
spirit, progressive technology and good corporate governance”. LBL
has been expanding its branches very quickly as well as Collecting and
mobilizing deposits. Laxmi Bank has grown with branches in Birgunj,
Banepa, two in Pokhara, Biratnagar, Narayanghat, Pulchowk, Lalitpur,
Teku, New Road, and more recently in Janakpur. Three more branches
will soon be operational from New Baneswor and Bhatbhatini in
Kathmandu and from Damak in outside the Valley. Laxmi Bank was
incorporated in April 2002 as a commercial bank.
The bank has trained its staff to serve the clients with effective
way. Bank Provide training & development programmes to enhance the
staff’s confident, efficiency. In spite of the tough competitions in the
banking business in Nepal, the bank has obtained noticeable success in
its transactions.
31
The bank has designed its premises in a very attractive and

abstemious way. One can feel total comfort. As a whole the bank has a
very efficient management, which can assure a good future to the
bank and an enchanting career to the staffs and safer investment to
the clients.
Management of SBL
Banking Sector has always been completive. To succeed they
must perform well and to perform well their management should be as
smooth as smooth as silk.
SBL highly concerns on its smooth management. They know how
to respond to a continuously changing consumer needs. They have
been practicing the art of market oriented strategic planning. They are
heavily commented to marketing management and strongly consumer
focused. They are dedicated to identify and satisfy consumer’s needs
and expectations. SBL is keeping on providing fabulous services and
facilities to its consumer. They have settled all their branch offices in
easily accessible locations and expanding business by establishing new
branches in different location for better access to customer on financial
support.
2.1.4Earning
Earning is the ultimate result of any business. Generally, if the
earnings are good then that business is running well. Similarly the
aggregate performance of the bank reflects from its earnings. Earning
is analyzed by calculating return on Assets (ROA), Return Equity
(ROE), Price Earning Ratio (P/E Ratio), Earnings per share (EPS),
Market price per share (MPS), Dividend Per share (DPS), Book Value
per Share (BPS). Earning is the ultimate result of any business.
32
Generally, higher earning reflects better financial position. Similarly the

aggregate performance of the bank reflects from its earnings.
Following ratios depicts the earning position of MBL, KBL, LBL and SBL.
Return on Total Assts (ROA)

The term ROA is return on total assets. Major assets of banks
are loan and advances, ROA reveals how efficiently the total recourses
have been utilized and measured the return on assets productive
sectors that can generate profit for the banks. Higher ROA shows the
better utilization and Management on the assets and extend profit
level. This ratio depicts how efficiently a bank is utilizing and
mobilizing its assets to generate profit. It is calculated as follow:
Net Profit
ROA =
Total Assets
Following table shows the ROA of MBL, KBL, LBL and SBL.
Table 16: ROA of MBL, KBL, LBL & SBL
Name of the
2061/62 2062/63 2063/64
bank
MBL 1.31% 1.48% 0.69%
KBL 0.0118% 1.15% 1.43%
LBL 0.83% 0.79% 0.95%
SBL 2.27% 1.37% 1.20%
Source: Annual report of MBL, KBL, LBL & SBL
Interpretation:
KBL’s ROA is in increasing ratio and has the highest ROA in 2063/64
whereas MBL’s, LBL’s & SBL’s ROA gets on fluctuating and decreased in
2063/64 compared to 2061/62 but LBL’s ROA climbing up in 2063/64
and MBL & SBL ROA decreasing in 2063/64
Price Earning Ratio (P/E Ratio)
33
This ratio assesses the market appraisal of the performance of

the firm. Market price of share is the key factor while making
assessment. Higher ratio would be better for the investors.
MPS
PE Ratio =
EPS
Table 17: PE ratios of MBL, KBL, LBL & SBL
Name of the
2061/62 2062/63 2063/64
bank
MBL 16.59 17.08 68.74
KBL 20.99 26.71 36.56
LBL 65.69 63.44 64.14
SBL NA 27.59 48.98
Interpretation:
Higher the P/E Ratio better for the shareholder that is used to
assess a bank’s performance as expected by the shareholders. We can
see LBL has the highest P/E ratio in 2061/62 & 2062/63 though
decreased in 2062/63.But increasing trend of PE ratio of MBL is
highest. If the PE ratio is high it shows that the company has not been
able to perform as per the market expectation.
Return on Equity (ROE)

This ratio denotes how much of the shareholders’ fund is
mobilized towards earning profit. The higher the ratio the better it is
for the bank. It is calculated as follows:
Net Profit
ROE = X 100
Total Shareholder' s Fund
Following table shows the ROE of MBL, KBL, LBL and SBL
34
Table 18: ROE of MBL, KBL, LBL & SBL
Name of the
2060/61 2061/62 2062/63
bank
MBL 13.31% 14.39% 7.41%
KBL 12.23% 11.12% 15.27%
LBL 4.39% 5.45% 7.77%
SBL 18.12% 10.82% 12.01%
Interpretation:
The above table shows that KBL has been successfully mobilizing its
shareholder’s funds and is thus generating high profits. SBL has also
been showing an increasing trend in this ratio in 2063/64 but
decreased in 2061/62. LBL has increasing trend of ROE but in small
ratio. But MBL ROE is in decreasing trend in 2063/64.
Earning Per Share (EPS)

The earning per share (EPS) is the share of a stock on the
earning of the company. The EPS measures the profit available to the
equity shareholders in a per share basis. The increasing EPS indicates
the increase in the value of shares and goodwill of the bank. Higher
ratio earns the higher return to shareholders and vice-versa. It is
calculated as follows:
Net Profit After Tax

EPS =
No of Outs tan ding Shares
Following table shows the ROE of MBL, KBL, LBL and SBL
35
Table 19: EPS of MBL, KBL, LBL & SBL
Name of the
2061/62 2062/63 2063/64
bank
MBL 15.43 18.74 9.02
KBL 17.58 16.59 22.70
LBL 4.34 5.80 10.75
SBL 20.08 13.05 15.88
Interpretation:
When Net profit of bank is high, the EPS of the bank will also be high
which shows the bank is in good conditions. From above table EPS of
KBL is high which shows that the bank is in best positions compare to
other banks this is the good sign to shareholders. LBL also has good
performance because of increasing trend of EPS though it is small ratio
of growth. SBL has also good ration of EPS but decreased in 2062/63
compared to 2061/62 but increased in 2063/64. MBL has decreased
trend of EPS in 2063/64.
2.1.5Liquidity
Liquidity is a bank ability to meet short-term obligation or generate
cash quickly at a reasonable cost. It reflects the short-term financial
strength of a bank. The liquidity in term can be used as an ability to
invest in a sensitive sector like government securities, money at call
etc. The limited portion of the deposit received through the depositor
can be easily converted into cash. Liquidity helps to reduce the
liquidity risk, which directly leads to bankruptcy. The ratio is calculated
by dividing current assets by current liabilities, which test the short-
term solvency of the firms.
Cash Reserve Ratio (CRR)
36
Every Commercial bank have to maintain a reserve with Nepal

Rastra Bank (NRB) equal to 5 % percentage of their total Local
Currency deposit liabilities to ensure sound solvency position.
Following table shows the CRR of MBL, KBL, LBL and SBL
Table 20: CRR of MBL, KBL, LBL & SBL
Name of the
2061/62 2062/63 2063/64
bank
MBL 8.27% 5.18% 8.29%
KBL 3.44% 2.71% 3.65%
LBL 8.95% 5.67% 5.65%
SBL 5.21% 5.03% 5.07%
Source: Annual report of MBL, KBL, LBL & SBL (Refer NRB Dir, Sech-4.31)
Figure 2: Comparative CRR
9
8
7
6 M BL
5
KBL
4
LBL
3
SBL
2
1
0
2061/62 2062/63 2063/64
Interpretation:
KBL has the lowest ratio in all fiscal year where as MBL has the highest
ratio. This shows that the bank has high liquidity and hence is safe, but
it also shows that the cash is remaining idle. All three banks are
success to maintain 5% CRR except KBL. SBL is very near to
mandatory percentage.
Cash and Bank Balance to Total Deposit (CBTTD):
37
This ratio represents how much liquidity a bank maintains in the

form of cash and bank balance out of its total deposit. This ratio is to
be maintained to meet any unexpected demand made by the
depositors. A higher ratio represents a greater ability to meet the
depositors demand. However, too high of a ratio is undesirable as it
blocks the capital and will increase the opportunity cost.
Cash and Bank Balance

CBTTD =
Total Deposit
Table 21: CBTTD of MBL, KBL, LBL & SBL
Name of the 2061/62 2062/63 2063/64

bank
MBL 13.36% 19.41% 20.88%
KBL 8.51% 6.88% 9.89%
LBL 17.27% 6.64% 6.34%
SBL 6.22% 5.51% 11.27%
Figure 3: Comparative CBTTD
25
20
15 MBL
KBL
10 LBL
SBL
5
0
2061/62 2062/63 2063/64
Interpretation:
38
As seen in the Table above, MBL has the highest cash and bank
balance in the fiscal year 2062/63 & 2063/64 compared to the other
three banks which denotes its capacity to meet the depositor’s
demands. And it has increased trend of CBTTD. KBL & SBL had
decreased trend of CBTTD in 2062/63 compared to 2061/62 but
increased trend in 2063/64 compared to 2062/63. LBL has decreased
trend of CBTTD in all three fiscal year.
Investment in government securities to total deposit (GSTTD):
Government security is a risk free security. The banks instead of
keeping their funds idle invest in various government securities, which
is liquid in nature as they can be traded any time. This ratio measures
how much of the total deposit is utilized in investing in government
securities.
Investment in Government Securities
GSTTD =
Total Deposits
Table 22: GSTTD of MBL, KBL, LBL & SBL
Name of the 2061/62 2062/63 2063/64

bank
MBL 8.39% 15.09% 13.49%
KBL 18.99% 17.96% 15.90%
LBL 13.47% 11.23% 18.88%
SBL 11.64% 16.61% 13.06%
Figure 4: Comparative GBTTD
20
15
MBL
10 KBL
LBL
5
SBL
0
2061/62 2062/63 2063/64
Interpretation:
39
KBL has huge portion of investment in government securities this

year 2061/62 & 2062/63 but LBL has huge portion in 2063/64 among
four banks. All the four banks maintained the reasonable investment in
these securities, which shows a safe banking approach and better
position in liquidity. Government securities are considered safe zone
but this reduces their earning, as the government securities generally
have low rate of return.
2.2 TREND ANALYSIS

Trend Analysis shows the recent position of the banks i.e. BOK, EBL
and NSBI. The major indicators that we have chosen for this analysis
are as follows:
a. Total Deposit
b. Total Loan & Advance Analysis
c. Profit Analysis
d. Investment Analysis
2.2.1Total Deposit
Table 23: Total Deposit of MBL, KBL, LBL & SBL
(Amt. in Million)
Name of Growth Growth
2061/62 2062/63 2063/64
The Bank % %
MBL 5,586.80 41 7,893.30 20 9,475.45
KBL 6,268.95 24 7,768.96 36 10,557.42
LBL 3,051.76 46 4,444.35 71 7,611.65
SBL 2,634.90 49 3,918.10 69 6,625.08
Source: annual report of MBL, KBL, LBL & SBL
40
Figure 5: Comparative Total Deposit
12000
10000
8000 M BL
6000 KBL
LBL
4000
SBL
2000
0
2061/62 2062/63 2063/64
Interpretation:
The above table shows, total deposit of all four banks are increasing
trend of deposits. KBL has the highest deposit volume among the four
banks. Deposit increasing trend of all four banks are admirable.
Growth rate of LBL & SBL is praiseworthy.
2.2.2Total Loans and Advances

Table 24: Loan & Advances of MBL, KBL, LBL & SBL
(Amt. in Million)

2061/62 2062/63 2063/64
The Bank % %
MBL 5,130.22 20 6,146.57 19 7,319.94
KBL 5,681.01 23 7,007.79 29 9,062.43
LBL 2,726.14 57 4,280.11 53 6,529.24
SBL 2634.90 47 3,869.27 63 6,319.73
41
Figure 6: Comparative Loan & Advances
10000
8000
MBL
6000
KBL
4000 LBL
SBL
2000
0
2061/62 2062/63 2063/64
Interpretation:
The above table shows that the trend of lending is increasing in all four
banks. But the MBL growth is decline in 2063/64 compare to 2061/62.
Comparing to other banks KBL has the highest trend of lending
advance, which shows that KBL takes higher risk in comparison to
others three banks. LBL & SBL have the praiseworthy growth rate in
loan & advance.
There is shown credit to deposit (CD) ratio of MBL, KBL, LBL, &
SBL.
Table 25: CD Ratio of MBL, KBL, LBL & SBL
2061/62 2062/63 2063/64

MBL 91.83% 77.87% 77.25%
KBL 90.62% 90.20% 85.84%
LBL 89.33% 96.30% 85.78%
SBL 104.42% 98.75% 95.39%
Interpretation:
All four banks had decreasing trend of CD ration. SBL has higher CD
Ratio in all fiscal year. But LBL CD ratio was increased in 2062/63
compared to 2061/62 but decreased in 2063/64 compared to 2062/63.
All four banks use their deposit fund to loan and advances.
42
2.2.3Profit Analysis
There is shown net profit of MBL, KBL, LBL and SBL.
Table 26: Profit of MBL, KBL, LBL & SBL

(Amt. in Million)

2061/62 2062/63 2063/64
The Bank % %
MBL 84.87 58 134.00 -45 74.09
KBL 84.20 23 103.67 64 170.26
LBL 26.47 34 35.39 85 65.58
SBL 65.25 8 70.28 36 95.31
Figure 7: Comparative Net Profit
180
160
140
120 MBL
100
KBL
80
LBL
60
SBL
40
20
0
2061/62 2062/63 2063/64
Interpretation:
MBL has higher profit in F/Y 2061/62 & 2062/63, and KBL has higher
profit in F/Y 2063/64. But in F/Y 2063/64 MBL’s profit is decreased by
45% in F/Y 2063/64 but not in Loss. Three banks had increasing trend
of profit in all fiscal year but MBL has decreasing trend of net profit in
2063/64.
43
2.2.4Investment Analysis
Investment includes Treasury Bills, Bonds, Saving Bonds, & Local &
Foreign Investment.
There is shown Investment of MBL, KBL, LBL and SBL.
Table 27: Investment of MBL, KBL, LBL, & SBL

(Amt. in Million)

2061/62 2062/63 2063/64
The Bank % %
MBL 483.61 295 1,909.30 3 1,972.47
KBL 1,280.27 20 1,539.95 33 2,050.63
LBL 468.44 22 569.31 155 1,450.20
SBL 309.09 143 750.98 46 1,094.63
Figure 8: Comparative Investment Analysis
2500
2000
1500 M BL
KBL
1000 LBL
SBL
500
0
2061/62 2062/63 2063/64
Interpretation:
KBL has the highest Investment Volume among four banks in 2061/62
& 2063/64 but MBL has the highest Investment volume in 2062/63.
Investment growth of LBL in 2063/64 is admirable & SBL’s growth in
2062/63 highest.
44
Chapter 3
3 SUMMARY, CONCLUSION & RECOMMENDATION
3.1 Summary & Conclusion

This fieldwork report has been prepared by studying the financial
performance analysis of MBL, KBL, LBL, & SBL based on the data of
three fiscal years (FY 2061/62 to FY 2063/64).
All the banks under study are able to maintain their CAR as per the
directives given by the NRB. LBL has the highest CAR among four
banks from 2061/62 to 2063/64. MBL & KBL are very near to maintain
CAR as per NRB directives. SBL’s CAR is fluctuating, in 2061/62 its CAR
is 13.64% & increased in 2062/63 to 14.16% but in 2063/64
decreased to 11.84%
Analysis shows that SBL has the lowest Non-Performing Loan and its
provision for loan loss is also consistent, i.e. 100% in all the three
years. But the loan loss provision of KBL is low among four banks. It is
seen credit control mechanism in KBL is good as compared to others
as its performing category loan is higher. Three banks KBL, LBL & SBL
NPL is in decreasing trend, so it is going towards better result. But MBL
NPL in increasing trend which shows that its credit control mechanism
is failed in 2063/64 because MBL can able to decline NPL in 2062/63.
Return on Asset in 2063/2064 of KBL is higher which is 1.43%. SBL
has also good ROA than MBL & LBL but its decreasing trend.
LBL has highest Price Earning Ration, which is 64.14% in all three
fiscal year. Price Earning Ratio is the ratio of Market Price per share to
Earning Per Share.
45
Higher the earning per share better will be the appreciation to

shareholders. KBL has highest EPS in 2063/64, which is really good in
terms of shareholder. MBL has the lowest EPS among four banks. In
2061/62, SBL has highest EPS but decreased in 2062/63 and in
2063/64 its climb up and satisfactory. Earning per share is directly
related to the Net Profit (after tax) of the bank, so we can guess that
KBL must have good profit.
KBL has been successfully mobilizing its shareholder’s funds and is
thus generating high profits because its ROE is highest among four
banks.
If we talk about Net Profit after all the provision, KBL has highest profit
of Rs. 170.26 million in 2063/64.
Liquidity position of KBL is very low because it maintains low ratio of
CRR at Nepal Rastra Bank. Other banks are able to maintain CRR
requirements as per NRB directives. More CRR will definitely reduce
the yield (profit), which ultimately increases the cost of fund.
Cash & bank balance to total deposit of MBL is very high among four
banks, which shows that the bank is able to fulfill depositor’s demand
anytime in case of withdrawal but it not good for the bank because its
fund becomes idle and cannot generate income.
The total deposit of all four banks are increasing trend. If we compare
KBL has the highest deposit volume.
Loan & advances of all four banks are increasing trend. If we compare
KBL has the highest volume of loan and advances.
Credit to Deposit ratio of SBL is highest among four banks. In 2061/62

its CD ratio is 104.42% & in 2063/64 95.39%, which shows that SBL is
very aggressive than other banks but it is in decreasing trend as we
compare to 2061/62 to 2063/64.
46
At last we conclude that all the four banks performance is admirable.

Among four same generation banks, KBL’s performance is better.
Though LBL & SBL also performed well. But MBL had not performed
well in 2063/64 because its profit is dropped, NPL to Total loan is
increased, LLP is also increased, CD ratio is decreased, maintain higher
ratio of CRR.
3.2 Recommendation
The main source of fund of commercial banks is collecting
deposits from publics. Without enough deposits collection, bank cannot
operate smoothly. So it is recommended to collect more amounts as
deposits through large variety of schemes and facilities. Similarly,
customization of credit card, provide facility of transfer money to their
home who work/live in foreign country. The minimum amount needed
to open an account should be minimized so that it will attract other
smaller depositors and entrepreneurs for mobilizing their small
investment.
NRB has directed to commercial banks to invest their certain
percentage in deprived and priority sector. The study has found that
KBL has earned high profit because of its good performance at the
same time their services are limited only to profitable sectors. It
reveals that it has not granted loan on priority and deprived sector.
Portfolio management of the bank assets basically means
allocation of funds in different components of banking assets having
different degrees of risk and varying rate of return in such a way that
the conflicting goal of maximum heat and minimum risk can be
achieved. The banks should make continuous yield investment
portfolio.
47
Loans and advances are the main sources of income and also
means of utilization of resources of commercial banks. Negligence in
administrating these assets could be the cause of liquidity crisis in the
bank and one of the main reasons of the bank failure. Collection of
loan has been most challenging task for commercial banks these days,
increase on non- performing assets discloses the failure of commercial
banks in the recovery of loan.
In the light of growing competition in the banking sector the
business of the bank should be customer oriented. Marketing is an
effective to attract customers. Different marketing techniques like
advertisement through audiovisual published websites, documentary
etc. Similarly, draw attention of customers through new technologies
like E-banking and Internet banking service increase investment
through their wide range international banking method should be
introduced.
Banks face problems in recovering loans and Advances and their
larger amount of loan is blocked as non- performing assets and which
sometimes reduce income. To overcome problem, special loan recovery
act should be enacted to improve its profitability.
If the services of commercial banks expand all over the nation it
will collect ideal money from different areas and can be utilized for
income generation purpose. So the commercial banks should expand
its branches all over the rural and urban areas.
48
Bibliography
Annual Reports of MBL............................Machhapuchre Bank Limited
Annual Reports of KBL......................................Kumari Bank Limited
Annual Reports of LBL........................................Laxmi Bank Limited
Annual Reports of SBL.................................Siddhartha Bank Limited
www.mbl.com.np...................................Machhapuchre Bank Limited
www.kumaribank.com.............................. .......Kumari Bank Limited
www.laxmibank.com.........................................Laxmi Bank Limited
www.siddharthabank.com............................Siddhartha Bank Limited
www.nrb.org.np………………………………………………………….Nepal Rastra Bank
Fieldwork Assignment and Report Writing.......................Prem R. Pant
Money and Banking........................... .................Vaidya, Shakeseare
Financial Market and Institutions..........................Vaidya, Shakeseare
Principle and Practice of Banking and Insurance.......Bhandari, Dilli Ray
49
Abbreviations
A/C Account
ABBS Any Branch Banking System
AD After the Death of Christ
ANZ Austria New Zealand
ATM Automatic Teller Machine
B.S. Bikram Sambat
CBTTD Cash & Bank Balance to Total Deposit
CRR Cash Reserve Ratio
e.g. For example
FCY Foreign Currency
FY Fiscal Year
GSTTD Government Securities to Total Deposit
IT Information Technology
KBL Kumari Bank Limited
LBL Laxmi Bank Limited
L/C Letter of Credit
LCY Local Currency
Ltd. Limited
MBL Machhapuchre Bank Limited
No. Number
NRB Nepal Rastra Bank
NRs. Nepalese Rupees
p.a. Per Annum
POS Point of Sale
SBL Siddhartha Bank Limited
SWIFT Society for Worldwide Interbank Financial Telecom
TT Telegraphic Transfer
WAP Wireless Application Protocol
XML Extensible Markup Language
50

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Comparative Financial Performance of MBL, KBL, LBL & SBL

CHAPTER PAGE NO.

1.10.3 Board of Directors.........................................................................................18

LIST OF CHART, TABLES AND FIGURES

List of Tables Page No.

Bank constitutes an important segment of the financial infrastructure

1.2 Origin of Modern Banking System

accepting deposits and transferring the money. Thus, Modern banking

1.3 Development of Banking in Nepal

1966. After 1984 the government gradually liberalized and opened up

Table 1: List of Commercial Banks

1 Nepal Bank Ltd. 1994/07/30 380.4

12 Lumbini Bank Ltd. 2055/04/01 750.0

Note: * Agricultural Development bank came into operation from 2024/09/18

Growth of Financial Institutions:

Types of Financial Number of Institutions in Mid July

1.4 Purpose of the study

The major purpose of this study is to do the analysis of Financial

1.6 Scope of the study

This study is focused on the analysis of Financial Performance of banks

1.7 Limitations of the study

Due to limited time we have focused only to the financial performance

1.8 INTRODUCTION TO MACHHAPUCHCHHRE BANK LIMITED

Table 3: Capital Structure of KBL

FY 2061/62 Capital Structure FY 2062/63

Chipledhunga,Mahendrapul, Ram Bazar,

Mr. Surya Bahadur K.C.

Mrs. Geeta Shrestha Mr. Kishor Kumar Shah

1.8.4Products and Services Offerings of MBL

 Loan (Term Loan, Working Capital Loan, Trust Receipt Loan,

1 Total Asset 6,445.42 41 9,069.83 19 10,807.62

2 Net Worth 637.74 46 931.09 7 1,000.26

3 Deposits 5,586.80 41 7,893.30 20 9,475.45

6 Net interest income 194.90 41 274.70 8 296.76

7 Operating Profit 128.40 50 192.91 -53 91.10

8 Net Profit 84.87 58 134.00 -45 74.09

1.9 INTRODUCTION TO KUMARI BANK LIMITED

Debit Card, which is accessible in entire VISA linked ATMs (including

Table 5: Capital Structure of KBL

FY 2062/63 Capital Structure FY 2063/64

New Road,Pratap Bhawan Biratnagar Branch

Dharan Road, Kanipur Mall, Gongabu,

Kumaripati, Dry Port, Sirsiya

Amir Pratap JB Rana Shiva Ratan Sharada

Lalit Jung Shahi Jagdish Prasad Chaudhary

1.9.4Products and Services Offerings of KBL

1.9.5 Financial Highlights

2 Net Worth 645.44 34 863.51 20 1,038.60

3 Deposits 6,268.95 24 7,768.96 36 10,557.42

1.10INTRODUCTION TO LAXMI BANK LIMITED

platform. Flexcube incidentally has been ranked the number one

The Capital Structure of LBL as on FY 2063/64 was as follows:

Table 7: Capital Structure of KBL

FY 2062/63 Capital Structure FY 2063/64

Birgung Branch Newroad

Banepa Branch Pulchowk,

Madhu Sudan Agrawal Mr. C.P.Khetan

1.10.4Products and Services Offerings of LBL

 Loan (Overdraft, Working Capital Loan/Demand Loan/Short-

Loan/Importer’s Loan, Packing Credit/Export Loan, Letter of

Table 8: Financial Highlights

2 Net Worth 643.57 6 682.08 27 864.39

3 Deposits 3051.76 46 4444.35 71 7,611.65