FINANCIAL PERFORMANCE ANALYSIS OF

COMMERCIAL BANK IN NEPAL (WITH CENTURY

COMMERCIAL BANK LIMITED AND NEPAL SBI BANK LIMITED)

A Project Work Report

Submitted By
Paban Rasaili

T.U. Regd. No.: 7-2-279-275-2016

Symbol No.: 2790049
Koteshwor Multiple Campus

Submitted To:
The Faculty of Management
Tribhuwan University
Kathmandu

In partial fulfillment of the requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)
Jadibuti Kathmandu, Nepal
2020
 DECLARATION

I hereby declare that the project work entitled “A FINANCIAL PERFORMANCE

ANALYSIS OF COMMERCIAL BANK IN NEPAL (WITH CENTURY COMMERCIAL
BANK LIMITED AND NEPAL SBI BANK LIMITED)” submitted to the faculty of
management, Tribhuwan University, Kahmandu is an original piece of work under the
supervision of Prof. Mr. Raju Thapa, faculty member of Koteshwor Multiple Campus,
Koteshwor is submitted in a partial fulfillment of the requirements for the award of the
degree of Bachelor of Business Studies (BBS) This Project report has not been submitted
to any other university or institutions for the arwarded of any degree or diploma.

……………………………………..

Paban Rasaili

Koteshwor Multiple Campus

T.U. Regd. No. : 7-2-279-275-2016

Symbol No.: 2790049

 SUPERVISOR’S RECOMMENDATION

This is to certify that the summer project entitled “FINANCIAL PERFORMANCE

ANALYSIS OF COMMERCIAL BANK IN NEPAL ( CENTURY COMMERCIAL
BANK LIMITED AND NEPAL SBI BANK LIMITED)” is an academic work done by
“Mr. Paban Rasaili” submitted in the partial fulfillment of the required for the degree of
Bachelors of Business Studies at faculty of Management, Tribhuwan University under my
guidance and supervision. To the best of my knowledge, the information presented by him in
the summer project report has been submitted earlier.

Report Advisor
MR. Raju Thapa
Koteshwor Multiple Campus
Date:

i
 VIVA -VOCE SHEET

We have conduct the viva-voce examination of summer project

Submitted By:
Paban Rasaili

Enitiled:
Financial Performance Analysis of Commercial Banks (Century Commercial Bank Ltd. &
Nepal SBI Bank Ltd.)

And found the summer project to the original work of the students and written to the
prescribed format. We recommend the summer project to the accepted as partial fulfillment
of the requirement of for

Bachelor’s of Business Studies (BBS)

Viva-Voce Committee

Head, Research Department:……… ……………………………………..

Member, (Research Supervisor):………………………………………….
Member \(External Export): ………………………………………………

Date:…………………………….

ii
 ENDORSEMENT

We hereby Endorse that the project work in the entitled “ FINANCIA PERFORMANACE
ANALYSIS OF COMMERCIAL BANKS IN NEPAL ( CENTURY COMMERCIAL BANK
LTD. & NEPAL SBI BANK LTD)” submitted by Paban Rasaili of KOTESHWOR MULTIPLE
CAMPUS , Koteshwor, Kayhmandu to the Office of the Dean, Faculty of Management,
Tribhuwan University, is my work done in the form of partial fulfillment of the requirement of the
Bachelors of Business Studies (BBS) under the supervision of MR. Raju Thapa of Koteshwor
Multiple Campus.

………………………….. ……………………….

Mr. Prakash Pokharel Mr. Gobinda Bahadur Karki

Management Research Committee Head Koteshwor Multiple Campus
Date: Date:

iii
 ABSTRACT

This Study has been designed for the partial fulfillment of the degree of Bachelor of
Business Study (BBS) prescribed in T.U. syllabus for the Four Years Course. The main
objectives of this course is to meet the demand of the practical knowledge that the
students required along with the practical.

The Topics entitles “A FINANCIAL PERFORMANCE ANALYSIS OF COMMERCIAL

BANK IN NEPAL (WITH CENTURY COMMERCIAL BANK LIMITED AND
NEPAL SBI BANK LIMITED)” Koteshwor, Kathmandu is prepared for the partial
fulfillment of BBS study requirement. All the facts and figures are truly presented and
deferent statically and financial tools have used for the purpose of making the study
lucid and quick understanding.

I have also tried my level best to present the topic in clear, easy and systematic manner.
I hope this study will be very much helpful for the Nepal Bank Limited ans also coming
students of BBS 4th year Students.

Paban Rasaili
BBS 4th Year
Koteshwor Multiple Campus

iv
 ACKNOWLEDGEMENT

In the today rapid changing world the banking play an important role in the economic
development of the country. The bank is the backbone of economic development of any
country. Hence, I am thankful to T.U. for providing us the course, which let us to
comprehend the importance of the banking.

In the partial fulfillment of requirement for the degree of Bachelors of Business Studies,
this field work report has been prepared, in the topic of “FINANCIAL PERFORMANCE
ANALYSIS OF COMMERCIAL BANK IN NEPAL ( CENTURY COMMERCIAL
BANK LIMITED AND NEPAL SBI BANK LIMITED)”

My special thanks & deep gratitude goes to Mr. Raju Thapa and Prakash Pokharel,
lecturer of Koteshwor Multiple Campus who provide me all the valuable suggestions and
orientation class, without which I could not have got any idea of report writing.

I would like to take immerse opportunities to thank Century Bank Ltd. and Nepal SBI Bank
Ltd. staff members for providing the necessary information and data, kind and liberal co-
operation shown to me during my personal visit.

Finally, I would also like to thanks to all those whom I might have forgotten to mention.

Thank You,
Paban Rasaili
Koteshwor Multiple Campus
Koteshwor,Kathmadu

v
 TABLE OF CONTENT

Title Page i
Declaration ii
Supervisor’s Recommendation iii
Viva-Voice Sheet iv
Endorsement v
Acknowledgement vi
Table of Content vii
List of Table viii
Abbreviations ix

CHAPTER –I ITRODUCTION
1.1 Background 1
1.2 Profile of Selected Institute 2
1.3 Statement of The Problem 3
1.4 Objective of The Study 4
1.5 Rationale 5
1.6 Limitation of The Study 6
1.7 Organization of Study 7
2.0 Review 8
2.1 Conceptual Review 8
2.2 Review of Previous Study 9
2.3 Research Gap 9

CHAPTER –II RESEARCH METHODOLOGY

3.0 Research Design 10
3.1 Source of Data 11
3.2 Papulation and Sample 11

vi
3.3 Tools and Techniques of Analysis 12
3.4 Data Analysis Tools 13
4.0 Results & Finding
4.1 Data Presentation & Analysis 15
4.2 Major Finding 21

CHAPTER- III DISCUSSIONS CONCLUSION AND IMPLICATIONS

5.1 Discussions 24
5.2 Conclusions 25

REFERENCES
APPENDICES

vii
 LIST OF TABLES

Table Title Page No.

No.
4.1 Current Ratio 16
Cash & Bank Balance To Current And Saving Deposit
4.2 Ratio 17
4.3 Cash & Bank Balance To Total Deposit Ratio 18
4.4 Performing Assets To Total Deposit Ratio 19
4.5 Total Interest Expenses To Total Interest Income Ratio 20
4.6 Total Interest Income To Total Assets Ratio 22
4.7 Correlation Analysis Between Deposit And Net Profit 24
4.8 Correlation Between Performing Assets To Net Profit 25

viii
ABBREVIATIONS

ADB : Agricultural Development Bank

B.S. : Bikram Sambat

C.V. : Coefficient of Variation

CCB : Century Commercial Bank

NSBI : Nepal SBI Bank

F/Y : Fiscal Year

GDP : Gross Domestic Product

IMF : International Monetary Fund

IT : Information Technology

Ltd. : Limited

NBL : Nepal Bank Limited

NEPSE : Nepal Stock Exchange
NG : Nepal Government
No. : Number
NPV : Net Present Value
NRB : Nepal Rastra Bank
P/L : Profit and Loss
Pvt. : Private
RBB : Rastriya Banijya Bank
S.D. : Standard Deviation
SLR : Statutory Liquidity Ratio
T.U. : Tribhuvan University
TDR : Total Deposit Ratio

WTO : World Trade Organization

ix
1
 CHAPTER 1
INTRODUCTION

1.1 Background of Study

Financial analysis is the process of analyzing various items of financial statement of a

firm analyzing statement of a firm to ascertain information above the magnitude, timing and
riskiness of future cash flows. Financial statement analysis involves in two types of comparison;
one is to compare a firm’s performance with that of other firms in the same industry; and the
other is to evaluate trends in the firm’s financial position over time. Financial analysis is
essential to understand what the firm’s financial statement is conveying about financial
performance of the firm. Manager can identify deficiencies in financial performance of the firm
and take its comparative strengths and weakness. In other words, financial analysis involves
actions to improve the performance.
A simple answer to the question “what a bank is?” Bank is an institution which deals with
money. Generally, “Bank” is financial institution that performs various monetary transactions by
lending, borrowing and the exchanging money. Nepal Bank Limited was established in
15th November 1937 as the first commercial bank in Nepal. Rastriya Banijya bank is the second
government owned commercial bank which was established in 23 January 1966.

In addition to accepting deposits and making loans, banks also provide other financial
services like cash management services, credit and debit cards, electric cards, foreign exchanges,
real estate loans and so on. In Nepal, the financial services that banks offer has changed in recent
years as new technologies have emerged and the level of competition has increased in the
market. The banking sector is mainly responsible for collecting household saving in terms of
different types of deposit and regulating them in the society by lending in different sector of
economy. The banking sector is mirror of the large economy, the smooth and effective,
monitoring; supervision and regulation of banking activities are required for the sustainable
economic growth of country. Banking institutions are inevitable for the resources mobilization
and all-round development of the economy. It is the resources of economic development and
maintains economic confidence of various segments and extends credit to people.

2
1.2 Profile Century Bank Ltd. & SBI Bank Ltd. (CCBL & SBI).

The first commercial bank in Nepal, Nepal Bank Ltd (NBL), was established in the year
1994 B.S. This is a major milestone in the the history of Nepal as the country entered into
official financial system. After the nineteen year of establishment of NBL, the Nepal Rastra
Bank (NRB) was established in the year 2013 B.S.

Rastriya Banijya and Agricultural Development Bank ltd. were established in the year 2022 and
2024 B.S. respectively. 47 years after the first bank was established in Nepal, the first privately
owned commercial bank, Nabil Bank ltd., was established in the year 2041 BS.

Seven more commercial banks were added in a decade after 2041 B.S. Only four commercial
banks were established from the period of 2051 B.S. to 2063 B.S. There are mainly two reasons
for it. In this time period the country saw the sluggish economic growth due to the maoist
insurgency. The second reason being the reluctance on issuing license by the regulatory body,
the NRB. After the Maoist insurgency came to an end in the year 2063 B.S., at least one
commercial bank was established every year till last year. The banking industry, like other
sector, saw growth in the absence of ongoing conflict. However, this sector was also not immune
from poor governance, corruptions and scandals. The government owned banks were the most
affected ones du0e to direct political interference in the banking activities.
Century Commercial Bank Limited (CCBL) is a National Level Commercial Bank
established on January 23, 2011 with the objective of providing simplified banking service by
taking advantage of innovations in information and communication technology.
Nepal SBI Bank Limited (NSBL) is a subsidiary of State Bank of India (SBI) having 55
percent of ownership. NSBL was established in July, 1993 and has emerged as one of the leading
banks of Nepal, with the objective of providing simplified banking service by taking advantage
of innovations in information and communication technology.

1.3 Statement of The Problem

Establishment of Joint Venture banks concentrate only in urban area, like Kathmandu,
Pokhara, Birgung, Hetauda, Biratnagar, etc. has raised certain questions. This application
is not able to contribute the socio- economic development of the country where around
80% people live in rural and 79% of the population depends upon agriculture. These
banks should expand their operation in rural areas. NRB, as the central bank has ruled
that joint venture banks should invest 10% of their total investment in the rural areas.

3
 These banks are inclined to pay fines rather than investing their resources to such less
profitable sector.

The main objective of the bank is to collect deposits as much as possible from the
customer and to mobilize into the most profitable and preferable sector. The present study
basically focused on the financial performance of Centuary Bank Limited and Nepal SBI
Bank Ltd.
A comparative analysis of financial performance of the banks would be highly beneficial
for pointing out their strength and weakness. Although joint venture banks are considered
efficient, but how far are they efficient? This question does emerge in banking sector. At
present we have twenty-six commercial banks. In spite of rapid growth, some indicators
show performance is not much encouraging towards the service coverage. In such a
situation the study tries to analyze the present performance of banks, which would give
the answers of following queries.

a) What are the comparative liquidity, profitability, activity and leverage ratio
among Centuary Bank Limited and Nepal SBI Bank Ltd banks?

b) Are the trends of different ratios of these banks satisfactory?

1.4 Objective of The Study

The main objectives of the study is to evaluate and analysis the financial performance of
these two Centuary Bank Limited and Nepal SBI Bank Ltd and to recommend the
suitable suggestion for improvement.

a) To analyze and compare the financial strengths and weakness as of the sample
financial institutions.

b) To determine the financial performance through the use of appropriate

financial and statistical tools.

c) To evaluate the financial position of Centuary Bank Limited and Nepal SBI Bank Ltd.

1.5 Rationale

Commercial banks are not one of the major core components of modern economy. They give
greater contribution to GDP too. The production of finance and real – estate sub sector is
increasingly comparatively. However various financial sector liberalization programs such as
SAP and ESAP has been initiated with the loan and assistance of World Bank, IMF and

4
 ADB, the banking sector continued to be in though in this situation too. At this situation, the
commercial banks should be more competitive. They should become financially strength/
healthy and must have growth potentially. And they have to shape their plans and strategies
accordingly. In such a situation, this study tried to analyze and indicate the overall financial
health whether they are capable to compete the challenges and grab to opportunities or not.
So, the study basically covered the commercial banks falling in the same strategic group to
be more meaningful.
Thus, a case study was conducted on based on top five private – sector commercial banks
ranking by NEPSE according to their market capitalization ratio. Thus the study may be
more fruitful and rationale to their stakeholders at present situation, where the commercial
bank becomes advancing through IT – integration.

1.6 Limitations Of The Study

The following are the limitation of the present study: -

 This study is limited to the comparative study of financial performance of two banks
Century Bank Limited and Nepal SBI Bank Ltd.
 This study is based on secondary data.

 This study has analyzed and evaluated of data to the latest five years period i.e. since
2015/16 to 2019/20 ( i.e. 5 years historical data)
 In this study, only selected financial and statistical tools and techniques are used.

 This research has been conducted on the requirement of partial fulfillment of

Bachelors of Business Study.

1.7 Organization Of The Study

This study has organized into the following five chapters:

Chapter – 1: Introduction

This chapter includes background of the study, focus of the study, statement of the
problems, objectives of the study, significance of the study and limitations of the study.
Another topic reviews is the existing literature on the concept of financial performance
analysis. It also contains reviews of journals and articles, and earlier thesis related to the
subject.

5
Chapter - 2: Research Methodology

This chapter expresses the way and technique of the study applied in the research
process. It includes research design, population and sample, data collection procedure and
processing, tools and method of analysis. In this chapter collected and processed data are
presented, analyzed and interpreted with using financial tools as well as statistical tools.

Chapter - 3: Summary, Conclusion And Recommendations

In this chapter, summary of whole study, conclusions and recommendations are made.
At the end of the study, Bibliography and Appendices have also been incorporated.

6
2.0 Review
Review of literature comprises upon the existing literature and research related to the
present study with a view to find out what had already been studied. According to Wolf
& Pant “The purpose of the reviewing the literature is to develop some expertise in One’s
area, to see what new contribution can be made and to review some idea for Developing
research design”. (Pant and Wolf; 1996:31-44). This portion has been divided into two
parts: -

a. Conceptual Framework

b. Review of Related Studies

2.1 Conceptual Framework

The modern financial evaluation has greatly affected the role and importance of
financial performance. Nowadays, finance is best characterized as ever changing with
new ideas and techniques. Only efficient manager of the company can achieve the set up
goals. If a bank does not maintain adequate equity capital, it makes the bank more risky.
If a bank has inadequate equity capital, it must be used more debt that has high fixed cost.
So any firm must have adequate equity capital in their capital structure.
The main objectives of the bank are to collect deposits as much as possible from the
customers and to mobilize into the most profitable sector. If a bank fails to utilize it’s
Collected resources than it cannot generate revenue. Resource mobilization management
of bank includes resource collection, investment portfolio, loans and advances, working
capital, fixed assets management etc. It measures the extent to which bank is successful
to utilize its resources. To measure the bank performance in many aspects, we should
analyze its financial indicator with the help of financial statements.
It is performed to determine the liquidity, solvency, efficiency and profitability position
of an organization. The function or the performance of finance can be broken down into
three major decisions i.e. the investment decision, the financing decision, and the
dividend decisions. An optional combination of the three decisions will maximize the
value of the firm.

7
2.2 Review of Previous Studies
Finance is a broad field and there are various books written in this subject. The book of M.Y.
Khan and P.K. Jain (1990) is considered to be a useful book in the financial management.
The modern approach of Khan and Jain views the term financial management in broad sense
and provides a conceptual and analytical framework for financial decision making.
According to them, “The finance function covers both acquisitions of funds as well as their
allocation; hence apart from the issues of acquiring external funds, the main concern of
financial management is the efficient and wise allocation of funds to various uses.”
B.N. Ahuja (1998), “Financial Performance analysis is a study or relationship among the
various financial factor in business a disclosed by a single set of statement and a study of
the trend of these fact as shown in a series of statements. By establishing a strategic
relationship between the item of a balance sheet and income statements and other
operative data, the financial analysis unveils the meaning and signification of such
items.” According to R.W. Metcalf and P.H. Tatar (1996), “Financial Performance
analysis is a process of evaluating the relationship between components parts of a
financial statement to obtain a better understanding of a firm’s position and

performance.” Similarly, Khan and Jain have defined that (1990) “The ratio analysis is
defined as the systematic use of ratio to interpret the financial performance so that the
strength and weakness of firm as well as its historical performance and current financial
condition can be determined.”

Mr. Regmi (2015) thesis "A Comparative Study of The Financial Performance of
Century Commercial Bank And NBBL" 30, he suggested NBBL to increase its current
assets because the bank is not maintaining adequate liquidity position in comparison with
Century Commercial Bank. As capital structures of both the bank are highly levered both
the banks are recommended to maintain and improve mix at debt and owner's equity by
increasing equity share. He further suggests to Century Commercial Bank to improve the
efficiency in utilizing the deposits in loan and advance for generating the profit NBBL
should try to maintain present position on this regards. Profitability position of Century
Commercial Bank is comparatively better than the same of NBBL. So, NBBL is
recommended to utilize its resources more efficiently for generating more profit margins.
If resources held idle, bank faces high cost and causes the low profit margin. An ideal

8
 dividend payout ratio is based upon shareholders expectations and the growth
requirement of the banks. NBBL is suggested to increase its dividend payout ratio.
(Regmi, 2009, p.29)
The two banks should extend their resources to rural areas and promote the
development of poor and disadvantaged group. In order to do so banks should open their
branches in the remote areas with objectives of providing cheaper banking services
especially Century Commercial Bank should initiated an this regard because it has few
branches in comparison to NBBL. Because of the start competition between banking,
sectors both the banks are suggest to formulate and implement some sound and effective
financial and non-financial strategies to minimize operational expenses to meet required
level of profitability. The banks are further suggested to adopt modern banking
technologies to enhance their better and wide market.

2.3 Research Gap

In this study, the major areas is to disclose the financial performance relates to Nepalese
commercial banks. This type of research were done rarely. This study shows that the
unique feature of findings. Previous researches on the basis of financial performance of
commercial banks in Nepal.

But this research is about financial performance of two bank of Nepal with sample of
Centuary Commercial Bank Ltd. and Nepal SBI Bank Limited. In the previous research,
there is no clear-cut accounting and financial performance of banks. The research can
help the people who wanted to know about the overall financial standard and accounting
procedure of Commercial bank in Nepal.
There are two-selected banks to find out the problem and prospects of study. Therefore,
this topic may be new as well as the researches efforts may be appreciable.

9
 CHAPTER 2
RESEARCH METHODOLOGY

The rationale behind the study is to evaluate and assess the financial position or
performance of the two newly operated joint venture banks viz. Nepal SBI Bank Limited
and Everest Bank Limited. Thus, this chapter includes those methods and techniques used
for finding out a fore said purpose.

Research methodology refers to the various sequential steps (a long with the rationale of
each step) to he adopted by a researcher in studying a problem with certain objective in
view. It is a way to systematic solve the research problem it may be understood as a
science of studying how search is done scientifically. Includes the various steps that are
generally adopted by a researcher studying his/ her research problem along with the logic
behind them, it would be appropriate to mention here that research project are not
meaningful to any one unless they are in sequential order which will be determined by
the particular problem at hand therefore, this study aims at analyzing and interpreting the
purpose of comparative financial performance or appraisal of two JVBs. This chapter
focuses and deals with the following aspects or methodology.

- Research design

- Population and Sample

- Source of data

- Data collection procedure

- Method of Date analysis

3.0 Research Design

Research design is the task of defining the research problem. In other words, "A research
design is the arrangement of conditions, for collection and analysis of data in a manner
that aims to combine relevance to the research purpose with economy in procedure. In
fact, the research design is the conceptual structure within which the research is conduct.
General objective; of this research study is to examine and evaluate the financial
performance of two commercial banks especially that of Centuary Commercial Bank
Limited and Nepal SBI Bank Limited in order to achieve the objective, both descriptive

10
 and analytical research design has been followed. The study focuses on the examination
of relationship between those variables that influence-financial decisions of the sampled
batiks hence; it is an ex-post factor research.

3.1 Sources of Data

Although present study is on secondary data. However, necessary suggestion are also
taken from various experts both inside the bank whenever required the necessary data is
obtained from the head office of the Commercial Banks such as, published balance sheet,
profit and loss account and other related statement of accounts as well as the annual
reports of the respectively banks. Likewise, other related arid necessary information are
also obtained from the publication of security exchange center, Nepal Rasta Bank and
other publications used for the purpose are book & booklets magazine journals,
newspaper school of thought etc.

3.2 Population And Sample

The population for this study comprises twenty seven Commercial banks currently
operating in the country. All the commercial banks perform the functions of commercial
banks under rules, regulations and directives of Nepal Rastra Bank. The sample consists
of two judgmentally selected banks- Century Commercial Bank and Nepal SBI Bank.

3.3 Method of Data Analysis

The collected and observed data are tabulated after adjusting necessary amount of each.
However, for the analysis of data following tools are used.

3.3.1 Financial Tools

Financial tools are those, which are used for the analysis and interpretation of financial
data. These tools can be used to get the precise knowledge of a business, winch in turn,
are fruitful in exploring the strengths and weaknesses of the financial policies and
strategies.

11
3.3.2 Statistical Tools
Various statistical tools can be used to analyze the data available to the researcher. These
tools are used in research in order to draw the reliable conclusion through the analysis of
financial data.

3.4 Data Analysis Tools

3.4.1 Financial Tools

Financial tools are those, which are used for the analysis and interpretation of financial
data.
Current Assets
i) Current Ratio =
Current Liabilities

Cash and bank balance

ii) Cash and bank balance to current and saving deposits ratio = Current and
saving deposits

Cash and Bank Balance

iii) Cash and bank balance to total deposit ratio =
Total Deposit

Performing Assets
iv) Performing Assets to Total deposit ratio =
Total Deposit

Total Interest Expenses

v) Total Interest Expn. To Total Interest Income ratio =
Total Interest Income

Interest Income
vi) Total Interest Income To Total Assets ratio =
Total Assets

12
3.4.2 Statistical Tools

Various statistical tools can be used to analyze the data available to the researcher. These
tools are used in research in order to draw the reliable conclusion through the analysis of
financial data.
Following tools are used for are purpose.

 Arithmetic mean
 Standard Deviation
 Variation
 Coefficient of Variation
 Coefficient of Correlation

i) Arithmetic Mean

An average is a single value selected from a group of values to represent them in same way,
which is supposed to stand for whole group of which it is a pare, as typical of all the values
in the group. Arithmetic mean of a given set of observations is their sum divided by the
number of observation. In general, if X1, X2, X3...............Xn are the given observations, then
arithmetic mean usually denoted by X is given by,

X1, X2, X3...............Xn

X =
N
Where, n = number of observation

ii) Variance

It is a statistical measure of the variability of s set of observations. The symbol is

pronounced "Sigma Square". It is the measure of total risk. The smaller the variance, the
lower the risk of the stock and vice versa.
2
∑ (X1- (X1) )

σX= ∑
t=1 N
Where,

13
 n= No of observation

X1= Average rate of Return

iii) Standard Deviation

It is the square root of the variance standard deviation

2
∑ (X1- (X1) )

σ2 = ∑
t=1 n

Where,

X = Expected return of the historical data.

N = Number of observations.

iv) Coefficient Of Variation

According to Prof. Karl Pearson, coefficient of variation is the percentage variation in

mean, standard deviation being considered as the total variation in the mean. It is one of the
relative measures of dispersion that is useful in comparing the amount of variation in data
groups with different mean. It is denoted by C.V. and is obtained by dividing arithmetic
mean to standard deviation. Thus,

σ
C.V.= x 100

v) Karl Person's Coefficient Of Correlation

It is a statistical tool for measuring the intensity or the magnitude of linear

relationship between two series. Karl Pearson's measure, known as Pearson's

14
 correlation coefficient between two variable and series X and Y is usually denoted by
'i' and can be obtained as Where,

n ∑x y - ∑x .∑y
R=
2 2
[{∑x – (∑x) } {∑y – (∑y) }]

Where,
n = Number of observations in series
∑x= Sum of observation in series X

∑y= Sum of observation in series Y

X 2 = Sum of squared observation in series X

2=
Y Sum of squared observation in series Y

ΣXY sum of the product of observation in series X and Y value of r lies between -1 and +

1. r = 1 implies that there is a perfect positive correlation between the variable, r = 1

implies that there is a perfect negative correlation between the variable r = 0 means the
variable are uncorrelated. But r = 0 does not always mean that the variables are
uncorrelated; they may be related in some other form such as logarithm, quadratic,
exponential etc.

4.0 Result And Finding

This chapter deals with the analysis and interpretation of data following the researcher
methodology dealt in the chapter. In the course of analysis, data gathered from the
various sources have been inserted in the tabular form according to 'heir' homogenous
nature. The various tables prepared for the analysis purpose have been shown in annexes.
Using financial and statistical tools, the data have been analyzed the result of the analysis
has been interpreted keeping in mind the conventional standard with respect to ratio
analysis, directives of NRB and other factors while using other tools. Moreover, financial
performance of the sampled banks has especially been analyzed in cross-sectional
manner. Specifically, the chapter includes analysis and interpretation of the following.
 Ratios analysis
 Income and expenditure analysis
 Correlation Analysis

15
4.1.1 Ratio Analysis
Ratio analysis has been adapted to evaluate the financial health, operating result and growth of
the sampled banks. In order to analyze and interpret the tabled data, the following ratios have
been used.

 Liquidity ratio

 Leverage ratio

 Capital adequacy ratios

 Turnover ratios

 Asset quality ratios

4.1.2 Liquidity Ratios

Liquidity ratios have been employed to test the ability of the banks to pay immediate
liabilities. These include current ratio, cash and bank balance to total deposit ratio, NRB
balance to current and saving deposit ratios, NRB balance to fixed deposit ratio and fixed
deposit ratio and fixed deposit to total deposit ratio.
a) Current Ratio
Table 4.1
Current Ratio of CCB and Nepal SBI Bank Rupees in Thousand (,000)
Banks Century Commercial Bank Ltd Nepal SBI Bank
Current Current Current Current Current Current
Year Assets Liabilities Ratio Assets Liabilities Ratio
2015/16 27,077,975.00 25,491,995.00 1.06 57,365,353.18 70,537,548.96 0.81
2016/17 30,583,230.23 29,322,294.11 1.04 78,034,581.66 87,095,494.05 0.90
2017/18 46,845,622.42 42,671,734.63 1.10 91,397,656.43 88,548,765.26 1.03
2018/19 67,005,811.39 63,067,482.93 1.06 106,618,956.11 106,753,264.97 1.00
2019/20 74,020,000.36 72,104,572.29 1.03 117,196,713.89 112,102,102.05 1.05
Mean 1.06
2.19

S. D. 0.27
0.97
C. V 12.32
52.72
COMBINED S.D. 0.63

16
 In the above table 4.1 show that current ratio of Century Commercial Bank for the study
period remained 1.06:1, 1.04:1, 1.10:1, 1.06:1 and1.03:1 respectively form the year
2016\2016 to 2019/20. Mean of the ratios appeared 1.06 and CV appeared 2.2358%.
Similarly the ratios of Nepal SBI Bank for the corresponding period remained 0.81:1, 0.90:1,
1.03:1, 1.00:1 and 1.05:1 means of the ratios came 0.9571 whereas CV came 29.5588%. The
ratio of both the banks showed slightly decreasing trend. In Century Commercial Bank the
ratio did not fall below 1.03:1 whereas with respect to Nepal SBI Bank, it declined in as
against non- decreasing trend in other years. Mean of the ratios in Century Commercial Bank
was slightly greater than that of Nepal SBI Nak which depicts that both of the banks could
not maintain the conventional standard of 2:1. Having a glance at the nature of assets and
liabilities of the commercial banks, the ratio below the stated standard may be accepted as
satisfactory, but it signifies that the bank have the poor liquidity position banks may face the
problem of working capital if they need to pay the current liabilities at demand.

b) Cash And Bank Balance To Current And Saving Deposit Ratio

Cash and Bank Balance

=
Current and Saving Deposit
Table 4.2
Cash and Bank Balance to Current & Saving Deposit Ratio of CCB and Nepal SBI Bank
Rupees in Thousand (,000)
Banks Century Commercial Bank Ltd Nepal SBI Bank
Ratio Ratio
Cash and Current and Cash and Current and
(%) (%)
Year Bank Saving Bank Saving
Balance Deposit Balance Deposit
2015/16 4,315,759.66 7,560,931.00 57.08 10,389,818.49 32,363,113.66
32.10

2016/17 5,815,277.84 15,624,096.83 37.22 13,229,680.99 34,959,771.88

37.84

2017/18 7,974,522.74 21,313,753.09 37.41 16,140,462.18 35,777,791.78

45.11

2018/19 12,527,199.40 24,818,295.50 50.48 17,564,852.20 95,567,254.12

18.38

2019/20 13,493,890.46 25,438,172.76 53.05 22,703,935.85 40,200,462.40

56.48

Mean 10.03 21.9

S. D. 2.88 4.93
C. V 28.67% 22.54%
COMBINED S.D. 7.58

17
 In above table 4.2 it shows that, the ratio remained 57.08%, 37.22%, 37.41%, 50.48%, and
53.05% in the respective years of the period in Century Commercial Bank. Mean, SD and
CV of the ratios were 47.05% , 6.8861, and 14.6358% respectively. Similarly, the ratio
remained 32.10%, 37.84%, 45.11%, 18.38% and56.48% in corresponding years of study
period in Nepal SBI Bank. Mean of the ratios appeared 37.98% whereas SD and CV
appeared 12.74 and 33.55% respectively. The ratios of both the banks revealed fluctuation
trend over the period, of Nepal SBI Bank remained highest in the year 2019/2020 and then it
declined in consecutive years, the ratio appeared in decreasing trend, it remained highest in
Century Commercial Bank in the year 2015/2016 . The means ratio of Century Commercial
Bank appeared greater than that of Nepal SBI Bank, which indicates that the former is more
efficient in paying the immediate obligation. Higher CV of ratio in Nepal SBI Bank as
compared to Century Commercial Bank signifies greater variation in the ratios.

c) Cash And Bank Balance To Total Deposit Ratio

Cash and Bank Balance

=
Total Deposit
Table 4.3
Cash and Bank Balance to Total Deposit Ratio of CCB and Nepal SBI Bank
Rupees in Thousand (,000)
Banks Century Commercial Bank Ltd. Nepal SBI Bank Ltd.
Ratio Ratio
Year Cash and Total Cash and Total
(%) (%)
Bank Deposit Bank Deposit
Balance Balance
2015/16 4,315,759.66 24,948,567.97 17.30 10,389,818.49 65,213,519.72
15.93

2016/17 5,815,277.84 28,967,846.55 20.07 13,229,680.99 81,664,548.67

16.20

2017/18 7,974,522.74 42,593,653.75 18.72 16,140,462.18 84,027,267.55

19.21

2018/19 12,527,199.40 53,129,691.14 23.58 17,564,852.20 97,721,846.22

17.97

2019/20 13,493,890.46 64,973,734.16 20.77 22,703,935.85 110,236,203.17

20.60

Mean 7.11 12.89

S. D. 1.96 2.95
C. V 27.50% 22.90%
COMBINED S.D. 3.82

18
 In table 4.3 it shows that the ratios were 17.30%, 20.07%, 18.72%, 23.58% and 20.77 in
Century Commercial Bank in the respective years of study period. Mean SD and CV of
the ratios came 20.09%, 1.7034 and 8.48% respectively. In the similar way, the ratio in
Nepal SBI Bank remained 15.93%, 16.20%, 19.21%, 17.97% and 20.60% in the
corresponding years. Mean SD and CV of the ratios came 17.98%, 1.77 and 9.86%
respectively. Glancing at the nature of ratios, trend of cash and bank, balance to total
deposit of both the banks appeared in decreasing trend. But both bank’s the ratio reached
highest in the year 2019\2020. Mean ratio of Century Commercial Bank came higher than
that of Nepal SBI Bank which means that Century Commercial Bank has the greater
ability to repay the deposit i.e. Century Commercial Bank is more efficient to serve the
customers from liquidity point vive. CV the ratios remained lower in Century
Commercial Bank, which signifies greater consistency in it.

d) Performing Assets To Total Deposit Ratio

Performing Assets
=
Total Deposit
Table 4.4
Performing Assets to Total Deposit Ratio of CCB and Nepal SBI Bank
Rupees in Thousand (,000)
Banks Century Commercial Bank Ltd. Nepal SBI Bank Ltd.
Ratio Ratio
Year Performing Total Performing Total
(%) (%)
Assets Deposit Assets Deposit
2015/16 26,175,263.39 24,948,567.97 104.92 66,266,844.08 65,213,519.72 101.62
2016/17 30,878,217.43 28,967,846.55 106.59 84,068,035.90 81,664,548.67 102.94
2017/18 47,334,703.58 42,593,653.75 111.13 89,550,692.61 84,027,267.55 106.57
2018/19 62,575,816.95 53,129,691.14 117.78 97,939,335.61 97,721,846.22 100.22
2019/20 75,549,597.61 64,973,734.16 116.28 114,434,375.05 110,236,203.17 103.81
Mean 107.85 111.93

19
S. D. 1.01 2.63
C. V 0.94 2.35
COMBINED S.D. 2.848

In above table 4.4 it shows that the ratios to Century Commercial Bank remained
106.59%, 111.13%, 117.78%, 116.28,% 107.85% in the respective years of study period.
Mean and CV of the ratios appeared 111.93% and 3.97% respectively. In the similar way,
the ratios in Nepal SBI Bank were 102.94%, 106.57%, 100.22%, 103.81% and 111.93%
in the corresponding years. Mean and CV of the ratios came 105.06% and 3.78% in that
order. The ratio in Nepal SBI Bank showed fluctuating trend throughout the review
period whereas it normal in rising trend in Century Commercial Bank up to the third year
and decreased in the final year. Mean of the ratios came greater in Century Commercial
Bank than in Nepal SBI Bank, which indicates that Century Commercial Bank remained
more successful regarding the use of the cost bearing deposit in profitable sectors. In
other words, Century Commercial Bank seemed at upper level with respect to the wise
and beneficial use of outsider fund. But Present Financial Crises caused to decrease in
Deposit increment ratio makes fall down in the PA to TD ratio of Both Banks. CV
analysis showed that the variation in the performing assets to total deposit of Nepal SBI
Bank was more uniform than that of Century Commercial Bank.

e) Total Interest Expenses To Total Interest Income Ratio

Total Interest Expenses

=
Total interest income

Table 4.5
Interest Income to Expenses Ratio of CCB and Nepal SBI Bank Rupees in Thousand (,000)
Banks Century Commercial Bank Ltd. Nepal SBI Bank Ltd.
Ratio Ratio
Year Accrued Total Accrued Total
(%) (%)
Interest Interest Interest Interest
Income Income

20
2015/16 1,205,662.77 1,862,154.66 64.75 1,565,150.93 3,981,262.34
39.31

2016/17 1,132,714.42 2,012,502.62 56.28 2,994,483.07 5,911,160.53

50.66

2017/18 1,980,287.52 3,120,020.36 63.47 4,911,241.59 9,070,350.35

54.15

2018/19 4,247,418.59 6,174,037.07 68.79 6,551,844.01 11,278,131.60

58.09

2019/20 7,845,892.23 65.46 7,364,245.62 11,492,571.36

64.08
5,135,812.19
Mean 24.39 10.29
S. D. 8.4 6.57
C. V 34.43 63.84
COMBINED S.D. 10.32

Table 4.5 shows that the ratios in Century Commercial Bank remained 64.75%, 56.28%,
63.47%, 68.97% and 65.46% in the respective years of the review period. Mean and CV
of the ratios came 63.75% and 6.47% respectively. In Nepal SBI Bank, the ratios were
39.31%, 50.66%, 54.15%, 58.09% and 64.08% in the corresponding years. Mean of the
ratios appealed 53.26% and CV appeared 15.54%. The ratios in Century Commercial
Bank reflected fluctuating trend, it has increased from third year by 5-7% and decreased
in second years, in Nepal SBI Bank, it depicted increasing trend up to the fifth year.
Lower mean ratio in Nepal SBI Bank indicates better profitability position as compared
to Century Commercial Bank. Overall picture shows that Nepal SBI Bank is more
successful in allocating the interest bearing debt in profitable sectors. On the other hand,
it is also obvious that interest spread rate is high in the bank CV of the ratios appeared
greater in Nepal SBI Bank, which mean that were relatively less uniform throughout the
review period.

f) Total Interest Income To Total Assets Ratio

Total Interest Income

=
Total Assets
Table 4.6
Interest Income to Total Assets Ratio of CCB and Nepal SBI Bank Rs. in Thousand (,000)
Banks Century Commercial Bank Ltd. Nepal SBI Bank Ltd.
Ratio Ratio
Year Total Total Total Total
(%) (%)
Interest Assets Interest Assets

21
 Income Income
2015/16 1,862,154.66 27,602,977.79 6.75 3,981,262.34 78,515,345.28
5.07

2016/17 2,012,502.62 32,724,003.10 6.15 5,911,160.53 99,828,627.91

5.92

2017/18 3,120,020.36 50,057,794.02 6.23 9,070,350.35 102,373,893.66

8.86

2018/19 6,174,037.07 72,568,767.97 8.51 11,278,131.60 118,145,861.58

9.55

2019/20 7,845,892.23
82974455.71
9.46 11,492,571.36 132,239,684.79
8.69

Mean 5.48 5.75

S. D. 0.26 0.27
C. V 4.8 4.62
COMBINED S.D. 0.298

Table 4.6 shows that the ratios of Century Commercial Bank remained 6.75%, 6.15%,
6.23%, 8.51% and 9.46% in the respective years of review period. Mean of the ratios
appeared 7.42% and CV appeared 17.88%. In Nepal SBI Bank, the ratios were
maintained 5.07%, 5.92%, 8.86%, 9.55% and 8.69% in the corresponding years. Mean
and CV of the ratios came 7.62% and 23.31% respectively. In Century Commercial
Bank, the ratio showed slight increasing whereas in Nepal SBI Bank, it followed
decreasing trend except in the last year of the study period. In Century Commercial Bank,
the ratio ranged from 6.15% in the second year to 9.46% in the fourth year. In Nepal SBI
Bank, it ranged from 5.07% in the base year to 9.55% in the fourth year. Mean ratio was
higher in Nepal SBI Bank, which loads us to the conclusion that Nepal SBI Bank
managed the assets more effectively to earn interest. Furthermore, interest earned to the
total assets in different years of the study period remained more uniform in Century
Commercial Bank as revealed by lower CV.

4.1.3 Correlation Analysis

It is a useful statistical for measuring the intensity of the magnitude of linear relationship
between two series. Karl Pearson's coefficient of correlation is most common and useful
tool to measure the relationship between two variables in the bank. The correlation
coefficient (r) between two variables X and Y can be obtained by using following
formula.

22
 Where,

n = Number of observations in series X and Y

ΣX = Sum of observations in series X

ΣY = Sum of squared observations in series Y

ΣX² = Sum of squared observations in series X

ΣY² = Sum of squared observations in series Y

ΣXY = Sum of the product of observations in series in X and Y

Here,

Degree Direction

Positive Negative

Perfect +1 -1

Significant ( very high ) +0.75 to +1 -0.75 to -1

High +0.50 to +0.75 -0.50 to -0.75
Low +0.25 to +0.50 -0.25 to -0.50
Insignificant (very Low) 0 to +0.25 0 to -0.25
Absent 0 0

a) Correlation Analysis Between Deposit And Net Profit

Table 4.7
Deposit to Net Profit Ratio of CCB and Nepal SBI Bank Rupees in Thousand (,000)
Bank
Century Commercial Bank Nepal SBI Bank
s
Deposit Net Profit Net Profit
Year Deposit (X)
(X) (Y) (Y)

23
2015/ 248,140.0 ∑X2=443,715,9 ∑X2=119,807352
3,083.00 100,976.91 1,682.00
16 0 90,473 424.19
2016/ 264,908.0
4,575.00 138,024.44 2,372.00
17 0
2017/ 300,484.0 ∑Y2=151,73974
4,919.00 181,862.54 2,964.00 ∑Y2=78,392717
18 0 0
2018/ 318,428.0
6,359.00 239,762.98 4,512.00
19 0
2019/ 346,813.0 ∑XY=8090742 ∑XY=4,2464248
7,528.00 333,229.46 6,387.00
20 0 4320 29.64
∑X=1478 ∑Y=2646 ∑X= ∑Y=
773 4 993856.33 17917.00
Correlation 0.968 0.9966

Table 4.7 shows that the coefficient of correlation and probable error (P.E.) of correlation
coefficient between total deposit and net profit in Century Commercial Bank 0.968 and
0.019. I the review period respectively correlation coefficient higher than six times the
probable error i.e. 0.968 > 6X0.019. It deposit and net profit of the bank are positively
correlated and the correlation is significant. The coefficient of correlation and probable
error of the coefficient between the same variables in Nepal SBI Bank were 0.996 and
0.00204 respectively. Correlation coefficient came greater than six times the probable
error i.e. 0.9966>6x 0.002043, that implies that the total deposit and net profit in the bank
are highly and positively correlated in other word, net profit of the bank increases almost
to the same degree with increase in the amount of deposit. Between two banks, Nepal
SBI bank seems more efficient regarding the utilization of the deposit for income
generating purpose as revealed by greater coefficient of correlation in Nepal SBI Bank.

b) Correlation Between Performing Assets And Net Profit

Table 4.8
Performing Assets to Net Profit Ratio of CCB and Nepal SBI Bank Rs. in Thousand (,000)
Bank
Century Commercial Bank Nepal SBI Bank
s
Deposit Net Profit Net Profit
Year Deposit (X)
(X) (Y) (Y)
2015/ 278,445.0 ∑X2=5621504 ∑X2=158879264
3,083.00 117,325.16 1,682.00
16 0 4944 486.28
2016/ 294,603.0
4,575.00 159,592.83 2,372.00
17 0

24
2017/ 335,191.0 ∑Y2=151,739 ∑Y2=78,392717.
4,919.00 214,325.74 2,964.00
18 0 740 00
2018/ 361,755.0
6,359.00 271,493.42 4,512.00
19 0
2019/ 393,202.0 ∑XY=911543 ∑XY=479401393
7,528.00 369,168.47 6,387.00
20 0 890 4.17
∑X=1663 ∑Y=2646 ∑X=99358 ∑Y=
196 4 6.33 17917.00
Correlation 0.969 0.993

Table 4.8 highlights that the coefficient of correlation and probable error of the
coefficient between performing assets and net profit in Century Commercial Bank
remained 0.969 and 0.018 respectively correlation coefficient is higher than six times the
probable error i.e. 0.969 > 6 x 0.018. It signifies that the net profit and performing assets
of the bank are positively related, and the correlation significant. Band can raise its net
profit bye investing the fund in performing assets. And the coefficient of correlation and
probable error of the coefficient between performing assets and net profit in Nepal SBI
Bank were 0.9930 and 0.0042 respectively. Correlation coefficient appeared greater the
six times the probable error i.e. 0993<6 x 0.004211. It indicates that the net profit and
performing assets of the bank are highly and positive related. Furthermore, the bank can
raises its net profit by increasing the performing assets.

4.2 Major Findings

The following findings have been derived from the analysis and interpretation of date.

1) Liquidity Position
 In term of current ratio both banks are below than the normal standard but
Century Commercial Bank is slightly better than Nepal SBI Bank. The
average ratio of Century Commercial Bank is higher than Nepal SBI Bank.
The C.V. of Nepal SBI Bank is higher than Century Commercial Bank which
indicates that Century Commercial Bank is riskier and there are fluctuations in
the ratios of Nepal SBI Bank, in Century Commercial Bank ratios are
decreasing
 In term of Cash and bank balance to deposit ratio the average ratio of Century
Commercial Bank which is higher than Nepal SBI Bank. And with
comparing to average ratio, Century Commercial Bank is more profitable

25
 because the liquidity position of Century Commercial Bank is better than that
of Nepal SBI Bank.
 In term of cash and bank balance to current and saving deposit ratio, the
average ratio of Century Commercial Bank is higher than Nepal SBI Bank
which indicates that a very high ratio indicates the unwise investment
decision. This shows that the bank is unable to invest its current deposits in
productive or profitable area.

2) Activity Turnover Ratio

 The loan and advance to total deposit ratio is employed to measure the utilization of
their total deposit on loan and advances. The average ratio of Nepal SBI Bank is
nominally lower than that of Century Commercial Bank. It shows that both banks has
better utilization of deposits at same level. According to co-efficient of variation,
Nepal SBI Bank is more fluctuating than Century Commercial Bank over the study
period. The C.V. of Nepal SBI Bank is 4.71% which is higher than Century
Commercial Bank which .
 In term of loan and advance to fixed deposit ratio, the average ratio of Century
Commercial is higher than that of Nepal SBI Bank. In this analysis, it is concluded that
Nepal SBI Bank has proper utilization of fixed assets than Century Commercial Bank
because Nepal SBI Bank has higher average ratio than Century Commercial Bank.

3) Profitability Ratio

Profitability ratio is measurement of efficiency and the search for it provides the
degree of success in achieving desired profit. Profitability in term of Net Profit to
total assets ratio of Century Commercial Bank is found higher than that of Nepal SBI
Bank. The yearly ratio of both banks is in fluctuating trend. It can be seen that Nepal
SBI Bank net profit to total assets ratio is less than that of Century Commercial Bank.
Century Commercial Bank has managed to earn a steady rate of return on its assets
employed in each fiscal year. The average rate of return of Century Commercial Bank
is higher than that of Nepal SBI Bank, which concludes that Century Commercial
Bank has found better performance by utilizing overall resources.

26
 CHAPTER 3
SUMMARY AND CONCLUSION

5.1 Summary
Banks, which deal with commercial activities, are known as commercial banks. These
financial institutes help to integrate every financial activity of the community. The main
objective of a commercial bank is to play a vital role in the development of good trade.

Commercial banks are mechanisms of mobilizing funds in returnable resources. They

offer financial support to all types of business through providing various types of loans
and other financial services. Commercial banks aid the economic development of the
nation.

Commercial banks pool together the savings of the community and use the funds
productively through prudent investments. The commercial act 2031 defines a
commercial banks as a bank which deals in exchanging currency, accepting deposits,
giving loans an is involved in commercial activities.

Integrated and speedy developed of the country is possible only when competitive
banking service reach every nooks and corners of the country. Today number of
commercial bank are concentrated in only few places because lack of development of
infrastructure in remote places. Government must give attention toward remote places.

Bank plays vital role in the economic development of nations. So today it is challenging
for government to formulate the new banking policy rationally in remote area. Actually
more than 60% of total areas of Nepal is covered with rural areas. For the economic
development of rural areas it is necessary to provide banking services in rural areas.

The research work entitled the comparative study on financial performance analysis of
commercials banks include the following banks: -

1) Century Commercial Bank Ltd.

2) Nepal SBI Bank Ltd.

The research work should have reached the destiny where we satisfy with the queries of
research problems which were specified in the statement of the problem in the introductory

27
 chapter. To conduct the research work, the researcher consulted mainly the secondary
sources such as documents published by concerned banks and also consulted the
personalities of the related bank as primary sources where as necessary. Before presenting
and analyzing the data, there was also need to review of related books, prior research on the
topic. Obviously, it helped the researcher to construct conceptual framework and to analyze
and interpret the secondary data according to objective set forth previously. Then the
research work was analyzed and interpreted by financial tools such as liquidity ratio, activity
turnover ratio, leverage ratio, earning per share, profitability ratio and dividend per share as
well as statistical tools such as mean, standard deviation, CV.

5.2 Conclusion

Establishment of commercial banks especially joint venture banks have continued in

response to the economic liberalization policies of the government. So, now in Nepal
there are twenty six (research period) commercial banks competing with each other in
their business. These joint venture banks are mainly concentrated themselves on
financing foreign trade, commerce and industry. This study has been mentioned already
that the research concentrates. The researcher has evaluated data for the least 5 years
period i.e. 2015/16 to 2019/20. The researcher has analyzed the data by using financial
tools like ratio analysis as well as statistical tools like mean, s.d., hypothesis etc. The
liquidity ratio measures the ability of a firm to meet its short-term obligations and select
the short-term financial solvency of a firm. The liquidity position of the banks in term of
current ratios shows that the ratios of both banks Nepal SBI Bank and Century
Commercial Bank are always below the normal standard (i.e. 2:1) where as Century
Commercial Bank average ratio is lower than Nepal SBI Bank. It shows that the liquidity
position in term of current assets to current liabilities of Nepal SBI Bank is better than
Century Commercial Bank. So, it is concluded that Nepal SBI Bank is better short-term
solvency position as compared with Century Commercial Bank. The Liquidity position of
cash and bank balance to deposit ratio of Nepal SBI Bank is higher than that of Nepal
SBI Bank. So, it is concluded that Nepal SBI Bank has sufficient cash and bank balance
to deposit than that of Nepal SBI Bank. Likewise, the liquidity position of Nepal SBI
Bank in terms of cash and bank balance to current and saving deposit ratio is found
higher than Century Commercial Bank. Here, Nepal SBI Bank has so high ratio that it is

28
not better because “ideal assets earn nothing”. So, both banks should invest in productive
area. This analysis shows that Nepal SBI Bank has more cash ideal than Century
Commercial Bank. In the same way, fixed deposit to total deposit ratio of Nepal SBI
Bank is better than that of Century Commercial Bank. The ratio of Nepal SBI Bank is
higher. So, the higher ratio of fixed deposit to total deposit ratio indicates the strong
liquidity position.

29
 BIBLIOGRAPHY
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30
 Kene, Simon M. (1983).Stock Market Efficiency Theory, Evidence and Implication, India,
Heritage Publisher New Delhi.

ANNEX-1

Current Ratio

(Amount in Rs,000)
Banks Century Commercial Bank Ltd Nepal SBI Bank
Current Current Current Current Current Current
Year
Assets Liabilities Ratio Assets Liabilities Ratio
2015/
25,491,995.0
16 27,077,975.00 1.06 57,365,353.18 70,537,548.96 0.81
0
2016/
29,322,294.1
17 30,583,230.23 1.04 78,034,581.66 87,095,494.05 0.90
1
2017/
42,671,734.6
18 46,845,622.42 1.10 91,397,656.43 88,548,765.26 1.03
3
2018/
63,067,482.9 106,618,956.1 106,753,264.9
19 67,005,811.39 1.06 1.00
3 1 7
2019/
72,104,572.2 117,196,713.8 112,102,102.0
20 74,020,000.36 1.03 1.05
9 9 5
Mean 2.19
1.06
S. D. 0.2814
0.0237
C. V 29.5588
2.2358
COMBINED S.D. 0.2233

Computation table of SD, CV, combined CD value of t

We here assume that current ratio of Century Commercial Bank as value X and current ratio of
Nepal SBI Bank as value Y
Banks Century Commercial Bank Ltd. Nepal SBI Bank Ltd.
(X- (Y-
Year Current (X-Xc) Current (Y-Yn)
Xc)2 Yn)2
Ratio Ratio

31
2015/ 0.0206
0
16 1.06 0.00 0.81 (0.14) 95
2016/ 0.0002 0.0037
17 1.04 (0.02) 37 0.90 (0.06) 4
2017/ 0.0015 0.0056
18 1.10 0.04 53 1.03 0.08 33
2018/ 1.63E- 0.0017
19 1.06 0.00 05 1.00 0.04 33
2019/ 0.0010 0.0078
20 1.03 (0.03) 14 1.05 0.09 02
0.0028
∑X= 5.29 ∑(x-x)2= 4.785586761 ∑(Y-Yn)2 0.0396
2
∑Y=

ANNEX-2
Cash and Bank Balance to Current and Saving Deposit Ratio
Rupees in Thousand (,000)
Banks Century Commercial Bank Ltd Nepal SBI Bank
Ratio Ratio
Cash and Current and Cash and Current and
(%) (%)
Year Bank Saving Bank Saving
Balance Deposit Balance Deposit
2015/
16 4,315,759.66 7,560,931.00 57.08 10,389,818.49 32,363,113.66 32.10
2016/
15,624,096.8
17 5,815,277.84 37.22 13,229,680.99 34,959,771.88 37.84
3
2017/
21,313,753.0
18 7,974,522.74 37.41 16,140,462.18 35,777,791.78 45.11
9
2018/
24,818,295.5
19 12,527,199.40 50.48 17,564,852.20 95,567,254.12 18.38
0
2019/
25,438,172.7
20 13,493,890.46 53.05 22,703,935.85 40,200,462.40 56.48
6
Mean 47.05% 37.98%
S. D. 6.89 12.74
C. V 14.64% 33.55%

32
 ANNEX-3
Cash and Bank Balance to Total Deposit Ratio
Rupees in Thousand(,000)

Banks Century Commercial Bank Ltd. Nepal SBI Bank Ltd.

Ratio Ratio
Year Cash and Total Cash and Total
(%) (%)
Bank Deposit Bank Deposit
Balance Balance
2015/
24,948,567.9
16 4,315,759.66 17.30 10,389,818.49 65,213,519.72 15.93
7
2016/
28,967,846.5
17 5,815,277.84 20.07 13,229,680.99 81,664,548.67 16.20
5
2017/
42,593,653.7
18 7,974,522.74 18.72 16,140,462.18 84,027,267.55 19.21
5
2018/
53,129,691.1
19 12,527,199.40 23.58 17,564,852.20 97,721,846.22 17.97
4
2019/
64,973,734.1 110,236,203.1
20 13,493,890.46 20.77 22,703,935.85 20.60
6 7
Mean 20.09% 17.98%
S. D. 1.7034 1.77
C. V 8.48% 9.86%

ANNEX-4
Performing Assets to Total Deposit Ratio
Rupees in Thousand (,000)

Banks Century Commercial Bank Ltd. Nepal SBI Bank Ltd.

Ratio
Year Performing Total Ratio (%) Performing Total
(%)
Assets Deposit Assets Deposit
2015/1
6 26,175,263.3 24,948,567.97 104.92 66,266,844.08 65,213,519.72 101.62

33
 9
2016/1
30,878,217.4
7 28,967,846.55 106.59 84,068,035.90 81,664,548.67 102.94
3
2017/1
47,334,703.5 42,593,653.75
8 111.13 89,550,692.61 84,027,267.55 106.57
8
2018/1
62,575,816.9 53,129,691.14 97,721,846.22
9 117.78 97,939,335.61 100.22
5
2019/2
75,549,597.6 110,236,203.17
0 64,973,734.16 116.28 114,434,375.05 103.81
1
Mean 111.93% 105.60%
S. D.
C. V 1.397% 3.78%

ANNEX-5
Accrued Interest to Total Interest Income Ratio
Rupees in Thousand (,000)
Banks Century Commercial Bank Ltd. Nepal SBI Bank Ltd.
Ratio Ratio
Year Accrued Total Accrued Total
(%) (%)
Interest Interest Interest Interest
Income Income
2015/1
6 1,205,662.77 1,862,154.66 64.75 1,565,150.93 3,981,262.34 39.31
2016/1
7 1,132,714.42 2,012,502.62 56.28 2,994,483.07 5,911,160.53 50.66
2017/1
8 1,980,287.52 3,120,020.36 63.47 4,911,241.59 9,070,350.35 54.15
2018/1
9 4,247,418.59 6,174,037.07 68.79 6,551,844.01 11,278,131.60 58.09
2019/2
0 5,135,812.19 7,845,892.23 65.46 7,364,245.62 11,492,571.36 64.08
Mean 63.75% 53.26%
S. D.
C. V 6.44% 15.54%

34
 ANNEX-6
Accrued Interest to Total Interest Income Ratio
Rupees in Thousand (,000)
Banks Century Commercial Bank Ltd. Nepal SBI Bank Ltd.
Ratio
Year Total Total Ratio (%) Total Total
(%)
Interest Assets Interest Assets
Income Income
2015/1
27,602,977.
6 1,862,154.66 6.75 3,981,262.34 78,515,345.28 5.07
79
2016/1
32,724,003.
7 2,012,502.62 6.15 5,911,160.53 99,828,627.91 5.92
10
2017/1
50,057,794. 102,373,893.6
8 3,120,020.36 6.23 9,070,350.35 8.86
02 6
2018/1
72,568,767. 118,145,861.5
9 6,174,037.07 8.51 11,278,131.60 9.55
97 8
2019/2 82974455.7
132,239,684.7
0 7,845,892.23 1 9.46 11,492,571.36 8.69
9
Mean 7.42% 7.62%
S. D.
C. V 17.88& 23.13%

ANNEX-7
Correlation analysis between Total Deposit and Net Profit
Rupees in thousand (‘000)
Banks Century Commercial Bank Nepal SBI Bank

35
Year DEPOSIT NET DEPOSIT(X) NET
(X) PROFIT(Y) PROFIT(Y)
2015/16 ∑X2=443,7 ∑X2=119,
15,990,47 807,352,4

248,140.00 3,083.00 3.00 100,976.91 1,682.00 24.19

2016/17
264,908.00 4,575.00 138,024.44 2,372.00
2017/18 ∑Y =151,7
2
∑Y2=78,3
300,484.00 4,919.00 39,740.00 181,862.54 2,964.00 92,717.00
2018/19
318,428.00 6,359.00 239,762.98 4,512.00
2019/20 ∑XY=8 ∑XY=4,2
,090,7 46,424,82
42,432 9.64
346,813.00 7,528.00 .00 333,229.46 6,387.00
∑X= ∑Y= ∑X= ∑Y=
1,478,773.00 26,464.00 993,856.33 17,917.00

Correlation
0.968 0.9966

ANNEX-8
Correlation analysis between Performing Assets and Net Profit
Rupees in Thousand (‘000)
Banks Century Commercial Bank Nepal SBI Bank

Year Performing NET Performing NET

Assets (X) PROFIT(Y) Assets (X) PROFIT(Y)
2015/16 ∑X2= ∑X2=

36
 562,150,0 158,879,2
278,445.00 3,083.00 44,944.00 117,325.16 1,682.00 64,486.28
2016/17
294,603.00 4,575.00 159,592.83 2,372.00
∑Y =151,
2

2017/18 7 ∑Y2=78,3
335,191.00 4,919.00 39,740.00 214,325.74 2,964.00 92,717.00
2018/19
361,755.00 6,359.00 271,493.42 4,512.00
2019/20 ∑XY=9 ∑XY=
11,543 4,794,013
,890.0 ,934.17
393,202.00 7,528.00 0 369,168.47 6,387.00
∑X= ∑Y= ∑X= ∑Y=

1,663,196.00 26,464.00 993,856.33 17,917.00

Correlation 0.969 0.9930

37