A CASE STUDY

ON

PROFIT AND LOSS ANALYSIS OF

EVEREST BANK LIMITED

A Project Work Report

By
Binod Panthee
Exam Roll No: 709200055
T.U. Registration No: 7-2-920-84-2019
DANFE COLLEGE
Group: Finance

Submitted To:

The Faculty of Management

Tribhuvan University
Kathmandu

In partial fulfillment of the requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Putalisadak, Kathmandu
July, 2024
 DECLARATION

I hereby declare that the work reported in this project entitled “PROFIT AND LOSS
ANALYSIS OF EVEREST BANK LIMITED” submitted to the Faculty of Management,
Tribhuvan University, Kathmandu is an original piece of work under the supervision of Mr.
Ganesh Khadka, faculty member of Business Research, Danfe College, Putalisadak,
Kathmandu and submitted in my partial fulfillment of the requirements for the degree of
Bachelor of Business Studies (BBS). This project work report has not been submitted to any
other university or institution for the award of any degree or diploma.

Binod Panthee
Date: 2024-07-

ii
 SUPERVISOR'S RECOMMENDATION

The project work report entitled “PROFIT AND LOSS ANALYSIS OF EVEREST BANK
LIMITED” submitted by Binod Panthee of Danfe College, Putalisadak, Kathmandu is
prepared under my supervision as per the procedure and format requirements laid by the
Faculty of Management, Tribhuvan University as partial fulfillment of the requirements for
the degree of Bachelor of Business Studies (BBS). I, therefore, recommend the project work
report for evaluation.

To be printed on letter head.

Ganesh Khadka
Lecturer, Danfe College
Date: 2024-07-06

iii
 ENDORSEMENT

We hereby endorse the project work report entitles "PROFIT AND LOSS ANALYSIS OF
EVEREST BANK LIMITED" submitted by Binod Panthee of Danfe College, Putalisadak,
Kathmandu, in partial fulfillment of the requirements for the degree of the Bachelor of
Business Studies (BBS) for external evaluation.

Mr. Bishnu Sharma Mr. Krishna Prasad Paudel

Chairman, Research Committee Campus Chief/Principal
Date: 2024-07-06 Date: 2024-07-06

iv
 ACKNOWLEDGEMENT

This report has been prepared in partial fulfillment of requirement of the Bachelor of
Business Studies final year course. I would like to express my gratitude to Danfe College for
providing a great opportunity of preparing a field work report in accordance to its syllabus.
What so ever was the situation this report is finally prepared with the help and guidance of
many of my well-wishers.

I am very much thankful to all the teacher of Danfe College; without whose knowledge and
suggestions in several ways, this report would not have been prepared. My special thanks go
to my teachers and lecturers in Danfe College, who helped and guided me a lot in preparing
this report.

I am also very much indebted to Everest Bank Limited, and its concerned official for
providing me the necessary data and information related with the company. Their friendly
behavior and warm co-operation helped me gathers necessary information.

While preparing this report, I would like to express my sincere thanks and gratitude to my
teacher for his good guidance, comment, and suggestion.

Binod Panthee
Danfe College

v
 TABLE OF CONTENTS

Title Page No.

TITLE PAGE ……………………………………………………………………… i

DECLARATION...........................................................................................................iii
SUPERVISOR'S RECOMMENDATION.......................................................................iv
ENDORSEMENT...........................................................................................................v
ACKNOWLEDGEMENT..............................................................................................vi
TABLE OF CONTENTS...............................................................................................vii
LIST OF TABLES..........................................................................................................ix
LIST OF FIGURES........................................................................................................x
ABBREVIATION...........................................................................................................xi
CHAPTER I..................................................................................................................1
INTRODUCTION........................................................................................................1
1.1 Background of Study:......................................................................................................1
1.2 Profile of organization.....................................................................................................1
1.3 Statement of Problem.......................................................................................................2
1.4 Objectives of the Study....................................................................................................3
1.5 Rationale of the Study......................................................................................................4
1.6 Related Literature Review................................................................................................4
1.6.1 Conceptual Review (Introduction)............................................................................5
1.6.2 Research Gap.............................................................................................................7
1.7 Report Structure...............................................................................................................8
1.8 Research methodology.....................................................................................................8
1.8.1 Type of Research (Research Design)........................................................................9
1.8.2 Population and Sample..............................................................................................9
1.8.3 Types of Data:...........................................................................................................9
1.8.4 Data Collection Procedure:.....................................................................................10
1.8.5 Tools Used:.............................................................................................................10
1.9 Limitation of Study........................................................................................................12
CHAPTER II..............................................................................................................13
RESULT AND ANALYSIS.......................................................................................13

vi
 2.1 Data Presentation:..........................................................................................................13
2.2 Major Findings:..............................................................................................................22
CHAPTER III.............................................................................................................23
SUMMARY AND CONCLUSION...........................................................................23
3.1 Summary:.......................................................................................................................23
3.2 Conclusion:....................................................................................................................23
BIBLIOGRAPHY......................................................................................................25
APPENDICES............................................................................................................26

vii
 LIST OF TABLES

Table No. Table Details Page No.

1 Profit & Loss Analysis 14
2 Net Margin Ratio Analysis 15
3 Return on Assets 17
4 Return on Equity 19
5 P.E. Ratios 21

viii
 LIST OF FIGURES

Figure No. Figure Details Page No.

1 Profit and Loss from FY 76/77 to FY 79/80 14
2 Net Margin Ratio Analysis from 76/77 to 79/80 16
3 Return on Assets from 76/77 to 79/80 18
4 Return on Equity from 76/77 to 79/80 20
5 P.E. Ratios from 76/77 to 79/80 22

ix
 ABBREVIATION

S.N. Short Form Full Form

1 B.B. S Bachelor of Business Studies

2 B.S. Bikram Sambat

3 B/S Balance Sheet

4 CRR Cash Reserve Ratio

5 CBS Centralized Banking Solution

6 DPS Dividend Per Share

7 DPR Dividend Payout Ratio

8 EBL Everest Bank Limited

9 etc. Etcetera

10 F/Y Fiscal Year

11 Ltd. Limited

12 NRB Nepal Rastra Bank

13 P.E Price Earnings Ratio

13 PNB Punjab National Bank

14 ROA Return on Assets

15 ROE Return on Equity

13 % P.A. Percentage Per Annum

x
 1

CHAPTER I
INTRODUCTION

1.1 Background of Study:

Banks are major institutions in financing. Bank involves in a process of collecting scattered
money and to help its mobilization in different sectors according to the need of customers.
Bank helps to develop saving habit of people, which in turns help to make other people to
invest for their business. Banking loan helps to invest in industrial sector, commercial sector,
production sector, trade & commerce, Bank also helps to develop international business by
initiating as a mediator on export & import. This way banks help to strengthen the national
development (Economic Survey, 2004/05: 3).
Banks are those financial institutions that offer the widest range of financial services
especially credit, saving, payment services and perform the widest range of financial
functions of any business firm if the economy. The most important functions are; lending and
investing money (the credit function), making payments of behalf of customers for their
purchase of goods and services (the payments function) managing financial assets and real
property for customers (the cash management, risk and roust functions) and assisting
customers if investing funds (through the brokerage, investment banking and saving
functions) (Vaidhya, 1999: 5).

As “business week” noted “banking is essential to modern economy but banks are not”
(quoted in Financial Times,1996). This statement is supported by a recent report from Booz
Allen & Hamilton (Warner, 1996) that claims the Internet poses a very serious threat both to
the customer base of the traditional banking of oligopoly and its profits. Indeed, the online
banking has prompted many banks to rethink their strategies in order to stay competitive.
Customers today are demanding much more than banking services.

1.2 Profile of organization

Everest Bank Limited (EBL), founded in 1994, the Bank has been one of the leading banks of
the country and has been catering its services to various segments of the society. With clients
 2

from all walks of life, the Bank has helped the nation to develop corporately, agriculturally &
industrially.
Punjab National Bank (PNB), the joint venture partner of EBL (holding 20% equity) is one of
the largest nationalized banks in India having presence virtually in all important centers.
Owing to its performance during the year 2012-13, the Bank earned many laurels &
accolades in recognition to its service & overall performance. PNB was awarded with
“IDRBT Banking Technology Excellence Award” under Customer Management &
Intelligence Initiatives. The Bank also bagged “Golden Peacock Business Excellence Award
2013” by Institute of Directors. Similarly, the Bank was recognized as ‘Best Public Sector
Bank’ by CNBC TV 18. The bank has now more than 7,000 branches and 8,500 ATMs
spread all across India. As a joint-venture partner, PNB has been providing top management
support to EBL under Technical Service Agreement.
The bank has been conferred with “Bank of the Year 2006, Nepal” by the banker, a
publication of financial times, London. The bank was bestowed with the “NICCI Excellence
award” by Nepal India chamber of commerce for its spectacular performance under finance
sector.
It has one of the Largest Network among private sector banks spread across Nepal and all
connected with ABBS. It has representative office in India to facilitate remittance from India.
It facilitates direct drawing arrangement with PNB and HDFC bank India whereby instant
payment is done on presentation of the instrument. It has more than 126 remittance payout
location in Nepal.
Everest Bank Limited (EBL) provides customer-friendly services through its wide Network
connected through ABBS system, which enables customers for operational transactions from
any branches. The bank has 105 Branches, 137 ATM Counters, 31 Revenue Collection
Counters and 3 Extension Counters across the country making it a very efficient and
accessible bank for its customers, anytime, anywhere.
Similarly, Indian tourists and businessmen having PNB cards will be able to use EBL ATM,
while in Nepal. EBL is playing a pivotal role in facilitating remittance to and from across
globe. Being the first Nepalese bank to open a representative office in Delhi, India, the
Nepalese in India can open account in Nepal from the designated branches of Punjab
National Bank and remit their saving economically through banking channel of Nepal.
 3

1.3 Statement of Problem

Commercial banks on Nepal have been facing various challenges and problems. Some of
them arising due to the economic condition of the country, some of them arising due to
confused policy of government and many of them arising due to default borrowers. After
liberalization of economy, banking sector has various opportunities.

However, the financial institutions are increasing regularly. Liquidity is maximum with the
financial institutions. Hence, the banks and financial institutions are competing among
themselves to advance credit to limited opportunity sectors. Banks and financial institutions
are investing in house loan, hire purchase loan for safety purpose. Due to lack of good
lending opportunities, banks is facing problems of over liquidity. Nowadays, banks have
increasing number of deposits in fixed and saving accounts but have decreasing trend in
lending behaviors. So, this has caused major problems in commercial banks. Nowadays, due
to competition among banks, the interest rate charge for loan is in decreasing trend. Due to
unhealthy competition among the banks, the recovery of the bank’s credit is going towards
negative trends. Non- Performing credits of the banks are increasing year by year. To control
such type of state, the regulatory body of the banks and financial institutions, NRB has
renewed its directives of the credit loss provision. Therefore, it is necessary to do the ratio
analysis to know the current position of the bank and to make the effective decision
accordingly.

The research problems may be stated in the form of following questions: -

a. How is the profit trend of Everest Bank Limited?

b. How is the trend of Net Profit Margin, ROE, ROA, P.E. Ratio?

1.4 Objectives of the Study

As mentioned above, since profit is the heart of any organization, more so in the banking
sector. Hence, the purpose of this fieldwork is to analysis the financial position of EBL
through the analysis of profit and loss. Hence, the main objective with which this fieldwork
has been carried out can be listed as follows:
 4

a. To analyze the profit and/or loss trend of EBL.

b. To analyze the profitability ratios of EBL.
c. To analyze the profitability ratios of EBL.
d. To analyze efficiency of Everest Bank through Profitability Ratios.
e. To suggest on Findings.

1.5 Rationale of the Study

At present the joint venture banks are gaining a wide popularity through their efficient
management and professional services and playing an eminent role in the economy. Lending
is one of the main functions of commercial banks where the whole banking business if rested
upon. Study on joint venture commercial bank and especially their lending practices; carry a
great significance to shareholders of the bank, to the professionals, to the students who wants
to know about lending practices of commercial banks. This study adds new ideas and
findings about the concerned joint venture banks.

This study no doubt will have importance to various groups but in particular if directed to a
certain group of people/organizations, which are.

a. Important to shareholders.
b. Important to management bodies of the bank for evaluation of bank’s
performance.
c. Important to outsiders who are mainly customers, finance agencies, stock
exchanges etc.
d. Important to the government bodies or the policy makers such as central bank.

1.6 Related Literature Review

Literatures are the main sources of information related with the study. The chapter deals with
review of literature react to the working capital of the commercial banks. This chapter has
been divided into two main sections. The first section of the chapter implies with the
conceptual framework of the study which second implies the review of previous studies.
Literature reviews are secondary sources, and do not report new or original experimental
work. Most often associated with academic-oriented literature, such reviews are found
 5

in academic journals, and are not to be confused with book reviews that may also appear in
the same publication. Literature reviews are a basis for research in nearly every academic
field. A narrow-scope literature review may be included as part of a peer-reviewed journal
article presenting new research, serving to situate the current study within the body of the
relevant literature and to provide context for the reader. In such a case, the review usually
precedes the methodology and results sections of the work.

A literature review discusses published information in a particular subject area, and

sometimes information in a particular subject area within a certain time period.

A literature review can be just a simple summary of the sources, but it usually has an
organizational pattern and combines both summary and synthesis. A summary is a recap of
the important information of the source, but a synthesis is a re-organization, or a reshuffling,
of that information. It might give a new interpretation of old material or combine new with
old interpretations. Or it might trace the intellectual progression of the field, including major
debates. And depending on the situation, the literature review may evaluate the sources and
advise the reader on the most pertinent or relevant.

Literature reviews provide you with a handy guide to a particular topic. If you have limited
time to conduct research, literature reviews can give you an overview or act as a stepping
stone. For professionals, they are useful reports that keep them up to date with what is current
in the field. For scholars, the depth and breadth of the literature review emphasizes the
credibility of the writer in his or her field. Literature reviews also provide a solid background
for a research paper’s investigation. Comprehensive knowledge of the literature of the field is
essential to most research papers.

1.6.1 Conceptual Review (Introduction)

There is an important role of banks in the economic growth and development of a country. To
achieve an ideal economic growth and development, the banks should have strong and well-
managed organization of banking system. When banking is appropriately organized, it aids
and facilitates the growth of trade and industry and hence of national economy. In the modern
economy, banks are considered not as dealer in money but as the leaders of development.
 6

Banks are not just the storehouse of the country’s wealth but are the reservoirs of necessary
for economic development.

Banking plays a significant role in the economic development of a country. Bank is a

resource for the economic development, which maintains the self-confidence of various
sectors of society and extends credit to the people. So, commercial banks are those financial
institutions mainly dealing with activities of the trade, commerce, industry and agriculture
that seed regular financial and other helps from them for growing and flourishing. The
objective of commercial banks is to mobilize idle resources into the most profitable sectors
after collecting them from scattered sources. Commercial bank contributes significantly in the
formation and mobilization of internal capital and development effort.

Bakar and Tahir (2009) in their paper used multiple linear regression techniques and
simulated neural techniques for prediction bank performance. ROA was used as dependent
variables. They concluded that network method outperforms the multiple linear regression
method however it need clarification on the factor used and they noted that multiple linear
regression not withstanding its limitations can be used as a simple tool to study the linear
relationship between the dependent variable and independent variables.

Varzu (2010) Banks are channels between saving surplus and saving deficit people and thus,
they are the bridge of utilized scatter fund to productive sectors. Hence, they represent a vital
role in the transmission of government economic policies (especially monitory policies) to
the economy. When bank credit is expensive, the investment slows down and unemployment
rises. Bank deposit represents the most significant component of the money supply used by
the public. Commercial banks play an important role for economic development of the
country as they provide capital for the development of industry, trade and business by
investing the saving collected as deposits from public. They render various services to their
customers facilitating their economic and social life.

Neceur (2003) using a sample of ten Tunisian banks from 1980 to 2000 and a panel linear
regression model, reported a strong positive impact of capitalization to ROA. There are
number of studies, which examine the bank performance using CAMEL framework, which is
the last model of financial analysis.
 7

Elyor (2009) and Uzhegova (2010) have used CAMEL model to examine factors affecting
bank profitability with success. The CAMEL framework is the most widely used model
(Baral, 2005). The central bank of Nepal (NRB) has also implemented CAMEL framework
for performance evaluation of the bank and other financial institution. CAMEL stands for
capital adequacy, assets quality, management efficiency, Earnings performance and liquidity.
The capital adequacy ratio is a key a key measure to determine the health of banks and
financial institutions.

Among the various reviews of various journals pertaining to the study, the major and most
contributing to the study has been outlined below.

1.6.2 Research Gap

Many research studies have been conducted by the different students, experts and researchers
about accounting procedure and its mobilization. There have been found numerous research
studies on financial companies and public enterprises regarding reports. Some studies are
related to a case study of a single company and some others are comparative in nature. But
the study of accounting procedure and its mobilization of EBL can be hardly found. From the
review of related studies no one studies have been found (accounting procedure and its
mobilization) in the context of EBL. The financial and statistical tools used by most of the
researchers were ratio analysis, test of hypothesis and regression analysis. This research
includes different tools like ratio analysis, correlation analysis and trend analysis as specific
tools. This is an implied gap stated differently. Likewise, having a complete set of literature
the researcher can simply form a gap. Having contradiction in literature the researcher will
also form a research problem where How Entrepreneurial Orientation (EO) affects firm
performance? Whether EO affects positively or negatively? The researcher intends to
investigate this because results between EO and firm performance are inconclusive in nature.
When he concludes his study, he may also state there is a positive, negative or no relationship
between EO and firm Research, Research Gap and the Research Problem performance.
Whatever the result he gets, it adds new knowledge to the existing literature. Likewise, within
foreseeable future scholars may also confirm that there is a positive, negative or no
relationship between EO and firm performance. In that state, the research gap fills. Having a
 8

positive, negative or no relationship a new theory can be built. Let’s say, there is a positive
relationship between Entrepreneurial Orientation and Firm Performance.

1.7 Report Structure

The study has been organized into five chapters. The titles of each of these chapters are as
follow:

In Introduction chapter, it comprises background of the study, statement of problem,

objectives of the study, rationale of study and report structure.

In Review of literature chapter, it comprises conceptual review, review of previous works

and research gap.

In Research methodology, its deals with the types of research, population and sample, types
of data, data collection procedure, instrument, technique of analysis and limitation.

In Data presentation and analysis, analyses of data deal with different statistical and the
financial tools that are used in the analysis of the data.

In Discussion and conclusion, includes the discussion conclusion and implication.

1.8 Research methodology

Research methodology refers to the various sequential steps that to be adopted by a researcher
during the course of studying a problem with certain objectives. It tends to solve the search
problem in a systematic way. Hence, overall research method methodologies in a greater
extent and also use the descriptive part based on both technical aspect and logical aspect. A
methodology does not set out to provide solutions - it is, therefore, not the same as a method.
Instead, a methodology offers the theoretical underpinning for understanding which method,
set of methods, or best practices can be applied to specific case, for example, to calculate a
specific result.
It has been defined also as follows:
 9

a) "The analysis of the principles of methods, rules, and postulates employed by

a discipline"
b) "The systematic study of methods that are, can be, or have been applied within
a discipline"
c) "The study or description of methods"

This research tries to perform a well deigning quantitative quantities research in a very clear
and direct way using both financial and statistical tools.

1.8.1 Type of Research (Research Design)

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.
The research design is the conceptual structure within research is conducted. In this study
descriptive research design is used which involves observing and describing the behavior of a
subject without influencing it in any way. A descriptive research studies are those studies
which are concerned with describing the characteristics of a particular individual or of a
group. The results from descriptive research can in no way be used as a definitive answer or
to disprove a hypothesis but, if the limitations are understood, they can still be a useful tool in
many areas of scientific research.

1.8.2 Population and Sample

The term “population” of universe for research means the universe of research study in which
the research is based” (Pant, 2000:75). At present there are 20 commercial banks operating in
Nepal and most of their stocks are traded actively in the stock market. Among the 20 banks; 3
banks have Government ownership and remaining 17 banks have private ownership. Among
them Everest Bank Limited is chosen as sample for the present study on the basis of good
financial performance.

1.8.3 Types of Data:

The data used in this study are secondary in nature. Published annual reports of the concerned
banks are taken as basic source of data. The data relating to financial performance are directly
 10

obtained from the concerned banks. Similarly, related books, magazines, journals, articles,
reports, bulletins, data from Nepal Stock Exchange and Nepal Rastra Bank, Central Bureau of
statistics, related website from internet etc. as well as other supplementary data and various
economic surveys are also used. Previous related studies to the subject are also counted as
source of information.

1.8.4 Data Collection Procedure:

Since the data have been obtained from secondary sources, after collection of financial
statement, master sheet of financial data has been extracted and tabulated as per the need of
this study. In order to process the data, financial statement and other available information
were reviewed. These data were grouped in different tables and charts according to their
nature. Most of the data have been compiled in one form and processed and interpreted as
required.

1.8.5 Tools Used:

Financial as well as the statistical tools are used to make the analysis more convenient,
reliable and authentic. For data analysis, different items from the balance sheet and other
statements are tabulated. Their ratios, percentages, mean, standard deviations, and
coefficients of variations are then calculated and presented in the tables. To study the
relationship between two or more variables, correlation coefficients are also calculated. In
order to know about the sources and applications of the fund, funds flow statement is
prepared. Likewise, trend analysis is also used to know the trend of various ratios. Following
are the brief introductions of the financial and statistical tools used in this study.

The data collected from various sources are analyzed and presented in tables and format
in the research study. To analyze the collected data statistical tools are used. Such tools are:

a. Tabulation

b. Classification

c. Bar Diagram
 11

d. Pie-Chart

a. Tabulation: In the tabulation method all the data are presented in tabulated method. In the
study here is also data are analyzed in tabulated method.
b. Classification: Classification is the process of separating the data of given table. All the
report data are classified and finalized in the following study.
c. Bar Diagram: Bar diagram is the easiest way to presenting the data which has in tabulated
and uniformity in nature. All ta study related data are presenting in bar diagram.
d. Pie-Chart: Pie chart is the way of data presenting where data are in percentage basis. All
the data are presented in the present in percentage basis which is related to the study.

1.8.5.1 Statistical Tools:

Various financial tools mentioned above were used to analyze the profit and loss of Everest
Bank Limited. Likewise, the relationship between different variables related to the study
topics were also drawn out using statistical tools.

1.8.5.2 Financial Tools:

Financial ratios are calculated to ascertain the financial condition of the firm. It is the
relationship between financial variables contained in the financial statements (i.e., balance
sheet, profit and loss account and income statements). It helps the related parties to spot out
the financial strength and weakness of the firm. There are several financial tools, which can
be applied in order to analyze the performance of commercial banks. The financial tools used
in this study are as follows: Liquidity Ratio, Activity Ratio, and Profitability Ratio.
Profitability Ratio used in the research are:
a. Net Profit Margin
b. Return on Assets
c. Return on Equity
d. Earnings Per share
e. Price Earnings Ratio
 12

1.9 Limitation of Study

To complete this research, we follow the different books, journals, articles and dissertation.
Thus, reliability of the study is based of those things. This study will not examine the ratio
analysis of all listed commercial banks due to lack of time; the study will see only the ratio
analysis of one commercial bank- Nepal Everest Bank Limited, which is listed in NEPSE.
This study will cover only the past five years period since 2076/77 to 2079/80. To prepare
these reports secondary data are collected from annual general meeting (AGM)’s reports of
the listed banks and trading reports of NEPSE. Primary information is collected from
respective office and related persons. It may not cover the whole qualitative and quantitative
analysis of the commercial banks of time and resource constraints.

The research study has some limitations. The main limitations of the study are as follows:

1. Though, there has been in operation of many commercial banks in Nepal, only
Everest Bank Limited is taken for the proposed study.

2. The secondary data will be used for presentation and interpretation.

3. This study is only a case study; hence the conclusion drawn from the study does not
ensure wide applicability in all types of enterprise running in different situations.

4. This study has to be completed in stipulated time as a result of which scope of

research is limited.

5. The financial constraints limited access to certain advanced research tools, software,
and databases that could have enriched the analysis.
 13

CHAPTER II
RESULT AND ANALYSIS

2.1 Data Presentation:

The researchers first collect related data and information about particular topic that is
profitability, data then collected from the annual reports, other bulletin, magazines, previous
annual report and present the data to understand. Therefore, the data are presented in simple
form as a bar diagram and tables. While preparing this report data are taken from annual
report of Everest Bank Limited.

2.1.1 Profit and Loss of EBL

The profit and loss section provides a financial summary reflecting the company's
performance over a specific period. It details revenues, costs, and expenses to determine net
profit or loss. This section helps stakeholders assess the company's financial health and
operational efficiency. Accurate reporting is crucial for decision-making, forecasting, and
strategic planning. Highlighting key figures and trends can aid in understanding profitability
and areas needing improvement. Proper analysis can lead to informed business strategies and
financial planning.

The profit and loss account of EBL from FY 76/77 to 79/80 is presented as below:

Table 1 : Profit and Loss Analysis

Fiscal Income Expenses Profit %Increase/(Decrease)

Year w.r.t. P.Y.

75/76 14,450,905,535 11,396,783,474 3,054,122,062 18.30%

76/77 15,486,617,994 12,970,374,284 2,516,243,710 (17.61%)

 14

77/78 13,075,950,491 11,305,010,994 1,770,939,497 (29.62%)

78/79 17,355,916,122 14,872,147,260 2,483,768,862 40.25%

79/80 24,025,105,015 20,662,989,576 3,362,115,439 35.36%

Table 1 shows the Profit and Loss of Everest Bank Limited from the Fiscal year 75/76 to
79/80. According to the table, profit of EBL for FY 75/76 has increased by 18.3% with
respect to FY 74/75 which decreases by 17.61% in 76/77. Further Profit has decreased by
29.62% in 77/78 however we see upliftment of profit after thereon by 40.25% in FY 78/79
and again 35.36% in FY 79/80 amounting to Rs. 3,362,115,439.

Profit for the past five fiscal years can be presented through following bar diagram:

Profit & Loss

4000000000

3500000000

3000000000

2500000000

2000000000

1500000000

1000000000

500000000

0
75/76 76/77 77/78 78/79 79/80

Fig 1: Profit & Loss for FY 76/77 to FY 79/80

Figure 1 shows the profit of EBL from the FY 75/76 to 79/80. According to Bar diagram,
Profit shows the decreasing trend from FY 75/76 to FY 77/78 and after thereon it shows an
increasing trend and speed up the profit amount in FY 79/80.

2.1.2 Net Margin of EBL

 15

Net Margin Ratio analyzes the company's profitability as a percentage of total revenue. It
calculates net profit after all expenses, taxes, and interest are deducted from total sales. This
metric provides insight into the efficiency of cost management and overall financial health. A
higher net margin indicates better profitability and operational efficiency. This section helps
stakeholders understand the company's capacity to generate profit relative to its revenue.
Clear presentation of net margin trends assists in strategic planning and performance
evaluation.

The Net Profit Margin of EBL from FY 76/77 to 79/80 is presented as below:

Table 2 : Net Margin

Fiscal Profit Sales Net Margin% %Increase/(Decrease)

Year w.r.t. P.Y.

75/76 3,054,122,062 14,450,905,535 21.13% (1.64%)

76/77 2,516,243,710 15,486,617,994 16.25% (4.89%)

77/78 1,770,939,497 13,075,950,491 13.54% (2.70%)

78/79 2,483,768,862 17,355,916,122 14.31% 0.77%

79/80 3,362,115,439 24,025,105,015 13.99% (0.32%)

Table 2 shows the net margin of EBL from FY 75/76 to FY 79/80. The Net margin ratios are
21.13%, 16.25%, 13.54%, 14.31% and 13.99% for Fiscal Year 75/76 to 79/80 respectively.
According to table net margin ratio is in decreasing trend up to 77/78 however a positive
impact is seen in FY 78/79 which is not maintained in FY 79/80.

From the above analysis, it is clear that the value tends from positive to negative. It shows the
trend is in decline. The reasons behind the trending toward the positive are given below.

a. Due to the decrement in the interest expenses (COGS) of Everest Bank Limited in
each five years.
 16

b. Due to higher interest income.

c. Due to lower other indirect expenses.

The reasons behind the trending toward the negative are given below.

a. Due to the increment in the interest expenses (COGS) of Everest Bank Limited in
each five years.

b. Due to lower interest income.

c. Due to higher other indirect expenses.

Net Margin for the past five fiscal years can be presented through following bar diagram:

Net Margin In %
25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
75/76 76/77 77/78 78/79 79/80

Fig 2: Net Margin for FY 76/77 to FY 79/80

Figure 2 shows the net margin ratio of EBL from the FY 75/76 to 79/80. According to Bar
diagram, Net margin shows the decreasing trend from FY 75/76 to FY 79/80.

2.1.3 Return on Assets of EBL

Return on assets (ROA) section evaluates how efficiently a company uses its assets to
generate profit. ROA is calculated by dividing net income by total assets, expressing the
 17

result as a percentage. This metric helps stakeholders understand how well management is
utilizing the company’s assets to produce earnings. A higher ROA indicates more effective
asset utilization. This section provides insights into operational efficiency and profitability.
Analyzing ROA trends aids in assessing the company’s financial performance and strategic
decision-making.

Return on Assets for the past five FY is presented as below:

Table 3 : Return on Assets

Fiscal Profit Assets ROA %Increase/(Decrease)

Year w.r.t. P.Y.

75/76 3,054,122,062 170,077,533,454 1.8% 0.01%

76/77 2,516,243,710 185,023,189,704 1.36% (0.44%)

77/78 1,770,939,497 212,336,128,516 0.83% (0.53%)

78/79 2,483,768,862 225,211,057,360 1.1% 0.27%

79/80 3,362,115,439 250,090,492,650 1.34% 0.24%

Table 3 shows the Return of Assets (ROA) for the FY 75/76 to FY 79/80 which are 1.8%,
1.36%, 0.83%, 1.1%, 1.34% respectively. According to table ROA shows decreasing trend up
to FY 77/78 and from FY 77/78 to FY 79/80, ROA has increasing trend.

to FY 77/78 and from FY 77/78 to FY 79/80, ROA has increasing trend.

The reasons behind the trending toward the negative are given below.

a. Due to decrement in net profit of Everest Bank Limited in each five years.

b. Due to decrement in total assets of the bank in each five years.

c. Due to reduction in profit margin.

 18

d. Due to under-utilization of fixed assets.

The reasons behind the trending toward the negative are given below.

a. Due to increment in net profit of Everest Bank Limited in each five years.

b. Due to increment in total assets of the bank in each five years.

c. Due to increment in profit margin.

d. Due to over-utilization of fixed assets

ROA for the past five fiscal years can be presented through following bar diagram:

ROA
2.00%
1.80%
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
75/76 76/77 77/78 78/79 79/80

Fig 3: ROA for FY 76/77 to FY 79/80

Figure 3 shows the Return of Assets of EBL from the FY 75/76 to 79/80. According to Bar
diagram, ROA shows the decreasing trend from FY 75/76 to FY 78/79 and shows a positive
prospect in FY 79/80.

2.1.4 Return on Equity of EBL

Return on equity (ROE) section measures a company's profitability by revealing how much
profit is generated with shareholders' equity. ROE is calculated by dividing net income by
shareholder equity and expressing it as a percentage. This metric helps investors gauge the
 19

efficiency of the company in using equity to generate profits. A higher ROE indicates strong
financial performance and effective management. This section provides insights into the
company’s return on investments made by shareholders. Analyzing ROE trends aids in
evaluating financial health and guiding investment decisions.

Return on Equity for the past five FY is presented as below:

Table 4 : Return on Equity

Fiscal Profit Equity ROE %Increase/(Decrease)

Year w.r.t. P.Y.

75/76 3,054,122,062 17,625,063,404 17.33% 1.33%

76/77 2,516,243,710 18,637,356,460 13.5% (3.83%)

77/78 1,770,939,497 20,870,674,018 8.49% (5.02%)

78/79 2,483,768,862 22,561,775,271 11.01% 2.52%

79/80 3,362,115,439 25,371,669,260 13.25% 2.24%

Table 4 shows the return on equity for the five years from FY 75/76 to FY 79/80 which is
17.33%, 13.5%, 8.49%, 11.01%, 13.25%. According to table, ROA has decreased from
17.33% to 8.49% in FY 77/78 and increased to 13.25% in FY 79/80.
From the above analysis, it is clear that the value tends from negative to positive. The reasons
behind the trending toward the negative are given below.
a. Due to high debt payment.
b. Due to decrease in net profit.
c. Due to low paid-up capital.
d. Due to higher rate of tax payment.
The reasons behind the trending toward the negative are given below.
a. Due to low debt payment.
b. Due to increase in net profit.
 20

c. Due to high paid-up capital

d. Due to lower rate of tax payment.

ROE for the past five fiscal years can be presented through following bar diagram:

ROE
20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
75/76 76/77 77/78 78/79 79/80

Fig 4: ROE for FY 76/77 to FY 79/80

Figure 4 shows the Return of Equity of EBL from the FY 75/76 to 79/80. According to Bar
diagram, ROE shows the decreasing trend from FY 75/76 to FY 77/78 and shows a positive
prospect in FY 78/79 and FY 79/80.

2.1.5 P.E. Ratio of EBL

Price-to-Earnings (P/E) ratio section evaluates a company's stock valuation relative to its
earnings. The P/E ratio is calculated by dividing the current market price per share by the
earnings per share (EPS). This metric helps investors understand how much they are paying
for each rupee of earnings, indicating market expectations for future growth. A higher P/E
ratio suggests optimism about the company's growth prospects, while a lower P/E may
indicate undervaluation or potential risk. This section aids in comparing valuation levels
across companies and industries. Analyzing P/E trends assists in making informed investment
decisions.
 21

Price Earnings Ratio for the past five FY is presented as below:

Table 5 : PE Ratio

Fiscal MPS EPS P.E. Ratio

Year

75/76 665.88 38.05 17.5

76/77 675.01 29.71 22.72

77/78 737.86 19.71 37.06

78/79 438.95 26.3 16.69

79/80 562.91 31.43 17.91

Table 5 shows P.E Ratio for FY 75/76 to FY 79/80 which is 17.5, 22.72, 37.06, 16.69 and
17.91 respectively.

From the above analysis, it is clear that the value tends from positive to negative. It shows the
trend is in decline. The reasons behind the trending toward the positive are given below.

a. Due to higher price of stocks.

b. Due to lower ROE.

c. Due to increment in interest revenue.

The reasons behind the trending toward the negative are given below

a. Due to lower price of stocks.

b. Due to higher ROE.

c. Due to decrement in interest revenue.

P.E Ratio for the past five fiscal years can be presented through following bar diagram:
 22

P.E Ratio
40.00

35.00

30.00

25.00

20.00

15.00

10.00

5.00

-
75/76 76/77 77/78 78/79 79/80

Fig 5: ROE for FY 76/77 to FY 79/80

Figure 5 shows the P.E. of EBL from the FY 75/76 to 79/80. According to Bar diagram, P.E.
ratio has increased up to FY 77/78 and there after on it decreased up to FY 79/80.

2.2 Major Findings:

After doing this fieldwork, the researcher got the thorough knowledge of the financial
position of the bank through the analysis of profit and loss position analysis. The major
finding of the fieldwork can be listed as follows:
EBL is in profit since its first year of operation

i. The profit trend of EBL has a decreasing trend up to FY 77/78 and after thereon has an
increasing trend up to FY 79/80.
ii. Net Margin ratio of EBL has a decreasing trend up to FY 79/80.
iii. Return on Assets has downward fall from FY 75/76 to FY 78/79 and has shown positive
prospect in FY 79/80.
iv. Return on Equity has decreasing trend from FY 75/76 to FY 77/78 and shows a positive
prospect in FY 78/79 and FY 79/80.
v. P.E. ratio has increased up to FY 77/78 and reached its peak at P.E. 37.06 however
thereafter on it decreased to 16.69 in FY 78/79 & 17.91 FY 79/80.
 23

CHAPTER III
SUMMARY AND CONCLUSION

3.1 Summary:

The project is prepared on this topic “A Study on profitability position on Everest Bank
Limited”. The objective of this report is to find out profitability position on Everest Bank
Limited, to determine trend of profitability, to show the profitability condition of the bank.
The basic objective of the study is to find out the profitability position of Everest Bank
Limited. Thus, this report brings the banks objective and its visions.
After that the study talks about the Literature review done for this report. It includes the
reviewing of previous working related topic. This report includes the four related studied with
their objectives and their findings to support this study.
Next, the study brings the concept of research mythology. The chapter deals about the
methodology that is used for this report. It talks about the research design, source of data
sampling technique, data processing, tools, technique etc. Thus, the study uses the
exploratory research design and based on secondary data.
Lastly, Research revolves around the data presentation analysis and data the profitability
position of the bank. Various ratios (NPM, ROA, ROE, EPS and P/E Ratio) have been
computed to determine the financial condition of the bank relating to profitability
management.

3.2 Conclusion:

The overall results are not satisfactory and are in fluctuating trend. But in some cases, Everest
Bank Limited should take certain steps to improve the bank’s profitability position.
Therefore, some recommendations are put forward for its improvement along with the
development of the company. Based on the analysis, data and findings, the following
conclusions are made:
a. The analysis of data shows the net profit margin (NPM) of Everest Bank Limited is
tending towards positive to negative. So, the bank should reduce the interest expenses,
increase the interest income and reduce labor and operation cost.
 24

b. The Net profit margin (GPM) of the Everest Bank Limited is also tending towards
positive to negative. So, the bank should increase price, limit the discounting, cut
waste, schedule employee need, no overtime period, give bonus when deserved.
c. However, the return on assets (ROA) of the Everest Bank Limited is tending towards
negative to positive. It is a good sign, especially the growing companies. So, the bank
has to keep maintaining ROA factors.
d. Similarly, the return on equity (ROE) of the Everest Bank Limited is tending towards
negative to positive. So, the bank should maintain paid of capital, liabilities, net
income.
e. Again, the earning per share (EPS) of the Everest Bank Limited is tending towards
negative to positive. So, the bank should maintain its earning (net profit).
f. The Price Earnings ratio (P/E ratio) of the Everest Bank Limited is tending towards
positive. So, the bank should maintain the price of stock and earnings.
 25

BIBLIOGRAPHY

Nepal Ministry of Finance. (2022). Economic survey 2021/2022. Kathmandu: Ministry of

Finance.
Nepal Bankers' Association. (2021). Annual review of the banking sector. Kathmandu: Nepal
Bankers' Association.
Pandey, S. (2021, October).” Everest Bank: A decade of growth.” Nepal Economic Review,
25(10), 34-38.
Baidya, S. (2056). “Financial markets and institutions “(1st ed.). Kathmandu, Nepal: Taleju
Prakashan.
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return framework “(1st ed.). Delhi: Oxford University Press.
Nepal Rastra Bank. (2058).” Nepal Rastra Bank regulations”. Baluwatar, Nepal: Nepal
Rastra Bank.
Lama, D. (2018). “Evaluating the financial stability of Everest Bank Limited.” Central Bank
Working Papers (No. 324). Nepal Rastra Bank.
Rose, P. S. (1995). Commercial bank management (International ed.).
Sharpe, W. F., Alexander, G. J., & Bailey, J. V. (2000). Investments (5th ed.). New Delhi:
Prentice Hall of India Pvt Ltd.
Shrestha, S., & Amatya, S. (2002). “Statistics and quantitative techniques for business
studies” (1st ed.). Kathmandu, Nepal: Ratna Pustak Bhandar.
Sharma, R. P. (2018). Financial analysis and performance of banks. Kathmandu: Himalayan
Publishers.
Singh, A., & Bhandari, S. (2020). “Financial performance analysis of Everest Bank Limited:
A comparative study with other commercial banks in Nepal.” Journal of Banking and
Finance, 12(3), 45-67.
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Websites:

http://www.everestbankltd.com
 26

APPENDICES

1. Balance Sheet of last five Fiscal Year (76/77 to 79/80)

Balance Sheet of 2018/19:

 27

Balance Sheet of 2019/20:

 28

Balance Sheet of 2020/21:

 29

Balance Sheet of 2021/22:

 30

Balance Sheet of 2021/22:

 31

Balance Sheet of 2022/23:

 32

Balance Sheet of 2023/24:

 33

2. Profit and Loss Account of Last Five Year

 34

Profit and Loss Account of 2018/19:

 35

Profit and Loss Account of 2019/20:

 36

Profit and Loss Account of 2020/21:

 37

Profit and Loss Account of 2021/22:

 38

Profit and Loss Account of 2022/23: