A Project Report

ON

Performance Analysis of NIC Asia Bank Limited

Submitted To:

Faculty of Management

Tribhuvan University

In Partial fulfillment for the degree

OF

Bachelor of Business Administration

(Session 2077-2081)

Under the Guidance of: Submitted By:

Mr. Ishwori Ghimire Durga Kumari Khatri

Faculty Member BBA 3rd Semester

MMC Roll No. 27567/20

Mahendra Multiple Campus

Bharatpur Ghorahi, 15 Dang, Nepal.
 Declaration

I hereby declare that the project work report entitled “Financial

analysis of NIC Asia Bank Pvt. Ltd” submitted for the BBA is my
original work and the project work has formed the basis for the
award of my degree, diploma or other similar titles. The
information has been collected from genuine and authentic
sources. The work has been submitted in partial fulfillment of the
requirements of Mahendra Multiple Campus, Tribhuvan
University.

Durga Kumari Khatri

Mahendra Multiple Campus

Tribhuvan University

Supervisor
Mr. Ishowari Ghimire

Faculty Member

MMC
 Acknowledgements

A project report entitle “A Project Report on Financial analysis of NIC

Asia Bank Pvt Ltd” has been prepared to fulfill the partial requirements
of the project report of BBA 3 rd semester. Foremost, I would like to
express my deep gratitude to NIC Asia Bank for providing the exciting
opportunity to be one of them and giving me through guidance and
opportunity to move ahead with project work objectives. I am grateful
to all staffs for their valuable cooperation, guidance, direction and
continuous support throughout the project work. I would like to thank
Mr. Ishowari Ghimire sir and the entire faculty members for supervising
me and providing necessary guidelines to complete the report. I would
like to express my heartfelt thanks to all who assisted with their
valuable suggestions and ideas while preparing the report.

Thank you!
 Abstract

As per the curricular of MMC at Tribhuvan University, I was assigned to

under a project work in an organization during the third semester of
the program BBA after a proper study in the required field. To conduct
this study, I choose NIC Asia Bank Limited. During the period of this
study, I tried to discover or research as much as possible about financial
ratios obtained by bank. The purpose of this project work is to relate
the theoretical knowledge acquired in our academic period in a real life
situation and gain the practical knowledge as well as experience. The
project also has an intention to help me understand, analyze and
present the basic ratio analysis. It also helped me to analyze the
industry as a whole.
 Table of Content
1. Introduction
 Background of the study
 Objective of the study
 Rational of study
 Limitation of study
2. Introduction of the banking Industry
 Meaning of the Bank
 Meaning of Commercial bank
 Commercial bank in Nepal
3. Introduction of NIC ASIA Bank
 Introduction
 Product /services
 Objectives
 Board of Directors &Management Team
4. Literature Review
5. Research Methodology
 Introduction
 Research Design
 Population and Sample
 Data collection Procedures
 Methods of Analysis
 Data Analysis Tools
6. Data Presentation
7. Ratios Analysis
1. Introduction
1.1 Background of the study
The history of the financial sector especially Modern Industry can be
traced back to 1694 A.D. in England; but as far as Nepalese Banking
History is concerned, it is only a third quarter of a century old with the
establishment of Nepal Bank Limited in 1937 A.D. which is first bank of
Nepal. Now, if we closely analyze the financial sector, we will find that
the financial sector branches out of two sub sector: the banking sector
and non-banking sector. The banking sector encompasses the Central
Bank and 27 Commercial Banks; whereas the non-banking sector
encompasses of Development Bank, Finance Companies, Co-operation,
Micro-finance, and other financial institution such as Insurance
Companies, Mutual Funds, Provident Funds, Postal Saving Offices and
Nepal Stock Exchange.

BBA is four years (semester wise) of under-graduate level program

offered by Tribhuwan University whose mission is to develop socially
responsive, creative, and result-orientated management professional in
the rapidly growing business sector in Nepal and abroad. MMC provides
both theoretical as well as practical knowledge to its students. Under its
practical knowledge provision we, the students of BBA, are required to
complete this project of any organization of our choice. To fulfill this
purpose, I worked my homework in NIC ASIA Bank.
1.2 Objective of the study
The primary objective of this project report is to gain valuable
information about the bank and business sector, more specially the
banking industry in addition to this another major purpose is also to
relate the theoretical knowledge with the practical experience and to
enable us to be more prolific in acquiring the real life techniques of
achieving result with the knowledge gained from the academic
environment. The other specific objectives of the study are:

 To evaluate the liquidity position to measure the

strength of financial performance of NIC ASIA Bank.
 To evaluate the activity and operation with reference to
mobilization of the collected funds.
 To analyze the relationship between total deposit and
total investment.
 To evaluate the earning and profitability position of NIC
ASIA Bank.
 To study the Banking procedure carried out.
 To examine the different product and service offered by
NIC ASIA Bank.

1.3 Rational of the study

Analysis of financial performance of any company is very important.
Actually, on the basis of the financial analysis we can say that the
concerned company is strong or not. This study is mainly compared the
financial performance of NIC ASIA Bank which compare the position of
NIC ASIA Bank under the study, which encourage to improve the
different position and performance of NIC ASIA Bank. From the data
presentation and analysis researcher finds different strength and
weakness of the selective banks which is recommended to the banks
for their further improvement.

Banking Institutions definitely contribute and play an important role for

domestic resources mobilization, economic development and maintain
economic confidence.

 This study has multidimensional significance in particular

area of NIC ASIA banks which have been undertaken that
justifies for finding out important points and facts to
researcher, shareholders, brokers, traders, financial
institution, and public knowledge.
 This study helps and justifies for finding out the financial
performance of NIC ASIA Bank and Government of Nepal to
make plans and polices.
 This study certainly input the policymakers of NIC ASIA Bank
for making plans and polices of the effective banking
system.

1.4 Limitation of the study

Every works have its own restriction and limitation due to the lack of
time resources and knowledge. The work is completed within the
periphery of its limitation. Despite the enough efforts of researcher,
this project is not free from limitation. This project is presented just for
the partial fulfillment of BBA. There may be many problems while
presenting this project report. Following are the major limitations of
this project report.

 This report is based on secondary data collected from

NIC ASIA Bank. Thus, the result of the analysis
depends on the information provided by the
concerned office.
 This report is limited to analyze the four periods.
 Standard normal performance level is not available
especially in Nepalese context.
 The source of data i.e. published annual report and
internet web site is assumed to be correct.
 Interpretations of data are depended upon common
sense which may not be accurate.

2. Introduction of the banking Industry

2.1 Meaning of banking
A bank is a business organization that receives and holds deposits of
funds from others, makes loans, extents credit and transfer funds by
written under order of depositors. Banking is the business of protecting
money for others. Banks lend this money, generating interest that
creates profits for the bank and its customers. Bank is a financial
institution licensed to accept deposits and make loans.

2.2 Meaning of Commercial Bank

A Commercial Bank is one which exchange money, deposits money,
accept deposits, grants loans and performs commercial banking
functions and which is not meant for co-operative, agriculture,
industries or for such specific purpose. The term commercial bank
refers to a financial institution that accepts deposits, offers checking
account services, makes various loans, and offers basis financial
product like certificate of deposit and saving accounts to individual and
small business. Commercial Banks are those banks, which perform all
kinds of banking function as accepting deposits, advancing credits,
credits creation and agency functions etc. They provide short term
credits, medium term credits and long term credits for trade and
industry. They also operate off-balance sheet functions such as issuing
guarantee bonds, letter of credits. All economic activities of each and
every country are greatly influenced by the commercial banks of that
country. Thus, commercial banks have become the heart of financial
system. Commercial banks are rated as Class ‘A’ bank by NRB.

2.3 Commercial Bank in Nepal

In the context of Nepal the first commercial bank, “Nepal Bank Limited”
was established in 1937 A.D. and second “Rastriya Banijya Bank” was
established in 1996 A.D. Nepal has opened its door to foreign
commercial bank in the kingdom almost a decade back. As the country
followed economic liberalization, there was massive entrance of foreign
banks in Nepal. Consequently, Nepal Arab Bank was established in 1985
A.D. Similarly, the Nepal Indosuez Bank was established as a joint
venture between Nepal and Finance in 1986 A.D. The legitimate entry
of foreign commercial banks with full-fledged banking functions led to
rapid growth of banking system. After 1990 economic linearization
policy obtained by the government, now there are 27 commercial
banks operating banking activities in the country.

2. Introduction of NIC ASIA Bank

3.1 Introduction
NIC ASIA Bank started its operations in 1998 with a view and objective
of extending professionalized and efficient banking services to various
segments of the society. The bank is providing customer-friendly
services through its Branch Network. As a result, NIC ASIA Bank has
more than 5 lakh customer today. All the branches of the bank are
connected through Anywhere Branch Banking System (ABBS), which
enables customers for operational transactions from any branches.

The bank has been one of the leading banks of the country and has
been catering its service to various segment of the society since then.
With clients from all walks of life, the bank has helped develop the
nation corporately, the bank has entered into arrangements with banks
and finance companies in different countries, which enables quick
remittance of funds by the Nepalese citizens in countries like UAE,
Kuwait, Qatar, Saudi, Arabia, Malaysia, Singapore and UK. In NIC ASIA
Bank, customers always seek quality service at their convenience. The
knowledge and research endowed with this project will surely be
constructive towards the pavement of professional life.

Capital Structure

The capital structure of NIC ASIA Bank as on fiscal year (2077/2078)

Authorized Capital 20903619500

Issued Capital 11564005370
Paid up Capital 11564005370
3.2 Product/Services
Product/services offered by NIC ASIA have never backed in providing
the best products and services to meet the requirement of its
customers be that the existing and potential customers. NIC ASIA Bank
is indeed successful to provide these entire products through the
analysis of the customer feedback form. Customer’s satisfaction is the
paramount driver at NIC ASIA. The different product and services
offered by NIC ASIA are as follows:

 Saving Account
 Retail Lending
 Working Capital Finance
 Project Finance
 Trade Finance
 Bank Account
 Deposit Schemes
 Attractive and competitive Interest rates
 Flexible Options
 Premium Business Loan
 Digital Banking
 Cards
3.3 Objective of NIC ASIA Bank
 To develop lifelong relationship with clients and achieve
profitability through customer oriented service and customer
satisfaction.
 To widespread its branch network in different part of the
countries.
 To provide financial help to the general public.
 To encourage industries by providing necessary capitals.
 To provides safe deposit to the customers.
 To provides various kind of credit facilities.

3.4 Board of directors:

1. Mr. Tulsi Ram Agrawal Chairman
2. Mr. Jagadish Prashad Agrawal Director
3. Mr. Ram Chandra Sanghai Director
4. Dr. Aaditya Kumar Agrawal Director
5. Mr. Rajendra Aryal Director
6. Mr. Binod Kumar Pyakurel Director
7. Mr. Ganesh Man Shrestha Director
3.5 Management Team:
1. Mr. Laxman Risal CEO
2. Mr. Bishal Sigdel CEO
3. Mr. Dipak Dhakal Head Internal
Audit
4. Mr. Pramod Raj Sharma Company
Secretary

4. Literature Review
The review of literature is a crucial aspect of planning of the study. This
chapter highlights the concept and review of existing literature that is
valuable and related with this particular topic. Several books,
dissertations, research papers, report, journals are review while
preparing the review.

Review of the literature is focused and directed towards specific

purposes. It is a selective subject. A researcher has to select the kind of
literature to be reviewed and determine the purpose. It starts with the
selections of a problem for research, continues through the various
stages of the research process and end with report writing.

Reviewing different available literature from various source are the

major objective of this chapter. The prime focus for collecting external
literacy information through various textbooks, research journals and
research report. Various articles relating to different aspect of
commercial bank will help to conduct the study smoothly. Review of
literature is divided into two categories:

1. Conceptual Frame Work

2. Theoretical Review

This attempts to review the following relevant literature to make the

project report effective:

Review of supportive texts

 Review of books and related article

 Review of financial report of NIC ASIA Bank
 Review of previous project report
5. Research Methodology
5.1 Introduction
Research methodology is a systematic investigation on a particular
subject matter. It is a study of material and source in order to establish
facts and reach a new conclusion. It is concerned with the various
methods and techniques used in the process of research studies. The
main objective of this report is to analyze the financial performance of
NIC ASIA Bank. The following methodology is applied in this report to
meet the objective which is described as below.

5.2 Research Design

Research design is the framework of the research methods and
techniques chosen by researcher to conduct a study. The research
design refers to the overall strategy that researcher choose to integrate
the different components of the study in a coherent and logical way,
thereby ensuring we will effectively address the research problem; it
constitutes the blueprint for the collection, measurement, and analysis
of data. It determines how we will collect and analysis our data.
Therefore, analytical research design is applied to achieve the desired
objectives.

5.3 Population and Sample

In this study convenience sampling method will be used. At present
there are 27 commercial banks operating in Nepal under the guidance
of Nepal Rastra Bank. These twenty seven commercial banks are
considered as population and only one bank as NIC ASIA Bank Limited
has taken as sample of this study because of limited time and resource.

5.4 Data collection Procedures

This study is mainly based on secondary data. Required
information has been obtained from NIC ASIA website. The
annual report has been also obtained from
www.nicasiabank.com. Some data and information, literature
review is collected from previous report which is provided by
our teachers. Different journals magazines, published and
unpublished reports, Wikipedia etc. are the data collection
procedures.

5.5 Methods of Analysis

Method analysis is the study of how a work is done whereas research
design shows the structure of the job and names the tasks within the
structure, methods. Purpose of this report is arranged and tabulated
different data obtained from various sources. Data analysis methods
are: 1. Quantitative analysis, 2. Qualitative analysis, 3. Text analysis, 4.
Statistical analysis, 5. Content analysis, 6. Discourse analysis. Using
various financial and statistical tools makes analysis of data. Such
financial tools are presented as under.

5.6 Data Analysis Tools

Data analysis tools are defined as a series of charts, maps designed to
collect, interpret, and present data for wide range of application and
industries. This report is based on following tools and techniques.

5.6.1. Earnings per share (EPS)

Earnings per share is the monetary value of earnings per outstanding
share of common stock for a company. It is key measure of corporate
profitability and is commonly used to price stocks. It is calculated as a
company’s profit divided by the outstanding shares of its common
stock.

Formula:

EPS = Net profit/No. of outstanding share

5.6.2. Dividend per share (DPS)

Dividend per share is the total dividends declared in a period dividend
by the number of outstanding ordinary share issued. It is calculated as
the sum of a company’s dividends divided by the outstanding shares.

Formula:

DPS = Dividend/ No. of outstanding share

5.6.3. Price Earnings Ratio (R/E Ratio)

Price-earnings ratio is the ratio of a company’s share price to the
company’s earnings per share. The ratio is used for valuing companies
and to find out whether they are overvalued or undervalued. It is
calculated by dividing the stock’s current price by its latest earnings per
share.

Formula:

R/E Ratio = Market price per share/Earnings per share (MPS/EPS)

5.6.4. Net Income

Net Income refers to the amount of an individual or business makes
after deducing costs, allowances and taxes. It is also called earnings, is
sales minus cost of goods sold, general expenses, taxes, and interest. It
is key matric used to assess the financial health and revenue of
business.

Formula:

Net Income = Total Revenues – Total Expenses

5.6.5. Paid-up Capital

Paid-up capital is the amount of money a company has received from
shareholders in exchange for shares of stock. It is the amount of money
that the company gains by selling its shares and not the money that the
borrowed. It is the company’s stock or equity. It is calculated as
subtract total liabilities from total assets.

5.6.6. Return on Assets (ROA)

The return on assets which is often called the firm’s return on total
assets, measure the overall effectiveness of management in generating
profit with its available assets. The higher the firm’s return on assets
the better it is doing in operation and vice versa. It is calculate as
follow:

ROA = Net Income/Total Assets

5.6.7. Return on Equity (ROE)

The return on equity measures the return on the owner’s investment in
the firm. The owner’s investment refers to the equity capital employed
by the firm. It includes common stock, paid-in capital and retained
earnings. Higher ratio of return on equity is better for owner. It is
calculated as follows:

ROE = Net Income/ Total equity

6. Data Presentation

Particular 078-079Q4 078-079Q3 078-079Q2 078-079Q1 077-078Q4

in(000)

Paid up 11564005370 11564005370 11564006370 11564006370 11564006370

capital

Book value 217.52 210.11 199.89 189.90 178.93

Net income 4525422.36 3604598.21 2402066.31 1180691.66 3251084.14

EPS 39.13 41.56 41.54 40.84 28.11

ROE 17.99% 19.78% 20.78% 21.51% 15.71%

Data source: Unaudited Quarterly Financial

Report Published by the company

7. Ratios Analysis
This chapter deals with presentation and analysis of data collection
from ‘Financial Report Published by the company’. In this chapter, data
and information are presented and analyzed using different financial
tools in order to achieve the objectives of the study.

Ratio analysis is a quantitative method of gaining insight into a

company’s liquidity, operational efficiency, and profitability by studying
its financial statements such as the balance sheet and income
statement.

In order to meet the paid up capital requirement of NRB, there is not

necessary to increase paid-up capital. So, NIC Asia has gradually
constant its paid-up capital as 11564005370, in the fiscal year 2078-
2079.

However, with the constant capital, the bank has been able to grow its
profit. The profit has risen from Rs.3251084140 to Rs.4252422360.

The ROE stand at 17.99 percent at the end of 2078/2079. They have
increased from a low of 15.71 percent at 2077/2078.

Earning per share of the NIC Asia bank has increased from Rs.28.11 to
Rs.39.13. The investors will pay more for a company’s share if earning
per share is increased.

Book value of the bank has increased from Rs.178.93 to Rs.217.52. The
share should be perceived as more valuable, and the share price should
increase.

References
http://http://www.nicasiabank.com/

https://en.wikipedia.org/wiki/NIC_ASIA_BANK

https://nepsealpha.com/stocks/NICA/info