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Profitability Analysis of Commercial Banks of Nepal (Summer Project)

Executive Summary

Profit is the difference between revenues generated and costs incurred from activity over a period of time. It is also called earnings or income. Profitability is the deviation of the term profit, which explains the ability to make a profit. It is a measure of a firm’s efficiency. Profitability ratios reveal the company’s ability to earn a satisfactory profit and return on investment. Various factors affect the profitability of commercial banks. Some factors might be the amount of working funds, cost of funds, yields on funds, spread, operating costs, risk cost, non-interest income, level of technology, level of non-performing assets, and level of competition. The aim of the study is to provide stakeholders with accurate information regarding profitability position as well as major factors affecting the profitability of commercial banks. The main purpose of the study is to measure and compare the overall profitability and analyze the profit trends of commercial banks in Nepal. This study also identifies the major factors affecting the profitability of commercial banks. Out of 28 commercial banks in Nepal, 2 commercial banks are taken as samples for the study and they are NSBL and HBL. This study collects data from NSBL and HBL from FY 2011/12 to FY 2015/16. This study is descriptive as well as analytical in nature and makes use of secondary data to attain the overall objectives. The secondary data have been collected from NRB official websites, different magazines, newspapers, publications, annual reports of respective banks, etc. Various financial tools like ROE, ROA, net profit margin, interest payout ratio, RECE, EPS, overhead efficiency, and interest spread and statistical tools like mean, standard deviation, coefficient of variation, and trend analysis are used for the analysis of data. The findings reveal that all the sample banks are in a better position in terms of profitability but the profitability position of HBL is higher than that of NSBL.


Report Title: Profitability Analysis of Commercial Banks of Nepal (With reference to Nepal SBI Bank Limited and Himalayan Bank Limited)

Prepared By: Basanta Aryal

Degree: Bachelor

Program: Bachelor of Business Administration (BBA)

Specialization: Banking and Finance

College: Shanker Dev Campus

University: Tribhuvan University

Year: 2017


Profitability Analysis of Commercial Banks of Nepal | Summer Project | Research Report | 2017

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Note: This summer project (research report) was prepared by Mr. Basanta Aryal for the partial fulfillment of the requirement for the degree of Bachelor of Business Administration (BBA). So, it is advised to use this report only for literature review, or as guidance. Copying or practicing plagiarism is strictly forbidden.

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