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FINANCIAL ANANLYSIS OF SIDDHARTHA BANK

LIMITED

A Project Work Report Proposal

By

Swastika Chaudhary
TU Registered Number:
Viswa Deep Multiple Campus

Submitted to

The Faculty of Management

Tribhuvan University
Kathmandu

In Partial Fulfillment of the Requirements for The Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Tripureshwor, Kathmandu, Nepal

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Table of Contents

Title Page …………………………………………………………………………………. … i

Declaration ……………………………………………………………………………………. ii
Supervisor’s Recommendation ………….…………………………………………………. iii
Endorsement …………………………………………………………………………………. iv
Acknowledgements …………………………………………………………………………. v
Table of Contents…………………………………………………………………………….vi
List of Tables ………………………………………………………………………………...viii
List of Figures………………………………………………………………………………. ix
Abbreviations ………………………………………………………………………………… x

Appendix E: Table of Contents

INTRODUCTION ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...1
Background ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...1
Profile of SBL. ... ... ... ... ... ... ... ... ... ... ... .....3
Objectives ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .5
Rationale ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...6
Review ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 7
Methods ... ... ... ... ... ... ... ... ... ... ... ... ... ... . .... .. 8
Limitations ... ... ... ... ... ... ... ... ... ... ... ... ...10

CHAPTER II: RESULTS AND ANALYSIS ... ... ... ... ... ..... ... ... 11
Data Presentation ... ... ... ... ... ... ... ... ... ... ... .. ... ...12
Analysis of Results .. ... ... ... ... ... ... ... ... ... ... ... .. ... ... ... ... ..20
Findings ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .. 25
CHPTER III: SUMMARY AND CONCLUSION ... ... ... ... ... .... ... 27
Summary ... ... ... ... ... ... .... ... ... ... ... ... ... ... ... ... .. ... 27
Conclusion... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .28
BIBLIOGRAPHY ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...... 29
APPENDICES ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 30
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Background:
Today’s world is the world of the global economy. Economy is the backbone of the any
financial institutions. Banks are the major institutions of that affect the economy of the
country. Being a finance student, we should be aware of the current scenario of the bank
and its performance as a part of it. And I would like to prepare the report on the financial
analysis of the Siddhartha bank.
A bank is an institution which deals in the money collecting all the deposits from the
customer honoring customer’s drawings against such deposits on demand. In present days
various types of the banks are established for instance industrial banks, commercial
banks, agricultural banks, development banks, joint-stock banks, co-operative banks.
Modern banks are most advanced in compared to ancient banks
Nepal is the developing country and the economy of the country relies on the foreign aid.
Despite of the richness in the cultural resources, natural resources, water resources it has
the lower per capita income low GDP and low economic conditions. Banks are the major
economic factors to contribute in the economy of the country.
There are There are 27 commercial banks, 20 development banks, 22 finance companies,
85 microfinance institutions and 1 infrastructure development bank operating
in Nepal (NRB).  Several development banks and finance companies have entered into
the merger/acquisition agreement with commercial banks. Commercial banks are
established to promote the trade and industry of the country. They accept the deposits
under the various accounts and grants loan for the various productive purposes. Bank
plays a very important role in Investment by collecting saving from individual and
providing loans to individuals and industries for economic activities. Bank itself invests
in different securities of the company and industries. It helps to mobilize the idle saving
in financial activities. Banking has played a very important part in the economic
development of all the nations of the world therefore it is termed as the life blood of
modern commerce.
Financial analysis is the process of evaluating businesses, projects, budgets, and other
finance-related transactions to determine their performance and suitability

Profile of the organization:

Siddhartha Bank Limited is one of the largest private commercial bank in Nepal. The
bank is an ‘A’ class commercial bank licensed by Nepal Rastra Bank and has 189
branches all across the nation with its head office in Kathmandu which provides entire
commercial banking services and remittance services Siddhartha Bank Limited is one of
the largest private commercial bank in Nepal. The bank is an ‘A’ class commercial bank
licensed by Nepal Rastra Bank and has 189 branches all across the nation with its head
office in Kathmandu which provides entire commercial banking services and remittance
services.
The main objectives of the Siddhartha Bank desire to be one of the leading banks of the
industry by fulfilling the interest of the stakeholders. The Bank also aims to provide total
customer satisfaction by way of offering innovative products and developing and
retaining highly motivated and committed human resource.
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Vision: Siddhartha Bnak runs with a vision to be financially sound, operatonally efficient
and keep abreast with technological developments.
Mission:
Siddhartha bank desires to be one of the leading banks of the industry by fulfilling the
interest of the stakeholders. The bank also aims to provide total customer satisfaction by
way of offering innovative products and developing and retaining highly motivated and
committed human resource.
Rationale:
 To
assess financial statements which contain information on past performances and
interpret it as a basis for forecasting future rates of return and for assessing risk. For
determining credit risk, deciding the terms and conditions of a loan if sanctioned,
interest rate, and maturity date etc. Commercial banks have the huge responsibility
towards economic development of country which main goal to maximize the surplus
by effective and efficient mobilization funds and resources. Commercial institutions
have obligations to provide social services oriented contribution for the social
economic uplift to the country by providing considerable loan and advanced towards
less privileged sectors.
REVIEW:

Review of literature means reviewing research studies or other relevant proposition in

the related financial analysis of the of the commercial banks. This area of the study
shows that all the past and previous studies. This area of the study helps to conclude
the past and previous analysis of the financial statement and conclude the effective
way for the further development of the organization. For the review study the
researcher’s uses different books and journals, reviews and abstracts etc.
METHOD:
This study focused on a comparative study of financial performance Siddhartha
Bank Limited by using financial and statistical tools like ratio analysis, line graph,
trend analysis, correlation coefficient analysis, and growth ratio etc. Analysis is
focused on facts – findings, pinpointing problems and recommending correctives
measures. When looking at specific company, the financial analysis will often
focused on, income statement, balance sheet and cash flow statement. Financial ratio
helps the researcher to make a qualitative analysis about bank.It includes the
methodology used for the study, it consists of research design, population and
sample size, sources of data, data collection, data collection procedure, tools and
techniques used to analysis.

Review of literature
Literature review refers the review of different source of literature such as book, journal,
research paper and other studies related to the dividend policy. It has been expected that
the review will help to identify research gap.

Sources of the data:

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Various data and information will be collected from the secondary sources wile
conducting the research .the data will be collected from the NRB directives, annual reports
and publication of the selected banks hereby other required information will be collected
from the websites etc.

Research Design
A research design is the arrangement of conditions for collection and analysis of data that
aims to combine relevance to the research purpose. Research design is the plan, structure
and strategy of investigations conceived so as to obtain answers to research questions and
to control variances. [ CITATION FNK96 \l 1033 ]

Tools and techniques of analysis data of research

The collected and observed data is tabulated after adjusting necessarily amounts of each
overhead. However, the analysis of data as follows:

Financial Ratio

Capital adequacy ratio (CAR). It takes into account the most important financial risks-
foreign exchange, credit and interest rate risks, by assigning risks weightings to the
institutions assets. Risk Weighted Assets (RWA), Tier 1 Capital, Tier 2 Capital, will be
used to calculate the total capital adequacy ratios.
Tier 1+Tier 2Capitals
Capital Adequacy Ratio =
RWA
where,
Tier 1 = Core Capital
Tier 2 = Supplementary Capital
RWA = Risk Weighted Assets (Exposures)

Debt equity ratio (DE). Definition and Formula

And so on….

Statistical tools
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Arithmetic mean (A.M.). The sum of a collection of numbers divided by the number of

the collection is arithmetic mean. It is known as mean or average. It is denoted by X .

( X )=
∑X
n
Arithmetic Mean

where,
X̄ = Arithmetic mean
∑x = Sum of all the values of the variable X
n = Number of observations

Standard deviation (S.D.). Standard deviation is a measure that is used to quantify the
amount of variation or dispersion of a set of data values. It is denoted by the Greek letter
sigma σ or SD.

1
Standard deviation
(σ )=
√ n
∑ ( X −X )2

Coefficient of variation (C.V.). Coefficient of variation is the relative measure of

dispersion which is defined as the ratio of standard deviation to the mean expressed in

percentage. It is denoted by C.V.

σ
CV = ×100 %
X

o Financial tools
o ii. Statistical  tools
o Financial tools:
There are different types of financial tools that can be applied to the analysis the financial
performance Siddhartha Bank Limited for our fieldwork following portfolios analysis
tools are used;
a.  Exchange gain to total income ratio
b.  Return on assets
c.  Overhead expenses ratio
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d. Return on equity
e. Staff expenses, total income ratio
f.  Earning per share
   
 Statistical   tools:
For our fieldwork study selected Statistical tools are taken to examine the economics data
of Century Commercial Bank and Nepal SBI Bank.
a.       Mean
b.      Standard Deviation
c.       Coefficient of Variation

Limitation:
Limited however, there are 28 commercial banks are operating in
Nepal. The research is only focused on study of financial performance.
Nonetheless this research work covers only one commercial banks
namely Siddhartha bank. Reliability of this study will depend upon the
data and information of bank and conclusion drawn from this will not
be applicable to similar other financial institutions. Besides this
following are some limitations of the study are:
  This study examines only financial performance of Siddhartha Bank Limited.
  This study is based on secondary data and such as published financial statement of
commercial bank along with other related journal, newspapers, magazines, and bulletins
etc. which are also insufficient for completion of the study.
  The study period will cover only five year fiscal years ...............
This study is conducted in partial fulfillment of the requirement for the B.B.S. 4 th year. So
it possesses some also limitation of its own.

One of the limitations of the study is with regard to term coverage of the study to arrive
any meaningful conclusions regarding the trend in the pattern and structure of financial a
time service of fairly a long period is needed. But this study has considered financial
year.
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