FINANCIAL ANALYSIS OF KUMARI BANK LIMITED

A Field Work Report

Submitted By:

Prajwola Gajurel

T.U Registration No:

Exam Roll No:

Hetauda School of Management

Submitted To:

The Faculty of Management

Tribhuvan University

Kathmandu

In Partial Fulfillment of Requirement of the degree of

BACHELOR OF BUSINESS STUDIES (B.B.S)

Hetauda, Makwanpur

February, 2022
 DECLARATION

I hereby declare that the project work entitled “FINANCIAL ANALYSIS OF

KUMARI BANK” submitted to the faculty of management, Tribhuvan University is
an original piece of work under the supervision of Mr. Tika Prasad Sapkota, faculty
member, Hetauda School of Management, Hetauda and is submitted in partial
fulfillment of the requirements for the reward of the Bachelor’s Degree of Business
Studies (BBS). This project work report has not been submitted to any other
university of institution for the reward of any degree of diploma.

……………………

Prajwola Gajurel

Date: February, 2022

ii
 (Affiliated to TU) 🕾057-524711, 524701

Hetauda School of Management

Estd – 1995
Hetauda, Makwanpur

SUPERVISOR’S RECOMMENDATION

The project work report entitled “FINANCIAL ANALYSIS OF KUMARI BANK”

submitted by Prajwola Gajurel of Hetauda School of Management, Hetauda, is
prepared under by supervision as per the procedure and format requirements laid by
the faculty of management, Tribhuvan University, as partial fulfillment of the
requirements for the award of the degree of Bachelors of Business Studies (BBS). I,
therefore, recommend the project work for evaluation.

……………………

Tika Prasad Sapkota

Hetauda School of Management 
Date: February, 2022

iii
 🕾057-524711, 524701

(Affiliated to TU)

Hetauda School of Management

Campus
Estd – 1995
Hetauda, Makwanpur

ENDORSEMENT

We hereby endorse the project work report entitled “FINANCIAL ANALYSIS OF

KUMARI BANK” submitted by Ms. Prajwola Gajurel of Hetauda School of
Management, Hetauda in partial fulfillment of the requirements for award of the
Bachelor of Business Studies (BBS) for external evaluation.

………………………                                             .….……………………..

Ram Pandit Khanal                                                  Puran Bahadur Joshi 

Head                                                                        Principal

Management Research Committee                         Hetauda School of Management

Hetauda School of Management                            Date: February, 2022          

Date: February, 2022                                                    

iv
 ACKNOWLEDGEMENT

This report has been prepared as the partial fulfillment for the requirement of
Bachelor of Business Studies (BBS) 4 year program. This report “FINANCIAL
th

ANALYSIS OF KUMARI BANK” under “Financial Performance” is sectorial area

management. I am benefited by this field work report assignment as a practical
knowledge in the area of commerce. The satisfaction and euphoria that accompanies
the successful completion of any task would be incomplete without mentioning the
names of the people who made it possible, whose constant guidance and
encouragement crown all the efforts with success. I owe a debt of gratitude to all of
them, who were so generous with their time and expertise.

I am highly intended and extremely thankful to my respected teacher Mr. Tika

Prasad Sapkota, whose internal and external guidance was a constant source of
guidance. I thank everybody who helped directly or indirectly in completing the
project that will go a long way in my career; the project is really knowledgeable and
memorable one,

Beyond all I would like to extend my gratitude to my family and friends who have
been a regular source of inspiration. 

Prajwola Gajurel

BBS 4 year
th

Hetauda School of Management

February, 2022

v
 TABLE OF CONTENTS

Title page … … … … … … … … … … … … … … … … … … … … ……...I

Declaration… … … … … … … … … … … … … … … … … … … ……... II

Supervisor's Recommendation … … … … … … … … … … … … … …...III

Endorsement… … … … … … … … … … … … … … … … … … ………..IV

Acknowledgement … … … … … … … … … … … … … … … … … …….V

Table of contents … … … … … … … … … … … … … … … …. VI

List of Table ……………………… … … … … … … … … … … … … VIII

List of Figure … … … … … … … … … … … … … … … … … … ……IX

Abbreviations … … … … … … … … … … … … … … … … …… …... X

CHAPTER I – INTRODUCTION

1.1 Background of the Study 1

1.2 Statement of the Problem 3

1.3 Objective of the Study 3

1.4 Rational of the Study 3

1.5 Review of Literature 3

1.6 Research Methodology 5

1.7 Limitation of the Study 8

1.8 Report Structure 8

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CHAPTER 2 – RESULT AND ANALYSIS

2.1 Data Presentation 10

2.2 Analysis of Results 10

2.3 Major Findings 17

CHAPTER 3- SUMMARY AND CONCLUSION

3.1 Summary 19

3.2 Conclusions 20

BIBLIOGRAPHY 21

APPENDIX 22

vii
 LIST OF TABLES

Table Title of table Page

2.1 Current ratio of KBL 11

2.2 Quick ratio of KBL 12

2.3 Return on Shareholder’s Fund 13

2.4 Return on capital employed 15

2.5 Return on Assets 16

viii
 LIST OF FIGURE

Fig Title of figure Page

2.1 Current ratio of KBL 11

2.2 Quick ratio of KBL 12

2.3 Return on Shareholder’s Fund 14

2.4 Return on capital employed 15

2.5 Return on Assets 17

ix
 ABBREVIATION

BBS: Bachelor in Business Studies

NBL: Nepal Bank Limited

FY: Fiscal Year

Ltd: Limited

Fig: Figure

KBL: Kumari Bank Limited

CR: Current Ratio

QR: Quick Ratio

ROE: Return on Equity

ROCE: Return on capital employed

ROA: Return on assets

% Percentage

BS: Bikram Sambat

ATM: Automatic Teller Machine

NRB: Nepal Rastra Bank

x
 CHAPTER – 1

INTRODUCTION

1.1 Background of the study:

A bank is a financial institution licensed to receive deposit and make loans. Banks
may also give financial services such as wealth management, currency exchange and
safe deposit boxes. There are two types of banks: commercial / retail banks and
investment banks. In most countries, banks are regulated by the national government
or central bank.
Financial analysis is the process of evaluating businesses, projects, budgets and other
finance-related entities to determine their performance and suitability. Typically,
financial analysis is used to analyze whether an entity is stable, solvent, liquid or
profitable enough to warrant a monetary investment. When looking at a specific
company, a financial analyst conducts analysis by focusing on the income statement,
balance sheet and cash flow statement. Financial analysis also helps to evaluate and
decision making for business operation. In financial analysis process ratio analysis
process is the most dominant and logical structure to help business related
stakeholder. Under the financial ratio analysis process there are few categories to
identical area of financial institution. So business stakeholders try to concentrate to
get overall business overview from profitability, liquidity, assets management and
solvency ratio analysis. These ratios not only help in decision making process also
emphasized on risk avoiding and profit raising related factors. To calculate this ratio
need to take quantitative data from bank trading activity and other sources.

1.1.1 Profile, events and activities of the organization:

Kumari Bank Limited (KBL):
Kumari Bank Limited, came into existence as the fifteenth commercial bank of
Nepal by starting its banking operations from Chaitra 21, 2057 BS ( April 03, 2001)
with an objective of providing competitive and modern banking service in the
Nepalese financial market. The bank has paid up capital of 13.87 billion.
Kumari Bank Limited has been providing wide range of modern banking services
through 246 points of representations located in various urban, semi-urban and rural

1
parts of a country, with 196 branches, 14 extension counters and 38 branchless
banking units. It also provides E-banking and SMS banking services in Nepal. The
bank always focus on building sound technology driven internal system to cater the
changing needs of the customers that enhance high comfort and value. The adoption
of modern Globus Software developed by Temenos NV, Switzerland and arrangement
of centralized data base system enables customer to make highly secured transactions
in any branch regardless of having account with particular branch. Similarly, the bank
has been providing 365 days banking facilities, extended banking hours till 7 PM in
the evening.
Visa Electron Debit Card, which is accessible in entire VISA linked ATMs and POS
(Point of Sale) terminals both in Nepal and India, has also added convenience to the
customers. The bank has been able to get recognition as an innovative and fast-
growing institution striving to enhance customer value and satisfaction by backing
transparent business practice professional management and corporate governance.
The key focus of the bank is always center on serving unfulfilled needs of all classes
customers located in various parts of the country by offering modern and competitive
banking products and services in their door step. The bank always prioritizes the
priorities of the valued customers.

Vision:
 To establish ourselves as a leader in banking by providing a range of financial
services suitable to the needs of the market with high priority on customer care
while simultaneously embracing the interests of all stakeholders and value of a
good corporate citizen.

Mission:
 Leveraging and integrating the existing strengths of the institutions.
 Reaching out and serving wide range of customers within and outside the country.
 Developing a culture of “Giving Extra Care to the Customers”.
 Being innovative in designing and delivering services.
 Adopting prudent investment practices for building up a sound assets base.

2
1.2 Statement of the problem:
The study shows the following statement of problem:
 What are the assets and liabilities position of Kumari Bank Limited?
 What is the profitability position of Kumari Bank Limited?

1.3 Objective of the study:

This study serves a number of objectives which are as follows:
 To determine the assets and liabilities position of Kumari Bank Limited.
 To analyze the profitability of the bank.

1.4 Rational of the Study:

In this changing pace of the time, most of the commercial banks are gaining a wide
popularity through their efficient management and professional services and playing a
great role in the economy. The main purpose of the commercial banks is to have
efficient financial management so that stakeholders get satisfactory. This study adds
new idea and findings about the concerned bank.
This study is helpful for all the concerned parties which add new ideas and findings
about Kumari Bank Limited. This studies that will have importance to various
groups but in particular is directed to a certain groups of people/organizations are:-

1. To the investors
2. To the creditors
3. To management of the bank
4. To the customers
5. To the other parties
6. And this study will be equally useful to the other readers, students of related
subjects and other people who are concern with banking field.

1.5 Review of Literature:

Literature review is a comprehensive study of such document and preparation of a
summary of the study of books, articles and resource reports available in the market
on a topic. They are the secondary source and do not report new or original
experimental work. Most often associated with academic oriented literature, such

3
reviews are found in academic journals and are not to be confused with reviews that
may also appear in the same publication. Literature review is the basis of research in
nearly every academic field. Some of the study is also done through by reviewing the
previous year thesis, through articles of the concerned bank found in the internet etc.
A narrow scope literature review may be included as part of a peer- reviewed
journals, article presenting new research, serving to situate the current study within
the body of the relevant literature and to provide context for the reader.

1.5.1 Review of Previous Works

Ranabhat, R. (2021), “Financial Analysis of Muktinath Bikas Bank Limited”.
The objectives of the report are as follows:
 To explore the profitability position.
 To ascertain the liquidity position.
The conclusion of this report are as follows:
 The profitability position of the bank seems to be sufficient throughout the
year but it is decreasing. The bank must utilize its deposits and manpower
effectively.
 The liquidity position of the bank is good since the quality of the current assets
is very good.

Das, A. (2020), “Comparative Financial Analysis of Nepal Bank Limited and Nabil
Bank Limited”.
The objectives of the study are as follows:
 To analyze the liquidity position of selected commercial bank.
 To analyze the guidelines and provisions related to loan classification and loan
loss provision.
The conclusion of the study are as follows:
 The liquidity position of Nepal Bank Limited is higher than Nabil Bank
Limited.
 The average mean, Standard Deviation and Coefficient of Variation of Nabil
Bank Limited is higher than Nepal Bank Limited which represents the higher
return as well as it is highly risky than Nepal Bank Limited.

4
Manandhar, N. (2019), “Financial Performance Analysis of Standard Chartered
Bank Nepal Limited”.
The objectives of the study are as follows:
 To analyze the financial performance.
 To evaluate the financial position in terms of ROA and ROE.
The conclusion of the study are as follows:
 The cash and bank balance is not properly utilized. So, it hurts the financial
performance of the bank.
 The ROA and ROE of the bank is not satisfactory because it is in decreasing
trend.

1.5.2 Research gap

Research gap refers to difference in result between previous and present study in
similar field. So, to find the gap we need to study and analyze the study conducted on
same topic in different time period. There have been numerous studies conducted on
the field of financial analysis but this report will help to find out reliable and current
results.

Previous study on analysis of financial statement of commercial bank provide

concentrated or limited information as previously most banks don’t properly disclose
their every financial transaction but this report will provide more information about
financial analysis of Kumari Bank Limited. It is necessary to find out fresh pattern of
financial analysis of Kumari Bank Limited.

1.6 Research Methodology

Research methodology is the specific procedures or techniques used to identify,
select, process, and analyze information about a topic. It is a systematic way of
solving the research problem. It may be understood as a science of studying how
research is done scientifically. In it, the various sequential steps that are generally
adopted by the researcher in studying his research problem with certain objectives in
view are studied. A research methodology helps us to find out accuracy, validity and
suitability. The nature of the data used in this study is mainly based on secondary.

5
1.6.1 Types of Research
Research method section describes the rational for the application of specific
procedures or techniques used to identify, select and analyze information applied to
understanding the research problem. It allows the reader to critically evaluate a
study’s overall validity and reliability. Financial ratios are important tools of financial
analysis. It’s based on Quantitative data and tools.
There are two types of research methods:

Quantitative research
Quantitative research is inquiry into an identified problem, based on testing a theory,
based on testing a theory, measured with numbers, and analyzed using statistical
techniques. The goal of quantitative methods is to determine whether the predictive
generalizations of a theory hold true. We will explore some of the issues and
challenges associated with quantitative research in this section. Seek the advice of
faculty members who have conducted quantitative studies for advice, support and
encouragement.

Qualitative research
A study based upon a qualitative process of inquiry has the goal of understanding a
social or human problem from multiple perspectives. Qualitative research is
conducted in a natural setting and involves a process of building a complex and
holistic picture of the phenomenon of interest. We will explore some of the issues and
challenges associated with qualitative research in this section. Look for colleagues
who engage in qualitative research to serve as a sounding board for procedures and
processes you may use as a new faculty member.
This research is based on Quantitative research methods.

1.6.2 Population and Sampling

A population is a complete enumeration of each and every unit of the universe as a
whole. It is related to the total study of material in detail. There are 28 A class
licensed banks in Nepal but this study considers only Kumari Bank Limited as a
sample. Sample is a small separated part showing the quality of the whole. In sample,
only a part of the universe is considered and conclusions about the entire universe are

6
drawn on that basis. Here for the proposed study, I have taken Kumari Bank Limited
as a sample.

1.6.3 Types of Data

Data are the foundation of the research. Basically, there are two types of data. They
are as follow:
Primary Data: Primary data is the type of data which is collected by researcher
himself during their own research using research tools such as experiments, survey,
questionnaire and observation.
Secondary Data: Secondary data is the type of data which is collected by someone
other than the user. Common sources of secondary data are published records of
organizations, information collected by government, organizational records.
The data used in this report are of secondary data. This research has been conducted
in secondary data basis, so the last five years is collected from:
 Website of Kumari Bank Limited
 Annual report of Kumari Bank Limited

1.6.4 Data Analysis Tools

The collected data will be analyzed with the help of different financial tools.

Financial Tools
Financial tools are those which are used for the analysis and interpretation of financial
data. Here in this study, the financial tools included are:

Profitability ratios:
Net Profit after tax
 Return on Shareholders fund (ROE) =
Total Equity
Net Profit after tax
 Return on capital employed (ROCE) =
Total Capital Empolyed
Net Profit after tax
 Return on assets (ROA) =
Total Assets

7
Analysis of assets and liabilities:

Current Assets
 Current ratio (CR) =
Current Liabilites
Quick Assets
 Quick ratio (QR) =
Current Liabilites

1.7 Limitations of the Study

Almost data are taken from the audited balance sheet from the head office of Kumari
Bank Limited, in order to draw a clear, true and suggestive financial analysis.
However, limitations of the study are as follows:
 This study is based on secondary data.
 This data covers only five years period from FY 2073/74 to 2077/78.
 The data used on the calculations will be rounded up.
 The data will be analyzed by comparing with the five years average data because
of the unavailability of the standard company average.
 This study will be carried out based on the published financial statements namely
balance sheets, profit and loss accounts, related schedules and published annual
report. These published documents have their own limitations.

1.8 Report Structure

This study will be divided into three chapters as follows:

Chapter One deals with the subject matter of the study. The whole research will be
based on the introduction chapter. The outline of the research is presented in the
chapter. It includes review of literature, objectives of the study, the research
methodology used to evaluate the financial analysis of Kumari Bank. It also consists
of research design, sources of data, population and sample. 

8
Chapter Two is the main part of the study which fulfills the objective of the study by
presenting data and analyzing them with the help of various financial tools as per the
methodology. In this chapter, result and analysis of the study is conducted. 

Chapter Three includes the major summary and conclusion of the study. This
chapter deals with the summary and conclusion of the study and gives
recommendation for improvement in the financial analysis of Kumari Bank Limited.

9
 CHAPTER II
RESULT AND ANALYSIS

2.1 Data Presentation

Data presentation refers to the presentation of all quantitative data that has been
gathered from the primary and secondary sources into meaningful and understandable
format. In the other words, data presentation refers to the organization of data into
table, graphs or charts so that logical and statistical conclusion can be derived from
the collected measurement.

Data analysis is defined as a process of cleaning, transforming, and modeling data to

discover useful information for business decision-making. It is the process where the
statement or the report gets resolve by breaking them into simple statement.
Analyzing the financial position of any firm or organization is quite difficult without
the financial data of the firm. Every bank has a financial record of every financial
transaction because keeping a financial record helps to know the current financial
position of the bank. The main purpose of analyzing the financial performance and
interpretation is to highlight the strength and weakness of the business enterprises. 
In this research secondary data are used for the data collection. The following
methods are used to evaluate the financial performance of Kumari Bank Limited.

2.2 Analysis of Results

a. Current Ratio
Current ratio is simply the ratio of current assets and current liabilities. It is also
known as “Working capital ratio”. Current ratio is the measure of the firm’s short
term solvency. The ratio of the firm depends upon the kinds of the business it does.
It can be computed by using the following formulas:
Current Assets
Current Ratio(CR)=
Current Liabilites

10
 Table no. 2.1
Current Ratio of KBL (Amount in million)
Year Current assets Current liabilities Current Ratio
2073/74 60623.0842 52044.5940 1.1648
2074/75 41569.2280 82694.8280 0.5027
2075/76 103880.75 92518.0980 1.1228
2076/77 145543.8886 131618.2354 1.1058
2077/78 186884.0685 165662.3614 1.1281
Source: Annual report of KBL

Figure 2.1
Current ratio of KBL

Current Ratio
1.4
1.1648 1.1057999999999
1.2 1.1228 9 1.1281

1
Current Ratio

0.8
Current Ratio
0.6 0.5027

0.4

0.2

0
2073/74 2074/75 2075/76 2076/77 2077/78
Fiscal year

In the above table and figure, the current ratio of KBL in fiscal year 2073/74,
2074/75, 2075/76, 2076/77 and 2077/78 is 1.1648 times, 0.5027 times , 1.1228 times,
1.1058 times and 1.1281 times respectively. The current ratio in the FY 2074/75 is

11
declined by 0.5027 times as compared to 2073/74. Thereafter in 2075/76 the Current
ratio is increased to 1.1228 times and declined again to 1.1058 times and again
increased to 1.1281 times in 2077/78. It shows that the bank has maintain its CR in
current fiscal year.
b. Quick Ratio
Quick Ratio is obtained by subtracting inventories from current assets and then
dividing by current liabilities. Quick ratio is viewed as a sign of company’s financial
strength or weakness. Quick ratio establishes the relationship between quick assets
and current liabilities. It is computed as under:
Quick Assets
Quick Ratio=
Current Liabilites

Table no. 2.2

Quick ratio of KBL (Amount in million)
Fiscal year Quick assets Current liabilities Quick Ratio
2073/74 45185.7142 52044.5940 0.8682
2074/75 12349.5154 82694.8280 0.1493
2075/76 41505.2460 92518.0980 0.4486
2076/77 69490.5886 131618.2354 0.5280
2077/78 43862.4675 165662.3614 0.2648
Source: Annual report of KBL

Figure no. 2.2

Showing Quick ratio of KBL

12
 Quick Ratio
10.8682000000000
01
0.9
0.8
0.7
0.6 0.528
Quick Ratio

0.5 0.4486 Quick Ratio

0.4
0.2648
0.3
0.2 0.1493
0.1
0
2073/74 2074/75 2075/76 2076/77 2077/78
fiscal year

In the above table and figure, the Quick ratio of KBL in the fiscal year 2073/74,
2074/75, 2075/76, 2076/77 and 2077/78 is 0.8682, 0.1493, 0.4486, 0.5280 and 0.2648
respectively. The quick ratio in the FY 2074/75 is declined by 0.1493 from 0.8682 as
compared to 2073/74. Thereafter it is increased to 0.4486, 0.5280 in the FY 2075/76
and 2076/77. However in the FY 2077/78 it is declined to 0.2648.

Profitability Ratio:
Profitability ratio measures the efficiency and searches the degree of success in
achieving desired profit. Through this ratio the investor decides whether to invest in a
particular business or not.

a) Return on Shareholders' Fund

Return on Shareholders' Fund measure the rate of return earned on shareholders'
investment. Shareholders’ investment is the equity capital employed by firm. It
includes paid up capital as well as retained earnings. ROE is calculated by dividing
net income by total shareholder equity.
' Net Profit after tax
Return on Shareholder s Fund( ROE)=
Total Equity

Table no. 2.3

13
 Return on Shareholder’s fund (Amounts in Million)
Fiscal year Net profit after Shareholder’s ROE
tax fund
2073/74 793.1430 8263.369 9.60%
2074/75 707.41 5818.46 12.16%

2075/76 1230.3783 11719.0 10.49%

2076/77 1158.5060 17268.17 6.70%
2077/78 1970.7302 18892.22 10.43%

Source: Annual report of KBL

Figure 2.3
Showing Return on Shareholders' Fund

ROE
14.00%
12.16%
12.00%
10.49% 10.43%
9.60%
10.00%
Return on Equity

8.00% 6.70%
ROE
6.00%

4.00%

2.00%

0.00%
2073/74 2074/75 2075/76 2076/77 2077/78
fiscal year

In the above table and figure, net profit after tax for the fiscal year 2073/74, 2074/75,
2075/76, 2076/77and 2077/78 are Rs.793.1430, 707.41, 1230.3783, 1158.5060 and
1970.7302 million respectively. Return on shareholders' fund for those fiscal year are
9.60%, 12.16%, 10.49%, 6.70% and 10.43% respectively. Return on shareholders'
fund is increased to 12.16% from 9.60% in 2074/75 as compared to 2073/74 but it has
decreased to 10.49%, 6.70% in 2075/76 and 2076/77 and increased to 10.43% in
14
2077/78 as compared to 2076/77. According to the current year bank has maintain its
ROE as it is increased in the current year.

b. Return on Capital Employed

Return on capital employed measure the rate of return earned on capital employed.
Capital employed is the sum of investment is the equity and long – debt by firm. It
includes paid up capital as well as retained earnings. It is calculated as following;
Net Profit after tax
Return on Capital Employed (ROCE)¿=
Total Capital Empolyed

Table 2.4
Return on capital employed (Amount in Million)
Fiscal year Net profit after Capital employed ROCE
tax
2073/74 793.1430 9371.5660 8.4633%
2074/75 707.41 5818.46 12.15%

2075/76 1230.3783 12793.31 9.6174%

2076/77 1158.5060 21723.3646 5.3330%
2077/78 1970.7302 24120.4486 8.1704%
Source: Annual report of KBL

Figure 2.4
Showing Return on Capital Employed

15
 ROCE
14.00%
12.15%
return on capital employed 12.00%
9.62%
10.00%
8.46% 8.17%
8.00%
ROCE
6.00% 5.33%

4.00%

2.00%

0.00%
2073/74 2074/75 2075/76 2076/77 2077/78
fiscal year

In the above table and figure, net profit after tax for the fiscal year 2073/74, 2074/75,
2075/76, 2076/77 and 2077/78 are 793.1430, 707.41, 1230.3783,1158.5060
and1970.7302million respectively. Return on capital employed for those fiscal year
are 8.4633%, 12.15%, 9.6174%, 5.3330% and 8.1704% respectively. Return on
capital employed is increased by 12.15% in 2074/75 as compared to 2073/74.Thereafter it
has declined by 9.6174% and 5.3330% in 2075/76 and 2076/77. However, it has
increased by 8.1704% in 2077/78 as compared to 2076/77. Bank has maintained its
ROCE in the current year as it is increased.

c. Return on Asset
It measures overall effectiveness of management of the firm in generating income
using its assets. It calculates the ability of firms to return on total assets invested. The
ratio can be calculated as below;
Net Profit after tax
Returnon Assets ( ROA ) =
Total Assets

Table 2.5
Return on Assets (Amount in million)
Fiscal year Net profit after Total assets ROA

16
 tax
2073/74 793.1430 61416.16 1.29%
2074/75 707.41 66348.09 1.0662%
2075/76 1230.3783 105311.4 1.16%
2076/77 1158.5060 153341.6 0.755%
2077/78 1970.7302 189782.81 1.0384%
Source: Annual report of KBL

Figure 2.5
Showing Return on Assets

17
 ROA
1.40% 1.29%
1.16%
1.20% 1.06% 1.04%
1.00%
Return on Assets

0.76%
0.80%
ROA
0.60%

0.40%

0.20%

0.00%
2073/74 2074/75 2075/76 2076/77 2077/78
fiscal year

In the above table and figure, net profit after tax for the fiscal year 2073/74, 2074/75,
2075/76, 2076/77 and 2077/78 are 793.1430,707.41,1230.3783,1158.5060
and1970.7302million respectively. Return on assets for those fiscal year are 1.29%,
1.0662%, 1.16%, 0.755% and 1.0384% respectively. Initially, it has declined by
1.0662% in 2074/75 as compared to 2073/74 and increased by 1.16% in 2075/76 as
compared to 2074/75 and decreased by 0.755% in 2076/77 and increased by 1.0384%
in 2077/78. However bank has maintain its ROE in current year as it is increased.

2.3 Major Findings

The major findings that I found throughout the financial analysis of Kumari Bank
Limited are listed below:

1. The Current ratio of KBL is decreased in FY 2074/75 as compared to 2073/74. In

FY 2075/76 the current ratio is increased. However again in 2076/77 it declines and
increases in the current fiscal year 2077/78. However, the fluctuation shows the
current assets and liabilities are not properly utilized. It hurts the financial
performance.

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2. The Quick ratio of the bank is decreased in the FY 2074/75 as compared to
2073/74. In FY 2075/76 and 2076/77 it has increased. However in the current FY it
has declined. Therefore, the bank has to maintain its Quick assets and liabilities.
3. The ROE of KBL is increased in FY 2074/75 as compared to FY 2073/74.
Thereafter, ROE is decreased in FY 2075/76 and 2076/77 which shows decreasing
trend. However in the current FY 2077/78, ROE is increased. So, the bank has enough
ROE in the current year.
4. The ROCE of KBL is increased in the FY 2074/75 as compared to 2073/74.
Thereafter it declines in FY 2075/76 and 2076/77 which shows decreasing trend.
However in the current FY 2077/78 it is increased. So, the bank has sufficient ROCE
in the current year.
5. In terms of profitability ratios, bank’s ROA is decreased in the FY 2074/75 as
compared to 2073/74. In FY 2075/76, it is increased. Thereafter in 2076/77 it declines
and then in the current fiscal year 2077/78 it increases. The bank’s ROA is fluctuating
throughout the year. So, the bank have to take the appropriate action to maintain its
returns at sufficient level.

CHAPTER- III

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 SUMMARY AND CONCLUSION

3.1 Summary
Kumari Bank Limited, came into existence as the fifteenth commercial bank of
Nepal by starting its banking operations from Chaitra 21, 2057 BS ( April 03, 2001)
with an objective of providing competitive and modern banking service in the
Nepalese financial market. Kumari Bank Limited has been providing wide range of
modern banking services through 246 points of representations located in various
urban and semi urban part of the country, 196 branches outside and inside the valley
and 14 extension counters and 38 branchless banking units. The bank always focus
on building sound technology driven internal system to cater the changing needs of
the customers that enhance high comfort and value.

Financial analysis is the process of evaluating businesses, projects, budgets and

other finance-related entities to determine their performance and suitability.
Typically, financial analysis is used to analyze whether an entity is stable, solvent,
liquid or profitable enough to warrant a monetary investment. When looking at a
specific company, a financial analyst conducts analysis by focusing on the income
statement, balance sheet and cash flow statement. Financial analysis also helps to
evaluate and decision making for business operation. In financial analysis process
ratio analysis process is the most dominant and logical structure to help business
related stakeholder. Under the financial ratio analysis process there are few
categories to identical area of financial institution. So business stakeholders try to
concentrate to get overall business overview from profitability, liquidity, assets
management and solvency ratio analysis. These ratios not only help in decision
making process also emphasized on risk avoiding and profit raising related factors.
To calculate this ratio need to take quantitative data from bank trading activity and
other sources.

3.2 Conclusion
After the detail study, we can conclude the following:

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 1. Kumari Bank’s current ratio is decreasing in 2074/75 as compared to 2073/74.
After, it is increased in 2075/76 and decreased again in 2076/77. Thereafter it is
increased in the current fiscal year 2077/78. The current ratio of KBL shows
fluctuation trend over years which hurts the financial performance.
2. The quick ratio of Kumari Bank is decreasing in 2074/75 and 2075/76 as
compared to 2073/74. Thereafter it is increased in 2076/77 but in decreasing trend.
However in the current fiscal year it is decreased again. The bank’s quick ratio is
fluctuating over years. The bank has to maintain its assets and liabilities in order to
achieve good financial performance.
3. By analyzing over ROE, we can see that it is fluctuating over past five years. It
means the management team is not managing the equity properly that the
shareholders have contributed to the company. Therefore, the performance of bank
in terms of ROE is not satisfactory over different periods.
4. The ROCE of the bank increased in 2074/75 as compared to 2073/74. Thereafter it
is decreased in 2075/76 and 2076/77. However it is increased in the current year.
Therefore the performance of the bank in terms of ROCE is not satisfactory.
5. The fluctuating trend of ROA over past five years indicates that the company is
not making enough income from the use of assets. It is due to poor management.
The bank is not using its total assets to generate maximum revenue.. Therefore the
performance of bank in terms of ROA is not satisfactory over different periods.

BIBLIOGRAPHY

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Reports:
Ranabhat, R. (2021), “Financial Analysis of Muktinath Bikas Bank Limited”.
Das, A. (2020), “Comparative Financial Analysis of Nepal Bank Limited and Nabil
Bank Limited”.
Manandhar, N. (2019), “Financial Performance analysis of Standard Chartered
Bank Nepal Limited”.

Website of Kumari Bank Limited: www.kumaribank.com

Website of research info: www.google.com
Annual report of Kumari Bank Limited (2073/74 – 2077/78)

APPENDIX-1

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Proposal on Financial Analysis of Kumari Bank Limited
1.1 Background of Study
Financial analysis is the process of evaluating businesses, projects, budgets and other
finance-related entities to determine their performance and suitability. Typically,
financial analysis is used to analyze whether an entity is stable, solvent, liquid or
profitable enough to warrant a monetary investment. When looking at a specific
company, a financial analyst conducts analysis by focusing on the income statement,
balance sheet and cash flow statement. Financial analysis also helps to evaluate and
decision making for business operation. Under the financial ratio analysis process
there are few categories to identical area of financial institution. So business
stakeholders try to concentrate to get overall business overview from profitability,
liquidity, assets management and solvency ratio analysis. These ratios not only help to
decision making process also emphasized on risk avoiding and profit raising related
factors. To calculate this ratio need to take quantitative data from bank trading activity
and other sources.

1.1.1 Profile Events and Activities

Kumari Bank Limited (KBL)
Kumari Bank Limited came into existence as the fifteenth commercial bank of Nepal
by starting its banking operations from Chaitra 21, 2057 B.S (April 03, 2001) with an
objective of providing competitive and modern banking services in the Nepalese
financial market. Kumari Bank Limited has been providing wide - range of modern
banking services through 246 point of representation located in various urban, semi-
urban and rural parts of the country with 196 branches, 14 extension counters and 38
branchless banking units.

1.2 Statement of Problem

The study shows the following statement of problem:

i. What are the assets and liabilities position of Kumari Bank?

ii. What is the profitability position of Kumari Bank Limited?

1.3 Objective of Study

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The main objective of this report is to measure the financial strength of Kumari Bank.
The objectives of the study are:-

i. To determine assets and liabilities position of Kumari Bank Limited.

ii. To analyze the profitability of the bank.

1.4 Significance of the Study

This study is helpful for all the concerned parties which add new idea and findings
about Kumari Bank Limited. The studies that will have importance to various groups
but in particular is directed to a certain groups of people/organizations are:

1. To the investors
2. To the creditors
3. To management of the bank
4. To the customers
5. To the other parties
6. And this study will be equally useful to the other readers, students of related
subjects and other people who are concern with banking field.

1.5 Review of Literature

Literature review are secondary source and do not report new or original experimental
work. Most often associated with academic-oriented literature, such reviews are found
in academic journals, and are not to be confused with book reviews that may also
appear in the same publication. Literature review 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.

1.6 Research Methodology

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Research methods help to find out accuracy, validity and suitability. The justification
on the present study cannot be obtained without help of proper research methodology.
For the purpose of achieving the objectives of the study, the descriptive methodology
is used.

1.6.1 Research design

For research activity, conceptual plan, board plan, framework, blue print or as a whole
directional plan is called research design. After selection of a research topic or issue,
the plan formulated for a research activity is called research design.

1.6.2 Population

Among the different financial institutions in Nepal, 28 commercial banks are the
population of this study.

1.6.3 Sample

From 28 commercial banks, Kumari Bank Limited is the sample of this study.

1.7 Limitations of the Study

This study is conducted for the partial fulfillment of the requirement for the degree of
the Bachelor in Business Studies (BBS).

The other limitations of the study are:-

 It is academic research.
 This study focuses on only the covered area.
 This study is based on secondary data.

1.8 Structure of Report     

Chapter-1: Introduction

It deals with the subject matter of the study. The outline of the research is presented in
the chapter. The whole research will be based on the introduction chapter. It also
includes review of literature, the research methodology used to evaluate financial
analysis of Kumari Bank Limited.

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Chapter-2: Result and findings

It is the main part of the study which fulfils the objectives of the study by presenting
data by result analysis with the help of various financial tools as per methodology. In
this chapter, major findings of the study have been conducted based on secondary
data.

Chapter-3:  Summary and conclusion

This chapter will mention the summary and conclusion of the study.

APPENDIX-2
Financial Statement of Kumari Bank Limited
As on 2077/78

26
Statement of Profit or Loss of Kumari Bank Limited
As on 2077/78

27
Financial Statement of Kumari Bank Limited
As on 2076/77

28
Statement of Profit or Loss of Kumari Bank Limited

29
As on 2076/77

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31