A Proposal of

FINANCIAL PERFORMANCE ANALYSIS OF SIDDHARTHA

BANK LTD.

By:
Basant Kumar Yadav

T.U. Regd. No. 7-2-242-440-2020

Symbol No. ……………….

Makawanpur Multiple Campus, Hetauda
(Finance Group)

Submitted to
The Faculty of Management
Tribhuvan University
Kathmandu

In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Hetauda, Makawanpur
January, 2025
1.1 Background of the study
Profitability means ability to make profit from all the business activities of an
Organization, company, firm, or an enterprise. It shows how efficiently the
Management can make profit by using all the resources available in the market.
According to Harward & Upton, “profitability is the ‘the ability of a given investment
to earn a return from its use.” However, the term ‘Profitability’ is not synonymous to
the term ‘Efficiency’. Profitability is an index of efficiency; and is regarded as a
measure of efficiency and management guide to greater efficiency. However,
profitability is an important yardstick for measuring the efficiency, the extent of
profitability cannot be taken as a final proof of efficiency. Sometimes satisfactory
profits can mark inefficiency and conversely, a proper degree of efficiency can be
accompanied by an absence of profit. The net profit figure simply reveals a
satisfactory balance between the values receive and value given. The change in
operational efficiency is merely one of the factors on which profitability of an
enterprise largely depends. Moreover, there are many other factors besides efficiency,
which affect the profitability.

1.2 Profile of organization.

Siddhartha Bank Ltd.
Siddhartha Bank Limited (SBL) is one of the largest private Commercial
Bank in Nepal which is 18th commercial bank to be licensed by Nepal Rastra Bank. It
started operation in Dec 2002. and has 196 branches and 226 ATMs all across the
nation with its head office in Kathmandu which provides entire commercial banking
services and remittance services. Siddhartha bank is also official title sponsor of the
(NPL) Nepal Premier League for a five-year period starting in 2024.

The bank's shares are publicly traded as an 'A' category company in the Nepal Stock
Exchange. Siddhartha Bank Limited has received several awards and recognitions for
its performance and contribution to the banking industry in Nepal. It has been
awarded as the 'Bank of the Year' by The Banker, a leading financial magazine, and
has also been recognized by various organizations for its contribution to the economy
and society.
1.3 Statement of Problems
Nepal is an economically developing country and it has numerous problems. People
of Nepal are always in shortage of funds for any kinds of purposes like to meet basis
needs; education, standard of living, have a very flexible loan provision that has
facilitated the investors as well as the user of the fund. MSSLCSL has made certain
criteria for lending loans to the needy groups with or without collateral. In order to
evaluate the following issues the researcher is motivated to prepare this report.
a) What is the trend of deposit and loan investment?
b) What is the trend of ratio of interest income to total loan?
c) What is the trend of ratio of net profit to total loan?
d) What is the diversity of loan?

1.4 Objectives of the study

The Main objectives are as follows:
 To draw conclusion regarding the liquidity position of a firm would be
satisfactory if it is able to meet its current obligation when they become
due.
 To assets the long term financial viability of the bank. The long term
solvency is measured by the leverage capital structure and probability
ratios which focus on earning power and operating efficiency.
 To find out the ability of the firm of meet its short term as well as long
term obligation to its creditors to ensure as reasonable return to ensure as
reasonable return to its owner and secure optimum utilization the assets.
 To measure whether the financial position of a firm is improving or
declining over the year.

1.5 Rationale of the study

This report writing of the very crucial part of our courses without this report we can’t
our 4rd year diploma. Report is not beneficial to us only bust also to the other sector of
society mentioned as below:
a) Easy for bank to know their financial strength to absorbed losses and protect
depositors and other creditors.
 b) Easy for general public to know about the condition of bank whether they’re
gaining or bearing losses.
c) Reference for the forth coming student while preparing reports in this
subject.

1.6 Review of literature

Review of Related Studies
There was no formal previous work in the selected topic. It is totally new topic and
field study. Since there is no research in this topic so I select this topic. The research
work is not conducted on this topic till now and I preferred to select unique topic for
my research work. So there is no any sort of formal previous reports regarding banks
and its profitability analysis.

1.7 Methodology
Research Design & Methodology
Research design is the plan, structure and strategy for conducting the study.
For the research design, first of all the information and data concerned with the study
should be collected. This is a case study and only one sample is taking into
consideration.
1.7.1 Population of Sample Size
As on mid-march 2014, there are 32 commercial banks in Nepal
Sample
Researcher has selected only one bank as a conventional sampling among the
32 commercial banks for the purpose of field work report.
1.7.2 Sources of Data
This study is mainly based on secondary types of data. However primary types
of data are also collected during the field visit. The data collected for the study is
secondary in nature. Information was collected from the statistics published by Nepal
Rastra Bank in its website (www.nrb.org)
Primary Sources of Data
The primary sources of data are collected through field visit and questionnaire
to related officials. However, this report does not contain any primary sources of data.
Secondary Sources of Data
This report consists of only secondary data. I have only included secondary
data. This report is completely based on secondary data has no concerned with
primary sources of data.
1.7.3 Nature and Sources of Information/Data collection procedure
This study is primarily based on the secondary source of data. So, the necessary data
for the study are collected mainly from the concerned institutions. The study is
concerned with the guidelines of NRB on investment policy of commercial banks. For
this purpose commercial banking statistic, annual report, quarterly economic bulletins
published the different commercial banking. These include annual reports for last
three years and report of each year Beside these, the following sources of data are also
being considered.
1.7.4 Tools for analysis and data presentation
Before analyzing the data, the data and information have been presented
systematically in the formats of Tables, Graphs and Charts which will explain a lot
about the data and information collected.
For the analysis of the research study, the following financial tools and statistical tools
are used
Financial Tools
Financial analysis is the process of analyzing various items of financial statements to
access a firm's comparative strengths and weakness. In other words, financial analysis
involves analyzing financial statement prepared in accordance with generally
accepted accounting principles to ascertain information concerning the magnitude,
timing and riskiness of future cash flows.
As we know there is various type of ratio. We have grouped these ratios into tive
types ie Liquidity. Activity. Profitability, Risk and Growth ratios. None of single ratio
gives us accurate information about financial condition and performance of a firm.
Hence, we are analyzing a group of ratios to make reasonable judgment. Following
ratios are calculated from the calculated data.
i. Liquidity Ratio
ii. Activity Ratio
iii. Profitability Ratio
iv. Risk Ratio
1.8 Limitations of the study
As in every field thermo are some limitations in the some way there are also some
limitation on this study. They are as follows:
 The study has been confined off only on Siddhartha Bank Limited.
 The study has been mainly on secondary data so this study is not free from
the limitation of secondary data.
 Only three fiscal year data are used to make Study. So it does not show
the financial position of other period.
 The study is limited on annual report publication by SBL.
 The study is only concerned with financial statement Analysis.
 Ratio analysis base on standard.
 Calculation of too many ratios creates confusion intend of reveling
meaningful conclusion.

1.9 Organization of the Study

The whole study of the research has been divided into Three different chapters,
including appendices and annexes.
 Chapter one - Introduction: background, profit of the organization, event,
Activates etc., objective of the study, Rational, Review of Literature, Method of
study, limitation of the study.
 Chapter two - Result and Analysis: Presentation of Result, Findings.
 Chapter three - Summary and Conclusion: Summary, Conclusion