A STUDY ON FINANCIAL ANALYSIS OF

EVEREST BANK Ltd.

Butwal

Submitted By:
Anuradha Sharma
Oxford College
T.U. Reg. No: 7-2-559-5-2009
Exam Roll. No:

Submitted to:
Office of the Dean
Faculty of Management
Tribhuvan University

In partial fulfillment of the requirement for the degree of

Bachelor of Business studies

Butwal
Bhadra, 2069

RECOMMENDATION

This is to certify that the field work assignment report

Submited By
Anuradha Sharma
T.U. Reg No:
Exam Roll No:

Entitled
A STUDY ON FINANCIAL ANALYSIS OF EVEREST BANK
LIMITED, BUTWAL

has been prepared as approved by this department in the prescribed

format
of faculty of management. This project work assignment report is
forwarded
for examination.

Mr. Krishna Adhikari

Pashupati Adhikari
(Supervisor)
(Co-ordinator)

Mr. Bhesraj Banjade

(Department head

Mr.

ACKNOWLEDGEMENT
The project report entitled Financial analysis of Everest Bank Limited
is presentation for the partial fulfillment of requirement of degree of
Bachelor of business studies (BBS) of Tribhuwan University, under the
subject Banking and Insurance.
This report has been prepared with outstanding suggestions, kind
supports, guidance and inspiration from various personalities. I express
my deep appreciation to Mr. Krishna Adhikari (supervisor), Mr. Bhesraj
Banjade (department head), Mr. Pashupati Adhikari (Co-ordinator).
I would like to thanks my respected all teachers who had taken
orientation class and generated ideas for us.
I must express my gratitude to Mr. Bishnu Prasad Gyawali (branch
manager) and entire staff of Everest Bank Limited, for providing
requisite statistical data for this report.
Lastly, I would like to appreciation to my family, friends who support
and encourage me while preparing this report.

Anurad
ha Sharma
BBS 3rd
years
Oxford College, Butwal

TABLE OF CONTENT

Recommendation
Acknowledgement
i
Table
ii
List
iii
List
iv
List
v

of

Contents

of

Tables

of

Figures

of

Abbreviation

CHAPTER-1
Page No.
1.1
1
1.2
3
1.3
3
1.4
4
1.5
4
1.6
5

INTRODUCTION

Back

ground

of

Significance

of

the
the

Literature
Purpose

of

of

study
Review

the

Fieldwork
Limitation

study

study
Procedure

the

study

CHAPTER
6-17
2.1
6
2.2
17

2:

DATA

Data
Major

PRESENTATION

AND

ANALYSIS

presentation

and

analysis

findings

of

study

CHAPTER: SUMMARY, CONCLUSION AND

RECOMMENDATION
18-2O
3.1
18
3.2
19
3.3
19
Time allotment
Bibliography
Proposal

Summary
Conclusion
Recommendation

LIST OF TABLES AND FIGURES

List
Page No.

of

Table

Table
no.
2.1
Income
statement
of
Everest
Bank
Ltd.
6
Table
no.
2.2
Balance
sheet
of
Everest
Bank
Ltd.
7
Table
no.
2.3
Liquidity
Ratio
8
Table
no.
2.4
Asset
Utilization
Ratio
9
Table no. 2.5 Net Interest margin
10
Table
no.
2.6
Profit
margin
11

Table
12

List
Page No.

no.

2.7

Return

on

of

Figure no. 2.1 Trend line of Ratios

Figure
no
2.2
Pie
Chart
10
Figure
no
2.3
Capital
11

Assets

Figure

of

Profitability
Adequacy

LIST OF ABBREVIATION

9
Ratios
Ratios

%
EBL

Percentage
Everest Bank Limited
&

BBS
Studies
i.e.
Reg. no
TU
Fig
TATOR
ROE

And
Bachelor of Business
That is
Registration Number
Tribhuvan University
Figure
Total Asset Turnover Ratio
Return on Asset

CHAPTER-1
INTRODUCTION

1.1

Background of the Fieldwork Project:

Financial analysis is the process of analyzing the various item of

financial statement of a firm to ensure its comparative strength and
weakness.
Financial management has undergone through various change during
the past century. Finance was studies as a part of economics before but
in the early 19th century it developed as separate field to study with
the development of the industry location in 20 th century. Most of the
European countries were oriented towards industrialization.
Financial management is the acquisition, management and financing of
resources for prices in external economic market. It is not only concern
with collection of capital but also with proper utilization of those
capitals into productive areas.
Financial management is the source of income which is required to
analyze the performance of company such as it represents a record of
historical and financial performance and development over the year. It
is prepared by the cooperation at the end of a period. The statements
are prepared by the organization engaged in profit earning activities to
reveal their position. A careful analysis of financial statement enables
the managers and others to understand relative strength and
weakness of the firm in relation to various aspects of firms financial
performance. So this statement provides a fair comprehensive position
and its performance during a particular period.
An analysis of financial position is necessary to serve the purpose of
interested group looser in the society. The analysis provides different
users such as investors, government, management. This analysis
provides different information about profitability of the company. Such
as returns of investment net profit margin, return of shareholders
equity etc. the strength weakness of the firm can be analyzed, so that
they can make decision from their own point of view.
There are many financial institutions which are working as
intermediaries. They have made financial activity easy. Present study
focus on the financial analysis of Everest Bank Limited, for the year
2008/09 to 2010/11.
Brief Profile of EBL

Everest Bank Limited (EBL) started its operations in 1994 with a view &
objective of extending professionalized & efficient banking to various
segments of the society. The bank is providing customer friendly
services through its Branch Network. All its the branches are
connected through Anywhere Branch Banking System (ABBS) which
enables customers for operational transactions from any branches. The
bank has 45 branches, 55 ATM counters & 21 Revenue Collection
Counters across the country making it a very efficient and accessible
bank for its customers, anytime anywhere.
With an aim to help Nepalese citizens working abroad, the bank has
entered into arrangements with banks and finance companies in
different countries like UAE, Kuwait, Bahrain, Qatar, Saudi Arabia,
Malyasia, Singapore and U.K.
Bank has set up its representative offices at New Delhi (India) to
support Nepalese citizen remitting money and advising banking related
services.
Catering to more than 4 lacs customer today, the bank has been one of
the leading banks of the country & has been catering its service to
various segments of the society since then. With clients from all walks
of life, the bank has helped develop nation corporately, agriculturally &
Industrially.
Joint Venture Partner
Punjab National Bank (PNB) is its joint venture partner holding 20%
equity in the bank is the largest nationalized bank in India with its
presence virtually in all the important centers at India, PNB offers a
wide variety of banking services which include corporate bond and
personal banking, industrial finance, agricultural finance, financing of
trade and international banking. For its excellence in banking services,
it was recently awarded the Best Bank Award 2011 amongst all
banks in India by the leading magazine, Business India.
Awards
The bank has been conferred with Bank of the year 2006, Nepal by
the Banker, a publication of financial times, London.

The bank was bestowed with the NICCI Excellence award by Nepal
India chamber of commerce for its spectacular performance under
finance sector.

Pioneering Achievements
Recognizing the value of offering a complete range of services, EBL
have pioneered in extending various customer friendly products such
as Home Loan, Education Loan, EBL flexi Loan, EBL property plus
(Future Lease Rental), Home Equity Loan, Vechile Loan, Loan against
Life Insurance policy & Loan for professionals.
EBL was one of the first bank to introduce anywhere Branch Banking
(ABBS) in Nepal. It has introduced Mobile Vechile Banking system to
serve the segment deprived of proper banking facilities through its
Birtamod Branch, which is the first its kind.
EBL has introduced branchless banking system first time in Nepal to
cover unbanked sector of Nepalese society.
EBL is first bank that has launched e-ticketing system in Nepal. EBL
customer can buy Yeti airlines ticket through internet.

1.1 Significance of the study :

To run the firm, financial position must be sound. The study provides
information on financial position of the firm and different problems of
the firm. The study must concerns with the following specific issues:
1. What is the liquidity position does the firm hold?
2. What is the relationship between EPS and MPS of the firm?
3. What is the interest income and interest expenditure?
4. What is the profitability position of the firm?
1.2

Literature Review:

According to Ross, Peter S, (2000), Financial analysis refers to

the assessment of a business to deal with the planning, budgeting,
monitoring, forecasting, and improving of all financial details within an
organization.
According to Brigham E.F., L.G. Gapenski, (1992), financial
analysis means assessing the viability, stability and profitability of a
project. It also includes techniques used for determining the needs of a
business.
1.3

Purpose of the study:

The major purpose this project work study is to know the financial
position of the organization. It helps to get the information about
various ratios in order to interpret the financial statement so that the
strength and weakness of the firm as well as its historical performance
and current financial condition can be determined. Some specific
objectives in our topic are listed as below:
1. To assess capital adequacy.
2. To find the income and expenditure.
3. To identify the components of income and expenditure.
4. To determine the profitability position.

1.4

Fieldwork procedure:

This project work study attempts to analyze the relationship among

different figure in the financial statement for determining the financial
performance of the bank. The methods used for research purpose are
highlighted here. It includes the period covered, nature and sources of
data collection procedure. The methods used in collection procedures.
The methods used in collection of data are listed below.
1.4.1 Sources of data
To analyze topic different data are gathered. The sources from where
information achieved are as follows:
A. Primary source and
B. Secondary source.
A. Primary source
The data collected for the first time by the researcher himself from the
field of enquiry is called primary data. Primary data collection includes
questionnaire method. Direct interview method and direct observation
method.
a) Questionnaire method:
The related workers are interviewed by preparing the schedule of
question in the relevant topic.
b) Direct interview method:
The direct interview is the raw information, it is collected by
interviewing the manager of the firms.

c) Direct observation method

To acquire the practical knowledge the workers were being observed in
the spot.

B Secondary source
The data which are initially collected by someone but obtained from
some published sources are called secondary data. The data from
various sources are collected and proper data for purpose of the study
are arranged and analyzed. The sources of secondary data are:
a) Report provided by the management of the Everest Bank Limited.
b) office records and magazines.
c) Different related books journals, daily newspaper report published
by different other
medias.
d) Different related Web sites.
1.4.2 Tools used for analysis
Since the study is concerned of financial aspect of the firms, some
important tools like of the firms are:
a) Statistical tools
Bar diagram
Tables
Trend line
b) Financial ratio
Ratio analysis
Fund flow statements
1.5 Limitation of the study:
The study is not free from some limitation that the researcher has
experienced during research work activities performance and
generation drawn regarding the study of financial analysis of Everest
Bank Ltd. The limitation served as constraints to perform the assigned
task effectively and efficiently.
1) The study realize on secondary data collected from the annual
reports of the bank.

2) The study period covers only 3 years period from 2008/09 to

2010/011.
3) This study considers only one bank out of large number of bank.
4) There are many factors that affect the financial analysis of
Everest Bank Ltd.
5) Conclusion drawn by study is based on the reliability of statistical
and financial tools.

CHAPTER II
DATA PRESENTATION AND ANALYSIS
2.1 Presentation and Analysis of data
The data are the raw information which are meaningless until and
unless analyzed and presented in systematic manner. In this chapter,
data obtained from secondary sources are analyzed. To fulfill the
objective of study, the data are analyzed using various appropriate
financial and statistical tools. It has been divided into two sections:Data presentation and analysis.
2.1.1 Income statement and Balance sheet for the year 20082011
Income statement of Everest Bank ltd.
Rs.
S.
N.

Particulars

Years
2008/09

1
2

3
4
5

Interest income

2,18,68,14,99
2
Interest expenses
1,01,28,74,35
3
A. Net interest income (1-2) 1,17,39,40,6
39
Commission and discount
20,20,94,44
6
Other operating income
10,64,03,69
4
Foreign exchange gain/loss (net)
6,25,26,81
9

2009/10

2010/11

3,10,24,51,48
4
1,57,27,90,30
6
1,52,96,61,1
78
20,81,23,48
1
14,23,11,42
7
4,78,79,96
7

4,33,10,26,08
7
2,53,58,75,55
2
1,79,51,50,5
35
20,34,68,42
4
14,80,61,97
9
4,62,59,06
5

6
7

9
10

11

12
13

B. Total operating
(A+3+4+5)
Staff expenses

income 1,54,49,65,5
98
18,69,19,87
0
Other operating expenses
29,20,10,52
2
C. Operating profit before 1,06,60,35,2
provision (B-6-7)
06
Provision for possible losses
9,30,84,88
0
D. Operating profit (C-8)
97,29,50,3
26
Non operating income/expenses
50,05,25
(net)
6
Return back from provision for
80,44,17
possible loss
0
E. Profit
from
regular
98,59,99,7
activities (D+9+10)
52
Extraordinary
income/expenses
(55,49,17
(net)
0)
F. Profit before bonus and
98,04,50,5
taxes (E+11)
82
Provision for staff bonus
8,91,31,87
1
Provision for tax
25,25,85,95
4
G. Net profit/loss (F-12-13)
63,87,32,7
57

1,92,79,76,0
53
22,63,64,00
9
35,25,11,23
1
1,34,91,00,8
13
7,70,10,62
5
1,27,20,90,1
88
1,23,38,97
2
8,35,53,46
1
1,36,79,82,6
21
(6,11,92,47
6)
1,30,67,90,1
45
11,87,99,10
4
35,62,25,40
9
83,17,65,6
32

2,19,29,40,0
03
29,31,30,56
7
3,81,12,05
4
1,51,66,97,3
82
9,82,99,48
2
1,41,83,97,9
00
14,33,38
5
5,63,37,47
8
1,47,61,68,7
63
(1,20,51,52
2)
1,46,41,17,2
41
13,31,01,56
7
39,97,12,04
6
93,13,03,6
28

Table no. 2.1

Balance sheet of Everest Bank Ltd.
Rs.
Capital and liabilities
1
.

Share Capital

2
.

Reserve and surplus

3
.

Debenture and bond

Years
2008/09

2009/10

2010/11

1,03,04,67,3
00

1,27,96,07,4
90

1,39,15,70,4
39

1,17,31,57,7
55

1,47,95,30,3
65

1,72,19,75,6
17

30,00,00,000

30,00,00,000

30,00,00,000

4
.
5
.
6
.
7
.
8
.
9
.

Borrowing
Deposit liabilities

31,20,00,000
33,32,29,46,
246

40,46,00,000
36,93,23,10,
008

48,20,00,000
41,12,79,14,
339

14,86,55,592

14,55,14,679

4,97,16,572

21,80,80,345

27,62,52,832

57,68,97,427

2,05,22,280

(11,36,458)

2,69,00414

Bills payable
Purposed dividend
Income tax liabilities
Other liabilities
Total liabilities

39,10,19,136 56,60,81,795 55,92,37,454

36,91,68,48 41,38,27,60 46,23,62,12
,654
,711
,262

Assets

Year
2008/09

2009/10

2010/11

1 Cash in hand
94,46,95,793 1,09,15,00,4
07

1,04,89,98,7
21

4,78,71,63,5
41

4,70,63,20,5
90

2 Balance with NRB

3 Balance with other Banks and Financial
Institutions
4 Call and Short note Account

5,62,51,13,8
49

43,25,11,829 1,10,22,00,7
47
-

36,75,43,641

5,94,84,80,2
73
23,88,46,73,
616

7,74,39,28,3
21
31,05,76,91,
462

5 Investment
6 Loans, advances and bills purchased

5,00,83,07,5
89
27,55,63,56,
032

7 Fixed assets
8 Non- Banking Assets

42,71,57,451 46,30,94,391 46,02,58,735

-

9 Other Assets
Total Assets

49,21,66,151 53,61,87,696 85,14,70,792

36,91,68,48 41,38,27,60 46,23,62,12
,654
,711
,262
Table no. 2.2

2.1.2 Analysis of Different Ratios

2.1.2.1 Analysis of short term solvency position
This ratio measure the firms ability to satisfy its short term
commitments out of current or liquid assets to analyze the short term
solvency position, Liquidity ratio is used.
Liquidity ratio is the quantitative relationship between Liquid assets &
total depositors. Here liquid assets are cash or cash worth assets like
Bank & cash balance, Money at call and short notice, Balance in other
Banks etc.

On the other hand depositors are those obligations which must be paid
demand by the depositors.
Table no. 2.3 Liquidity Ratio
Fiscal year

EBL
Liquid asset

Deposit

Liquidity Ratio

2008/09

6,16,43,71,163

33,32,29,46,246

2009/10

7,81,88,15,003

36,93,23,10,008

0.2117

2010/11

6,12,28,62,952

41,12,79,14,339

0.1489

0.1850

Table no 2.3

Fig. no. 2.1

Bar diagram showing liquidity ratio
In the above figure, years and values has been shown in X- axis and Yaxis respectively.
Liquid assets to total deposit ratio is increasing at first and then after
decreasing. The liquidity of 2008/09 is 0.1850, 2009/10 is 0.2117 &
2010/2010 is 0.1489 increasing liquidity ratio is seems to be good but
decreasing ratio in last year of research period is not good for the
organization.

2.1.2.2 Asset Utilization Ratio

Asset utilization ratio measures the efficiency with which a bank uses
its assets to generate profits. This ratio is also known as the Assets
turnover ratio or Assets management efficiency ratio. It is calculated as
under:

Asset utilization = Total operating revenues / Total assets

Table no. 2.4 Asset Utilization Ratio
Fiscal year
2008/09
2009/10
2010/11

Operating
revenue
1,54,49,65,598

Total assets

36,91,68,48,65
4
1,92,79,76,053 41,38,27,60,71
1
2,19,29,40,003 46,23,62,12,26
2
Table no.2.4

TATOR (%)
4.1850
4.6589
4.7429

Fig. no. 2.2 Bar diagram showing asset utilization ratio

According to above table & bar diagram, the Asset Utilization of EBL is
in increasing trend, it can be said that EBL has better effective
utilization of its total investment in assets in term of generating
income.

2.1.2.3 Profitability Ratios

Profitability ratios show the combined effects of liquidity, asset
management and debt management on operating results. It measures
the earning of the company for a certain period. Five widely used
measure of profitability ratio are Net Profit Margin (NPM), Net Interest
Margin (NIM), Earning spread, Return on assets (ROA), Return On
Equity (ROE) some of them are mentioned here,

A)Return on equity

Return on equity (ROE) is percentage of net profit (Income) on total

equity of the firm. It also shows how effectively the bank is utilizing its
total equity worth for profit generation. The efficiency can be analyzed
from the table below.
Return on equity (ROE) = Net Income/ Total equity capital
Table no. 2.5 Return on equity of EBL
Fiscal year
2008/09
2009/10
2010/11

Net Income

Total equity
capital
63,87,32,757
2,20,36,25,055
83,17,65,632
2,75,91,37,855
93,13,03,628
3,11,35,46,056
Table no. 2.3

ROE
0.2899
0.3015
0.2991

Fig no. 2.3 Trend line showing ROE of EBL

According to table and diagram, the return on equity is quite
fluctuating and it is decreasing trend in the fiscal year 2009/10, This
result of ROE prove the way to deteriorate the enthusiasm of present
and potential investors of equity. Also it directly affects the value of
shares and goodwill of bank.

B)Net Interest Margin

The net interest margin is the difference between revenue generated

by interest bearing assets (loans and investments) and the interest
cost of borrowed funds expressed as a percentage of either, average
total assets or, as some analysts prefer, average earning assets. The
NIM is calculated as follows;
Net Interest Margin = Net Interest Income/ Interest Earning Assets

Table no. 2.6 Net interest margin

Fiscal year
2008/09
2009/10
2010/11

Net Interest
Income

Interest
Earning
Assets
1,17,39,40,639 36,91,68,48,65
4
1,52,96,61,178 41,38,27,60,71
1
1,79,51,50,535 46,23,62,12,26
2
Table no. 2.6

NIM (%)
3.18
3.69
3.88

Fig no. 2.4 Net interest Margin

From the above table & figure it can be said that the Net Interest
Margin of EBL is in increasing trend. It refers that EBL is in profitability
position.

C)Profit Margin

Profit margin shows the relationship between net income and operating
income. It shows proportion of net income with respect to its operating
income. The profit margin is calculated as under;
Profit Margin = Net profit / operating income
Table no. 2.7 Profit margin
Fiscal year
2008/09
2009/10
2010/11

Net profit

Operating
Income
63,87,32,757
1,54,49,65,598
83,17,65,632
1,92,79,76,053
93,13,03,628
2,19,29,40,003
Table no. 2.7

Net Profit
margin (%)
41.3428
43.1419
42.4683

Fig no. 2.5 trend line showing NPM of EBL

From the table & figure presented above NPM of EBL is quite
fluctuating at first increases & reaches up to 43.1419% then slightly
decreases & reaches up to 42.4683%. But in average Net Profit margin
of EBL seems to be in sound position.

2.2 Major Finding of the Study

The presentation and analysis of data done in this chapter exacts many
results and point regarding different aspects of the bank. However the
most and major can pointed out as follows.

Details
a)Short term
solvency
position
- Liquidity ratio
b)Asset
utilization
ratio
-Total asset
turnover ratio
c)Profitability
ratio
-Return on
equity
-Net interest
margin (%)
-Profit margin
(%)

Table no 2.8
EBL
2008/09
2009/10

2010/11

0.1850

0.2117

0.1487

4.1850

4.6589

4.7429

0.2899
3.18

0.3015
3.69

0.2991
3.88

41.3428

43.1499

42.4683

CHAPTER III
SUMMARY, CONCLUSION AND RECOMMENDATIONS
3.1 Summary
This report mainly concern with the principal objectives to comply with
assessment required for the degree of BBs 3rd year of Tribhuvan
Uiversity. EBL is one of the successful banks operating the territory of
Nepal, providing fair banking service to its customers namely
remittance letter of credit, loan, locker, guarantees etc are major and
one of indirect investment for the nation by EBL. So, this company is
selected for the purpose of study, it started operation since 1994 with
the objectives to fuel the Nepalese economy and take it to hover
height as well as to facilitate the nation economy to competitive
globally.

This report is summed up in three chapters. It begins with brief

background information of financial development of bank, statement of
the problem, objectives of fieldwork projects & methodology followed
till the completion of the report writing. The sampled objectives of
fieldwork & methodology followed till the completion of the report
writing. The sampled period of the study is only of three fiscal years.
All the data which have been extracted from Income statement &
Balance sheet of presented years, are of secondary nature. To meet the
basis purpose of the study different financial ratios are used as per the
five subsidiary objectives. The presentation and analysis part of the
field work project also consider by table.