Portfolio Analysis of Nepalese Commercial Banks

Abstract

Investment portfolio refers to an investment that combines several assets. Investment portfolio is one which the income or profit of the banks depend upon directly. Investment portfolio usually offers the advantage of reducing risk through diversification of risk from risky investment to less risky investment. The objective of portfolio is to develop a portfolio that has the maximum return at whatever level of risk. The investment portfolio is the tool which helps to reduce risk and maximize return. The banks should never invest its funds in those securities; difference may cause a great loss. The bank should accept that type of securities which are commercial, durable, marketable stable, transferable and high market price. Any country depends upon the economic development for developing the country. To strengthen, the economy of any country both the private and public sector should play a great role, which contributing to our nation. The process of the economic development depends upon various factors, however economists are now convinced that capital formation and its proper utilization plays a paramount role for rapid economic development. All the economic activities of each and every country are greatly influenced by the commercial banking business of the country.

Banks are an essential part of the business activities which are established to safe guard people’s money and there by using the money in making loans and investments. CBs collects scattered financial resources from the masses and invests them among those engaged in commercial and economical activities of the country. CBs are those financial institutions deal in accepting deposits to persons and institutions and giving loans against securities and it also provide technical and administrative assistance to industries, trade and business enterprises. CBs are defined as a bank is a financial institution, which performs widest range of economic and financial functions of any business firm in the economy. CBs plays vital role for development of a developing country. Banks provides internal resources for developing country’s economy. For the fulfillments of the objectives of the study many analysis has been done such as operation of CBs, investment and loan and advance portfolio, risk and return analysis, portfolio risk and return on investment, ratio analysis, trend analysis, portfolio performance test and hypothesis test. For the analysis mainly secondary data are used, which is collected from concerned banks, NRB, NEPSE, SEBON.