Comparative Analysis of Financial Performance of Rastriya Banijya Bank Limited and Nepal Bank Limited

Abstract

This study entitled “Comparative Analysis of Financial Performance of RastriyaBanijya Bank Limited and Nepal Bank Limited” was conducted on government-owned banks of Nepal. Both the descriptive and comparative financial performance analysis approaches were used. Five year audited financial reports from 2069/70 to 2073/74 of the two government-owned commercial banks were taken for analysis purpose. Qualitative analysis was undertaken by looking at various set of ratios and statistical tools that are routinely used to measure bank performance. Conclusions were then drawn from the computation of the relevant ratios that allowed the author to make and effective comparison of said banks. So, for most researches have tries to assess the growth of private banks relative to government-owned banks in terms of assets ownership and loan granting ability. But this study has tried to assess two government-owned commercial banks financially sound or not by as a case study. Financial ratios were considered to measure capital adequacy, assets quality, management quality, earning quality, liquidity quality and profitability of the commercial banks. In both financial performance analysis approaches i.e., the descriptive and comparative analysis, commercial banks of Nepal’s financial performance showed that RBBL gets first position on the basis of CBBCA(17.02%), CBBTDR(17.76%), ROA(1.83%), ROE(60.65%) and ITDR(29.16%). While NBL gets first position on the basis of CAR(1.35%), LATAR(56.28%) and NPALAR(4.36%). It is also found that the determination factor CAR, CBBCA, ROE, ROA impact the financial performance of commercial bank in Nepal. It also concluded that the CAR, CBBCA, ROA, ROE, IEIIR are one the key determinants offinancial performance of commercial banks in Nepal. The study recommends the weak bank to improve their financial performance by improving the assets quality, management quality, earning quality and liquidity quality and it also recommend the bank management has to work to retain optimum amount of cash and granting the excess amount to borrowers of the bank as a loan or investing it in other profitable investments. Actually the banks should come forward to increase the number of clients, develop entrepreneurship, diversify their business with large number of small investors and come forward to meet the national objective of privatization by mobilizing more entrepreneurs.