A Comparative Study on Financial Performance of Selected Commercial Banks in Nepal: A Camel Model Analysis

Abstract

Sound financial health of a bank is the guarantee not only to its depositors but is equally significant for the shareholders, employees and whole economy as well. As sequel to this maxim, efforts have been made from time to time to measure the financial position of each bank and manage it efficiently and effectively. The present study is an attempt to evaluate and compare the financial performance of selected commercial banks in Nepal for the period 2013-2017. One of the most effective supervisory techniques, CAMEL rating system (basically a quantitative technique) has been used to compare the banks based on their performances. In this study one private bank and one commercial bank have been chosen as a sample to meet the purpose of the study. The study used the secondary data sourced from the annual reports of selected banks. i.e. NIBL and RBBL.Data have also been obtained browsing the official website of NRB and SEBON. Only descriptive tool has used to obtain the meaningful result of the collected data and to meet the research objectives. Firstly, collected data are tabulated under various heading and then tabulated data are analyzed using various financial and statistical tools and compared these values with the help of different figure. Results indicate that the selected banks had met the NRB standard of core capital ratio. The decreasing trend of non-performing loan to asset ratio showed that the assets quality of NIBL was good during the period of study. Total expenses to total income ratio was decreased which showed that the management efficient of all RBBL was good with large amount of positive gap between income per employee and expense. Major portion of total income of NIBL and RBBL has covered by interest income. Average ROA of NIBL was higher than RBBL. It indicates the better productivity of NIBL. The ROE of both banks was satisfactory but NIBL need to improve in that ratio. Net income to total loan and advance ratio of banks was fluctuating since first fiscal year which showed the week earning power of both banks and should improve it. Liquidity ratio of NIBL and RBBL were good and meet the standard level of NRB.