Analysis of Financial Performance of Nepalese Commercial Banks in Nepal (With reference to Nabil Bank Limited and Himalayan Bank Limited)

Abstract

This study aims to find out the Analysis of Financial Performance of Commercial Banks in Nepal (With reference to Nabil bank Ltd and Himalayan Bank Ltd). For this purpose, two banks are selected as sample size of the study during the fiscal year 2073/74 to 2077/78 BS. The secondary data are used to examine the analysis of financial performance of selected banks. The data used in this study are obtained from the annual reports and websites of the Nepalese Commercial banks . For analysed the data, financial tools like ratio analysis as well as statistical tools like Mean, Standard Deviation, Correlation are used. The findings of the study shows that the Liquidity positions of the banks is beneficial to invest on government securities than to keep cash and bank balance idle. It measures the cash and bank balance to current assets has found that mean of Himalayan bank is higher than that of Nabil bank i.e. 4.93% but the coefficient of variation CV of Himalayan bank is 26.43% less than the CV of Nabil bank 37.27%. This shows that the Himalayan bank is more consistence than Nabil bank as CV of Nabil bank is high so risk is also high. While investingon government securities to current assets also, the mean of Nabil bank and Himalayan bank is 14.57% and 17.26%. As the ratio of Nabil bank is high, so it has invested its large portion of its idle cash on government securities. But the CV of Nabil bank is more 33.62% than that of Himalayan bank 13.92% which shows more consistency so its risk is high. According to Leverage ratio of the banks, the average debt equity ratio of Nabil bank and Himalayan Bank is 11.40 times and 15.64 times which shows that the Himalayan bank has maintained higher debt equity ratio than Nabil bank.Whereas the total debt ratio of Nabil bank and Himalayan bank is 91.79%and 93.94% which shows that both banks relied heavily on debt for financing their total assets. While studying the Profitability ratio of the banks,ROSE of Nabil bank 32.30% which is higher than that of Himalayan bank 22.80% but the CV is less than that of Himalayan bank. ROA of Nabil Bank is 2.66% and Himalayan bank is 1.39%. As regards with analysis and interpretation of data of Nabil bank and Himalayan bank are successful to some extend to meet their operating as well as financial goals .