A Comparative Financial Performance Analysis of Nepal Bank Limited and Nepal SBI Bank Limited

Abstract

The objective of the study was to compare the financial performance of different ownership structured commercial bank in nepal based on their financial characteristics and identify the determinants of performance exposed by the financial ratios. The research was to compare the financial performance analysis of NBL and Nepal SBI Bank Ltd. among twenty eight commercial banks in Nepal, to explore the outcome of banks financial positions and its strength in banking sectors. Ratio Analysis is used to measure the financial performance of banks and the ratios including of liquidity ratio, asset management ratio (activity ratio) and profitability ratio. Secondary data were used for the study collected from the annual economic review of Nepal Rastra Bank and annual reports of NBL and NSBI Bank ltd. For the period of Five years from 2012/13 – 2016/17. Data were analyzed by using appropriate financial and statistical tools and the descriptive and analytical research designs were used. The target population for this study is the total commercial banks (i.e. 28) of Nepal, out of them 2 banks are taken as sample for the study. The finding from this study indicates that there was below standard of current ratio of both banks. The asset management ratio of activity ratio reveals that both the banks have able to utilize or manage the resources or assets satisfactorily. Comparatively, loan and advances to total deposit ratio, loan and advances to saving deposit ratio of NBL is more efficiently utilizing the outside funds in extending credit for profit generation. The research also proved that financial performance of bank help to make financial decisions effectively and also make sure of utilizing the assets efficiently. The research also found that the sample banks have irregular dividend policy over the study period. The study recommends that banks needs to make appropriate financial decisions and strategies to make banks financial position in good stead.