Portfolio management of commercial bank in Nepal

Abstract

This research delves into the portfolio management strategies adopted by commercial banks in Nepal, with a specific focus on five prominent institutions: Sanima Bank Limited, Everest Bank Limited, Standard Chartered Bank Nepal Limited, Nepal SBI Bank Limited, and Siddhartha Bank Limited. The primary objectives revolve around assessing the existing state of portfolio management, exploring its correlation with financial performance, and evaluating how investment decisions impact overall bank performance. Employing a descriptive and analytical research framework, data primarily sourced from various publications, governmental bodies, and libraries formed the basis of analysis. Utilizing analytical methodologies like correlation and regression analyses, the study aimed to uncover significant relationships among key variables. The findings suggest a positive correlation between non-performing loans and return on assets, implying that an increase in non-performing loans corresponds to higher returns and bank size. However, the study observed a weak negative relationship between return on equity and return on assets, alongside a notable negative correlation between the loan-to-deposit ratio and return on assets. Through linear regression analysis, the study accounted for the variance in the dependent variable, with identified predictors significantly influencing the model's outcomes. Acknowledging limitations such as a relatively small sample size and dependence on secondary data, this study nonetheless offers valuable insights into the portfolio management practices of Nepalese commercial banks. Notably, it underscores the significance of factors like non-performing loans and loan-to-deposit ratios in shaping profitability metrics. Moving forward, future research endeavors should aim to mitigate these limitations while broadening the scope to encompass a more comprehensive array of variables for a nuanced understanding of portfolio management practices within Nepal's banking sector. Keywords: Return on Assets, Return on Equity, Government Securities, Share and Debenture, Loan and Advance, Bank Size