Impact of merger and acquisition in Nepali banking sector: A case study of Prabhu Bank

Abstract

This study investigates the impact of mergers in the Nepalese banking sector by conducting a comprehensive financial performance analysis of Prabhu Bank Limited before and after its merger. The research objectives are twofold: firstly, to assess the influence of the merger on Prabhu Bank's financial performance; and secondly, to evaluate the broader significance of mergers within the Nepalese banking landscape. The analysis encompasses key profitability ratios, including Return on Loan and Advance Ratio, Return on Total Assets Ratio, and Return on Equity Ratio. Pre-merger and post-merger data are presented and examined, shedding light on the bank's ability to generate earnings from loans and advances, its overall asset efficiency, and its capacity to provide returns to shareholders. The findings reveal fluctuations in these ratios across the two periods, reflecting the complex interplay of economic conditions, interest rate dynamics, and borrower creditworthiness. Through a meticulous examination of the financial metrics, the study concluded that while the merger introduced volatility in the bank's performance, its overall efficiency and profitability remained steady. The study recommends a focus on seamless integration strategies, proactive risk management, diversified loan portfolios, and transparent communication with shareholders to optimize the positive impact of mergers and ensure sustained financial performance in the Nepalese banking sector.