PROFITABILITY RATIO ANALYSIS OF NABIL BANK

A PROJECT WORK REPORT

Submitted by:

SHANKAR BHANDARI

TU Reg. No: 7-2-25-983-2020

Symbol No.: 700250279

Nepal Commerce Campus

Group: Finance

Submitted to:

The Faculty of Management

Tribhuvan University

Kathmandu

In Partial Fulfillment of the Requirement for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Kathmandu, Nepal

June, 2025
 DECLARATION

I hereby declare that the project work entitled “PROFITABILITY RATIO ANALYSIS OF
NABIL BANK” submitted to the faculty of Management, Tribhuvan University, Kathmandu
is an original piece of work under the supervision of Mr. Gyanendra Bikram Shah, Faculty
member of Nepal Commerce Campus, Kathmandu; and is submitted in the partial fulfillment
of the requirement for the award of Bachelor of Business Studies (BBS). The project work
report has not been submitted to any other Universities or Institutions for the award or any
degree or diploma.

Signature:

Shankar Bhandari

June, 2025
 SUPERVISOR’S RECOMMENDATION
The project work report entitled “PROFITABILITY RATIO ANALYSIS OF NABIL
BANK” submitted by Shankar Bhandari of Nepal Commerce Campus, Kathmandu is
prepared under my supervision as per the procedure and format requirements laid by the
Faculty of Management, Tribhuvan University, as partial fulfillment of the requirements for
the award of the degree of Bachelor of Business Studies (BBS). I therefore recommend the
project work report for the evaluation.

Signature:

Name of Supervisor: Gyanendra Bikram Shah

Name of Campus: Nepal Commerce Campus, Min-bhawan

Date: June 2025

 ENDORSEMENT
We hereby endorse the project work report entitled “PROFITABILITY RATIO
ANALYSIS OF NABIL BANK” submitted by Shankar Bhanadari of Nepal Commerce
Campus, Min-bhawan Marg in partial fulfilment of the requirement for the award of
Bachelor of Business Studies (BBS) for external evaluation.

……………………… …………………………

Ass. Prof. Dr. Jitendra Prasad Upadhyay Prof. Dhurv Parsad Silwal

Head, Research Committee Campus chief

June, 2025 June, 2025

 ACKNOWLEDGEMENT
I would like to express my heartfelt gratitude to all those who have helped me to prepare this
Project report. Firstly, I would like to thank Tribhuvan University for providing us the
opportunity to prepare this project report which will broaden our theoretical knowledge and
understanding into a practical approach.

I would like to express my gratitude towards Supervisor Mr. Gyanendra Bikram Shah who
patiently and tirelessly guided me in the preparation of this project report. Thank you very
much for your constant and consistent encouragement in the task of preparing this project
even though the going proved daunting.

I am also very thankful to my parents, friends and relatives for great support in every stage of
study like financial, internet searching and printing and providing reference to gather
information regarding the topic. I therefore express my gratitude and regards to my friends
for their unconditional support throughout my study.

Shankar Bhandari

Researcher

BBS 4th Year

Nepal Commerce Campus, Min-bhawan Marg

 Table of Contents
CHAPTER- I INTRODUCTION.................................................................................................11
1.1. Background of the Study...............................................................................................11
1.2. Profile of the organization.............................................................................................12
1.2.1. Banking services rendered by Nabil bank.............................................................13
1.3. Statement of the problem...............................................................................................13
1.4. Objective of the study....................................................................................................14
1.5. Significance of the study...............................................................................................14
1.6. Literature review............................................................................................................15
1.6.1. Conceptual review.................................................................................................15
1.6.2. Review of previous work.......................................................................................16
1.7. Research methodology...................................................................................................17
1.7.1. Research Design....................................................................................................17
1.7.2. Population and sample...........................................................................................18
1.7.3. Types of data..........................................................................................................18
1.7.4. Data collection procedure......................................................................................18
1.7.5. Tools used..............................................................................................................18
1.8. Organizations of the study.............................................................................................18
1.9. Limitation of the study...................................................................................................19
Chapter II.......................................................................................................................................20
RESULTS AND ANALYSIS.........................................................................................................20
2.1 Presentation and Analysis of Data.................................................................................20
2.1.1. Net profit Margin...................................................................................................20
2.2. Key Findings..................................................................................................................25
CHAPTER III: SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS........................26
3.1 Summary..............................................................................................................................26
3.2 Conclusion...........................................................................................................................26
3.3 Recommendations................................................................................................................27
REFERENCES..............................................................................................................................29
ABBREVIATIONS
 CHAPTER- I
INTRODUCTION
1.1.Background of the Study

Every firm is most concerned with its profitability. One of the most frequently used tools of
financial ratio analysis is profitability ratios, which are used to determine the company's
bottom line and its return to its investors. Profitability measures are important to company
managers and owners alike. If a small business has outside investors who have put their own
money into the company, the primary owner certainly must show profitability to those equity
investors. Profitability ratios show a company's overall efficiency and performance.

The word bank comes from an Italian word 'banco', meaning a bench, since Italian merchants
in the Renaissance made deals to borrow and lend money beside a bench. They placed the
money on that bench. Some person takes its origin the banker would keep his money and his
records. Generally, Bank is an Institution which accepts deposits, makes business loans and
offers related services. Bank is an organization which deals with financial transactions and
collects deposits from those people who have surplus money and lend it to those people who
need money for different purposes. In an economy, the bank is regarded as one of the
economic backbones of the country for its development. Bank is a financial institution that
deals in money. The basic function of bank is collecting deposits and granting loans. It
involves credit creation that in related to creation of deposit and loans ‘In the economy' the
bank collects small saving of general people, accumulative it and lends to the productive
sectors of the society for the overall economic development.

To determine the efficiency of bank maximum returns is not sufficient, profitability analysis
is also important for banks. Profitability analysis shows the ratio between profit and
investment, which helps to motivate the organization to perform well.
1.2.Profile of the organization

Nabil Bank Ltd is the Nepal’s first ever joint venture bank that initiated its operation on
12th July 1984. Nepal bank (international) limited Ireland was its joint venture partner at
that time. It also received management support from national bank of Bangladesh, Dhaka
at the time of inauguration. Its authorized capital used to have only rs.100 million at the
starting time. Now it has ascended its capital to Rs.500 million. With advancement it has
14 branches on a national scale which is the utmost number of any joint venture bank in
Nepal. NABIL bank is distinguished for providing the latest technology with vastly
personalized service. Most of its banking activities and services are done through
computers. NABIL provides different services like ATM, credit cards, tele-banking
services, e-banking services, safe deposit locker services. Besides these services
NABIL is the only bank to maneuver inside the international airport of arrival and
departure of cargoes. NABIL has drawing arrangements with 75 banks in 40 countries of
the world and with the exchange companies and banks as well. The policies of his
majesty’s government and Nepal Rastra Bank rules and regulations preside over NABIL.
Among different commercial banks, Nabil bank is the commercial bank which collects
money from generally from public and invests that amount in different productive sectors.
It does not accept deposit and provide loans but also transfer money from one place to
another place or person has an agent. Nabil bank is expanding its branch according to
needs, want and market of people or public.
Table 1.2
Board of Directors of Nabil Bank Limited
Upendra prasad Poudyal Chairman
Nirvana Chaudhary Director
Mayal Mukherjee Director
Ananta Poudyal Director
Pravin Tibrewala Director
Syed Mansur Mustafa Director
Sarita Bhatta Adhikari Director
 1.2.1. Banking services rendered by Nabil bank

Nabil Bank Limited offers a comprehensive range of banking services designed to meet
the needs of individuals, businesses, and institutions. In the retail segment, the bank
provides savings accounts, current accounts, fixed deposits, personal loans, home loans,
vehicle loans, debit and credit cards, and education loans, all aimed at helping individuals
manage their personal finances effectively. For corporate clients, Nabil Bank offers
business loans, overdraft facilities, trade finance services, and cash management
solutions, along with advisory services in areas like mergers, acquisitions, and project
finance. The bank also has a strong presence in investment banking, providing capital
raising services, underwriting, and financial consulting. In addition, Nabil Bank is at the
forefront of digital banking in Nepal, offering services such as mobile banking through
the Nabil Smart app, internet banking, ATM and POS services, and digital payments. The
bank also facilitates foreign exchange, remittance services, and foreign currency accounts
for individuals and businesses engaged in international transactions. Furthermore, Nabil
Bank supports sectors such as agriculture and microfinance through specialized loan
products and collaborates with insurance companies to offer various insurance services.
With a strong focus on customer convenience and innovation, Nabil Bank continues to
deliver modern and efficient financial services across its network.

1.3.Statement of the problem

Nabil Bank is currently facing several significant challenges that are affecting its financial
stability and operations. One of the major issues involves a performance guarantee of
around ₹1 billion issued for the Upper Trishuli 3B hydropower project. Due to a court
order in China, the bank has been unable to recover this amount from China Everbright
Bank, forcing it to set aside the amount as a loss. This has added pressure to the bank’s
capital reserves. At the same time, the Nepal Rastra Bank (NRB) rejected Nabil’s plan to
issue Rs 5 billion worth of preference shares, which was intended to strengthen its capital
base. As a result, the bank’s capital adequacy ratio has dropped close to the regulatory
minimum, raising concerns about its financial resilience.
 Further complicating matters is criticism regarding Nabil’s loan recovery practices. The
bank has allegedly begun taking over distressed businesses indirectly through consultants,
a move seen as an attempt to bypass NRB regulations that prohibit banks from operating
businesses. Additionally, complaints have been raised that the bank has violated repayment
procedures by prioritizing principal repayment before interest, contrary to NRB rules.
These actions have prompted regulatory scrutiny.
Moreover, Nabil Bank’s merger with Nepal Bangladesh Bank (NBB) has encountered
delays due to internal disagreements over staff alignment and demotions, hindering the
integration process. On the customer service front, the bank has received mixed feedback,
with many clients expressing dissatisfaction with branch service, delays in digital KYC
processes, and inefficiencies in handling IPO applications and remittances. Altogether,
these issues highlight a period of operational, regulatory, and reputational challenges for
Nabil Bank that require urgent attention and corrective measures.

1.4.Objective of the study

A study is concluded, and the report is prepared with certain objectives kept in mind. In the
absence of specific objectives, studying loses its value. The general purpose of the study is
to discuss, examine and evaluate the profitability position of NABIL Bank Limited, thus
this study has been conducted to achieve the following objectives.
1. To assess the profitability position of Nabil Bank Limited using financial ratios.
2. To understand the trends and implications of profitability over the selected time frame.
3. To compare profitability ratios with industry benchmarks or peer banks, if applicable.

1.5.Significance of the study

The study of profitability analysis of NABIL Bank Ltd. helps to find out the profitability
position or performance of the bank. Every organization must analyze its financial
performance in every step of its operation, promotion and expansion. There should be an
appropriate equilibrium between the earning and non-earning assets. Commercial banks
are always guided by the objective of profitability. All financial decisions of commercial
 banks are for the betterment of shareholder’s wealth. The study ponders to find out whether
Nabil bank Ltd is alert or not in this regard.
This study will be helpful to enhance the financial performance of concern organization.
This study will be useful and valuable for academicians, students, teachers and investors in
the field of accounting and finance. This study enlightens the shareholders, finance
agencies, stock exchange, stock traders, customers, depositors and debtors who can
objectively identify the better banks to deal with.
The main significance of this study are as follows:
1. The study helps the public to have information about the profitability performance of the
bank.
2. The study helps to analyze the efficiency of the bank in terms of their profitability.
3. The study assists future researchers to know how NABIL banks manage their
profitability.

1.6.Literature review

Literature review refers to the study of pervious research works and book with the purpose
of knowing the issue in detail and finding out the appropriate methodology to solve the
issue. Literature review is the basis of research nearly in every academic concerning the
research topic by himself/ herself. It helps researchers to know what has been found about
the topic and what news contribution can be made or necessary. It supports the researcher
to explore the relevant and true facts for the reporting purposes in the field study. Literature
review is a very important aspect of research. This chapter highlights upon the existing
literature. For this several books, dissertations, reports, handouts and articles published in
journals and newspapers are reviewed.

1.6.1. Conceptual review

conceptual review provides the fundamental theoretical framework and foundation to the
present study. For these various books, research papers, articles etc. dealing with
theoretical aspect of profitability is taken into consideration.
Profitability
Profitability means the ability to make profit from all the business activities of an
organization. Company, firm, or enterprise. It shows how efficient management can make
profit by using all the resources available in the market. according to Harward and Upton,
“profitability is the ability of a given investment to earn a return its use.”
Profitability serves as a measurement of efficiency, and a guide to further improvement. It
is critical in determining a firm overall health. In terms of revenue and profit it can be
define as the capacity to generate profit from all the aspects of a business; illustration how
proficient the management is in yielding revenue by employing available resources.

1.6.2. Review of previous work

Profitability ratio analysis is a crucial tool in assessing the financial performance and
operational efficiency of banking institutions. Several studies have analyzed the
profitability ratios of Nabil Bank Limited to assess its financial performance over time.
Profitability ratios, including Net Profit Margin (NPM), Return on Assets (ROA), and
Return on Equity (ROE), are commonly used to measure a bank's ability to generate
earnings relative to its revenue, assets, and shareholder equity. According to Van Horne &
Wachowicz (2005), profitability ratios help stakeholders understand how well a company
converts sales into profits and how efficiently it utilizes its assets. These metrics are
particularly relevant in the banking sector, where margins are often narrow and
competition is intense.
Several empirical studies have been conducted on Nepalese commercial banks, including
Nabil Bank. Shrestha (2014) analyzed the financial performance of selected commercial
banks in Nepal and found that Nabil Bank consistently reported high profitability ratios
compared to its peers. The study concluded that Nabil’s effective risk management,
diversified loan portfolio, and strong customer base contributed to its superior
profitability performance.
Similarly, Thapa and Neupane (2017) studied the relationship between bank size and
profitability and concluded that Nabil Bank’s large asset base and high operational
efficiency contributed significantly to its strong ROA and ROE. The research emphasized
that profitability in Nepalese banks is influenced not only by internal financial
management but also by external factors such as regulatory policies and market
competition.
Moreover, Bhattarai (2019) examined the trend analysis of financial ratios of Nabil Bank
over five years and observed a stable growth pattern in net profit margin and return on
assets. However, the study also highlighted fluctuations in ROE due to changes in equity
structure and dividend payout policies. It was suggested that continuous monitoring of
cost efficiency and credit risk is necessary to maintain sustainable profitability.
In the context of the Nepalese banking sector, profitability ratio analysis also plays a
pivotal role in investment decisions. Investors often rely on these ratios to assess the
financial health of banks. As per NRB Financial Stability Report (2022), profitability
ratios are also used by regulatory bodies to assess the resilience and performance of
banks considering economic pressures such as liquidity constraints and market shocks.
Subedi (2020) conducted a comprehensive review using key financial indicators such as
Return on Assets (ROA), Return on Equity (ROE), and Earnings Per Share (EPS),
concluding that Nabil Bank maintained a stable profitability trend.
Gajurel (2022) expanded on this by incorporating statistical tools like mean and
coefficient of variation, highlighting the bank's efficient resource utilization and
consistent earnings.
Similarly, Tamang (2017) emphasized the bank’s strong financial standing through ratio
analysis, underscoring its effective management practices.
Collectively, these studies affirm that Nabil Bank has demonstrated sound financial
health through sustained profitability.
In conclusion, the literature consistently underscores the importance of profitability ratio
analysis in measuring the financial strength of banks. For Nabil Bank, these ratios have
reflected strong performance historically, though recent challenges such as capital
adequacy concerns and merger integration issues may influence future profitability
metrics. Therefore, continuous profitability ratio analysis remains essential for
understanding the financial sustainability and strategic direction of Nabil Bank in a
competitive and evolving banking environment.
1.7.Research methodology

Research methodology refers to the various sequential steps to be adopted by a researcher

in studying a problem with certain objectives in view. It is a research method used to test
the hypothesis. It describes the method and process applied in entire subject of the study.

1.7.1. Research Design

This study follows a descriptive research design, focusing on the analysis of profitability
ratios of Nabil Bank Limited using historical financial data. It aims to describe and
interpret the bank’s financial performance over a selected period without manipulating
any variables.
1.7.2. Population and sample
The population of this study includes all commercial banks operating in Nepal. However,
Nabil Bank Limited has been selected as the sample using purposive sampling due to its
strong market presence and consistent financial reporting. The study covers data from the
last five fiscal years.
1.7.3. Types of data
This study is based on secondary data, primarily obtained from the published annual
reports, financial statements of Nabil Bank Limited, and related research articles. No
primary data was collected.
1.7.4. Data collection procedure
The required secondary data was collected from the official website of Nabil Bank
Limited, its annual reports, and financial publications. Additional supporting information
was gathered from research journals and online academic resources.
1.7.5. Tools used
For this study, financial tools such as Return on Assets (ROA), Return on Equity (ROE),
Net Profit Margin (NPM), and Earnings Per Share (EPS) were used to assess profitability.
Statistical tools like mean, standard deviation, and coefficient of variation were applied to
analyze data trends and consistency.

1.8.Organizations of the study

The study has been organized into four chapters, each devoted to some aspects of the study
of capital structure. Chapter One to four consists of introduction, research methodology,
presentation and analysis of data, and summary, conclusions, and recommendations of the
 study. The rationale behind this kind of approach is to follow a simple research
methodology approach.
Chapter One: It deals with major issues to be investigated along with background of the
study, statement of the problem, and objectives and scope of the study, literature review of
capital structure analysis in bank in view of different scholars and investors, the research
methodology employed in the study such as research design, nature and sources of data,
and data analysis tools.
Chapter Two: The second chapter deals with the results and analysis of information and
data collected during the study.
Chapter Three: This chapter deals with the findings and results of the data presentation and
analysis. This includes summary and conclusions.

1.9.Limitation of the study

The study is not free from some limitation that the researcher has experienced during
research work activities performance and generation drawn regarding the study of financial
analysis of Prabhu Bank Ltd. The limitation served as constraints to perform the assigned
task effectively and efficiently. From the start of this study some force has restricted the
area of study, which may interrupt the accuracy, fluency knowledge limitation of this
whole work.
1. The study focuses solely on Nabil Bank Limited, without comparing it to other
commercial banks.
2. Only secondary data from published reports and financial statements were used, which
may limit the scope of accuracy.
3. The analysis covers data from only the last five fiscal years, potentially omitting long-
term financial trends.
4. The study does not account for external factors like market conditions or government
policies that might affect profitability.
 Chapter II

RESULTS AND ANALYSIS

2.1 Presentation and Analysis of Data
The subject matter and objective of this study has been introduced in the first chapter. To
achieve those objectives necessary analytical tools and techniques have been discussed in
unit “Research and Methodology”. In this unit relevant data has been presented and analyzed
with reference to profitability ratio analysis of Nabil banks. This chapter thesis work presents
the data, facts, figures and their interpretation. The data is raw information which is
meaningless until and unless analyzed and presented in a systematic manner. This thesis is
based on secondary data. To fulfill the objective of study, the relevant data collected from
secondary sources are presented and analyzed by using various appropriate financial,
statistical and graphical tools and techniques. The analysis of data consists of organization,
tabular graphical representations of profitability condition of bank.
1.1.1. Net profit Margin
Net Profit, also known as net income or net earnings, is the amount of money a company
earns after subtracting all expenses from its total revenue. These expenses include the
cost of goods sold (COGS), operating expenses, interest, taxes, and any other costs. It
represents the company’s actual profit during a specific period and is a key indicator of
financial performance. The net profit margin is calculated by:
Net Profit Margin = Net profit
Revenue

Table no. 2.1

 Net Profit Margin

Net Profit (in

Fiscal Year Revenue (in million) NPM (%)
million)
2019–20 3,463.24 18,669.76 18.55

2020–21 4,527.52 20,844.95 21.72

2021–22 4,260.00 18,522.00 23.00

2022–23 6,400.00 50,690.00 12.62

2023–24 6,200.00 49,840.00 12.44

Total 88.33

Average 17.666
S.D (σ)
4.437
C.V (%)
25.12%
 Graph 1: Net Profit vs Revenue

The Net Profit Margin measures the percentage of revenue that remains as net profit after all
expenses are deducted. In the fiscal year 2019–20, the bank achieved a net profit of NPR
3,463.24 million against a revenue of NPR 18,669.76 million, resulting in a Net Profit Margin of
18.55%. The following year, 2020–21, saw an improvement with net profit rising to NPR
4,527.52 million and revenue increasing to NPR 20,844.95 million, which raised the NPM to
21.72%.
In 2021–22, Nabil Bank generated a net profit of NPR 4,260 million from revenue of NPR
18,522 million, reaching its highest NPM of 23.00% during the study period. However, a
significant decline was observed in the subsequent years. In 2022–23, despite higher net profit of
NPR 6,400 million and increased revenue of NPR 50,690 million, the NPM fell sharply to
12.62%. The decline continued in 2023–24, where the net profit stood at NPR 6,200 million with
revenue of NPR 49,840 million, resulting in an NPM of just 12.44%.
On average, the Net Profit Margin over the five-year period was 17.67%, with a standard
deviation of 4.437 and a coefficient of variation of 25.12%, indicating a moderate level of
fluctuation. The decreasing trend in recent years suggests that the bank’s profit margins have
come under pressure, possibly due to increasing operational costs, regulatory challenges, or
changing market dynamics.
Table 2.2: Return on Assets

Net Profit (in

Fiscal Year Assets (in million) ROA (%)
million)

2019–20 3,463.24 237,680.03 1.46

2020–21 4,527.52 291,026.23 1.56
2021–22 4,260.00 419,820.00 1.01
2022–23 6,400.00 481,200.00 1.33
2023–24 6,200.00 557,020.00 1.11

Total 6.47

Average 1.294
S.D (σ)
0.207
C.V (%)
15.99%
 Graph 2: Net Profit vs Total Assets

Return on Assets reflects the efficiency with which the bank utilizes its total assets to generate
net profit. In the fiscal year 2019–20, Nabil Bank reported assets worth NPR 237,680.03 million
and net profit of NPR 3,463.24 million, resulting in an ROA of 1.46%. The ROA reached its
peak at 1.56% in 2020–21, supported by an increase in both net profit and total assets.
In 2021–22, while assets grew substantially to NPR 419,820 million, the net profit slightly
declined, resulting in a lower ROA of 1.01%. In 2022–23, total assets further increased to NPR
481,200 million and net profit rose to NPR 6,400 million, yielding an ROA of 1.33%. However,
in 2023–24, despite asset growth to NPR 557,020 million, net profit declined slightly, reducing
the ROA to 1.11%.
The average ROA during the study period was 1.29%, with a standard deviation of 0.207 and a
coefficient of variation of 15.99%. This indicates relatively stable asset utilization but highlights
a gradual decline in asset profitability, which may require improved credit management and
operational efficiency.

Table 2.3: Return on Equity

Net Profit (in Shareholders'

Fiscal Year ROE (%)
million) Capital (in million)

2019–20 3,463.24 25,855.66 13.39

2020–21 4,527.52 29,805.94 15.19
2021–22 4,260.00 52,980.00 8.04
2022–23 6,400.00 56,910.00 11.24
2023–24 6,200.00 58,680.00 10.57

Total 58.43

Average 11.686
S.D (σ)
2.446
C.V (%)
20.93%
 Graph 3: Net Profit vs Shareholders' Capital

Return on Equity measures the profitability relative to shareholders' equity, reflecting

how well the bank generates returns for its owners. In 2019–20, Nabil Bank achieved a
net profit of NPR 3,463.24 million with shareholders' capital of NPR 25,855.66 million,
resulting in an ROE of 13.39%.
In 2020–21, ROE increased to 15.19% as both profit and equity improved. However, a
significant rise in shareholders’ capital to NPR 52,980 million in 2021–22, combined
with a decline in net profit, led to a sharp drop in ROE to 8.04%. In 2022–23, ROE
improved slightly to 11.24% as profit increased, but it decreased again to 10.57% in
2023–24 despite a modest decline in net profit and continued equity growth.
The five-year average ROE was 11.69%, with a standard deviation of 2.446 and a
coefficient of variation of 20.93%, indicating moderate variability. The overall declining
trend in ROE suggests that while capital accumulation has strengthened the bank’s
stability, it has simultaneously diluted profitability per unit of equity.

1.2. Key Findings

  The major things that I found throughout the analysis of Profitability of Nabil Bank
Limited are as follows:
 The Net Profit Margin exhibited a strong performance initially, peaking at 23.00% in
2021–22, but declined sharply to 12.44% by 2023–24.
 Return on Assets remained relatively stable, averaging 1.29%, though a slight decline
is observable in the later years.
 Return on Equity showed the highest variability, with a peak of 15.19% and a low of
8.04%, indicating that increasing equity levels have impacted returns to shareholders.
 Profitability ratios reflect that while the bank maintained strong performance in
earlier years, external and internal challenges in recent years have impacted financial
efficiency.
 Operational costs, regulatory interventions, and merger-related issues may have
contributed to the recent decline in profitability.

CHAPTER III: SUMMARY, CONCLUSIONS, AND

RECOMMENDATIONS

3.1 Summary
Profitability refers to an organization's ability to generate earnings using its available resources
while controlling expenses. Profitability analysis examines how efficiently a company operates
to earn profit from its overall activities. It is a key indicator of financial strength and operational
performance.
In this research, the facts and results obtained in the previous chapters have been summarized.
The first chapter provided a comprehensive introduction to the study, including the background
of the research, a brief profile of Nabil Bank Limited, the statement of the problem, objectives,
significance of the study, literature review, research methodology, limitations, and structure of
the report. The literature review was conducted based on theoretical frameworks of banking
principles and past empirical studies relevant to profitability analysis. Suitable research
methodologies have been applied to analyze and evaluate the profitability condition of the
selected bank.
The second chapter focused on the presentation and analysis of collected financial data. The
financial data from the bank's published reports were presented in an organized manner using
tables, figures, and statistical tools. The profitability ratios such as Net Profit Margin (NPM),
Return on Assets (ROA), and Return on Equity (ROE) were calculated and analyzed
systematically to examine the bank's financial performance over the selected five-year period.
The third chapter summarizes the overall findings and presents the conclusions derived from the
analysis. In addition, this chapter includes the key findings, conclusions, and recommendations
for improving the bank’s future profitability performance.

3.2 Conclusion
Based on the comprehensive financial ratio analysis conducted in this study, it can be concluded
that Nabil Bank Limited has demonstrated strong profitability performance in the earlier fiscal
years of the study period. However, in recent years, the profitability indicators such as Net Profit
Margin, Return on Assets, and Return on Equity have shown a declining trend.
The analysis indicates that the bank has maintained satisfactory revenue generation capabilities,
but rising operational costs, regulatory interventions, and market competition have exerted
pressure on its profit margins. The decreasing Return on Assets suggests that the bank needs to
improve its efficiency in utilizing its expanding asset base. Similarly, the fluctuating Return on
Equity reflects the impact of increasing shareholders' equity and comparatively slower profit
growth, resulting in diluted returns to shareholders.
Furthermore, external factors such as the bank’s merger integration process, regulatory decisions,
and certain operational inefficiencies have also contributed to the declining profitability
performance in recent years. Therefore, while the overall financial position remains stable,
proactive measures are required to enhance operational efficiency and maintain sustainable
profitability levels in the future.

3.3 Recommendations
Based on the study's findings and conclusions, the following recommendations have been
presented to strengthen the profitability position of Nabil Bank Limited:
a) Effective Cost Control:
 The bank should adopt effective cost management strategies to reduce operating expenses
and maintain stable profit margins. Regular review of operational efficiency can help
identify and eliminate unnecessary costs.

b) Improvement in Asset Utilization:

Proper credit appraisal and risk assessment processes should be strengthened to ensure
optimal utilization of the bank’s assets. Efforts should be made to minimize non-
performing assets to improve asset-based returns.

c) Balanced Capital Growth:

The bank should maintain an appropriate balance between capital expansion and
profitability to prevent excessive dilution of shareholders’ returns. Capital raising
activities should align with expected growth in profitability.

d) Investment in Technology:

Technological advancements should be incorporated in banking operations to improve

service delivery, operational efficiency, and customer satisfaction. This will also help
reduce administrative costs in the long run.

e) Strengthening Risk Management:

The bank should enhance its risk management framework and ensure compliance with
regulatory guidelines to mitigate financial and operational risks.

f) Diversification of Income Sources:

The bank should explore alternative revenue-generating activities such as investment

banking, wealth management, and advisory services to reduce dependency on traditional
interest income.

g) Improvement in Customer Service:

The bank should focus on improving its service quality, digital platforms, and customer
relationship management to enhance customer loyalty and attract new clients.

h) Efficient Merger Integration:

 The bank should resolve internal challenges related to staff alignment and operational
integration resulting from the recent merger to realize the full benefits of consolidation.

REFERENCES

Nabil Bank Limited. (2019–2024). Annual Reports. Retrieved from https://www.nabilbank.com

Nepal Rastra Bank. (2022). Financial Stability Report. Nepal Rastra Bank, Kathmandu.
Subedi, B. (2020). Profitability Analysis of Nepalese Commercial Banks. Journal of Economics
and Management Studies, 5(3), 87-98.