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1. i
Kathmandu University
School Of Management
Comparing and Analyzing Financial Statements
Standard Chartered Bank Ltd and Nabil Bank Ltd
Date of Submission: June 15. 2020
Submitted to:
Dr. PawanKumar Jha
Faculty of Accounting Information
Submitted By:
SectionA
Group B
Members:
Lasta Siddhi Bajracharya
(197012)
Shiwani Sharma (197089)
Anuska Jayswal (197035)
Manak Subedi(197112)
Siddhartha Lamichhane (197050)

2. ii
ACKNOWLEDGEMENT
We would like to express our deepest gratitude to our respected faculty, Dr. Pawan Kumar
Jha sir for providing us with this opportunity to carry out this project regarding the financial
statement comparison and analysis of the reputed banks of Nepal, Nepal Standard Chartered
Bank Limited and Nabil Bank. We are immensely pleased to have been familiar with the
banking affairs of Nepal and the rigorous process of the preparation of the financial
statements. Carrying out this research was extremely, informational, fruitful and productive
which has definitely been able to enhance the horizon of our accounting knowledge. As
banking career aspirants, it is a must for us to be acquainted with knowledge of banking and
accounting and this project has truly been helpful in attaining this objective. We would also
like to thank our family members for being extremely patient and helpful towards us while
we were dealing with our projects’ assignments at home. Also, we would like to thank our
friends for providing us with valuable suggestions and recommendations in completing this
project.

3. iii
TABLE OF CONTENTS
1. INTRODUCTION ............................................................................................................... 1
 INTODUCTION TO STANDARD CHARTERED BANK......................................1
 INTRODUCTION TO NABIL BANK......................................................................2
 . OBJECTIVE OF THE STUDY ...............................................................................3
2. LITERATURE REVIEW ....................................................................................................4
3. PERFORMANCE ANALYSIS THROUGH CAMELS APPROACH ............................... 5
4. REASEARCH METHODOLOGY...................................................................................... 6
 DATA AND SAMPLE ..............................................................................................6
 METHODS OF ANALYSIS......................................................................................6
 LIMITATION ............................................................................................................6
5. DATA ANALYSIS AND INTERPRETATION .................................................................7
 STANDARD CHARTERED BANK.........................................................................7
 NABIL BANK LIMITED........................................................................................15
6. CONCLUSION.................................................................................................................. 22
7. PRACTICAL IMPLICATIONS ........................................................................................ 23
8. REFERENCES .................................................................................................................. 24

4. 1
INTRODUCTION
A strong banking system is an essential factor towards the development of the country. For a
developing country like Nepal, it is essential to keep a check on the situation of prominent
banking institutions through comparison and analysis of the Financial Statements. Analyzing
and comparing financial statements helps to identify the trends and relationships
between financial statement items for management as well as external users.
Among the 28 commercial banks in Nepal, Standard Chartered Bank Ltd and Nabil Bank Ltd
are two of the most prominent mainstream banks in Nepal. These two are one of the two
current competing joint venture commercial banks. Nabil Bank is the first foreign joint
venture bank under National Bank Ltd, Bangladesh whereas Standard Chartered Bank is the
foreign joint venture bank which is the largest international bank currently operating in Nepal
under Standard Chartered Grind Lays Bank Ltd, Australia and United Kingdom. The
main role of commercial banks is to provide financial services to the general public and
business, ensuring economic and social stability and sustainable growth of the economy. In
this respect, credit creation is the most significant function of commercial banks.
In the context of Nepal, these commercial banks are important for the economic development
of the country. Therefore, analysis and comparison of the Financial Statements like Balance
Sheet, Cash Flow Statement etc using various ratios is done for Standard Chartered Bank Ltd
and Nabil Bank Ltd.
INTODUCTION TO STANDARD CHARTERED BANK
Standard Chartered Bank Nepal Limited is a leading bank in Nepal which has been in
operation since 1987 when it was initially registered as a joint-venture operation. Today the
Bank is an integral part of Standard Chartered Group having an ownership of 75% in the
company with 25% shares owned by the Nepalese public. The Bank enjoys the status of the
largest international bank currently operating in Nepal. It is a leading international banking
group, with more than 84,000 employees and a 150-year history in some of the world’s most
dynamic markets. The Bank believes in delivering shareholder value in a social, ethical and
environmentally responsible manner. Standard Chartered throughout its long history has
played an active role in supporting those communities in which its customers and staff live.
Standard Chartered Bank Nepal Limited provides a broad range of banking products and
services to a wide variety of clients and consumers comprising individuals, mid-market local
companies, multinational corporations, major public sector organizations, government
corporations, airlines, hotels and the development organization segment comprising of
embassies, aid agencies, NGOs and INGOs. It is Nepal's first bank to implement the policy of
Anti-Money Laundering and to apply the 'Know Your Customer' procedure to all customer
accounts.
Standard Chartered has played an important role throughout its long history in helping the
societies where its customers and employees live. It focuses on projects which help children,
especially in the areas of health and education. Environmental projects are also considered

5. 2
occasionally. The mission of the bank is to consistently help the customers make Intelligent
Financial Choices. By being the preferred provider of the Highest Quality services in the
Chosen business areas, Relevant to all the Constituencies. By being a Workplace of Choice
that fosters Excellence, builds Intellectual Network and results in Absolute Professionalism.
INTRODUCTION TO NABIL BANK
Nabil Bank Limited is the first private sector bank in the nation to start its business as of July
1984. Nabil was established to expand modern banking services of international standard to
various sectors of the society. In pursuit of its goal, Nabil offers a full range of commercial
banking services through its 93 representative points. Also, Nabil has presence throughout the
nation through over 1500 Nabil Remit agents.
Nabil is moving forward with a Mission to be “1st Choice Provider of Complete Financial
Solutions” for all its stakeholders; Customers, Shareholders, Regulators, Communities and
Staff. Nabil is determined in delivering excellence to its stakeholders in an array of avenues,
not just one parameter like profitability or market share. It is reflected in its Brand
Promise “Together Ahead”. The entire Nabil Team embraces a set of Values “C.R.I.S.P”,
representing the fact that Nabil consistently strives to be Customer Focused, Result Oriented,
Innovative, Synergistic and Professional.
Nabil, as a pioneer in introducing numerous revolutionary products and marketing strategies
in the domestic banking sector, represents a milestone in Nepal's banking history as it started
an era of modern banking with customer satisfaction calculated as a focal goal while doing
business. Bank operations including daily activities and risk management are managed by a
highly skilled and experienced management team. Bank is fully equipped with modern
technology that includes standard international banking software supporting e-channels and
e-transactions.
Nabil bank works with the underlying values of honesty, integrity, good work, ethics giving
back to the community and above all creating a sustainable and valuable business that not
only enables the bank to conduct business, develop products & services and deliver on the
goals and commitments but also creates opportunities, both social and economic for the
country. At Nabil, the vision is to be a bank for all across all geopolitical zones and
socioeconomic strata of the nation that can provide myriads of financial solutions and create
values for all our stakeholders, to stand in the community with our economic and civic roles.
Nabil Bank’s mission is to prove that the bank is driven by the spirit for realizing those
visionary aspirations. With that end in view, they work in partnership with their stakeholders
and the community at large. The roadmap to reaching where they have set their mind on is by
maneuvering our strategic action plans through a well-teamed and synergistic workforce into
industrial end products and customized services.

6. 3
OBJECTIVE OF THE STUDY
The objectives of comparing and analyzing the financial statement of Nabil Bank Ltd and
Standard Chartered Bank Ltd are as follows:
1. To make a comparative study of the financial strengths as well as weaknesses of both the
banking institutions.
2. To know the comparative position of joint venture banks in Nepal to know how similar or
different they are
3. To know about the practical implication of the study.
4. To know Assessment of Past Performance and Current Position of Nabil and Standard
Chartered Bank
5. Prediction of Net Income and Growth Prospects
6. To gain more knowledge about analysis and comparison of financial statements
7. To bring the knowledge gained through the course taught by the faculty into practical
practice

7. 4
LITERATURE REVIEW
This report is focused on the comparison and analysis of the financial statements of two
commercial banks listed at NEPSE which are Nepal Standard Chartered bank Ltd and Nabil
Bank Ltd. The report deals with the analysis and comparison of the two banks of the year of
2014-2015 and 2015-2016. The main objective or goal of making this report is to analyze the
financial statements of the banks and compare them. The main research methodology used to
obtain the data, analyze and compare it is secondary data collection method. The information
gathered in this report is mainly obtained from annual report and journals. The official site of
Standard Chartered Bank as well as Nabil Bank has provided its annual reports in a well
manner which made study of the financial statements easier. However, the study of the
financial statements is limited to the free information provided in the internet. None the less,
the group members have tried to use the knowledge to understand and analyze it.
Financial statements are written records that convey the business activities and the financial
performance of a company. Financial statements are often audited by government agencies,
accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.
Financial statements include:
 Balance sheet
 Income statement
 Cash flow statement
Basically, financial statement analysis deals with the process of reviewing and analyzing a
company’s financial statements to make the economic decisions. The main objectives are to
access the past performance, current position as well as predict the profitability and prospect
of the company.
The comparison and analysis of the financial statements of Standard Chartered Bank and
Nabil Bank is done using different ratios such as liquidity ratio, market value ratio,
profitability ratio, etc. Though the report required a lot of hard work it was very productive
and educative especially since we are business students who want to in a similar field.
Therefore, this project has been helpful, productive and educative.

8. 5
PERFORMANCE ANALYSIS THROUGH CAMELS
APPROACH
1. Capital Adequacy
Examiners assess institutions' capital adequacy through capital trend analysis. Examiners also
check if institutions comply with regulations pertaining to risk-based net worth requirement.
To get a high capital adequacy rating, institutions must also comply with interest and
dividend rules and practices. Other factors involved in rating and assessing an institution's
capital adequacy are its growth plans, economic environment, ability to control risk, and loan
and investment concentrations.
2. Asset Quality
Asset quality covers an institutional loan's quality which reflects the earnings of the
institution. Assessing asset quality involves rating investment risk factors that the company
may face and comparing them to the company's capital earnings. This shows the stability of
the company when faced with particular risks. Examiners also check how companies are
affected by fair market value of investments when mirrored with the company's book value of
investments.
3. Management
Management assessment determines whether an institution is able to properly react to
financial stress. This component rating is reflected by the management's capability to point
out, measure, look after, and control risks of the institution's daily activities.
4. Earnings
An institution's ability to create appropriate returns to be able to expand, retain
competitiveness, and add capital is a key factor in rating its continued viability. Examiners
determine this by assessing the company's growth, stability, valuation allowances, net interest
margin, net worth level and the quality of the company's existing assets.
5. Liquidity
To assess a company's liquidity, examiners look at interest rate risk sensitivity, availability
of assets which can easily be converted to cash, dependence on short-term volatile financial
resources and ALM technical competence.
6. Sensitivity
Sensitivity covers how particular risk exposures can affect institutions. Examiners assess an
institution's sensitivity to market risk by monitoring the management of credit concentrations.
In this way, examiners are able to see how lending to specific industries affect an institution.
These loans include agricultural lending, medical lending, credit card lending, and energy
sector lending.

9. 6
REASEARCH METHODOLOGY
Using CAMELS Parameters, the rating of individual banks is done along five key
parameters- Capital adequacy, Asset quality, Management capability, Earnings capacity, and
Liquidity. Each of the five dimensions of performance is rated on a scale of 1 to 5, varying
from fundamentally strong bank to fundamentally weak bank. This model has been applied in
the following select banks.
DATA AND SAMPLE
We had to choose secondary data instead of primary data because it was the most readily
available choice for us and there was no relevance of using primary data because the financial
reports of both the banks were publicly published. Due to this there seemed to be no use of
visiting the banks and collecting the data.
The limitations of using secondary data are:
 Doesn’t provide up to date information
 Lack of control over data quality
The present study seeks to evaluate the financial performance of the two banks of Nepal
under NEPSE, representing the nationalized commercial bank (i.e. Standard Chartered Bank
and Nabil Bank). We have selected these two banks for the study, keeping in view their role
and involvement in shaping the economic conditions of Nepal, specifically in terms of
advances, deposits, manpower employment and branch network etc. The present study is
mainly based on secondary data drawn from the annual reports of the respective banks. This
data is related to 3 years (2014-2016).
METHODS OF ANALYSIS
Using CAMELS Parameters, the rating of individual banks is done along six key parameters-
Capital adequacy, Asset quality, Management capability, Earnings capacity, Liquidity and
sensitivity to the market. Each of the six dimensions of performance is rated on a scale of 1 to
6, varying from fundamentally strong bank to fundamentally weak bank. This model has been
applied in the following select banks.
LIMITATION
It was the first time any of us ever did this type of project due to which there were a lot of
problems. All of us didn’t know the proper ways to analyze the data due to which it took us a
lot of time to complete the project. Also, we had to analyze the financial data of of 4 years
two banks but we could not get the clear information of both banks in a single annual report.
Due to this, we had to cancel all our progress and start all over again with the quarterly report.
Also, some of the annual reports were written in Nepali which made it difficult for us to
understand the terms used.

10. 7
DATA ANALYSIS AND INTERPRETATION
STANDARD CHARTERED BANK
PROFIT AND LOSS ACCOUNT
Particulars 2015-2016(Rs.) 2014-2015(Rs.)
Interest Income 2,415,582,668 2,571,011,989
Interest Expenses 565,704,649 657,496,524
Net Interest Income 1,849,878,019 1,913,515,465
Commission and Discount 357,519,713 362,963,897
Other Operating Incomes 48,095,736 38,009,978
Exchange Fluctuation Income 629,555,473 613,935,937
Total Operating Income 2,885,048,940 2,928,425,277
Staff Expenses 484,135,635 468,277,976
Other Operating Expenses 438,913,878 420,973,157
Provision for Possible Losses 260,751,090 188,682,237
Operating Profit 1,701,248,338 1,850,491,907
Non-Operating Income/ (Loss) 37,852,982 63,860,761
Provision for Possible Loss Written Back 257,973,683 149,688,331
Profit from Ordinary Activities 1,997,075,003 2,064,040,999
Income/ (Expenses) from Extra Ordinary Activities 1,787,396 17,525,496
Net Profit after considering all Activities 1,998,862,399 2,081,566,495
Provision for Staff Bonus 181,714,764 187,099,491
Provision for Income Tax 524,653,003 584,115,087
-Current Year's Tax Provision 502,475,497 586,716,733
-Up to Previous Year's Tax Provision 856,419 7,746,200
-Current Year's Deferred Tax Income/Expenses 21,321,087 (10,347,846)
Net Profit/Loss 1,292,494,632 1,310,351,917

11. 8
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars 2015-2016 2014-2015
Income
Accumulated Profit up to Previous year 32,606,508 10,028,482
Adjustment to Opening Reserve (443,643)
This Year’s Profit 1,292,494,632 1,310,351,917
Deferred tax 89,556,937
Actuarial Gain/ (Losses) 880,000 2,099,000
First Time adoption of NFRS (25,231,350) (12,987,130)
Deferred Tax Previous Year (264,000) (629,700)
Total 1,390,042,728 1,308,418,926
Expenses
General Reserve Fund 258,498,926 258,005,070
Proposed Dividend 49,340,807 431,883,592
Proposed Issue of Bonus Shares 937,475,333 562,040,300
Exchange Fluctuation Fund 29,357,997 23,883,456
Investment Adjustment Reserve 1,200
Total 1,274,674,264 1,275,812,418
Accumulated Profit/ (Loss) 115,368,464 32,606,508

12. 9
BALANCE SHEET
Capital and Liabilities 2015-2016(Rs.) 2014-2015(Rs.)
Share Capital 3,749,901,333 2,810,201,500
Reserves and Fund 3,774,273,853 3,282,542,250
Loans and Borrowings 500,000,000 -
Deposit Liability 55,727,178,456 57,286,482,037
Bills Payable 310,183,573 177,086,075
Proposed Dividend 49,340,807 431,883,592
Other Liabilities 1,074,854,457 1,070,848,625
Total Liabilities 65,185,732,479 65,059,044,079
Assets 2015-2016 (Rs.) 2014-2015 (Rs.)
Cash Balance 799,366,056 785, 63,609
Balance with Nepal Rastra Ban 1,514,671,384 9,308,116,260
Balance with 1,658,294,743 1,478,689,578
Banks/Financial Institution
Money at Call and Short Notice 6,069,660,000 11,973,546,000
Investments 23,094,621,556 13,120,062,528
Loans, Advances 31,302,949,596 27,681,313,256
and Bills Purchased
Fixed Assets 71,306,083 83,853,400
Other Asset 674,863,061 627,826,967
TotalAssets 65,185,732,479 65,059,044,079

13. 10
STATEMENT OF CASH FLOW
2015-2016 2014-2015
Rs. `000 Rs. `000
Cash flow from operating activities
Loss/ (profit) before taxation 1,802,164
1,878,693
Adjustments for non-cash items and non-operating adjustments
Depreciation 20,463 15,242
Gain on disposal of assets (20,696)
(51,747)
Dividend income (9,373)
(11,133)
Defined benefit plan net charge 20,673 21,353
Changes in Operating assets and Liabilities
Change in operating assets (7,134,928)
(9,293,811)
Change in operating liabilities (857,505)
11,111,897
Contributions to defined benefit schemes (88,104) (11,732)
Taxes Paid (541,301)
(569,216)
Net cash from operating activities (6,808,608) 3,089,546
Cash flows from investing activities
Purchase of property, plant and equipment (31,079) (39,408)
Disposal of property, plant and equipment 43,860 60,786
Dividends received from investment in securities 9,373
11,133
Net cash used in investing activities 22,154 32,511
Cash flows from financing activities
Issue of ordinary and preference share capital, net of expenses 2,225 2,322
Dividends paid to ordinary shareholders, net of scrip (359,627) (828,541)

14. 11
Net cash (used in)/from financing activities (357,402) (826,219)
Net increase/ (decrease) in cash and cash equivalents (7,143,856) 2,295,838
Cash and cash equivalents at beginning of year 9,211,143 6,915,305
Cash and cash equivalents at the end of the year 2,067,287 9,211,14
LIQUIDITY RATIO
Computation of Current Ratio
Fiscal year Current assets Current
liabilities
Current ratio
2015/016 42019804840 57161557293 0.73:1
2014/015 51855128151 58966300329 0.87:1
To know the liquidity position of a company, the first step is to analyze the current ratio. Its
essential in this regard as it shows the ability of a firm to pay its current liabilities. A good
current ratio to have is between 1 and 1.2 which makes it easy for the firm to clear short term
liabilities.
However, from the above table we can see that Standard Chartered has doesn’t have an
optimal current ratio in both 2015/16 and 2014/15 fiscal years. Their current ratio is less than
1, specifically 0.73:1 in 2015/16 and 0.87:1 in 2014/15. This means that Standard Chartered
can face liquidity problems if it isn’t careful and does nothing to improve its current ratio.
Computation of Quick Ratio
Fiscal year Quick assets Current liabilities Quick ratio
2015/016 41344941779 57161557293 0.72:1
2014/015 51227301184 58966300329 0.86:1
Similar to current ratio, the quick ratio is the ratio between the most liquid current assets and
current liabilities. So, it shows the ability of a company to pay off its current liabilities
immediately if the need arises.
In this regard as well the position of Standard Chartered isn’t optimal as its quick ratio comes
under 1, specifically 0.72:1 in 2015/16 and 0.86:1 in 2014/15. So unless the bank finds a way
to hold on to its liquid assets for a period of time or decrease current liabilities, in order to
improve its quick ratio, it might face liquidity problems.

15. 12
SOLVENCY RATIO
Computation of Debt Ratio
Debt ratio is simply the ratio of total liabilities (debt) and total assets. It essentially indicates
the portion of a company's assets that were financed by creditors. So, its better for a firm to
have lower debt to assets ratio as it would indicate security while the higher a company's debt
to assets ratio is, there is more risk involved.
In this regard Standard Chartered has improved from 0.90:1 in 2014/15 to 0.88:1 in 2015/16.
While the ratio of 0.88:1 is not optimal and shows that the firm is in risk as most of its assets
are financed by creditors; it is still a slight improvement from the 2014/15 fiscal year.
Computation of Debt Equity Ratio
Fiscal
year
Total Debt Total Shareholder’s fund Debt Equity Ratio
2015/016 57661557293 7524175186 7.66:1
2014/015 58966300329 6092743750 9.69:1
The debt to equity ratio is another important ratio which measures the relative proportion
of debt and shareholder's equity used to finance the firm's assets. In the case of banks a lower
debt equity ratio is preferred as lower debt equity ratio means that a company has more equity
than debt.
In this regard we can see that this debt equity ratio is far from optimal and as a result this
can deter investors from investing in the bank as they view it as a risky investment. And even
though 7.66:1 is far from optimal we must say that even this is a huge improvement from
9.69:1 from the 2014/15 fiscal year.
Fiscal year Total debt Total assets Debt ratio
2015/016 57661557293 65,185,732,479 0.88:1
2014/015 58966300329 65,059,044,079 0.90:1

16. 13
PROFITABILITY RATIO
Computation of Return on Assets
Fiscal year Net Income Total Assets ROA
2015/016 1,292,494,632 65,185,732,479 1.98%
2014/015 1,310,351,917 65,059,044,079 2.01%
Return on Assets (ROA) essentially indicates how efficiently a firm generates income using
its assets. So we can say that higher ROA is good for a firm. However when looking at banks
they generally have lower ROA than other firms and through the above data we can say that
the current position with the ROA is pretty good for Standard Chartered.
Though the ROA of Standard Chartered has decreased from the 2014/15 financial year, the
current ROA of the bank is still pretty good.
Computation of Return on Equity
Fiscal year Net income Shareholder’s Equity ROE
2015/016 1,292,494,632 3,749,901,333 34.46%
2014/015 1,310,351,917 2,810,201,500 46.62%
Return on Equity (ROE) is the indicator which shows the ability of a firm to generate income
from the available shareholder's equity. So, a higher return of equity is generally considered
as good. In this regard as well Standard Chartered is well off as it has ROE of more than 30%
in both fiscal years we took into consideration. Although the ROE has undeniably decreased
from 2014/15 fiscal years, a ROE of 34.46% is still far from bad and so we can safely say the
Standard Chartered is doing good in this regard. However the fluctuation of 12% is also huge
and steps should be taken by the bank to ensure that the ROE doesn’t fluctuate again that
much in the span of a single fiscal year.
Net interest margin
Fiscal year Net interest income Total assets NIM
2015/016 1,849,878,019 65,185,732,479 2.83%
2014/015 1,913,515,465 65,059,044,079 2.94%
Net interest margin is the measure of the difference between the interest income generated
and interest paid (net interest income) relative to the amount of their assets. For banks, this
figure is particularly important as a major source of their income is through interest on loans
they provide. It is generally better for banks to have higher NIM.

17. 14
The NIM for Standard chartered has decreased from 2.94% in the 2014/15 fiscal year to
2.83% in the 2015/16 fiscal year. Although the NIM has decreased the NIM of 2.83 percent is
still pretty good and indicates that Standard Chartered is doing well in this regard.

18. 15
NABIL BANK LIMITED
PROFIT AND LOSS ACCOUNT
Particulars 2015-16 (Rs.) 2014-2015 (Rs.)
1. Interest Income
2. Interest Expense
Net Interest Income
3. Commission and Discount
4. Other Operating Income
5. Exchange Income
6,170,462,161
1,829,490,964
4,340,971,197
508,797,332
381,205,183
586,057,240
5,778,165,636
2,233,742,466
3,544,423,170
500,560,120
271,608,285
512,477,284
Total Operating Income 5,817,030,952 4,829,068,859
6. Staff Expense
7. Other Operating Expense
8. Exchange Loss
787,900,575
623,965,573
-
754,703,900
630,050,041
-
Operating Profit before Provision
for Possible Losses
4,405,164,804 3,444,314,918
9. Provision for Possible Losses 5,076,142 169,025,826
Operating Profit 4,400,088,662 3,275,289,092
10. Non-Operating Income
/(Expense)
11. Provision for Possible Losses
Write Back
44,435,966
52,150,704
29,544,181
2,095,609
Profit from Regular Activities 4,496,675,332 3,306,928,882
12. Income/(Expense) from Extra-
ordinary Activities
(47,300,717) (2,924,675)
Profit from All Activities 4,449,374,615 3,304,004,207
13. Provision for Staff Bonus
14. Provision for Income Tax
Current Tax
Prior Period Tax
Deferred Tax
15. Share of Non-Controlling
Interest in the Profit of Subsidiary
405,835,874
1,201,867,899
1,212,397,367
-
(10,529,468)
18,209,803
301,711,292
897,224,652
908,094,962
-
(10,870,310)
6,905,483
Net Profit/(Loss) 2,823,461,039 2,098,162,780

19. 16
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars 2015-2016 2014-2015
Income
1. Accumulated Profit up to Last Year (Restated Balance)
2. Current Year’s Profit
3. Exchange Equalization Fund
4. Capital Adjustment Reserve
5. Deferred Tax Reserve
6. Investment Adjustment Reserve 13,149,583
7. Dividend Equalization Fund
8. Contingent Reserve
706,821,569
2,823,461,039
-
-
-
-
-
250,000
492,933,551
2,098,162,780
-
-
-
-
-
449,733
Total 3,543,682,191 2,591,546,064
Expense
1. Accumulated Loss up to Last Year - -
2. Current Year’s Loss - -
3. General Reserve
4. Contingent Reserve
5. Institution Development Fund - -
6. Dividend Equalization Fund - -
7. Employees Related Reserve - -
8. Proposed Cash Dividend
9. Proposed Stock Dividend (Bonus Shares)
10. Special Reserve Fund
11. Exchange Fluctuation Fund
12. Capital Redemption Reserve
13. Capital Adjustment Fund
14. Deferred Tax Reserve
15. Investment Adjustment Reserve –
16. Effects of changes in Controlling Interest held in
Subsidiary
-
-
564,000,000
1,000,000
-
-
-
713,485,440
1,426,970,880
5,141,155
59,200,000
108,000,000
-
10,529,468
-
5,257,711
-
-
419,000,000
1,000,000
-
-
-
250,260,537
1,097,296,200
-
45,500,000
60,000,000
-
10,870,310
797,448
Total 2,893,584,654 1,884,724,495
17. Accumulated Profit/(Loss) 650,097,537 706,821,569

20. 17
BALANCE SHEET
Capital and liabilities 2015-16 2014-2015
Share Capital
Reserves & Surplus
Non-Controlling Interest
Debentures & Bonds
Borrowings
Deposits
Bills Payable
Proposed Dividend
Income Tax Liabilities
Other Liabilities
6,183,540,480
5,453,679,291
112,763,605
300,000,000
1,900,000,000
110,210,927,524
453,715,059
713,485,440
-
2,291,247,767
4,754,950,200
4,764,561,193
38,741,506
300,000,000
-
103,957,095,808
243,433,464
250,260,537
1,792,061
4,385,990,637
Total 127,619,359,166 118,696,825,406
Assets 2015-16 2014-15
Cash Balance
Balance with Nepal Rastra
Bank
Balance with
Banks/Financial
Institutions
Money at Call and Short
Notice
Investment
Loans, Advances and Bills
Purchased
Fixed Assets
Non-Banking Assets
Other Assets
1,640,632,219
5,826,016,495
3,025,881,300
819,418,493
36,109,856,759
76,106,016,881
802,280,175
-
3,289,256,844
1,820,201,446
12,984,904,257
3,846,621,869
323,541,000
30,978,933,625
65,501,925,164
827,282,530
-
2,413,415,515
Total 127,619,359,166 118,696,825,406

21. 18
STATEMENT OF CASH FLOW
Particulars 2015-2016 (Rs.) 2014-2015 (Rs.)
(a) Cash Flowfrom Operating Activities
1. Cash Received
1.1 Interest Income
1.2 Commission and Discount Income
1.3 Income from Foreign Exchange Transaction
1.4 Recovery of Loan Written Off
1.5 Other Incomes
2. Cash Payment
2.1 Interest Expenses
2.2 Staff Expenses
2.3 Office Operating Expenses
2.4 Income Tax Paid
2.5 Other Expenses
(4,487,947,084)
7,387,446,568
5,897,879,989
517,439,157
586,057,240
4,864,999
381,205,183
(4,607,554,147)
(1,829,280,488)
(1,045,619,275)
(511,176,016)
(1,215,390,059)
(6,088,308)
7,044,098,092
6,882,809,668
5,588,838,994
502,307,281
512,477,284
7,577,824
271,608,285
(4,728,838,488)
(2,233,637,671)
(1,073,824,960)
(511,054,345)
(909,964,125)
(357,387)
Cash Flowbefore changes in Working Capital 2,779,892,421 2,153,971,181
(Increase)/Decrease in Current Assets
1. (Increase)/Decrease in Money at Call and Short Notice
2. (Increase)/Decrease in Other Short-Term Investment
3. (Increase)/Decrease in Loans, Advances and Bills
Purchase
4. (Increase)/Decrease in Other Assets
(13,283,449,781)
(495,877,493)
(1,455,177,074)
(10,614,808,030)
(717,587,183)
(23,210,829,651)
414,313,000
(13,026,706,096)
(10,961,185,057)
362,748,502
Increase/(Decrease) in Current Liabilities
1. Increase/(Decrease) in Deposits
2. Increase/(Decrease) in Certificates of Deposits
3. Increase/(Decrease) in Short Term Borrowings
4. Increase/(Decrease) in Other Liabilities
6,015,610,275
6,253,831,716
-
1,900,054,673
(2,138,276,114)
28,100,956,563
28,596,326,612
-
(7,554,561)
(487,815,488)
Increase/(Decrease) in Current Liabilities
1. Increase/(Decrease) in Deposits
2. Increase/(Decrease) in Certificates of Deposits
3. Increase/(Decrease) in Short Term Borrowings
4. Increase/(Decrease) in Other Liabilities
6,015,610,275
6,253,831,716
-
1,900,054,673
(2,138,276,114)
28,100,956,563
28,596,326,612
-
(7,554,561)
(487,815,488)
(c) Cash Flowfrom Financing Activities
1. Increase/(Decrease) in Long term Borrowings (Bonds,
Debentures etc) - -
2. Increase/(Decrease) in Share Capital*
3. Increase/(Decrease) in Other Liabilities
4. Increase/(Decrease) in Refinance/facilities received from
NRB - -
5. Dividend Paid
(104,042,554)
-
66,419,400
-
(170,461,954)
(1,801,073,324)
-
1,051,920
-
(1,802,125,244)
(d) Income/(Loss)from change in exchange rate in Cash
& Bank balance
- -
(e) Current Year’s Cash Flowfrom All Activities (8,159,197,557.78) 5,698,291,796
(f) Opening Cash and Bank Balance 18,651,727,571 12,953,435,775
(g) Closing Cash and Bank Balance 10,492,530,014 18,651,727,571

22. 19
LIQUIDITY RATIO
Computation of Current Ratio
Fiscal year Current assets Current
liabilities
Current ratio
2015/016 90707222230 113669375800 0.8:1
2014/015 86890609250 108838572500 0.8:1
From the above table we can see that current ratio for Nabil bank is less than optimal. Which
it has remained constant in both fiscal years the current ratio of 0.8:1 is still not optimal as it
shows that the current liabilities are more than the current assets, and if nothing is done to
improve this, the bank can face liquidity problems in the future.
Computation of Quick Ratio
Fiscal year Quick assets Current liabilities Quick ratio
2015/016 87417965390 113669375800 0.77:1
2014/015 84477193740 108838572500 0.78:1
In this case as well the quick ratio for Nabil bank is not optimal. The ratio of 0.77:1 shows
that the current liabilities cannot be paid off by the most liquid current assets immediately if
the need arises. So the bank should try to take its quick ratio to at least 0.85:1 or 0.9:1 if they
don’t want to face liquidity problems in the future.
SOLVENCY RATIO
Computation of Debt Ratio
The debt to assets ratio from the above table shows that the majority of the bank's assets are
financed by creditors. This ratio has also not fluctuated significantly through the fiscal years
and Nabil should work towards lowering this ratio from 0.91:1 as currently the position of
Nabil is risky as most of its assets are financed through debt.
Fiscal year Total debt Total assets Debt ratio
2015/016 115982139400 127,619,359,166 0.91:1
2014/015 109177314000 118,696,825,406 0.92:1

23. 20
Computation of Debt Equity Ratio
Fiscal
year
Total Debt Total Shareholder’s fund Debt Equity Ratio
2015/016 115982139400 11637219770 9.96:1
2014/015 109177314000 9519511393 11.47:1
The debt to equity ratio is another important ratio which measures the relative proportion
of debt and shareholder's equity used to finance the firm's assets. In the case of banks a lower
debt equity ratio is preferred as lower debt equity ratio means that a company has more equity
than debt.
From this table we can see that Nabil has decreased its debt equity ratio from 11.47:1 to
9.96:1. However 9.96 is still considerably high and Nabil should work to lower it further in
order to attract more investors as well as for its overall well being.
PROFITABILITY RATIO
Computation of Return on Assets
Fiscal year Net Income Total Assets ROA
2015/016 2,823,461,039 127,619,359,166 2.21%
2014/015 2,098,162,780 118,696,825,406 1.77%
From the above table we can see that Nabil has become more efficient in using their assets to
generate more net income. This is made clear because of the increase in ROA from 1.77% in
the 2014/15 fiscal year to 2.21% in the 2015/16 fiscal year. This ROA is pretty good,
especially for a bank and so we can say that Nabil is well off in this regard.
Computation of Return on Equity
Fiscal year Net income Shareholder’s Equity ROE
2015/016 2,823,461,039 11637219770 24.26%
2014/015 2,098,162,780 9519511393 22.04%
From the above table we can see that Nabil increased its ROE from an already high 22.04%
to 24.6%. Since the ROE reflects how efficiently a firm has used its shareholder's equity in

24. 21
generating income, a higher ROE is generally better and so we can see that Nabil is well off
in this regard as well.
Net interest margin
Fiscal year Net interest income Total assets NIM
2015/016 4,340,971,197 127,619,359,166 3.40%
2014/015 3,544,423,170 118,696,825,406 2.98%
Net Interest Margin is a major indicator that shows how good a bank is doing in generating
income through their interests relative to total assets. So, a higher NIM is better for a bank
and from the above table we can see that Nabil increased its already high NIM of 2.98% in
2014/15 to 3.40% in 2015/16.

25. 22
CONCLUSION
So, when comparing the various ratios and other indicators that showed how well a bank is
doing, we found similar results from both Standard Chartered and Nabil bank. In this
comparison we considered important aspects such as liquidity, solvency as well as
profitability. The results when tallied side by side are as follows:
Ratios Nabil Bank Limited Standard Chartered
Limited
2015-16 2014-15 2015-16 2014-15
Current Ratio 0.8:1 0.8:1 0.73:1 0.87:1
Quick Ratio 0.77:1 0.78:1 0.72:1 0.86:1
Debt Ratio 0.91:1 0.92:1 0.88:1 0.90:1
Debt Equity Ratio 9.96:1 11.47:1 7.66:1 9.69:1
Return on Assets 2.21% 1.77% 1.98% 2.01%
Return on Equity 24.26% 22.04% 34.46% 46.62%
Net interest margin 3.40% 2.98% 2.83% 2.94%
For liquidity analysis we considered current and quick ratio. We found that across the board
the statistics of both Standard Chartered and Nabil bank were similar except in the cases of
Return on Equity (ROE), Debt equity ratio and Net Interest Margin (NIM) where the
differences were more noticeable. In the case of ROE and Debt equity ratio, Standard
Chartered was in a better position whereas for NIM, Nabil was better off. Also, we came to
notice that except in the ratios concerning solvency, Standard Chartered Bank’s position was
getting weaker in the 2015/16 fiscal year. This drop is apparent when looking at current ratio
and ROE as in these indicators their position taken a significant drop from the 2014/15 fiscal
year. On the other hand, when looking at Nabil bank's position with the help of these
indicators we found that their position has been getting better significantly than the fiscal year
2014/15. Their ROA, ROE and NIM had increased significantly, they had lowered their debt
ratio and debt equity ratio in their favor and even their liquidity ratios remained pretty much
the same.
So, even though when just looking at the above table we see that their positions with regards
to various factors such as liquidity, solvency as well as profitability might look the same,
things are totally different once we consider the drop and rise of favorable positions of
Standard Chartered and Nabil Bank respectively. Finally through all this analysis we have
come to the conclusion that though their current positions with regard to solvency, liquidity
and profitability are similar, if the trends we have observed continue then Nabil Bank will be
in a significantly better position than Standard Chartered before long.

26. 23
PRACTICAL IMPLICATIONS
 The general purpose of financial decision making is to provide baseline for the
analysis and comparison of the financial situation of the corporation. Investors
use the information gathered from the financial statements such as the results of
operations, financial position, and cash flows of an organization which helps to
make decision regarding the value and credit worthiness of the company. The
information present in financial accounting helps to understand the history, and
current financial condition of the company.
 Financial reports represent information base for business decision making. Management
of the company is focused on the perception of future events as a result of the present
decision, while accounting is ex post oriented. For businesses as well as people,
finances affect everything. People make decisions about what they can and can't do
based on their incomes and outflows. Financial decisions help in the growth of the
company as correct decisions are the key base of growth.
 Financial decisions help the creditors access the liquidity, solvency and the value of
the business or company. The creditors rely on various ratios which are derived from
the financial statements of the company.
 Businesses do this even more so, as their livelihood is tied to turning a profit. The
impact of finances on how businesses make decisions fills books and is an area of
study for business schools. A cursory review shows a few primary types of decisions
that hinge on a company's financial health.
 In the market businesses constantly strive to grow to increase revenues, margins and
profits. Financial decisions help in the growth of the company as correct decisions are
the key base of growth and expansion.
 It also helps to determine the company's financial position that the company needs to be
in order to grow vary widely by industry, size of business, market and even the taste for
risk of the management and ownership.
 It also helps the businesses to determine regarding the allocation of resources.

27. 24
REFERENCES
Nabil Bank Limited first private commercial bank, (2020) Nabil Bank Limited, Retrieved
from https://nabilbank.com/index.php/component/investor/#
Annual-Reports- Standard Chartered Bank Nepal, (2020) Standard Chartered Bank Limited,
Retrieved from https://www.sc.com/np/investor_relations/annual-reports/en/
About us| Standard Chartered Bank| Nepal, (2020) Standard Chartered Bank limited,
Retrieved from https://www.sc.com/np/about-us/
About Nabil Bank, (2020) Nabil Bank Limited, Retrieved from
https://nabilbank.com/index.php/intro/about-nabil-bank.html