A STUDY ON PROFITABILITY ANALYSIS OF

Kamana Sewa Bikash Bank Limited

A Project Work Proposal

Submitted By:
Manju Nagarkoti

TU Regd. No.:7-2-22-856-2018
College Roll no.: 358/075

Patan Multiple Campus

Patan Dhoka, Lalitpur

Submitted To
The Faculty of Management Tribhuvan University Kathmandu

In Partial Fulfillment of the Requirements for the Degree of BACHELOR OF

BUSINESS STUDIES (BBS)

Kathmandu
January 2023
Table of Contents
CHAPTER I: INTRODUCTION.............................................................................................1

1.1 Background........................................................................................................................1

1.2 Introduction to Kamana Sewa Bikash Bank.......................................................................2

1.3 Vision.................................................................................................................................3

1.4 Mission...............................................................................................................................3

1.5 Overall Strategic Objectives...............................................................................................3

1.6 Statement of Problem....................................................................................................4

1.7 Objectives of the study..................................................................................................4

1.8 Rationale of the Study........................................................................................................6

1.9 Limitation of the Study..................................................................................................6

1.10 Organization of the study..............................................................................................7

CHAPTER-II LITERATURE REVIEW..................................................................................8

2.1 Conceptual Review.............................................................................................................8

2.2 Brief Review of Literature.................................................................................................8

2.3 Research Gap......................................................................................................................8

CHAPTER-III RESEARCH METHODOLOGY....................................................................9

3.1 Research Design.................................................................................................................9

3.2 Research Methods..............................................................................................................9

3.3 Population and Sample.......................................................................................................9

3.4 Types of Data.....................................................................................................................9

3.5 Data Collection Procedure..................................................................................................9

3.6 Tools and Techniques of Analysis:....................................................................................9

3.7 Financial tools..................................................................................................................10

3.8 Statistical Tools:...............................................................................................................10

CHAPATER-IV PRESENTATION AND ANALYSIS OF DATA......................................11

Analysis of Profitability Ratios..............................................................................................11

REFERENCES.......................................................................................................................12
CHAPTER I: INTRODUCTION

1.1 Background
A bank is a type of financial institution that issues credit and accepts public deposits.
Through capital markets, lending activities can be carried out directly or indirectly.
Commercial/retail banks and investment banks are the two different categories of banks.
Banks are typically governed by the national government or central bank. Banks are heavily
controlled in the majority of nations due to their significance to the stability of a nation's
finances. Although banking as we know it today developed in the wealthy towns of
Renaissance Italy in the 14th century, it was in many respects a continuation of ideas and
conceptions of credit and lending that had their origins in the ancient world.
The Middle English term "bank" was derived from the Middle French word "banque," the
Old Italian word "banca," which means "table," and the Old High German word "banc,"
which means "seat, counter." Jewish Florentine bankers throughout the Renaissance used
benches as temporary desks or exchange counters instead of working at tables draped in
green tablecloths.
After giving governments a 51% ownership stake, Nepal Bank Limited was incorporated in
1937, marking the beginning of the country's banking sector. According to the Nepal
Commercial Bank Act from 2031 B.S., "a commercial bank refers to such type of bank that
deals in money exchange, accepting deposits, advancing loan, and commercial transaction
except some special function done by other specified bank such as co-operation agriculture
and industrial bank." The Nepal Bank Limited was founded in 1994 on 30th Kartik, B.S.
Currently, Nepal has 28 commercial banks.

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1.2 Introduction to Kamana Sewa Bikash Bank

The Kamana Sewa Bikash Bank Limited is a national-level development bank that is
supported by well-known business figures, groups, and reputable local citizens who have
achieved success in their fields of industry and profession while maintaining high standards
of moral character and social standing. Kamana Sewa Bank is dedicated to providing a
broad range of banking products and services tailored with cutting-edge technology to meet
the specific needs of every customer/client and thereby delight them by exceeding their
expectations. This is done under the direction of a reputable Board of Directors and a
professional and dynamic management team with extensive experience and a proven track-
record in the banking industry.

The Kamana Sewa Bank Team is dedicated to provide its esteemed customers high-quality
goods and services with the highest consideration and civility in accordance with the shared
goal of "Your Partner For Progress." We at Kamana Sewa think that the cornerstone for
establishing trust and boosting confidence between the client and the bank is the provision
of high-quality goods and services that are created or tailored to best meet the client's needs
through ongoing research, development, and innovation. As a result, the Kamana Sewa
Bank Team affirms its dedication to consistently working to supply cutting-edge goods and
services to all customers in order to best meet their needs. This will ensure the maximum
benefit and value addition for the consumer as well as for all other stake holders.

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1.3 Vision

To ease people's life.

1.4 Mission

To provide financial services and ease people's lives by committing the development and
expansion of the bank to the neighborhood, its residents, its patrons, its staff, and its
stockholders by:
1. meeting the financial expectations of all societal levels
2. delivering superior customer service through providing individualized, high-quality
services and goods
3. ensuring fair results for all relevant parties
4. utilizing cutting-edge technology with a focus on customer satisfaction and serving
as a powerful catalyst for socioeconomic improvements
5. keeping corporate governance standards high at all levels

Fundamental Principles and Code of Conduct

1. To fulfill its vision and goal, the Bank has established the following core
values:

2. Deliver comprehensive and high-quality financial services.

3. provide benefit to the stakeholders

4. Be responsible for following through on our commitments

5. Integrity and honesty should be shown at all times.

6. Be risk- and customer-conscious in equal measure.

7. Be productive and tech-savvy.

1.5 Overall Strategic Objectives

Maintain the bank's basic principles and code of behavior. The capacity to generate a
profit, which is a crucial component for a company's existence, is now referred to as
profitability. Every business organization was founded with the goal of making
money. Profits are necessary for a company' survival as well as for growth and
diversification since investors, creditors, and employees all desire a reasonable return
on their investment. And only by making a profit can a company organization fulfil its

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duty to diverse societal groups. The potential for the firm to generate profits
determines its continued survival, and it is also seen to be the primary element in
determining how well-known the business is. Profit also affects the business's ability
to borrow money. As a result, it is regarded as the primary variable in determining the
returns that the firm generates from the initial capital invested.

Profit and profitability are sometimes used interchangeably. However, there is really a
distinction between the two. Profit is a relative idea, but profitability is an absolute
phrase. They do, however, play different functions in business and are tightly
connected and reliant on one another. Profit is a financial advantage that is obtained
when the income from a commercial activity exceeds the costs, taxes, and other
expenditures required to maintain the activity. Profitability is quantified by the profit
expressed as a percentage of sales, or profit margin. The difference between total
revenue and entire expenses is known as profit.

Profitability was described as a measure of a firm's efficiency by Khan & Jain (1998).
It serves as a control measure for both operational effectiveness and a company's
earning capacity.

Profitability was defined by Weston & Copland (1998) as the sum of numerous
policies and choices. Ratios are utilized to gauge profitability and provide definitive
answers on how well the company is run. Therefore, the company's managers,
creditors, investors, and owners have an interest in the business's prosperity.

1.6 Statement of Problem

Gaining profits is a company undertaking's main goal. Making a profit is seen as being
crucial to a company' existence. According to Khartik & Varghese (2011), profitability
relies on greater resource and labor use. Increasing production capacity and using cutting-
edge technology to reduce labor costs and boost productivity are advantageous from both an
investment return and profitability standpoints.
The following topics are covered in the study: 
1. What is the Return on Equity?
2. Is the bank's profit margin adequate?
3. What is the bank's return on assets?

1.7 Objectives of the study

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Analyzing the bank's profitability is the study's key goal. And these are the exact goals:
1. To assess the bank's level of ROE; 
2. To assess the bank's level of ROE;
3. To assess the bank's level of ROA; 
4. To assess the bank's level of ROE

1.8 Rationale of the Study

This study will look at the bank's numerous ratios to see whether it has maintained the right
number of ratios or not. The purpose of the research is to get a thorough knowledge of
various organizational practices and policies, as well as how the bank's overall role in the
organization functions. The following parties might be listed as those to whom this research
will be useful and valuable:
1. To the shareholders (shareholders)
2. To the debtors (loan providers)
3. The depositors, please (account holders)
4. Additionally, this research will be equally helpful to other readers, students studying
relevant fields, and other individuals interested in the banking industry.

1.9 Limitation of the Study

There is much room for debate about the correctness and validity of the findings made on
the Bank of Kathmandu's ratio study. The following are some of this study's limitations:
1. Only secondary data that is readily accessible will be utilized to interpret decision-
related outcomes.
2. The lack of suitable literature journals has led some people to feel that the research is
insufficient.
3. Due to the department's ambiguous functioning, several duties from multiple
departments were left out.
4. Due to the rounding up of different variables, the ratio analysis may have a few
minor inaccuracies.
5. It is an analysis of Bank of Kathmandu transactions during a five-year period. As a
result, the case study's conclusion may not be as solid.
6. The research is only being undertaken to meet the requirements for the bachelor's
degree in business studies (BBS).
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7. Analysis has been done using basic tools

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1.10 Organization of the study

Chapter I contains a synopsis of the problem, the objectives of the study, the justification
for the study, its limitations, and the chapter structure. It also includes a brief description of
the bank in general and of the particular bank.

Chapter II conceptual review, a synopsis of the literature, and the research gap are
included.

Chapter III Describes the research methodologies that were used to identify the pertinent
information about the study, including the nature and sources of the data, the tools and
techniques of analysis.

Chapter IV To make the task of evaluation easier, it includes the methods of presenting
those pertinent data and analyzes them in terms of ratios. Finally, it includes significant
discoveries or the outcome.

Chapter V Covers the study's summary and conclusion as well as advice for the bank on
how to perform.

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 CHAPTER-II

LITERATURE REVIEW

2.1 Conceptual Review

According to the needs of the research topics, the majority and all of the practical,
experimental, and mediating data and information will be executed and expressed in
different diagrams, charts, tabular forms, etc. This will facilitate effective presentation and
evaluation of the subject matter.

2.2 Brief Review of Literature

Although many researchers have previously studied the profitability analysis of various
banks, including the majority of the in-depth information and data, this research will provide
additional, more current, actual, and precise information and data.

2.3 Research Gap

The stability and expansion of the economy are significantly influenced by the strength and
performance of the banks. For its operations to continue over the long term, a bank must run
smoothly. Additionally, the bank's ability to operate profitably and with adequate capital is crucial.
Their research and mine were conducted at different times. Therefore, there might be a difference in
our research's conclusion.

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 CHAPTER-III

RESEARCH METHODOLOGY

3.1 Research Design

A research design outlines in great detail how the study will be conducted. A research design will
typically outline how data will be gathered, the tools that will be used, how they will be used, and
how the data will be analyzed.
In addition, research design is a framework for research that aids in data collection, measurement,
and analysis while taking resource constraints into account. Descriptive and analytical research
designs will be used to achieve the study's goal.

3.2 Research Methods

The process of arriving at a solution to a problem through the planned and systematic
handling of the gathering, analyzing, and interpreting of facts and figures is known as
research methodology. Because the data I'll be using for my research comes from a
secondary source that has already been published, I'll be using the quantitative research
methodology.

3.3 Population and Sample

In Nepal, currently there are 27 Commercial Banks among them Bank of Kathmandu is taken as
sample for project work because it is reputed commercial bank which is able to gain the trust of
public in short span of time. Overall data of the bank are population whereas the data for 5 years
will be taken as sample.

3.4 Types of Data

The entire set of required documents for this study have been gathered from various sources.
Secondary sources are where we can find the information. Therefore, only secondary data should be
used. The bank's annual reports will be mined for the information needed for the study.

3.5 Data Collection Procedure

The last five years' worth of data for this study were gathered from the following sources: 
1. the Kamana Sewa Bikash Bank
2. Bank of Nepal's Annual Report
3. Online publications, bank news, additional books and magazines, etc.

3.6 Tools and Techniques of Analysis:

The collected data is tabulated after necessary adjustments for each overhead, but the following tools
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are used for data analysis:
We'll use a variety of monetary and statistical tools to analyze the data we've collected.

3.7 Financial tools

 Return on equity = Net income
 Total Equity

 Return on assets = Net income

 Total Assets

 Earning per share = Total earning

 No.of shares

 Net profit margin = Net income

 Total income × 100%

3.8 Statistical Tools:

Trend Analysis is the statistical technique used to examine the data.

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 CHAPATER-IV

PRESENTATION AND ANALYSIS OF DATA

The strategy for achieving the goals of the case study mentioned in chapter 1 is data presentation and
analysis. Various tools and techniques are used for this. These methods and tools are already
described in the section on "Research Methodology." Every data presentation is followed by an
analysis so that the proper conclusions can be made. As a result, information about deposit collection
and loan disbursement is presented and examined in this chapter.
The following tools are employed for analysis:

Analysis of Profitability Ratios

a) Return on Assets

b) Return on Equity

c) Net Profit Margin

d) Interest Income

e) Interest Expense

f) Total Operating Income

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REFERENCES
 Company Act,2063
 Nepal Rastra Bank Act,2058
 Bank And Financial Institution Act,2073
 Information obtained from the Kamana Sewa Bikash Bank Ltd. official website.
 What Is Profitability? - Definition & Analysis - Video & Lesson Transcript. (n.d.). Retrieved
from http://study.com/academy/lesson/what-is-profitability- definition-analysis-quiz.html

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