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Profitability Analysis OF Jyoti Bikash BANK
This is a format of the BBS 4th year report of Jyoti Bikash Bank. Hope...
Course
Research Work (BBS 250)
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Tribhuvan Vishwavidalaya
Academic year: 2023/2024
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CHAPTER I
INTRODUCTION
1 Backgroundof the study
Profit is a financial benefit that is realized when the amount of
revenue gained from a business activity exceeds,cost and taxes
needed to sustain the activity. Any profit that is gained goes to the
business’s owner,who may or may not decide to spend it on the
business. Profit is a term that often describes the financial gain a
business receives when revenue surpasses costs and expenses.
Terms with similar meanings include ‘earning’ , ‘income’ and
‘margin’. Every business should earn sufficient profits to survive and
grow over a long period of time. In general, profit refers to a
financial gain, especially the difference between the amount earned
and the amount spent in buying, operating, or producing something.
In other word profit is an amount of money that you gain when you
are more for something than it cost you to make, get, or do it.
Thus,profit is not just the reward to owners but it is also related with
the interest of other segments of the.
Profitability is the ability to earn profit from all the activity of the
business. It is a measure of an organizations profit relative to its
expenses. In other words, it is a ability of a company to use its
resources to generate revenues in excess of its expenses. it is
composed of two words profit and ability. The word profit represents
the absolute figure of profit but an absolute figure alone does not
give an exact ideas of the adequacy or otherwise of increase or
change in performance as shown in the financial statement of the
business. The word abililty reflex the power of the business to earn
profit, it is called earning performance.
Profitability indicates earning capacity of the banks. It highlights the
managerial competency of the banks. It also portrays work culture,
operating efficiency of the banks.
profitability is the ability to make profit from all the business
activities of an organization, company, form or an enterprise. it
shows how effeciently the management can make profit by using all
the resources available in the market. profitability is the primary
goal of all business ventures. without profitability the business ill not
survive in the long run. so,measuring cureent and past profitability
and projecting future profitability is very important.
1 Profile of the organization
Jyoti Bikash Bank Ltd. JBBL is a national level development bank
licensed by Nepal Rastra Bank and has started its operation from 9th
sharwan 2065 (24th july 2008). Jyoti Bikash Bank limited is a national
level development bank engagedin commercial banking activity
with category “kha” license from Nepal Rastra Bank. Jyoti Bikash
Bank Limited is establish for providing banking facilities to the
general public for various purpose. Jyoti Bikash Bank Limited aims to
serve wide range of customers with its unique customer oriented
quality service from branches all over the country. JBBL has 97
branches in nepal including the head office, 73 are inside the valley
and 24 are outside the valley. JBBL also provides ATM services to
the costumers. JBBL has 25 ATM in nepal.
The purpose of JBBL is to bring meaningful and perennial prosperity
in the lives of citizens through provision of wide range of highly
accessible financial services and dissemunation of related financial
information therein. The vision of JBBLis to be established as an
institution with the larger cause of citizens and society at the center,
delivering modern, informed and easy financial services by building
upon best practices of
to achieve. The study mainly aims at finding out the general and
specific objectives of jyoti bikash bank ltd.
1.4 General objectives
To analyze the profitability condition of JBBL.
To analyze the financial performance of JBBL.
1.4 specific objectives
To determine the net profit margin of JBBL.
To provide recommendations and suggestion for improvement of
financial performance JBBL.
To calculate the ROE and ROA of JBBL.
1 Rationale
The rationale of the research is the reason for conducting the study.
The study is needed because it is very useful to the companies to
identify the strengths and weakness of the respective companies,
students for further researches, investors etc. Some of the reasons
are summarized in the following points.
This study helps the public to analyze risk of banks. it helps to
public to believe that whether their fund is secured or not.
This study helps to check the profitability condition of JBBL.
This study helps to understand the financial condition of JBBL.
It also helps to compare the performance with the standard set.
It is useful to the students of banking and finance to study the
profitability and productivity.
1 Review of litrature
Review of literature is the study of previous research works and
books
with the purpose of knowing the research issue in details and find
out appropriate methodology. Review of litrature is helps to know
what have been establish on a topic in a past and what are there
strenth and weakness. It is also the reading of the works of others
before commencing on our own research work. It paves the way for
better research so, for this study, I have analyzed some previous
works and reports.
1.6 Conceptual review
Literature survey is that descriptive analysis of any specific topic
which is related only that topic and gives more essential
information. It helps to guide the researcher to be in track to fullfill
the objective of the study.
Loan is also the important source of profit for banks.
Many scholars in discussing about the loan policies said that there is
positive relationship between lending policy and the profitability of
bank.
1.6 Review of previous work
Khadka, (2018) has conducted a study on profitability analysis of
JBBL. The study has used the secondary data to evaluate the trend
and ability for the acievement of janata bank. It determine net
interest margin, return on equity, return on assets and net profit
margin of janata bank and also evaluate how the company increase
net profit.
The study show that the net profit margin table of 2060/2070 to
2070/2071 has been increasing. After the FY 2070/2071 the net
profit margin again has decreased by slightly percent. Then in FY
2072/2073 to 2073/2074, it has again increased. this shows that the
bank has performing effectively. The ROA of the bank seem
flucating. The ROA has increased in FY 2071/2072 which implied
strong efficiency and operating performance of the bank. However
the ROA is slowly decreasing in FY 2072/2073 due to unable to
utilize the resources property. ROA is comparativ analyze which
show that the company who has the higher ROA implied a best
company.
Thuyaju, (2017) has conducted a study on “profitability analysis of
sanima bank limited.’’
Profitability ratios are measure of performance the indicates the
amount of the firm is earning to base such as sales, assets or
equity. The main objectives of this study are profitability analysis of
sanima bank limited. The specified objectives of this study is to
explore about profit marginand eps ofsanima bank over the past
year, to find the roa and roe of sanima bank in recent year. He bank
is running in good profit in respect with both total assets and better
debt equity position of the firm. The major finding of the study are:
The study shows mean, median, skewness, kurtosis and standard
deviation of EPS, ROA and ROE.
1 Method of the study
This research method is concern with various methods and
techniques. It is systematic way to carry out the research. It follows
the secondary sources of data collection various aspects of the
reseach methodology of data collection are as research design,
population and sample,source of data, data collection procedure,
tools, limitation of the study. The research goes through the
quantitative approach of the study.
It includes:
1.7 Research design
A rearch desing is the agreement conditions, for the collection and
analysis of data in careful manner that aims to combined relevance
to the research purpose with economy in procedures. It is a
framework of research which helps in collection, measurement and
analysis of data. There are various types of research design among
which descriptive research desgin is most appropriate research
design for this study. This study ais on profitability analysis of Jyoti
Bikash Bank Ltd. This study is mainly based on secondary data. This
research tries to perform a well designed qualitative research in
very clear and direct way using both financial and statistical tools.
1.7 Population and sample
Sampling means a specific unit which represents a whole. It is a unit
drawn out from the population available. A researcher must
sepecially define the target population about which they want to
make the judgment. Among the bank, only one bank will be taken
using convenience sampling method for the study i Jyoti Bikash
Bank Limited.
1.7 source of data
There are two sources of data i primary data and secondary data.
This research is based on secondary data. secondary data can be
collacted either from public or private sources not for immediate
study but for some spific purpose. The necessary data are collected
from records, financial reports, and journals of Jyoti Bikash Bank Ltd.
1.7 Data collection procedures
The research desing followed for the study was analytical as well as
descriptive. Data collection can be gather from group discussion,
interview, obsevation, quationerie etc. For analytical purpose the
souvenir published by Jyoti Bikash Bank Limited. Published bulletins,
broachers, leaflet, record and other related respective data of
various year were collected. The period covers only few years for
the descriptive purpose.
1.7 Tools
Various financial and statistical tools are used to analyze collected
data to achieve the objective of the study. The tools that are used
for data analysis are as follows:
1.7.5 Statistical tools
Return on equity measures the rate of return on the ownership
interest of the common stock owners while net profit is focused on
the profit earned by commercial banks. The return on equity is a
measure of the profitability of a business in relation to the equity.
The ROE is calculated by dividing net income by the shareholders
equity. The fomula of Return on equity is given below.
Return on Equity =
Net profit after tax
Shareholders equity
iii. Return on Assets
Return on Assets is a metric used to evaluate how efficiently a
company is able to generate profit with the assets it has available.
ROA is an indicator of how profitable company assets are in
generating profit. ROA is most useful when comparing two
companieswithin the same industry. This is because the assets that
are required to do business in different industries from one another,
making it hard to appropriatetely compare, say, an airline and a law
firm. The reutrn on assets percentage show how profitable a
company assets are in generating revenue. This number tells what
the company can do with what it has, i how many rupees of
earnings they derive from each rupees of assets they control.
Return on Assets =
Net Interest Income
Total Assets
iv. Net Interest Income
Net interest income is the diffrence between revenue that is
generated from a bank assets and the expreses associated with
paying out its liabilities. A typical banks assets consist of all forms of
personal and commercail loans, mortagages and securities. The
liabilities of bank are the customer deposites. In other word, net
interest income can be defined as the excess revenue that is
generated from the interest earned on assets over the interest paid
out on deposite. It can be calculated as follows.
Net Interest Income = Interest income — Interest expenses
v. Net interest margin
Net interest margin is another most important popular tool of
profitability measurement. Net interest margin is the difference
between revenue generates by interested bearing assets and
interest of cost of borrowed funds expressed as a percentage either
average or as some analysis prefers average earning assets. Net
interest margin is the ratio of net interest income and average
interest earning assets. Net interest margin measures the
profitability of banks. It can be calculated as follows:
Net Interest Margin =
Net interest income
Average interest earning assets
vi. Earning Per Share
Earnings per share can be defined as an expected amount that
shareholders could get on any Share held by them. It is calculated
as a company profit divided by number of outstanding shares of its
commom stock. Earning Per Share is an extremely vital business
statistic used to entice, persuade and demonstrate to investors the
advantage of putting their money into practicular firm. EPS measure
the profit of the bank total number of share outstanding. Earning
profit per share measure the profit available to the shareholders on
per share basis. The income per common share can also be known
as earning per share. It helps to determine the market price of the
equity share of company. It can be calculated as:
Earning Per Share =
Net income
Number of share outstanding
chapter presents the summary of findings of this research,
conclusions, recommendations, limitations of the study and
suggestion of areas which may require further consideration as far
future research is concerned.
CHAPTER II
RESULT AND ANALYSIS
2 Data Presentation and Analysis of Result
Data presentation is a process of comparing two or more data sets
with visual aids, such as graphs and tabulations method. Using
graph, you can represent how the information relates to other data.
This process follows data analysis and helps organise information by
visualising and putting it into a more readable format. Data
presentation based on the framework and theories, ratio analysis
has been used for the of data. The data so collected must be
prepared and systematically so that can be presented in various
forms such as tabular form, diagrammatical form, graphical form
etc. After presentation, the next step is to analyze the data with the
help of financial and statistical data.
In this chapter, the collected data are presented and analyzes with
the help of different tools. So, it is the central part of the study,
which helps to analyze the profitability of Jyoti Bikash Bank Ltd.
Annual report of JBBL. Present the financial statement of the bank
i balance sheet and profitand loss account, retainef earning etc.
2.1 Net Profit Margin
Net Profit Margin is ratio of net profit to revenues for company or
business segment. A high net profit margin indicates that a business
is running better. It is the performance evaluation of the
organization. The
net profit margin is intended to be a measureof the overall success
of a
of bank performance.
Table 1 :
Net Profit Margin of Jyoti Bikash Bank Ltd in lakh.
Figure 1:
Year NPAT Income Net profit margin
(％)
2074/75 3,461 9,180 37.
2075/76 5,313 14,673 36.
2076/77 4,884 15,854 30.
2077/78 6,638 19,616 33.
2078/
6,700 21,690 30.
Figure 2 :
2074/75 2075/76 2076/77 2077/78 2078/
0
2
4
6
8
10
12
14
Series1 Series2 ROE ( ％ )
Figure 2 shows that the ROE of JBBL from year 2074/75 to 2078/79.
the ROE was 10％ in FY 2074/75 which increased to 13％ in FY
2075/76. Similarly the ROE decrease to 10% in FY 2076/77 which
increased to 12 ％ in FY 2077/78. Later the ROE decreased to
11％ in FY 2078/79.
2.1 Return on Assets
ROA is a financial ratio that shows the percentage of profit a
company earns in relation to its overall resources. It is commonly
defined as net income dividend by total assets. The return on assets
YEAR NPAT TOTAL EQUITY ROE (％)
2074/75 3461 31505 10.
2075/76 5313 40069 13.
2076/77 4884 45040 10.
2077/78 6638 52458 12.
2078/79 6,700 56372 11.
percentage show how profitable a company assets are in generating
revenue. ROA gives an indication of the capital intensity of the
company, which will depende on the industry, company that require
larger intial investments will generally have lower retun on assets.
Table 3 :
Return on Assets of JBBL in lakh.
Figure 3 :
2074/75 2075/76 2076/77 2077/78 2078/
0
0.
0.
0.
0.
1
1.
1.
1.
Series1 Series2 ROA( ％ )
Figure 3 shows the return on assets in differents five years. The ROA
in FY 2074/75 has increase i 1％. In FY 2075/76 to 2078/79 it
year NPAT Total assets ROA(％)
2074/75 3461 234019 1.
2075/76 5313 364599 1.
2076/77 4884 423611 1.
2077/78 6638 601743 1.
2078/79 6700 714078 0.
2074/75 2075/76 2076/77 2077/78 2078/
0
2
4
6
8
10
12
14
16
18
20
Series1 Series2 EPS ( ％ )
The figure 4 shows the earning per share by companys
shareholders. Its clearly shows the position of EPS in different fiscal
years. The EPS increase from FY 2074/75 to 2075/76. The EPS
decreased in FY 2076/77 and reached 13％. it is again increased
in FY 2077/78 i 17 ％. However, after that period the EPS is
decreasing in FY 2078/79 i 15％ , this is because of increasing
number of common stock shares.
2 findings
Bank is a financial institution that accepts deposites from the public
and create a credit by making loans. It mobilized the unused fund in
the productive sector. Investment and loan is the major sources of
profit in the bank. This study shows the profotability position of jyoti
bikash bank limited. The report covered the observation of five
years data from FY 2074/75 to 2078/79 of yoti Bikash Bank Ltd.
After the study, following findings are made:
The study shows that the net profit margin trend of FY 2074/
to FY 2076/77 has been decreasing. In NPM decreasing,
increasing activities are on going until FY 2078/79.
The ROE of the bank has increased in FY 2074/75 to 2075/76.
but it decreased in FY 2076/77. its shows that the return on
equity of JBBL has both increasing and decreasing
simultaneously in FY 2077/78 to 2078/79.
The study shows that the ROA has 1 ％ in FY 2074/75 but
slowly it starts to decreased from FY 2075/76 to till FY 2078/79.
This shows that the bank hasnot gained proper return in assets
in this year then compared to past years.
The study shows that the different fiscal year eps of JBBL. The
EPS was increasing from FY 2074/75 to 2075/76 which later
decreased in FY 2076/77 and again increased in FY 2077/78, but
decreased in FY 2078/79.
The study also shows that the bank is providing the banking
facilities according to the direction of NRM.
According to the study the profitability of JBBL gradually doesnot
seems efficient performance due to covide- 19 which got better
from FY 2078/79.
CHAPTER III
SUMMARY AND CONCLUSION
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Profitability Analysis OF Jyoti Bikash BANK
Course: Research Work (BBS 250)
173 Documents
Students shared 173 documents in this course
University: Tribhuvan Vishwavidalaya
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1
CHAPTER I
INTRODUCTION
1.1 Backgroundof the study
Profit is a financial benefit that is realized when the amount of
revenue gained from a business activity exceeds,cost and taxes
needed to sustain the activity. Any profit that is gained goes to the
business’s owner,who may or may not decide to spend it on the
business . Profit is a term that often describes the financial gain a
business receives when revenue surpasses costs and expenses.
Terms with similar meanings include ‘earning’ , ‘income’ and
‘margin’. Every business should earn sufficient profits to survive and
grow over a long period of time. In general, profit refers to a
financial gain, especially the difference between the amount earned
and the amount spent in buying, operating, or producing something.
In other word profit is an amount of money that you gain when you
are more for something than it cost you to make, get, or do it.
Thus,profit is not just the reward to owners but it is also related with
the interest of other segments of the.
Profitability is the ability to earn profit from all the activity of the
business. It is a measure of an organizations profit relative to its
expenses. In other words, it is a ability of a company to use its
resources to generate revenues in excess of its expenses. it is
composed of two words profit and ability. The word profit represents
the absolute figure of profit but an absolute figure alone does not
give an exact ideas of the adequacy or otherwise of increase or
change in performance as shown in the financial statement of the
business. The word abililty reflex the power of the business to earn
profit, it is called earning performance.
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