PERFORMANCE ANALYSIS OF FINANCIAL INSTITUTIONS

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PERFORMANCE ANALYSIS OF FINANCIAL INSTITUTIONS

• SANJEEV MANANDHAR
• GENERAL MANAGER
• PRIME BANK

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What is Banking Business?

• Banking business is managing various risks in
  much efficient fashion to trade off between risks
  and return

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Financial market of Commercial Banks 2065/66

• Total commercial banks26
• Total Deposits 528 billion
• Total Loans 433 billion
• Average deposit growth 19
• Average credit growth 24

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CAMELS

• The six important areas, commonly referred to as
  the CAMELS, for analysis are
• Capital adequacy
• Asset quality
• Management competence and commitment
• Earnings capability
• Liquidity and
• Sensitivity to market risk

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PERFORMANCE ANALYSIS

• Financial Status of Financial Institutions and
  where it stands today with other Banks
• Deposit market of Nepal Vis-a- vis Financial
  Institution
• Credit market of Nepal Vis-a vis Financial
  Institution
• Credit market of Nepal as per Geographical
  locations

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Various Risks in banks

• Banking business, by its nature operates under
  various risks
• Credit Risks
• Operational Risks
• Market risks
• Liquidity risks
• System Risks
• Accounting Risks
• Legal Risks
• Reputations risks

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CREDIT ANALYSIS

• ANNUAL GROWTH
• NON PERFORMING ASSETS
• ECONOMIC AND GEOGRAPHICAL CONCENTRATION
• COLLATERAL QUALITY
• DOCUMENTATION QUALITY
• RECOVERY OF INTEREST AND PRINCIPAL

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Loan Growth of Banks
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DEPOSIT ANALYSIS

• ANNUAL GROWTH
• DEPOSIT CONCENTRATION
• DEPOSIT COMPOSITION
• FIXED DEPOSIT
• SAVING DEPOSIT
• CURRENT DEPOSIT
• CALL DEPOSIT
• COST OF DEPOSIT

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Deposit structure of Banks
Others 38B
Current 50B
Fixed 92 B
Savings 192B
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Deposit Growth of Banks
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LIQUIDITY RISKS

• DOES THE FINANCIAL INSTITUTIONS HAVE PERFORMED
  GAP ANALYSIS
• DOES THE FINANCIAL INSTITUTIONS HAVE ENOUGH
  INVESTMENT IN LIQUID ASSETS
• DOES THE FIS HAS REASONABLE CREDIT DEPOSIT
  RATIO
• DOES THE FI HAS A CAPACITY TO REPLACE MATURING
  HUGE FIXED DEPSOTIS AND WITHDRAWAL OF CALL
  DEPOSITS

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INVESTMENT ANALYSIS

• DOES THE FI HAS ENOUGH INVESTMENTS IN TREASURY
  BILLS AND GOVERNMENT BANKS
• WHAT ARE OTHER INVESTMENTS MADE BY THE FI

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ANALYSIS OF INCOME STATEMENT

• INTEREST YIELD
• COST OF FUND
• NET INTEREST INCOME COMPARED TO RISKS ASSETS
• OTHER INCOME vs INTEREST INCOME
• OPERATING EXPENSES vs DEPOSIT/LOANS
• STAFF COST vs DEPOSIT/LOANS
• NET PROFIT vs PAID UP CAPITAL
• GROWTH TREND OF INCOMES AND EXPENDITURE
• EXTRAORDINARY ITEMS

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248 billion good loan market of Nepal
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250 BILLION GOOD CREDIT MARKET
GEOGRAPHICAL DISTRIBUTION OF LOANS
Mngr/Dgd 3.75 B
20
PKR 6.25 B
NPJ 2.5 B
KTM 125 B
Sngr 8 B
Hda 2.5 B
Jhapa 2.5 B
BRJ 25 B
Jpur 2.5 B
BRT 20 B
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Source NRB Reports/estimates etc.
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Where PCBL stands Deposits
19
Where PCBL Stands Loans
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Growth of PCBL
Particulars PCBL Growth Average Industry Growth
Deposits 123 19
Loans 92 24
Net Profits 406

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COMPARITIVE PERFORMANCE OF OTHER BANKS (2065/66)
Rs in Billion
Particulars PCBL PCBL PCBL BOA BOA BOA
2066 2065 Growth 2066 2065 Growth
Deposit 11.78 5.27 123 8.8 3.05 188
Loans 9.8 5.1 92 7.6 2.75 176
Net Profit 0.14 0.028 406 0.06 0.045 33
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PERFORMANCE OF OTHER BANKS (2065/66) Rs in Billion
Particulars Nabil Nabil Nabil NIBL NIBL NIBL
2066 2065 Growth 2066 2065 Growth
Deposit 37.3 31.92 17 46.7 34.45 35
Loans 27.58 21.36 29 36.8 27.52 33
Net Profit 1.03 0.74 40 0.91 0.69 32
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PERFORMANCE OF OTHER BANKS (2065/66) Rs in Billion
Particulars Kumari Kumari Kumari Laxmi Laxmi Laxmi
2066 2065 Growth 2066 2065 Growth
Deposit 15.7 12.77 23 16.05 10.91 47
Loans 14.59 11.33 28 13.46 9.68 39
Net Profit 0.25 0.17 47 0.18 0.12 50