A Case Study of Nabil Bank

CHAPTER- I INTRODUCTION 1. 1 Concept of Banking The term Bank is derived from the latin word bancus, Italian word banca, French word banque which means bench utilise by medieval money exchanges and German word bank which means joint stock company. According to oxford dictionary bank means an creation for keeping money and valuable safety of the money being paid out on the customer order by means of cheque.Historic all toldy, banks have been recognized for the great range of financial function they crevice from checking accounts of saving plans to loan for businesses consumers and governments. Hence, bank can be identified by the function they perform in the economy. Bank is a financial institution which deals with money. Banks collect the money from the surplus social unit (savers) and lend to famine units ( pulmonary tuberculosisrs). Bank raises the bloodlines by accepting deposits, borrowing funds and issuing equity.These funds are used by the banks to buy securities and t o make loans. Since, it accepts deposits and grants loan, it is regarded as the trader of money. Banks can be divided int three types on the basis of their functions and operate ie. Central bank, Commercial bank and Development bank. Commercial bank offer function to individuals, hey are primarily concerned with receiving deposits and lending to businesses. Commercial bank is to a fault known as the financial service needs in the economy. 1. Introduction of Nabil redactment Banking Nabil Bank peculiar(a), the first foreign joint run a danger bank of Nepal, started operations in July 1984. It has paid up corking of NRs200 million. Nabil was incorporated with the objective of extending international commonplace modern banking operate to various sectors of the society. Pursuing its objective, Nabil provides a full range of commercial banking services done its 47 points of representation across the kingdom and over 170 reputed correspondent banks across the globe.Nabil Bank Li mited with its mission to be the initiative Choice Provider of sleep together Financial Solutions ventured into p separatelyy market link activities and incepted its fully have subsidiary Nabil garbment Banking Ltd. (Nabil frame) which renders investment banking connect services to the masses. Thus, Nabil initiate intentions to run aground itself as one of the leading Merchant Bankers in its short span of operation and as an enthronization Banker with healthy professional expertise in long run introducing modernistic products and services in the Nepalese capital market with strict adherence to prevailing rules and regulations. . 2. 1 Services of Nabil investiture Banking Nabil rate renders its institutional and retail lymph nodes wide range of services some of which are delivered currently while others pass on be delivered in due course with call for exploration & innovation and due approval received from the Regulators as and when required, expound as under 1. Management of Public Offers/Further Public Offers Nabil dedicate renders both its institutional and retail client services of managing public offer of shares/ debentures/right issuance of securities to existing shareholders/further public offer of securities etc to its backing and has team of professional expertise to render quality services at competitive rates. . Underwriting Nabil invest on selective basis post independent appraisal of proposals reviewed through its professional team is rendering underwriting related services to its clientele as SEBON has made it mandatory for all institutions going public to underwrite at least fifty percent of the securities on offer prior public issue. 3. Portfolio ManagementThe Clients can delegate all their investment management related decisions to a pool of corporate finance experts of Nabil identify who inturn will use the vast pool of industry specific data collected and analyzed by its research unit for making investments for clients portfolio which focuses primarily on safety of principal investment along with maximization of returns to Clients. 4. Registrar to Securities (RTS)Nabil Invest renders Registrar to Securities (RTS) related services to the valued shareholders of its institutional client and in the process keep on improving quality & timely delivery of services, the major hitch in this nature of services by competing institutions. 5. Loan Syndication Nabil Invest will use its existing relationship with other Banks/Financial Institutions to acquire required financial support for the financial closure of certain projects which it identifies as feasible and recommends for investment.The financial closure will be reached with either one institution or a syndicate of Banks/Financial Institutions depending on the coat of projects and the requirement to diversify the risks to various portfolios from the part of member Banks/Financial Institutions. 6. Other Services Besides the services identified, Nabil Inv est will always keep on exploring innovative products and services that matches regional and global standards and target to launch the same in customization with the local market with due approval taken from the Regulators, if & when required.Thus, Nabil Invest intends to issue wide clientele rendering investing Banking related services setting example and obtaining first performer advantage in the capital market of the country. 1. 3 Objectives of the fieldwork The objectives of the fieldwork are as follows- ?To delineate capital building of Nabil Invest ?To analyze financial position and performance of Nabil Invest ? To evaluate portfolio of Nabil Invest 1. 4 Methods of selective information collection Data collection is the process of collection of data and information through different sources or methods. To prepare this fieldwork report, the following method has been used- Secondary Method-The data , which is not orginally collected unless obtained from published and unpub lished sources, are called secondary data. These data are not original in character. The sources aid as secondary data for this field work reports are the annual reports of Nabil Bank, websites of nabil bank and nabil investment, books etc. CHAPTER-II info ANALYSIS AND PRESENTATION 2. 1 Capital anatomical complex body part of Nabil Invest Table 2. 1 Capital Structure ProposedEffective NRs(000)%NRs(000)% Nabil Bank78000527800074. 29 CG Finco P. Ltd27000182700025. 71 General Public4500030-- gist150000100105000100Source- Annual Report of Nabil Bank From the above table, it is shown the proposed and effective capital structure of Nabil invest. Nabil Invest proposed 52% capital of Nabil Bank, 18% capital of CG Finco P. Ltd and 30% capital of General Public. However, Nabil Invests effective capital structure is 74. 29% by Nabil Bank and 25. 71% by CG Finco P. Ltd. It can be shown graphically as follows- Fig 2. 1- A Pie chart of Proposed Capital Structure of Nabil Invest Fig 2. 2- A P ie chart of Effective Capital Structure of Nabil Invest 2. 2 Financial position and performance of Nabil Invest 2. 2. 1 Balance sheet of Nabil InvestTable 2. 2 NRs(000) Capital & Liabilities2010/112009/10 Share Capital10500070000 reserves and Surplus7457-529 Accounts Payable72182628 Provision for Staff Bonus1065- Deferred Tax Liability60- Other Liabilities and aliment69417 Total12149472117 Assets2010/112009/10 Balance with banks2633770000 Investments83400- Advance valuate (net of income tax liabilities)4453- Fixed assets (net of depreciation)61691941 Deferred tax assets-176 Other assets1135- Total12149472117 In the above, the balance sheet size grew by around 68% in the first place due to rise in paid up capital.Paid-up capital which got profitd by NRs. 35million was contributed by CG Finco P. Ltd. NRs. 27 million and Nabil Bank NRs. 8 million. In addition, net simoleons earned during the year as well as contributed to increment. exculpate worth of the Company surpassed paid- up capital after it registered profit. It can be graphically presented as at a lower place- Fig- A Bar Diagram of Assets And Share Capital of Nabil Invest 2. 2. 2 Income Statement of Nabil Invest Table 2. 3NRs (000) Particulars2010/112009/10 IPO Fees305- Interest Income12979- Management Services6196- Gross Income19480- power Expenses1574222General Operating Expenses4927482 Depreciation charge1267- Gross expenses7768705 Operating expediency11712-705 Staff Bonus1065- Profit before Tax10647-705 Tax Expense2662-176 Profit after Tax7985-529 Opening Retained Earning-529- resolution Retained Earning7457-529 Source- Annual Report of Nabil Bank A significant chroma of the profit was contributed by interest income which not only incorporates return on equity placement but also the emergence realized in the form of sharing of interest income with BFIs / Other Institutions whose public offers are being managed by NI in the capacity of Issue Manager.In addition, the Company also managed to earn returns by rendering change management services to the Bank. It is graphically Presented as - Fig- A bar diagram of profit of Nabil Invest 2. 3 Portfolios of Nabil Invest Table2. 4 (in million) Particulars2010/112009/10 1. Nepal administration Treasury Bills64895896 2. Nepal Government Saving Bonds-- 3. Nepal Government other securities22552077 4. Nepal Rastra Bank Bonds-- 5. Foreign Bonds178187 6. Local Licensed Institutions305- 7. Foreign Banks36615391 8. Organized Institutions Shares192159 9.Organized Institutions Bonds andDebentures-- 10. Other Investments 10. 1 NCM shared fund1. 21. 2 10. 2 prompt Investment1. 61. 5 Total Investment13082. 813712. 7 Source- Annual Report of Nabil Bank The above table shows the portfolios of Nabil Invest in different securities and bonds. Here the two years fiscal years investment portfolios are provided. In the accustomed table the highest derive of investment was done in Government Treasury Bills. It can be identify that Nabil Inves t is targeted towards the Government T- bills and securities. It can be due to no default risk and it is a risk free asset.I has also a high rate of investment in foreign banks. The lowest amount of investment of Nabil Invest is in mutual fund and Swift Investment. The above table is presented in a graph as below- Fig- A bar diagram of Portfolios of Nabil Invest 2. 4 deal Result After thoroughly analyzing, it is analyzed that Nabil bank has been operating as the subsidiary bank for Investments ie. Nabil Investment Banking. Nabil Investment Banking (Nabil Invest) is providing innovative, quality and timely services to the investors at large. From the analysis of data, it the capital structure of Nabil Invest has been identified.The proposed capital structure of Nabil Invest is 52% by Nabil bank, 18% by CG Finco P. Ltd and 30% by the General Public. exactly it is in effect that 74. 29% of capital is owned by Nabil bank and 25. 71% capital is owned by CG Finco P. Ltd. From this it ca n In F/Y 2009/10, the profit after tax is negative NRs 529,000 whereas in F/Y 2010/11, the profit after tax is NRs 7,985,000. This shows the increasing trend of profit of Nabil Invest. The high volume of the profit was contributed by the interest income. The portfolios of investment shows the different areas of investment by Nabil Invest.The highest amount of investment of Nabil Invest was Government Treasury bills for fiscal year 2009/10 and 2010/11 ie. NRs 5896 million NRs 6489 million respectively. It has also invested in Government Bonds, Securities and other Investments. CHAPTER-III SUMMARY AND CONCLUSION 3. 1 Summary NABIL Bank stands as the Bank of 1st Choice in the industry considering its network, a number of branches, a large capital base, diverse customized services and products, a chain of ATMs service points covering a wide regional / local spectrum. NABIL stands ahead in everything it does.The strategic purpose of Nabil is to create values and economic opportunities ac ross all the economic zones of the country and architecting products and services to that end. Nabil Investment Banking (Nabil Invest), a subsidiary of Nabil bank Ltd is rendering the investment banking related services to the masses. Thus, Nabil Invest targets to establish itself as one of the leading Merchant Bankers in its short span of operation and as an Investment Banker with strong professional expertise in long run introducing innovative products and services in the Nepalese capital market with strict adherence to prevailing rules and regulations.From the analysis, Nabil Invest has 74. 29% capital of Nabil Bank and 25. 71% capital of CG Finco P. Ltd. However, the proposed capital structure of NI is 52% of Nabil Bank, 18% of CG Finco P. Ltd and 30% of General Public. The income statement of Nabil Invest shows increasing trend of profit in each fiscal year ie. NRs 7985000 in F/Y 2010/11 and negative NRs 529000 in F/Y 2009/10. In fiscal year 2010/11 the profit was contributed b y the interest income which not only incorporates return on equity placement but also the proceeds realized in the form of sharing of interest income.The balance sheet of Nabil Invest shows the increase in amount of share capital of Nabil Invest as well as increased in fixed assets and other assets. From Investments Portfolios of Nabil Invest, it is recognized that highest amount of investment has been made for the Government Treasury Bills in each fiscal year. The lowest amount of investment has been made for other investments like NCM Mutual Fund and Swift Investment. 3. 2 Conclusion From the above study, it is clear that for the purpose -To be the first Choice Provider of Complete Financial Solutions Nabil bank has created a subsidiary ie.Nabil Investment Banking Ltd. (Nabil Invest). Nabil Investment over the period will be managing public issues, underwriting of securities, management of clients portfolio & rendering the services of the registrar to securities to client institut ions. In addition, the unit will also be delivering Bond/Debenture Trusteeship services, work as Assets Management Company of the mutual fund promoted by Nabil, provide investment advisory services etc.Further, the Unit will keep on exploring and introducing innovative instruments in the Nepalese capital market. It is providing innovative, quality and timely services to the investors at large. Thus, the ultimate goal of Nabil Invest would be to stabilize the unit as just not a Merchant Banker but as an Investment Banker providing innovative, quality and timely services to the investors at large. This would differentiate itself from its competitors and create a niche of itself in the market.