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PERFORMANCE ANALYSIS OF FINANCIAL INSTITUTIONS

PERFORMANCE ANALYSIS OF FINANCIAL INSTITUTIONS

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PERFORMANCE ANALYSIS OF FINANCIAL INSTITUTIONS

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  1. PERFORMANCE ANALYSIS OF FINANCIAL INSTITUTIONS SANJEEV MANANDHAR GENERAL MANAGER PRIME BANK

  2. What is Banking Business? • Banking business is managing various risks in much efficient fashion to trade off between risks and return;

  3. Financial market of Commercial Banks :2065/66 • Total commercial banks:26 • Total Deposits: 528 billion • Total Loans: 433 billion • Average deposit growth: 19% • Average credit growth: 24%

  4. 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

  5. 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;

  6. 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;

  7. CREDIT ANALYSIS • ANNUAL GROWTH; • NON PERFORMING ASSETS; • ECONOMIC AND GEOGRAPHICAL CONCENTRATION; • COLLATERAL QUALITY; • DOCUMENTATION QUALITY; • RECOVERY OF INTEREST AND PRINCIPAL;

  8. Loan Growth of Banks

  9. DEPOSIT ANALYSIS • ANNUAL GROWTH; • DEPOSIT CONCENTRATION; • DEPOSIT COMPOSITION; • FIXED DEPOSIT; • SAVING DEPOSIT; • CURRENT DEPOSIT; • CALL DEPOSIT; • COST OF DEPOSIT;

  10. Deposit structure of Banks Others 38B Current 50B Fixed 92 B Savings 192B

  11. Deposit Growth of Banks

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

  13. INVESTMENT ANALYSIS • DOES THE FI HAS ENOUGH INVESTMENTS IN TREASURY BILLS AND GOVERNMENT BANKS; • WHAT ARE OTHER INVESTMENTS MADE BY THE FI;

  14. 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;

  15. 248 billion good loan market of Nepal

  16. 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 H’da 2.5 B BRJ 25 B Jhapa 2.5 B Jpur 2.5 B BRT20 B 17 Source : NRB Reports/estimates etc.

  17. Where PCBL stands: Deposits

  18. Where PCBL Stands: Loans

  19. Growth of PCBL

  20. COMPARITIVE PERFORMANCE OF OTHER BANKS (2065/66) Rs in Billion

  21. PERFORMANCE OF OTHER BANKS (2065/66) Rs in Billion

  22. PERFORMANCE OF OTHER BANKS (2065/66) Rs in Billion