PERFORMANCE
ANALYSIS OF AGRICULTURAL DEVEPLOPMENT BANK LTD.
Submitted by:
Dhansing KC
BBA 3rd Semester
Mahendra Multiple campus
Ghorahi, Dang
Submitted to:
Ishwori Ghimire
Concerned Department- MMC
A Project Work
Report In Partial Fulfillment of the Requirement for
the Degree of
Bachelor
of Business Admiration (BBA) internal Assignment.)
Aug-16-2022
DECLARATION
I hereby declare
that the project work report entitled “A Performance Analysis Of Agricultural
Development Bank Limited.” submitted to Faculty of Management, Tribhuvan
University, Kathmandu is an original analytical work under the supervision of Prof.
Ishwari Prasad Ghimire, Faculty member, Mahendra Multiple Campus- Dang, and
is submitted in partial fulfillment of the requirements for the award of the
degree of Bachelor of Business Administration (BBA).
This project work report is a new experience to me. Obviously, an great
opportunity too. I have given my best effort. However, In case of any errors, I
have got a dedicated finance teacher to help me eliminate such mistakes.
TABLE
OF CONTENT
Title page 1
Acknowledgement
2
Table of Contents
3
Abbreviations
4
CHAPTER I
Ø Objectives
7
Ø Limitations
of study 8
Ø Rationals 9
Ø Population and sample
10
Ø Tools
10-11
Ø
Data collection procedure 12
Ø
Data Presentaion
13
Ø
Data analysis 14
ABBREVIATIONS
ADBL :
Agricultural Development Bank Limited
EPS
: Earnings Per Share
BFIs : Bank and financial Institutions
NRB
: Nepal Rastra Bank
ROA
: Return on Assets
ROE
: Return on Equity
T.U.
: Tribhuvan University
PE
: Price to earning ratio
BACKGROUND OF THE STUDY
Fundamental analysis is
a method used to determine the value of a stock by analyzing the financial data
that is fundamental to the company. In order to make a rational and scientific
investment decision, an investor has to evaluate a lot of information as to the
part as well as the expected future performance of companies, industries and the
economy as a whole in advance, such evaluation or analysis is known as
fundamental analysis.
The study of ‘Performance Analysis Of
Agricultural Development Bank Ltd.’ to outline the strength and weaknesses is
done by taking ratios between various fundamental indicators like
EPS,PE,Networth etc. Out of 28 commercial banks 27 of them are listed in NEPSE.
Banks are the financial institutions that
mobilizes money of depositors to various productive sectors. The growth and
state of financial sector resembles a country’s strength. Withot proper
development of financial sectors, no other sector can smoothly run and expand.
The expansion of real/productive sectors significantly depends upon the growth
of financial sector. The more bigger and powerful the financial sectors the
more they can invest on real sectors. Thus, the condition of financial sectors
directly affects the output of an economy.
Profile
Of Sample Bank
Agricultural
Development Bank Limited (ADBL) is “A”
class bank established on january 2, 1968 a.d. with the main objective of providing institutional credit for enhancing the production and
productivity of the agricultural sector in the country, the Agricultural
Development Bank, Nepal was established under the ADBN Act 1967, as successor
to the cooperative Bank. ADBL’s 51%
shares is owned by the government and remaining 49% is owned by public. The bank worked as a premier rural credit
institution since its establishment, contributing substantial agricultural
credit supply in the country. Rural finance has been the principal operational
area of ADBN in the past. However, the bank is also involved in commercial
banking operations since 1984, to provide commercial banking services. It has 278 branches operating over 7
provinces and 77 districts. While providing comprehensive services with
complete banking solution, the bank has main motto of promoting rural
agriculture, productive and deprived sectors. The bank is committed to provide
best banking services through its widespread network and help the government
from its part, to achieve the aim of:"Prosperous Nepal, Happy
Nepali".
Some indicators of
performance analysis are as follows;
52 days
price(low-high): 303.8 – 551
Book value : 214.72
Latest Dividend
(2077/78): 20 % bonus+1.05 % cash
Book close : 31 Dec,2021
Objective
Of Study
To
analyse the performance of Agricultural Development Bank to depict strengths
and weakness using tools: PE ratio, EPS, networth, ROA, Net profit, ROE and
total assets
Limitations
Of Study
·
Limited Budget
·
Limited Time of reference ( historic
data of last 4 quarters only)
·
Secondary source of data collection
·
Negligence of other indicators
Rational of study
This study is done to depict the financial position of Agricultural Development Bank limited and analyse its strengths and weaknesses. Furthermore, it helps to formulate appropriate policies to eliminate existing problems and operate bank more efficiently. Thus, this research could be an aid to new investors, existing shareholders, students, researchers and the whole BFIs.
Population And Sample
There are 155 BFIs currently operating in Nepal. Out of this population ADBL is selected as sample of study.
Tools
ROA(Return On Assets):
Return on assets is the numerical relationship
between net incomes after taxes to total assets of a company. It is primarily
an indicator of managerial efficiency. It indicates how capably the management
of the company has been converting the institution’s assets into net earnings.
ROE(Return
On Equity):
ROE is the measure of a company's net income
divided by its shareholders' equity. It is a gauge of a corporation's
profitability and how efficiently it generates those profits. The higher the
ROE, the better a company is at converting its equity financing into profits.
PE Ratio:
The price to earnings ratio, also called the P/E ratio, tells investors how much a company is worth. The P/E ratio is simply the stock price divided by the company’s earnings per share for a designated period like the past 12 months. The price/earnings ratio conveys how much investors will pay per share for Rs. 1 of earnings.
NETWORTH:
Net worth is the value
of all assets, minus the total of all liabilities. Put another way, net worth
is what is owned minus what is owed. Net worth is a measure of
wealth. Net worth is the sum of all assets owned by a person or a company,
minus any obligations or liabilities.
Net Profit:
Net profit is the amount of money a business earns after deducting all its operating, interest, and tax expenses over a given period of time. To arrive at this value, we need to know a company's gross profit, and then interest and tax liabilities are deducted to reach net profit. Net profit is the measurement of a company's profit once operating costs, taxes, interest and depreciation have all been subtracted from its total revenues.
Total Assets:
The meaning of total assets is all the assets, or items of value, a business owns. Included in total assets is cash, accounts receivable (money owing to you), inventory, equipment, tools etc. The value of all of a company’s assets is added together to find total assets.It is the resource with economic value that a business owns or controls with the expectation that it will provide a future benefit.
Data Collection Procedure
In
this study, data is collected from secondary source. i.e, posted by company on
website. Annual audiated report is the major source of data for this study. NRB directives, banking and
financial statistics and other publications are collected from the website of
NRB
As on 2078/79
|
Quarters |
Tools |
|||||
|
ROE |
PE
ratio |
Networth |
Net
Profit |
Total
Assets |
ROA |
|
|
Q1 |
6.08% |
|
240.20 |
485,378.20 |
228,781,385.89 |
0.212
% |
|
Q2 |
8.7 |
|
205.40 |
1,422,512.58 |
229,097,392.98 |
0.62 |
|
Q3 |
7.79 |
|
204.30 |
1,905,393.79 |
241,804,121.36 |
0.787 |
|
Q4 |
7.97 |
|
2012.25 |
2,690,057.78 |
245,987,541.55 |
1.093 |
The above table shows the indicators that resembles the company’s performance throughout the quarters. 1st qarter shows the performance of first 3 months of financial year. Quarter 2nd is the aggregate of 1st and 2nd. In this way, Quarter 4th is the aggregate of all quarters. i.e, anuual.
Data
Analysis:
The
state and trend of these indicators help us to analyse the strengths and
weakness of this bank.
ROE: Return on equity is 7.97% on the last
quarter. It is the derivative of net profit and total equity. It fluctuates on
the basis of net profit. ROE increases with the increase in net profit but decreses with the rise in equity.
Networth: Networth is in declining trend. It is due to
the trend of distributing bonus share to shareholders. As the number of share
increases, networth also declines. On the other hand, it indicates the increase
or decrease in total assets and total liabilities. i.e, networth is the
difference between total assets owned minus total liabilities obliged to pay.
Net profit:
Net profit is in increasing sate throughout the quarters. Q4 resembles the
annulized net profit. It signifies that ADBL is concerned about enhancing
operational efficiency. It is the strength of the company.
Total Assets:
Total assets is also at increasing trend. when
there is an increase in total assets in a given period, the liabilities
and equity of the company increase by the same amount. That means that net
working capital is also increasing. Net working capital is current assets of a
company minus its current liabilities. It deals with a portion of the total
assets.
ROA: Return on assets (ROA) measures how efficient a company's management is in earning a profit from their economic resources or assets on their balance sheet. It is in increasing state. It is good for investors.
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