investment portfolio analysis

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PRESENTATION ON INVESTMENT PORTFOLIO ANALYSIS OF COMMERCIAL BANKS PRESENTED BY: PAWAN KAWAN ROLL No: 14 MBA- III UNIGLOBE COLLEGE

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MBA-III, Uniglobe College, Kathmandu, Nepal

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Page 1: Investment portfolio analysis

PRESENTATION ON

INVESTMENT PORTFOLIO ANALYSIS OF COMMERCIAL BANKS

PRESENTED BY:PAWAN KAWAN

ROLL No: 14MBA- III

UNIGLOBE COLLEGE

Page 2: Investment portfolio analysis

CHAPTER IINTRODUCTION

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BACKGROUND

• Commercial banks are organizations which normally perform financial transactions.

• The banks are mobilizing the savings of the people for the investment purposes.

• The investment portfolio should be carefully analyzed so that the investment should ensure minimum risk and maximum profit.

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STATEMENT OF PROBLEM

• What is the relationship of investment with total deposit, loan and advances and total profit?

• What is the proportion of investment of different commercial banks?

• How much risk commercial banks are facing while investing in different assets?

• Which bank has higher investment in five years?

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OBJECTIVES OF THE STUDY

• To evaluate and analyze the variation in investment structure.

• To analyze risk and return on investment portfolio of different commercial banks.

• To analyze the relationship of investment with other variables like deposit, loan and advance, net profit and size of the firm.

• To find out the proportion of investment of commercial banks.

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• The present study will be of substantial importance for:

o investors, planners, researchers, students, and policy makers to meet their personal and organizational objectives by identifying the various weaknesses prevailing in the investment.

• It is expected that this work will be helpful to decision makers to maximize the values of their organization.

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RESEARCH HYPOTHESIS

• H1: Investment is positively related to Size of the firm, Profitability and Deposits

• H2: Investment is negatively related with Loan and advances

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LIMITATION OF THE STUDY

• Only five commercial banks are selected.

• The study covers only five years period.

• The validity and confidence of the data depends on their faith and trustworthiness of the published data.

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CHAPTER IIREVIEW OF LITERATURE

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• Gitman and Joehnk, “ Investment is any vehicle into which funds can be placed with the expectation that will preserve or increases in value and generated positive returns.”

• Weston & Brigham, “A portfolio simply represents practice among investor of having their funds in more than one asset. The combination of investment asset is called a portfolio”.

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• Makowitz showed that the variance of the rate of return was a meaningful measure of portfolio risk under a reasonable set of assumptions, this theory indicated the importance of diversifying the investments to reduce the total risk of the portfolio.

• CAPM which was developed by Sharpe and Litner, this model will allow investors to determine the required rate of return for any risky assets.

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• The study of Edward J. Kane and Stephen A. Buser’s in title” portfolio diversification at commercial banks” deals how a firm perform a useful function by holding a portfolio of efficiently price securities. According to them, it is rational for a firm to engage in prior round of asset diversification on behalf of its shareholder’s even when all assets are priced efficiently and available for direct purchase by shareholders.

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CHAPTER IIIMETHODOLOGY

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• Research methodology refers to the various sequential steps to adopt by a researcher in studying a problem with certain objective in view.

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POPULATION AND SAMPLE

S.N Name of Banks Observations

1 Global Bank Ltd. 5

2 Kumari Bank Ltd. 5

3 Nepal Investment Bank Ltd. 5

4 Nepal SBI Bank Ltd. 5

5 Standard Charter Bank Nepal Ltd. 5

Total observations 25

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Population Size = 32

Sample Size = 5

Sample Percentage = 15.62%

Cont…

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NATURE AND SOURCES OF DATA COLLECTION

• The main source of secondary data comprises annual reports of concerned banks, related journals, newspapers, Internet, official publication, related studies and thesis etc.

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Model 1:• Inv= a + β1 X1 + β2 X2 + β3X3 + β4X4 + ei Where,• a = Constant variable• Inv = Log of Investment amount• X1= Log of Deposit• X2 = Log of net profit• X3= Log of Loan and Advances (loan)• X4 = Log of Size of bank (total assets)

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CHAPTER IV DATA ANALYSIS AND FINDING

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Proportion of Investment in percentage

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Proportion of Investment (Mean)

Global Kumari Nepal SBI NIBL SCB

13.61% 12.98%

32.79%

16.60%

45.54%

Proportion of Investment

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Proportion of Investment (Standard Deviation)

Global Kumari Nepal SBI

NIBL SCB0

2

4

6

8

10

12

14

Proportion of Investment (Standard Deviation)

Proportion of Investment (Standard Deviation)

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MULTIVARIATE ANALYSIS

• Multivariate analysis (MVA) is based on the statistical principle of multivariate statistics, which involves observation and analysis of more than one statistical outcome variable at a time.

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Summary of model 1

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .985a .970 .964 .08896

a. Predictors: (Constant), Deposits, Profit, loan, Size

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ANOVAa

Model Sum of Squares

df Mean Square F Sig.

1

Regression 5.083 4 1.271 160.583 .000b

Residual .158 20 .008

Total 5.242 24

a. Dependent Variable: Investment

b. Predictors: (Constant), Deposits, Profit, loan, Size

Cont…

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Coefficientsa

Model Unstandardized Coefficients Standardized Coefficients

t Sig.

B Std. Error Beta

1

(Constant) -1.298 .782 -1.660 .113

Size 2.420 1.639 1.511 1.477 .155

Profit .016 .026 .041 .612 .547

loan -1.924 .190 -1.072 -10.143 .000

Deposits .521 1.529 .332 .341 .737a. Dependent Variable: Investment

Cont…

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CHAPTER VCONCLUSION AND RECOMMENDATION

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CONCLUSION

• Commercial Banks play very important role in the economic life of the nation.

• Standard Charter Bank has high proportion of investment than other banks with less variation.

• There is positive relationship of Investment with Size of the firm, Net profit and Deposit but statistically insignificant.

• There is negative relation of investment with Loan and advance and is statistically significant.

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RECOMMENDATION

• The commercial banks must have clear investment policy on different securities.

• SCB must maintain present variation in investment which is less than other banks.

• It is recommended that Nepal SBI bank must control its variation which is very high than other banks.

• Commercial banks must increase its net profit and deposit in order to increase its investment.

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THANK YOU