for a better future - sunrise bank · 2019-06-02 · 2 sunrise bank limited covering the period...

...for abetter future

ANNUAL REPORT | 2017-18

Sunrise Plaza, Gairidhara

Kathmandu Metropolitian City-2

TEL.: 01-4004560, 4004562,

4004563, 4004564 TOLL.: 16600 122444 FAX.: 01-4422475 SWIFT: SRBLNPKA E-MAIL: [email protected]

2 SUNRISE BANK LIMITED

Covering the period 16th July 2017 to 16th July 2018, this annual report

comprehensively covers the performance of Sunrise Bank Limited and its

subsidiary, Sunrise Capital, for the reporting period and includes among

other matters; an analysis of the operational results, a review of the financial

performance and an overview of the Bank’s corporate governance, risk

management and compliance frameworks.

The Report includes forward-looking statements, which relate to the possible

future financial position and results of the operations of Sunrise Bank Limited.

These statements by their nature involve an element of risk and uncertainty,

as they relate to future events that are not predictable. However, we do

not undertake to update or revise any of these forward-looking statements

publicly, whether to reflect new information or future events or otherwise.

3ANNUAL REPORT | 2017-18


Our motto of "Rising to Serve" drives all the efforts of Sunrise Bank to emerge as market leader with a business that is founded on strong fundamentals supported by state-of-art banking technology, and motivated staffs whose skills are continuously enhanced.


REPORT OBJECTIVESThe consolidated as well as standalone

financial statements, prepared in accordance

with NFRS, remain the primary source of

communication with stakeholders. The

purpose is to show how we are working to

improve every aspect of our business for the

benefit of stakeholders.


STRATEGIC REPORT An Overview 10 Financial Highlights & Review 14 Macroeconomic Outlook 16

CORPORATE GOVERNANCE Governance at a Glance 24 Board of Directors 26 Chairman's Statement 30 CEO’s Perception 32 Management Team 34 Department Heads 38 Corporate Governance 40

RISK REVIEW Board Level Committees 44 Risk Management Committees 47

CORPORATE SOCIAL RESPONSIBILITY Social Responsibilty 54 CSR Activities 56

HUMAN RESOURCE MANAGEMENT Human Resource 60

PRODUCTS & SERVICES Sunrise Swasthya Yojana 66Technology Driven 70 Schemes 76 Corporate Banking 80

FINANCIAL STATEMENTS Director's Report 88 Auditor’s Report 97 Financial Statement 98 Disclosure 204

INVESTOR'S RELATIONSHIP Shareholder’s Information 210 Disclose under Rule 26 213

BANK'S PERFORMANCE Analysis 216Remittance Network 220 Branch Network 223 ATM Lists 226

Contents


EMBRACING INNOVATIONInnovation has, is and will always be the cornerstone of our success. Itsupports our efforts to build tangible and intangible infrastructure and to integrate relevant economic, social and environmental issues into our strategic planning process and day-to-day operations.


STRATEGIC REPORT GOVERNANCE RISK REVIEW HUMAN RESOURCECORPORATE RESPONSIBILITY


Strategic Report

PRODUCTS & SERVICES FINANCIAL STATEMENT INVESTOR'S RELATIONSHIP BANK'S PERFORMANCE

Sunrise Bank’s secret of continued growth and success is it’s highly diversified and well-balanced business model. Being among the preferred banks in Nepal, we have always taken a proactive stance towards improving strategic alignment to drive stronger growth and deliver the highest returns on stakeholder value.

In the year under review, we embraced a broader performance-driven strategy to transform all key business pillars and support services, and to sharpen their alignment with our vision to ‘Establish Sunrise Bank as a lead bank in all places of our branch locations and nation-wide’. At the heart of our strategy is the marriage of our corporate goals with the aspirations of stakeholders, which prompted us to leverage on four key pivots; strengthen top line, enhance digital capability, boost core capital and expand the bottom line. To grow the top line in 2018, we continued to orient ourselves more consistently toward both Retail and SME customers in all core markets. At the same time, to strengthen our roots as a commercial bank, we adopted a two-pronged approach; firstly to increase our penetration and capture market share in selected retail segments and secondly to be the first-mover to promote unique, as well as structured solutions to capture the Retail and Corporate segment.

Hand-in-hand with this volume driven strategy we enhanced digital capabilities, for which our IT transformation programme became the key enabler. Our IT transformation programme also spearheads our efforts to differentiate ourselves from peers. Further, investments in digital technology were aimed at enhancing customer service, augmenting the risk management framework and improving employee productivity.

Equally important to our long-term success is our cost structure. Ongoing cost controls efforts are aimed at reducing our cost-to-income ratio, which, combined with top line growth, are instrumental in meeting bottom line targets. We have always understood that supporting our ambitious plans will most certainly depend how well we manage our capital requirements now and in the future. Based on this premise, we are in the process to raise NPR 1 Bn through an unsecured, subordinated and redeemable debenture, which will strengthen the Bank’s Tier II capital by mid July 2019.

We constantly question the status quo to find new and better ways to do things. With fresh eyes, we seek out new ways to meet customer needs and help shape their own path, through innovative products, insightful advice and invigorating attitude. In doing so, we have leveraged on innovation to build a fully integrated multi-channel banking system that combines traditional and digital channels, giving rise to an unprecedented level of customer convenience. Innovation has helped us to simplify our procedures, reduce organizational layers and delegate more decision making powers to branches, enabling us to respond to customers’ needs faster than ever before. Meanwhile, amidst the growing risk of cyber security threats, we have begun to emphasize on innovation to preserve both customer privacy and data security.


An Overview

SUNRISE BANK LIMITED, a leading financial institution, was established as the 23rd commercial bank in Nepal on 12 October 2007. Its corporate office is located at the Gairidhara Crossing, in Kathmandu. Sunrise Bank is driven by its motto "Rising to Serve" and offers innovative products and services to all categories of clients. It also offers products that can contribute towards the economic development needs of the country.

The Bank is continuously supervised by the Board of Directors that has members with extensive knowledge and entrepreneurial experience. The Chairman of the Bank, Mr. Motilal Dugar is a business leader with extensive interests in both industry and the services sector. The management team comprises of five members with Mr. Ratna Raj Bajracharya

as CEO. This team of seasoned banking and management professionals is dedicated towards establishing an institution determined to cater to the needs of all categories of clients.

Sunrise Bank’s continued growth and success is founded on a highly diversified and well-balanced business model. The Bank has had balanced growth throughout its first decade and is now poised to expand into new markets. The Bank's ever growing geographical coverage has enabled it to serve a spectrum of customer segments, including retail, middle market, small and medium enterprises, and large corporations. The Bank has been continuously upgrading its services using state-of-art Core Banking technology, while remaining vigilant on risks and risk management.

The Bank serves a spectrum of customer segments, including retail, large corporate, middle market, Small and Medium Enterprises (SMEs) and Deprived Sectors. Sunrise Bank’s continued growth and success is founded on a highly diversified and well-balanced business model and a robust multi-channel environment.

Sunrise Bank keeps pushing its limits and continuously endeavors to be a market leader, thanks to a strategy based on innovation and service differentiation

VISION You & Us. Together We Can Build.

MISSION Establish Sunrise Bank as a lead bank in all places of our branch locations and nationwide.

STRATEGY Our strategies are long-term and our commitment towards corporate sustainability is absolute.

OBJECTIVES The overall objective of the bank is to contribute to nation building and meeting the expectation of its shareholders, depositors, customers and other stakeholders. The Bank will make concerted efforts to realize its goal by leading the banking sector in every front with:

n Expanding presence of the Bank within and outside the country,

n Targeting under-served or potential services like SMEs and retail businesses,

n Reshaping and restructuring bank's infrastructure and systems,

n Service provision through efficient and knowledgeable staffs supported by automated procedures, and

n High degree of compliance and risk management.



The Bank remained a strong player in the market throughout 2017/2018. The market indicators for fiscal year was bolstered by,

n Good revenue generation despite the cut throat competition in the market and liquidity crisis.

n Prudent risk management system to minimize financial and operational risks and eliminate losses.

n Remarkable growth in balance sheet with a good composition of capital and liquid assets.

n Diverse credit portfolio to minimize credit risk and maximize returns.

n Surge in investment and sizable incomes from investments.

n Integrated team efforts from the ground level to top management, and

n Reinvention of products and services to cater diverse needs of customers.

SOUND CAPITAL STRUCTURE, by maintain minimum Capital Adequacy requirement under BASEL – III and meeting the NRB requirement of minimum paid-up capital.

EFFICIENT OPERATIONAL BASE, by establishing state of art servicing facilities to serve its client through improved systems, procedures and infrastructures.

GOOD ASSETS QUALITY, by maintaining good quality of assets with lowest Non-performing Assets (NPA) level in the industry through effective appraisal and monitoring mechanism and penetration to un-served and potential areas of business.

STANDARD CUSTOMER SERVICES, by providing state of art services to its clients, including technical support to assess their business operations and market responsive cost.

STAFFING STANDARD AND CAREER, by providing competitive compensation packages and career development opportunity to its staff.

GOOD CORPORATE GOVERNANCE, by fully complying with regulatory requirement, improved risks management systems, continuous monitoring of compliances and reliable reporting mechanism.

OPERATIONAL HIGHLIGHTS

CORE VALUES

CODE OF CONDUCTCommitment to the highest standards of transparency, reliability and ethical business conduct are well-established guiding principles within the Bank. These are articulated in a comprehensive policy and a Code of Conduct communicated to and understood by all employees.




TABLE OF SECTORAL LENDING (NPR MILLION)

SECTOR 2016/17 2017/18 GROWTH

Industry 9,509 12,587 32.37%

Trade 11,181 12,628 12.95%

Agriculture 3,721 5,550 49.16%

Others 27,923 30,562 9.45%

Total 52,334 61,326 17.18%

SrBL PerformanceA L I G N M E N T W I T H S T R A T E G I E S

OVER ITS JOURNEY of 11 years, Sunrise Bank has built a solid foundation to face the challenges and opportunities. The Bank has a successful history, a distinctive culture and a shared pride in performance, which is the foundation for its growth

Across the Bank, its employees place great value on working together and share a genuine desire to best serve customers. SrBL is confident that its strategy is sound and that proper execution of its plans can help towards ensuring meaningful progress needed for creating long-term value for all stakeholders, including customers. This approach has driven Sunrise Bank to truly live up to its brand proposition.

The major force driving growth at Sunrise Bank are its core values and enhanced digital capabilities, both of which are vital for continued progress. While integrating technology the Bank continuously strives to create a culture that exemplifies service excellence, simplification of interfaces between customers and the Bank, and creating secure transactional platforms.

Sunrise Bank has emerged as a trusted bank in Nepal and will keep investing in its highly customer-centric strategies. SrBL values the trust customers have placed on it, which is the rationale for investments in the right technology and teams to protect customer information while also delivering faster and more reliable services.

The Bank recognizes that customer-led innovation is crucial in the rapidly changing digital space. This explains its efforts to continuously engage in developing customer focused concepts and platforms, more of which will be introduced in the coming years.

Engaging stakeholders is another core component of the Bank's strategy implementation process. By developing and maintaining meaningful relationships, the Bank has been able to continuously improve its relations with stakeholders and in building the trust needed for expanding business. Sunrise Bank trusts that its vision, and products and services that cater more to its customers to remain as the pillars in its path to progress.



Financial Highlights

GROSS LOANS AND ADVANCES CAGR (Last 3 years) : 11.54%

(In NPR Million)

TOTAL OPERATING COSTCAGR (Last 3 years) : 27.56%

(In NPR Million) NET PROFITCAGR (Last 3 years) : 15.79%

(In NPR Million)

TOTAL ASSETSCAGR (Last 3 years) : 11.91%

(In NPR Million)

71,859 82,783 59,067

15/16 16/17 17/18

TOTAL DEPOSITSCAGR (Last 3 years) : 10.40%

(In NPR Million)

15/16 17/1816/17

61,013

51,650

44,197

15/16

15/16

52,334

16/17

16/17

61,326

1,622

1,210

782

17/18

17/18

TOTAL REVENUECAGR (Last 3 years) : 32.85%

(In NPR Million)

8,563

6,107

3,652

15/16

16/17

17/18

17/18

16/17

15/16

1,477

1,113 951

69,493



Financial Review TOTAL ASSETS

CAGR (Last 3 years): 11.91% The year 2017/18 showed a remarkable growth of NPR 10,924 million in total assets

TOTAL REVENUE CAGR (Last 3 years): 32.85% Our stakeholder's contribution to our revenue increased by NPR 2,456 million during the review year .

NET PROFIT CAGR (Last 3 years): 15.79% This year net profit showed a significant increment by 33%. This is the result of increase in revenue, cost control and decrease in non performing loan

TOTAL DEPOSITS CAGR (Last 3 years): 10.40% Our innovative products and deposit mobilisation strategies also yielded good results with increase in deposits base by NPR 8,480 million during the review yeart

GROSS LOANS AND ADVANCES CAGR (Last 3 years): 11.54% Bank financed 8,992 million more in various sectors and contributed towards holistic growth

TOTAL OPERATING COST CAGR (Last 3 years): 27.56% With internal cost control mechanism and addition of 21 new branches, the increment in total operating cost has been limited to NPR 412 million including growth in number of staffs by 203.




Macroeconomic Outlook

ECONOMIC GROWTH and development was expected to jump-start once the country’s transitional political situation stabilized following the formation of federal, provincial and local governments. GDP growth rate in Nepal has averaged 4.48% between 1993 and 2018 reaching an all-time high of 8.22% in 1993-94 and record low of 0.12% in 2001-02. GDP growth for FY 2017/18 was 6.30%. The budget for FY 2018 set the GDP growth target at 8.00%.

Political instability (following the decade long insurgency), high inflation, lack of continuous power supply (Grid) and other infrastructures including industrial security had hindered economic growth. Most of these hindering factors have now been overcome including improvement in power supply. The growth rate in agricultural output has spurred growth supplemented by rapid expansion of bank branches in rural and suburban areas to result in robust credit demand especially from the agriculture, clean energy and SME sectors. This increased credit demand has actually outpaced the growth rate of money supply in the financial system often leading to financing issues. Banks have not been able meet the credit demands for the last three fiscal years owing to the cash crunch which is why central bank has now allowed external commercial borrowing by banks.




Major macroeconomic concern for the financial markets has been the slow pace of deposit growth. The widening import bills and slow growth of exports have widened the trade gap and this has lead to BoP deficits. Even though inward remittances have grown year on year, this has been outpaced by imports. Despite everything, the country has robust foreign exchange reserves, almost about 1/3rd of GDP. Inflation has now slowed down to single digits. Though the equity indices are in the red, the base of equity capital markets has expanded. The central bank’s decision to increase the capital base of commercial banks to NPR 8 billion has made the banking system more resilient to risk exposures.

Introduction of the Interest Rate Corridor by the central bank (NRB) was a step towards stabilizing the short-term rates as well the money market. Consolidation of banks and financial institutions through mergers and acquisition has also helped to make the banking system stronger. Similarly, the introduction of interbank payment and upcoming RTGS settlement can lift the national payment system to international standards.

The financial frictions seen in recent months have improved significantly. The gap between deposit and credit growth has narrowed. The comfortable level of central bank liquidity has also contributed to easing the financial situation. The upward trend in market interest rates has been arrested. The increased level of capital, the introduction of a fixed interest rate corridor in the monetary policy statement and macro-prudential tools in place are measures aimed at making financial sector more resilient and stable going forward.

6.3% GROWTH IN GDP

8.6% REMITTANCES INCREASED

26.7% TRADE DEFICIT

19.2% GON REVENUE INCREASED

FY 2017-18




The end of the fiscal year 2017-18 will mark a decade since the world economy was dragged into a downward spiral that was initially sparked by risky mortgages in the United States. The mortgage crisis, however, was not the only challenge in the intervening years. The world experienced Europe’s debt crisis, emerging markets’ vulnerability to volatile capital flows, oil price fluctuations, and geopolitical events such as the Arab Spring and Brexit all of which added to the uncertainty. The tide, however, seems to be turning of late, especially since last year when the world economy reverted. According to estimates

by the International Monetary Fund (IMF), global real GDP grew 3.6% in 2017, the highest in five years.

With economic activity gathering pace on both sides of the Atlantic and the Asian growth engine ploughing ahead alongside the Pacific Rim, the global economy seems poised for a strong head start this year. It would, however, be foolhardy to imagine a world without risks. Increasing private sector debt levels, geopolitical risks, and rising protectionist rhetoric could reverse the positive trends.

GLOBALPERSPECTIVE

According to estimates by the International Monetary Fund (IMF), global real GDP grew 3.6 percent in 2017, the fastest pace in five years.

GLOBAL GROWTH IN GDP

3.7%

NEPAL GROWTH IN GDP

6.3%




If there is a protagonist in the global growth story of 2017, it is trade. According to the IMF, the total volume of global exports is estimated to have grown by 4.1% in 2017, up from 2.3% in 2016. This was the fastest growth in exports since 2011 and the first time in three years that exports growth outpaced global GDP growth. Asia has been a key contributor to trade growth since late 2016, with European economies also contributing last year. Germany, for example, recorded double-digit exports growth in Q3 2017 for the first time in eight years.

Strong growth in international trade also reveals a high degree of resilience despite uncertainty about trade and investment relations, and rising protectionist rhetoric. Asian economies, for example, are increasingly trading with one another, taking advantage of growing demand within the region. Similarly, withdrawal of the United States from the Trans-Pacific Partnership (TPP) has not shaken the resolve of the remaining 11 nations to continue with a trade pact, albeit on a smaller scale. And as a shot in the arm for these nations, the United Kingdom has expressed interest to join the TPP as it tries to offset trade losses arising from Brexit. This may encourage other non-Pacific nations to follow suit.

Developed economies continue to benefit from accommodative monetary policy. The balance sheets of the central banks of four major economies—the United States, Euro Area, the United Kingdom, and Japan—alone have quadrupled from pre-crisis levels to reach almost $16 trillion, approaching 20% of world GDP. Despite four policy rate hikes in the United States, the Federal Reserve’s interest rate path has been gradual and will likely remain so in 2019. In the Eurozone, the European Central Bank (ECB) has been at the forefront of the fight against yields, thereby easing the fiscal pain for debt-ridden economies. Key emerging economies have also eased policy in recent quarters; Turkey and Mexico are notable exceptions.

Higher global liquidity and easy monetary policy have aided credit growth with emerging economies outpacing the developed ones. A likely reason for the surge in emerging economies is large portfolio inflows from developed economies in search of higher earnings, that have aided in the sharp rise of corporate and household credit in the latter.

Adding to the list of concerns is the rising protectionist rhetoric and a move away from a multilateral trading order. While the question mark hanging over the North American Free Trade Agreement has been resolved, negotiations for a smooth Brexit have suffered in recent days. Businesses are therefore in an uneasy terrain. Should manufacturers move factories? Will financial services in Europe relocate from London? Who should retailers bank on: the tried-and-tested US consumers or the happy spenders in Asia? For businesses, adding to the discomfort will be technology-related disruptions and rising geopolitical risk in the Korean peninsula and the Middle East.

GDP growth rate of Nepal has averaged 4.48% from 1993 till 2018 reaching an all-time high of 8.82% in FY 1993-94 and record low of 0.12% in FY 2017-18.




Customer CentricBusiness Model

SUNRISE BANK recognizes that today’s customers have less and less time to visit its branches, even though their needs are greater than ever. Modern consumers are moving away from conventional banking and are demanding more conveniences, better service quality and technology-enabled ways to access services 24/7.

Sunrise Bank has already begun to transform its business model to match this change. This required a rethink of customer fundamentals and establishing stronger customer ties. The Bank communicates more frequently with current and potential customers and this has helped it to better understand their needs for delivering products and services that match the changing expectations and needs. The Bank believes that every customer has the right to expect sound and superior banking solutions, backed by the latest technology and excellent customer service.

Over the years, the Bank has consciously diversified its business model to portray a greater degree of customer-centricity in its offerings. It has successfully combined both conventional brick-and-mortar banking concepts with the latest developments in global banking to deliver a superior banking experience. The Bank also continues to emphasize the importance of strengthening its IT backbone as the basis of achieving service excellence. This approach has resulted in a definitive competitive edge. It addition, the Bank has also over the years, strategically expanded its

footprint in order to fulfill the needs of new and emerging market segments.

The Bank's goal is to create an immediate rapport with new clients and encourage them to choose Sunrise Bank as their primary bank. Meanwhile, the Bank's listening practices have continued to help it to better understand its customers’needs and respond promptly to their concerns.

To facilitate multi-device access, the Bank has taken steps to enhance the customer-centricity and user-friendliness in its digital banking processes. It has also continued physical outreach and diversification of distribution to take the Bank closer to customers. It is already become a 'Bank with a Voice' (Toll free call center) and has an expanding branch network and ATM coverage . Grievance handling system at the Bank has also been continuously improved to increase efficiency and effective responses to complaints. The Bank also plans to spend considerable time and resources to reinforce the skills of frontline staff, and reinforce call center operations, to ensure effective service delivery.

Additional steps that the Bank plans to undertake to remain on top of competition are creating a learning culture that promises both individual and organizational development, and promoting innovation and maximum value creation for customers.



CORPORATE GOVERNANCESunrise Bank believes in sound corporate governance as a key operational strategy to beat competition. It has several units led by the board to oversee governance and ensure that its practices result in a bank that is agile, secure and trusted by customers.


STAFF GRIEVANCES

17

RESOLVED AMICABLY

224CUSTOMER COMPLAINTS

Governanceat A Glance

THE GOVERNANCE UNIT of the bank comprises of the heads of operations, compliance, human resources and legal units and is responsible for monitoring compliance on a monthly basis. The committee identifies governance issues, suggests mitigation and reports along with its recommendation. Its guiding philosophy is that effective governance is at the core of all successful banks.

The Bank also has one Board-level as well as management level committees to look after the money laundering and terrorist financing issues. The Money Laundering Prevention Committee, a board level committee, comprises of at least one board member along with the heads of the compliance and operation departments as members. This committee meets as required, and also every quarter to discuss money laundering, terrorist financing, suspicious transactions, and needs and efficacy of the system of the bank to tackle the issues.

The Bank organizes knowledge sharing sessions and provides training/orientations on AML and good governance to directors, top management and staffs on a regular basis. The training/orientations are routinely organized to make all staff aware about their AML/ CFT related responsibilities and regulations and related laws. Compliance workshops and orientations are mandatory for staff handling different banking operations to ensure there is timely reporting of deviations from accepted standards. The Bank has a zero tolerance environment in governance and compliance related matters, and this has remained a strong deterrent for deviant behavior. The Bank has in place a comprehensive KYC, AML, CFT policies & procedures.

Sound companies are made of staffs who are satisfied with their jobs. The Bank's governance systems extend to continuously listening to grievances and forwarding issues to a top-ranking staff. The Grievance Cell at the Bank resolves outstanding issues. Customers at the Bank can also submit grievances/ complaints that are handled promptly. In the past year there were four staff grievances and 224 customer complaints that were resolved amicably.

The Bank also has a system of keeping staff records updated by requiring every staff member to fill in Know Your Employees (KYE) forms, which includes information on both social and financial status of the employees, such as the assets details for officer and higher ranking staff. The directors of the Bank are also required to make disclosure of their assets, networks and engagements outside the company.

All in all, the feedback system of the good governance unit and grievance cell has enabled continuous monitoring of the situation of both the staff and customers. This has been vital for devising corrective measures. Every branch of Sunrise Bank has a Complaints and Suggestion Box for customers. The content of these boxes are reviewed every month to ensure timely corrections.



MR. MOTI LAL DUGAR

MR. MOTI LAL DUGARMR. MOTI LAL DUGARMR. MOTI LAL DUGAR

MR. MOTI LAL DUGAR


MR. MOTI LAL DUGAR MR. MOTI LAL DUGARMR. MOTI LAL DUGAR

MR. MOTI LAL DUGARMR. MOTI LAL DUGAR

FROM LEFT TO RIGHT: Mr. Deepak Nepal, Director; Mr. Malchand Dugar, Director;

Dr. Bhogendra K. Guragain, Director; Mr. Motilal Dugar, Chairman; Er. Bachh Raj Tater, Director;

Mr. Jyoti Kumar Begani, Director; Mr. Om Krishna Joshi, Director & Dr. Deepak Prasad Bhattarai, Director

BOARD OFDIRECTORS


Profile of Directors

Mr. Motilal DugarCHAIRMAN

Mr. Motilal Dugar is also the Chair of the MV Dugar Group, one of Nepal’s largest private enterprises. Mr. Dugar pioneered the automobile business in Nepal and has more than 50 years of experience and representing renowned companies like Mahindra, John-Deere, Royal Enfield, Piaggio, Leica, Minemaster, Kirloskar, etc. The group is developing hydropower projects that will generate 317 MW and make it among the largest private sector hydropower developers in the country. He is the former Chairman of Gurans Life Insurance Co. Ltd. Mr. Dugar is also the President of The Bhagawan Mahavir Jain Niketan, and the Vice President of the Nepal USA Chamber of Commerce and Veerayatan Nepal. He also owns Kohinoor Cold Storage, the largest such undertaking in Nepal.

Mr. Dugar is a well-known industrialist and business person in Nepal with engagements in establishing and operating manufacturing and service industries for over 55 years. He has remained a director of SrBL since its establishment.

Dr. Bhogendra K. GuragainDIRECTOR

Dr. Bhogendra Guragain, a Tribhuvan University graduate with an MBBS degree, also holds an M.Sc. (Epidemiology) from the Erasmus University Rotterdam, Netherlands. He has over 19 years of experience in civil service and international leadership, and has been a director since establishment. An extensive traveler, Dr. Guragain has also worked as International Program Advisor for Medical Foundation, London and as visiting professor in more than a dozen of universities in Europe and North America (USA and Canada). He also served as an advisor at the World Health Organization and has worked with various UN agencies. Nepal's BOSS magazine had voted him as Nepal’s top 50 personalities in 2004 and 2005. He is executive chairman of Ngadi Group Power Ltd. and Chairman of Siuri Ngadi Power P. Ltd., Shuvam Power Ltd. and Kathmandu Fun Valley P. Ltd. and a Director of Barun Hydropower Co. Ltd.

Er. Bachh Raj TaterDIRECTOR

Chairman of the Tater Group, Er. Bachh R. Tater is a well-known businessman and a pioneer in private hydropower development in Nepal. A former banker, Mr. Tater has also been serving as the Chairman of South Asia Infrastructure Development Pvt. Ltd., Ridi Khola Hydropower Development Co. Ltd., and Vishal Plastocab Industries Pvt. Ltd. He is also a director of the Arun Valley Hydropower Development Company Ltd. As a civil engineer, he had worked for a year at the Department of Irrigation, Government of Nepal and was involved for 24 years as Chief of Construction Section, Agricultural Development Bank Ltd., Nepal.

Mr. Malchand DugarDIRECTOR

Mr. Malchand Dugar comes from one of Nepal's largest business families. He, along with his father – Late Mr. Tolaram Dugar (founder Chairman of Sunrise Bank Limited, Gurans Life Insurance Company Limited and TM Dugar Group), has established a number of successful industries in Nepal.

As Chairman of the TM Dugar Group, he heads several companies including Dugar Foods and Beverages Pvt Ltd., Advikk Exim International Pvt Ltd., Shrish Warehousing Solutions Pvt Ltd., Pooja Warehousing Solutions Pvt Ltd., Amrit Pulses Industries, Shrish Cold Storage, Navkar International, Nepal Sal Seed Oil Pvt Ltd., and Bikas Intercontinental, etc. He is a former Director of Gurans Life Insurance Co. Ltd. Mr Dugar has 45 years of experience in business and has also served on the Board of Sunrise Bank Limited for several years.



Dr. Deepak Prasad BhattaraiDIRECTOR

Dr. Bhattarai represents the public shareholders in the Bank’s board. A founder member of the Nepal Engineering College, Dr. Bhattarai is also a visiting professor at the Institute of Engineering, Tribhuvan University. He is a member of Academic Council, Pokhara University and also serves as an advisor at Kist Medical College and Tourism & Hotel Management College. Dr. Bhattarai is a senior consultant at Construction Management Technologies Pvt. Ltd. and has published three books on different aspects of engineering, and numerous articles in both national and international journals.

Mr. Deepak NepalDIRECTOR

Mr. Deepak Nepal is a representative of public shareholders in the Bank’s board. He is a Diploma Holder in Commerce from Tribhuvan University. Mr. Nepal has been involved in the corporate sector for last 36 years and also was a Director at Gurans life insurance Co. Ltd. for more than six years. He was also an active Executive Member in Nepal Foreign Trade Association for four years. He has also worked as a representative of Nepal Foreign Trade Association in the capacity of president of its' tax committee with Nepal Government Revenue Committee.

Mr. Jyoti Kumar BeganiDIRECTOR

Mr. Jyoti K. Begani represents the public in the Bank’s board. Mr. Begani is the proprietor of Sadasukhi Enterprises and is also involved in social service. He served a term as the Chairman of Nepal Jain Council, Bhagwan Mahabir Jain Niketan-Kathmandu, Shree Jain Shwetambar Terapanthi Shabha-Kathmandu and the Lions Club of Kathmandu. He has also served as the secretary of the World Hindu Federation. He is also a former Director at Gurans Life Insurance Co. Ltd.

Mr. Om Krishna JoshiINDEPENDENT DIRECTOR

Mr. Om K. Joshi is an independent director. Mr. Joshi had been a director in erstwhile Narayani National Finance Ltd. for more than 3 years before being appointed as a director at the Bank. He served for over nine years as a Managing Director at Narayani Finance Ltd, and also a five year term as Finance Director at the Nepal Agriculture Research Council. He worked for more than 27 years at the Agriculture Development Bank Nepal Ltd. Mr. Joshi holds a Master of Commerce degree from Tribhuvan University, and a Bachelor of Law degree from the same university. He had also served as a director of Sagarmatha Insurance Co. Ltd.




The Bank has remained as a good corporate citizen and has continuously remained committed to the welfare of society.



Chairman’s Statement

Dear Fellow Shareholders,

It is my privilege to write to you as the Chairman of your Bank. I feel honored to accept the responsibility of chairing the Board. On behalf of the Board of Directors of SrBL, I express my sincere gratitude to all of you for your continuous support and cooperation during the past 11 years. I am also happy to report that we have delivered admirable financial performance in FY 2017/18 (FY 2074/75) with loans and advances of NPR 60.21 billion, Deposit of NPR 69.5 billion and Profit of NPR 1477 million. The Total Assets of the Bank has increased to NPR 82.78 billion.

We have expanded our network to 103 branches and 114 ATMs. Another 20 new branches and an equal number of ATMs are in the process of being set up -- 10 of them will be operational by mid-July 2019. We have also extended our reach to 18 far-flung areas in the country as village branches as per our commitment to have presence nationwide.

The Bank has already crossed the NPR 8 billion paid-up capital requirement as it increased its paid-up capital to NPR 8.15 billion. The Bank has, therefore, proposed a cash dividend of 11.5% this year out of the profit and reserve instead of bonus shares, as per the aspiration of our shareholders.

SrBL has attained significant growth which is evident from this Annual Report. The financials for this year have been prepared as per the Nepal Financial Reporting Standard (NFRS) and is different from the earlier financial reports.

The Bank has remained as a good corporate citizen and has continuously remained committed to the welfare of society. It has contributed towards many initiatives that have resulted in tangible and intangible benefits to people deprived from both education and health.

The Bank provided Bal Mandir, Naxal – a school for orphaned children -- food and clothing, and assisted the procurement of skin grafting equipment (Dermatome) for the Burn Ward of the government-run Kanti Children’s Hospital.

Finally, I would like to congratulate all of you for completing 11 years of successful operations. Our trusted shareholders, valued customers, dedicated employees, directors and executives, both past and present, deserve a big round of applause! I specially thank all the employees at Sunrise Bank for the hard work they have put in to attain the results. There will be challenging circumstances in business and the operating environment as we progress but I firmly believe that we will hold ground and will continue to move forward, always striving to achieve quality for delivering satisfying results. This is possible when business and compliance go hand-in-hand, which is also what we call ethical business.

Thank You, Motilal Dugar CHAIRMAN



THE IMPROVED PERFORMANCEThe year in perspective has also seen Sunrise Bank moving into a righteous path with satisfactory expansion in resource mobilization and business lending as well as profitability. Deposit resources have increased by 17.6% while lending growth has remained at 18% thus maintaining the pace along with the increment in resources. Profitability has recorded positive growth with 32.7% over last year. The return on equity has improved to NPR 18.13 (previous year NPR 16.96 ) per share. The return on equity still does not sound attractive. However, a consideration has to be made to the fact that the bank has increased its equity fourfold during last two years, from NPR 2,000 million to NPR 8,000 million at the behest of regulatory directives. A justified level of business growth and profit has yet to be achieved to commensurate with the increased capital. Our best efforts towards enhancement in business volume in the coming years that would ensure proper return on shareholders’ capital will continue.

HARDENED ECONOMIC REALITYNepal has turned into a federal governance structure. The most positive aspect this year has been the completion of all three levels of elections and formation of stable governments with comfortable majorities at the central and provincial houses of parliaments. Due to this political stability a great amount of confidence level in the minds of general public has arisen giving high hopes in business/economic prospects. Yet the delay in formalizing the mechanism in the operations of federal structure has cast doubts about its successful transformation soon.

The political success has yet to be transformed in economic front. In banking, the situation of “shortage in loanable funds” in the system has surfaced again. Demand for credit has largely outpaced the growth in resources. It is largely attributed to the failure on the part of the government to spend, increased consumption of the general public putting more pressure on outgo of funds by way of imports, and huge surge in the demand for credit generated in the system, which again is attributed towards the large number of branch network spread out by the financial sector resulting in enhanced “reach to finance” even at rural areas.

The situation is perceived to last for a longer period simply due to lack of any foreseeable policy measures proposed by the government to ensure appropriate amount of funds flow into the system. The banks, including us, would require remaining more vigilant pursuing a more prudent practice in resource mobilization and lending.

CONVERSION INTO NFRSEffective this fiscal year, Banks were instructed to prepare their financial statements in NFRS standard. The major departure in the existing and changed accounting policy has been shifting of recognition of income from “cash basis” to “accrual basis”. The resulting effect has an impact of cash outflow of nearly 40% of such “accrued income” in the form of payment of “staff bonus” and “income tax” on the revenue which is yet to be realized! Also, banks were also taxed on the “assumed accrued profit” on “restructured profit” of previous years arising on account of conversion of the financial statements into NFRS. The upfront cost has occurred and hit

the banks unaware. Yet, the retained earnings arising out of recognition of such “accrued profit” has yet to be permitted for inclusion under bank’s capital.

HUMAN RESOURCE MANAGEMENTDue to opening of large number of branches by each bank, as well as aggressive operational movements of some banks during the period, the industry’s supply of manpower situation has aggravated. The industry’s staff turnouts remain heavy. We are not spared either. To cater to such a situation a vivid manpower recruitment and training policy and practices have been put in place, which is working satisfactorily.

DIVIDENDThis year, the bank has proposed Cash dividend for the first time during last 5 years at 11.5% amounting to NPR 937 million. Hitherto the bank has been distributing “stock” dividend continuously since last three years to support enhancement in requisite capital. Since growth in banking business has to be supported by proportionate increase in its capital, a distinctive dividend policy will need consideration for future.

APPRECIATION The bank is moving forward with great amount of confidence. The vision “YOU & US … TOGETHER WE CAN BUILD” has been shared and practiced among us all. I am placing on record my sincere appreciation to all stakeholders for their contributions in building this bank more vibrant and stronger.

Thank You, Ratna Raj Bajracharya CEO


CEO’s Statement


Mr. Apachh Kumar Yadav, DGM

Mr. Ratna Raj Bajracharya, CHIEF EXECUTIVE OFFICER

MANAGEMENT TEAM


Mr. Sarbendra Mishra, AGM/CFO

Mr. Robin Nepal, DGM

Ms. Asha Rana Adhikary, SENIOR DGM

F R O M L E F T T O R I G H T :

Mr. Apachh Kumar Yadav, DGM;

Mr. Ratna Raj Bajracharya, CHIEF EXECUTIVE OFFICER;

Mr. Sarbendra Mishra, AGM/CFO;

Ms. Asha Rana Adhikary, SENIOR DGM;

Mr. Robin Nepal, DGM


The Bio of Management

Mr. Ratna Raj BajracharyaCHIEF EXECUTIVE OFFICER

Mr. Ratna Raj Bajracharya joined Sunrise Bank Ltd. as Chief Executive Officer in May 2015. Just before joining the Bank, he had been working as Chief Executive Officer of Global IME Bank Ltd., another Class“A”commercial bank, where he worked for 4 years. He also successfully completed his tenure as Chief Executive Officer in yet another Class“A”commercial bank of the country, namely, Nepal Credit and Commerce Bank Ltd. He worked at Nepal Bank Ltd., a government-private sector joint venture bank and the oldest bank of Nepal, under management contract, as the Chief Financial Officer. He began his career with Nepal Rastra Bank, the central bank of Nepal, where he spent 20 years in different capacities. Mr. Bajracharya has experience of over 40 years in the banking and the financial sector.

A senior Chartered Accountant, Mr. Bajracharya has served as the president of Association of the Chartered Accountants of Nepal, president of Institute of Chartered Accountants of Nepal, director of Securities Board of Nepal, etc.

Ms. Asha Rana AdhikarySENIOR DGM

Ms. Asha Rana Adhikary possesses more than 30 years of banking experience. She started as an Accounting Assistant at Stanford University, California, USA in the year 1985 and subsequently as a Joint Account Officer at Rastriya Banijya Bank Ltd., Nepal from 1988 to 1993. During this period, she also worked with ERNST and YOUNG in 1990 under the aegis of Commercial Bank Problem Analysis and Strategy Study (CBPASS) and with BOOZlALLEN & HAMILTON in 1992. Later, she worked fromthe position of Senior Officer to Senior Manager at Himalayan Bank Ltd. from December 1993 to September 2007 before starting her career at Sunrise Bank Limited as Assistant General Manager.

Ms. Adhikary has attended several professional training programs and has also imparted several trainings. She had attended‘Program for Cross Cultural Management (PCCM) in Tokyo, Japan conducted by AOTS, Japan in 2004. She had also attended Bank Management Course (BMC) in Stockholm, Sweden in 1991, including its Follow-up Asia Program in the Philippines in 1999.

Ms. Adhikary is a Gold Medalist, First Class First in MBA and was a recipient of the Mahendra Bidya Bhushan Gold Medal and Nepal Bank Limited Sardar Gunjamansingh Gold Medal. She also secured First position among the girl candidates in Nepal in the Certificate Level - Intermediate and had received the Aishwarya Bidya Padak. She was awarded with King Birendra-Aishwarya Scholarship for pursuing Bachelor in Commerce studies.



Mr. Apachh Kumar Yadav DGM

Mr. Apachh Kumar Yadav served Sunrise Bank Ltd. since July 2015. He also served as an Assistant General Manager at Machhapuchhre Bank Ltd., Deputy Manager at Nepal SBI Bank Ltd. and Deputy Chief Credit Officer at Nepal Bank Ltd. Mr. Yadav was a Member of ICC Management Team for the restructuring of Nepal Bank Ltd. under the Financial Sector Technical Assistance Project. He also served as an Accounting Consultant for "The Private Sector Support Program"- A World Bank Project. He also served as a Group Coordinator for the Special Audit & Accounts Reconstruction Work in "Rastriya Banijya Bank Account Reconstruction Project". He was also Business Process & Portfolio Management Specialist in Agricultural Development Bank Ltd.

A Chartered Accountant, Mr. Yadav secured third position in Bachelors in Commerce, Tribhuvan University and forth position in Intermediate in Commerce, Tribhuvan University. He has wide experience in audit of commercial banks, finance companies, insurance companies, hotels and manufacturing companies.

Mr. Robin NepalDGM

Mr. Robin Nepal started his career with Sunrise Bank Ltd. in November 2009 as a Chief Manager. He also served as a Deputy Manager; Head-Risk Management Department at Himalayan Bank Ltd. Mr. Nepal has banking experience of about 2 decades and has served various senior management roles in corporate lending and risk management. He started his banking career at Nepal Grindlays Bank Ltd., now Standard Chartered Bank Nepal Ltd. He holds a Masters degree in Business Administration.

Mr. Nepal has attended various professional trainings inside and outside the country. He obtained training on Integrated Risk Management from B.D.P. Consultants, Pune and Centralization of Trade Finance from Habib Bank, Karachi. He attended seminar in International banking, Commerzbank Frankfurt; and on Project Finance, Reserve Bank of India, among others.

Mr. Sarbendra MishraAGM/CFO

Mr. Sarbendra Mishra is a seasoned professional with more than 23 years of banking/finance experience. He started his banking career at Nabil Bank in the 1990s and worked there for about 15 years in core operation, trade finance, credit cards, corporate credit and treasury. He joined Sunrise Bank in 2007, and in 2010 moved to Civil Bank as Chief Operating Officer. He has also undertaken various leadership roles. He has rejoined Sunrise Bank as AGM/CFO. He is a former member of the Society ofTechnical Analysts, London; and the Canadian Securities Institute. He is an active member of the Association for Finance Professional (AFP), Bethesda, Maryland, USA. He holds first class Master’s Degree in Business with majors in Multinational Corporate Finance.



S T A N D I N G F R O M L E F T TO R I G H T :

Mr. Pritam Lal Shrestha, Mr. Prakash Paudel, Mr. Praveen Acharya, Ms. Pragya Adhikari, Mr. Anup Koirala, Mr. Rajendra Pd. Timsina, Mr. Deepak Raj Joshi, Mr. Ishwar K Pathak

S I T T I N G F R O M L E F T TO R I G H T :

Ms. Nikky Basnet, Mr. Ganesh Regmi, Ms. Kanchan Joshi, Ms. Rabina Acharya

DEPARTMENTHEADS


S T A N D I N G F R O M L E F T TO R I G H T :

Mr. Abinash Prabhakar, Mr. Hari Prasad Acharya, Ms. Pooja Pradhan, Mr. Rajesh Kumar Manandhar, Mr. Dipen Man Singh Pradhan, Mr. Bibek Risal, Mr. Bishnu Pd. Upreti, Mr. Suman Thapa

S I T T I N G F R O M L E F T TO R I G H T :

Mr. Keshab Prasad Subedi, Ms. Prabhavati Bista, Mr. Rajendra Pd. Joshi, Ms. Sandhya Atri, Mr. Dileep Mainali, Mr. Vijay Krishna Shrestha


CorporateGovernance

The corporate governance standards are high. The Bank operates in a very highly regulated environment locally, and also globally, and is committed to abide by the international rules and regulations such as Basel Accord, UCPDC, URDG, FATF Guidelines, requirements of our correspondents, among others. Sunrise Bank has been strictly following the policies, guidelines and directives issued by regulators. It also has in place its own standards for compliance as well as those of international correspondent banks. The Bank monitors and controls compliance requirements on a daily basis using state of art banking and AML software.

The Board of Directors provides overall policy guidance and oversight to the Bank's operations, aided by Board-level committees formed as per the regulatory as well as the bank's own requirements. The Board and Board-level committee meetings are convened as and when required and within the regulatory norms.

Alongside the efforts to strengthen corporate governance, the Bank also has in place a strong automated system to prevent money laundering and terrorist financing. The AML/CFT system assists in tracking and controlling unusual/suspicious transactions and reporting the same to regulatory bodies. The Bank also has a data update/purification unit which updates KYC of customers in the CBS. Further, SrBL has in place automated SWIFT sanction screening for monitoring cross border fund transfers through SWIFT. This is a fully technology-driven platform involving cloud computing.

The Bank has a strong and independent system of Risk Management, with a Chief Risk Officer and a separate and independent Risk Management Division to look after integrated risks.




BUSINESS ETHICS AND COMPLIANCESunrise Bank adheres to the highest banking standards when it comes to doing business. It has a policy of zero tolerance for non-compliance to the values of corporate governance. It deals with all customers equally and fairly, and provides equal opportunities of employment to people from all social groups, particularly women.

BOARD STRUCTURE The Bank has eight directors in the Board that will be reduced to seven from 13 January 2019. Currently, the Board has one independent Director and 50% each of the remaining directors come from the promoter and public groups. The promoter and public directors are appointed for a term of four years through election held during the Annual General Meeting whereas the independent director is appointed by the Board for a term of four years. The Annual General Meeting for this year is scheduled on 13th January 2019.

STAKEHOLDER'S RELATIONSHIPThe Bank prioritizes the management of stakeholder relationship. It treats both shareholders and customers fairly and equitably while maintaining cordial relationship with regulators. The Bank has a subsidiary company called Sunrise Capital Ltd., which is also the Share Registrar and Transfer Agent of the Bank. The Bank has an excellent mechanism for collection and resolution of customer and shareholder grievances.

INTERNAL CONTROLAll Banks in Nepal are required to know their employees and maintain updated information on them. Sunrise Bank has a Know Your Employees (KYE) policy that is updated with information of staffs and their families. Staff declarations and disclosures on their professional & personal life and assets are updated annually. Knowing people working at the Bank and their aspirations can allow management to support them, where needed, to ensure that it remains a tightly knit family. The Bank has a system of annual performance evaluations to ensure that everyone

has a personal goal to meet. It also carries out surprise checks in different departments and branches to ensure compliance and smooth operations.

The Bank has zero tolerance to non-compliance and compromises made in the course of doing business. This policy has been put in place to ensure that the services provided are of the highest quality.

SHAREHOLDERS INFORMATIONThe promoters of the Bank hold 51.1% of the shares and public shareholders own the remaining 48.9% shares of the company. The company is listed in the Nepal Stock Exchange under the symbol SrBL. The average share price for the past year was NPR 562 and the earning per share last year was NPR 16.76.

EMPLOYEESEmployees are treated as the human capital and the Bank understands that only satisfied employees can increase productivity. The staffs are provided an environment where they can continue learning with support from the Bank, in some cases, and also provides continuous in-house training and capacity enhancement opportunities.

Sunrise Bank had 956 staff members in July 2017. The staffing at Sunrise Bank comprises of permanent employees, those on probation, contractual employees and also associates performing outsourced functions. All staff members have been exposed to one training or another for ensuring common understanding of values, in additional to instructions on specialized skills needed for specific jobs. During the last 11 years, Sunrise Bank has grown to more than 1,159 staffs as on mid July 2018 across its 103 branches. The Bank has plans to add another 20 branches as it takes its services deeper in areas unreached by commercial banks. The penetration of the Bank in small urban and semi urban areas is also key to resource mobilization.

The Bank also has a policy of rewarding high-performing staffs, and sanctioning those who compromise ethics and corporate values.



RISKREVIEWRisk review and mitigation is a top priority at Sunrise Bank. A committee of Directors is responsible for continuously assessing different risks faced in banking to ensure that they are restrained at manageable levels.


AUDIT COMMITTEE The Board of Directors has established an Audit Committee under a non-executive Director. This committee reviews the Bank’s financial condition, its internal controls, and audit program, and issues necessary guidelines to management after detailed discussion of the findings of the internal audit. The external as well as internal auditors have direct access to this Committee. The Board of Directors regularly discusses the reports of the auditors and the Committee. As per the policy and practice, the Chief Executive has not been included as the member of the Audit Committee.

The composition of the committee is as follows:

NAME DESIGNATION

Dr. Deepak Prasad Bhattarai Coordinator

Dr. Bhogendra Guragain Member

Mr. Malchand Dugar Member

S.A.R Associates, Internal Auditor Member

Mr. Ishwar K Pathak Member Secretary/ CRO

Board Level Committee

The Board comprises of a Chairman, three directors from among promoters, three public directors and one professional director representing the promoter and public shareholders as per the provision of Company Act, 2063.

The Board represents and protects the rights of members/investors. It interacts with the CEO periodically where the directors assess the overall direction and strategy of the Bank for establishing policy based governance systems, and for ensuring that corporate governance standards prescribed by the regulatory authorities are met. The CEO ensures that the daily banking activities are carried in compliance with applicable laws, directions of regulatory bodies and principles of corporate governance.

As per the provision of Nepal Rastra Bank, there are four board level standing committees in the Bank, viz.; The Audit Committee, The Risk Management Committee, The Employee Compensation and Benefit Committee, and the Money Laundering Prevention Committee. They are headed by one of the non-executive directors and includes non-executive directors and senior officials of the Bank. Apart from these, the Bank may also have other ad-hoc board level committees, formed as a special purpose vehicle, with task-specific deadlines.




RISK MANAGEMENT COMMITTEE The Risk Management Committee aims to assist the Board of Directors in its responsibility to oversee the adequacy of the risk management process & framework. The Committee works to make sure that the Bank possesses efficient and effective risk management system that covers all types of risks. In addition, the Committee is also responsible for setting, assessing, reducing, monitoring and reporting risk levels for the attention of the Board of Directors.

The composition of the committee is as follows:

EMPLOYEE COMPENSATION AND BENEFIT COMMITTEE (ECBC) The ECBC was formed in order to develop and look after the compensation and amenities of, and policies related to, the employees of the Bank. The committee is involved in forming the overall human resources strategy aligned with the business strategy of the Bank.

The composition of the ECBC is as follows:

NAME DESIGNATION

Er. Bachh Raj Tater, Director Coordinator

Mr. Ratna Raj Bajracharya, CEO Member

Mr. Sarbendra Mishra, AGM Member/AGM

Ms. Prabhavati Bista, Member Head - Human Resources Dept. Secretary

NAME DESIGNATION

Dr. Bhogendra Guragain Coordinator

Dr. Deepak P. Bhattarai Member

Mr. Apachh K. Yadav Member /DGM

Mr. Robin K. Nepal, DGM Member/DGM

Mr. Ishwar K Pathak Member Secretary/ CRO




THE BANK’S Risk Management Committee (RMC) was formed to assist the Board of Directors in overseeing the risk management process at the appropriate level. The Committee was established to make sure that bank possesses efficient and effective risk management plans covering all types of risks. In addition, the Committee is also responsible for setting, assessing, reducing, monitoring and reporting risk levels for the attention of the Board of Directors.

RMC monitors and provides recommendations to the Board on the SrBL business risk strategy, monitors the alignment of SrBL risk profile with risk appetite as defined in the Board Statement

of Risk Appetite, ensures that SrBL maintains an appropriate level and quality of capital and liquidity in line with the risks inherent in its activities, and oversees the identification, management, monitoring and reporting of risks inherent in SrBL operations. Such oversight includes, but is not limited to, the points discussed below:

n To update and advise the Board on adequacy and effectiveness of existing risk identification, assessment, control, mitigation and management system and further improvement of the risk management framework.

n To advise the Board following regular review and monitoring of risk level in business activities, risk tolerance limit; risk mitigation, management and development of strategies, policy and procedures for maintaining prudent level of risk management.

n To discuss and advise the Board regularly after obtaining risk management reports from management and reviewing the risk assessment, measurement, mitigation and monitoring processes.

n To notify and advise the Board on capital adequacy based on risk weighted assets, ICAAP; adequacy of policies & procedures, and risk tolerance limit for supporting business risk strategies under risk management framework.

n To advise the Board on risk management issues following NRB Directives and Guidelines and setting internal limits and maintaining of necessary risk management framework.


Risk Management Committee


n To regularly review and discuss stress testing results, and advise the Board on the effect and requirement of future changes, and developments of policies and framework.

n To review of limits/authorities delegated by Board and reasonableness thereof for proper use and further assessment for future changes and amendments as required.

n To report to the Board quarterly following assessment and review of ALCO decisions and determination of asset composition, asset placement, income generation capacity and position of asset quality upgrade or decline.

n To regularly update the Board on overall economic situation and developments. Monitor changes anticipated for the economic and business environment, including consideration of emerging trends and other factors considered relevant to SrBL’s risk profile and risk appetite, and to report on mitigation of effects of anticipated changes on financial position of the Bank.

n To review and update the Charter at least annually and recommend changes to the Board for approval.

n To ensure that the Bank has a strong management information system relating to reporting.

n To recommend to the Board on any other matters related to risk management to the extent RMC considers necessary.

RMC membership and coordinator is determined from time to time by the Board. RMC consists of a minimum of four and a maximum of five members. A non-Executive Director is appointed as Coordinator of the committee. The Audit Committee Coordinator is an ex-Officio member, along with the head of the Operation Division. The Chief Risk Officer is the member secretary.

The composition of the SRBL risk management committee in 2018 was follows:

During 2017/18, the committee held six meetings and NRs. 76,500/- (after deduction of TDS) was paid as fee to the director members of the committee.

NAME DESIGNATION

Dr. Bhogendra K. Guragain Coordinator

Dr. Deepak P. Bhattarai Member

Mr. Apachh K. Yadav Member/DGM

Mr. Robin K. Nepal Member/DGM

Mr. Ishwar K. Pathak Member Secretary/ CRO



Risk Management and Control Environment

THE BANK aims to ensure informed decision-making and strong risk awareness throughout the organization. Over the last few years, it has invested heavily in developing a comprehensive and robust risk management infrastructure. This includes credit, market and operational risk identification processes; risk measurement models and rating systems; and a strong business processes to monitor and control these risks.

As an independent risk-assessing unit under the regular supervision and guidance of Chief Risk Officer (CRO), the Risk Management Department (RMD) focusses on assessing, monitoring and minimizing different types of risks that are identified. RMD works to ensure management as envisaged in the Risk Management Policy Guidelines as well as in the Directives of the NRB. It works to ensure that the Bank takes well-calculated business risks while safeguarding it capital, financial resources and profitability. The major objective of RMD is to minimize the negative impact of the occurrence of any risk event.

The major objectives of the Bank’s risk management function are:n Monitoring of the Risk Management

Policy framework and managing risks including Credit risk, Operation risk, Market risk and other risks.

n Driving the Bank towards maintaining good standards of corporate governance in line with the statutes and regulations set by the regulatory bodies.

n Regular up-grading of Internal Risk Grading system to make it more effective and efficient.

The major strategy of the Bank’s Risk Management function are:n Application of transparent, responsible,

accountable, independent risk analysis system, both in operations and business functions

n Strengthen risk management systems, and

n Efficient compliance addressing mechanisms.

The Bank uses several measures for minimizing and managing risks, which are discussed below:

STRATEGIC RISK Effective management of strategic risk requires the Bank to establish prudent policies, procedures and limits approved by the Board to ensure objective evaluation and responsiveness to the Bank’s business environment.

The Bank has formulated and approved a five-year strategic plan to define its direction, and to guide decision making on allocating resources to pursue the defined strategy. Further, the strategic plan is continuously monitored and evaluated against actual results.

CREDIT RISK Credit risk is the likelihood that a borrower or financial instrument issuer is unwilling or unable to pay interest or repay the principal according to the terms specified in a credit agreement that could result in economic loss to the Bank.




Exposure to credit risk arises from a wide range of customers and product types, and the risk grading systems in place to measure and monitor these risks are correspondingly diverse. Senior management receives a variety of reports on credit risk exposures including loan impairments, total exposures and Risk Weighted Assests (RWAs), as well as updates on specific portfolios that are considered to have heightened credit risk.

The Bank adopts different methodologies for assessing credit risk involved in the exposure to individual borrowers or counterparties as well as at the portfolio level. The Bank maintains an Internal Risk Grading System (IRGS) for its loan and advances underlying the credit quality.

Further, review of credit by RMD is based on group exposure of the customer. Individual credit files with group exposure of more than NPR 30 million are routed through RMD during the approval process. Portfolios of loans that do not require routing through RMD during approval are reviewed by RMD on a quarterly basis.

LIQUIDITY AND FUNDING RISK Liquidity and funding risk is the potential for loss to the Bank arising from either its inability to meet obligations as they fall due or to fund increases in assets without incurring unacceptable cost or losses.

The Bank has an effective liquidity risk management system for analyzing on and off-balance sheet positions to forecast future cash flows for ascertaining how the funding requirements would be met. The Bank’s liquidity risk management involves systems to identify, measure, monitor and control its liquidity exposures.

INTEREST RATE RISK Interest rate risk is the exposure of the Bank's financial condition to adverse movements in interest rates. Accepting this risk is a normal part of banking and can be an important source of profitability and shareholder value. However, excessive interest rate risk taking can pose significant threats to a bank's earnings and capital base.

The Bank has in place Assets Liability Management (ALM) Policy, and Assets Liabilities Management Committee (ALCO) that monitor risks arising from changes in interest rates. ALCO ascertains appropriate interest rates on deposits and premiums on loan products.

FOREIGN EXCHANGE RATE RISK Foreign exchange rate risk is the potential impact of adverse currency rate movements on earnings and economic value. This involves settlement risk, which arises when the Bank incurs financial loss due to foreign exchange positions taken in both the trading and banking books.

In line with the capital framework prescribed by NRB, the bank focuses on foreign exchange rate risk management for managing / computing the capital charge on market risk. The Treasury Middle Office (TMO) performs the risk review function in relation to foreign exchange risk. The TMO regularly reconciles positions of traders to ensure that these are within assigned limits.

Foreign Exchange Risks are discussed at ALCO meetings and also at the division level on open position on daily basis. The limits for open position are controlled, level wise which ensures in-depth knowledge of the market and movement before taking decisions.

MARKET (PRICE) RISK Market (Price) risk is the risk that a Bank may experience loss due to unfavorable movements in market prices. It arises from the volatility of positions taken in the four fundamental economic markets:n Interest-sensitive debt securities,n Equities,n Currencies, andn Commodities.

The volatility of each of these markets exposes the Bank to fluctuations in the price or value of on and off-balance sheet marketable financial instruments. Changes in the prices of equity instruments, commodities and other instruments create a price risk and the potential for loss arising from the process of revaluing equity or investment positions.




The Bank has mechanisms for investment and disinvestment of equities in accordance with the changing circumstances and business requirements in the SrBL Investment Policy, 2014.

OPERATIONAL RISK Operational risk is the risk of loss resulting from inadequate internal processes, people and systems and external events. Globalization, together with increased financial innovation, is making the activities of banks and thus their risk profile more complex. These developments have made operational risk more pronounced.

The Bank has an independent operational risk management function under the RMD that is responsible for identification, assessment and mitigation of material operational risks. This function is primarily responsible for implementation of operational risk management framework across the Bank.

n AML/CFT Compliance Risk There is growing sensitivity

about money laundering and terrorism financing. As a result there is a need to focus on these areas where related risks are relatively high in order to allocate resources in the most effective ways.

Accordingly, the Bank has separate units for compliance of AML/CFT regulations. The division is headed by senior officer with adequate access to the daily report, operational processes and has the right to recommend the changes in the system and procedures.

COMPLIANCE RISK Compliance risk is the risk of legal or regulatory sanctions; material financial loss or damage to reputation that a Bank may suffer as a result of failure to comply with laws, regulations, rules, regulator’s directives, self-regulatory organization’s standards and applicable codes of conduct.

Compliance risk management not only deals with compliance with regulatory requirements but also with the Bank’s self-regulatory standards and code of conduct. The Bank has a separate compliance department that identifies the compliance requirements and submits optimized responses. This department aims to provide assurance of compliance with internal and external requirements to the management and ensures adequate measures to manage/mitigate compliance risk. It also provides governance advisory service to the management thereby establishing a zero tolerance culture in the Bank.

REPUTATION RISK Reputation risk is the potential that negative publicity regarding the Bank's business practices, which can cause a decline in the customer base, costly litigation, or revenue reductions. Reputation risk management is handled on an on-going basis.

The Bank has developed a reputation data base and identifies key controls and tracking reports through suggestion boxes maintained at its branches, and information officer.




CORPORATE SOCIALRESPONSIBILITYSunrise Bank is a good corporate citizen and believes in contributing towards overall development of the society it serves. It has given back to society at every opportunity and will continue this partnership for change.


Corporate Social Responsibility

The Bank's social responsibility initiatives are win-win engagements that not only appeal to socially conscious consumers and employees but also make an impact on the lives of ordinary people.

Blood donation initiatives are organized by branches in areas where there are shortages. Other CSR measures include providing canes to support the visually impaired and other support systems; Walkathon, Bagmati Sarsafai, and plantation of fruit trees under a Central Bank notice that requires one employee to plant one fruit tree.

The Bank's Narianapur branch provided financial support to the flood victims for procuring tents and plastic sheets.

The Bank installed CCTV and solar lights at Shree Shristi Kanta Lokeshwor Karuna Maya Temple, Bhaktapur Nala. The Bank has provided scholarships to nine students at different schools.

Another CSR initiative was a Walkathon organized in coordination with Nepal Cancer Survivors Society (NCSS). The purpose was to make people aware of cancer. Another activity included financial support to a Shelter Ashraya Nepal (SAN) that works to support street children to help them lead dignified lives. With the Bank's support SAN provides street children basic amenities, education and food; it also uses the fund to organize various skills development trainings.

Another CSR initiative of the bank was providing a skin grafting machine (Dermatome) for the Burns Ward of Kanti Children’s Hospital.

The Bank's CSR activities have also supported children residing at Veerayatan Nepal, Sanepa -- an orphanage. It has supported the organization by sponsoring the education, food and overall development of the children for a year.

The Bank has provided financial support to "Teach for Nepal Fellowship" in order to support formal education of children in rural areas. This support can enable children from areas with government schools to get an education that prepares them to compete with children from other parts of Nepal.

Another on going activity at the Bank that engages people are public meetings (mass-melas) organized to explain the benefits of banking, and to also pass on information about its unique products and services.

Another Bank scheme, "Sunrise Surakshit Ghar Karja", supports the insurance of home loan clients, where the insurance company pays off the assured loan amount in case of the death of the borrower. This scheme not only provides protection to the borrower throughout the loan tenure but also assures a capital return upon maturity of the loan.

Finally, the Bank's branches in different parts of Nepal organize orientation sessions on financial literacy, basic accounting and tax policy for existing and prospective SME clients. Such orientations assist participants in compliance with government policies while running their businesses.

During the year, the Bank carried out 40 financial literacy programs through its branches across the country.



CORPORATE BUSINESS ETHICS Trust and integrity are two foundations on which most banks are built. A high level of trust can develop when customers perceive that a company is exhibiting unwavering commitment to ethical business practices. This trust is essential for people to entrust a Bank with their savings. Sunrise Bank if fully committed to run the company responsibly and to serve the long-term interests of customers, employees and communities it serves.

The Bank has a transparent set of rules, practices and processes that keep the best interests of the customers as guiding principle. The Bank is responsive and accountable for its actions. It has made equitable and inclusive growth values to aspire for, abides by law, and is committed to upholding rule of law. These are values that drive corporate governance at Sunrise Bank.

These principles of corporate governance provide the Bank the framework within which it seeks to attain its objectives. The values guide every sphere of management, from action plans and internal control measures to performance measurement and corporate disclosures. These governance guideposts guide the Bank in setting and pursuing objectives in the context of the social, regulatory and market environment. High standards and adherence to the rules has assisted the Bank to weather crises and reduce the possibility of fraud and scandals. It is this trust in the market that has made the Sunrise brand a strong player in Nepal's highly competitive banking and financial sector.

CSR POLICIES Sunrise Bank is a good social citizen and is very clear on its obligations to society. The Bank promises to do what is right, to take a long-term view and support clients, customers, and the communities in areas where it operates. The Bank has always worked with and upheld fundamental values such as honesty and sincerity for creating a sustainable and valuable business that not only enables it to benefit while providing services, but also creates opportunities for it to contribute towards the social and economic development of the country.

The Bank's corporate social responsibility (CSR) activities are primarily aimed at working in collaboration with customers, shareholders, investors and employees to engage in activities that can benefit communities. The range of activities it has supported under CSR include environmental protection, conservation of Nepali culture, arts and history; supporting educational and health related activities among people from underprivileged groups, providing financial and material support to differently-abled people, and other activities that allow it to engage with communities.

The CSR activities are founded on the notion that helping to build strong communities can also help the Bank to become stronger. This is motivated by the belief that 'we are what our community is' and that it is also our collective future. In addition to this, the Bank’s CSR policies are also in accordance with provisions defined in the central bank’s circular dealing with CSR.



1 2

5

7


SUNRISE CSR ACTIVITIES1. Bank provided Dermatome machine (Skin Grafting

machine) to the Burn ward of Kanti Children Hospital.

2. Handing over flood relief fund amounting NPR 15 lakh to Image Channel

3. Walkathon-Cancer Awareness Program for Nepal Cancer Survivors Society ( NCSS)

4. Handing over various kitchen utensils, warm clothes to infants and toddlers, bed sheets with pillow case and food items to the children of Bal Mandir

5. Sunrise Bank has sponsored a Fellow of Teach For Nepal amounting to NPR 500,000 which covers the cost of recruitment, pre-service training, on-going support and leadership workshop and stipend.

6. Finacial support to Veerayatan Nepal and it’s noble undertaking by sponsoring in education, food and overall development of the children residing in the organization’s shelter in Sanepa for a year.

7. Scholarship to 9 students for 10 years

8. Blood Donation Program during bank's 10th years anniversary

9. Sunrise Bank had installed CCTV and solar lights at Shree Shristi Kanta Lokeshwor Karuna Maya Temple, Bhaktapur Nala

8

43

9

6


HUMAN RESOURCE MANAGEMENTSunrise Bank believes in the abilities of the women and men of Nepal to help attain its goals. This is the philosophy behind the continuous learning opportunities it offers to staff in the organization.


Human Resource Overview

Any organization is as good as the people that work there. A professionally managed experienced workforce is critical to the success of any enterprise. Sunrise Bank's most valuable assets are its human resources, the operational leadership teams at the corporate, divisional and branch levels, and its core management. The Bank has excellent mix of banking professionals who have become the part of the Sunrise family.

Sunrise Bank began operations with 130 employees and now has a staff body of 1159 in the last 11 years it has been in business. It has also grown from 6 to 103 branches across 7 provinces of the country.

Staff turnover is a major issue in Nepal's banking sector but Sunrise Bank has managed to ensure that its core team remains intact through sound human resources interventions such as employee capacity development opportunities and rewards and sanctions based on performance appraisals.

The development of staff capacity to ensure continued growth in business is the focus of the Bank's human resources strategy. It aims to attain this goal by maintaining the right number of staff with the right skills in different business functions.

The main focus of human resource managers is to retain a team of high performing, skilled and motivated staff committed to attain organizational growth in accordance with the overall mission and objective of the Bank.

To ensure this Sunrise Bank defines the roles and responsibilities of staffs and management and provides employees an environment where they can be innovative, and perform at the level needed to beat the competition.

Despite efforts, it is clear that human resource management will remain a challenge at the Bank given the intense competition in the sector. To offset the impact of staff shortages, the Bank has begun investing in Information Technology to stream line workflows, and to attain a level of automation and digitalization of processes and functions to match that expected from a 21st century bank.

TRAINING NUMBER OF TRAINING TOTAL PARTICIPANT

Internal 76 2,846

External 75 315

International 13 28

Total 164 3,189

Total Training, till Ashad End, 2075

Total Number Of Trainings

164

Total Beneficieries

3,189



CONTRIBUTION TOWARDS HR The HR Department understands the value of capable human resources and organizes capacity building interventions as part of its 5-year human resources development strategy.

The activities include standardizing procedures for selecting staff who could be high performers in the industry, and to provide them opportunities to develop within the organization. Its activities are guided by the following:

n Standardize procedures for selecting potential high performers in the industry and provide them opportunity to develop within the organization.

n Maintain good employee relationship and instill a sense of belongingness in the institution.

n Ensure equitable and market-based compensation packages.

n Provide career development opportunities, and

n Support in-house capacity development through training, transfer opportunities from operations to business areas and vice-versa.

Total Number of Staffs (Till Ashad End 2075): 1159

865 Permanent

172 Probation

21 Contract

101 Outsourcing



HR Policies


Human resources define and shape the future of the Bank and this is possible with well-defined objectives and vision for managing the workforce. The human resource management policies include,

TRAINING AND DEVELOPMENT Continuous training and staff development is an important for effectively managing competent human resources. Human resource management at Sunrise Bank includes learning processes in-house, external or overseas. These training programs contribute towards sharpening skills, introducing new concepts, and changing attitudes in addition to gaining knowledge to enhance overall staff performance.

PERFORMANCE APPRAISAL Performance of each individual staff member contributes to overall performance of the Bank. Therefore, the Bank assesses the performance of each employee individually or as a team.

TRANSFERS/ASSIGNMENT Human resource development is also possible through acquiring knowledge by undergoing job rotations, transfers and assignment in various functions of the Bank. Regular transfers of staff also contribute towards enhancing competence.

SUCCESSION PLANNING The Bank supports succession planning for employees with demonstrated potential and grooms them to become

future leaders. This not only provides growth opportunity for employees but also serves as a foundation for the wellbeing of the Bank.

QUALITY WORK LIFE The human resources department works to ensure the safety, health and welfare of our employees. The main goal is to foster a safe and healthy work environment. The Bank complies with the local law and has measures to take reasonable care about the health and safety of employees. Staff medical and accidental cost are covered under employee insurance schemes. The Bank also encourages work-life balance with appropriate working hours and leave/vacation policies.

GRIEVANCE HANDLING A recent initiative for handling grievances includes a formal process to address each grievance with personal visit to the employee by members of the Grievance Cell for fact-finding. Timely management of grievances has helped in ensuring sound relationships among employees and a better work environment.

KNOW YOUR EMPLOYEE INITIATIVES Considering the risks in banking, the Bank has put in place a Know Your Employee process that involves documenting information on all employees. While this has helped the Bank to know its employees at a personal level it has also helped to control staff-related risks in banking.


PRODUCTS& SERVICESInnovation drives the design and delivery of bespoke products at Sunrise Bank. Ease of access to banking services, supported by strong back-end infrastructure, is the foundation for its services.


Sunrise Bank Limited has developed a “Health Insurance Facility” and “Accidental/Death Insurance Facility” which can be availed by every saving account holder.

A. SUNRISE HEALTH INSURANCE FACILITY:Health insurance facility is designed to facilitate the saving account holders to avail the medical treatment with ease, and assists them to recover their health expenses.

i. Eligible Customer:n All saving Deposit Account holders

are eligible for this facilityn The facility is limited to the saving

deposit holder as an individual. The insurance coverage does not cover any dependents.

n Treatment can be sought from both government and private hospitals that are tied to the scheme.

n The account holders are eligible for the facility from the day 1 of account opening.

ii. Benefit to customer:The health insurance facility extends up to 25% of weighted average deposit during the last 365 days of saving account or the bill amount whichever is lower, with a maximum limit of Rs. 100,000.

B. ACCIDENTAL/DEATH INSURANCE FACILITY:The accidental insurance facility is an attempt to incorporate the possible risk of accidental death and/or permanent disability of the account holder. The future is uncertain, so the prime objective of this facility is to cover the possible expenses/risks born by family members of account holder during accidental death and/or permanent disability.

i. Eligibility:All natural person with a saving deposit at the bank

ii. Benefit to customer:Insurance coverage is limited to four times the balance on saving account maintained on preceding day end of the accident or NPR 500,000 whichever is less.

Sunrise Swasthya Yojana


DISCOUNT IN TIE-UP HOSPITALThe account holders can avail discounts that have been agreed with partner hospitals using an identification as a Sunrise Bank account holder.

TOTAL TIED UP PRIVATE HOSPITALS

108

232TOTAL BENEFICIARIES TILL DATE


1. WHAT IS SUNRISE HEALTH INSURANCE FACILITY? It is a unique facility that is linked with all our saving accounts wherein customers can benefit in two ways as below:

n Saving Account holders can claim Health Insurance for up to 25% of weighted average deposit during last 365 days of saving deposit or the bill amount whichever is lower, with a maximum limit of Rs. 1,00,000 only hospitalized case or 150 exclusion daycare treatments once in a year.

n All customers can avail discount facilities ranging from 5% to 20% in over 100 tied up hospitals country wide.

2. WHAT ARE THE 4 SPECIAL BENEFITS THAT SUNRISE BANK SAVING ACCOUNT HOLDER GETS?n Accidental Insurance up to 5 Lakhs

or 4 times of balance whichever is lower.

n Health Insurance up to 1 Lakhs or Hospital Bill or 25% of weighted average balance whichever is lower

n 5% to 20% discount in more than 100 tied up hospitals.

n Maximum benefit up to 31%. (Interest rate 6% and Health Insurance 25%)

3. WHICH CUSTOMERS ARE ELIGIBLE FOR SUNRISE HEALTH INSURANCE?All our saving account holders are eligible to apply for Health Insurance Claim. However, all our accountholders can get discount from 5%-20% in over 100 hospitals tied up with Sunrise Bank.

4. ARE CURRENT HOLDERS ELIGIBLE FOR HEALTH INSURANCE CLAIM?No. Only saving account holders. However, current account holders are also eligible for the discount in the hospitals which are tied up with us.

5. WHAT IS THE MAXIMUM AMOUNT THAT CAN BE CLAIMED UNDER SRBL HEALTH INSURANCE FACILITY?NPR 100,000

6. AFTER HOW MANY DAYS OF ACCOUNT OPENING WILL THE CUSTOMER BE ELIGIBLE FOR THE FACILITY?From the account opening date itself.

7. IN CASE OF JOINT ACCOUNT, CAN BOTH THE ACCOUNT HOLDERS CLAIM FOR SRBL HEALTH INSURANCE FACILITY AT A TIME?No, only one of the account holders can claim for Health Insurance per year, which will be on first come first serve basis. However, both are eligible for the discount in the hospitals which are tied up with us.

8. HOW MANY TIMES CAN AN ACCOUNT HOLDER CLAIM FOR HEALTH INSURANCE FACILITY IN A YEAR?Once a year

9. WHICH COMPANY IS OUR INSURANCE PARTNER?Shikhar Insurance Company Ltd

10. CAN A SAVING ACCOUNT HOLDER CLAIM SRBL HEALTH INSURANCE IF TREATMENT IS DONE IN HOSPITALS OTHER THAN THOSE TIED UP WITH US OR SIKHAR INSURANCE CO. LTD?No, the treatment must be done in the hospitals tied up with us or Shikhar Insurance Company Limited. However, claims of all Government Hospital Bills of Nepal are eligible.

11. HOW MANY DAYS DOES THE CUSTOMER NEED TO BE HOSPITALIZED TO CLAIM SRBL HEALTH INSURANCE FACILITY?Minimum of one night hospitalization is required. However, in case of 150 day care surgeries, the claim can be done even if the account holder is not hospitalized.

12. WHAT IS THE NUMBER OF HOSPITAL THAT ARE TIED UP WITH SUNRISE BANK LIMITED FOR HEALTH INSURANCE FACILITY TILL DATE?100+ Hospitals

13. HOW LONG DOES THE BANK TAKE TO REIMBURSE THE CLAIMED AMOUNT?Not more than 7 working days.

14. WHICH DAILY BALANCE IS TAKEN TO CALCULATE AVERAGE BALANCE FOR A YEAR?Daily Closing Balance

15. WITHIN HOW MANY DAYS AFTER DISCHARGE SHOULD A CUSTOMER CLAIM SRBL HEALTH INSURANCE?15 days

16. CAN FAMILY MEMBERS OF THE ACCOUNT HOLDER ENJOY SRBL HEALTH INSURANCE FACILITY?No, only the account holder can enjoy the facility. Separate account needs to be opened in the name of family members in order to be eligible for the facility.

FAQ



Our Saving Deposit Customers Receiving Insurance Amount Under Sunrise Swasthya Yojana


Technology Driven

TECHNOLOGY is the driving force for innovation and banking. The use of digital technologies in banking is growing exponentially with new uses being developed at a fast pace. Sunrise Bank places technology at the heart of banking, guided by a vision of a transformed society with cutting edge technology to support the transition. The Bank has used technology both internally and externally by capitalizing on the benefits of technological advancements.

The Bank is "Rising to Serve" by defining new levels of customized banking products and services to cater the needs of customers, and for creating the new markets in banking.

The Bank has been seeking digital transformation in order to maintain its competitiveness, efficiency and cost saving. The main goal is to provide customers more convenient and faster banking services through alternate delivery channels like ATM, point of sale (POS), online banking, mobile banking, social media, etc. Digital banking is the future and Sunrise Bank is in the process of rendering multichannel experiences to customers and staff through investments in IT for improving the integration of ICT in business processes and operations. The Bank is focusing on multi-channel approaches to marketing, selling, and serving customers in a way that creates an integrated and seamless

customer experiences. All multi-channel experiences on desktop, mobile, tablet and other devices are planned for integration into one multi-experience platform. Digitization can improve customer engagement by making channels more interactive and easy to use for services like opening or closing an account, applying for loans, tracking applications, fund transfer, paying bills, enquiries, customer self services, etc.

As the Bank has a vision of delighting customers by fulfilling diverse banking requirements, it is in the process of revamping the overall technology platform to enhance efficiency, augment security and facilitate client capabilities. In retail baking, the Bank has launched online account opening service and introduced new payment options. Some recent achievements in ICT use are discussed below.



CORE BANKING SYSTEM The Bank has upgraded the Core Banking Solutions (CBS) to Finacle 10 for first time in Nepal. CBS is the backbone IT application that not only maintains accounting and holds customer data, but also facilitates different transaction requirements. Finacle 10 is a software that is top ranked internationally and has highly flexible infrastructure. It supports 24 hours banking and extends possibility of almost all types of channel banking through its Application Program Interface (API) service. With implementation of the CBS application, the Bank hopes to delight its customers with astonishing digital banking experiences.

DATA CENTER The Bank has hosted its core system in a managed cloud environment. This has helped to avoid any compromise on the standard of the data center. This data center has world-class certifications and compliance requirements. The strong infrastructure has high availability, allows real time replications and is resilient to system failures.

The Bank has adopted the strategy of outsourcing most of the technological products with the motive of achieving quick technology adoption and security of information.

DATA WAREHOUSING In last three years, the Bank has undergone through a number of strategic mergers and acquisitions. In addition, it has worked to adapt the robust CBS and migrated data from different organizations into the main CBS. With implementation of new systems, the challenge is the maintenance of the legacy system and protection of information assets. For achieving the availability of the data in the legacy system, the Bank has

implemented worldclass warehousing infrastructure in Htrunk and Hadoop's big data environment. It is working with a top class infrastructure provider and international partner to maintain effective and highly efficient data warehousing.

DISASTER RECOVERY (DR) The Bank has a robust disaster recovery site. This ensures the continuous protection of Bank's data and customer information. It is maintained with all modern-day standards and located in a different seismic zone. A complete business continuity plan exists to help confirm that the DR resources work perfectly when the need arises.

CALL CENTER The Bank has started its own call center service and has become the 'Bank With Voice'. It is used for handling transactional interactions, informational calls, and addressing more complex issues, including sales and purchase-related activities. This system aims to serve as a primary point for remote customer interactions. It also provides opportunities for cross-selling and up-selling products. It is designed to help deliver a multichannel experience to customers. The Bank believes that the call center service will be crucial in increasing customer satisfaction and improving overall customer experience, and has received positive feedback on the service from customers.

BUSINESS PROCESS AUTOMATION The Bank has a definite roadmap to move to a fully digitized environment. Apart from the application for delivery of services to customers, it intends to run its operations in a fully digitized environment. Business Process Automation is one of the top strategic moves of the Bank in



which it evaluates the possibility of converting all of its internal processes to a digital environment. It has acquired many applications including software for human resource management, assets management, KYC and AML, document management, inventory management, conference video call, etc. While outsourcing is the principal strategy, the Bank has also developed an internal general workflow and tracking system with intranet that has proved to be beneficial. It is also considering implementing full-fledged workflow management, loan processing system, performance management, and other systems to realize full benefits of complete digitization.

Complete office automation and paperless office are the targets of the Bank. As achieving paperless processing requires availability and sufficiency of the technology, it has taken a gradual adaptation policy that will be completed over time.

DIGITAL CHANNEL-ENABLING OPERATIONS Customers expect uniform experience across all digital channels of interaction. The Bank is now in the process of streamlining the front end and back end of different platforms so that customers get the same experience across all delivery channels. It has also created a new customer experience layer (mobile first approach) on top of existing core systems. The digitalization strategy of the Bank can improve customer engagement by making the channels more interactive and easy to use for activities like opening or closing of account, applying for loan, tracking deals, fund transfer, paying bills, inquiry and transaction, managing standing instructions, etc.

INTERNET BANKING The Bank has implemented sophisticated international internet banking system that can offer

customers a bank-less banking environment. It is equipped with enhanced security features and strong authentication mechanisms that assure the protection of customer credentials, passwords and information.

MISSED-CALL BANKING The Bank has introduced a simple and innovative product called Missed Call Banking for the first time in the banking industry in Nepal. This service allows banking even without the internet. This has been of particular use to serve customers in rural area who do not have internet services and people who do not possess smart phones or are not used to mobile banking. Missed-call banking services include a wide range of services such as balance enquiry, mini statement, top-up facility and instant help service. The Bank has a plan to add other features on this platform.



MOBILE BANKING Mobile is the present and future of IT enabled platforms. It is close to the individual and has become indispensible, while its capability has increased. The Bank has added number of features in its mobile banking applications. The payment channels have been increased including that of electricity bills. Many other features are also in the process of implementation. Recently, the Bank has implemented a new version of mobile banking (Bank Smart V5) that is capable of extending more features to customers, including more detailed information such as QR code based payments, self-registration, self-management, etc. The Bank is also in the process of making this platform more informative and the features more intensive.

ATM TRANSACTIONS The Bank has a wide network of ATM terminals. It has also enhanced its ATM infrastructure for chip security and fraud deterrence with EMV compliant cards, which is one of the requirements of the Central Bank. The Bank has also automated the ATM reconciliation process that has reduced manual interventions in the reconciliation procedures.

CARD SYSTEM The Bank offers a variety of debit cards and credit cards with enhanced security features. It values both the security and convenience of customers. All cards of Sunrise Bank are EMV compliant, which reduces the possibility of fraud and compromise of customer information.

CREDIT CARD The Bank also has credit card services in addition to the existing debit cards. This allows customers to do transactions even if they do not have a deposit balance in their accounts.

3D SECURE ONLINE TRANSACTION Bank has introduced the online payment features on the VISA network. The customer can now enjoy the online shopping experience and ecommerce transactions with 3D secure capability.

NEW WEBSITE DEVELOPMENT Keeping in line with ongoing improvement of the technology infrastructure, the Bank is currently developing a new website that will be more robust and interactive and will include advanced features for enhancing customer experiences.

PAYMENT CHANNELS Augmenting the cash-free transaction environment, the Bank has implemented different payment channels covering a wide range of areas and merchant sets. Whereas, the Bank is the member of Nepal Clearing House Limited (NCHL) and has implemented its services for online inter-banking payment system, it is also keen on collaborating with other payment partners in the industry. Along with this, the Bank is providing the services for payments through different third party applications like: IME Pay, Khalti, Esewa, etc.

BRANCH-LESS BANKING The Bank has deployed a number of branchless banking services where it does not have physical presence.



MANAGEMENT INFORMATION SYSTEM The introduction of the CBS has helped the Bank integrate the tools for a strong Management Information System that helps it to identify the requirement of customers and manage its business processes. This system uses CBS data and generates operational, managerial and strategic information used by different units in the Bank.

THIRD PARTY INTEGRATION The Bank has improved its ability for quick and secure integration with the third party channels. With implementation of Finacle Core Banking Solutions and its extensive Finacle Integrator API, the Bank has prepared the integration environment for approved and strategic channels. The integration capability has been built over the open architecture and the flexible technological platform has proved to be efficient for collaboration with third parties.

IT POLICY Sunrise Bank recently published a robust IT Policy with the purpose of providing comprehensive reference to mitigate IT security risks, organize IT within the bank, educate, and adopt global standards. It also helps the individual employees to obtain guidance on the standard norms.

TRAINING The Bank has made significant investment in upgrading technology and training people. It believes that an arsenal of technology and trained human resources can help the Bank grow. It has adopted online training via video conferencing and online materials and examinations. Bank also has hired resources to facilitate and expedite the process of digitation.

The Bank has a pool of qualified technical experts in all required technological platforms. The staff have also been trained on technology use.

Bankingmartmart

Sunrise

Banking



ONLINE ACCOUNT OPENING The Bank has started an online account opening facility through its website. Now customers can fill in the required information through Bank’s website and open desired saving account without even visiting the branch. Besides, the Bank is in the process for adding online LC and Bank guarantee opening, etc. In addition, Bank has started the DMAT Account opening through DP-secure for supporting the digitization drive for secure transactions.

ONLINE VALIDATION The Bank has started the service of validating the Bank Guarantees through its website. This enables government offices and other principals to confirm that the Bank’s undertaking is not forged and remains valid, adding both reliability and trust. It is also planning to extend this kind of service on other instruments to help deter the fraud.

ONLINE AND ALERT SERVICES Acquiring information has become a habit for people. Customers need suitable information regularly in relation to their business affairs. The

Bank has started alerts and feeds through SMS, email and mobile GSM/internet push. This service is expected to keep the customer informed and alert of their financial and nonfinancial dealings with the Bank.

CYBER SECURITY The Bank periodically conducts the audit of information security for assessing risks related to the information system and infrastructure. This type of assessment includes both the Bank-managed and outsourced services, covering of datacenter infrastructure including disaster recovery site, digital channels, technologies in use and mechanism deployed; and also prioritizes information assets based on business risk. The Bank had conducted a security assessment that covered public domain reconnaissance, social engineering / phishing, layers of network security assessment, etc. Developing the adequate information security policies and enforcing them, cyber maturity assessments, and improving incident response across all the business functions are major targets of security assessment exercise.



THE BANK knows the value of money to customers and their expectations for the services and returns. The deposits are tailored for different purposes to serve the varied needs of customers. The schemes also suit the requirements of international customers who can open accounts online and also use remittance services. The deposits are also designed to serve the CSR, particularly the Sunrise Disable Saving Account. Deposits can be saving, fixed, call and current deposit, and range from non-interest bearing accounts to normal savings and high yielding fixed deposits.

DEPOSITDeposit mobilization is one of the primary functions of the Bank. Deposits mobilized play a key role not only as an important source of funds but also as instrument for promoting saving and banking habit among people. The Bank is making efforts to mobilize deposits in both rural and urban areas.

TYPES OF DEPOSITDeposits at SrBL are categorized as follow:

A. LCY SAVING DEPOSIT PRODUCTSThe Bank believes in mobilizing small savings to build deposits. There are no limits to deposits and they can result in a good return for customers. The Bank has a number of saving products to serve different

groups of customers. For example the Pink Saving Account is aimed at empowering women, the Sunrise Disable Saving Account seeks to motivate the differently abled people; and Senior Citizen Saving Account for seniors. The different savings options available at the bank are as follows.

n Normal Saving The normal saving deposits are meant for individuals and households who save from their regular earnings and use it when they require funds. With no limits in deposits and withdrawals, the product serves the convenience of customers.

n Maha Bachat Khata Sunrise Maha Bachat Khata offers competitive interest rates to customers who are interest sensitive. This account also has other attractive features.

n Sunrise Pink Bachat Khata This product targets female customers taking into account their unique saving habit. This saving increases their access to productive resources.

n Sunrise Payroll Account This product aims to provide financial services to salaried staffs of organizations and seeks to facilitate smooth payments of salaries.

Deposits



n Sunrise Fat Saving This account targets high net worth clients who are interest sensitive and who also give priority to the different features that come along with the product.

n Sunrise Bal Bachat Kosh The account is aimed at encouraging children to save and increase their seed money that grows to significant amounts over time.

n Sunrise Senior Citizen Saving Account The Senior Citizen Savings Account serves individuals who are 50 years old and older. The account provides safety of the capital, assured returns and regular payouts with emphasis on personalized services.

n Suryodaya Remit Bachat Khata Suryodaya Remit Bachat Khata has been designed to solicit deposits of Nepali citizens working abroad, and is targeted towards remitters and beneficiaries of remittance.

n Sunrise Share Dhani Khata Sunrise Share Dhani Khata has been developed for shareholders of Sunrise Bank Limited targeting customers who had been allotted shares in the Initial Public Offering of the Bank. This product also serves shareholders who have purchased SrBL shares from secondary market.

n Sunrise Disability Saving Account This special account is a part of CSR initiative of SrBL. Apart from attractive interest rates, the Bank also gives special attention to providing other banking services to these customers efficiently.

n Sunrise Branchless Banking (BLB) Saving Account BLB Saving Account is designed to encourage unbanked communities to save their earnings. This service is provided to people served through Branchless Banking points.

n Relief Saving Account Relief Saving Account was started to encourage victims of the 2015 earthquake to collect earthquake relief funds through the banking channels.

B. FCY SAVING DEPOSIT PRODUCTSSunrise Bank Limited introduced the foreign currency deposits to cater to the niche market of foreign workers in Nepal, Nepalese involved in foreign trade, and those working in foreign organizations.

SrBL offers three types of FCY saving deposit products:

1. USD Saving Account2. EUR Saving Account3. GBP Saving Account4. Suryodaya Remit Bachat Khata

(USD)

C. FIXED DEPOSITSThe Bank also encourages customers to deposit idle funds for a longer period of time and obtain the best possible returns. The Bank offers a competitive interest rate, agreed at the time of account opening. The interest rate for the fixed deposit depends on the size of the deposits and the maturity date. The Bank has different fixed deposit schemes to serve the varied needs of customers, these include:1. Individual Fixed Deposit2. Institution Fixed Deposit3. Sunrise Maha Muddati

D. CALL ACCOUNTSCall accounts provide certain interest rate on deposits and are more flexible than fixed deposits. It provides the facility of savings accounts through accrual of interest. The interest rate on the call account depends on the nominal interest rate on savings at the bank. Call accounts are available for both individual and corporate clients.

n Normal Call Account This Call Account is an interest

bearing account designed especially for institutions with stable deposits. Since Current Account is non-interest bearing, Call Account can earn an interest while the primary account will remain as a current account.

n Social Security Fund Account The Social Security Fund Account

is designed for people receiving social security allowances of various categories such as that for old age, disability, for single women, and other special groups who receive payments from the Government of Nepal.

n Retirement Fund Account This account is designed for the people who are provided with retirement benefit.

n Sunrise Portfolio Management Service (PMS) Deposit Account The Sunrise PMS Deposit account involves managing money of customers under the expert guidance of portfolio managers. This product is developed for customers willing to take the Portfolio Management Service for investment in instruments that provide maximum returns at minimum risk.



Retail Banking

SUNRISE BANK LIMITED has completed 11 years of its operation and has continuously been striving towards providing better services to customers. Retail lending is a profitable sector in Nepali banking and the Bank has been lending to individual customers both for consumption and for business/productive purposes. Retail loans comprise of around 38 per cent of the total loan portfolio. The Bank has prepared comprehensive documents describing each of the retail product and has also been designing new products and upgrading the existing ones to match the changing market dynamism and customer needs.

Following are the major retail products offered by the Bank.

HOME LOAN This product has been devised in accordance with the vision of SrBL: “Together We Can Build”. A home is not only desired by many Nepalese but also the major area of investment. The Bank has been providing Home Loan to individuals to fulfill their financial requirement for acquiring/construction/maintenance of residential property. The loan is also provided for existing building/apartments leveraged against the value of property.

SUNRISE SURAKSHIT GHAR KARJA Sunrise Surakshit Ghar Karja is a unique and flourishing retail product of SrBL. After the devastating earthquake of 25 April 2015 there has been a growing demand for an additional scheme in home loan

that covers the borrower's family in case of unforeseen events. This loan is tied up

with the endowment life insurance policy of the borrower. This scheme provides life insurance protection to the borrower throughout the loan tenure and also covers the borrower’s family from the outstanding loan and ensures retention of the property in case of any unforeseen incident. In addition, the scheme also provides capital return in the form of bonus from the insurance company to the borrower upon the maturity of the loan.

HIRE PURCHASE LOAN The attitude towards borrowing has changed over time and households have begun to upgrade their living standards by leveraging their future income. In view of this changing consumer pattern, the Bank has been extending Hire Purchase Loans for the purchase of new vehicles both for consumer and commercial purposes, equipments, and privately used vehicles to both individuals and businesses.

SAJILO KARJA/PERSONAL LOAN The people of Nepal have varied and unique cultures and traditions. The Bank has been financing Sajilo Karja/Personal Loan to needy individuals to access finance for covering various legitimate personal financial needs on fully collateralized basis.

EDUCATION LOAN The Bank provides education loans to support quality education in the country and abroad. The Education Loan provided by the Bank is available to students seeking to pursue higher/technical/professional education both in Nepal and abroad.

MARGIN LENDING This product allows individuals, firms or companies to borrow money from the Bank without hassles by pledging shares of the companies listed in the Nepal Stock Exchange (NEPSE).

SIGNATURE LOAN This is a type of personal loan that the bank extends to professionals on a non-revolving basis. Such loans, up to NPR 1.5 million, are provided without fixed asset collateral.

CREDIT CARD The Bank offers VISA credit cards to customers for secure withdrawals, purchase and online payment solutions.

LOAN AGAINST FIXED DEPOSIT RECEIPT This product has been devised with the intent to address some financial emergencies of businesses and individuals to fulfill their intended requirements without ending the fixed deposit prematurely. Customers can draw up to 90 per cent of the fixed deposit amount as loan.



Remittance

REMITTANCE has taken the centre stage in Nepal’s economic development. Migration of Nepali youth to the Gulf region and other countries in search of work has been the major source of remittances entering the country. The financial flows generated by these migrants are substantial. According to official data, about 1.7 million Nepalese are working in 40 different countries, excluding India where it is estimated that there are an equal number of Nepalese who have gone there through various unofficial channels.

Financial institutions and money transfer companies have not only helped the country to bring remittances through formal channels but have also helped towards increasing the foreign exchange reserves at the Central Bank. However, it is estimated that only around 40% of migrant

workers use formal channels to send their earnings home.

Sunrise Bank Ltd., established its' Remittance Department in 2009 to facilitate inward remittances. It has since been continuously expanding its international and domestic networks. The Bank has remittance business arrangements with 20 foreign remittance companies / banks in 14 countries and a domestic network of more than 7000 agents spread across Nepal. The Bank also begun remittance business arrangements with multiple domestic remittance companies / banks to provide a one stop solution for remittances entering Nepal through formal sources.

The Bank has also pioneered retail loans to family members of migrant workers based on their income sources abroad.

Sunrise Bank Ltd. was also among the first banks to provide mobile banking facilities to migrant workers abroad, to enable them to access personal accounts from their mobile phones. This has not only helped them monitor activity in their account but also allows them to top-up mobile phones of family members, make utility payments, fund transfers to other financial institutions, buy movie tickets, etc. The Bank has plans to incorporate Fixed Deposit application forms, Dmat account opening forms, etc., into Mobile Banking which will allow migrant workers to avail additional services easily by using Mobile Banking.

INTERNATIONAL REMITTANCE NETWORK




AT SUNRISE BANK LTD. we offer various kinds of financing and banking services for corporations, projects and infrastructures. The Corporate Banking & Trade Payments Department has four functions - Corporate Banking, Mid Market Banking, Project & Infrastructure Financing and Trade Payments Services. Corporate Banking handles all corporate clients with exposure above Rs. 100 million, Mid Market with exposure above Rs. 40 million to Rs. 100 million, and the Project and the Infrastructure function handles all credit exposures falling under its domain.

Under Trade Payments functions, the Bank provides all types of trade related services, including advisory services, for Import and export businesses through a separate dedicated Trade Payment Desk at the Head Office and selected branches. The services may include processing of letter of credit (LC) applications, credit sanctioning, document screening, document purchase and collection services, follow-ups for LC document payment, settlement, etc. The department not only facilitates funding requirements of clients but also provides advisory services for improving their financial performance and compliance to regulatory requirements.

Corporate Banking & Trade Payments covers an extensive area of banking. It assists clients to invest in a project, meet working capital requirements, facilitate or finance on export or import, and for other requirements. The Bank is always ready to work and grow with customers as a strong financial partner in terms of business, industrialization, and infrastructure development. In this age of globalization, the corporate lending schemes

not only meet the requirement of the domestic corporate sector but also that of global corporates.

The Bank offers Fixed Term Loans for financing existing or new projects to create fixed assets. The facility is also available to finance plant, machineries and equipment, land and buildings. The repayment tenure of the loan is fixed as per the project duration and to ensure that the financial obligations are met through cash flow generated by the project.

The Bank finances working capital requirements through its overdraft facility. It finances working capital (stock & receivables) requirements by providing other kinds of working capital credit facilities on flexible repayment terms. The Bank also provides short-term pledge loans that can be obtained by pledging stocks under the lock of Bank. Customers can sell their stock after settling the short-term pledge loan.

Demand loans assist customers to build up their stock and receivables to a desired level, against which the loan is disbursed. The borrower agrees to the repayment period for this loan at the time of application and that has to be justifiable in terms of the business activities.

Through export finance, the Bank finances various export requirements such as pre- and post-shipment loans, documents negotiation/documentary bill purchase, etc. The Bank has also been providing export refinancing facility under Nepal Rastra Bank provision to encourage exports.

Corporate Banking & Trade Payments



The Bank has an import loan facility to finance domestic and international trade transactions through LC, telegraphic transfer, demand drafts, DAP (Documents Against Payment) and DAA (Documents Against Acceptance). The Bank finances import of goods in the form of Trust Receipt up to a percentage of the import document value as decided by the management. Repayment of this facility is generally linked with the cash conversion cycle of the goods imported or as decided by the management from time to time.

The Bank coordinates with other banks and financial institutions; participates as Lead Bank or a Joint/Co-Lead Bank to provide consortium loans for high value funding requirements both as fixed term and working capital loans (Both funded as well as non-funded loans). Customers can avail this loan for establishment, capacity addition, up-gradation of existing facilities as well as for acquisition/ takeover of existing facilities. The loan is available to both manufacturing and service sectors.

The Bank also extends loan in foreign currency. Such facilities are provided to the tourism sector, hospitals, export and other Industries/projects as guided by Nepal Rastra Bank. The foreign currency credit facilities can be short or long term based on repayment capacity of customers.

Import letter of credit (Foreign and Local) facilities are offered by the Bank is in accordance with customers' procurement contracts/proforma invoices and this facilitates import of goods and services, and local purchases. The Bank also provides export letter of credit facilities to improve sales in both domestic and international markets.

Bank guarantees issued by the Bank not only facilitate the bidding requirements for various contracts but also help to ensure the performance of the related party in terms of execution of contractual performance (supplies and/or assigned job/services). It also provides surety of return of advances mobilized for performance of any given contract.



AS A PART of its long-term strategy to shift more weight from large-scale corporate credit towards consumer and small business credit and diversify loan portfolio, the Bank has continuously devised new/innovative business products and reengineered existing ones to remain competitive. There has been an incredibly intense competition for small business lending and SrBL has designed and launched several business loan products for rural populations.

The strength of Sunrise Bank is its branch network, particularly branches located outside Kathmandu that can play a vital role in serving the rural populations. As most of microfinance players and cooperatives are located outside Kathmandu Valley, it may be an opportunity for Deprived Sector Banking Department (DSB) and branches of Sunrise Bank to grow together with rural lending.

For deprived sector banking, Sunrise Bank Limited has devised deprived sector loans in two forms. They are deprived sector wholesale lending and individual deprived sector lending. Under wholesale lending the Bank provides loan to Microfinance (D Class Bank), and Co-operatives while under individual deprived sector lending, it provides underprivileged and rural people loans for small business, agriculture and other productive sectors. SrBL has also designed and rolled out products like “Srbl Laghu Byabsaya Karja, which also falls under deprived sector loan. The main purpose of this loan product is to provide the financial solutions to borrowers to create fixed assets as well as to meet the requirements for small business enterprises.

DSB has also plans to target other sectors to increase its portfolio and diversify at the same time. Such sector would be dairy sector/ Livestock farming, Agriculture/Herbal products, etc.

Sunrise bank has prioritized agriculture lending not to just meet just 10% portfolio set out by Nepal Rastra Bank (NRB) but also to make an impact in individuals livelihood that would have an impact on economic of the country. Financing in agriculture is a growing concept and is very different than other sectors. As a bank we are trying to make sure our investment are effective to expand agriculture business in Nepal, which is fruitful for the clients and the country. To reach clients in rural areas directly, Sunrise Bank has opened number of branches in rural areas and has assigned separately deprived sector banking staff and agriculture marketing staff for this purpose.

The government and the NRB are working to classify this sector as development finance and therefore the Bank can gain distinct mileage by getting involved in this period. The promotional efforts would have to emphasize the bank’s vision and commitment towards economic development of the country. The efforts can also be directed towards cross-selling other banking products. Other promotional efforts e.g. personal relationships, sponsorships of events, joint training programs, commercial advertisement in media can also serve as effective tools.

The Bank plans to use its branch network for distribution to increase the DSB loan portfolio in the coming days.

Microfinance


SME Banking


SUNRISE BANK has been continuously striving towards providing better services to customers. In this competitive environment, it is essential for any bank to introduce new products or expand the customer base of existing products in order to grow. Small and medium enterprises (SMEs) comprise an important lending sector that are served through different products.

Under funded facilities the Bank provides Term Loan and Working Capital Loan. Term Loan is provided to cover fixed assets financing (land and building), financing for capital items (CapEx), construction equipment, and civil construction works, etc. for a maximum period of 10 years, repayable on EMI or EQI basis. The repayment schedule of the loan is customized to match the requirement.

Working Capital facilities include Overdrafts, Demand Loan, Installment Credit Facility, Contract Loan, Import/Export Credit, and Bills

Purchase/Discount services, etc. These products assist customers to fulfill their working capital requirements.

The Bank also provides non-funded facilities to customers. These include LC and bank guarantees. The bank guarantees facilitate bidding requirements of various contracts and also help to ensure the performance of the related party in terms of execution of contractual obligations. They also provide surety of return of advances mobilized for performance of a contract. Similarly, the Bank also provides supply credit guarantee, retention guarantee, deferred payment guarantee etc.

Apart from providing financial services, the Bank also organizes orientation programs on general accounting and taxation frequently for promoters and staff of small and medium businesses across the county to enhance their understanding of taxation and contribute to improved bookkeeping skills.


Branchless Banking (BLB) enables banks and financial institutions to provide services through hand held devices known as POS/Tab with the help of a Business Correspondent. It assists banks and financial institutions to spread their footprint without setting up a physical branch. In this modality of banking, commercial outlets such as small grocery shops, medical shops, etc. can act in some capacity to provide basic banking services

on behalf of banks and financial institutions to their customers. Branchless Banking represents significantly cheaper alternative to conventional branch-based banking and allows financial institutions to offer financial services outside the traditional bank premises by using delivery channels like retails agents, mobile phone, etc. BLB can be used to substantially increase the financial services to unbanked communities.

Branchless Banking C-ASBAThe “Centralized Application for ASBA-based issuance Applications Supported by Blocked Amount” (C-ASBA) was developed by CDS & Clearing Ltd. and is used for share applications online. To apply, a customer has to visit a bank branch to register in the C-ASBA system with verified bank account and DMAT account number to obtain the C-ASBA Registration Number (CRN). The CRN is mandatory for verifying share applications.

C-ASBA is essentially an authorization to block the money committed in the bank account for buying shares. If an investor is applying through C-ASBA, his/her application money is blocked in the bank account. After allotment, only the part of money as per the allotment is debited from the applicant's account and remaining amount is unblocked.

The Securities Board of Nepal (SEBON) has issued guidelines regarding Issue of Securities, where it addresses the ASBA application charges. Accordingly, the maximum charge that can be levied is NRs. 100. The bank charges NRs. 25 per application for customers applying for shares at a branch, while it is free of cost for customers applying through the MERO SHARE portal. The application charge to be paid to the Issue Manager is NRs. 10 per application.



Mobile banking allows customers to conduct financial transactions remotely using a mobile device such as a smartphone or tablet. It uses application software called an app, provided by the financial institution for the purpose. Mobile banking is one banking channel that is available at all times.

Mobile banking reduces the cost of handling transactions by reducing the need for customers to visit a bank branch for non-cash withdrawals and deposit transactions.

Sunrise Bank's mobile banking is called Sunrise Bank Smart, which is a unified digital banking solution that provides customers with the services of mobile banking and digital payments while providing a multimedia rich and cost effective environment for the Bank to carry out instant marketing/promotional campaigns, and communicate with customers.

Customers can enjoy a vast array of available features on an interactive mobile app carefully designed for easy navigation.

Sunrise Bank Smart is currently available for Android and iOS applications and supports both the SMS and GPRS channels giving customers the option to use either one depending upon the availability of network and internet access.

MobileBanking

The term DMAT stands for Dematerialization or the process in which paper share certificates and other securities in the physical form are converted into electronic form, and credited in the depository. DMAT helps in eliminating the problem of physical handling of securities. A depository is similar to a bank. It holds shares, which belong to investors, in electronic form. The investor has to open an account with the depository, through a Depository Participant (DP). These Depository Participants (DP) are authorized agents to operate DMAT accounts. These DP acts as an agent between the investors and the company. Shares and securities are held electronically in a dematerialized (or DMAT) account, instead of the investor having physical possession of certificates.

DEMAT Account Services

Lower transactioncosts

Easytransfer ofsecurities

Sharesplits & bonus sharesautomaticallycreditedto account

No riskof losingphysical sharecertificates

Hassle free

e

DEMATACCOUNT



FINANCIAL STATEMENTDespite operating in a highly competitive market, Sunrise Bank has grown consistently every year. Its wide network across the country now provides the foundation to do better and grow faster.


Director’s Report

THE BOARD OF DIRECTORS of Sunrise Bank Ltd. has pleasure in presenting their Annual Report on the state of affairs of the Company to the shareholders of Sunrise Bank Ltd. for the financial year ended 17th July 2018, together with the audited Financial Statements of the Bank, Consolidated Financial Statements of the Group for that year and the Auditors’ Report on those Financial Statements, conforming to the requirements of the Nepal Rastra Bank Directives, Companies Act 2063 and the Banking and Financial Institutions Act 2073. The Financial Statements were reviewed and approved by the Board of Directors on 29 November 2018.

On behalf of the Board of Directors, I would like to welcome all of you to the 11th Annual General Meeting of Sunrise Bank Ltd. Since its inception, the Bank has been able to attain continuous, balanced growth through innovation, adoption of high-tech solutions and development of innovative financial products. We take your permission to present the Bank’s achievement in the FY 2017/18 (FY 2074/75)

R E V I E W O F B A N K ’ S O P E R A T I O N

F O R F I S C A L Y E A R 2 0 1 7 - 1 8



A. KEY FINANCIAL HIGHLIGHTS


PARTICULARS FY 2017/18 FY 2016/17 GROWTH %

Share Capital 8,153 8,081 1

Reserve & Surplus 3,402 2,717 25

Total Deposits 69,493 61,167 14

Total Loans and Advances 60,213 51,271 17

Investment Securities 9,720 6,169 58

Placement with Bank and Financial Institutions 3,870 3,358 15

Total Assets 82,783 71,859 15

Net Worth Value per share 141.73 138.72 2

The Bank achieved growth of 15% during the year in total assets, reaching NPR 82.7 billion. It has also achieved sustainable growth of 14% in Total Deposits, totaling NPR 69.5 billion, and 17% in Total Loans and Advances, totaling NPR 60 billion. The Bank has mobilized its resources well. Each year, the Bank continues to implement financial strategies that enhance its Financial Capital to enable it to carry out day-to-day business activities. Growth in key parameters also shows that the Bank is in progressing along with its customers.

STATEMENT OF FINANCIAL POSITION NPR Million

PARTICULARS FY 2017/18 FY 2016/17 GROWTH %

Net Interest Income 2,871 2,314 24

Fee/Commission & Other Operating Income 848 666 27

Total Operating Income 3,559 2,819 26

Personnel Expenses 908 689 32

Operating Expenses 555 360 54

Operating Profit 2,047 1,695 21

Profit for the Period 1,477 1,113 33

Earnings per Share

Basic Earnings per Share 18.13 17.26

Diluted Earnings per Share 18.13 17.26

Driven by strong revenue growth, the Bank’s bottom line grew by 33%, compared to the previous year.

STATEMENT OF PROFIT OR LOSS NPR Million

C. ATM NETWORK The Bank offers a variety of debit and credit cards to customers with enhanced security features. All cards of Sunrise Bank are EMV compliant that reduces the possibility of fraud, and compromise of customer information, to almost nil. The Bank has a wide network of ATM terminals and all of these are being made ready for chip security and fraud deterrence. The Bank has 115 ATMs across the country and customers can also benefit from the common ATM network of NEPS member banks.

In addition, the Bank has revamped the overall technology platform to enhance efficiency, augment security, and facilitate client capabilities. In retail baking, the Bank has launched online account opening services and also offers clients innovative payment options. Significant investment has gone towards upgrading technology and training human resources. This is because we believe that only state-of-art technology and qualified human resources can help a bank to grow in this day and age.

D. REMITTANCES Sunrise Bank Ltd. has been providing remittance services since its inception through its web-based remittance product named “Suryodaya Remit”. It now has over 4,500 payout agents, in addition to its 103 branches across the country to facilitate the disbursement of remittances received from around the globe. Sunrise Bank maintains its presence in USA,

B. KEY FINANCIAL HIGHLIGHTS The Bank now has 103 full-fledged branches, 6 province offices, 3 extension counters, and 24 branch-less banking outposts that serve customers at almost every business center. The national network covers all major business centers in Nepal. In the international front we have an extensive network of correspondent banking counter parties in all major global financial hubs. The Bank has a strategy of opening branches not only at the urban centers but also in the rural municipalities across the country.


UK, Italy, Australia, Israel, Malaysia, Qatar, Bahrain, Oman, Kuwait, UAE, Japan, Korea and India for tapping into the remittance business. Besides, the Bank has also been serving people wanting to send remittances within the country through the branch network. Customers using the service to send and receive money can do that at more than 4,500 locations nationwide.

E. MOBILE FINANCIAL SERVICES The mobile phone has been evolving into an intimate platform that brings together many technological possibilities. It is personal and therefore suited for banking operations. The Bank has added a number of features in its mobile banking application. The payment channels have been increased and customers can now use it to directly pay their electricity bills. More features are in the process of being added. This can make banking with Sunrise Bank a seamless experience for customers.

Sunrise Bank's mobile banking platform 'Sunrise Smart Banking' is a unified digital banking solution that provides customers with banking services on their fingertips. It allows banking and digital payments in a multimedia rich interface, while also providing a cost-effective means for the Bank to maintain stakeholder relations and undertake marketing/promotional campaigns.

Sunrise Smart Banking is currently available for Android and IOS applications and supports both short messaging services (SMS) and GPRS giving customers the option to use either one depending on network availability and internet access.

F. ACTIVITIES OF THE BANK’S SUBSIDIARY Sunrise Capital Limited is the subsidiary company of the Sunrise Bank Limited. Previously, NIDC capital market had set up a subsidiary company named NCM merchant Banking limited to provide merchant banking activities under the direction of NRB and guidelines of SEBON. After NIDC Capital Markets Limited was acquired by Sunrise Bank on 10 Feb, 2017 (28th Magh, 2073) and renamed Sunrise Capital Limited, it has

been providing merchant banking services as a subsidiary of Sunrise Bank Limited. It is Nepal's premier investment services company, with several decades of experience in helping people protect and increase their wealth. No other firm can match the depth of its experience and its dedication to personal service. It has been providing customized and extraordinary financial services ranging from merchant banking, advisory, and assets management services to depository participant functions. The strength of our parent company, together with our network and experience has enabled it to become the premier provider of customer-centric and innovation-driven investment banking services in Nepal.

G. MAJOR ACTIVITIES DURING THE YEAR:1. Information Technology and

Digital Banking: Sunrise Bank has been the first bank to implement Finacle Core Banking Software while other banks are still in the planning phase. With this, the Bank has achieved a new height in Nepal’s banking industry. The Bank now has a definite roadmap to move to a fully digitized environment. Sunrise Bank intends to use digitization not only for delivering services to customers but also to transition to a fully digitized banking environment. Business Process Automation is one of the key strategic moves of the Bank where it has been continuously evaluating the possibility of taking all of its internal processes to the fully digital platform. The Bank has acquired many applications, including software, for human resource management, assets management, Know Your Customer (KYC) and anti-money laundering (AML), document management, inventory management, conference video calls, etc. It is also considering the implementation of workflow management, performance management, automatic tracking system and other systems in the coming days to attain complete digitization of business processes. It has hired human resources to facilitate and expedite this digital transformation.



Sunrise Bank has implemented a sophisticated Internet banking system at par with international standards to offer customers a bank-less banking environment. It has enhanced security features with strong authentication mechanisms that guarantee the protection of customer's credentials, passwords and information.

The Bank has started online account opening facility through its website, which is one of many initiatives undertaken to transform the way a customer does banking. Customers can now fill in all the required information through the Bank’s website and open the desired account without the need to visit a branch.

The Bank has also started the service of validating Sunrise Bank issued bank guarantees through its website. This enables government offices and other principals to confirm that the Bank’s undertakings are valid. This has reinforced its reliability and trust.

Recently, the Bank implemented a new version of the mobile banking (Bank Smart V5) which is capable of extending more features to the customers, more detailed information, including QR code based payments, self-registration, self-management, etc. The Bank has plans to upgrade this platform to a higher version by making it more informative and feature intensive.

Sunrise Bank introduced a very simple but innovative product called Missed Call Banking -- the first in the banking industry in Nepal. This product was welcomed by customers. The center of this product is banking service even without the Internet. It has been a success because the Bank has a lot of customers in rural area who do not have proper Internet services. Also many people do not own smart phones or are not used to mobile banking because of age factors and others to rely only on the Internet.

Sunrise Bank has also introduced Viber-Banking services whereby the customers can avail various facilities for free through the Public Group in Viber.

2. Call Centre: For the first time in Nepal, Sunrise Bank started its own call center and has now become the “Bank With a Voice”. The call center has been very crucial for handling transactional interactions, informational calls, and for addressing complex issues, including sales and purchase-related activities. The call center is the first point of contact for remote customer interactions. It also provides opportunities for cross-selling and up-selling financial products and services. It is designed to deliver multiple ways for customers to connect with the Bank, which it believes can play a crucial role in enhancing customer satisfaction.

3. Remittance: Sunrise Bank Ltd., established the Remittance Department in 2009 with the intention of channelizing inward remittances from various countries. It has since been continuously increasing its international as well as domestic remittance networks. At present the Bank has remittance business arrangements with 20 foreign remittance companies / banks covering 14 countries and a domestic network of 4,500 agents spread across Nepal. The Bank has also initiated remittance business arrangements with 20 domestic remittance companies / banks with the aim of providing one stop solution for any remittance entering the country from formal sources.

4. Establishment of Branches and ATMs: With the establishment of 21 branches during the year, and 11 new branches during the current fiscal year, total Branch network has increased to 103 (including 18 Rural Branches). Similarly, total number of ATMs operated by the Bank is 114.

5. Corporate Social Responsibility: Sunrise Bank is a good corporate citizen and believes in contributing towards overall development of the society it serves. It has



given back to society at every opportunity and will continue this partnership for change. A separate section of the Annual Report discusses the Bank’s CSR activities.

H. MACROECONOMIC OUTLOOK Estimates of Central Bureau of Statistics (CBS) show the growth in the real GDP (at producers' price) at 6.30% in 2017/18 compared to 7.9% in the preceding year. Similarly, the real GDP at basic price was estimated to grow by 5.9% compared to a growth of 6.90% in the previous year. Good monsoon rains, improved power supply and normal supply situation helped accelerate growth from the low base of the preceding year. The growth in real GDP at producers' price was 6.30% in 2017/18.

The growth rate in agricultural output was 2.9% and that of the non-agricultural sector was 4.9%. The service sector was estimated to grow by 9.0% compared to a growth of 6.9% in the previous year. Increased number of tourists, and expansion of trade and communication accounted for the rise in service sector.

The annual average consumer price inflation was 4.2% in 2017/18 from 4.5% in the previous year. The annual average inflation of 2017/18 has been the lowest since 2004/05. The higher base price of the preceding year, improved supply situation and lower global prices including that of India contributed to the easing inflation in the review year.

Merchandise trade deficit widened 26.7% to Rs 1,161.64 billion in 2017/18. The export-import ratio declined to 6.5% in the review year from 7.4% in the previous year.

The year-on-year unit value export price index based on customs data increased to 10.3% while import price index increased to 12.5% in 2017/18. Consequently, the terms of trade (TOT) index decreased to 7.1% compared to 9.1% in the previous year.

Remittances from Nepalese working abroad increased by 8.6% to NPR 755.60 billion in

the review year compared to a growth of 4.6% in the previous year. However, the ratio of workers' remittances to-GDP declined to 25.10% in 2017/18 from 26.3% in 2017/18. The net transfer receipts increased by 1.5% to NPR 864.67 billion in the review year. Such receipts had increased by 9.5% in the previous year.

Government revenue increased by 19.2% to NPR 726.80 billion in 2017/18. The revenue collection met 99.50% of the budget target of NPR 730.60 billion. Government expenditure, on cash basis, increased by 26.2% to NPR 1029.20 billion in 2017/18 compared to an increase of 40.20% to NPR 815.7 billion in 2016/17. Budget deficit on cash basis increased to NPR 268.85 billion from NPR 188.69 billion in 2016/17. The ratio of budget deficit-to-GDP stood at 8.9% in the review year.

The GON resorted to gross domestic borrowing of NPR 107.19 billion in 2017/18. This is 3.6% of GDP. Gross domestic borrowing of NPR 88.34 billion was mobilized in the previous year. The GoN repaid NPR 37.56 billion domestic debt in 2017/18. The GoN maintained a cash balance of NPR 126.15 billion at NRB at the end of 2017/18. At the end of the previous fiscal year, such balance was NPR 106.27 billion.

The outstanding foreign loan of the GoN stood at NPR 503.63 billion in mid-July 2018. The outstanding domestic debt of the GoN increased from NPR 283.71 billion of mid July 2017 to NPR 390.90 billion in mid July 2018. The total government debt amounted to NPR 894.53 billion, which stood at 29.7% of GDP. Likewise, the total debt servicing/revenue ratio stood at 9.9% in mid July 2018.

Domestic credit expanded by 24.9% in the review year compared to a growth of 20.6% in the previous year. Deposits at Banks and Financial Institutions (BFIs) increased by 19.20% in the review year compared to an increase of 14% in the previous year.

The weighted average 91-day Treasury Bill rate increased to 3.74% in the 12 months of 2017/18



from 0.71% a year ago. The weighted average inter-bank transaction rate among commercial banks, which was 0.64% a year ago, increased to 2.96% in the review month. However, the weighted average inter-bank rate increased to 5.40% from 4.47% a year ago. The total number of BFIs licensed by NRB was 151 in mid-July 2018 from 149 a year ago. In mid-July 2018, Nepal had 28 commercial banks, 33 development banks, 25 finance companies and 65 microfinance institutions. The branch network expanded to 6,651 in mid-July 2018 from 5,068 a year ago. In all 162 BFIs (including ‘D ’ class) were involved in mergers and acquisitions during the review period. Because of this the number of companies listed at the NEPSE decreased to 196 in mid-July 2018 from 208 in mid-July 2016. Of listed companies, 147 are BFIs (including insurance companies).

Financial frictions seen in recent months have significantly improved. The gap between deposit and credit growth has narrowed. The comfortable level of central bank liquidity has eased the financial situation. The upward trend in market interest rates has been arrested. The increased level of capital, the introduction of fixed interest rate corridor in the recent monetary policy statement, and macro-prudential tools now in place are the measures aimed at making financial sector more resilient and stable going forward.

The current account slipped to a deficit of NPR 245.22 billion in 2017/18 as compared to deficit of NPR 10.13 billion in the previous year. The Balance of Payments recorded a surplus of NPR 0.96 billion in the review year compared to a surplus of NPR 82.15 billion in the previous year.

Recurrent expenditure increased by 32.4% to NPR 680.31 billion compared to a growth of 40.9% in the preceding year. Capital expenditure increased by 20.4% to NPR 239.91 billion compared to its growth of 72.2% in the previous year. Financial expenditure increased by 5.8% to NPR 108.80 billion.

The NEPSE index, on y-o-y basis, decreased by 23.4% to 1,212.4 points in mid-July

2018 from 1582.7 points in mid-July 2017. The stock market capitalization, on y-o-y basis, decreased by 22.70% to NPR 1,435.14 billion in mid-July 2018. The ratio of market capitalization-to-GDP stood at 47.70% in mid-July 2018.

For the past 15 years there has been steady growth in the balance sheets of bank and financial institutions. The growth has been fuelled by broad money derived from remittance inflows. Remittance inflows that have grown almost every year began slowing down in the second quarter of the fiscal year 2016-17. Meantime the trade deficit has continued to widen resulting in a balance of payments deficit. Government expenditure, particularly the capital budget has largely remained under spent. But revenue collection remained at a record high and remained unspent in the treasury accounts. The slow spending, slowdown in remittances and a widening trade gap led to a decrease in money supply and a slowdown in bank deposits.

Besides macroeconomic factors such as the trade and current account deficits, slower capital expenditure by government, and slowing rate of remittance inflows also contributed to deceleration of deposit expansion. The resources at banks (deposit growth) had slowed down but banks continued to aggressively expand loans and advances at levels well above the available deposits in the market.

There was also shift in the market with customers converting their savings accounts into fixed deposits pushing the cost of funds upwards. Lending rates also increased but the banks could not go higher than certain levels owing to the stiff competition. This led to general fall in interest spread and the net interest income of the banking industry as a whole.

The Bank attained decent growth in business volume during the first quarter of 2018/19. Total deposits have increased to NPR 75.79 billion and net loans to NPR 66.59 billion. Sunrise Bank has already attained the



statutory target of having a minimum NPR 8 billion as paid up capital. Despite the negative macroeconomic indicators, the Bank has continued to attain the planned growth targets for 2018/19. The anticipated profitability targets were unmet in the first quarter due to festival season towards the end of the quarter that slowed down the collection of interests. Payments were recovered during the subsequent quarter and the Bank is confident to be able to deliver both robust business growth and a decent profit volume at the end of the fiscal year.

I. ISSUANCE OF DEBENTURE The Bank has planned to issue Debenture worth NPR 1 Billion by the third quarter of FY 2018/19 to augment the supplementary capital as well as to strengthen CCD Ratio. NRB approval has already been obtained and SEBON’s approval is awaited.

J. MUTUAL FUND SPONSOR The Bank has also planed to sponsor the proposed Mutual Fund of NPR 1 Billion to be issued by its subsidiary, Sunrise Capital Limited.

K. CUSTOMER RELATIONS AND RISK MANAGEMENT The Bank has had a steady growth of customers. The customer base increased from about 441,912 in July 2018 to 476,000 in four months. Both the number of accounts and deposits has been growing satisfactorily since mid-July.

The Bank has always been guided by the principles of customer satisfaction, and customer-in-priority. It was the pioneer in launching customized products and high quality services in both loans and deposits. Further, the Bank has now adopted the principle of moving beyond customer satisfaction towards "customer delight". The Bank has fully adhered to the KYC norms and AML principles, and international best practices. It has a full-fledged Compliance Department at the corporate level and a Compliance Officer at each branch. Further, the Compliance Department has a separate AML section to keep close watch on money

laundering and terrorist financing risks. In order to look after the risks associated with banking, the Bank has appointed a Chief Risk Officer who has been working towards building a risk management culture in the Bank alongside the identification, measuring and mitigation of risks related to credit, operations, market, foreign exchange, liquidity and reputation risks, etc. The Bank has been very aggressive in capacity building of employees by supporting trainings and workshops to enhance their skills on using the tools required for risk assessment and aversion.

L. HUMAN RESOURCES The Bank has a workforce of about 1159 employees, which is a growth from 956 in 2017/18. The Bank believes that its success rests on the performance of its employees and has been prioritizing the maintenance of a well-trained and qualified workforce through capacity development interventions at all levels. The capacity development interventions focus on developing a workforce of dedicated and professional staff with qualities such as honesty, integrity, professional capability, creativity, and cooperation. Because staff capacity building is directly related to employee productivity and customer delight, the Bank has also been sending employees to attend national and international training programs. Nepal Rastra Bank (NRB) has directed all banks to spend at least 3% of the total employee expenses in training and capacity building, which the Bank has adhered to fully.

M. CORPORATE GOVERNANCE The Board of Directors and management of SrBL are committed to high level of corporate governance across the organization. All members of the Board have fully complied with the directives issued by the NRB pertaining to corporate governance and the associated code of conduct. The Bank has an Audit Committee as well as a Risk Management Committee to look after the audit and risk-related issues. Further, the Bank also has a Money Laundering Prevention Committee to continuously monitor money laundering and terrorism financing-related



issues. SrBL believes that regular disclosures promote transparency, which in turn fosters corporate good governance.

N. CONTRIBUTION TO REVENUE The Bank has paid NPR 986.7 million as various taxes to Government of Nepal, which includes NPR 490 million as corporate tax, NPR 361.3 million as interest tax on deposits, NPR 67.6 million as employee income tax, and NPR 7.87 million as house rent tax. The Bank also pays reverse VAT on procurements of goods and services from outside the nation.

O. COMMITTEES The Bank has formed various board-level committees for implementing, controlling and monitoring policy decisions. These include the Audit Committee, Risk Management Committee, and Human Resources Management Committee. More recently, the Bank has formed Money (Assets) Laundering Prevention Committee, which is coordinated by a non-executive director. Each committee has a specific Terms of Reference. The members of the committees comprise of non-executive directors and senior executives. Besides, there also are several other management-level committees: The CEO heads the Management Committee, with senior executives as members. Other committees include the Assets Liability Committee, Human Resources Management Committee, and Procurement Committee.

P. FINANCIAL STATEMENT The Bank has presented the financial statements including balance sheet as on 32 Asar 2075 B.S., profit and loss statement of fiscal year 2074/75, cash flow statement, related annexure and consolidated financial statements including that of its subsidiary Sunrise Capital Ltd. to the general meeting for approval.

The Bank is fully committed to abide by the instructions of NRB provided at the time of AGM clearance as well as during the audit.

Q. DIVIDEND The board of the Bank has approved 11.5% cash dividend to its shareholders. In the last fiscal year, the Bank had provided 15% bonus

shares to shareholders. The Bank is looking forward to providing attractive dividends to its shareholders also in the coming years.

R. CHANGE IN BOARD COMPOSITION AND ELECTION After the enactment of BAFIA 2073, the board of a bank or financial institution can have only 5 to 7 members. The article of association of the Bank had provision of 9 members in the board, in line with BAFIA 2063, which the Bank proposes to reduce to 7. After the amendment of memorandum of association and article of association, there will be the provision of 7 directors (3 each from promoter and public groups and 1 independent director.)

S. APPOINTMENT OF THE AUDITOR M/s P. L. Shrestha and Company, Chartered Accountants was appointed as the auditor of the Bank for fiscal year 2074/75 BS by last year’s Annual General Meeting under the recommendations of the Audit Committee. The same company has been recommended by the Audit Committee as auditor for the fiscal year 2075/76 BS for approval of the general meeting.

Finally, we would like to express our sincere gratitude towards all who have directly or indirectly worked towards the betterment of the Bank and who have provided their valuable comments and suggestions for improvement of its product and services, as well as services delivery. We would also like to thank our valued customers, shareholders, Government of Nepal, Ministry of Finance, Nepal Rastra Bank, Securities Board of Nepal, Office of the Company Registrar, Nepal Stock Exchange Ltd., and the Bank’s tireless employees. We will continuously strive to improve the service standards of SrBL and provide better services to customers and higher returns to shareholders.

Thank you!

Motilal Dugar CHAIRMAN

Dr. Bhogendra Guragain DIRECTOR




The Financial Statements of the Bank have been prepared in accordance with Nepal Financial Reporting Standards and carve-outs issued by the Institute of Chartered Accountants of Nepal on September 20, 2018 on NFRS requirement, which allowed alternative treatments.

Financial information recorded in compliance with directives of Nepal Rastra Bank and relevant business practices followed by the bank unless as adjusted for compliance with NFRS.

Interest income increased by of 40.89% during 2017-18. Interest expenses have also significantly grown by 53.41% during 2017-18 and net-interest income increased by 24.05%. Fees, Commission & other operating income have increased by 24.05% while the staff & Operating Expenses have increased by 39.48%.

DURING 2017-18

COMPLIANCE STATEMENT

PERFORMANCEREVIEW

BANKPARTICULARS FY 2017/18 FY 2016/17 PERCENT

Net Interest Income 2,871 2,314 24

Fee/Commission & Other Operating Income 848 666 27

Total Operating Income 3,559 2,819 26

Personnel Expenses 908 689 32

Operating Expenses 555 360 54

Operating Profit 2,047 1,695 21

Profit for the Period 1,477 1,113 33

Earnings per Share

Basic Earnings per Share 18.13 17.26

Diluted Earnings per Share 18.13 17.26

Interest expenses increased

53.41%

Interest income increased

40.89%

Net interest income increased

24.05%



STRATEGIC REPORT GOVERNANCE RISK REVIEW HUMAN RESOURCECORPORATE RESPONSIBILITY PRODUCTS & SERVICES FINANCIAL STATEMENT INVESTOR'S RELATIONSHIP BANK'S PERFORMANCE

STATEMENT OF FINANCIAL POSITION

GROUP BANK

16/JUL/18 15/JUL/17 16/JUL/18 15/JUL/17 16/JUL/16

RESTATED RESTATED RESTATED

PARTICULARS NOTE 32/03/2075 31/03/2074 32/03/2075 31/03/2074 01/04/2073

Assets

Cash and Cash Equivalents 4.1 2,586,532,195 2,278,225,290 2,442,007,615 2,060,959,540 2,772,391,178

Due from Nepal Rastra Bank 4.2 5,033,055,545 7,496,218,748 5,033,055,545 7,496,218,748 3,809,870,298

Placement with Bank

and Financial Institutions 4.3 3,939,629,863 3,299,928,896 3,869,629,863 3,358,047,347 2,618,168,668

Derivative Financial Instruments 4.4 - 804,900 - 804,900 24,625,457

Other Trading Assets 4.5 24,959,135 19,805,977 - - -

Loans and Advances to BFIs 4.6 999,587,580 1,113,357,496 999,587,580 1,113,357,496 955,546,373

Loans and Advances to Customers 4.7 59,213,551,390 50,158,059,904 59,213,551,390 50,158,059,904 42,360,640,660

Investment Securities 4.8 9,720,458,385 6,168,650,705 9,720,458,385 6,168,650,705 5,845,165,201

Current Tax Assets 4.9 47,686,848 168,515,048 43,085,259 164,593,723 27,774,490

Investment in Subsidiaries 4.10 157,142,000 78,570,981

Investment in Associates 4.11 - - -

Investment Property 4.12 119,254,047 161,448,497 119,254,047 161,448,497 103,907,648

Property and Equipment 4.13 733,539,802 538,320,422 730,247,831 534,388,879 435,533,216

Goodwill and Intangible Assets 4.14 76,776,984 58,533,970 76,415,384 58,533,970 5,892,829

Deferred Tax Assets 4.15 51,953,563 - 53,146,995

Other Assets 4.16 328,875,325 511,550,835 325,328,298 505,235,904 107,967,937

Total Assets 82,875,860,662 71,973,420,688 82,782,910,192 71,858,870,594 59,067,483,955

Moti Lal Dugar CHAIRMAN

Dr. Dipak Psd BhattaraiDIRECTOR

Sarbendra MishraCHIEF FINANCIAL OFFICER

Dr. Bhogendra GuragainDIRECTOR

Dipak NepalDIRECTOR

Apachh K YadavDEPUTY GENERAL MANAGER

Er. Bachchharaj TaterDIRECTOR

Jyoti Kumar BeganiDIRECTOR

Ratna Raj BajracharyaCHIEF EXECUTIVE OFFICER

Malchand DugarDIRECTOR

Om Krishna JoshiDIRECTOR

As per our report of even date

CA Rajesh Poudel, Partner P.L. Shrestha & Co.,

Chartered Accountants

PLACE: KathmanduDATE: 29 November, 2018

As on 16 July, 2018 (32 Asar, 2075)



GROUP BANK

16/JUL/18 15/JUL/17 16/JUL/18 15/JUL/17 16/JUL/16

RESTATED RESTATED RESTATED

PARTICULARS NOTE 32/03/2075 31/03/2074 32/03/2075 31/03/2074 01/04/2073

Liabilities

Due to Bank and Financial Institutions 4.17 2,126,890,375 3,880,814,202 2,126,890,375 3,880,814,202 1,819,765,220

Due to Nepal Rastra Bank 4.18 526,567,379 - 526,567,379 - -

Derivative Financial Instruments 4.19 23,324,347 - 23,324,347 - -

Deposits from Customers 4.20 67,193,215,276 57,168,040,996 67,366,127,515 57,286,159,447 49,981,295,235

Borrowings 4.21 - - - - -

Current Tax Liabilities 4.9 - - - - -

Provisions 4.22 - - - - -

Deferred Tax Liabilities 4.15 - 28,300,421 - 25,736,338 8,483,721

Other Liabilities 4.23 1,353,450,682 1,102,888,337 1,185,662,469 930,766,449 692,282,883

Debt Securities Issued 4.24 - -

Subordinated Liabilities 4.25 - -

Total Liabilities 71,223,448,059 62,180,043,957 71,228,572,085 62,123,476,436 52,501,827,060

Equity

Share Capital 4.26 8,152,555,851 7,018,104,701 8,152,555,851 7,018,104,701 3,976,046,341

Share Premium 127,161,065 - 127,161,065 - -

Retained Earnings 977,590,216 1,370,545,311 941,855,312 1,349,474,048 1,787,863,993

Reserves 4.27 2,340,415,129 1,375,464,658 2,332,765,879 1,367,815,408 801,746,561

Total Equity Attributable to Equity Holders 11,597,722,260 9,764,114,670 11,554,338,107 9,735,394,158 6,565,656,895

Non Controlling Interest 54,690,343 29,262,061 - - -

Total Equity 11,652,412,603 9,793,376,731 11,554,338,107 9,735,394,158 6,565,656,895

Total Liabilities and Equity 82,875,860,662 71,973,420,688 82,782,910,192 71,858,870,594 59,067,483,955

Contingent Liabilities and Commitments 4.28 37,637,909,885 29,399,476,614 37,637,909,885 29,399,476,614 19,977,904,651

Net Worth per share 142.26 139.13 141.73 138.72 165.13





Dipak NepalDIRECTOR











Contd... STATEMENT OF FINANCIAL POSITION



STATEMENT OF PROFIT OR LOSS For the year ended on 16 July, 2018 (32 Asar, 2075)

GROUP BANK

FY 2017/18 FY 2016/17 FY 2017/18 FY 2016/17

RESTATED RESTATED

PARTICULARS NOTE FY 2074/75 FY 2073/74 FY 2074/75 FY 2073/74

Interest Income 4.29 7,665,882,082 5,427,830,619 7,647,361,187 5,427,830,619

Interest Expense 4.30 4,758,167,715 3,108,710,613 4,776,433,114 3,113,432,728

Net Interest Income 2,907,714,367 2,319,120,006 2,870,928,074 2,314,397,891

Fee and Commission Income 4.31 630,890,254 525,689,944 619,913,935 517,251,423

Fee and Commission Expense 4.32 156,832,524 160,951,054 159,339,397 161,126,207

Net Fee and Commission Income 474,057,730 364,738,890 460,574,537 356,125,216

Net Interest, Fee and Commisson Income 3,381,772,097 2,683,858,896 3,331,502,611 2,670,523,107

Net Trading Income 4.33 (4,213,288) (15,039,447) - -

Other Operating Income 4.34 228,220,735 161,767,072 227,687,940 148,444,059

Total Operating Income 3,605,779,544 2,830,586,521 3,559,190,551 2,818,967,166

Impairment Charge/ (Reversal)

for Loans and Other Lossess 4.35 48,592,743 74,914,523 48,592,743 74,914,523

Net Operating Income 3,557,186,801 2,755,671,998 3,510,597,807 2,744,052,643

Operating Expense

Personnel Expenses 4.36 922,548,218 699,371,977 908,491,597 688,899,187

Other Operating Expenses 4.37 449,742,801 318,879,547 442,241,660 312,593,742

Depreciation & Amortisation 4.38 113,892,669 48,866,519 112,414,993 47,529,783

Operating Profit 2,071,003,112 1,688,553,954 2,047,449,558 1,695,029,931

Non Operating Income 4.39 68,202,348 31,719,267 68,202,348 13,917,746

Non Operating Expense 4.40 164,382,029 85,922,276 164,382,029 85,922,276

Profit Before Income Tax 1,974,823,432 1,634,350,946 1,951,269,877 1,623,025,401

Income Tax Expense 4.41 479,188,636 512,967,882 474,298,024 510,173,471

Current Tax 621,264,344 454,034,370 615,003,079 447,435,702

Deferred Tax (142,075,707) 58,933,512 (140,705,055) 62,737,769

Profit for the Period 1,495,634,796 1,121,383,063 1,476,971,853 1,112,851,929

Profit Attributable to: - -

Equity-holders of the Bank 1,491,635,514 1,116,867,702 - -

Non-Controlling Interest 3,999,282 4,515,361 - -

Profit for the Period 1,495,634,796 1,121,383,063 1,476,971,853 1,112,851,929

Earnings per Share

Basic Earnings per Share 18.36 17.39 18.13 17.26

Diluted Earnings per Share 18.36 17.39 18.13 17.26





Dipak NepalDIRECTOR













STATEMENT OF OTHER COMPREHENSIVE INCOMEFor the year ended on 16 July, 2018 (32 Asar, 2075)

GROUP BANK

PARTICULARS FY 2017/18 FY 2016/17 FY 2017/18 FY 2016/17

Net Profit for the year 1,495,634,796 1,121,383,063 1,476,971,853 1,112,851,929

Other Comprehensive Income, Net of Income Tax

a) Items that will not be reclassified to profit or loss

n Gains/(losses) from investments in equity instruments

measured at fair value 218,118,395 34,470,617 218,118,395 34,470,617

n Gains/(losses) on revalution - - - -

nAtuarialgains/(loss)ondefinedbenefitplans (12,045,984) 513,956 (12,045,984) 513,956

n Income tax relating to above items (61,821,723) (10,495,372) (61,821,723) (10,495,372)

Net other comprehsive income that will not be

reclassified to profit or loss 144,250,687 24,489,201 144,250,687 24,489,201

b) Items that are or may be reclassified to profit or loss

nGains/(losses)oncashflowhedge -

n Exchange gains/(losses)

(arisingfromtranslatingfinancialassetsofforeignoperation) -

n Income tax relating to above items -

nReclassifytoprofitorloss

Net other comprehsive income that are or may be

reclassified to profit or loss - - - -

c) Share of other comprehensive income of associate

accounted as per equited method

Other Comprehensive Income for the Period, Net of Income Tax 144,250,687 24,489,201 144,250,687 24,489,201

Total Comprehensive Income for the Period 1,639,885,483 1,145,872,264 1,621,222,541 1,137,341,130

Total Comprehensive Income attributable to:

Equity-Holders of the Bank

Non-Controlling Interest 3,999,282 4,515,361

Total Comprehensive Income for the Period 1,635,886,201 1,141,356,903 1,621,222,541 1,137,341,130





Dipak NepalDIRECTOR













STATEMENT OF CHANGES IN EQUITY For the year ended on 16 July, 2018 (32 Asar, 2075)

GROUP ATTRIBUTABLE TO EQUITY-HOLDERS OF THE BANK NON- TOTAL PARTICULARS SHARE SHARE GENERAL EXCHANGE REGULATORY FAIR VALUE REVALUATION RETAINED OTHER TOTAL CONTROLLING EQUITY CAPITAL PREMIUM RESERVE EQUALISATION RESERVE RESERVE RESERVE EARNING RESERVE INTEREST

Balance at Shrawan 01, 2073 5,301,395,141 - 774,260,314 21,181,584 - - - 15,996,590 31,832,466 6,144,666,095 - 6,144,666,095

Adjustment/Restatement (1,325,348,800) - - - - - - 1,771,867,403 (25,527,803) 420,990,800 420,990,800

Adjustment/Restated Balance as at Shrawan 01, 2073 3,976,046,341 - 774,260,314 21,181,584 - - - 1,787,863,993 6,304,663 6,565,656,895 6,565,656,895

Comprehensive Income for the year - -

Profitfortheyear 1,121,383,063 1,121,383,063 1,121,383,063

Other Comprehensive Income, Net of Tax - - - - - 24,129,432 - - 359,769 24,489,201 24,489,201

Gains/(losses) from investments in equity instruments measured at fair value 24,129,432 24,129,432 24,129,432

Gains/(losses) on revalution - -

Atuarialgains/(losse)ondefinedbenefitplans 359,769 359,769 359,769

Gains/(losses)oncashflowhedge - -

Exchange gains/(losses) (arising from translating financialassetsofforeignoperation) - -

Total Comprehensive Income for the year - - - - - 24,129,432 - 1,121,383,063 359,769 1,145,872,264 1,145,872,264

Transfer to Reserves during the year 235,217,747 1,786,864 - - (311,054,005) (64,033,109) (138,082,503) 29,262,061 (108,820,442)

Transfer from Reserves during the year - - - - - -

Transactions with Owners, directly recognized in Equity - -

Right Share Issued 1,564,892,700 1,564,892,700 1,564,892,700

Share Based Payments - -

Dividend to Equity-Holders - -

Bonus Shares Issued 1,325,348,800 (1,325,348,800) - -

Cash Dividend Paid - -

Addition from acquisition during the year 151,816,860 148,047,816 - - 102,895,190 97,701,060 125,314,387 625,775,314 625,775,314

Total Contributions by and Distributions - -

Balance at Asar 31, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,370,545,311 67,945,710 9,764,114,669 29,262,061 9,793,376,730

Balance at Shrawan 01, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,370,545,311 67,945,710 9,764,114,669 29,262,061 9,793,376,730

Adjustment/Restatement (513,956) (513,956) (513,956)

Adjustment/Restated Balance as at Shrawan 01, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,370,031,355 67,945,710 9,763,600,713 29,262,061 9,792,862,774



Other Comprehensive Income, Net of Tax - - - - - 152,682,876 - - (8,432,189) 144,250,687 - 144,250,687



Atuarialgains/(losse)ondefinedbenefitplans (8,432,189) (8,432,189) (8,432,189)



Total Comprehensive Income for the year - - - - - 152,682,876 - 1,495,634,796 (8,432,189) 1,639,885,483 - 1,639,885,483

Transfer to Reserves during the year - 295,394,371 4,173,321 526,481,883 - - (838,499,900) 8,451,024 (3,999,301) 25,428,282 21,428,981

Transfer from Reserves during the year - - - - - - 13,800,816 (13,800,816) - -


Right Share Issued 71,074,300 127,161,065 - 198,235,365 198,235,365

Share Based Payments - - -


Bonus Shares Issued 1,063,376,850 (1,063,376,850) - - -

Cash Dividend Paid - - -


Balance at Asar 31, 2075 8,152,555,851 127,161,065 1,452,920,248 27,141,769 526,481,883 279,707,498 - 977,590,216 54,163,730 11,597,722,260 54,690,343 11,652,412,603



GROUP ATTRIBUTABLE TO EQUITY-HOLDERS OF THE BANK NON- TOTAL PARTICULARS SHARE SHARE GENERAL EXCHANGE REGULATORY FAIR VALUE REVALUATION RETAINED OTHER TOTAL CONTROLLING EQUITY CAPITAL PREMIUM RESERVE EQUALISATION RESERVE RESERVE RESERVE EARNING RESERVE INTEREST

Balance at Shrawan 01, 2073 5,301,395,141 - 774,260,314 21,181,584 - - - 15,996,590 31,832,466 6,144,666,095 - 6,144,666,095








Atuarialgains/(losse)ondefinedbenefitplans 359,769 359,769 359,769




Transfer to Reserves during the year 235,217,747 1,786,864 - - (311,054,005) (64,033,109) (138,082,503) 29,262,061 (108,820,442)



Right Share Issued 1,564,892,700 1,564,892,700 1,564,892,700





Addition from acquisition during the year 151,816,860 148,047,816 - - 102,895,190 97,701,060 125,314,387 625,775,314 625,775,314


Balance at Asar 31, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,370,545,311 67,945,710 9,764,114,669 29,262,061 9,793,376,730

Balance at Shrawan 01, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,370,545,311 67,945,710 9,764,114,669 29,262,061 9,793,376,730

Adjustment/Restatement (513,956) (513,956) (513,956)

Adjustment/Restated Balance as at Shrawan 01, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,370,031,355 67,945,710 9,763,600,713 29,262,061 9,792,862,774



Other Comprehensive Income, Net of Tax - - - - - 152,682,876 - - (8,432,189) 144,250,687 - 144,250,687






Total Comprehensive Income for the year - - - - - 152,682,876 - 1,495,634,796 (8,432,189) 1,639,885,483 - 1,639,885,483

Transfer to Reserves during the year - 295,394,371 4,173,321 526,481,883 - - (838,499,900) 8,451,024 (3,999,301) 25,428,282 21,428,981

Transfer from Reserves during the year - - - - - - 13,800,816 (13,800,816) - -


Right Share Issued 71,074,300 127,161,065 - 198,235,365 198,235,365

Share Based Payments - - -


Bonus Shares Issued 1,063,376,850 (1,063,376,850) - - -

Cash Dividend Paid - - -


Balance at Asar 31, 2075 8,152,555,851 127,161,065 1,452,920,248 27,141,769 526,481,883 279,707,498 - 977,590,216 54,163,730 11,597,722,260 54,690,343 11,652,412,603






Dipak NepalDIRECTOR





BANK ATTRIBUTABLE TO EQUITY-HOLDERS OF THE BANK TOTAL PARTICULARS SHARE SHARE GENERAL EXCHANGE REGULATORY FAIR VALUE REVALUATION RETAINED OTHER TOTAL EQUITY CAPITAL PREMIUM RESERVE EQUALISATION RESERVE RESERVE RESERVE EARNING RESERVE

Balance at Shrawan 01, 2073 5,301,395,141 - 774,260,314 21,181,584 - - - 15,996,590 31,832,466 6,144,666,095 6,144,666,095








Atuarialgains/(losses)ondefinedbenefitplans 359,769 359,769 359,769




Transfer to Reserves during the year 235,217,747 1,786,864 - - (332,125,268) (71,682,358) (166,803,015) (166,803,015)


Transactions with Owners, directly recognized in Equity - - -

Share Issued 1,564,892,700 1,564,892,700 1,564,892,700





Addition from acquisition during the year 151,816,860 148,047,816 - 102,895,190 106,232,194 125,314,387 634,306,448 634,306,448


Balance at Asar 31, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,349,474,048 60,296,461 9,735,394,157 9,735,394,157

Balance at Shrawan 01, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,349,474,048 60,296,461 9,735,394,157 9,735,394,157

Adjustment/Restatement (513,956) - (513,956) (513,956)

Adjustment/Restated Balance as at Shrawan 01, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,348,960,092 60,296,461 9,734,880,201 9,734,880,201



Other Comprehensive Income, Net of Tax - - - - - 152,682,876 - - (8,432,189) 144,250,687 144,250,687






Total Comprehensive Income for the year - - - - - 152,682,876 - 1,476,971,853 (8,432,189) 1,621,222,541 1,621,222,541

Transfer to Reserves during the year - 295,394,371 4,173,321 526,481,883 - (834,500,599) 8,451,024 0 0

Transfer from Reserves during the year - - 13,800,816 (13,800,816) - -


Share Issued 71,074,300 127,161,065 198,235,365 198,235,365






Balance at Asar 31, 2075 8,152,555,851 127,161,065 1,452,920,248 27,141,769 526,481,883 279,707,498 - 941,855,312 46,514,480 11,554,338,107 11,554,338,107

Contd... STATEMENT OF CHANGES IN EQUITY










BANK ATTRIBUTABLE TO EQUITY-HOLDERS OF THE BANK TOTAL PARTICULARS SHARE SHARE GENERAL EXCHANGE REGULATORY FAIR VALUE REVALUATION RETAINED OTHER TOTAL EQUITY CAPITAL PREMIUM RESERVE EQUALISATION RESERVE RESERVE RESERVE EARNING RESERVE

Balance at Shrawan 01, 2073 5,301,395,141 - 774,260,314 21,181,584 - - - 15,996,590 31,832,466 6,144,666,095 6,144,666,095








Atuarialgains/(losses)ondefinedbenefitplans 359,769 359,769 359,769




Transfer to Reserves during the year 235,217,747 1,786,864 - - (332,125,268) (71,682,358) (166,803,015) (166,803,015)


Transactions with Owners, directly recognized in Equity - - -

Share Issued 1,564,892,700 1,564,892,700 1,564,892,700





Addition from acquisition during the year 151,816,860 148,047,816 - 102,895,190 106,232,194 125,314,387 634,306,448 634,306,448


Balance at Asar 31, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,349,474,048 60,296,461 9,735,394,157 9,735,394,157

Balance at Shrawan 01, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,349,474,048 60,296,461 9,735,394,157 9,735,394,157

Adjustment/Restatement (513,956) - (513,956) (513,956)

Adjustment/Restated Balance as at Shrawan 01, 2074 7,018,104,701 - 1,157,525,877 22,968,448 - 127,024,622 - 1,348,960,092 60,296,461 9,734,880,201 9,734,880,201



Other Comprehensive Income, Net of Tax - - - - - 152,682,876 - - (8,432,189) 144,250,687 144,250,687






Total Comprehensive Income for the year - - - - - 152,682,876 - 1,476,971,853 (8,432,189) 1,621,222,541 1,621,222,541

Transfer to Reserves during the year - 295,394,371 4,173,321 526,481,883 - (834,500,599) 8,451,024 0 0

Transfer from Reserves during the year - - 13,800,816 (13,800,816) - -


Share Issued 71,074,300 127,161,065 198,235,365 198,235,365






Balance at Asar 31, 2075 8,152,555,851 127,161,065 1,452,920,248 27,141,769 526,481,883 279,707,498 - 941,855,312 46,514,480 11,554,338,107 11,554,338,107



STATEMENT OF CASH FLOWS For the year ended on 16 July, 2018 (32 Asar, 2075)

GROUP BANK

FY 2017/18 FY 2016/17 FY 2017/18 FY 2016/17

RESTATED RESTATED


Cash Flows from Operating Activities

Interest Received 7,264,058,495 5,149,858,859 7,264,058,495 5,149,858,859

Fee and Other Income Received 621,104,241 540,029,064 621,104,241 540,029,064

Dividend Received - - - -

Receipts from Other Operating Activities 291,880,117 178,140,312 276,534,441 155,670,991

Interest Paid (4,762,032,994) (2,959,722,613) (4,762,032,994) (2,959,722,613)

Commissions and Fees Paid (159,339,397) (161,126,207) (159,339,397) (161,126,207)

Cash Payment to Employees (827,022,828) (624,187,028) (813,501,982) (612,087,619)

Other Expenses Paid (712,435,953) (555,263,502) (703,809,176) (548,345,064)

Operating Cash Flows before Changes in Operating Assets and Liabilities 1,716,211,680 1,567,728,884 1,723,013,627 1,564,277,411

(Increase) Decrease in Operating Assets (8,935,917,233) (8,479,876,732) (8,938,685,136) (8,481,828,729)

Due from Nepal Rastra Bank - - - -

Placement with Banks and Financial Institutions (511,582,516) (739,878,679) (511,582,516) (739,878,679)

Other Trading Assets - - - -

Loans and Advances to BFIs 113,769,916 (157,811,123) 113,769,916 (157,811,123)

Loans and Advances to Customers (9,004,783,523) (7,723,080,437) (9,004,783,523) (7,723,080,437)

Other Assets 466,678,889 140,893,507 463,910,987 138,941,511

Increase (Decrease) in Operating Liabilities 8,937,008,493 10,042,967,033 8,994,515,609 10,046,014,313

Due to Banks and Financials Institutions (1,753,923,827) 2,061,048,982 (1,753,923,827) 2,061,048,982

Due to Nepal Rastra Bank 526,567,379 - 526,567,379 -

Deposit from Customers 10,026,218,926 7,315,018,826 10,079,968,068 7,304,864,212

Borrowings - -

Other Liabilities 138,146,015 666,899,226 141,903,990 680,101,120

Net Cash Flow from Operating Activities before Tax Paid 1,717,302,939 3,130,819,185 1,778,844,100 3,128,462,996

Income Tax Paid (498,960,828) (575,360,282) (491,882,126) (567,004,452)

Net Cash Flow from Operating Activities 1,218,342,111 2,555,458,904 1,286,961,974 2,561,458,544

Cash Flows from Investing Activities

Purchase of Investment Securities (3,720,415,526) (1,021,388,398) (3,632,493,920) (1,008,680,823)

Receipts from Sale of Investment Securities - -

Purchase of Property and Equipment (306,811,081) (217,642,156) (305,611,381) (216,948,278)

Receipts from Sale of Property and Equipment - -

Purchase of Intangible Assets (17,881,413) (52,641,141) (17,881,413) (52,641,141)

Purchase of Investment Properties - -

Receipts from Sale of Investment Properties - -

Interest Received 186,049,783 123,081,881 186,049,783 123,081,881

Dividend Received - - - -

Net Cash Used in Investing Activities (3,859,058,237) (1,168,589,815) (3,769,936,931) (1,155,188,361)



GROUP BANK

FY 2017/18 FY 2016/17 FY 2017/18 FY 2016/17

RESTATED RESTATED


Cash Flows from Financing Activities

Receipts from Issue of Debt Securities - -

Repayments of Debt Securities - -

Receipts from Issue of Subordinated Liabilities - -

Repayments of Subordinated Liabilities - -

Receipt from Issue of Shares 1,361,612,215 2,920,241,500 1,261,612,215 2,890,241,500

Dividends Paid (15,000,000) (28,000,000) -

Interest Paid - -

Other Receipts/Payments (877,445,669) (1,328,326,976) (877,445,669) (1,328,326,976)

Net Cash from Financing Activities 469,166,545 1,563,914,524 384,166,545 1,561,914,524

Net Increase (Decrease) in Cash and Cash Equivalents (2,171,549,581) 2,950,783,613 (2,098,808,411) 2,968,184,707

Cash and Cash Equivalents at Shrawan 01, 2073 9,774,444,038 6,816,512,970 9,557,178,288 6,581,846,126

EffectofExchangeRatefluctuationsonCash and Cash Equivalents Held 16,693,283 7,147,455 16,693,283 7,147,455

Closing Cash and Cash Equivalents 7,619,587,739 9,774,444,038 7,475,063,160 9,557,178,288

Contd... STATEMENT OF CASH FLOWS





Dipak NepalDIRECTOR













e-banking products, remittances, foreign currency operations and other financial services to its customers through its branches, extension counters, strategic business units, ATMs and network of agents.

Ownership of Subsidiary as at 16th July 2018 is given below:

Subsidiary The principal activities of the Subsidiary are to provide merchant/investment banking services that include management of public offerings, portfolio management, underwriting of securities, fund management of mutual fund schemes, depository participant's service under Central Depository Service (CDS) and administration and record keeping of securities of its clients.

2. BASIS OF PREPARATION

2.1 STATEMENT OF COMPLIANCE The Financial Statements of the Bank have been prepared in accordance with Nepal Financial Reporting Standards and carve-outs issued by the Institute of Chartered Accountants of Nepal on September 20, 2018 on NFRS requirement, which allowed alternative treatments and the bank adopted following carve outs:a. NAS 17: Lease,b. NAS 39: Financial Instruments: Recognition and measurement, - Impairment accounting, - Calculation of interest income as per effective interest rate - Calculation of interest income on amortized cost

Disclosure of carve-outs is provided in para 3.16 for Lease (NAS 17) and para 2.4.3, 3.1, 3.4.2, 3.4.6 and 3.13 for Financial Instruments: Recognition and measurement (NAS39).

Financial information recorded in compliance with directives of Nepal Rastra Bank and relevant business practices followed by the bank unless as adjusted for compliance with NFRS.

2.2 REPORTING PERIOD AND APPROVAL OF FINANCIAL STATEMENTS

2.2.1 Reporting Period The accounting policies set out below have been applied consistently to all periods presented in these financial statements and in preparing the opening NFRS statement of financial position as 16 July 2016, which is the opening date of the previous financial year for the purposes of the transition to NFRSs, unless otherwise stated.

1. SUNRISE BANK LIMITED

1.1. GENERAL Sunrise Bank Limited (hereinafter referred to as “the Bank”) is a public limited liability company domiciled in Nepal with its registered office at Gairidhara, Kathmandu. The Bank’s shares are listed and traded in Nepal Stock Exchange Limited. The Bank carries out commercial banking activities and other financial services in Nepal under the license from Nepal Rastra Bank (NRB), the Central Bank of Nepal, as Class “A” licensed financial institution under the Bank and Financial Institution Act, 2017.

1.2 FINANCIAL STATEMENTS The Financial Statements of the Bank for the year ended 16 July 2018 comprises Statement of Financial Position, Statement of Profit or Loss, Statement of Other Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows, Notes to the Financial Statements, Significant Accounting Policies of the Company and Statement of Financial Position and reconciliation as at the transition date (i.e. 17 July, 2016).

The Consolidated Financial Statements comprises Parent “Sunrise Bank” and its subsidiary “Sunrise Capital Limited” which together is referred to as the Group.

1.3 PRINCIPAL ACTIVITIES AND OPERATIONS

Bank The principal activities of the Bank are to provide commercial banking services including agency services, trade finance services, investment and treasury operations, card services,

NOTES TO FINACIAL STATEMENT

NAME PRINCIPAL ACTIVITIES FY 2017/18 FY 2016/17

SunriseCapital Managementofpublicofferings,portfolio 78.571%Limited management, underwriting of securities, shareholding management of mutual fund schemes.



The Bank follows the Nepalese financial year based on the Nepalese calendar. The corresponding dates for the English calendar are as follows:

RELEVANT FINANCIAL STATEMENT NEPALESE CALENDAR ENGLISH CALENDAR DATE / PERIOD DATE / PERIOD

Opening NFRS SFP* date 1 Shrawan 2073 16 July 2016 Comparative SFP* Date 31 Ashadh 2074 15 July 2017Comparative reporting period 1 Shrawan 2073 - 31 Ashadh 2074 16 July 2016 - 15 July 2017 First NFRS SFP* Date 32 Ashadh 2075 16 July 2018First NFRS reporting period 1 Shrawan 2074 - 32 Ashadh 2075 16 July 2017 - 16 July 2018

*SFP = Statement of financial position

2.2.2 Responsibility for Financial Statements The Board of Directors is responsible for the preparation and presentation of Financial Statements of Sunrise Bank Limited as per Nepal Financial Reporting Standards (NFRS).

2.2.3 Approval of Financial Statements by Directors The accompanied Financial Statements have been authorized by the Board of Directors vide its resolution dated 2075/08/13 (2018/11/29) and recommended for its approval by the Annual General Meeting of the shareholders.

2.3 FUNCTIONAL AND PRESENTATION CURRENCY The Financial Statements of the Bank are presented in Nepalese Rupees (Rs), a functional and presentation currency, which is the currency of the primary economic environment in which the Bank operates. Financial information are presented in Nepalese Rupees. There was no change in Bank’s presentation and functional currency during the year under review.

2.4 USE OF ESTIMATES, ASSUMPTIONS AND JUDGMENTS The preparation of Financial Statements in conformity with Nepal Financial Reporting Standards (NFRS) requires the management to make judgments, estimates and assumptions

that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

The most significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have most significant effect in the Financial Statements are as follows:

2.4.1 Going Concern The Board of Directors has made an assessment of the Bank’s ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, the Board of Directors is not aware of any material uncertainties that may cast significant doubt upon Bank’s ability to continue as a going concern and they do not intend either to liquidate or to cease operations of it. Therefore, the Financial Statements continue to be prepared on the going concern basis.

2.4.2 Fair Value of Financial Instruments Where the fair values of financial assets and financial liabilities recorded in the statement of financial position can be derived from active markets, they are derived from observable market data. However, if this is not available, judgment is required to establish fair values. The valuation of financial instruments is described in more details in Note 5.1 under “Fair Value of financial assets and liabilities”.

2.4.3 Impairment of Financial Assets – Loans and Receivables The Bank reviews its individually significant loans and advances at each statement of financial position date to assess whether an impairment loss should be recorded in the income statement. In particular, judgment of the management is required in the estimation of the amount and timing of future cash flows when determining the impairment loss.

These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the impairment allowance.

Loans and advances that have been assessed individually and all individually insignificant loans and advances are then assessed collectively, in groups of assets



with similar risk characteristics, to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident. The collective assessment takes in to account data from the loan portfolio such as levels of arrears, credit quality, portfolio size etc. and judgments based on current economic conditions.

The Bank has categorized total loan into 5 products namely Term Loan, Personal Loan, Home Loan, Hire Purchase, Short Term Loan. The loan has been classified into various period on the basis of due days as follows:

AGEING

CURRENT

01-30 DAYS

31-60 DAYS

61-90 DAYS

91-120 DAYS

121-150 DAYS

151-180 DAYS

180 DAYS AND ABOVE

The Loss rate on each period has been calculated by multiplying Probability of Default (PD) with Loss Given Default (LGD). Probability of Default has been calculated on the basis of probability matrix by taking 48 months loan data as the basis. For the purpose of calculation of Loss Given Default (LGD), the loan which has been categorized as loss as per NRB directive, has been taken and the recovery history of the same has been analyzed upon to reach the LGD. The individually impaired loan has been subtracted from the total loan and the same has been multiplied by loss rate to calculate collective impairment. Total impairment is the sum of the collective and individual impairment. Loans and advances above 40 million

are considered for incurred loss model impairment which approximately comes at 35% of total portfolio.

The bank has opted to apply carve-out on impairment of loans and receivables. Accordingly, individual and collective impairment loss amount calculated as per NFRS is compared with the impairment provision required under NRB directive no. 2, higher of the amount derived from these measures is taken as impairment loss for loans and receivables.

2.4.4 Impairment of Financial Instruments designated at fair value through other comprehensive income The Bank reviews its debt securities designated at fair value through other comprehensive income, at each reporting date to assess whether they are impaired. Objective evidence that an debt security designated at fair value through other comprehensive income is impaired includes among other things significant financial difficulty of the issuer, a breach of contract such as a default or delinquency in interest or principal payments etc. The Bank also records impairment charges on equity investments designated at fair value through other comprehensive income where there is significant or prolonged decline in fair value below their cost. The determination of what is ‘significant’ or ‘prolonged’ requires judgment. The Bank generally treats ‘significant’ as 20% and ‘prolonged’ as greater than six months. In addition, Bank evaluates, among other factors, historical share price movements, duration and extent up to which the fair value of an investment is less than its cost.

2.4.5 Taxation The Bank is subject to income tax and judgment is required to determine the total provision for current, deferred and other taxes due to the

uncertainties that exist with respect to the interpretation of the applicable tax laws, at the time of preparation of these Financial Statements.

Deferred tax assets are recognized in respect of tax losses to the extent that it is probable that future taxable profit will be available against which the losses can be utilized. Judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits, together with future tax planning strategies.

2.4.6 Defined Benefit Plans The cost of the defined benefit obligations and the present value of their obligations are determined using actuarial valuations.

The actuarial valuation involves making assumptions about discount rates, future salary increments, mortality rates and possible future pension increments if any. Due to the long-term nature of these plans, such estimates are subject to uncertainty. All assumptions are reviewed at each reporting date.

In determining the appropriate discount rate, management considers the interest rates of Nepal government bonds with maturities corresponding to the expected duration of the defined benefit obligation. The mortality rate is based on publicly available mortality tables. Future salary increment and pension increment are based on expected future salary increment rates of the Bank.

2.4.7 Fair Value of Property, Plant and Equipment The freehold land and buildings of the bank are not reflected at fair value and no revaluation has been carried at the reporting date. Under NFRS 1, a first-



time adopter may elect to use a previous GAAP revaluation of an item of property, plant and equipment at, or before, the date of transition to NFRSs as deemed cost at the date of the revaluation, if the revaluation was, at the date of the revaluation, broadly comparable to:a. Fair value; orb. Cost or depreciated cost in accordance with NFRSs, adjusted to reflect, for

example, changes in a general or specific price index

2.4.8 Useful Life-time of the Property, Plant and Equipment The Bank is following the cost model for recognition of Property, Plant and Equipment. The Bank reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at each reporting date.

Land is not depreciated. Depreciation of other assets is calculated using the written down value method to amortize their cost over their estimated useful lives, as follows:

Costs of refurbishment and renovation of leasehold premises are depreciated over the remaining period of that lease or 10 years, whichever is less.

For additions during the year, depreciation is charged from the month the assets is put to use and for disposed assets, depreciation is charged up to the month immediately preceding the month of disposal.

Licence fees for the software paid by the Bank are amortized over the period of the licence. Profit or loss on disposal of fixed assets is recognized in the profit and loss of the year.

2.4.9 Commitments and Contingencies All discernible risks are accounted for in determining the amount of all known liabilities. Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events or present obligations where the transfer of economic benefit is not probable or cannot be reliably measured. Contingent liabilities are not recognized in the Statement of Financial Position but are disclosed unless they are remote.

2.4.10 Classification of Investment Properties Management requires using its judgment to determine whether a property qualifies as an investment property. The Bank has developed criteria so it can exercise its judgment consistently. A property that is held to earn rentals or for

S. N. ASSETS TYPES LIFE OF AN ASSET (IN YEARS)

1. Building 50

2. Furniture & Fixtures 10

3. OfficeEquipments 10

4. Plant & Machinery 10

5. Vehicles 7

6. Computers and Accessories 7

7. Intangible Assets 5

8. Leasehold Assets 10

9. Deferred Furnishing 3

capital appreciation or both and which generates cash flows largely independently of the other assets held by the Bank is accounted for as investment properties. On the other hand, a property that is used for operations or in the process of providing services or for administrative purposes and which do not directly generate cash flows as a standalone assets are accounted for as property, plant and equipment. The Bank assesses on an annual basis the accounting classification of its properties taking into consideration the current use of such properties. Currently the Bank does not have any investment property.

2.5 CHANGES IN ACCOUNTING POLICIES Accounting policies are the specific principles, bases, conventions, rules and practices applied by the bank in preparing and presenting financial statements. The bank is permitted to change an accounting policy only if the change is required by a standard or interpretation; or results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity's financial position, financial performance, or cash flows. The bank uses the same accounting policies in its opening NFRS statement of financial position and throughout all periods presented in its first NFRS financial statements. Those accounting policies comply with each NFRS effective at the end of its first NFRS reporting period.

2.6 New Standards in issue but not yet effective Standards issued but not yet effective up to the date of issuance of the financial statements are set out below. The Bank will adopt these standards when they become effective.



NFRS 9- Financial Instruments: NFRS 9 states a logical principle base to classify financial assets and financial liabilities which is driven by cash flow characteristics and the business model in which an assets or liability is held. Further this standard recommends the assessment of impairment based on more timely recognition of incurred losses as referred in NAS 39 and entities are required to account for incurred credit losses from the initial recognition of financial instruments.

IFRS 9 became effective on 1 January 2018 and will have an effect on classification and measurement of the Bank’s financial assets. NFRS 9, as issued reflects the first phase of work on replacement of NAS 39 and applies to classification and measurement of financial assets and liabilities.

IFRS 15- Revenue from contract with customers: The IASB issued a new standard for revenue recognition which overhauls the existing revenue recognition standards. The standard requires the following five step model framework to be followed for revenue recognition:

a. Identification of the contracts with the customer

b. Identification of the performance obligations in the contract

c. Determination of the transaction price

d. Allocation of the transaction price to the performance obligations in the contract (as identified in step ii)

e. Recognition of revenue when the entity satisfies a performance obligation.

The new standard would be effective for annual periods starting from 1 January 2018 and early application is allowed. The management is assessing the potential impact on its financial statements resulting from application of IFRS 15.

2.7 NEW STANDARDS AND INTERPRETATION NOT ADOPTED The bank has adopted applicable Nepal Financial Reporting Standards which are effective as on the date of preparation of this financial statement.

2.8 DISCOUNTING When the realization of assets and settlement of obligation is for more than one year, the Bank considers the discounting of such assets and liabilities where the impact is material. Various internal and external factors have been considered for determining the discount rate to be applied to the cash flows of company.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these Financial Statements, unless otherwise indicated.

3.1 BASIS OF MEASUREMENT The Financial Statements of the Bank have been prepared on the historical cost basis, except for the following material items in the Statement of Financial Position:

a. Investment designated at fair value through other comprehensive income (quoted) is measured at fair value.

b. Liabilities for defined benefit obligations are recognized at the present value of the defined benefit obligation less the fair value of the plan assets.

c. Financial assets and financial liabilities held at amortized cost at measured using a rate that is a close approximation of effective interest rate. However, the bank has opted to apply carve-out and measure the financial assets and liabilities

at carrying amount i.e. amount disbursed to borrower and amount received from the lender by the bank.

3.2 BASIS OF CONSOLIDATION

3.2.1 Business Combinations and Goodwill Business combinations are accounted for using the acquisition method as per the requirements of Nepal Financial Reporting Standard - NFRS 03 (Business Combinations). The Bank measures goodwill as the fair value of the consideration transferred including the recognized amount of any non-controlling interest in the acquiree, less the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase gain is immediately recognized in the profit or loss.

The Bank elects on a transaction-by transaction basis whether to measure non-controlling interest at its fair value, or at its proportionate share of the recognized amount of the identifiable net assets, at the acquisition date. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss. Transactions costs, other than those associated with the issue of debt or equity securities, that the Bank incurs in connection with a business combination are expensed as incurred.

The Bank has applied Exemptions for NFRS 3 as follows:

A first-time adopter may elect not to apply NFRS 3 retrospectively to past business combinations (business combinations that occurred before the date of transition to NFRSs). However, if a first-time adopter restates any



business combination to comply with NFRS 3 it shall restate all later business combinations and shall also apply NFRS 10 from that same date.

3.2.2 Non-Controlling Interest (NCI) The group presents non-controlling interests in its consolidated statement of financial position within equity, separately from the equity of the owners of the parent. The group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests. The proportion allocated to the SUNRISE Bank and non-controlling interests are determined on the basis of present ownership interests.

The group also attributes total comprehensive income to the owners of the Bank and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

3.2.3 Subsidiaries Subsidiaries are entities that are controlled by the Bank. The Bank is presumed to control an investee when it is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. At each reporting date the Bank reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more elements of control mentioned above.

The Financial Statements of subsidiary are fully consolidated from the date on which control is transferred to the Bank and continue to be consolidated until the date when such control ceases. The Financial Statements of the Bank’s subsidiary are prepared for the same reporting year as per the Bank, using consistent accounting policies.

The acquired identifiable assets, liabilities are measured at their cost at the date of acquisition. After the initial measurement, the Bank continues to recognize the investments in subsidiaries at cost.

The subsidiary of the Bank is incorporated in Nepal.

3.2.4 Loss of Control When the Bank loses control over a Subsidiary, it derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position. The Bank recognizes any investment retained in the former subsidiary at its fair value when control is lost and subsequently accounts for it and for any amounts owed by or to the former subsidiary in accordance with relevant NFRSs. That fair value shall be regarded as the fair value on initial recognition of a financial asset in accordance with relevant NFRS or, when appropriate, the cost on initial recognition of an investment in an associate or joint venture. The Bank recognizes the gain or loss associated with the loss of control attributable to the former controlling interest.

3.2.5 Special Purpose Entity (SPE) An entity may be created to accomplish a narrow and well-defined objective (eg. to effect a lease, research and development activities or a securitization of financial assets). Such a special purpose entity (‘SPE’) may take the form of a corporation, trust, partnership or unincorporated entity.

The Bank does not have any special purpose entity.

3.2.6 Transaction elimination on consolidation In consolidating a subsidiary, the group eliminates full intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions

between the subsidiary and the bank (profits or losses resulting from intra-group transactions that are recognized in assets, such as inventory and fixed assets, are eliminated in full).

3.3 CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include cash in hand, balances with banks and money at call and at short notice. These are subject to insignificant risk of changes in their fair value and are used by the Bank in the management of short term commitments.

Details of the Cash and Cash Equivalents are given in Note 4.1 to the Financial Statements.

3.4 FINANCIAL ASSETS AND FINANCIAL LIABILITIES

3.4.1 Initial Recognition

A. Date of Recognition All financial assets and liabilities are initially recognized on the trade date, i.e. the date on which the Bank becomes a party to the contractual provisions of the instrument. This includes ‘regular way trades’. Regular way trade means purchases or sales of financial assets that required delivery of assets within the time frame generally established by regulation or convention in the market place.

B. Recognition and Initial Measurement of Financial Instruments The classification of financial instruments at the initial recognition depends on their purpose and characteristics and the management’s intention in acquiring them. All financial instruments are measured initially at their fair value plus transaction costs that are directly attributable



to acquisition or issue of such financial instruments except in the case of such financial assets and liabilities at fair value through profit or loss, as per the Nepal Accounting Standard - NAS 39 (Financial Instruments: Recognition and Measurement). Transaction costs in relation to financial assets and financial liabilities at fair value through profit or loss are dealt with the Statement of Profit or Loss.

3.4.2 Classification and Subsequent Measurement of Financial Instruments Classification and Subsequent Measurement of Financial Assets At the inception, a financial asset is classified into one of the following:

a. Financial assets at fair value through profit or loss

b. Financial assets held for tradingc. Financial assets designated at fair

value through profit or lossd. Held to Maturity Financial Assetse. Loans and Receivablesf. Financial assets designated

at fair value through Other Comprehensive Income

The subsequent measurement of financial assets depends on their classification.

a. Financial Assets at Fair Value through Profit or LossA financial asset is classified as fair value through profit or loss if it is held for trading or is designated at fair value through profit or loss.

i. Financial Assets Held for Trading Financial assets are classified as held for trading if they are acquired principally for the purpose of selling or repurchasing in the near term or holds as a part of a portfolio that is managed together for short-term profit or position taking. This category also includes

derivative financial instruments entered into by Bank that are not designated as hedging instruments in hedge relationships as defined by Nepal Accounting Standards (NAS) 39 “Financial Instruments: Recognition and Measurement”.

Financial assets held for trading are recorded in the Statement of Financial Position at fair value. Changes in fair value are recognized in ‘Net trading income’. Dividend income is recorded in ‘Net trading income’ when the right to receive the payment has been established

Bank evaluates its held for trading asset portfolio, other than derivatives, to determine whether the intention to sell them in the near future is still appropriate. When Bank is unable to trade these financial assets due to inactive markets and management’s intention to sell them in the foreseeable future significantly changes, the Bank may elect to reclassify these financial assets. Financial assets held for trading include instruments such as government securities and equity instruments that have been acquired principally for the purpose of selling or repurchasing in the near term.

ii. Financial Assets Designated at Fair Value through Profit or LossBank designates financial assets at fair value through profit or loss in the following circumstances:

n Such designation eliminates or significantly reduces measurement or recognition inconsistency that would otherwise arise from measuring the assets.

n The assets are part of a group of Financial assets, financial

liabilities or both, which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

n The assets contain one or more embedded derivatives that significantly modify the cash flows that would otherwise have been required under the contract.

Financial assets designated at fair value through profit or loss are recorded in the Statement of Financial Position at fair value. Changes in fair value are recorded in ‘Net gain or loss on financial instruments designated at fair value through profit or losses’ in the Statement of Profit or Loss. Interest earned is accrued under ‘Interest income’, using the effective interest rate method, while dividend income is recorded under ‘Other operating income’ when the right to receive the payment has been established.

The Bank has not designated any financial assets upon initial recognition as designated at fair value through profit or loss.

b. Held to Maturity Financial Assets Held to Maturity Financial Assets are non-derivative financial assets with fixed or determinable payments and fixed maturities which the Bank has the intention and ability to hold to maturity. After the initial measurement, held to maturity financial investments are subsequently measured at amortized cost using the effective interest rate, less impairment. The amortization is included in ‘Interest income’ in the Statement of Profit or Loss. The losses arising from impairment of such investments are recognized in the Statement of Profit or Loss.



c. Loans and Receivables from Customers Loans and receivables include non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:

n Those that the Bank intends to sell immediately or in the near term and those that the Bank, upon initial recognition, designates as fair value through profit or loss.

n Those that the Bank, upon initial recognition, designated at fair value through other comprehensive income

n Those for which the Bank may not recover substantially all of its initial investment through contractual cash flows, other than because of credit deterioration.

After initial measurement, loans and receivables are subsequently measured at amortized cost using the effective interest rate, less allowance for impairment. The amortization is included in ‘Interest Income’ in the Statement of Profit or Loss. The losses arising from impairment are recognized in ‘Impairment charge / reversal for loans and other losses’ in the Statement of Profit or Loss.

However, the bank has opted to apply carve-out provided by the Institute of Chartered Accountants of Nepal and recognize interest income at the coupon rate and continually measured the carrying amount of loans and receivable at cost/fair value less repayment and allowance for impairment.

d. Financial Assets designated at fair value through Other Comprehensive Income Financial Assets designated at fair value through Other Comprehensive Income include equity and debt securities. Equity Investments classified here are those which are

neither classified as ‘Held for Trading’ nor ‘Designated at fair value through profit or loss’. Debt securities in this category are intended to be held for an indefinite period of time and may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial measurement, financial investments designated at fair value through other comprehensive income are subsequently measured at fair value. Unrealized gains and losses are recognized directly in equity through ‘Other comprehensive income / expense’ in the ‘Fair Value reserve’. When the investment is disposed of the cumulative gain or loss previously recognized in equity is recognized in the Statement of Profit or Loss under ‘Other operating income’. Interest earned whilst holding ‘ financial investments designated at fair value through other comprehensive income’ is reported as ‘Interest income’ using the effective interest rate. Dividend earned whilst holding ‘financial investments designated at fair value through other comprehensive income’ are recognized in the Statement of Profit or Loss as ‘other operating income’ when the right to receive the payment has been established. The losses arising from impairment of such investments are recognized in the Statement of Profit or Loss under ‘Impairment charge for loans and other losses’ and removed from the ‘fair value reserve’.

Financial assets designated at fair value through other comprehensive income that are monetary securities denominated in a foreign currency – translation differences related to changes in the amortized cost of the security are recognized in income statement and other changes in the carrying amount are recognized in other comprehensive income.

In the normal course of business, the fair value of a financial instrument on initial recognition is the transaction price (that is, the fair value of the consideration given or received). In certain circumstances, however, the fair value will be based on other observable current market transactions in the same instrument, without modification or repackaging, or on a valuation technique whose variables include only data from observable markets, such as interest rate yield, option volatilities and currency rates. When such evidence exists, the Bank recognizes a trading gain or loss on inception of the financial instrument, being the difference between the transaction price and fair value.

When unobservable market data have a significant impact on the valuation of financial instruments, the entire initial difference in fair value from the transaction price as indicated by the valuation model is not recognized immediately in the income statement. Instead, it is recognized over the life of the transaction on an appropriate basis, when the inputs become observable, the transaction matures or is closed out, or when the Bank enters into an offsetting transaction.

Classification and Subsequent Measurement of Financial Liabilities At the inception, Bank determines the classification of its financial liabilities. Accordingly financial liabilities are classified as:

a. Financial liabilities at fair value through profit or lossi. Financial liabilities held for

tradingii. Financial liabilities designated

at fair value through profit or loss

b. Financial liabilities at amortized cost



a. Financial Liabilities at Fair Value through Profit or LossFinancial Liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as fair value through profit or loss. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value and changes therein are recognized in profit or loss.

i. Financial Liabilities Held for Trading Financial liabilities are classified as held for trading if they are acquired principally for the purpose of selling or repurchasing in the near term or holds as a part of a portfolio that is managed together for short-term profit or position taking. This category includes derivative financial instrument entered into by Bank that are not designated as hedging instruments in hedge relationships as defined by Nepal Accounting Standard - NAS 39 (Financial Instruments: Recognition and Measurement).

ii. Financial Liabilities Designated at Fair Value through Profit or Loss Bank designates financial liabilities at fair value through profit or loss at following circumstances:

n Such designation eliminates or significantly reduces measurement or recognition inconsistency that would otherwise arise from measuring the liabilities.

n The liabilities are part of a group of Financial assets, financial liabilities or both, which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy

n The liability contains one or more embedded derivatives that significantly modify the cash flows that would otherwise have been required under the contract.

b. Financial Liabilities at Amortized Cost Financial instruments issued by Bank that are not classified as fair value through profit or loss are classified as financial liabilities at amortized cost, where the substance of the contractual arrangement results in Bank having an obligation either to deliver cash or another financial asset to another Bank, or to exchange financial assets or financial liabilities with another Bank under conditions that are potentially unfavorable to the Bank or settling the obligation by delivering variable number of Bank’s own equity instruments.

After initial recognition, such financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Within this category, deposits and debt instruments with fixed maturity period have been recognized at amortized cost using the method that very closely approximates effective interest rate method. The amortization is included in ‘Interest Expenses’ in the Statement of Profit or Loss. Gains and losses are recognized in the Statement of Profit or Loss when the liabilities are derecognized.

However, the bank has opted to apply carve-out provided by the Institute of Chartered Accountants of Nepal and recognise interest expense at the coupon rate and continually measured the carrying amount of loans and receivable at cost/fair value less repayment.

3.4.3 Reclassification of Financial Instruments

a. Reclassification of Financial Instruments ‘At fair value through profit or loss’, Bank does not reclassify derivative financial instruments out of the fair value through profit or loss category when it is held or issued.

Non-derivative financial instruments designated at fair value through profit or loss upon initial recognition is not reclassified subsequently out of fair value through profit or loss category.

Bank may, in rare circumstances reclassify financial instruments out of fair value through profit or loss category if such instruments are no longer held for the purpose of selling or repurchasing in the near term notwithstanding that such financial instruments may have been acquired principally for the purpose of selling or repurchasing in the near term. Financial assets classified as fair value through profit or loss at the initial recognition which would have also met the definition of ‘Loans and Receivables’ as at that date is reclassified out of the fair value through profit or loss category only if Bank has the intention and ability to hold such asset for the foreseeable future or until maturity.

The fair value of financial instruments at the date of reclassification is treated as the new cost or amortized cost of the financial instrument after reclassification. Any gain or loss already recognized in respect of the reclassified financial instrument until the date of reclassification is not reversed to the Statement of Profit or Loss.

If a financial asset is reclassified, and if Bank subsequently increases its



estimates of the future cash receipts as a result of increased recoverability of those cash receipts, the effect of that increase is recognized as an adjustment to the effective interest rate from the date of the change in estimate rather than an adjustment to the carrying amount of the asset at the date of change in estimate.

b. Reclassification of Financial Instruments designated at fair value through other comprehensive income Bank may reclassify financial assets out of financial assets designated at fair value through other comprehensive income category as a result of change in intention or ability or in rare circumstances that a reliable measure of fair value is no longer available.

A financial asset designated at fair value through other comprehensive income that would have met the definition of loans and receivables at the initial recognition may be reclassified out of financial assets designated at fair value through other comprehensive income to the loans and receivables category if Bank has the intention and ability to hold such asset for the foreseeable future or until maturity.

The fair value of financial instruments at the date of reclassification is treated as the new cost or amortized cost of the financial instrument after reclassification. Difference between the new amortized cost and the maturity value is amortized over the remaining life of the asset using the effective interest rate. Any gain or loss already recognized in Other Comprehensive Income in respect of the reclassified financial instrument is accounted as follows:

i. Financial assets with fixed maturity: Gain or loss recognized up to

the date of reclassification is amortized to profit or loss over the remaining life of the investment using the effective interest rate. If the financial asset is subsequently impaired, any previous gain or loss that has been recognized in other comprehensive income is reclassified from equity to profit or loss.

ii. Financial assets without fixed maturity:Gain or loss recognized up to the date of reclassification is recognized in profit or loss only when the financial asset is sold or otherwise disposed of. If the financial asset is subsequently impaired, any previous gain or loss that has been recognized in other comprehensive income is reclassified from equity to profit or loss.

If a financial asset is reclassified, and if Bank subsequently increases its estimates of future cash receipts as a result of increased recoverability of those cash receipts, the effect of that increase is recognized as an adjustment to the effective interest rate from the date of the change in estimate rather than an adjustment to the carrying amount of the asset at the date of change in estimate.

c. Reclassification of ‘Held to Maturity’ Financial Instruments As a result of a change in intention or ability, if it is no longer appropriate to classify an investment as held to maturity, Bank may reclassify such financial assets designated at fair value through other comprehensive income and re- measured at fair value. Any difference between the carrying value of the financial asset before reclassification and fair value is recognized in equity through other comprehensive income.

However, if Bank were to sell or reclassify more than an insignificant amount of held to maturity investments before maturity [other than in certain specific circumstances permitted in Nepal Accounting Standard - NAS 39(Financial Instruments: Recognition and Measurement)], the entire category would be tainted and would have to be reclassified as ‘Financial Instruments designated at fair value through other comprehensive income’. Furthermore, Bank would be prohibited from classifying any financial assets as ‘Held to Maturity’ during the following two years. These reclassifications are at the election of management and determined on an instrument by instrument basis.

3.4.4 De-recognition of Financial Assets and Liabilities

a. De-recognition of Financial Assets Bank derecognizes a financial asset (or where applicable a part of financial asset or part of a group of similar financial assets) when:

n The rights to receive cash flows from the asset have expired; or

n Bank has transferred its rights to receive cash flows from the asset or

n Bank has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement and either Bank has transferred substantially all the risks and rewards of the asset or it has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On de-recognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognized) and the sum of



the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

When Bank has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Bank’s continuing involvement in the asset. In that case, Bank also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that Bank has retained.

When Bank’s continuing involvement that takes the form of guaranteeing the transferred asset, the extent of the continuing involvement is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received by Bank that Bank could be required to repay.

When securities classified as financial instruments designated at fair value through other comprehensive income are sold, the accumulated fair value adjustments recognized in other comprehensive income are reclassified to income statement as gains and losses from investment securities.

b. De-recognition of Financial Liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an

exchange or modification is treated as de-recognition of the original liability and the recognition of a new liability.

The difference between the carrying value of the original financial liability and the consideration paid is recognized in profit or loss.

c. Repurchase and Reverse Repurchase Agreements Securities sold under agreement to repurchase at a specified future date are not de-recognized from the Statement of Financial Position as the Bank retains substantially all of the risks and rewards of ownership. The corresponding cash received is recognized in the Statement of Financial Position as a liability with a corresponding obligation to return it, including accrued interest under ‘Securities sold under repurchase agreements’, reflecting the transaction’s economic substance to the Bank. The difference between the sale and repurchase prices is treated as interest expense and is accrued over the life of the agreement using the effective interest rate. When the bank has the right to sell or re-pledge the securities, the Bank reclassifies those securities in its Statement of Financial Position as ‘Financial assets held for trading pledged as collateral or ‘Financial assets designated at fair value through other comprehensive income pledged as collateral, as appropriate.

Conversely, securities purchased under agreements to resell at future date are not recognized in the Statement of Financial Position. The consideration paid, including accrued interest, is recorded in the Statement of Financial Position, under “Reverse repurchase agreements’ reflecting the transaction’s economic substance to the Bank. The difference between the purchase and resale prices is recorded as ‘Interest income’ and is accrued

over the life of the agreement using the effective interest rate. If securities purchased under agreement to resell are subsequently sold to third parties, the obligation to return the securities is recorded as a short sale within ‘Financial liabilities held for trading’ and measured at fair value with any gains or losses included in ‘Net trading income’.

3.4.5 Fair Value Measurement ‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Bank has access at that date. The fair value of liability reflects its non-performance risk. When available, the Bank measures the fair value of an instrument using the quoted price in an active market for that instrument (Level 01valuation). A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis on an arm’s length basis.

If there is no quoted price in an active market, then the Bank uses valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Bank determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical



asset or liability (Level 01 valuation)nor based on a valuation technique that uses only data from observable markets (Level 02 valuation), then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognized in profit or loss on an appropriate basis over the life of the instrument but not later than when the valuation is wholly supported by observable market data or the transaction is closed out.

Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Bank entity and the counterparty where appropriate. Fair value estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties; to the extent that the Bank believes a third-party market participant would take them into account in pricing a transaction.

The fair value of a demand deposit is not less than the amount payable on demand, discounted from the first date on which the amount could be required to be paid.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest best use or by selling it to another market participant that would use the asset in its highest and best use.

The Bank recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

3.4.6 Impairment of Financial Assets Bank assesses at each reporting date, whether there is any objective evidence that a financial asset or group of financial assets not carried at fair value through profit or loss is impaired. A financial asset or group of financial assets is deemed to be impaired if and only if there is objective evidence of impairment as a result of one or more events, that have occurred after the initial recognition of the asset (an ‘incurred loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include: indications that the borrower or a group of borrowers is experiencing significant financial difficulty; the probability that they will enter bankruptcy or other financial reorganization; default or delinquency in interest or principal payments; and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

a. Impairment of Financial Assets carried at Amortized Cost For financial assets carried at amortized cost, such as amounts due from banks, held to maturity investments etc., Bank first assesses individually whether objective evidence of impairment exists for financial assets that are individually significant or collectively for financial assets that are not individually significant. In the event Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics such as collateral type, past due status and other relevant factors and collectively

assesses them for impairment. However, assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment.

If there is an objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the income statement. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

i. Individually Assessed Financial Assets The criteria used to determine whether there is objective evidence of impairment include and not limited to:

n Known Cash Flow difficulties experienced by the borrowers:

n Past due contractual payments of either principal or interest;

n Breach of loan covenants or conditions;

n The probability that the borrower will enter bankruptcy or other financial reorganization; and

n A significant downgrading in credit rating by an external credit rating agency.

If there is objective evidence that an impairment loss on financial assets measured at amortized cost has been incurred, the amount of the loss is measured by



discounting the expected future cash flows of a financial asset at its original effective interest rate and comparing the resultant present value with the financial asset’s current carrying amount. The impairment allowances on individually significant accounts are reviewed more regularly when circumstances require. This normally encompasses re-assessment of the enforceability of any collateral held and the timing and amount of actual and anticipated receipts. Individually assessed impairment allowances are only released when there is reasonable and objective evidence of reduction in the established loss estimate. Interest on impaired assets continues to be recognized through the unwinding of the discount.

Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Bank. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write off is later recovered, the recovery is credited to the impairment charges for loans and other losses.

When impairment losses are determined for those financial assets where objective evidence of impairment exists, the following common factors are considered:

n Bank’s aggregate exposure to the customer;

n The viability of the customer’s

business model and their capacity to trade successfully out of financial difficulties and generate sufficient cash flows to service debt obligations;

n The amount and timing of expected receipts and recoveries;

n The extent of other creditors ‘commitments ranking ahead of, or pari-pasu with the Bank and the likelihood of other creditors continuing to support the company;

n The realizable value of security and likelihood of successful repossession;

ii. Collectively Assessed Financial Assets Impairment is assessed on a collective basis in two circumstances:

n To cover losses which have been incurred but have not yet been identified on loans subject to individual assessment; and

n For homogeneous groups of loans those are not considered individually significant.

The bank has opted to apply carve-out on impairment of loans and receivables. Accordingly, individual and collective impairment loss amount calculated as per NFRS is compared with the impairment provision required under NRB directive no.2, higher of the amount derived from these measures is taken as impairment loss for loans and receivables.

Impairment losses under both options are presented hereunder;

Incurred but not yet identified impairment Individually assessed financial assets for which no evidence of loss has been specifically identified on an individual basis are grouped together according to their credit risk characteristics for the purpose of calculating an estimated collective loss. This reflects impairment losses that the bank has incurred as a result of events occurring before the reporting date, which the Bank is not able to identify on an individual loan basis and that can be reliably estimated.

These losses will only be individually identified in the future. As soon as information becomes available which identifies losses on individual financial assets within the group, those financial assets are removed from the group and assessed on an individual basis for impairment.

The collective impairment allowance is determined after taking into account:

n Historical Loss Experience in portfolios of similar credit risk; and

n Management’s experienced judgment as to whether current economic and credit conditions are such that the actual level of inherent losses at the reporting date is like to be greater or less than that suggested by historical experience.

Homogeneous groups of Financials Assets Statistical methods are used to determine impairment losses on a collective basis for homogenous

AS PER NFRS 2074/75

Individual 154,981,713

Collective 173,753,081

Total 328,734,794

Charge to P/L (157,584,702)

AS PER NRB 2074/75

Loan Loss Provision 1,112,849,682

Charged to P& L 393,293,979



groups of financial assets. Losses in these groups of financial assets are recorded on an individual basis when individual financial assets are written off, at which point they are removed from the group.

Bank uses the following method to calculate historical loss experience on collective basis:

After grouping of loans on the basis of homogeneous risks, the Bank uses net flow rate method. Under this methodology the movements in the outstanding balance of customers into default categories over the periods are used to estimate the amount of financial assets that will eventually be irrecoverable, as a result of the events occurring before the reporting date which the Bank is not able to identify on an individual loan basis.

Under this methodology, loans are grouped into ranges according to the number of days in arrears and statistical analysis is used to estimate the likelihood that loans in each range will progress through the various stages of delinquency and ultimately prove irrecoverable.

Current economic conditions and portfolio risk factors are also evaluated when calculating the appropriate level of allowance required covering inherent loss. These additional macro and portfolio risk factors may include:

n Recent loan portfolio growth and product mix

n Unemployment ratesn Gross Domestic Production

(GDP)Growthn Inflationn Interest ratesn Changes in government laws

and regulationsn Property pricesn Payment status

iii. Reversal of Impairment If the amount of an impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognized, the excess is written back by reducing the financial asset Impairment allowance account accordingly. The write-back is recognized in the Statement of Profit or Loss.

iv. Write-off of Financial Assets Carried At Amortized Cost Financial assets (and the related impairment allowance accounts) are normally written off either partially or in full, when there is no realistic prospect of recovery. Where there is no realistic prospect of recovery. Where financial assets are secured, this is generally after receipt of any proceeds from the realization of security.

v. Impairment of Rescheduled Loans and Advances Where possible, the Bank seeks to restructure loans rather than to take possession of collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, any impairment is measured using the original EIR as calculated before the modification of terms and the loan is no longer considered past due. Management continually reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be subject to a criteria are met and that future payments are likely to occur. The loans continue

to be subject to an individual or collective impairment assessment, calculated using the loan’s original effective interest rate (EIR).

vi. Collateral Valuation The Bank seeks to use collateral, where possible, to mitigate its risks on financial assets. The collateral comes in various forms such as cash, securities, letters of credit/guarantees, real estate, receivables, inventories, other non-financial assets and credit enhancements such as netting agreements. The fair value of collateral is generally assessed, at a minimum, at inception and based on the guidelines issued by the Nepal Rastra Bank. Non-financial collateral, such as real estate, is valued based on data provided by third parties such as independent valuator and audited financial statements.

vii. Collateral Legally Repossessed or Where Properties have Devolved to the Bank Legally Repossessed Collateral represents Non-Financial Assets acquired by the Bank in settlement of the overdue loans. The assets are initially recognized at fair value when acquired. The Bank’s policy is to determine whether a repossessed asset is best used for its internal operations or should be sold. The proceeds are used to reduce or repay the outstanding claim. The immovable property acquired by foreclosure of collateral from defaulting customers, or which has devolved on the Bank as part settlement of debt, has not been occupied for business use.

These assets are shown as Legally Repossessed Collateral under “Other Assets.”



b. Impairment of Financial Assets designated at fair value through other comprehensive income For financial investments designated at fair value through other comprehensive income, Bank assesses at each reporting date whether there is objective evidence that an investment is impaired.

In the case of debt instruments, Bank assesses individually whether there is objective evidence of impairment based on the same criteria as financial assets carried at amortized cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in the Income Statement. Future interest income is based on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to a credit event occurring after the impairment loss was recognized, the impairment loss is reversed through the Income Statement.

In the case of equity investments designated at fair value through other comprehensive income, objective evidence would also include a ‘significant’ or ‘prolonged’ decline in the fair value of the investment below its cost. Where there is evidence of impairment, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss is removed from equity and recognized in the Statement of profit or loss. However, any subsequent increase in the fair value of an impaired equity security designated at fair value

through other comprehensive income is recognized in other comprehensive income.

Bank writes-off certain financial investments designated at fair value through other comprehensive income when they are determined to be uncollectible.

3.4.7 Offsetting of Financial Instruments Financial assets and financial liabilities are offset and the net amount presented in the Statement of Financial Position when and only when Bank has a legal right to set off the recognized amounts and it intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under NFRSs or for gains and losses arising from a group of similar transaction such as in trading activity.

3.4.8 Amortized Cost Measurement The Amortized cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount recognized and the maturity amount, minus any reduction for impairment.

3.5 TRADING ASSETS One of the categories of financial assets at fair value through profit or loss is “held for trading” financial assets. All financial assets acquired or held for the purpose of selling in the short term or for which there is a recent pattern of short term profit taking are trading assets.

3.6 DERIVATIVES ASSETS AND DERIVATIVE LIABILITIES A derivative is a financial instrument whose value changes in response to the change in an underlying variable such as an interest rate, commodity or security price, or index; that requires no initial investment, or one that is smaller than would be required for a contract with similar response to changes in market factors; and that is settled at a future date.

Forward contracts are the contracts to purchase or sell a specific quantity of a financial instrument, a commodity, or a foreign currency at a specified price determined at the outset, with delivery or settlement at a specified future date. Settlement is at maturity by actual delivery of the item specified in the contract, or by a net cash settlement.

All freestanding contacts that are considered derivatives for accounting purposes are carried at fair value on the statement of financial position regardless of whether they are held for trading or non-trading purposes. Changes in fair value on derivatives held for trading are included in net gains/ (losses) from financial instruments in fair value through profit or loss on financial assets/ liabilities at fair value through profit or loss.

3.7 PROPERTY, PLANT AND EQUIPMENT

3.7.1 Recognition Property, plant and equipment are tangible items that are held for use in the production or supply of services, for rental to others or for administrative purposes and are expected to be used during more than one period. The Bank applies the requirements of the Nepal Accounting Standard - NAS 16 (Property, Plant and Equipment) in accounting for these assets. Property, plant and equipment



are recognized if it is probable that future economic benefits associated with the asset will flow to the entity and the cost of the asset can be measured reliably measured.

3.7.2 Measurement An item of property, plant and equipment that qualifies for recognition as an asset is initially measured at its cost. Cost includes expenditure that is directly attributable to the acquisition of the asset and cost incurred subsequently to add to, replace part of an item of property, plant& equipment. The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset to a working condition for its intended use and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalized as part of computer equipment. When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

3.7.3 Cost Model Property and equipment is stated at cost excluding the costs of day–to–day servicing, less accumulated depreciation and accumulated impairment in value. Such cost includes the cost of replacing part of the equipment when that cost is incurred, if the recognition criteria are met.

3.7.4 Revaluation Model The Bank has not applied the revaluation model to the any class of freehold land and buildings or other assets. Such properties are carried at a previously recognized GAAP Amount.

On revaluation of an asset, any

increase in the carrying amount is recognized in ‘Other comprehensive income’ and accumulated in equity, under capital reserve or used to reverse a previous revaluation decrease relating to the same asset, which was charged to the Statement of Profit or Loss. In this circumstance, the increase is recognized as income to the extent of previous write down. Any decrease in the carrying amount is recognized as an expense in the Statement of Profit or Loss or debited to the Other Comprehensive income to the extent of any credit balance existing in the capital reserve in respect of that asset.

The decrease recognized in other comprehensive income reduces the amount accumulated in equity under capital reserves. Any balance remaining in the revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.

3.7.5 Subsequent Cost The subsequent cost of replacing a component of an item of property, plant and equipment is recognized in the carrying amount of the item, if it is probable that the future economic benefits embodied within that part will flow to the Bank and it can be reliably measured. The cost of day to day servicing of property, plant and equipment are charged to the Statement of Profit or Loss as incurred.

3.7.6 Depreciation Depreciation is calculated by using the written down value method on cost or valuation of the Property & Equipment other than freehold land and leasehold properties. Depreciation on leasehold properties is calculated by using the straight line method on cost or valuation of the property. The rates of depreciations are given below:

Rate of Depreciation per annum (%)

3.7.7 Changes in Estimates The asset’s methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end.

3.7.8 Capital Work in Progress These are expenses of capital nature directly incurred in the construction of buildings, major plant and machinery and system development, awaiting capitalization. Capital work-in-progress would be transferred to the relevant asset when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Capital work-in-progress is stated at cost less any accumulated impairment losses.

PARTICULARS FOR THE FY ENDED ON REMARKS MID JULY 2017 & 2018

Building 5

OfficeEquipments/Furniture 15

Vehicle 15

Computer Hardware 20

Computer Software 20 Depreciated in 5 years

using Straight Line Method

Leasehold - Lease period

Deferred Furnishing 33.33 Depreciated in 3 years

using Straight Line Method



ASSET CATEGORY FOR THE YEAR ENDED FOR THE YEAR ENDED 16 JULY 2018 15 JULY 2017

Computer Software 5 years 5 years

Licenses 5 years or the period of license, 5 years or the period of license,

whichever is less whichever is less

3.7.9 Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of an asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that the Bank incurs in connection with the borrowing of funds.

3.7.10 De-recognition The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use. The gain or loss arising from de-recognition of an item of property, plant and equipment is included in the Statement of Profit or Loss when the item is derecognized. When replacement costs are recognized in the carrying amount of an item of property, plant and equipment, the remaining carrying amount of the replaced part is derecognized. Major inspection costs are capitalized. At each such capitalization, the remaining carrying amount of the previous cost of inspections is derecognized.

3.8 GOODWILL AND INTANGIBLE ASSETS

3.8.1 Recognition An intangible asset is an identifiable non-monetary asset without physical substance, held for use in the production or supply of goods or services, or for administrative purposes. An intangible asset is recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. An intangible asset is initially measured at cost. Expenditure incurred on an intangible

item that was initially recognized as an expense by the Bank in previous annual Financial Statements or interim Financial Statements are not recognized as part of the cost of an intangible asset at a later date.

3.8.2 Computer Software & Licenses Cost of purchased licenses and all computer software costs incurred, licensed for use by the Bank, which are not integrally related to associated hardware, which can be clearly identified, reliably measured, and it’s probable that they will lead to future economic benefits, are included in the Statement of Financial Position under the category ‘Intangible assets’ and carried at cost less accumulated amortization and any accumulated impairment losses.

3.8.3 Subsequent Expenditure Expenditure incurred on software is capitalized only when it is probable that this expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standard of performance and this expenditure can be measured and attributed to the asset reliably. All other expenditure is expensed as incurred.

Goodwill is measured at cost less accumulated impairment losses. Bank doesn’t have any goodwill in its books of accounts.

3.8.4 Amortization of Intangible Assets Intangible Assets, except for goodwill, are amortized on a straight–line basis in the Statement of Profit or Loss from the date when the asset is available for use, over the best of its useful economic life based on a pattern in which the asset’s economic benefits are consumed by the bank. Amortization methods, useful lives, residual values are reviewed at each financial year end and adjusted if appropriate. The Bank assumes that there is no residual value for its intangible assets.

3.8.5 De-recognition of Intangible Assets The carrying amount of an item of intangible asset is derecognized on disposal or when no future economic benefits are expected from its use. The gain or loss arising on de recognition of an item of intangible assets is included in the Statement of Profit or Loss when the item is derecognized.

3.9 INVESTMENT PROPERTY Investment property is property (land or a building or part of a building or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both but not for sale in the ordinary course of business.



3.10 INCOME TAX As per Nepal Accounting Standard- NAS 12 (Income Taxes) tax expense is the aggregate amount included in determination of profit or loss for the period in respect of current and deferred taxation. Income Tax expense is recognized in the statement of Profit or Loss, except to the extent it relates to items recognized directly in equity or other comprehensive income in which case it is recognized in equity or in other comprehensive income. The Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to tax authorities.

3.10.1 Current Tax Current tax assets and liabilities consist of amounts expected to be recovered from or paid to Inland Revenue Department in respect of the current year, using the tax rates and tax laws enacted or substantively enacted on the reporting date and any adjustment to tax payable in respect of prior years.

3.10.2 Deferred Tax Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences except:

n Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination, and at the time of transaction, affects neither the accounting profit nor taxable profit or loss.

n In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carried forward unused tax credits and unused tax losses (if any), to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences, carried forward unused tax credits and unused tax losses can be utilized except:

n Where the deferred tax asset relating to the deductible temporary differences arising from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of transaction, affects neither the accounting profit nor taxable profit or loss.

n In respect of deductible temporary differences associated with investments in Subsidiaries, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary difference will be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is probable that sufficient profit will be available to allow the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Current and deferred tax assets and liabilities are offset only to the extent that they relate to income taxes imposed by the same taxation authority.

3.11 DEPOSITS, DEBT SECURITIES ISSUED AND SUBORDINATED LIABILITIES Deposits, debt securities issued and subordinated liabilities are the Bank’s sources of funding. Deposits include non-interest bearing deposits, saving deposits, term deposits, call deposits and margin deposits. The estimated fair value of deposits with no stated maturity period is the amount repayable on demand. The fair value of fixed interest bearing deposits is considered as the interest receivable on these deposits plus carrying amount of these deposits. The fair value of debt securities issued is also considered as the carrying amount of these debt securities issued. Subordinated liabilities are liabilities subordinated, at the event of winding up, to the claims of depositors, debt securities issued and other creditors.

3.12 PROVISIONS A provision is recognized if, as a result of a past event, the Bank has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The amount recognized is the best estimate of the consideration required to settle the present obligation at the reporting date, taking in to account the risks and uncertainties surrounding



the obligation at that date. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is determined based on the present value of those cash flows.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Bank from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured as the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Provision are not recognized for future operating losses.

Before a provision is established, the Bank recognizes any impairment loss on the assets associated with that contract. The expense relating to any provision is presented in the Statement of Profit or Loss net of any reimbursement.

3.13 REVENUE RECOGNITION Revenue is recognized to the extent that it is probable that the economic benefits will flow to Bank and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized.

3.13.1 Interest Income For all financial assets measured at amortized cost, interest bearing financial assets designated at fair value through other comprehensive income and financial assets designated at fair value through profit or loss, EIR is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability.

The bank has opted to apply carve-out and recognize interest income on accrual basis applying the coupon rate, which is variable rate of interest.

3.13.2 Fee and Commission Income Fees earned for the provision of services over a period of time are accrued over that period. These fees include Service fees, commission income. Loan syndication fees are recognized as revenue when the syndication has been completed and the Bank retained no part of the loan package for itself, or retained a part at the same effective interest rate as for the other participants. Portfolio and other management advisory fees and service distribution fees are recognized based on the applicable contracts, usually on a time apportionment basis.

3.13.3 Dividend Income Dividend income is on equity instruments are recognized in the statement of profit and loss within other income when the Bank’s right to receive payment is established.

3.13.4 Net Trading Income Net trading income comprises gains less losses relating to trading assets and liabilities, and includes all realized interest, dividend and foreign exchange differences as wells as unrealized changes in fair value of trading assets and liabilities.

3.13.5 Net Income from other financial instrument at fair value through Profit or LossTrading assets such as equity shares and mutual fund are recognized at fair value through profit or loss. No other financial instruments are designated at fair value through profit or loss.

The bank has no income under the heading net income from other financial instrument at fair value through profit or loss.

3.14 INTEREST EXPENSE For financial liabilities measured at amortized cost using the rate that closely approximates effective interest rate, interest expense is recorded using such rate. EIR is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability.

3.15 EMPLOYEE BENEFITS Employee benefits include:

a. Short-term employee benefits such as the following, if expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services:

i. Wages, salaries and social security contributions;ii. Paid annual leave and paid sick leave;iii. Profit sharing and bonuses, and iv. Non-monetary benefits (such as medical care) for current employees;

Short term employee benefits are measured on an undiscounted basis and are expenses as the related service is provided. A liability is recognized for the amount expected to be paid under short term cash bonus or profit sharing plans if the Bank has present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

b. Post-employment benefits, such as the following:

i. Retirement benefits (eg: gratuity, lump sum payments on retirement); and



ii. Other post-employment benefits such as post-employment life insurance

c. Other long term employee benefits and

d. Termination benefits

Post employments benefits are as follows:

3.15.1 Defined Contribution PlansA defined contribution plan is a post-employment benefit plan under which an Bank pays fixed contribution into a separate Bank Account (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee services in the current and prior periods, as defined in Nepal Accounting Standards – NAS 19 (Employee Benefits).

The contribution payable by the employer to a defined contribution plan in proportion to the services rendered to Bank by the employees and is recorded as an expense under ‘Personnel expense’ as and when they become due. Unpaid contributions are recorded as a liability under ‘Other Liabilities’.

Bank contributed 10% on the salary of each employee to the Employees’ Provident Fund. The above expenses are identified as contributions to ‘Defined Contribution Plans’ as defined in Nepal Accounting Standards – NAS 19 (Employee Benefits).

3.15.2 Defined Benefit Plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Accordingly, staff gratuity has been considered as defined benefit plans as per Nepal Accounting Standards – NAS 19 (Employee Benefits).

a. Gratuity In compliance with Labor Act, 2017, provision is made in the account year of service, for gratuity payable to employees who joined bank on a permanent basis. An actuarial valuation is carried out every year to ascertain the full liability under gratuity.

Bank’s obligation in respect of defined benefit obligation is calculated by estimating the amount of future benefit that employees have earned for their service in the current and prior periods and discounting that benefit to determine its present value, then deducting the fair value of any plan assets to determine the net amount to be shown in the Statement of Financial Position. The value of a defined benefit asset is restricted to the present value of any economic benefits available in the form of refunds from the plan or reduction on the future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirement that apply to any plan in Bank. An economic benefit is available to Bank if it is realizable during the life of the plan, or on settlement of the plan liabilities.

Bank determines the interest expense on the defined benefit liability by applying the discount rate used to measure the defined benefit liability at the beginning of the annual period to the defined benefit liability at the beginning of the annual period. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating to the terms of Bank’s obligations.

The increase in gratuity liabilities attributable to the services provided by employees during the year ended 16th July, 2018 (current service cost) has been recognized in the Statement

of Profit or Loss under ‘Personnel Expenses’ together with the net interest expense. Bank recognizes the total actuarial gain and loss that arises in calculating Bank’s obligation in respect of gratuity in other comprehensive income during the period in which it occurs.

The demographic assumptions underlying the valuation are retirement age (58 years), early withdrawal from service and retirement on medical grounds.

b. Unutilized Accumulated Leave Bank’s liability towards the accumulated leave which is expected to be utilized beyond one year from the end of the reporting period is treated as other long term employee benefits. Bank’s net obligation towards unutilized accumulated leave is calculated by discounting the amount of future benefit that employees have earned in return for their service in the current and prior periods to determine the present value of such benefits. The discount rate is the yield at the reporting date on government binds that have maturity dates approximating to the terms of Bank’s obligation. The calculation is performed using the Projected Unit Credit method. Net change in liability for unutilized accumulated leave including any actuarial gain and loss are recognized in the Statement of Profit or Loss under ‘Personnel Expenses’ in the period in which they arise.

3.16 LEASES The determination of whether an arrangement is a lease, or it contains a lease, is based on the substance of the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.



3.16.1 Finance Lease Agreements which transfer to counterparties substantially all the risks and rewards incidental to the ownership of assets, but not necessarily legal title, are classified as finance lease. When Bank is the lessor under finance lease, the amounts due under the leases, after deduction of unearned interest income, are included in ‘Loans to & receivables from other customers’, as appropriate. Interest income receivable is recognized in ‘Net interest income’ over the periods of the leases so as to give a constant rate of return on the net investment in the leases.

When Bank is a lessee under finance leases, the leased assets are capitalized and included in ‘Property, plant and equipment’ and the corresponding liability to the lessor is included in ‘Other liabilities’. A finance lease and its corresponding liability are recognized initially at the fair value of the asset or if lower, the present value of the minimum lease payments. Finance charges payable are recognized in ‘Interest expenses’ over the period of the lease based on the interest rate implicit in the lease so as to give a constant rate of interest on the remaining balance of the liability.

The bank does not have finance lease transactions at the reporting dates.

3.16.2 Operating Lease All other leases are classified as operating leases. When acting as lessor, Bank includes the assets subject to operating leases in ‘Property, plant and equipment’ and accounts for them accordingly. Impairment losses are recognized to the extent that residual values are not fully recoverable and the carrying value of the assets is thereby impaired.

When Bank is the lessee, leased assets are not recognized on the Statement of Financial Position.

The bank has opted to apply carve out and recognise rentals payable and receivable under operating leases are accounted for on accrual basis based on agreement and are included in ‘Other operating expenses’ and ‘Other operating income’, respectively.

In case of straight line basis of accounting additional NPR 10,323,943 had to be charged in FY 2074/75.

3.17 FOREIGN CURRENCY TRANSLATION, TRANSACTIONS AND BALANCES All foreign currency transactions are translated into the functional currency, which is Nepalese Rupees, using the exchange rates prevailing at the dates when the transactions were affected.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Nepalese Rupees using the spot foreign exchange rate ruling at that date and all differences arising on non-trading activities are taken to ‘Other Operating Income’ in the Statement of Profit or Loss. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the rates of exchange prevailing at the end of the reporting period.

Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items in foreign currency measured at fair value are translated using the

exchange rates at the date when the fair value was determined.

Foreign exchange differences arising on the settlement or reporting of monetary items at rates different from those which were initially recorded are dealt with in the Statement of Profit or Loss.

Forward exchange contracts are valued at the forward market rates ruling on the reporting date. Both unrealized losses and gains are reflected in the Statement of Profit or Loss.

3.18 FINANCIAL GUARANTEE AND LOAN COMMITMENT A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due. Financial guarantee contracts may have various legal forms, such as a guarantee, some types of letter of credit, etc. Where the bank has confirmed its intention to provide funds to a customer or on behalf of a customer in the form of loans, overdrafts, etc. whether cancellable or not and the bank had not made payments at the reporting date, those instruments are included in these financial statements as commitments.

3.19 SHARE CAPITAL AND RESERVES Share capital and reserves are different classes of equity claims. Equity claims are claims on the residual interest in the assets of the entity after deducting all its liabilities. Changes in equity during the reporting period comprise income and expenses recognized in the statement of financial performance; plus contributions from holders of equity claims, minus distributions to holders of equity claims.



3.20 EARNINGS PER SHARE Bank presents basic and diluted Earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit and loss attributable to ordinary equity holders of Bank by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS is determined by adjusting both the profit and loss attributable to the ordinary equity holders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares, if any.

Earnings per share is calculated and presented in consolidated statement of profit or loss.

3.21 SEGMENT REPORTING An operating segment is a component of an entity:

n that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity),

n whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and

n for which discrete financial information is available.

Not every part of an entity is necessarily an operating segment or part of an operating segment. For example, a corporate headquarters or some functional departments may not earn revenues or may earn revenues that are only incidental to the activities of the entity and would not be operating segments. For the purposes of this NFRS, an entity’s post-employment benefit plans are not

operating segments.

The bank has identified the key segments of business on the basis of nature of operations that assists the Executive Committee of the bank in decision making process and to allocate the resources. It will help the management to assess the performance of the business segments. All operations between the segments are conducted on pre-determined transfer price. Treasury department acts as the fund manager of the Bank.

3.22 IMPAIRMENT OF NON-FINANCIAL ASSETS The Bank assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Bank estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or the fair value of the Cash Generating Units (CGU) fair value less costs to sell and its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre–tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, appropriate valuation model is used.

3.23 DIVIDEND ON ORDINARY SHARES Dividend on ordinary shares are recognized as a liability and deducted from equity when they are approved by the Bank’s shareholders. Dividend for the year that is approved after

the reporting date is disclosed as an event after the reporting date. Interim Dividend is deducted from equity when they are declared and is no longer at the discretion of the Bank.

3.24 CASH FLOW STATEMENT The cash flow statement has been prepared using ‘The Direct Method’, whereby gross cash receipts and gross cash payments of operating activities, finance activities and investing activities have been recognized.

3.25 COMPARATIVE FIGURES The comparative figures and phrases have been rearranged wherever necessary to conform to the current year’s presentation.

3.26 FIRST TIME ADOPTION OF NFRS As stated in Note 2.1, these are the Bank’s first financial statements prepared in accordance with NFRS.

The accounting policies set out in Note 3 have been applied in preparing the Financial Statements for the year ended 15th July 2018, the comparative information presented for the year ended 16th July 2017and in the preparation of an opening NFRS based Statement of Financial Position at 16th July 2016 (the date of transition).

Exemptions NFRS 1 First- time adoption of Nepal Accounting Standards allows first time adopters certain exemptions from the retrospective application of certain NFRS.

The Bank and has taken the following exemptions.

i. Business Combinations Business combinations are not applied for subsidiaries, which are considered business for NFRS, or in interest in associates and joint



ventures that occurred before 17th July 2016.

Use of this exemption means that the NAS carrying amounts of assets and liabilities, which are required to be recognized under NFRS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with NFRS. Assets and liabilities that do not qualify for recognition under NFRS are excluded from the opening NFRS statement of financial position.

The Bank did not recognize or exclude any previously recognized amounts as a result of NFRS recognition requirements. NFRS 1 also requires that the local NAS carrying amount of goodwill must be used in the opening NFRS statement of financial position (apart from adjustments for goodwill impairment and recognition or de-recognition of intangible assets).

ii. The Bank has elected to disclose the following amounts prospectively from the date of transition (i) the present value of the defined benefit obligation, the fair value of the plan assets and the surplus or deficit in the plan; and (ii) the experience adjustments arising on the plan liabilities and the plan assets.

iii. The Bank has designated quoted and unquoted equity Instruments held as at 15th July 2018 and 16th July 2017 as financial instruments designated at fair value through other comprehensive income.

3.27 OTHER DISCLOSURES

a. Staff Loans measured at fair value Under previous NAS, staff loans were recorded at cost less repayments net of loan loss provision, if any. Under NFRS, the Bank has to measure the staff loans granted below the market interest rate at their fair value, calculate based on the market interest rate of similar products.

The fair value of such loans as at Ashad 31 2075 the fair value of staff loan was Rs. 315.49 million and their previous NAS carrying amount was Rs. 437.22 million. The difference between the fair value and NAS carrying amount was Rs. 121.73 million has been netted off against staff loans & recognized as pre-paid staff cost in other assets.

On transition date Shrawan 1, 2073 was Rs 158.09 million and their previous NAS carrying amount was Rs 205.59 million. The difference between the fair value and NAS carrying amount has been netted off from staff loans & recognized as pre-paid staff cost in other assets.

b. Adjustment on loan impairment In compliance with the NRB Directives and subsequent amendment there to, specific loan loss provision were made based on the arrears time period and General provision were made at a specified rate given by NRB time to time.

Loan loss provision amounting to Rs. 880.42 million was recognized as per NAS 39 impairment provision comes to Rs. 266.46 million as at Shrawan 1, 2073,.

As at Ashad 31 2075 the impairment provision of Rs. 1,121.68 million was recognized against sum total of Rs. 525.1 million loan loss provision

previously recognized in NAS based accounts. The movement between the impairment balances of two years was recognized in the Income Statement as an impairment charge.

c. Financial Investments designated at fair value through other comprehensive income Under previous NAS, the Bank recognized its investment portfolios which are not held for trading activities at their cost. Under NFRS, the Bank has designated such investments as financial instruments designated at fair value through other comprehensive income and measured at fair value. Such investment includes equity investments, Mutual Funds.

At the date of transition to NFRS, there were no investments in the quoted securities for which fair value were to be recognized.

As at Ashad 31, 2074 the fair value of the investment was Rs. 427.25 million and NAS carrying amount was Rs. 393.77 million. The difference between the instruments fair value and NAS carrying amount was Rs. 34.47 million has been recognized in the fair value reserve and movement was charged to Other Comprehensive Income.

As at Ashad 31 2075 the fair value of the investment was Rs. 737.91Mn and NAS carrying amount was Rs. 519.80 million The difference between the instruments fair value and NAS carrying amount was Rs. 218.12 million has been recognized in the fair value reserve and movement was charged to Other Comprehensive Income.

The deferred tax liability has been created @30% on such income and routed through statement of profit or loss account to retained earning consequently decreasing the fair value reserve by such amount.



d. Interest Income Income amounting to Rs 5,427.83 million was recognized for financial year 2016/17 for accrual of interest on loans, Interest benefit for staff loans as an impact of interest unwinding.

Income amounting to Rs. 7,647.36 million was recognized for financial year 2017/18 for accrual of interest on loans, Interest benefit for staff loans as an impact of interest unwinding.

e. Personnel Cost An additional expense of Rs. 48.40 million was recognized as Personnel expenses as result of actuarial valuation and, amortization of prepaid staff loan for Financial Year 2016/17.

An expense of Rs. 28.34 million was reversed as Personnel expenses as result of actuarial valuation and, amortization of prepaid staff loan for Financial Year 2017/18.

i. Bonus to staffs –10% bonus has been calculated on Profit before tax (after including such Bonus).

ii. Tax – tax has been computed on the basis of profit computed from NFRS. The difference due to previous year has been booked in deferred tax.

Cash and cash equivalents include cash at vault and agency Bank account balances, which are subject to an insignificant risk of changes in value. The fair value of cash is the carrying amount.

Cash at vault is adequately insured for physical and financial risks. The amount of cash at vault is maintained on the basis fo the regulatory, liquidity and business requirements. To that extent there are regulatory and liquidity restrictions placed on the cash at vault. Cash held in FCY is subject to risk of changes in the foreign exchange rates. These are closely monitored, and risks, are promptly managed.

Balance with BFIs, and money at call and short notice have been classified as loans and receivablesand are subsequently measured at amortized costs. Risks associated with these assets are regularly assessed.

Statutory balances with NRB includes the CRR balance maintained with NRB.

The fair value of balance with the Nepal Rastra Bank is the carrying amount. Balance with central bank is categorized as loans and receivables to be subsequently measured at amortised cost.

4. NOTES TO SOFP AND SOPL

CASH AND CASH EQUIVALENT 4.1

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Cash in Hand 1,535,255,221 1,473,431,130 1,535,255,221 1,473,431,130 1,167,577,937

Balances with BFIs 1,051,276,974 804,794,160 906,752,394 587,528,410 1,604,813,241

Money at Call and Short Notice - - - - -

Other - - - - -

Total 2,586,532,195 2,278,225,290 2,442,007,615 2,060,959,540 2,772,391,178

DUE FROM NEPAL RASTRA BANK 4.2

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Statutory Balances with NRB 5,032,987,845 7,496,218,748 5,032,987,845 7,496,218,748 3,809,454,948

Securities purchased under Resale Agreement - - - - -

Other Deposit and Receivable from NRB 67,699 - 67,699 - 415,350

Total 5,033,055,545 7,496,218,748 5,033,055,545 7,496,218,748 3,809,870,298



Derivatives Financial Instruments is the net of forward debit and forward credit transacted for the purpose of risk management. It is revalued everyday on the basis of average forex rate.

PLACEMENT WITH BANKS AND FINANCIAL INSTUTIONS 4.3

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Placement with Domestic BFIs 70,000,000 60,000,000 - - -

Placement with Foreign BFIs 3,869,629,863 3,239,928,896 3,869,629,863 3,358,047,347 2,618,168,668

Less: Allowances for Impairment - - - - -

Total 3,939,629,863 3,299,928,896 3,869,629,863 3,358,047,347 2,618,168,668

DERIVATIVE FINANCIAL INSTRUMENTS 4.4

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Held for Trading - -

Interest Rate Swap - - - - -

Currency Swap - - - - -

Forward Exchange Contracts - - - - -

Others - - - - -

Held for Risk Management - -

Interest Rate Swap - - - - -

Currency Swap - - - - -

Forward Exchange Contracts - 804,900 - 804,900 24,625,457

Others - - - - -

Total - 804,900 - 804,900 24,625,457

OTHER TRADING ASSETS 4.5

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Treasury Bills - - - - -

Government Bonds - - - - -

NRB Bonds - - - - -

Domestic Corporate Bonds - - - - -

Equities 24,959,135 19,805,977 - - -

Other - - - -

Total 24,959,135 19,805,977 - - -

Balance with the central bank is principally maintained as a part of the regulatory cash reserve ratio required by the central bank. There are regulatory and liquidity restrictions placed on the level of balance with central bank.



Following process has been adopted by the Bank to calculate loss as per incurred loss model. The Bank has categorized total loan into 5 products namely Term Loan, Personal Loan, Home Loan, Hire Purchase, Short Term Loan. The loan has been classifed into various period on the basis of due days as follows:

AGEING

CURRENT

01-30 DAYS

31-60 DAYS

61-90 DAYS

91-120 DAYS

121-150 DAYS

151-180 DAYS

180 DAYS AND ABOVE

The Loss rate on each period has been calculated by multiplying Probability of Default (PD) with Loss Given Default (LGD). Probability of Default has been calculated on the basis of probability matrix by taking 48 months loan data as the basis. For the purpose of calcualtion of Loss Given Default (LGD), the loan which has been categorized as loss as per NRB directive has been taken and the recovery history of the same has been analyzed upon to reach the LGD.

LOANS AND ADVANCES TO BFIS 4.6

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Loans to Micro-Finance Institutions 995,121,876 1,112,942,459 995,121,876 1,112,942,459 955,332,206

Other 4,465,704 415,037 4,465,704 415,037 214,167

Less: Allowances for Impairment - - - - -

Total 999,587,580 1,113,357,496 999,587,580 1,113,357,496 955,546,373

ALLOWANCES FOR IMPAIRMENT 4.6.1

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Balance at Shrawan 01 - - - - -

Impairment Losss for the year: - - - - -

Charge for the year - - - - -

Recoveries/Reversal - - - - -

AmountWrittenOff - - - --

Balance at Asar End - - -

LOANS AND ADVANCES TO CUSTOMERS 4.7

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Loans and Advances

measured at Amortized Cost 60,326,401,072 51,220,201,623 60,326,401,072 51,220,201,623 43,241,059,664

Less: Impairment Allowances -

Collective Impairment (616,144,874) (563,840,428) (616,144,874) (563,840,428) (460,877,710)

Individual Impairment (496,704,808) (498,301,291) (496,704,808) (498,301,291) (419,541,294)

Net Amount 59,213,551,390 50,158,059,904 59,213,551,390 50,158,059,904 42,360,640,660

Loans and Advances measured at FVTPL - -

Total 59,213,551,390 50,158,059,904 59,213,551,390 50,158,059,904 42,360,640,660



The individually impaired loan has been substracted from the total loan and the same has been multiplied by loss rate to calculate collective impairment. Total impairment is the sum of the collective and individual impairment. Loans and advances above 40 million are considered for incurred loss model impairment which approximately come at 35% of total portfolio. Accrued Interest Receivable on loans have been considered under Loans and Advances measured at Amortized Cost.

ANALYSIS OF LOANS AND ADVANCES - BY PRODUCT 4.7.1

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Product

Term Loans 8,511,179,712 6,002,251,943 8,511,179,712 6,002,251,943 4,193,427,504

Overdraft 12,680,678,356 11,650,209,057 12,680,678,356 11,650,209,057 11,127,779,336

Trust Receipt/Import Loans 1,340,111,534 850,832,584 1,340,111,534 850,832,584 1,421,982,853

Demand and other

Working Capital Loans 7,691,405,393 5,580,866,374 7,691,405,393 5,580,866,374 9,078,464,259

Personal Residential Loans 8,126,224,951 6,703,095,699 8,126,224,951 6,703,095,699 4,297,442,503

Real Estate Loans 3,564,842,036 3,703,270,987 3,564,842,036 3,703,270,987 2,339,989,172

Margin Lending Loans 1,916,942,664 2,469,806,993 1,916,942,664 2,469,806,993 1,839,992,494

Hire Purchase Loans 5,158,223,654 5,067,377,757 5,158,223,654 5,067,377,757 3,865,502,113

Deprived Sector Loans 3,233,706,408 2,812,900,444 3,233,706,408 2,812,900,444 1,939,100,452

Bills Purchased 10,985 74,435,059 10,985 74,435,059 78,033,811

StaffsLoans 365,533,346 240,729,169 365,533,346 240,729,169 283,094,545

Other 7,327,391,819 5,711,396,448 7,327,391,819 5,711,396,448 2,612,081,594

Sub-Total 59,916,250,858 50,867,172,513 59,916,250,858 50,867,172,513 43,076,890,637

Interest Receivable 410,150,215 353,029,110 410,150,215 353,029,110 164,169,026

Grand Total 60,326,401,072 51,220,201,623 60,326,401,072 51,220,201,623 43,241,059,664

ANALYSIS OF LOANS AND ADVANCES - BY CURRENCY 4.7.2

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Nepalese Rupee 59,654,004,798 51,211,285,323 59,654,004,798 51,211,285,323 43,228,619,764

Indian Rupee - - - - -

United States Dollar 645,910,265 8,916,300 645,910,265 8,916,300 12,439,900.00

Great Britain Pound - - - - -

Euro 26,486,010 - 26,486,010 - -

Japanese Yen - - - - -

Chinese Yuan - - - - -

Other - - - - -

Grand Total 60,326,401,072 51,220,201,623 60,326,401,072 51,220,201,623 43,241,059,664

Gross Loans and Advances excluding Impairment has been considered above for analysis.



ALLOWANCE FOR IMPAIRMENT 4.7.4

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Specific Allowance for Impairment

Balance at Shrawan 01 498,301,291 419,541,295 498,301,291 419,541,295 717,725,619

Impairment Loss for the year (1,596,481) 78,759,996 (1,596,481) 78,759,996 (298,184,324)

Charge for the year 340,989,535 275,418,953 340,989,535 275,418,953 69,703,037

Recoveries/Reversals during the year (342,586,016) (196,658,957) (342,586,016) (196,658,957) (367,887,361)

Write-Offs - - - - -

Exchange Rate Variance on

Foreign Currency - - - - -

Other Movement - - - - -

Balance at Asar End 496,704,810 498,301,291 496,704,810 498,301,291 419,541,295

Collective Allowances for Impairment -

Balance at Sharawan 01 563,840,428 460,877,710 563,840,428 460,877,710 294,243,967

Impairment Loss for the year 52,304,444 102,962,718 52,304,444 102,962,718 166,633,743

Charge/(Reversal) for the year - - -

Exchange Rate Variance on

Foreign Currency - - -

Other Movement - - -

Balance at Asar End 616,144,872 563,840,428 616,144,872 563,840,428 460,877,710

Total Allowances for Impairment 1,112,849,682 1,062,141,719 1,112,849,682 1,062,141,719 880,419,005

ANALYSIS OF LOANS AND ADVANCES - BY COLLATERAL 4.7.3

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Secured

Moveable/Immoveable Assets 57,361,822,766 47,161,448,744 57,361,822,766 47,161,448,744 39,694,068,614

Gold and Silver 14,941,371 338,595,368 14,941,371 338,595,368 394,973,926

Guarantee of Domestic BFIs - - - - -

Government Guarantee - - - - -

Guarantee of International Rated Bank - - - - -

Collateral of Export Document - - - - -

Collateral of Fixed Deposit Receipt 497,790,629 523,967,480 497,790,629 523,967,480 211,272,471

Collatereal of Government Securities - - - - 55,395,911

Counter Guarantee - - - - -

Personal Guarantee 41,479,129 38,447,225 41,479,129 38,447,225 38,675,797

Other Collateral 2,388,402,268 3,149,276,195 2,388,402,268 3,149,276,195 2,846,672,945

Subtotal 60,304,436,163 51,211,735,011 60,304,436,163 51,211,735,011 43,241,059,664

Unsecured 21,964,909 8,466,612 21,964,909 8,466,612

Grand Total 60,326,401,072 51,220,201,623 60,326,401,072 51,220,201,623 43,241,059,664

Loans and advances to customers are backed by collateral securities to mitigate default risk. The type of the collaterals corresponding to the loans and advances to customers are given in the table below:



INVESTMENT SECURITIES 4.8

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Investment Securities measured

at Amortized Cost 9,139,682,907 5,823,145,191 9,139,682,907 5,823,145,191 5,455,125,337

Investment in Equity measured

at FVTOCI 580,775,479 345,505,514 580,775,479 345,505,514 390,039,864

Total 9,720,458,385 6,168,650,705 9,720,458,385 6,168,650,705 5,845,165,201

INVESTMENT SECURITIES MEASURED AT AMORTIZED COST 4.8.1

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Debt Securities - -

Government Bonds 5,941,300,000 4,013,800,000 5,941,300,000 4,013,800,000 3,114,625,000

Government Treasury Bills 1,353,010,455 1,368,215,700 1,353,010,455 1,368,215,700 680,928,998

Nepal Rastra Bank Bonds - - - - 1,630,350,000

Nepal Rastra Bank Deposit Instruments 1,639,480,000 293,275,000 1,639,480,000 293,275,000 -

Other 205,892,451 147,854,491 205,892,451 147,854,491 29,221,339

Foreign Currency Bond 111,150,776 107,038,188 111,150,776 107,038,188 -

Interest Receivables 94,741,676 40,816,303 94,741,676 40,816,303 29,221,339

Less:SpecificAllowancesforImpairment- - - - -

Total 9,139,682,907 5,823,145,191 9,139,682,907 5,823,145,191 5,455,125,337

INVESTMENT IN EQUITY MEASURED AT FVTOCI 4.8.2

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Equity Instruments

Quoted Equity Securities 559,809,479 267,694,359 559,809,479 267,694,359 370,280,864

Unquoted Equity Securities 20,966,000 77,811,155 20,966,000 77,811,155 19,759,000

Total 580,775,479 347,620,734 580,775,479 345,505,514 390,039,864

Treasury bills have been classifed as financial assets designated at fair value through statement of profit or loss (SoPL). Valuation of these instruments is assessed on the basis of similar bills on issue. These bills have the maturity period of less than one year and no variation has been observed from subsequent bills on issue, that have been considered as observable inputs. These instruments have been considered as risk free instruments. Considering the short maturity period of these instruments, risks as a result of changes in macro economic conditions is assessed to be nominal. These are highly liquid instruments and can be converted into cash immediatley on requirement. Government bonds have been classifed as held to maturity instrument as the Bank has intention and capacity to hold these instruments until their maturity. These instruments are carried at amortised costs. These instruments are issued by the government. Bank considers that the fixed return on these bonds adequately compensate for associated risks. Interest receivable includes interest accrued on above classified investment securities.

These include equity instruments in different companies. None of these investments result in control or significant influence over the invested entities. These instruments have been classified as available for sale assets. The movement in fair value of these instruments have been adjusted through other comprehensive income.



INV

EST

ME

NT

IN Q

UO

TED

EQ

UIT

Y

Gur

ans

Life

Insu

ranc

e

208

,334

Ord

inar

y S

hare

s o

f R

s. 1

00

Eac

h -

- 19

,858

,40

0

107,

708

,332

-

- 19

,858

,40

0

107,

708

,332

19

,858

,40

0

197,

917

,30

0

247,

500

Ord

inar

y S

hare

s o

f R

s. 1

00

Eac

h 19

,858

,40

0

128

,70

0,0

00

-

- 19

,858

,40

0

128

,70

0,0

00

Hyd

ro In

vest

men

t D

evel

op

men

t C

om

pan

y Li

mit

ed

159

,30

0 O

rdin

ary

Sha

res

of

Rs.

10

0 E

ach

- -

- -

15,9

30,0

00

6

8,9

76,9

00

116

,336

Ord

inry

Sha

res

of

Rs.

10

0 E

ach

11,6

33,6

00

18

,032

,08

0

11,6

33,6

00

22

,918

,192

11,6

33,6

00

18

,032

,08

0

11,6

33,6

00

22

,918

,192

Glo

bal

Sam

rid

hi Y

oja

na

- -

2,37

3,29

3 U

nits

pf

Rs.

10

Eac

h -

- -

-

- -

-

-

23,7

32,9

30

28,3

84

,58

4

NLG

Insu

ranc

e Li

mit

ed

84

7 S

hare

s o

f R

s. 1

00

Eac

h -

- -

- -

-

58

,932

1,6

68

,59

0

931

Sha

res

of

Rs.

10

0 E

ach

- -

58,9

32

69

1,26

8

- -

58,9

32

69

1,26

8

- -

370

Sha

res

of

Rs.

10

0 E

ach

58,9

32

344

,100

-

- 58

,932

34

4,10

0

- -

-

-

Nep

al In

sura

nce

Lim

ited

673

Sha

res

of

Rs.

10

0 E

ach

- -

88

,518

9

62,

390

-

- 8

8,5

18

96

2,39

0

8

8,5

18

817

,022

1,413

Sha

res

of

Rs.

10

0 E

ach

88

,518

929

,754

-

-

8

8,5

18

929

,754

-

-

-

-

Pra

bhu

Insu

ranc

e C

o. L

imit

ed

3,8

56 S

hare

s o

f R

s. 1

00

Eac

h -

-

-

-

235,

975

5,

784

,00

0

6,7

68

Sha

res

of

Rs.

10

0 E

ach

-

-

46

1,575

6

,76

7,52

0

46

1,575

6

,76

7,52

0

8,0

66

Sha

res

of

Rs.

10

0 E

ach

4

61,5

75

4,3

15,3

10

- -

4

61,5

75

4,3

15,3

10

Sag

arm

atha

Insu

ranc

e Li

mit

ed

209

,69

1 P

rom

ote

rs S

hare

s o

f R

s. 1

00

Eac

h -

- -

-

4,3

86

,00

0

4,3

86

,00

0

316

,58

0 S

hare

s o

f R

s. 1

00

Eac

h -

-

4

,38

6,0

00

4

,38

6,0

00

4

,38

6,0

00

4

,38

6,0

00

269

,09

3 P

rom

ote

rs S

hare

s o

f R

s. 1

00

Eac

h 4

,38

6,0

00

17

1,14

3,14

8

- -

4,3

86

,00

0

171,1

43,

148

47,

48

7 S

hare

s o

f R

s. 1

00

Eac

h -

6

3,6

32,5

80

-

- -

63,

632

,58

0

Lum

bin

i Ins

uran

ce L

imit

ed

35,8

73 S

hare

s o

f R

s. 1

00

Eac

h -

- -

-

2,4

08

,76

7 2,

40

8,7

67

42,

393

Sha

res

of

Rs.

10

0 E

ach

- -

2,4

08

,76

7 2,

40

8,7

67

2,4

08

,76

7 2,

40

8,7

67

89

,76

0 P

rom

ote

rs S

hare

s o

f R

s. 1

00

Eac

h -

8,9

76,0

00

-

-

- 8

,976

,00

0

5,8

96

Sha

res

of

Rs.

10

0 E

ach

2,4

08

,76

7 3,

242,

80

0

- -

2,4

08

,76

7 3,

242,

80

0

INFO

RM

ATI

ON

RE

LATI

NG

TO

INV

EST

ME

NT

IN E

QU

ITIE

S4

.8.3

G

RO

UP

B

AN

K

PA

RTI

CU

LAR

S 20

17/1

8 (7

4/7

5)

2016

/17

(73/

74)

2017

/18

(74

/75)

20

16/1

7 (7

3/74

) 20

15/1

6 (

72/7

3)

C

OST

FA

IR V

ALU

E

CO

ST

FAIR

VA

LUE

C

OST

FA

IR V

ALU

E

CO

ST

FAIR

VA

LUE

C

OST

FA

IR V

ALU

E



NA

BIL

Bal

ance

Fun

d

68

,621

Uni

ts o

f R

s. 1

0 E

ach

68

6,2

10

1,351

,834

-

- 6

86

,210

1,3

51,8

34

68

6,2

10

1,50

9,6

62

Rur

al M

icro

Fin

ance

Lim

ited

12 S

hare

s o

f R

s. 1

00

Eac

h -

- -

- -

- -

- 1,6

42

16,3

32

NM

B S

ulav

Inve

stm

ent

140

,110

Uni

ts o

f R

s. 1

0 E

ach

1,40

0,0

05

1,618

,271

1,4

00

,00

5 1,7

51,3

75

1,40

0,0

05

1,618

,271

1,4

00

,00

5 1,7

51,3

75

1,40

0,0

05

2,0

38,4

08

Sid

dha

rtha

Eq

uity

Ori

ente

d S

chem

e

2,35

9,0

97

Uni

ts o

f R

s. 1

0 E

ach

23,5

90

,970

24

,88

8,4

73

23,5

90

,970

27

,978

,89

0

23,5

90

,970

24

,88

8,4

73

23,5

90

,970

27

,978

,89

0

23,5

90

,970

30

,90

4,17

1

96

7,74

8 U

nits

of

Rs.

10

Eac

h -

9,2

51,6

71

- -

- 9

,251

,671

-

- -

-

NIB

L Sa

mri

dhi

Fun

d

173,

89

0 U

nits

of

Rs.

10

Eac

h 1,7

38,9

00

1,7

64

,98

4

1,7

38,9

00

2,

06

0,5

97

1,738

,90

0

1,76

4,9

84

1,7

38,9

00

2,

06

0,5

97

1,738

,90

0

2,30

5,78

1

Glo

bal

IME

Sam

utti

Fun

d 1

1,89

8,8

35 U

nits

of

Rs.

10

Eac

h -

-

-

- -

-

-

- 18

,98

6,3

50

23,16

3,34

7

4,2

71,9

28 U

nits

of

Rs.

10

Eac

h 4

2,71

9,2

80

37

,46

4,8

09

4

2,71

9,2

80

4

3,53

0,9

46

4

2,71

9,2

80

37

,46

4,8

09

4

2,71

9,2

80

4

3,53

0,9

46

-

-

Bo

ttle

r's

Nep

al T

erai

Ltd

.

40

9 S

hare

s o

f R

s. 1

00

Eac

h 6

4,5

90

2,

40

1,64

8

64

,59

0

2,4

88

,76

5 6

4,5

90

2,

40

1,64

8

64

,59

0

2,4

88

,76

5 -

-

NM

B H

ybri

d F

und

1,26

1,921

Uni

ts o

f R

s. 1

0 E

ach

12,6

19,2

10

12,2

28,0

14

12,6

19,2

10

12,5

43,

49

5 12

,619

,210

12

,228

,014

12

,619

,210

12

,54

3,4

95

-

-

NA

BIL

Eq

uity

Fun

d

563,

251

Uni

ts o

f R

s. 1

0 E

ach

5,6

32,5

10

5,55

3,6

55

5,6

32,5

10

5,6

32,5

10

5,6

32,5

10

5,55

3,6

55

5,6

32,5

10

5,6

32,5

10

- -

Nec

o In

sura

nce

Co.

Ltd

.

1,052

Sha

res

of

Rs.

10

0 E

ach

-

-

60

,36

3

1,032

,012

-

-

60

,36

3

1,032

,012

-

-

1053

Rig

ht S

hare

s o

f R

s. 1

00

Eac

h -

-

10

5,30

0

1,032

,99

3

-

-

105,

300

1,0

32,9

93

-

-

3,8

21 S

hare

s o

f R

s. 1

00

Eac

h 16

5,6

63

2,

132,

118

-

-

16

5,6

63

2,

132,

118

-

Nep

al L

ife

Insu

ranc

e C

om

. (N

LIC

)

2,17

6 S

hare

s o

f R

s. 1

00

Eac

h -

-

2,4

80

,925

4

,674

,04

8

2,4

80

,925

4

,674

,04

8

- -

3,0

89

Sha

res

of

Rs.

10

0 E

ach

2,4

80

,925

3,

243,

450

-

-

2,4

80

,925

3,

243,

450

NIB

L P

rag

ati F

und

1,027

,40

7 U

nits

of

Rs.

10

Eac

h 10

,274

,070

9

,24

6,6

63

10,2

74,0

70

10,2

74,0

70

10,2

74,0

70

9,2

46

,66

3 1

0,2

74,0

70

10,2

74,0

70

-

-

G

RO

UP

B

AN

K

PA

RTI

CU

LAR

S 20

17/1

8 (7

4/7

5)

2016

/17

(73/

74)

2017

/18

(74

/75)

20

16/1

7 (7

3/74

) 20

15/1

6 (

72/7

3)

C

OST

FA

IR V

ALU

E

CO

ST

FAIR

VA

LUE

C

OST

FA

IR V

ALU

E

CO

ST

FAIR

VA

LUE

C

OST

FA

IR V

ALU

E

Con

td..

. IN

FO

RM

AT

ION

RE

LA

TIN

G T

O IN

VE

ST

ME

NT

IN E

QU

ITIE

S



NLG

Insu

ranc

e C

om

pan

y Lt

d. (

Pro

mo

ter)

3,32

6 S

hare

s o

f R

s. 1

00

Eac

h -

- 18

2,6

00

4

,939

,110

18

2,6

00

4

,939

,110

-

-

5,9

90

Sha

res

of

Rs.

10

0 E

ach

182,

60

0

599

,00

0

- -

182,

60

0

599

,00

0

Rur

al M

icro

fina

nce

Dev

elo

pm

ent

Cen

tre

Ltd

13 S

hare

s o

d R

s. 1

00

Eac

h 1,6

42

8,4

89

1,6

42

10,0

75

1,64

2 8

,48

9

1,64

2

10,0

75

- -

Tara

go

an H

ote

l Ltd

.

570

Sha

res

of

Rs.

10

0 E

ach

58,7

68

15

6,18

0

58,7

68

14

8,7

70

58,7

68

15

6,18

0

58,7

68

14

8,7

70

- -

Uni

ted

Insu

rane

Co.

Ltd

.

1,68

0 S

hare

s o

f R

s. 1

00

Eac

h 15

8,6

00

1,6

04

,40

0

158

,60

0

2,4

02,

40

0

158

,60

0

1,60

4,4

00

15

8,6

00

2,

40

2,4

00

-

-

Soal

tee

Ho

tel L

imit

ed

1,54

6 S

hare

s o

f R

s. 1

00

Eac

h -

37

5,6

78

-

-

-

375,

678

-

-

-

-

Pre

mie

r In

sura

nce

Co

mp

any

272

Sha

res

of

Rs.

10

0 E

ach

-

306

,00

0

- -

- 30

6,0

00

-

-

-

-

Laxm

i Eq

uity

Fun

d

5,8

49

,58

7 U

nits

of

Rs.

10

Eac

h 58

,49

5,8

70

47,

381,6

55

-

-

58,4

95,

870

4

7,38

1,655

-

-

-

-

Him

alay

an G

ener

al In

sura

nce

459

Sha

res

of

Rs.

10

Eac

h -

20

6,5

50

-

-

-

206

,550

-

-

-

-

Shre

e R

am S

ugar

Mill

500

Sha

res

of

Rs.

10

0 E

ach

50,0

00

6

2,0

00

-

-

50

,00

0

62,

00

0

INV

EST

ME

NT

IN U

NQ

UO

TED

EQ

UIT

Y

Nep

al C

lear

ing

Ho

use

Lim

ited

28,5

15 O

rdin

ary

Sha

res

of

Rs.

10

0 E

ach

-

-

-

-

-

-

-

-

2,

851

,50

0

2,8

51,5

00

35,4

18 O

rdin

ary

Sha

res

of

Rs.

10

0 E

ach

2,

951

,50

0

2,9

51,5

00

2,

951

,50

0

2,9

51,5

00

2,

951

,50

0

2,9

51,5

00

2,

951

,50

0.0

0

2,9

51,5

00

.00

-

-

Nat

iona

l Ban

king

Inst

itut

e

12,0

00

Ori

din

ary

Sha

res

of

Rs.

10

0 E

ach

1,20

0,0

00

1,2

00

,00

0

1,20

0,0

00

1,2

00

,00

0

1,20

0,0

00

1,2

00

,00

0

1,20

0,0

00

1,2

00

,00

0

1,20

0,0

00

1,2

00

,00

0

Nep

al E

lect

roni

c P

aym

ent

Syst

em

150

,00

0 O

rdin

ary

Sha

res

of

Rs.

10

0 E

ach

15,0

00

,00

0

15,0

00

,00

0

15,0

00

,00

0

15,0

00

,00

0

15,0

00

,00

0

15,0

00

,00

0

15,0

00

,00

0

15,0

00

,00

0

15,0

00

,00

0

15,0

00

,00

0

G

RO

UP

B

AN

K

PA

RTI

CU

LAR

S 20

17/1

8 (7

4/7

5)

2016

/17

(73/

74)

2017

/18

(74

/75)

20

16/1

7 (7

3/74

) 20

15/1

6 (

72/7

3)

C

OST

FA

IR V

ALU

E

CO

ST

FAIR

VA

LUE

C

OST

FA

IR V

ALU

E

CO

ST

FAIR

VA

LUE

C

OST

FA

IR V

ALU

E

Con

td..

. IN

FO

RM

AT

ION

RE

LA

TIN

G T

O IN

VE

ST

ME

NT

IN E

QU

ITIE

S



Go

rakh

ali T

yres

Pvt

. Lim

ited

.

88

0 O

rdin

ary

Sha

res

of

Rs.

10

0 E

ach

106

,234

-

10

6,2

34

-

106

,234

-

106

,234

-

10

6,2

34

-

Nep

al S

tock

Exc

hang

e Li

mit

ed.

500

Ord

inar

y S

hare

s o

f R

s. 1

00

Eac

h -

-

-

-

-

-

-

-

5,0

00

5,

00

0

100

Ord

inar

y S

hare

s o

f R

s. 1

00

Eac

h 10

,00

0

10,0

00

10

,00

0

10,0

00

10

,00

0

10,0

00

10

,00

0

10,0

00

-

-

CIC

L

4,6

66

Sha

res

of

Rs.

10

0 E

ach

-

-

-

-

-

-

-

-

20

2,50

0

202,

500

5,71

6 S

hare

s o

f R

s. 1

00

Eac

h 22

9,5

00

22

9,5

00

22

9,5

00

22

9,5

00

22

9,5

00

22

9,5

00

22

9,5

00

22

9,5

00

-

-

Bir

at S

hoe

Ltd

.

11,3

50 S

hare

s o

f R

s. 1

00

Eac

h 1,1

42,

820

-

1,14

2,8

20

-

1,14

2,8

20

- 1,1

42,

820

-

-

-

But

wal

Sp

inni

ng M

ill

20 S

hare

s o

f R

s. 1

00

Eac

h 3,

200

-

3,

200

-

3,20

0

- 3,

200

-

Jyo

ti S

pin

ning

Mill

386

Sha

res

of

Rs.

10

0 E

ach

57,4

09

-

57

,40

9

-

57,4

09

-

57

,40

9

-

-

-

Laxm

i Eq

uity

Fun

d

5,8

49

,58

7 U

nits

of

Rs.

10

Eac

h -

-

58

,49

5,8

70

58,4

95,

870

58

,49

5,8

70

58,4

95,

870

-

-

Nec

on

Air

Lim

ited

.

828

Sha

res

of

Rs.

10

0 E

ach

179

,84

2

-

179

,84

2

-

179

,84

2

-

179

,84

2

- -

-

Shre

e R

am S

ugar

Mill

500

Sha

res

of

Rs.

10

0 E

ach

50,0

00

-

50

,00

0

-

-

-

Sub

arna

Pha

rmac

euti

cals

Lim

ited

.

10,0

00

Sha

res

of

Rs.

10

0 E

ach

500

,00

0

- 50

0,0

00

-

500

,00

0

-

500

,00

0

-

500

,00

0

500

,00

0

Suva

Bih

ani M

icro

fina

nce

15,7

50 S

hare

s o

f R

s. 1

00

Eac

h 1,5

75,0

00

1,5

75,0

00

-

-

1,5

75,0

00

1,5

75,0

00

-

-

-

-

Tota

l Inv

estm

ent

221,

484

,90

1 5

80,7

75,4

79

220

,59

6,1

11

345,

505,

514

22

1,4

84,9

01

580

,775

,479

22

0,5

96

,111

34

5,50

5,51

4

132,

96

8,83

3 39

0,0

39,8

64

Net

Car

ryin

g A

mo

unt

221,

484

,90

1 5

80,7

75,4

79

220

,59

6,1

11

345,

505,

514

22

1,4

84,9

01

580

,775

,479

22

0,5

96

,111

34

5,50

5,51

4

132,

96

8,83

3 3

90

,039

,86

4

G

RO

UP

B

AN

K

PA

RTI

CU

LAR

S 20

17/1

8 (7

4/7

5)

2016

/17

(73/

74)

2017

/18

(74

/75)

20

16/1

7 (7

3/74

) 20

15/1

6 (

72/7

3)

C

OST

FA

IR V

ALU

E

CO

ST

FAIR

VA

LUE

C

OST

FA

IR V

ALU

E

CO

ST

FAIR

VA

LUE

C

OST

FA

IR V

ALU

E

Con

td..

. IN

FO

RM

AT

ION

RE

LA

TIN

G T

O IN

VE

ST

ME

NT

IN E

QU

ITIE

S



Contd... INFORMATION RELATING TO INVESTMENT IN EQUITIES

All financial instruments are measured initially at their fair value plus transaction costs that are directly attributable to acquisition or issue of such financial instruments except in the case of such financial assets and assets at fair value through profit or loss, as per the Nepal Accounting Standard - NAS 39 (Financial Instruments: Recognition and Measurement). Transaction costs in relation to financial assets and financial assets at fair value through profit or loss are dealt with the Statement of Profit or Loss.

At the inception, Bank determines the classification of its financial assets. Accordingly financial assets are classified as:

A. Financial assets at fair value through profit or loss

i. Financial assets held for tradingii. Financial assets designated at

fair value through profit or lossB. Financial assets at amortized cost

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition as fair value through profit or loss. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value and changes therein are recognized in profit or loss.

Financial instruments issued by Bank that are not classified as fair value through profit or loss are classified as financial assets at amortized cost, where the substance of the contractual arrangement results in Bank having an obligation either to

deliver cash or another financial asset to another Bank, or to exchange financial assets or financial assets with another Bank under conditions that are potentially unfavorable to the Bank or settling the obligation by delivering variable number of Bank’s own equity instruments.

After initial recognition, such financial assets are subsequently measured at amortized cost using the effective interest rate method. Within this category, deposits and debt instruments with fixed maturity period have been recognized at amortized cost using the method that very closely approximates effective interest rate method. The amortization is included in ‘Interest Expenses’ in the Statement of Profit or Loss. Gains and losses are recognized in the Statement of Profit or Loss when the assets are derecognized.

CURRENT TAX ASSETS 4.9

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Current Tax Assets 48,693,154 169,384,181 43,085,259 164,593,723 1,094,658,245

Current year Income Tax Assets 48,693,154 169,384,181 43,085,259 164,593,723 1,094,658,245

Tax Assets of Prior Periods - - - - -

Current Tax Liabilities 1,006,306 869,133 - (1,066,883,755)

Current year Income Tax Liabilities 1,006,306 869,133 (1,066,883,755)

Tax Liabilities of Prior Periods -

Total 47,686,848 168,515,048 43,085,259 164,593,723 27,774,490

INVESTMENT IN SUBSIDIARIES 4.10

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Investment in Quoted Subsidiaries - - -

Investment in Unquoted Subsidiaries - - 157,142,000 78,570,981 -

Total Investment - - 157,142,000 78,570,981 -

Less: Impairment Allowances - - - - -

Net Carrying Amount - - 157,142,000 78,570,981 -

Fair value of investment in subsidiary is taken at cost.



INVESTMENT IN ASSOCIATES 4.11

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Investment in Quoted Associates - - - - -

Investment in Unquoted Associates - - - - -

Total Investment - - - - -

Less: Impairment Allowances - -

Net Carrying Amount - - - - -

INVESTMENT IN QUOTED SUBSIDIARIES 4.10.1

2017/18 (74/75) 2016/17 (73/74)

PARTICULARS COST FAIR VALUE COST FAIR VALUE

- - - -

- - - -

- - - -

- - - -

Total - - - -

INVESTMENT IN UNQUOTED SUBSIDIARIES 4.10.2

2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

PARTICULARS COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

Sunrise Capital Limited

785710 Shares of Rs. 100 Each 78,570,981 78,570,981

1571419.8 Shares of Rs. 100 Each 157,142,000 157,142,000 - -

Total 157,142,000 157,142,000 78,570,981 78,570,981 - -

INFORMATION RELATING TO SUBSIDIARIES OF THE BANK 4.10.3

BANK

PERCENTAGE OF OWNERSHIP HELD BY BANK

2017/18 2016/17

SunriseCapitalLimited 78.57% 78.57%

Total 78.57% 78.57%

NON CONTROLLING INTEREST OF THE SUBSIDIARIES 4.10.4

GROUP

PERCENTAGE OF OWNERSHIP HELD BY BANK 78.57%

NIDC Ltd

EquityInterestheldbyNCI(%) 21.43%

Profit(Loss)allocatedduringtheyear 3,999,282

Accumulated Balances of NCI as on Asar End 54,690,343

Dividend Paid to NCI

2073/74

NIDC Ltd

EquityInterestheldbyNCI(%) 21.43%

Profit(Loss)allocatedduringtheyear 4,515,361

Accumulated Balances of NCI as on Asar End 29,262,061

Dividend Paid to NCI



EQUITY VALUE OF ASSOCIATES 4.11.4

GROUP

PERCENTAGE OF OWNERSHIP HELD BY BANK

CURRENT YEAR PREVIOUS YEAR

Not Applicable

INVESTMENT IN QUOTED ASSOCIATES 4.11.1

GROUP BANK

2017/18 2016/17 2017/18 2016/17

PARTICULARS COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

- - - - - - - -

Total - - - - - - - -

GROUP BANK

2017/18 2016/17 2017/18 2016/17

PARTICULARS COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

Not Applicable

- - - - - - - -

Total - - - - - - - -

INVESTMENT IN UNQUOTED ASSOCIATEST 4.11.2

INFORMATION RELATING TO ASSOCIATES OF THE BANK 4.11.3

GROUP BANK

PERCENTAGE OF OWNERSHIP PERCENTAGE OF OWNERSHIP HELD BY BANK HELD BY BANK

2017/18 2016/17 2017/18 2016/17

Not Applicable

INVESTMENT PROPERTIES 4.12

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Investment Properties measured at Fair Value

Balance as on Shrwawan 01 161,448,497 103,907,648 161,448,497 103,907,648 104,765,597

Addition/(Disposal) during the year (42,194,449) 57,540,849 (42,194,449) 57,540,849 (857,949)

Net Changes in fair value during the year - - - - -

Adjustment/Transfer - - -

Net Amount 119,254,047 161,448,497 119,254,047 161,448,497 103,907,648

Investment Properties measured at Cost

Balance as on Shrwawan 01 - - - - -

Addition/(Disposal) during the year - - - - -

Net Changes in fair value during the year - - - - -

Adjustment/Transfer - - - - -

Net Amount - - - - -

Total 119,254,047 161,448,497 119,254,047 161,448,497 103,907,648



PROPERTY AND EQUIPMENT

GROUP

PARTICULARS LAND BUILDING LEASEHOLD COMPUTER VEHICLES FURNITURE MACHINERY EQUIPMENT TOTAL ASAR TOTAL ASAR PROPERTIES & ACCESSORIES & FIXTURES & OTHERS END 2074 END 2073

CostAs on Shrawan 2073 60,008,399.05 20,766,818.60 206,446,757.04 74,808,038.69 146,471,825.00 102,787,202.63 162,006,370.49 37,626,632.59 810,922,044.10 Addition during the year 30,274,999.95 6,111,943.00 25,833,165.81 28,258,174.12 37,359,420.00 19,363,909.47 30,821,396.41 3,630,542.00 181,653,550.76

Acquisition 30,274,999.95 6,111,943.00 25,833,165.81 444,652.04 3,464,886.00 304,697.74 484,985.22 658,460.00 67,577,789.76

Capitalization - - - 27,813,522.08 33,894,534.00 19,059,211.73 30,336,411.19 2,972,082.00 114,075,761.00

Disposal during the year - - (672,577.59) (20,363,393.00) (1,233,599.02) (4,933,600.18) (2,748,232.00) (29,951,401.79)

Adjustment/Revaluation - - - - - - - -

Balance as on Asar end 2074 90,283,399.00 26,878,761.60 232,279,922.85 102,393,635.22 163,467,852.00 120,917,513.08 187,894,166.72 38,508,942.59 962,624,193.07

Addition during the Year 29,640,000.05 4,160,000.00 72,273,448.77 33,227,670.70 55,913,017.41 37,213,450.01 49,714,949.15 2,980,477.50 285,123,013.59

Acquisition -

Capitalization 29,640,000.05 4,160,000.00 72,273,448.77 33,227,670.70 55,913,017.41 37,213,450.01 49,714,949.15 2,980,477.50 285,123,013.59

Disposal during the year (24,598,798.86) (23,962,379.75) (5,869,728.36) (6,808,795.46) (1,750,110.67) (62,989,813.10)

Adjustment/Revaluation 68,111.25 68,111.25

Balance as on Asar end 2075 119,923,399.05 31,038,761.60 304,621,482.87 111,022,507.06 195,418,489.66 152,261,234.73 230,800,320.41 39,739,309.42 221,453,608.74 953,517,495.34

Depreciation and Impairment As on Shrawan 01. 2073 - 15,948,012.99 108,100,536.69 52,904,928.98 50,833,395.31 57,691,321.71 115,727,237.33 24,783,691.29 425,989,124.31 Depreciation charge for the year - 1,165,673.30 23,045,513.49 5,982,730.61 17,600,631.60 6,802,068.55 13,728,826.95 2,249,852.19 70,575,296.69

Impairment for the year - - - - - - - - -

Disposals - - - (1,010,794.84) (11,645,761.31) (1,149,223.70) (2,319,514.00) (2,054,773.23) (18,180,067.08)

Adjustment - (15,948,012.99) - (5,467,113.28) (9,365,863.31) (6,946,735.79) (14,020,813.35) (2,332,044.17) (54,080,582.88)

As on Asar end 2074 - 1,165,673.30 131,146,050.18 52,409,751.48 47,422,402.29 56,397,430.77 113,115,736.93 22,646,726.08 424,303,771.04 Depreciation charge for the year 1,354,987.76 10,723,746.10 612,748.69 19,959,872.93 141,861.00 37,828,107.23 2,507,676.55 73,129,000.26

Impairment for the year -

Disposals (12,431,235.59) (32,691,705.80) (1,024,127.29) (46,147,068.69)

Adjustment -

As on Asar end 2075 - 2,520,661.06 141,869,796.28 53,022,500.17 54,951,039.63 56,539,291.77 118,252,138.36 24,130,275.34 26,981,931.57 424,303,771.04 Capital Work in Progress Net Book Value 119,923,399.05 28,518,100.54 162,751,686.59 57,770,444.06 138,888,820.03 94,945,564.95 112,548,182.06 14,901,633.61 730,247,830.89 As on Asar end 2073 60,008,399.05 20,766,818.60 98,346,220.35 27,116,773.81 104,997,502.12 52,529,693.15 58,127,780.76 18,214,429.82 440,107,617.67 As on Asar end 2074 90,283,399.00 25,713,088.30 101,133,872.67 49,983,883.75 116,045,449.71 64,520,082.30 74,778,429.79 15,862,216.51 538,320,422.03 534,388,879.03 As on Asar end 2075 119,923,399.05 28,518,100.54 162,751,686.59 58,000,006.90 140,467,450.03 95,721,942.95 112,548,182.06 15,609,034.08 733,539,802.20



4.13

GROUP


CostAs on Shrawan 2073 60,008,399.05 20,766,818.60 206,446,757.04 74,808,038.69 146,471,825.00 102,787,202.63 162,006,370.49 37,626,632.59 810,922,044.10 Addition during the year 30,274,999.95 6,111,943.00 25,833,165.81 28,258,174.12 37,359,420.00 19,363,909.47 30,821,396.41 3,630,542.00 181,653,550.76

Acquisition 30,274,999.95 6,111,943.00 25,833,165.81 444,652.04 3,464,886.00 304,697.74 484,985.22 658,460.00 67,577,789.76

Capitalization - - - 27,813,522.08 33,894,534.00 19,059,211.73 30,336,411.19 2,972,082.00 114,075,761.00

Disposal during the year - - (672,577.59) (20,363,393.00) (1,233,599.02) (4,933,600.18) (2,748,232.00) (29,951,401.79)


Balance as on Asar end 2074 90,283,399.00 26,878,761.60 232,279,922.85 102,393,635.22 163,467,852.00 120,917,513.08 187,894,166.72 38,508,942.59 962,624,193.07

Addition during the Year 29,640,000.05 4,160,000.00 72,273,448.77 33,227,670.70 55,913,017.41 37,213,450.01 49,714,949.15 2,980,477.50 285,123,013.59

Acquisition -

Capitalization 29,640,000.05 4,160,000.00 72,273,448.77 33,227,670.70 55,913,017.41 37,213,450.01 49,714,949.15 2,980,477.50 285,123,013.59

Disposal during the year (24,598,798.86) (23,962,379.75) (5,869,728.36) (6,808,795.46) (1,750,110.67) (62,989,813.10)

Adjustment/Revaluation 68,111.25 68,111.25

Balance as on Asar end 2075 119,923,399.05 31,038,761.60 304,621,482.87 111,022,507.06 195,418,489.66 152,261,234.73 230,800,320.41 39,739,309.42 221,453,608.74 953,517,495.34

Depreciation and Impairment As on Shrawan 01. 2073 - 15,948,012.99 108,100,536.69 52,904,928.98 50,833,395.31 57,691,321.71 115,727,237.33 24,783,691.29 425,989,124.31 Depreciation charge for the year - 1,165,673.30 23,045,513.49 5,982,730.61 17,600,631.60 6,802,068.55 13,728,826.95 2,249,852.19 70,575,296.69


Disposals - - - (1,010,794.84) (11,645,761.31) (1,149,223.70) (2,319,514.00) (2,054,773.23) (18,180,067.08)

Adjustment - (15,948,012.99) - (5,467,113.28) (9,365,863.31) (6,946,735.79) (14,020,813.35) (2,332,044.17) (54,080,582.88)

As on Asar end 2074 - 1,165,673.30 131,146,050.18 52,409,751.48 47,422,402.29 56,397,430.77 113,115,736.93 22,646,726.08 424,303,771.04 Depreciation charge for the year 1,354,987.76 10,723,746.10 612,748.69 19,959,872.93 141,861.00 37,828,107.23 2,507,676.55 73,129,000.26


Disposals (12,431,235.59) (32,691,705.80) (1,024,127.29) (46,147,068.69)

Adjustment -

As on Asar end 2075 - 2,520,661.06 141,869,796.28 53,022,500.17 54,951,039.63 56,539,291.77 118,252,138.36 24,130,275.34 26,981,931.57 424,303,771.04 Capital Work in Progress Net Book Value 119,923,399.05 28,518,100.54 162,751,686.59 57,770,444.06 138,888,820.03 94,945,564.95 112,548,182.06 14,901,633.61 730,247,830.89 As on Asar end 2073 60,008,399.05 20,766,818.60 98,346,220.35 27,116,773.81 104,997,502.12 52,529,693.15 58,127,780.76 18,214,429.82 440,107,617.67 As on Asar end 2074 90,283,399.00 25,713,088.30 101,133,872.67 49,983,883.75 116,045,449.71 64,520,082.30 74,778,429.79 15,862,216.51 538,320,422.03 534,388,879.03 As on Asar end 2075 119,923,399.05 28,518,100.54 162,751,686.59 58,000,006.90 140,467,450.03 95,721,942.95 112,548,182.06 15,609,034.08 733,539,802.20



BANK


CostAs on Shrawan 01, 2071 185,509,136 61,935,901.89 106,964,553 88,169,364.24 127,887,139.9 37,964,306 608,430,401 Addition during the year -

Acquisition 37,196,500 30,494,270 67,690,770

Capitalization -

Disposal during the year (24,145,936) (6,184,539.00) (30,330,475)

Adjustment/Revaluation -

Balance as on Asar end 2072 - - 185,509,136 61,935,902 120,015,117 88,169,364 152,196,871 37,964,306 645,790,696 Addition during the Year 60,008,399 36,714,832 20,937,621 14,970,079 60,596,765 25,259,171 21,707,282 9,116,678 249,310,827

Acquisition 60,008,399 36,714,832 20,937,621 7,920,731.2 17,242,265.4 11,275,622.3 19,463,840.4 9,104,539.5 182,667,851

Capitalization 7,049,347.5 43,354,500.0 13,983,548.7 2,243,441.8 12,138.0 66,642,976

Disposal during the year (405,970.0) (27,540,285.0) (4,352,326.4) (49,135.0) (5,763,762.0) (38,111,478)


Balance as on Asar end 2073 60,008,399 36,714,832 206,446,757 76,500,011 153,071,597 109,076,209 173,855,018 41,317,222 211,199,349 645,790,696

Depreciation and Impairment

As on Shrawan 01, 2071 89,086,652 41,460,898.8 49,666,941 49,188,040.35 88,531,701 21,539,719 339,473,952 Depreciation charge for the year 9,615,480 2,452,663 12,068,143


Disposals (15,407,182) (15,407,182)

Adjustment -

Balance as on Asar end 2072 - - 89,086,652 41,460,899 43,875,239 49,188,040 88,531,701 23,992,382 336,134,912.9Depreciation charge for the year 19,013,884.84 3,707,964.34 12,619,897 3,225,824.536 13,618,427.13 2,035,908 54,221,906


Disposals (276,146.8907) (15,763,039) (2,960,517.744) (33,422) (4,590,307) (23,623,433)

Adjustment 15,948,013 5,538,750.91 9,365,863 7,884,735 13,610,532 2,375,549 54,723,443

Balance as on Asar end 2073 - 15,948,013 108,100,537 50,431,467 50,097,960 57,338,082 115,727,237 23,813,532 421,456,828 336,134,912.9Capital Work in Progress Net Book Value 60,008,399 20,766,819 98,346,220 26,068,543 102,973,637 51,738,127 58,127,781 17,503,689 435,533,216 As on Asar end 2071 - - 96,422,484 20,475,003.09 57,297,612.00 39,355,439.02 16,424,587 229,975,125 As on Asar end 2072 - - 96,422,484 20,475,003 76,139,878 38,981,324 63,665,170 13,971,924 309,655,783 309,655,782.8As on Asar end 2073 60008399 20,766,819 98346220 - 153,071,597 0 0 103,340,180.8 435,533,216

Contd... PROPERTY AND EQUIPMENT



BANK


CostAs on Shrawan 01, 2071 185,509,136 61,935,901.89 106,964,553 88,169,364.24 127,887,139.9 37,964,306 608,430,401 Addition during the year -

Acquisition 37,196,500 30,494,270 67,690,770

Capitalization -

Disposal during the year (24,145,936) (6,184,539.00) (30,330,475)


Balance as on Asar end 2072 - - 185,509,136 61,935,902 120,015,117 88,169,364 152,196,871 37,964,306 645,790,696 Addition during the Year 60,008,399 36,714,832 20,937,621 14,970,079 60,596,765 25,259,171 21,707,282 9,116,678 249,310,827

Acquisition 60,008,399 36,714,832 20,937,621 7,920,731.2 17,242,265.4 11,275,622.3 19,463,840.4 9,104,539.5 182,667,851

Capitalization 7,049,347.5 43,354,500.0 13,983,548.7 2,243,441.8 12,138.0 66,642,976

Disposal during the year (405,970.0) (27,540,285.0) (4,352,326.4) (49,135.0) (5,763,762.0) (38,111,478)



Depreciation and Impairment

As on Shrawan 01, 2071 89,086,652 41,460,898.8 49,666,941 49,188,040.35 88,531,701 21,539,719 339,473,952 Depreciation charge for the year 9,615,480 2,452,663 12,068,143


Disposals (15,407,182) (15,407,182)

Adjustment -

Balance as on Asar end 2072 - - 89,086,652 41,460,899 43,875,239 49,188,040 88,531,701 23,992,382 336,134,912.9Depreciation charge for the year 19,013,884.84 3,707,964.34 12,619,897 3,225,824.536 13,618,427.13 2,035,908 54,221,906


Disposals (276,146.8907) (15,763,039) (2,960,517.744) (33,422) (4,590,307) (23,623,433)

Adjustment 15,948,013 5,538,750.91 9,365,863 7,884,735 13,610,532 2,375,549 54,723,443

Balance as on Asar end 2073 - 15,948,013 108,100,537 50,431,467 50,097,960 57,338,082 115,727,237 23,813,532 421,456,828 336,134,912.9Capital Work in Progress Net Book Value 60,008,399 20,766,819 98,346,220 26,068,543 102,973,637 51,738,127 58,127,781 17,503,689 435,533,216 As on Asar end 2071 - - 96,422,484 20,475,003.09 57,297,612.00 39,355,439.02 16,424,587 229,975,125 As on Asar end 2072 - - 96,422,484 20,475,003 76,139,878 38,981,324 63,665,170 13,971,924 309,655,783 309,655,782.8As on Asar end 2073 60008399 20,766,819 98346220 - 153,071,597 0 0 103,340,180.8 435,533,216



BANK


CostAs on Shrawan 01, 2072 - - 185,509,136 61,935,902 120,015,117 88,169,364 152,196,871 37,964,306 645,790,696 Addition during the year 60,008,399 36,714,832 20,937,621 14,970,079 60,596,765 25,259,171 21,707,282 9,116,678 249,310,827

Acquisition 60,008,399 36,714,832 20,937,621 7,920,731 17,242,265 11,275,622 19,463,840 9,104,540 182,667,851

Capitalization - - 7,049,348 43,354,500 13,983,549 2,243,442 12,138 66,642,976

Disposal during the year - (405,970) (27,540,285) (4,352,326) (49,135) (5,763,762) (38,111,478)

Adjustment/Revaluation (15,948,013) (5,213,664.106) (9,359,072) (7,433,812) (11848647.6) (5,371,488.522) (55,174,698)

Balance as on Asar end 2073 60,008,399 20,766,819 206,446,757 71,286,347 143,712,525 101,642,397 162,006,370 35,945,733 801,815,346 Addition during the Year 30,275,000 6,111,943 25,833,166 28,258,174 37,359,420 19,363,909 30,821,396 3,630,542 181,653,551

Acquisition 30,275,000 6.111.943 25,833,166 444,652.0393 3,464,886 304,697.7416 484,985.2191 658,460 67,577,790

Capitalization 27,813,522.08 33,894,534 19,059,211.73 30,336,411.19 2,972,082 114,075,761

Disposal during the year (672,577.59) (20,363,393) (1,233,599.02) (4,933,600.18) (2,748,232) (29,951,402)



Depreciation and ImpairmentAs on Shrawan 01. 2072 - - 89,086,652 41,460,899 43,875,239 49,188,040 88,531,701 23,992,382 336,134,913 Depreciation charge for the year - - 19,013,885 3,707,964 12,619,897 3,225,825 13,618,427 2,035,908 54,221,906


Disposals - - - (276,147) (15,763,039) (2,960,518) (33,422) (4,590,307) (23,623,433)

Adjustment - 15,948,013 - 5,538,751 9,365,863 7,884,735 13,610,532 2,375,549 54,723,443

As on Asar end 2073 - 15,948,013 108,100,537 50,431,467 50,097,960 57,338,082 115,727,237 23,813,532 421,456,828.4Depreciation charge for the year 1,165,673.3 23,045,513.49 5,982,730.612 17,600,631.6 6,802,068.549 13,728,826.95 2,249,852.19 70,575,296.69


Disposals (1,010,794.839) (11,645,761.31) (1,149,223.696) (2,319,514.003) (2054773.23) (18,180,067.08)

Adjustment (15,948,013) (6,109,972.07) (9,365,863.309) (6,946,735.788) (14,020,813.35) (2,332,044) (54,723,441.67)

As on Asar end 2074 - 1,165,673 131,146,050 49,293,431 46,686,967 56,044,191 113,115,737 21,676,567 419,128,616 421,456,828.4Capital Work in Progress Net Book Value 90,283,399 25,713,088 101,133,873 49,578,512 114,021,585 63,728,516 74,778,430 15,151,476 534,388,879 As on Asar end 2072 As on Asar end 2073 60,008,399 4,818,806 98,346,220 20,854,879 93,614,565 44,304,315 46,279,133 12,132,201 380,358,518As on Asar end 2074 90,283,399 25,713,089 101,133,873 - 160,708,552 - - 156,549,967 534,388,880




BANK


CostAs on Shrawan 01, 2072 - - 185,509,136 61,935,902 120,015,117 88,169,364 152,196,871 37,964,306 645,790,696 Addition during the year 60,008,399 36,714,832 20,937,621 14,970,079 60,596,765 25,259,171 21,707,282 9,116,678 249,310,827

Acquisition 60,008,399 36,714,832 20,937,621 7,920,731 17,242,265 11,275,622 19,463,840 9,104,540 182,667,851

Capitalization - - 7,049,348 43,354,500 13,983,549 2,243,442 12,138 66,642,976

Disposal during the year - (405,970) (27,540,285) (4,352,326) (49,135) (5,763,762) (38,111,478)

Adjustment/Revaluation (15,948,013) (5,213,664.106) (9,359,072) (7,433,812) (11848647.6) (5,371,488.522) (55,174,698)


Acquisition 30,275,000 6.111.943 25,833,166 444,652.0393 3,464,886 304,697.7416 484,985.2191 658,460 67,577,790

Capitalization 27,813,522.08 33,894,534 19,059,211.73 30,336,411.19 2,972,082 114,075,761

Disposal during the year (672,577.59) (20,363,393) (1,233,599.02) (4,933,600.18) (2,748,232) (29,951,402)



Depreciation and ImpairmentAs on Shrawan 01. 2072 - - 89,086,652 41,460,899 43,875,239 49,188,040 88,531,701 23,992,382 336,134,913 Depreciation charge for the year - - 19,013,885 3,707,964 12,619,897 3,225,825 13,618,427 2,035,908 54,221,906


Disposals - - - (276,147) (15,763,039) (2,960,518) (33,422) (4,590,307) (23,623,433)

Adjustment - 15,948,013 - 5,538,751 9,365,863 7,884,735 13,610,532 2,375,549 54,723,443

As on Asar end 2073 - 15,948,013 108,100,537 50,431,467 50,097,960 57,338,082 115,727,237 23,813,532 421,456,828.4Depreciation charge for the year 1,165,673.3 23,045,513.49 5,982,730.612 17,600,631.6 6,802,068.549 13,728,826.95 2,249,852.19 70,575,296.69


Disposals (1,010,794.839) (11,645,761.31) (1,149,223.696) (2,319,514.003) (2054773.23) (18,180,067.08)

Adjustment (15,948,013) (6,109,972.07) (9,365,863.309) (6,946,735.788) (14,020,813.35) (2,332,044) (54,723,441.67)

As on Asar end 2074 - 1,165,673 131,146,050 49,293,431 46,686,967 56,044,191 113,115,737 21,676,567 419,128,616 421,456,828.4Capital Work in Progress Net Book Value 90,283,399 25,713,088 101,133,873 49,578,512 114,021,585 63,728,516 74,778,430 15,151,476 534,388,879 As on Asar end 2072 As on Asar end 2073 60,008,399 4,818,806 98,346,220 20,854,879 93,614,565 44,304,315 46,279,133 12,132,201 380,358,518As on Asar end 2074 90,283,399 25,713,089 101,133,873 - 160,708,552 - - 156,549,967 534,388,880



BANK


CostAs on Shrawan 2073 60,008,399 20,766,819 206,446,757 71,286,347 143,712,525 101,642,397 162,006,370 35,945,733 801,815,346 Addition during the year 30,275,000 6,111,943 25,833,166 28,258,174 37,359,420 19,363,909 30,821,396 3,630,542 181,653,551

Acquisition 30,275,000 6,111,943 25,833,166 444,652 3,464,886 304,698 484,985 658,460 67,577,790

Capitalization - - - 27,813,522 33,894,534 19,059,212 30,336,411 2,972,082 114,075,761

Disposal during the year - - (672,578) (20,363,393) (1,233,599) (4,933,600) (2,748,232) (29,951,402)



Acquisition -

Capitalization 29,640,000 4,160,000 72,273,449 32,790,731 55,913,017 37,086,777.01 49,714,949 2,796,388 284,375,311

Disposal during the year (24,598,799) (23,962,380) (5,869,728.36) (6,808,795) (1,750,111) (62,989,813)

Adjustment/Revaluation 68,111.25 68,111

Balance as on Asar end 2075 119,923,399 31,038,762 304,621,483 107,063,875 192,659,190 150,989,756 230,800,320 37,874,320 1,174,971,104 953,517,495

Depreciation and ImpairmentAs on Shrawan 01. 2073 - 15,948,013 108,100,537 50,431,467 50,097,960 57,338,082 115,727,237 23,813,532 421,456,828 Depreciation charge for the year - 1,165,673 23,045,513 5,982,731 17,600,632 6,802,069 13,728,827 2,249,852 70,575,297


Disposals - - - (1,010,795) (11,645,761) (1,149,224) (2,319,514) (2,054,773) (18,180,067)

Adjustment - (15,948,013) - (6,109,972) (9,365,863) (6,946,736) (14,020,813) (2,332,044) (54,723,442)

As on Asar end 2074 - 1,165,673 131,146,050 49,293,431 46,686,967 56,044,191 113,115,737 21,676,567 419128616.3Depreciation charge for the year 1,354,988 10,791,857 118,821,67.88 19,514,638 10,124,807 15,753,021 2,320,247 71,741,725


Disposals (23,379,343) (12,431,236) (4,514,893) (4,797,470) (1,024,127) (46,147,069)

Adjustment -

As on Asar end 2075 - 2,520,661 141,937,907 37,796,256 53,770,370 61,654,105 124,071,288 22,972,686 444,723,273 419128616.3Capital Work in Progress Net Book Value 119,923,399 28,518,101 162,683,575 69,267,619 138,888,820 89,335,651 106,729,032 14,901,634 730,247,831 As on Asar end 2073 60,008,399 20,766,819 98,346,220 26,068,543 102,973,637 51,738,127 58,127,781 17,503,689 435,533,216 As on Asar end 2074 90,283,399 25,713,088 101,133,873 49,578,512 114,021,585 63,728,516 74,778,430 15,151,476 534,388,879 534,388,879As on Asar end 2075 119,923,399 28,518,101 162,683,575 69,267,619 138,888,820 89,335,651 106,729,032 14,901,634 730,247,831




GOODWILL AND INTANGIBLE ASSETS 4.14

GROUP

SOFTWARE

PARTICULARS GOODWILL PURCHASED DEVELOPED OTHER TOTAL ASAR END

Cost

As on Shrawan 01 2073 - 47,343,763 - - 47,343,763

Addition during the year - 23,485,422 - - 23,485,422

Acquisition - - - -

Capitalization - 23,485,422 - - 23,485,422

Disposal during the year - - - -

Adjustment/Revaluation - - - -

Balance as on Asar end 2074 - 70,829,184 - - 70,829,184

Addition during the Year - - - -

Acquisition - - - -

Capitalization - 33,618,638 - - 33,618,638

Disposal during the year - (7,820,534) - - (7,820,534)


Balance as on Asar end 2075 96,627,289 - - 96,627,289

Amortisation and Impairment

As on Shrawan 01. 2073 - 41,450,933 - - 41,450,933

Amortisation charge for the year - 7,128,569 - - 7,128,569

Impairment for the year - - - -

Disposals - - - -

Adjustment - (36,284,288) - - (36,284,288)

As on Asar end 2074 12,295,214 - - 12,295,214



Disposals - (9,214,786) - - (9,214,786)

Adjustment - - - -

As on Asar end 2075 - 19,850,305 - - 19,850,305

Capital Work in Progress

Net Book Value 76,776,984 76,776,984

As on Asar end 2073 - 5,892,829 - 5,892,829

As on Asar end 2074 - 58,533,970 - 58,533,970

As on Asar end 2075 - 76,776,984 - 76,776,984



BANK

SOFTWARE

PARTICULARS GOODWILL PURCHASED DEVELOPED OTHER TOTAL ASAR END

Cost

As on Shrawan 01 2073 - 47,343,763 - - 47,343,763

Addition during the year - 23,361,122 - - 23,361,122

Acquisition - - - -

Capitalization - 23,361,122 - - 23,361,122

Disposal during the year - - - -


Balance as on Asar end 2074 - 70,704,884 - - 70,704,884

Addition during the Year - - - -

Acquisition - - - -

Capitalization - 33,166,638 - - 33,166,638

Disposal during the year - (7,820,534) - - (7,820,534)


Balance as on Asar end 2075 96,050,989 - - 96,050,989

Amortisation and Impairment

As on Shrawan 01. 2073 - 41,450,933 - - 41,450,933



Disposals - - - -

Adjustment - (36,284,288) - - (36,284,288)

As on Asar end 2074 12,170,914 - - 12,170,914



Disposals - (9,214,786) - - (9,214,786)

Adjustment - - - -

As on Asar end 2075 - 19,635,605 - - 19,635,605

Capital Work in Progress

Net Book Value 76,415,384 76,415,384

As on Asar end 2073 - 5,892,829 - 5,892,829

As on Asar end 2074 - 58,533,970 - 58,533,970

As on Asar end 2075 - 76,415,384 - 76,415,384

Contd... GOODWILL AND INTANGIBLE ASSETS



DE

FER

RE

D T

AX

4.1

5

G

RO

UP

B

AN

K

1

SHR

AW

AN

, 20

73

1 S

HR

AW

AN

, 20

73

PA

RTI

CU

LAR

S D

EFE

RR

ED

D

EFE

RR

ED

TA

X

NE

T D

EFE

RR

ED

D

EFE

RR

ED

D

EFE

RR

ED

TA

X

NE

T D

EFE

RR

ED

TA

X A

SSE

TS

LIA

BIL

ITIE

S TA

X A

SSE

TS

TAX

ASS

ETS

LI

AB

ILIT

IES

TAX

ASS

ETS

/(

LIA

BIL

ITIE

S)

/(LI

AB

ILIT

IES)

Def

erre

d t

ax o

n te

mp

ora

ry d

iffer

ence

s o

n fo

llow

ing

item

s

Lo

ans

and

Ad

vanc

es t

o B

FIs

-

- -

-

Lo

ans

and

Ad

vanc

es t

o C

usto

mer

s

-

- (4

9,3

14,9

58)

(49

,314

,958

)

In

vest

men

t P

rop

erti

es

- -

- -

In

vest

men

t S

ecur

itie

s

-

-

- -

P

rop

erty

and

Eq

uip

men

t

-

23,6

41,0

06

(3

,214

,80

8)

20,4

26,19

8

Employees'DefinedBenefitPlan

-19,264,150

-19,264,150

Le

ase

Liab

iliti

es

-

- -

-

P

rovi

sio

ns

-

-

- -

OtherTem

poraryDifferences

-

-

-

-

Deferredtaxontemporarydifferences

-

42,905,155(52,529,766)

(9,624,610)

Def

erre

d t

ax o

n ca

rry

forw

ard

of

unus

ed t

ax lo

sses

-

-

-

-

Def

erre

d t

ax d

ue t

o c

hang

es in

tax

rat

e

-

-

- -

Net

Def

erre

d T

ax A

sset

(Li

abili

ties

) as

on

year

end

of

2072

/73

(9

,624

,610

)

Ad

just

men

t to

op

enin

g

1,1

40

,88

9

Clo

sing

Net

Def

erre

d T

ax A

sset

(Li

abili

ties

) as

on

year

end

of

2072

/73

(8

,483

,721

)

Def

erre

d T

ax (

Ass

et)/

Lia

bili

ties

as

on

Shra

wan

01,

20

72

1

0,2

96

,879

Ori

gin

atio

n/(R

ever

sal)

dur

ing

the

yea

r

(19

,921

,48

9)

DeferredTax(expense)/incomerecognizedinprofitorloss

(19,921,489)

Def

erre

d T

ax (

exp

ense

)/in

com

e re

cog

nize

d in

OC

I

-

Def

erre

d T

ax (

exp

ense

)/in

com

e re

cog

nize

d d

irec

tly

in e

qui

ty

G

RO

UP

B

AN

K

A

SAR

EN

D 2

074

A

SAR

EN

D 2

074

PA

RTI

CU

LAR

S D

EFE

RR

ED

D

EFE

RR

ED

TA

X

NE

T D

EFE

RR

ED

D

EFE

RR

ED

D

EFE

RR

ED

TA

X

NE

T D

EFE

RR

ED

TA

X A

SSE

TS

LIA

BIL

ITIE

S TA

X A

SSE

TS

TAX

ASS

ETS

LI

AB

ILIT

IES

TAX

ASS

ETS

/(

LIA

BIL

ITIE

S)

/(LI

AB

ILIT

IES)

Def

erre

d t

ax o

n te

mp

ora

ry d

iffer

ence

s o

n fo

llow

ing

item

s

Lo

ans

and

Ad

vanc

es t

o B

FIs

-

-

-

-

Lo

ans

and

Ad

vanc

es t

o C

usto

mer

s

(81,4

40

,256

) (8

1,44

0,2

56)

-

(81,4

40

,256

) (8

1,44

0,2

56)

In

vest

men

t P

rop

erti

es

-

-

- -

In

vest

men

t S

ecur

itie

s

(2,6

01,0

79)

(2,6

01,0

79)

-

-

-

P

rop

erty

and

Eq

uip

men

t 36

,99

5

(1,0

16,0

55)

(979

,06

0)

-

(1

,016

,055

) (1

,016

,055

)


51,659,126

51,659,126

51,659,126

-

51,659,126

Le

ase

Liab

iliti

es

-

-

-

-



Con

td..

. DE

FE

RR

ED

TA

X

G

RO

UP

B

AN

K

A

SAR

EN

D 2

074

A

SAR

EN

D 2

074

PA

RTI

CU

LAR

S D

EFE

RR

ED

D

EFE

RR

ED

TA

X

NE

T D

EFE

RR

ED

D

EFE

RR

ED

D

EFE

RR

ED

TA

X

NE

T D

EFE

RR

ED

TA

X A

SSE

TS

LIA

BIL

ITIE

S TA

X A

SSE

TS

TAX

ASS

ETS

LI

AB

ILIT

IES

TAX

ASS

ETS

/(

LIA

BIL

ITIE

S)

/(LI

AB

ILIT

IES)

P

rovi

sio

ns

-

-

-

-

OtherTem

poraryDifferences

1,166,456

-

1,166,456

1,166,456

-

1,166,456


(32,194,813)

52,825,582

(82,456,311)

(29,630,730)

Def

erre

d t

ax o

n ca

rry

forw

ard

of

unus

ed t

ax lo

sses

3,

89

4,3

92

3,8

94

,39

2 3,

89

4,3

92

-

3,

89

4,3

92

Def

erre

d t

ax d

ue t

o c

hang

es in

tax

rat

e

-

- -

-

Net

Def

erre

d T

ax A

sset

(Li

abili

ties

) as

on

year

end

of

2073

/74

(2

8,30

0,4

21)

(25,

736

,338

)

Def

erre

d T

ax (

Ass

et)/

Lia

bili

ties

as

on

Shra

wan

01,

20

73

76,7

38,5

62

(26

,50

6,0

60

)

Ori

gin

atio

n/(R

ever

sal)

dur

ing

the

yea

r

(4

8,4

38,14

0)

52,2

42,

398


(48,438,140)

62,737,769

Def

erre

d T

ax (

exp

ense

)/in

com

e re

cog

nize

d in

OC

I

(1

0,4

95,

372)

(1

0,4

95,

372)

Def

erre

d T

ax (

exp

ense

)/in

com

e re

cog

nize

d d

irec

tly

in e

qui

ty

-

G

RO

UP

B

AN

K

A

SAR

EN

D 2

075

A

SAR

EN

D 2

075

PA

RTI

CU

LAR

S D

EFE

RR

ED

D

EFE

RR

ED

TA

X

NE

T D

EFE

RR

ED

D

EFE

RR

ED

D

EFE

RR

ED

TA

X

NE

T D

EFE

RR

ED

TA

X A

SSE

TS

LIA

BIL

ITIE

S TA

X A

SSE

TS

TAX

ASS

ETS

LI

AB

ILIT

IES

TAX

ASS

ETS

/(

LIA

BIL

ITIE

S)

/(LI

AB

ILIT

IES)

Def

erre

d t

ax o

n te

mp

ora

ry d

iffer

ence

s o

n fo

llow

ing

item

s

Lo

ans

and

Ad

vanc

es t

o B

FIs

-

-

-

-

-

-

Lo

ans

and

Ad

vanc

es t

o C

usto

mer

s -

-

-

-

-

-

In

vest

men

t P

rop

erti

es

-

-

-

-

-

-

In

vest

men

t S

ecur

itie

s 10

6,4

52

(1,5

68

,84

6)

(1,4

62,

394

) -

-

-

P

rop

erty

and

Eq

uip

men

t 9

9,2

32

(26

,04

4,16

7)

(25,

94

4,9

35)

-

(2

6,0

44

,167)

(2

6,0

44

,167)


75,725,332

-

75,725,332

75,555,602

-

75,555,602

Le

ase

Liab

iliti

es

-

- -

-

-

-

P

rovi

sio

ns

-

-

-

-

- -

OtherTem

poraryDifferences

390,233

-390,233

390,233

-

390,233


76,321,249

(27,613,013)

48,708,237

75,945,835

(26,044,167)

49,901,668

Def

erre

d t

ax o

n ca

rry

forw

ard

of

unus

ed t

ax lo

sses

3,

245,

327

3,24

5,32

7

3,24

5,32

7 -

3,

245,

327

Def

erre

d t

ax d

ue t

o c

hang

es in

tax

rat

e

-

-

-

-

Net

Def

erre

d T

ax A

sset

(Li

abili

ties

) as

on

year

end

of

2074

/75

51,9

53,5

63

53,1

46

,99

5

Def

erre

d T

ax (

Ass

et)/

Lia

bili

ties

as

on

Shra

wan

01,

20

74

(28,

300

,421

)

(2

5,73

6,3

38)

Ori

gin

atio

n/(R

ever

sal)

dur

ing

the

yea

r

8

0,2

53,9

85

78

,88

3,33

2


142,075,708

140,705,056

Def

erre

d T

ax (

exp

ense

)/in

com

e re

cog

nize

d in

OC

I

(6

1,821

,723

)

(6

1,821

,723

)

Def

erre

d T

ax (

exp

ense

)/in

com

e re

cog

nize

d d

irec

tly

in e

qui

ty



OTHER ASSETS 4.16

The other assets that fall under the classification of financial instruments are carried at amortized costs and those other assets that do not fall within the definition are carried at cost. These instruments are regularly monitored for impairment.

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Assets held for Sale - - - - -

Other Non-Banking Assets - - - - -

Bills Receivable - - - - -

Accounts Receivable 96,139,934 52,823,547 94,933,780 47,541,340 79,767,242

Accrued Income - - - - -

Prepayments and Deposits 44,030,764 36,077,186 43,510,209 35,613,903 15,074,987

Income Tax Deposit - - - - -

Deferred Employee Expenditure - - - - -

Other Assets 188,704,626 422,650,102 186,884,310 422,080,661 13,125,708

Total 328,875,325 511,550,835 325,328,298 505,235,904 107,967,937

DUE TO BANKS AND FINANCIAL INSTITUTIONS 4.17

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Money Market Deposits - - - - -

Interbank Borrowing - - - - -

Other Deposits from BFIs 2,126,890,375 3,880,814,202 2,126,890,375 3,880,814,202 1,819,765,220

Settlement and Clearing Accounts - - - - -

Other Deposits from BFIs - -

Total 2,126,890,375 3,880,814,202 2,126,890,375 3,880,814,202 1,819,765,220

DUE TO NEPAL RASTRA BANK 4.18

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

RefinancefromNRB 523,732,510 -523,732,510 - -

Standing Liquidity Facility - - - - -

Lender of Last Resort facility from NRB - - - - -

Securities sold under repurchase agreements - - - - -

Other Payable to NRB 2,834,869 - 2,834,869 - -

Total 526,567,379 - 526,567,379 - -



DERIVATIVE FINANCIAL INSTRUMENTS 4.19

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Held for Trading

Interest Rate Swap - - -

Currency Swap - - -

Forward Exchange Contracts - - -

Others - - -

Held for Risk Management

Interest Rate Swap - - -

Currency Swap - - -

Forward Exchange Contracts. 23,324,347 23,324,347 - -

Others - - -

Total 23,324,347 - 23,324,347 - -

DEPOSITS FROM CUSTOMERS 4.20

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Institutional Customers:

Term Deposits 24,903,251,412 23,254,072,829 25,008,251,412 23,372,191,280 20,256,612,881

Call Deposits 3,578,948,054 2,329,616,726 3,646,860,293 2,329,616,726 4,254,812,381

Current Deposits 3,175,622,327 1,594,990,792 3,175,622,327 1,594,990,792 1,529,453,739

Others 1,112,269,041 1,044,705,240 1,112,269,041 1,044,705,240 1,020,654,548

Individual Customers

Term Deposits 14,042,160,657 12,120,954,655 14,042,160,657 12,120,954,655 5,280,067,195

Saving Deposits 19,786,710,542 16,382,387,511 19,786,710,542 16,382,387,511 17,163,701,327

Current Deposits 439,721,189 261,904,191 439,721,189 261,904,191 244,300,618

Others 154,532,054 179,409,052 154,532,054 179,409,052 231,692,547

Total 67,193,215,276 57,168,040,996 67,366,127,515 57,286,159,447 49,981,295,235

CURRENCY WISE ANALYSIS OF DEPOSIT FROM CUSTOMERS 4.20.1

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Nepalese Rupee 66,044,113,727 55,551,336,362 66,044,113,727 55,551,336,362 48,722,121,085

Indian Rupee - -

United States Dollar 1,302,418,263 1,710,287,408 1,302,418,263 1,710,287,408 1,235,974,515

Great Britain Pound 13,000,576 3,136,551 13,000,576 3,136,551 1,069,071

Euro 6,594,949 21,399,127 6,594,949 21,399,127 22,130,564

Japanese Yen - -

Chinese Yuan - -

Other - -

Total 67,366,127,515 57,286,159,447 67,366,127,515 57,286,159,447 49,981,295,235



BORROWINGS 4.21

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Domestic Borrowings

Nepal Government - - - - -

Other Institutions. - - - - -

Other - - - - -

Sub Total - - -

Foreign Borrowings

Foreign Banks and Financial Institutions - - - - -

Multilateral Development Banks - - - - -

Other Institutions - - - - -

Sub Total - - -

Total - - - - -

PROVISIONS 4.22

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Provisions for Redundancy - - -

Provisions for Restructuring - - - - -

Pending Legal Issues and Tax Litigation - - - - -

Onerous Contracts - - - - -

Other - -

Total - - - - -

MOVEMENT IN PROVISION 4.22.1

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Balance at Shrawan 01

Provisions made during the year - - - - -

Provisions used during the year - - - - -

Provisions reversed during the year - - - - -

Unwind of Discount - - - - -

Balance at Asar end - - -



OTHER LIABILITIES 4.23

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Liabilitiesforemloyeesdefined

benefitobligations 168,675,501 113,285,330 167,044,821 112,333,570 93,894,361

Liabilities for long service leave 77,289,026 59,863,515 77,289,026 59,863,515 52,981,981

Shorttermemployeebenefits - - - - -

Bills payable 23,715,576 17,204,029 23,715,576 17,204,029 19,516,359

Creditors and accruals 16,779,354 20,673,903 - - -

Interest payable on deposits - - - - -

Interest payable on borrowing - - - - -

Liabilities on defered grant income - - - - -

Unpaid Dividend 104,189,435 109,423,455 44,195,398 44,509,037 40,760,303

Liabilities under Finance Lease - - - - -

Employee bonus payable 197,482,343 173,073,288 195,126,988 170,436,789 174,576,162

Other Liabilities 765,319,446 609,364,818 678,290,660 526,419,509 310,553,717

Total 1,353,450,682 1,102,888,337 1,185,662,469 930,766,449 692,282,883

Non Financial liabilities are recorded and reported at cost based on legal and constructive obligation to the bank. Provisions are recognised when the bank has a present legal or constructive obligation as a result of past events, it is more likely that not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.

DEFINED BENEFIT OBLIGATION 4.23.1

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Present value of unfunded obligations 244,333,847 172,197,085 244,333,847 172,197,085 146,876,342

Present value of funded obligations - -

Total present value of obligations 244,333,847 172,197,085 244,333,847 172,197,085 146,876,342

Fair value of plan assets - - -

Present value of net obligations 244,333,847 172,197,085 244,333,847 172,197,085 146,876,342

Recognisedliabilityfordefinedbenefitobligations - -

The amounts recognised in the statements of financials positions are as follows :

PLAN ASSETS 4.23.2

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Equity securities - - - - -

Government bonds - - - - -

Bank deposit - - - - -

Other - - - - -

Total - - - - -

Actual return on plan assets



MOVEMENT IN THE PRESENT VALUE OF DEFINED BENEFIT OBLIGATIONS 4.23.3

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

DefinedbenefitobligationsatSawan1172,197,085 146,876,342 172,197,085 146,876,342 76,099,513

Actuarial losses 17,820,180 (4,454,163) 17,820,180 (4,454,163) 51,018,768

Benefitspaidbytheplan (6,672,902) (8,828,910)(6,672,902) (8,828,910) (2,293,963)

Current service costs and interest 60,989,484 38,603,816 60,989,484 38,603,816 22,052,024

Defined benefit obligations at Asar end 244,333,847 172,197,085 244,333,847 172,197,085 146,876,342

MOVEMENT IN THE FAIR VALUE OF PLAN ASSETS 4.23.4

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Fair value of plan assets at Sawan 1 - - - - -

Contributions paid into the plan - - - - -

Benefitspaidduringtheyear - - - - -

Actuarial (losses) gains - - - - -

Expected return on plan assets - - - - -

Fair value of plan assets at Asar end - - - - -

AMOUNT RECOGNISED IN PROFIT OR LOSS 4.23.5

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Current service costs 53,362,141 23,361,393 53,362,141 23,361,393 41,547,044

Interest on obligation 13,401,539 11,302,216 13,401,539 11,302,216 5,995,945

Expected return on plan assets - - - - -

Total 66,763,680 34,663,609 66,763,680 34,663,609 47,542,989

AMOUNT RECOGNISED IN OTHER COMPREHENSIVE INCOME 4.23.6

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Acturial (gain)/loss 12,045,984 (513,956) 12,045,984 (513,956) 25,527,803

Total 12,045,984 (513,956) 12,045,984 (513,956) 25,527,803

ACTUARIAL ASSUMPTIONS 4.23.7

BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75)

Discountrate 9% 8% 8%

Expectedreturnonplanasset 0% 0% 0%

Futuresalaryincrease 10% 10% 10%

Withdrawalrate 11% 11% 11%



DEBT SECUTITIES ISSUED 4.24

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Debt securities issued designated

asatfairvaluethroughprofitorloss - - - - -

Debt securities issued at amortised cost - - - - -

Total - - - - -

SUBORDINATED LIABILITIES 4.25

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Redeemable preference shares - - - - -

Irredemable cumulative preference

shares (liabilities component) - - - - -

Other - - - - -

Total - - -

SHARE CAPITAL 4.26

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Ordinary shares 8,152,555,851 7,018,104,701 8,152,555,851 7,018,104,701 3,976,046,341

Convertible preference shares

(equity component only) - - - - -

Irredemable preference shares


Perpetual debt


Total 8,152,555,851 7,018,104,701 8,152,555,851 7,018,104,701 3,976,046,341

Financial instruments issued are classified as equity when there is no contractual obligation to transfer cash, other financial assets or issue available number of own number of instrumens. Incremental costs directly attributable to the issue of new shares are shown in equity as deduction net of taxes from the proceeds. Dividends on ordinary shares and preference shares classifed as equity are recognised in equity in the period in which they are declared.



ORDINARY SHARES 4.26.1

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Authorized Capital

50,000,000 Ordinary share

of Rs. 100 each (2072/73) 5,000,000,000


of Rs. 100 each 10,000,000,000 10,000,000,000 10,000,000,000 10,000,000,000

Issued capital


of Rs. 100 each (2072/73) 3,976,049,741


of Rs. 100 each (2073/74) 7,018,104,701 7,018,104,701


of Rs. 100 each (2074/75) 8,152,555,851 8,152,555,851

Subscribed and paid up capital


of Rs. 100 each (2072/73) 3,976,046,341


of Rs. 100 each (2073/74) 7,018,104,701 7,018,104,701


of Rs. 100 each (2074/75) 8,152,555,851 8,152,555,851

Total 8,152,555,851 7,018,104,701 8,152,555,851 7,018,104,701 3,976,046,341

ORDINARY SHARE OWNERSHIP 4.26.2

2017/18 (74/75) 2016/17 (73/74)

PARTICULARS PERCENT AMOUNT PERCENT AMOUNT

Domestic ownership

Nepal Government

"A" class licensed institutions

Other licensed intitutions

Other Institutions

Public 48.90% 3,986,599,811 48.49% 3,402,770,940

Other 51.10% 4,165,956,040 51.51% 3,615,333,761

Foreign ownership

Total 100% 8,152,555,851 100% 7,018,104,701



RESERVES 4.27

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Statutory general reserve 1,452,920,248 1,157,525,877 1,452,920,248 1,157,525,877 774,260,314

Exchange equilisation reserve 27,141,769 22,968,448 27,141,769 22,968,448 21,181,584

Corporate social responsibility reserve 20,211,911 11,760,887 20,211,911 11,760,887 -

Capital redemption reserve - - - - -

Regulatory reserve 526,481,883 - 526,481,883 - -

Investment adjustment reserve 16,585,000 23,105,225 16,585,000 23,105,225 17,798,572

Capital reserve 7,649,249 7,649,249 - - -

Assets revaluation reserve - - - - -

Fair value reserve 279,707,498 127,024,622 279,707,498 127,024,622 -

Dividend equalisation reserve - - - - -

Actuarial gain (8,072,420) 359,769 (8,072,420) 359,769 (25,527,803)

Special reserve - - - - -

Other reserve 17,789,989 25,070,580 17,789,989 25,070,580 14,033,894

Total 2,340,415,129 1,375,464,658 2,332,765,879 1,367,815,408 801,746,561

The reserve include regulatory and free reserve

CONTINGENT LIABILITIES AND COMMITMENTS 4.28

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Contingent liabilities 24,749,879,404 19,131,639,640 24,749,879,404 19,131,639,640 14,216,052,312

Undrawn and undisbursed facilities 12,867,453,357 10,255,318,679 12,867,453,357 10,255,318,679 5,746,474,773

Capital commitment 8,058,829 - 8,058,829 - -

Lease Commitment - - - - -

Litigation 12,518,295 12,518,295 12,518,295 12,518,295 15,377,566

Total 37,637,909,885 29,399,476,614 37,637,909,885 29,399,476,614 19,977,904,651

Contingent liabilities: Where the Bank undertake to make a payment on behalf of its customers for guarantees issued, such as for performance bonds or as irrecovable letters of credit as part of the Bank's transaction banking business for which an obligation to make a payment has not arisen at the reporting date, those are included in these financial statement as contingent liabilities. Other contingent liabilites primarily include recocable letters of credit and bonds issued on behalf of customers to customs, for bids or offers. Commitments: Where the Bank has confirmed its intention to provide funds to a customer or on behalf of a customer in the form of loans, overdrafts, future guarantees, whether cancellable or not, or letters of credit and the Bank has not made payments at the reporting date, those instruments are included in these financial statment as committments.

There is a regulatory requirement to set aside 20% of the net profit to the general reserve until the reserve is twice the paid of share capital and thereafter minimum 10% of the net profit. The reserve is the acuumulation of setting aside of the profits over the period. There is a regulatory requirement to set aside 25% of the foreign exhange revaluation gain on the translation fo the foreign currency to the reporting currency. The reserve is the acuumulation of setting aside of the profits over the period. Movement in the reserves are given in detail in the Statement of Changes in Equity.



CONTINGENT LIABILITIES 4.28.1

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Acceptance and documentary credit 4,329,410,484 2,910,867,424 4,329,410,484 2,910,867,424 3,187,589,148

Bills for collection 656,511,726 77,333,142 656,511,726 77,333,142 612,226,357

Forward exchange contracts 3,020,875,000 2,166,150,000 3,020,875,000 2,166,150,000 2,174,597,282

Guarantees 16,743,082,194 13,977,289,074 16,743,082,194 13,977,289,074 8,241,639,525

Underwriting commitment - - - - -

Other commitments - - - - -

Total 24,749,879,404 19,131,639,640 24,749,879,404 19,131,639,640 14,216,052,312

UNDRAWN AND UNDISBURSED FACILITIES 4.28.2

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Undisbursed amount of loans - - - - -

Undrawn limits of overdrafts 12,867,453,357 10,255,318,679 12,867,453,357 10,255,318,679 5,746,474,773

Undrawn limits of credit cards - - - - -

Undrawn limits of letter of credit - - - - -

Undrawn limits of guarantee - - - - -

Total 12,867,453,357 10,255,318,679 12,867,453,357 10,255,318,679 5,746,474,773

CAPITAL COMMITMENTS 4.28.3

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Capital commitments in relation to

Property and Equipment

Approved and contracted for 8,058,829 8,058,829 - -

Approved but not contracted for - - - -

Sub total 8,058,829 - 8,058,829 - -

Capital commitments in relation to

Intangible assets

Approved and contracted for - - - - -

Approved but not contracted for - - - - -

Sub total - - - - -

Total 8,058,829 - 8,058,829 - -

Capital expenditure approved by relevant authority of the bank but provision has not been made in financial statements



LEASE COMMITMENTS 4.28.4

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Operating lease commitments

"Future minimum lease payments

under non cancellable operating lease,

where the bank is lessee"

Not later than 1 year - - - - -

Later than 1 year but not later than 5 years - - - - -

Later than 5 years - - - -

Sub total - - - - -

Finance lease commitments

"Future minimum lease payments

under non cancellable operating lease,

where the bank is lessee"

Not later than 1 year - - - - -

Later than 1 year but not later than 5 years - - - - -

Later than 5 years - - - - -

Sub total - - - - -

Grand total - - - - -

LITIGATION 4.28.5

GROUP BANK

PARTICULARS 2017/18 (74/75) 2016/17 (73/74) 2017/18 (74/75) 2016/17 (73/74) 2015/16 (72/73)

Contingent Tax Liabilities 12,518,295 12,518,295 12,518,295 12,518,295 15,377,566

INTEREST INCOME 4.29

GROUP BANK


Cash and cash equivalent - 33,201 - 33,201

Due from Nepal Rastra Bank - - - -

Placementwithbankandfinancialinstitutions 92,075,710 30,941,314 73,554,81630,941,314

Loanandadvancestobankandfinancialinstitutions - - --

Loans and advances to customers 7,228,983,242 5,200,800,651 7,228,983,242 5,200,800,651

Investment securities 308,761,792 170,887,432 308,761,792 170,887,432

Loanandadvancestostaff 36,061,338 25,168,021 36,061,33825,168,021

Other Interest Income - - - -

Total interest income 7,665,882,082 5,427,830,619 7,647,361,187 5,427,830,619

Interest income is recognized in accrual basis using the rate that closely approximates the EIR because the bank considers that the cost of exact calculation of effective interest rate (EIR) method exceeds the benefit that would be derived from such compliance. As a part of first convergence exercise to NFRS, the bank has not considered the accrued interest as income for those identifiable parties which got reversed in subsequent year which amounts to NPR 234,624,050 in FY 2072/73 and NPR 284,714,723 in FY 2073/74.



INTEREST EXPENSES 4.30

GROUP BANK


Duetobankandfinancialinstitutions - - --

Due to Nepal Rastra Bank 4,915,420 - 4,915,420 -

Deposits from customers 4,747,964,440 3,106,141,502 4,766,229,839 3,110,863,617

Borrowing 5,287,854 2,569,111 5,287,854 2,569,111

Debt securities issued - - - -

Subordinated liabilities - - - -

Other Charges - - - -

Total Interest expense 4,758,167,715 3,108,710,613 4,776,433,114 3,113,432,728

FEES AND COMMISSION INCOME 4.31

GROUP BANK


Loan administration fees - - - -

Service fees 229,401,022 224,263,589 229,401,022 224,263,589

Consortium fees - - - -

Commitment fees - - - -

DD/TT/Swift fees 15,507,843 9,654,251 15,507,843 9,654,251

Credit card/ATM issuance and renewal fees 86,024,731 90,164,782 86,024,731 90,164,782

Prepayment and swap fees - - - -

Investment banking fees 4,176,724 4,837,082 - -

Asset management fees 106,535 - - -

Brokerage fees - - - -

Remittance fees 12,977,783 7,990,499 12,977,783 7,990,499

Commission on letter of credit 44,786,829 41,138,574 44,786,829 41,138,574

Commission on guarantee contracts issued 159,686,349 124,530,733 159,686,349 124,530,733

Commission on share underwriting/issue 4,434,438 1,835,325 - -

Locker rental 5,210,560 5,475,155 5,210,560 5,475,155

Other fees and commision income 68,577,441 15,799,954 66,318,819 14,033,840

Total Fees and Commission Income 630,890,254 525,689,944 619,913,935 517,251,423

Fees and commissions are generally recognized on an accrual basis when the service has been provided or significant act is performed. Service processing fees on loan is recognized as fees and commission income by the bank and the same in recognized by the bank upfront and is not deferred with the tenure of loan.



FEES AND COMMISSION EXPENSE 4.32

GROUP BANK


ATM management fees 67,730,922 62,945,241 67,730,922 62,945,241

VISA/Master card fees - - - -

Guarantee commission - - - -

Brokerage - - - -

DD/TT/Swift fees. - - - -

Remittance fees and commission - - - -

Other fees and commission expense 89,101,602 98,005,813 91,608,476 98,180,966

Total Fees and Commission Expense 156,832,524 160,951,054 159,339,397 161,126,207

NET TRADING INCOME 4.33

GROUP BANK


Changes in fair value of trading assets - - - -

Gain/loss on disposal of trading assets (4,213,288) (15,039,447) - -

Interest income on trading assets - - - -

Dividend income on trading assets - - - -

Gain/loss foreign exchange transation - - - -

Other - - - -

Net trading income (4,213,288) (15,039,447) - -

Fees and commission expense relates mainly to the transaction and service fees, which are expenses as the services are received.

Gains and losses arising from changes in fair value of financial instruments held at fair value through profit and losses are included in the statement of profit or loss in the period in which they arise. Gains and lossed arising from changes in the fair value of available for sale financia assets are recognised directly in equity, until the financial assets are derecognised. Dividends on equity instruments are recognised in the statement of profit or loss within other income when the Bank has right to receive payment is established.



OTHER OPERATING INCOME 4.34

GROUP BANK


Foreign exchange revauation gain 16,693,283 7,147,455 16,693,283 7,147,455

Gain/loss on sale of investment securities - 13,435,964 - 13,435,964

Fair value gain/loss on investment properties - - - -

Dividend on equity instruments 13,448,885 1,082,592 12,916,090 1,082,592

Gain/loss on sale of property and equipment (2,662,564) 13,779,654 (2,662,564) 456,641

Gain/loss on sale of investment property - - - -

Operating lease income 3,412,434 3,329,009 3,412,434 3,329,009

Gain/loss on sale of gold and silver - - - -

Other Operating Income 197,328,697 122,992,399 197,328,697 122,992,399

Total 228,220,735 161,767,072 227,687,940 148,444,059

IMPAIRMENT CHARGE/(REVERSAL) FOR LOAN AND OTHER LOSSES 4.35

GROUP BANK


Impairment charge/(reversal) on loan and advances

to BFIs - - - -

Impairment charge/(reversal) on loan and advances

to customers 50,707,963 74,338,808 50,707,963 74,338,808

Impairmentcharge/(reversal)onfinancialInvestment (2,115,220) 575,715 (2,115,220) 575,715

Impairment charge/(reversal) on placement with BFIs - - - -

Impairment charge/(reversal) on property and

equipment - - - -

Impairment charge/(reversal) on goodwill and

intangible assets - - - -

Impairment charge/(reversal) on investment properties - - - -

Total 48,592,743 74,914,523 48,592,743 74,914,523

All other operating income not specifically provided under the income heads above is booked and presented under this head. This include foreign exchange revaluation gain, gain/loss on sale of available for sale securities, dividend on available for sale securities, gain/loss on sale of property and equipment, gain/loss on sale of investment properties, operating lease income, gain/loss on sale of gold and silver, finance income of finance lease etc.

Loans and advances are assessed individually and collectively as per incured loss model which is then compared with the loss provision prescribed by NRB directive no. 2.Higher of the loss as per incurred loss model and NRB directive is considered for impairment. Loans and advances above 40 million are considered for incurred loss model impairment which approximately come at 35% of total portfolio.



PERSONNEL EXPENSES 4.36

GROUP BANK


Salary 319,432,693 181,539,256 307,869,427 173,802,965

Allowances 255,670,480 204,103,040 255,670,480 204,103,040

Gratuity Expense 46,186,750 41,081,761 46,186,750 41,081,761

Provident Fund 24,946,072 17,223,215 24,946,072 17,223,215

Uniform 2,125,009 7,761,400 1,987,009 7,661,400

Training & development expense 16,218,107 12,504,528 16,218,107 12,504,528

Leave encashment 26,572,207 13,782,448 26,572,207 13,782,448

Medical - - - -

Insurance 7,554,691 31,308,270 7,554,691 31,308,270

Employees incentive - - - -

Cash-settled share-based payments - - - -

Pension expense - - - -

Finance expense under NFRS 26,359,865 22,834,267 26,359,865 22,834,267

Otherexpensesrelatedtostaff - - --

Subtotal 725,065,875 532,138,185 713,364,609 524,301,894

Employees Bonus 197,482,343 167,233,792 195,126,988 164,597,293

Grand total 922,548,218 699,371,977 908,491,597 688,899,187

Short term employee benefits are measured on an undiscounted basis and are expenses as the related service is provided. The contribution payable by the employer to a defined contribution plan in proportion to the services rendered to Bank by the employees and is recorded as an expense under ‘Personnel expense’ as and when they become due. Unpaid contribution are recorded as a liability under ‘Other Liabilities’.

OTHER OPERATING EXPENSE 4.37

GROUP BANK


Directors' fee 1,942,000 2,004,000 1,942,000 2,004,000

Directors' expense 1,095,680 1,007,626 1,095,680 1,007,626

Auditors' remuneration 1,285,940 1,276,900 1,130,000 1,130,000

Other audit related expense 324,162 800,000 324,162 800,000

Professional and legal expense 12,551,385 8,374,562 12,097,325 8,052,033

Officeadministrationexpense 159,281,091 68,476,519 158,014,041 68,022,280

Operating lease expense 87,935,180 73,584,632 86,161,430 71,934,632

Operating expense of investment properties - - - -

Corporate social responsibility expense 6,318,694 1,396,409 6,318,694 1,396,409

Onerous lease provisions - - - -

Other Expenses 179,008,668 161,958,899 175,158,328 158,246,762

Total 449,742,801 318,879,547 442,241,660 312,593,742

Operating lease expense has been recongnised on accrual basis. In case of straight line basis of accouting additional NPR 10,323,943 has to be charged.



DEPRECIATION AND AMORTISATION 4.38

GROUP BANK


Depreciation on property and equipment 62,427,544 48,866,519 60,949,868 47,529,783

Depreciation on investment property - - - -

Amortisation of intangible assets 51,465,125 - 51,465,125 -

Total 113,892,669 48,866,519 112,414,993 47,529,783

NON OPERATING INCOME 4.39

GROUP BANK


Recoveryofloanwrittenoff 22,400,570 -22,400,570-

Other income 45,801,779 31,719,267 45,801,779 13,917,746

Total 68,202,348 31,719,267 68,202,348 13,917,746

NON OPERATING EXPENSES 4.40

GROUP BANK


Loanwrittenoff 163,834,555 85,025,124 163,834,555 85,025,124

Redundancy provision - - - -

Expense of restructuring - - - -

Other expense. 547,474 897,152 547,474 897,152

Total 164,382,029 85,922,276 164,382,029 85,922,276

INCOME TAX EXPENSES 4.41

GROUP BANK


Current tax expense 621,264,344 454,034,370 615,003,079 447,435,702

Current year 619,651,855 452,822,459 613,390,590 446,223,791

Adjustments for prior years 1,612,489 1,211,911 1,612,489 1,211,911

Deferred tax expense (142,075,707) 58,933,512 (140,705,055) 62,737,769

Originationandreversaloftemporarydifferences (142,075,707) 58,933,512 (140,705,055)62,737,769

Changes in tax rate - - -

Recognition of previously unrecognised tax losses - - -

Total income tax expense 479,188,636 512,967,882 474,298,024 510,173,471

Depreciation is calculated by using the written down value method on cost or valuation of the Property & Equipment other than freehold land and leasehold properties. Depreciation on leasehold properties is calculated by using the straight line method on cost or valuation of the property. Intagible asset contains software which has been amortised over 5 years.

Income Tax expense is recognized in the statement of Profit or Loss, except to the extent it relates to items recognized directly in equity or other comprehensive income in which case it is recognized in equity or in other comprehensive income.



RECONCILIATION OF TAX EXPENSES AND ACCOUNTING PROFIT 4.41.1

GROUP BANK


Profitbeforetax 1,974,823,432 1,634,350,946 1,951,269,8771,623,025,401

Taxamountattaxrateof30% 592,447,030 490,305,284 585,380,963 486,907,620

Add:Taxeffectofexpensesthatarenot

deductible for tax purpose 79,760,973 88,720,848 79,388,097 70,213,035

Less:Taxeffectonexemptincome (3,874,827) (324,778) (3,874,827) (324,778)

Add/less:Taxeffectonotheritems (47,869,790) (127,638,548) (47,503,644) (112,331,739)

Total income tax expense 620,463,385 451,062,807 613,390,589 444,464,138

Effective tax rate 31.42% 27.60% 31.44% 27.38%

STATEMENT OF DISTRIBUTABLE PROFIT OR LOSS As on 16 July, 2018 (32 Asar 2075)

BANK

RESTATED

PARTICULARS 16 JULY 2018 15 JULY 2017

Net profit or (loss) as per statement of profit or loss 1,476,971,853 1,112,851,929

Appropriations:

a. General reserve (295,394,371) (235,217,747)

b.Foreignexchangefluctuationfund (4,173,321) (1,786,864)

c. Capital redemption reserve

d. Corporate social responsibility fund (14,769,719) (11,760,887)

e. Employees' training fund

f. Other - -

Profit or (loss) before regulatory adjustment 1,162,634,443 864,086,431

Regulatory adjustment:

a. Interest receivable (-)/previous accrued interest received (+) (346,008,422) -

b. Short loan loss provision in accounts (-)/reversal (+) - -

c. Short provision for possible losses on investment (-)/reversal (+) - -

d. Short loan loss provision on Non Banking Assets (-)/reversal (+) (119,254,047) -

e. Deferred tax assets recognised (-)/ reversal (+) (53,146,995) -

f. Goodwill recognised (-)/ impairment of Goodwill (+)

g. Bargain purchase gain recognised (-)/resersal (+)

h. Acturial loss recognised (-)/reversal (+) (8,072,420) -

i. Other (+/-)

Distributable profit or (loss) 636,152,559 864,086,431



5. DISCLOSURES AND ADDITIONAL INFORMATION

5.1 RISK MANAGEMENT Sunrise Bank has specific internal review mechanism to assess its position regarding each separate risk area including Credit Risk, Market Risk and Operational Risk.

5.1.1 Credit Risk The Bank has its own Credit Policy Guidelines to handle the Credit Risk Management philosophy that involves a continual measurement of probability of default/loss; identification of possible risks and mitigations. The provisions of Capital Adequacy Framework -2015 are compiled in line to line basis to overcome the Credit Risk. In order to manage and eliminate the credit risk, the Bank has a practice of maintaining the best quality assets in its book. The Bank’s Credit Policy elaborates detailed procedures for proper risk management. The Bank has delegated credit approval limits to various officials to approve and sanction various amount of credit request based on their individual expertise and risk judgment capability.

Regular monitoring of the credit portfolio ensures that the Bank does not run the risk of concentration of portfolio in a particular business sector or a single borrower. Similarly the Bank also exercises controlled investment policy with adequately equipped resource looking after the investment decisions.

To cap these all, the Bank has a strong Credit Committee in place comprising of various Directors from the Board of the Bank which reviews all credit proposals beyond a specified amount

5.1.2 Market Risk Bank risk management committee has approved the market risk policy of the Bank. As for the monitoring of market and liquidity risk, the Bank has an active Assets and Liability Management Committee (ALCO) in place which meets regularly and takes stock of the Bank’s assets and liability position and profile of assets & liabilities, monitors risks arising from changes in exchange rates in foreign currencies. All foreign exchange positions are managed by treasury consisting of front office dealers with specific dealing limits and an independent back office. The back office executes the deals made by the dealers and also monitors the liquidity position of the Bank. For the purpose of proper check and control, the front dealing room of treasury and the back office has different reporting line.

5.1.3 Liquidity Risk Liquidity risk is the potential for loss to a bank arising from either its inability to meet its obligations or to fund increases in assets as they fall due without incurring unacceptable cost or losses. Liquidity is the ability of an institution to transform its assets into cash or its equivalent in a timely manner at a reasonable price to meet its commitments as they fall due. Liquidity risk is considered a major risk for banks. It arises when the cushion provided by the liquid assets are not sufficient enough to meet its obligation. In such a situation banks often meet their liquidity requirements from market. Funding through market depends upon liquidity in the market and borrowing bank’s liquidity.

The board has ensured that the bank has necessary liquidity risk management framework and bank is capable of confronting uneven liquidity scenarios. The bank has formulated liquidity policies, contingency funding planning which are recommended

by senior management/ALCO and approved by the Board of Directors. The bank utilizes flow measures to determine its cash position. A maturity ladder analysis estimates a bank’s inflows and outflows and thus net deficit or surplus (GAP) over a time horizon. A maturity ladder is a useful device to compare cash inflows and outflows both on a day-to-day basis and over a series of specified time periods as presented in the NRB Ni.Fa.No.5.1 under NRB Directives No. 5.

5.1.4 Fair value of financial assets and liabilities Fair value is a market-based measurement, not an entity specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same – to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

Fair values are determined according to the following hierarchy:

Level 1 input Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Held for trading and financial instruments designated at fair value through other comprehensive income investments have been recorded using Level 1 inputs.



Level 2 inputs Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs Level 3 inputs are unobservable inputs for the asset or liability.

5.1.5 Operational Risk As a part of monitoring operational risks, the Bank has devised operational manuals for various Banking functions, which are reviewed and modified time to time as per the changing business context.

The Bank has adopted dual control mechanism in its all operational activities where each and every financial and non financial transaction is subject to approval from an authority higher than the transaction initiator. Regular review meetings are conducted to assess the adequacy of risk monitoring mechanism and required changes are made as and when felt necessary. Independent reconciliation unit is established to conduct daily reconciliation of all Nostro/agency accounts, Inter-Branch and Inter-Department account under direct supervision of Chief Financial Officer. The Bank has independent internal audit, which reports to the Audit Committee of the Bank. The Audit Committee meets frequently and reviews the business process and financial position of the Bank. In order to have better focus on managing operational risks across branches and to monitor them from Head Office level, the Bank has separate Branch Operation and Control & Compliance Department at Head Office. The Bank has strong MIS in place to monitor the regular operational activities.

5.2 CAPITAL MANAGEMENT

A. Qualitative Disclosures

i. Board and senior management oversight Bank management is responsible for understanding the nature and level of risk being taken by the bank and how this risk relates to adequate capital levels. It is also responsible for ensuring that the form and sophistication of the risk management processes is commensurate with the complexity of its operations. A sound risk management process, thus, is the foundation for an effective assessment of the adequacy of a bank’s capital position. The decisions made by the management are regularly reviewed by the BOD.

ii. Sound capital assessment Crucial component of an effective ICAAP is the assessment of capital. In order to be able to make a sound capital assessment, the bank have the following:

n Policies and procedures designed to ensure that the bank identifies, measures, and reports all material risks;

n A process that relates capital to the level of risk;

n A process that states capital adequacy goals with respect to risk, taking account of the bank’s strategic focus and business plan; and

n A process of internal control reviews and audits to ensure the integrity of the overall management process.

iii. Comprehensive assessment of risks Chief Risk Officer (CRO), along with his team, is responsible for overall risk management of the

Bank which includes managing, assessing, identifying, monitoring and reducing pertinent global, macro and micro-economic level business risks that could interfere with Banks objective and goals and whether the Bank is in substantial compliance with its internal operating policies and other applicable regulations and procedures, external, legal, regulatory or contractual requirements on a continuous basis. Further, CRO ensures integration of all major risk in capital assessment process.

iv. Risk Management Committee (RMC) Board level risk management committee has been set up under NRB Directive for ensuring/reviewing bank's risk appetite is in line with the policies.

v. Monitoring Monitoring and reporting of all risks, including credit, operational and market risks are identified, escalated, monitored and mitigated to the satisfaction of the risk type owner. The risk type owner is responsible for ensuring that all the risks are adequately identified, escalated, monitored and mitigated. The Bank has an adequate system in place for monitoring and reporting risk exposures and assessing how the changing risk profile affects the need for capital. The senior management and board of directors on a regular basis receive the report regarding the risk profile of the bank and its capital needs. All the material risks are identified, measured, monitored and reported by the respective risk type owner.

vi. Internal Control Review The internal control structure of the Bank is essential for sound



capital assessment process. Effective control of the capital assessment process includes an independent review and involvement of both internal as well as external audits wherever appropriate. The Bank is committed conduct the regular review of its risk management process to ensure its integrity, accuracy, and reasonableness. The effectiveness of the Bank’s internal control system is reviewed regularly by the Board, its committees, Management and Internal Audit.

The Internal Audit monitors compliance with policies and standards and the effectiveness of internal control structures across the Bank through its program of business/unit audits. The Internal Audit function is focused on the areas of greatest risk as determined by a risk-based assessment methodology. Internal Audit reports regularly to the Audit Committee. The findings of all adverse audits are reported to the Chief Executive Officer and Business Heads for immediate corrective actions.

vii. Assets and Liability Committee (ALCO) The ALCO, chaired by Chief Executive Officer, ensures functioning of the banking business in line with the set procedures and processes and recommends for necessary steps to address the risk associated with liquidity, movement in interest rate, exchange rate and equity price and other risks.

viii. Stress Testing Stress Testing is a risk management technique used to evaluate the potential effects on an institution’s financial condition, of a set of specified changes in risk factors, corresponding to exceptional but plausible events. The Bank conducts the stress test on quarterly basis and reports to senior management as well as to Nepal Rastra Bank.

ix. Maker-Checker Policy The Bank has adopted Maker-Checker Policy in all of the transactions. Each and every transaction is entered and authorized in CBS by two different individuals for better control and any deviations are closely monitored. The activities of any personnel can be monitored centrally through an integrated system which helps in minimizing the risk of misconduct.

B. Quantitative Disclosures

1. Capital Structure and Capital Adequacy

i. Tier 1 Capital and breakdown of its Components

ii. Tier 2 Capital and breakdown of its Components

iii. Details of Subordinated Term Debts Bank doesn’t have any subordinated term debts.

iv. Deductions from Capital

n Investment made in Gurans Life Insurance Company Limited of NPR 107.71 million and investment in Sunrise Capital Limited NPR 157.14 million (Investments in equity of institutions with Financial Interest)

n Rs 32.61 million for land and building not in use by bank that includes land purchased at Bharatpur, Chitwan (Rs 25.75 Million) not brought into use and proportionate WDV of buildings not used by bank and rented out to other parties (Rs 6.86 million)

n Fictitious Assets of Rs 76.4 Million.

S.N. PARTICULARS AMOUNT (NPR MILLIONS)

a Paid up Capital 8,152.56

b Share Premium / Capital Reserve 127.16

c Proposed Bonus Shares 0.00

d Statutory General Reserve 1,452.92

e Retained Earnings 941.86

f Un-auditedCurrentYearCumulativeProfit 0.00

g Other Free Reserves 17.79

h Less: Deferred Tax Assets 58.60

i Less: Fictitious Assets 76.42

j Less:Investmentinequityofinstitutionswithfinancialinterests 264.85

k Less: Purchase of land & building in excess of limit and unutilized 32.61

Core (Tier-1) Capital 10,265.25


a General Loan Loss Provision 616.14

b Exchange Equalization Reserve 27.14

c Investment Adjustment Reserve 16.58

Supplementary (Tier-2) Capital 659.87



v. Total Qualifying Capital

vi. Capital Adequacy of the Bank The capital adequacy of the bank (After Bank's adjustments of Pillar II) has been detailed below:

vii. Summary of the bank’s internal approach to assess the adequacy of its capital to support current and future activities, if applicable: Bank’s current paid up capital amounts to Rs 8.15 Billion. The Bank complies with the Capital Increment plan of NRB which has also helped the Bank to be in steady and strong capital position. The overall strategy of the bank has been formulated with the special consideration to the capital adequacy requirement according to BASEL-III.

viii. Summary of the terms, conditions and main features of all capital instruments, especially in case of subordinated term debts including hybrid capital instruments. Bank does not have any other capital instruments except fully paid equity shares as qualifying capital.

2. Risk Exposures

a. Risk Weighted Exposures All material risks faced by the bank have been addressed in the capital assessment process. However, bank has developed a process to estimate risks with reasonable certainties. All the three risks that have direct impact on the capital adequacy level have been managed in a structured manner with clear roles and responsibilities. In order to make a comprehensive assessment of risks, the process has, at minimum, addressed the forms of risks covered below:

All risks, including credit, operational and market risks are identified, escalated, monitored and mitigated to the satisfaction of the risk type owner. The risk type owner is responsible for ensuring that all the risks are adequately identified, escalated, monitored and mitigated. The Bank has an adequate


a Risk Weighted Exposure for Credit Risk 74,851.54

b Risk Weighted Exposure for Operational Risk 3,289.00

c Risk Weighted Exposure for Market Risk 209.65

RWA Before Pillar 2 adjustment 78,350.19

S. N. PARTICULARS AMOUNT (NPR MILLIONS)

a Common Equity Tier 1 Capital 10,265.25

b Core Capital 10,265.25

c Supplementary Capital 659.87

Total Capital 10,925.13

S. N. PARTICULARS %

a CommonEquityTier1CapitaltoTotalRiskWeightedExposures 12.58%

b Tier1CapitaltoTotalRiskWeightedExposures 12.58%

c TotalCapitaltoTotalRiskWeightedExposures 13.38%



system in place for monitoring and reporting risk exposures and assessing how the changing risk profile affects the need for capital. The senior management and board of directors on a regular basis receive the report regarding the risk profile of the bank and its capital needs. All the material risks are identified, measured, monitored and reported by the respective risk type owner.

b. Credit Risk under 11 Categories The Credit Risks under the 11 categories as per the Capital Adequacy Framework, 2015 and Basel –III has been detailed below:

c. Total Risk Weighted Exposure Calculation Table

d. Detail of Non-Performing Loans

e. Ratio of Non-Performing Loans

a Claims on Govt. and Central Bank 14,061.37 -

b Claims on other Financial Entities

c Claims on Banks 4,858.26 1,491.19

d Claims on Corporate and Securities Firm 23,962.02 23,962.02

e Claims on Regulatory Retail Portfolio 22,171.39 16,628.54

f Claims secured by Residential Properties 8,131.31 4,917.79

g Claims secured by Commercial Real State 2,051.36 2,051.36

h Past due Claims 572.57 858.86

i High Risk Claims 2,557.72 3,836.58

j Other Assets 3,978.53 2,277.04

k Offbalancesheetitems 36,941.67 18,828.17

Total 119,286.20 74,851.54

S.N. RISK CLASSIFICATION NET BOOK VALUE RWE (NPR MILLION)

Restructured Loans -

Sub-Standard Loans 119.97 89.98

Doubtful Loans 324.77 162.38

Loss Loans 304.33 -

Total NPA 749.07 252.36

PARTICULARS GROSS VALUE NET VALUET (NPR MILLION)

S.N. RISK WEIGHTED EXPOSURE AMOUNT (NPR MILLIONS)




Adjustments under Pillar II

Add:1%oftheNIItoRWAforALMPolicyandPractice 21.93

3%additionalriskweightforOperationalRisk 906.02

3%adjustmentonTotalRWEforOverallRisk 2,350.51

Total Risk Weighted Exposure 81,628.64

PARTICULARS CURRENT YEAR PREVIOUS YEAR

GrossNPA 1.24% 1.37%

NetNPA 0.42% 0.41%

5.3 CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES NAS 39 requires financial assets to be classified in one of the following categories:

n Financial assets at fair value through profit or loss

n Financial assets designated at fair value through other comprehensive income

n Loans and receivablesn Held to maturity investments

Financial assets at fair value through profit or loss have two sub-categories:

n Financial asset that is designated on initial recognition as one to be measured at fair value with fair value changes in profit or loss.

n Held for trading

NAS 39 recognizes two classes of financial liabilities:

n Financial liabilities at fair value through profit or loss

n Other financial liabilities measured at amortized cost using the effective interest rate method

The category of financial liability at fair value through profit or loss has two sub-categories:

n Financial liability that is designated by the entity as a liability at fair value through profit or loss upon initial recognition

n Held for trading

The classification of financial assets or liabilities is given in detail in Note 3.4.

5.4 OPERATING SEGMENT INFORMATION

1. General Information An operating segment is a component of an entity:



n that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity),

n whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and

n for which discrete financial information is available.

Not every part of an entity is necessarily an operating segment or part of an operating segment. For example, a corporate headquarters or some functional departments may not earn revenues or may earn revenues that are only incidental to the activities of the entity and would not be operating segments. For the purposes of this NFRS, an entity’s post-employment benefit plans are not operating segments.

2. Information about profit or loss, assets and liabilities

3. Measurement of operating segment profit or loss, assets and liabilitiesThe bank has identified the key segments of business on the basis of nature of operations that assists the Executive Committee of the bank in decision making process and to allocate the resources. It will help the management to assess the performance of the business segments. The Segment has been identified on the basis of geographic location of the branches. Investment balances, NRB balance, income from investment, forex income are reported in Head office under Province 3. Intra segment revenue and costs are accounted as per the policy of the bank and eliminated in the Head Office

4. Reconciliations of reportable segment revenues, profit or loss, assets and liabilities

a. Revenue b. Profit or Loss

PARTICULARS CREDIT TREASURY TRANSACTION ALL OTHER TOTAL ADMINISTRATION BANKING

a. Revenues from external customers 7,494 380 391 296 8,561

b. Intersegment revenues - 4,830 - - 4,830

c. Net Revenue 7,494 5,210 391 296 13,391

d. Interest revenue - - - - -

e. Interest expense 4,830 4,776 - - 9,607

f. Net interest revenue(b) 2,664 434 391 296 3,784

g. Depreciation and amortization 98 5 5 4 112

h. Segmentprofit/(loss) 2,566 429 385 292 3,672

i. Entity'sInterestintheprofitorlossofassociates

accounted for using equity method - - - - -

j. Other material non-cash items: - - - - -

k. Impairment of assets (1,113) - - - (1,113)

l. Segment assets 61,324 13,611 119 7,729 82,782

m. Segment liabilities - 61,167 - 21,615 82,782

Amount in Mn.

Amount in Mn.

Total revenues for reportable segments 13,391

Other revenues 296

Elimination of intersegment revenues 4,830

Entity’s Revenue 8,561

Amount in Mn.

Total profit or loss for reportable segments 3,380

Otherprofitorloss 292

Eliminationofintersegmentprofits 64

Unallocated amounts: -

Other Operating expense 1,785

Profit before income tax 1,951



c. Assets

d. Liabilities

5. Information about product and services

6. Information about geographical areas Revenue from following geographical areas

7. Information about Major Customer Revenue from single customer doesn’t exceed 10% of total revenue

Amount in Mn.

Total assets for reportable segments 75,065

Other assets -

Unallocated amounts 7,717

Entity's Assets 82,782

Amount in Mn.

Total liabilities for reportable segments 61,179

Other liabilities -

Unallocated liabilities 21,603

Entity's Liabilities 82,782

Amount in Mn.

a. Domestic 9,050

Province 1 1,626

Province 2 564

Province 3 5,370

Province 4 318

Province 5 617

Province 6 9

Province 7 439

b. Foreign -

Total 9,050

S.N REVENUE 13,391

a Loans related Services 7,494

b Treasury related services 5,210

c Transaction Banking related services 391

d Other services 296

Amount in Mn.

5.5 SHARE OPTIONS AND SHARE BASED PAYMENT A share-based payment is a transaction in which the bank receives goods or services either as consideration for its equity instruments or by incurring liabilities for amounts based on the price of the entity's shares or other equity instruments of the entity. The bank does not have any share option and share based payment.

5.6 CONTINGENT LIABILITIES AND COMMITMENT

5.6.1 Contingent Liabilities: Where the Bank undertakes to make a payment on behalf of its customers for guarantees issued, such as for performance bonds or as irrevocable letters of credit as part of the Bank’s transaction banking business for which an obligation to make a payment has not arisen at the reporting date, those are included in these financial statements as contingent liabilities.

Other contingent liabilities primarily include revocable letters of credit and bonds issued on behalf of customers to customs, for bids or offers.

5.6.2 Commitments: Where the Bank has confirmed its intention to provide funds to a customer or on behalf of a customer in the form of loans, overdrafts, future guarantees, whether cancellable or not, or letters of credit and the Bank has not made payments at the reporting date, those instruments are included in these financial statement as commitments.

Please refer Note No. 4.28.1 to 4.28.4 for the detail of contingent liabilities and commitments as at 16 July 2018.

5.6.3 Litigations Litigations are anticipated in the context of business operations due to the nature of the transactions involved. The Bank and the Group are involved in various such legal actions and the controls have been established to deal with such legal claims. There are pending litigations existing as at the end of the reporting period against the Large Taxpayers Office, resulting through normal business operations.

The details of litigations are presented in 4.28.5.



5.7 RELATED PARTIES DISCLOSURES

A. Transaction with related party

B Key Managerial Personnel Key Management Personnel of the Bank include members of the Board, Chief Executive Officer and all managerial level executives. Followings are a list of Board of Directors and CEO bearing office at 16 July 2018.

C. Compensation to Board of Directors All members of the Board are non-executive directors and no executive compensation is paid to the directors. Specific non-executive allowances paid to directors are as under: Board Meeting fees Rs. 1,942,000 Other benefits Rs. 1,095,680

5.8 MERGER AND ACQUISITION The Bank has not entered into any merger or acquisition activity for the fiscal year ended on 16 July 2018.

Investment in Associates and Joint Ventures Associates are those entities in which the Bank has significant influence, but not control, over the financial and operating policies. Investments in associate entities are accounted for using the equity method (equity-accounted investees) and are recognized initially at cost. The cost of the investment includes transaction costs.

The Bank doesn’t have any associates or joint ventures.

PARTICULARS FY 2017/2018

Deposit Maintained by Sunrise Capital 172.91

Interest Paid to Sunrise Capital 18.26

Expenses reimbursement to subsidiary 2.06

Commission and fees paid to Sunrise capital RTS Fee 0.35

Bonus De-mat Fee 0.29

Tender Issue Fee 0.05

Tender Collection Commission 0.73

Amount in Mn.

KEY MANAGEMENT PERSONNEL RELATION

Mr. Motilal Dugar Chairman

Dr. Bhogendra Guragain Director

Er. Bachchharaj Tater Director

Mr. Malchand Dugar Director

Dr. Deepak Prasad Bhattarai Director

Mr. Dipak Nepal Director

Mr. Jyoti Kumar Begani Director

Mr. Om Krishna Joshi Director

Mr.RatnaRajBajracharya ChiefExecutiveOfficer

5.9 ADDITIONAL DISCLOSURES OF NON-CONSOLIDATED ENTITIES Not applicable

5.10 EVENTS AFTER REPORTING PERIOD There are no material events that have occurred subsequent to 16 July, 2018 till the signing of this financial statement on 29 November 2018.

The Board has decided to propose 11.5% Cash Dividend to its shareholders, subject to approval of the 11th Annual General Meeting. In view of the acquisition benefit extended by the Income Tax Act, 2058, the shareholders who have acquired the shares after the date of acquisition (2073/10/28) shall be liable to pay applicable dividend tax.



DISCLOSURE EFFECT OF TRANSITION FROM PREVIOUS GAAP TO NFRSS

1. Reconciliation of equity

5.11

EXPLANATORY AS AT 01.04.2073 AS AT 31.03.2074 (END OFPARTICULARS NOTE * (DATE OF TRANSITION) LAST PERIOD PRESENTED UNDER PREVIOUS GAAP)

Total equity under Previous GAAP 6,144,666,095 9,467,298,305

Adjustments under NFRSs:

Impairment on loan and advances -

Fairvalue&employeesbenefitaccountingofstaffloan --

Lease accounting - -

Measurement of investment securities at fair value 1.1 257,177,264 -

Revaluation of property & equipment - -

Recognition of investment property - -

Amortisation of debt securities issued - -

Deferred tax 1.2 (25,673,952) (55,467,856)

Definedbenefitobligationofemployees 1.3 (78,803,352) (86,574,668)

Goodwill/Bargain purchase gain - -

Interest income 1.4 164,383,193 271,467,521

Other - -

Legally repossed Asset 1.5 103,907,648 161,448,497

Unearned Commission 1.6 - (22,777,641)

Total Adjustment to equity 420,990,800 268,095,853

Total Equity under NFRSs 6,565,656,895 9,735,394,158

2. Reconciliation of profit or loss

EXPLANATORY FOR THE YEAR ENDEDPARTICULARS NOTE * 31.03.2074 (THE LATEST PERIOD PRESENTED UNDER PREVIOUS GAAP)

Profit/(Loss) for the year

Previous GAAP 1,176,088,732

Adjustments under NFRSs:

Interest income 2.1 107,084,328

Impairment of loan and advances -

Employeesbenefitamortisationunderstaffloan

Definedbenefitobligationofemployee 2.2 (33,813,075)

Operating lease expense

Amortisation expense of debt securities

Other operating income

Interest expense

Depreciation & Amortisation

Other

Unearned Commission & Discount 2.3 (22,777,641)

Fair Value measurement of foreign bond 2.4 -

Deferred Tax 2.5 (40,289,275)

NBA Reserve 2.6 (73,441,139)

Total Adjustment to profit or loss (63,236,803)

Profit or loss under NFRSs 1,112,851,929

Other Comprehensive Income

Total Comprehensive income under NFRSs 1,112,851,929



3. E

ffec

t o

f N

FR

Ss a

do

pti

on

for

the

stat

emen

t o

f fi

nanc

ial p

osi

tio

n

Ass

ets

Cas

h an

d c

ash

equi

vale

nt

2,

772,

391,1

78

- 2,

772,

391,1

78

2,0

60

,959

,54

0

- 2,

06

0,9

59,5

40

Due

fro

m N

epal

Ras

tra

Ban

k

3,8

09

,870

,29

-

3,8

09

,870

,29

8

7,4

96

,218

,74

8

- 7,

49

6,2

18,7

48

Pla

cem

ent

wit

h B

ank

and

Fin

anci

al In

stit

utio

ns

2,

618

,168

,66

8

- 2,

618

,168

,66

8

3,35

8,0

47,

347

-

3,35

8,0

47,

347

Derivativefinancialinstrum

ents

24,625,457

-

24,625,457

804,900

-804,900

Oth

er t

rad

ing

ass

ets

-

-

-

-

-

-

Loan

and

ad

vanc

es t

o B

/FIs

955

,332

,20

6

-

955

,332

,20

6

1,112

,94

2,4

59

- 1,1

12,9

42,

459

Loan

s an

d a

dva

nces

to

cus

tom

ers

3.1

42,

148

,970

,90

5

211,8

83,

921

4

2,36

0,8

54,8

26

49

,96

9,5

77,6

88

18

8,8

97,

253

50,15

8,4

74,9

41

Inve

stm

ent

secu

riti

es

3.2

5,58

7,9

87,

938

25

7,17

7,26

4

5,8

45,

165,

201

6

,168

,650

,70

5

- 6

,168

,650

,70

5

Cur

rent

tax

ass

ets

27

,774

,49

0

-

27,7

74,4

90

16

4,5

93,

723

-

164

,59

3,72

3

Inve

stm

ent

in s

usid

iari

es

-

-

-

78

,570

,98

1

- 78

,570

,98

1

Inve

stm

ent

in a

sso

ciat

es

-

-

-

-

-

-

Inve

stm

ent

pro

per

ty

-

-

-

-

-

-

Pro

per

ty a

nd e

qui

pm

ent

4

35,5

33,2

16

-

435

,533

,216

53

4,3

88

,88

0

- 53

4,3

88

,88

0

Go

od

will

and

Inta

ngib

le a

sset

s

5,8

92,

829

-

5,

89

2,8

29

58,5

33,9

70

- 58

,533

,970

Def

erre

d t

ax a

sset

s 3.

3

17,19

0,2

31

(17,

190

,231

) -

29

,731

,519

(2

9,7

31,5

19)

-

Oth

er a

sset

s 3.

4

155,

46

8,6

65

56

,40

6,9

20

211,8

75,5

85

4

22,6

65,

635

24

4,0

18,7

64

6

66

,68

4,3

99

Tota

l Ass

ets

58

,559

,20

6,0

81

508,

277,

874

59

,067

,483

,955

71

,455

,686

,095

4

03,

184

,49

9

71,8

58,8

70,5

93

Liab

iliti

esD

ue t

o B

ank

and

Fin

anci

al In

stit

uio

ns

1,8

19,7

65,

220

-

1,8

19,7

65,

220

3,

88

0,8

14,2

02

-

3,8

80

,814

,20

2

Due

to

Nep

al R

astr

a B

ank

-

-

-

-

-

-

Derivativefinancialinstrum

ents

-

-

-

-

--

Dep

osi

ts f

rom

cus

tom

ers

4

9,9

81,2

95,

235

-

4

9,9

81,2

95,

235

57

,28

6,15

9,4

47

-

57,2

86

,159

,44

7

Bo

rro

win

g

-

-

-

-

-

-

Cur

rent

Tax

Lia

bili

ties

-

-

-

-

- -

Pro

visi

ons

-

-

-

-

- -

Def

erre

d t

ax li

abili

ties

3.

3 -

8

,48

3,72

1

8,4

83,

721

-

25

,736

,337

25

,736

,337

Oth

er li

abili

ties

3.

5 6

13,4

79,5

30

78,8

03,

352

6

92,

282,

88

3

821

,414

,140

10

9,3

52,3

09

9

30,7

66

,44

9

Deb

t se

curi

ties

issu

ed

-

-

-

-

-

-

Sub

ord

inat

ed L

iab

iliti

es

-

-

-

-

-

-

Tota

l lia

bili

ties

52,4

14,5

39,9

86

87,2

87,0

74

52,5

01,

827,

06

0

61,9

88,3

87,7

89

135,

088

,64

6

62,

123,

476

,435

E

qui

tyS

hare

cap

ital

3,9

76,0

46

,34

1

-

3,9

76,0

46

,34

1

7,0

18,10

4,7

01

-

7,0

18,10

4,7

01

Sha

re p

rem

ium

-

-

-

-

- -

Ret

aine

d e

arni

ngs

3.6

1,3

41,3

45,

390

4

46

,518

,60

3

1,78

7,8

63,

99

3

1,077

,077

,026

27

2,39

7,0

22

1,34

9,4

74,0

48

Res

erve

s 3.

7 8

27,2

74,3

64

(2

5,52

7,8

03)

8

01,7

46

,56

1

1,372

,116

,578

(4

,30

1,170

) 1,3

67,

815

,40

8

Tota

l eq

uity

att

rib

utab

le t

o e

qui

ty h

old

ers

6

,14

4,6

66

,095

4

20,9

90

,80

0

6,5

65,

656

,895

9

,467

,29

8,30

5

268,

095

,853

9

,735

,39

4,1

58

No

n-co

ntro

lling

inte

rest

Tota

l eq

uity

6

,14

4,6

66

,095

.00

4

20,9

90

,80

0.0

2 6

,56

5,6

56,8

95.0

2 9

,467

,29

8,30

5.0

0

268,

095

,852

.82

9,7

35,3

94

,157

.82

Tota

l lia

bili

ties

and

eq

uity

58,5

59,2

06

,081

50

8,27

7,87

4

59,0

67,4

83,9

55

71,4

55,6

86,0

94

4

03,

184

,49

9

71,8

58,8

70,5

93

A

S A

T 0

1.0

4.2

073

A

S A

T 31

.03.

2074

E

XP

LAN

ATO

RY

PR

EV

IOU

S E

FFE

CT

OF

OP

EN

ING

NFR

SS

PR

EV

IOU

S C

UM

ULA

TIV

E

AM

OU

NT

AS

N

OTE

* G

AA

P

TRA

NSI

TIO

N

STA

TEM

EN

T O

F G

AA

P

EFF

EC

T O

F P

ER

NFR

SS

TO N

FRSS

FI

NA

NC

IAL

TR

AN

SITI

ON

TO

PO

SITI

ON

NFR

SS



4. Effect of NFRSs adoption for statement of profit or loss and other comprehensive income

4. Effect of NFRSs adoption for statement of Cash Flows

Interest income 4.1 5,306,155,662 121,674,957 5,427,830,619

Interest expense 3,113,432,728 - 3,113,432,728

Net interest income 2,192,722,934 121,674,957 2,314,397,891

Fee and commission income 4.2 540,029,064 (22,777,641) 517,251,423

Fee and commission expense 4.3 161,126,207 - 161,126,207

Net fee and commission income 378,902,857 (22,777,641) 356,125,216

Net interest, fee and commission income 2,571,625,791 98,897,316 2,670,523,107

Net trading income - - -

Other operating income 148,444,059 - 148,444,059

Total operating income 2,720,069,850 98,897,316 2,818,967,166

Impairment charge/(reversal) for loans and other losses (1,473,384) (73,441,139) (74,914,523)

Net operating income 2,718,596,466 25,456,177 2,744,052,643

Operating expense

Personnel expenses 4.4 640,495,483 48,403,704 688,899,187

Other operating expenses 312,593,742 - 312,593,742

Depreciation & Amortisation 47,529,783 - 47,529,783

Operating Profit 1,717,977,458 (22,947,527) 1,695,029,931

Non operating income 13,917,746 - 13,917,746

Non operating expense 85,922,276 - 85,922,276

Profit before income tax 1,645,972,928 (22,947,527) 1,623,025,401

Income tax expense 469,884,196 - 510,173,471

Current Tax 447,435,702 - 447,435,702

Deferred Tax 22,448,494 - 62,737,769

Profit for the year 1,176,088,732 (22,947,527) 1,112,851,929

Other comprehensive income 24,489,201

Total Comprehensive 1,176,088,732 (22,947,527) 1,137,341,130

EXPLANATORY FOR THE YEAR ENDED NOTE * 31.03.2074 (THE LATEST PERIOD PRESENTED UNDER PREVIOUS GAAP)

PARTICULARS PREVIOUS CUMULATIVE EFFECT OF AMOUNT AS GAAP TRANSITION TO NFRSS PER NFRSS

Netcashflowsfromoperatingactivities 2,568,605,999 - 2,568,605,999

Netcashflowsfrominvestingactivities (1,155,188,361) -(1,155,188,361)

Netcashflowsfromfinancingactivities 1,561,914,524 - 1,561,914,524

Net increase/(decrease) in cash and cash equivalent 2,975,332,162 - 2,975,332,162

Cash and cash equivalent at the beginning of the period 6,581,846,126 - 6,581,846,126

Cash and cash equivalent at the end of the period 9,557,178,288 9,557,178,288

EXPLANATORY FOR THE YEAR ENDED NOTE * 31.03.2074 (THE LATEST PERIOD PRESENTED UNDER PREVIOUS GAAP)

PARTICULARS PREVIOUS CUMULATIVE EFFECT OF AMOUNT AS GAAP TRANSITION TO NFRSS PER NFRSS



1. Explanatory Notes to Reconciliation to Equity

1.1. Measurement of investment securities at fair value

Fair Value of Investment As per GAAP 132,968,834 109,238,723

Fair Value of Investment As per NFRS 390,146,098 109,238,723

Additional Fair Value 257,177,264 -

From FY 2073/74 investments in equity shares are valued at market price as per NRB directive no. 8. However, in case of foreign bond

investment bond premium was deferred with the life of bond. For NFRS compliance it has been considered as transaction cost and

amortizedusingeffectiveinterestmethod

1.2. Deferred Tax

Asset/(Liabliites) due to in LLP - -

Asset/(Liabliites) due to in AIR (49,314,958) (81,440,256)

Asset/(Liabliites) due to Gratuity Provision 20,281,416 23,689,811

Asset/(Liabliites) due to Leave Provision 3,359,590 2,282,590

Total (25,673,952) (55,467,856)

1.3. Defined benefit obligation of employees

Provision for Gratuity as per GAAP 26,289,642 33,367,535

Provision for Gratuity as per NFRS 93,894,361 112,333,570

Total Additional Gratuity Provision (67,604,719) (78,966,035)

Provision for Leave Encashment as per GAAP 41,783,347.51 52,254,881.58

Provision for Leave Encashment as per NFRS 52,981,981.00 59,863,515.00

Total Additional Leave Encashment Provision (11,198,633) (7,608,633)

Total Provision (78,803,352) (86,574,668)

1.4. Interest income

Accrued Interest as per GAAP 399,007,243 556,182,244

Less:InterestAccruedonLoanwrittenoff 234,624,050 284,714,723

Total 164,383,193 271,467,521

1.5. Legally repossed Asset

Provision for Non Banking Asset 103,907,648 161,448,497

1.6. Unearned Commission (22,777,641)

As per the policy of the bank if the commission on bank guarantee and LC is less than NPR 50,000 or the period the the guarantee

and LC is less than 1 year than total commission received is recognised on cash basis. To comply NFRS commission recognised on cash

basis has been recalculated as per accrual basis.

PARTICULARS AS AT 01.04.2073 AS AT 31.03.2074 (END OF (DATE OF TRANSITION) LAST PERIOD PRESENTED UNDER PREVIOUS GAAP)



2. Explanatory Note to Reconciliation of profit or loss

3. Explanatory Note on Effect of NFRSs adoption for the statement of financial position

2.1 Interest income

Closing Interest accrued 271,467,521

Opening Interest Accrued 164,383,193

Interest accrual during the year 107,084,328

2.2 Defined benefit obligation of employee 2072/73 2073/74

Provision for Gratuity as per GAAP (26,289,642) (33,367,535)

Provision for Leave Encashment as per GAAP (41,783,348) (52,254,882)

Provision for Gratuity as per NFRS 93,894,361 112,333,570

Provision for Leave Encashment as per NFRS 52,981,981 59,863,515

Actuarial loss/(Gain) on Gratuity (25,527,803) 513,956

Actuarial loss/(Gain) on Leave Encashment (25,490,965) 3,940,207

Total 27,784,584 91,028,831

2.3 Unearned Commission & Discount (22,777,641)

2.4 Fair Value measurement of foreign bond

Interest revsersal on bond -

Amortization of bond -

Total -

2.5 Deferred Tax 2072/73 2073/74

Opening Deferred Tax Asset/(Liabilities) as per NFRS (25,673,952) (55,467,856)

Charge to P& L (29,793,904)


3.1 Loans and advances to customers

Loans and advances as per GAAP 42,148,970,905 49,969,577,688

Accrued Interest 164,383,193 271,467,520.96

RemeasurementofStaffLoan 47,500,728 (82,570,267)

Total 42,360,854,826 50,158,474,941

3.2 Investment securities

Fair Value of Investment As per GAAP 132,968,834 109,238,723

Fair Value of Investment As per NFRS 390,146,098 109,238,723

Total 257,177,264 -




3.3 Deferred Tax

Deferred Asset/(Liabilities)Tax as per GAAP 17,190,231 29,731,519

Deferred Asset/(Liabilities)Tax as per NFRS (25,673,952) (55,467,856)

Closing Deferred Asset/(Liabilities)Tax as per NFRS (8,483,721) (25,736,337)

3.4 Other assets

Other Asset as per GAAP 155,468,665.40 422,665,635

Non Banking Asset 103,907,647.95 161,448,496.61

StaffLoanamortization (47,500,728) 82,570,267

Total 211,875,585 666,684,399

3.5 Other liabilities

Other Liabilities as per GAAP 613,479,530 821,414,140

Additional Provision of Gratuity 67,604,719 78,966,035

Additional Provision of Leave 11,198,633 7,608,633

Unearned Commission 22,777,641

Total 692,282,883 930,766,449

3.6 Retained earnings

Opening retained earning as per GAAP 1,341,345,390 1,077,077,026

Unearned Commission - (22,777,641)

Transfer to Reserve-Share issue cost - 4,660,939

Transfer to Regulatory Reserve (189,910,996) (81,556,525)

DefinedBenefitObligation (53,275,549) (86,934,438)

Foreign Bond Amortization 10,341,185

Interest Accrual 164,383,193 271,467,521

AFS & NBA Reserve 361,084,912 161,448,497

Deferred Tax (25,673,952) (55,467,856)

Total 1,787,863,993 1,349,474,048

3.7 Reserve

Opening Reserve as per GAAP 827,274,364 1,372,116,578

Fair Value Reserve - -

Non Banking Asset Provision - -

Transfer from Regulatory Reserve - -

Actuarial reserve (25,527,803.00) 359,769

Transfer from Reserve-Share issue cost (4,660,939)

Total 801,746,561 1,367,815,408


Contd... Explanatory Note on Effect of NFRSs adoption for the statement of financial position



4. Reconciliation of Effect of NFRSs adoption for statement of profit or loss and other comprehensive income

4.1 Interest Income

Opening Interest Income as per GAAP 5,306,155,662

Accrued Interest On loans & Advances 107,084,328

Interest reversal of foreign bond -

Amortizedinterestinstaffloan 14,590,629

Total 5,427,830,619

4.2 Fee and commission income

Openign Fee and commission income as per GAAP 540,029,064

Unearned commission on LC and Guarantee (22,777,641)

Total 517,251,423

4.3 Fees and Commission expense

Opening as per GAAP 161,126,207

Add :Excess Bond amortization reversal -

Total 161,126,207

4.4 Personnel expense

Opening as per GAAP 640,495,483

Amortizedinterestinstaffloan 14,590,629

DefinedBenefitobligation 33,813,075

Total 688,899,187

StaffbonusofNPR164,597,293hasbeenrecategorisedinopeningofGAAPpersonnelexpense

4.6 Deferred Tax

Opening Deferred Tax 22,448,494

Deferred Tax asset due to NFRS adjustment (56,719,974)

Deferred Tax Liabilities due to NFRS adjustment 86,513,877

Net 29,793,904

Closing Deferred Tax 52,242,398




CAPITAL ADEQUACY TABLE (SUMMARY) As on 16 July, 2018 (32 Asar, 2075)

CAPITAL ADEQUACY TABLE As on 16 July, 2018 (32 Asar, 2075)

1.1 PARTICULARS CURRENT YEAR PREVIOUS YEAR

NPR NPR

a Common Equity Tier 1 Capital 10,265,254,426 9,117,773,671

b Tier 1 Capital 10,265,254,426 9,117,773,671

c Tier 2 Capital 659,871,641 736,938,000

d Total Capital 10,925,126,067 9,854,711,671

e Risk Weighted Exposures 81,628,642,815 68,112,366,000

Regulatory Ratios

a LeverageRatio(RegulatoryRequirement>=4%) 8.54% 9.03%

b CommonEquityTier1toRiskWeightedExposureRatios 12.58% 13.39%

c Tier1toRiskWeightedExposureRatios 12.58% 13.39%

d Total Capital to Risk Weighted Exposure Ratio 13.38% 14.47%

1.1 RISK WEIGHTED EXPOSURE CURRENT YEAR PREVIOUS YEAR

NPR NPR

a Risk Weighted Exposure for Credit Risk 74,851,539,175 62,878,374,000

b Risk Weighted Exposure for Operational Risk 3,289,001,420 2,552,530,000

c Risk Weighted Exposure for Market Risk 209,649,240 81,250,000

Adjustments under Pillar II -

ALMpolicies&practicesarenotsatisfactory,add1%ofnetinterestincometoRWE 21,927,229 15,036,000

3%additionalriskweightforOperationalRisk 906,020,056 619,811,000

3%adjustmentonTotalRWE 2,350,505,695 1,965,365,000

Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 81,628,642,815 68,112,366,000

1.2 CAPITAL CURRENT YEAR PREVIOUS YEAR

NPR NPR

Tier 1 Capital (Core Capital) (CET 1 + AT1) 10,265,254,426 9,117,773,671

Common Equity Tier 1 (CET 1) 10,265,254,426 9,117,773,671

a Paid up Equity Share Capital 8,152,555,851 7,018,105,000

b Equity Share Premium 127,161,065 -

c Proposed Bonus Equity Shares 1,063,377,000

d Statutory General Reserves 1,452,920,248 1,157,526,000

e Retained Earnings 941,855,312 13,700,000

f Un-auditedcurrentyearcumulativeprofit - -

g Capital Redemption Reserve - -

h Capital Adjustment Reserve - -

i Dividend Equalization Reserves - -

j Bargain Purchase Gain

k Other Free Reserve 17,789,989 29,732,000

l Less: Goodwill - -

m Less: Intangible Assets (76,415,384) (3,890,000)

n Less: Deferred Tax Assets (53,146,995) (29,732,000)



1.2 CAPITAL CURRENT YEAR PREVIOUS YEAR

NPR NPR

o Less: Fictitious Assets

p Less: Investment in equity in licensed Financial Institutions - -

q Less:Investmentinequityofinstitutionswithfinancialinterests (264,850,332) (98,429,000)

r Less: Investment in equity of institutions in excess of limits - -

s Less: Investments arising out of underwriting commitments - -

t Less: Reciprocal crossholdings - -

u Less: Purchase of land & building in excess of limit and unutilized (32,615,329) (32,615,329)

v Less: Cash Flow Hedge

w Less:DefinedBenefitPensionAssets

x Less:UnrecognizedDefinedBenefitPensionLaibilities

y Less: Negative Balance of Reserve Accounts

z Less: Other Deductions


a Less: Shortfall in Provision (6.4 a 1) - -

b Less: Loans & Facilities extended to Related Parties & Restricted lending (6.4 a 2) - -

Additional Tier 1 (AT1) - -

a Perpetual Non Cumulative Preference Share Capital - -

b Perpetual Debt Instruments - -

c Stock Premium - -

Supplementary Capital (Tier 2) 659,871,641 736,938,000

a Cumulative and/or Redeemable Preference Share

b Subordinated Term Debt

c Hybrid Capital Instruments

d Stock Premium

e General loan loss provision 616,144,872 563,840,000

f Exchange Equalization Reserve 27,141,769 22,968,000

g Investment Adjustment Reserve 16,585,000 150,130,000

h Assets Revaluation Reserve

i Other Reserves

Total Capital Fund (Tier 1 & Tier 2) 10,925,126,067 9,854,711,671

1.3 CAPITAL ADEQUACY RATIOS CURRENT YEAR PREVIOUS YEAR

Tier1CapitaltoTotalRiskWeightedExposures(AfterBank'sadjustmentsofPillarII) 12.58% 13.39%

Tier1andTier2CapitaltoTotalRiskWeightedExposures(AfterBank'sadjustmentsofPillarII) 13.38% 14.47%



Cas

h B

alan

ce

1,53

5,25

5,22

1 -

- 1,

535,

255,

221

0%

-

BalanceW

ithNepalRastraBank

5,033,055,545

--

5,033,055,545

0%-

Gold

-

--

0%-

InvestmentinNepaleseGovernm

entSecurities

8,933,790,455

--8,933,790,455

0%-

AllClaimsonGovernm

entofNepal

94,525,051

--94,525,051

0%-

InvestmentinNepalRastraBanksecurities

-

--

0%-

AllclaimsonNepalRastraBank

-

--

0%-

ClaimsonForeignGovernm

entandCentralBank(ECA0-1)

-

0%-


entandCentralBank(ECA-2)

--

20%-



--

50%-


entandCentralBank(ECA-4-6)

--

100%-



--

150%-

Cla

ims

On

BIS

, IM

F, E

CB

, EC

and

on

Mul

tila

tera

l Dev

elo

pm

ent

Banks(MDB's)recognizedbythefram

ework

-

0%-

ClaimsonOtherMultilateralD

evelopmentBanks

--

100%-

ClaimsonPublicSectorEntity(ECA0-1)

--

20%-

ClaimsonPublicSectorEntity(ECA2)

--

50%-

ClaimsonPublicSectorEntity(ECA3-6)

--

100%-

ClaimsonPublicSectorEntity(ECA7)

--

150%-

Cla

ims

on

do

mes

tic

ban

ks t

hat

mee

t ca

pit

al

adequacyrequirements

928,251,752

-928,251,752

20%185,650,350

Cla

ims

on

do

mes

tic

ban

ks t

hat

do

no

t m

eet

capitaladequacyrequirements

--

100%-

Claimsonforeignbank(ECARating0-1)

1,126,317,471

-

1,126,317,471

20%225,263,494

Claimsonforeignbank(ECARating2)

1,731,799,379

-1,731,799,379

50%865,899,690

Claimsonforeignbank(ECARating3-6)

--

100%-

Claimsonforeignbank(ECARating7)

--

150%-

ClaimsonforeignbankincorporatedinSAARCregionoperatingwithabuff

erof

1%abovetheirrespectiveregulatorycapitalrequirement

1,071,893,321

-

1,071,893,321

20%214,378,664

ClaimsonDomesticCorporates

24,053,622,824-

91,602,753

23,962,020,072

100%23,962,020,072

ClaimsonForeignCorporates(ECA0-1)

--

20%-

ClaimsonForeignCorporates(ECA-2)

--

50%-

ClaimsonForeignCorporates(ECA3-6)

--

100%-

CU

RR

EN

T Y

EA

R

A. B

ALA

NC

E S

HE

ET

EX

PO

SUR

E

GR

OSS

BO

OK

SP

EC

IFIC

PR

OV

ISIO

N

ELI

GIB

LE C

RM

N

ET

VA

LUE

R

ISK

WE

IGH

T (E

) R

ISK

WE

IGH

T

V

ALU

E (

A)

& V

ALU

ATI

ON

(D)

(A-B

-C)

E

XP

OSU

RE

(D

*E

)

AD

JUST

ME

NTS

(B

)

RIS

K W

EIG

HTE

D E

XP

OSU

RE

FO

R C

RE

DIT

RIS

KA

s o

n 1

6 J

uly

, 20

18 (

32

Asa

r 20

75)



ClaimsonForeignCorporates(ECA7)

--

150%-

RegulatoryRetailPortfolio(NotOverdue)

22,586,608,494

-415,222,362

22,171,386,132

75%16,628,539,599

Claimsfulfillingallcriterionofregulatoryretail

exceptgranularity

-

--

100%-

Claimssecuredbyresidentialproperties

8,033,816,660

-

-8,033,816,660

60%4,820,289,996

Claimsnotfullysecuredbyresidentialproperties

-

--

150%-

Claimssecuredbyresidentialproperties(Overdue)

99,050,055

1,552,911

-97,497,144

100%97,497,144

ClaimssecuredbyCommercialrealestate

2,051,359,709

-

-2,051,359,709

100%2,051,359,709

Pas

t d

ue c

laim

s (e

xcep

t fo

r cl

aim

sec

ured

by

residentialproperties)

1,069,138,305

495,151,8961,413,886572,572,523

150%858,858,785

Hig

h R

isk

clai

ms

(Ven

ture

cap

ital

, pri

vate

eq

uity

inve

stm

ents

,

personalloansandcreditcardreceivables)

2,557,718,288

-2,557,718,288

150%3,836,577,432

Inve

stm

ents

in e

qui

ty a

nd o

ther

cap

ital

inst

rum

ents

of

inst

itut

ions

listedinthestockexchange

559,809,479

107,708,332

452,101,147

100%452,101,147

Inve

stm

ents

in e

qui

ty a

nd o

ther

cap

ital

inst

rum

ents

of

inst

itut

ions

notlistedinthestockexchange

178,108,000

157,142,000

-20,966,000

150%31,449,000

StaffLoansecuredbyresidentialproperty

336,516,250

121,734,652

214,781,598

60%128,868,959

Interestreceivable/claimongovernm

entsecurities

90,808,437

90,808,437

0%-

Cashintransitandothercashitem

sintheprocessofcollection

-

20%-

OtherAssets

2,141,956,676

477,338,601

-1,664,618,074

100%1,664,618,074

TOTA

L

8

4,2

13,4

01,

374

1,

360

,628

,393

50

8,23

9,0

00

82

,34

4,5

33,9

80

56,0

23,3

72,1

15

CU

RR

EN

T Y

EA

R

A. B

ALA

NC

E S

HE

ET

EX

PO

SUR

E

GR

OSS

BO

OK

SP

EC

IFIC

PR

OV

ISIO

N

ELI

GIB

LE C

RM

N

ET

VA

LUE

R

ISK

WE

IGH

T (E

) R

ISK

WE

IGH

T

V

ALU

E (

A)

& V

ALU

ATI

ON

(D)

(A-B

-C)

E

XP

OSU

RE

(D

*E

)

AD

JUST

ME

NTS

(B

)

Con

td..

. RIS

K W

EIG

HT

ED

EX

PO

SU

RE

FO

R C

RE

DIT

RIS

K



Con

td..

. RIS

K W

EIG

HT

ED

EX

PO

SU

RE

FO

R C

RE

DIT

RIS

K

RevocableCommitments

-

-

0%-

BillsUnderCollection

656,511,726

656,511,726

0%-

ForwardExchangeContractLiabilities

3,020,875,000

-

3,020,875,000

10%

302,087,500

LC C

om

mit

men

ts W

ith

Ori

gin

al M

atur

ity

Up

to

6 m

ont

hs

(domesticcounterparty)

3,080,908,035

280,862,834

2,800,045,200

20%

560,009,040

foreigncounterparty(ECARating0-1)

-

20%-

foreigncounterparty(ECARating-2)

-

50%-


-

100%-


-

150%-

LCCommitmentsW

ithOriginalMaturityOver6months(domesticcounterparty)

-

50%-


-

20%-


-

50%-


-

100%-


-

150%-

Bid

Bo

nd, P

erfo

rman

ce B

ond

and

Co

unte

r g

uara

ntee

(domesticcounterparty)

9,855,185,452

337,620,453

9,517,565,000

50%4,758,782,500


-

20%-


-

50%-


-

100%-


-

150%-

Underwritingcommitments

-

50%-

LendingofBank'sSecuritiesorPostingofSecuritiesascollateral

-

100%-

RepurchaseAgreem

ents,Assetssalewithrecourse(includingrepo/reverserepo)

-

100%-

AdvancePaymentGuarantee

6,887,896,742

111,878,1526,776,018,590

100%6,776,018,590

FinancialGuarantee

-

100%-

AcceptancesandEndorsem

ents

1,248,502,449

-

1,248,502,449

100%1,248,502,449

UnpaidportionofPartlypaidsharesandSecurities

-

100%-

IrrevocableCreditcommitments(Shortterm)

4,492,769,055

-

4,492,769,055

20%898,553,811

IrrevocableCreditcommitments(longterm)

8,374,684,302

-

8,374,684,302

50%4,187,342,151

OtherContingentLiabilities

12,518,295

-12,518,295

100%12,518,295

UnpaidGuaranteeClaims

42,176,362

42,176,362

200%84,352,724

Tota

l

3

7,67

2,0

27,4

18

- 73

0,3

61,4

39

36,9

41,

66

5,97

8

18,8

28,1

67,0

60

Tota

l RW

E f

or

cred

it R

isk

(A)

+(B

)

121

,885

,428

,79

1 1,

360

,628

,393

1,

238,

60

0,4

39

119

,286

,19

9,9

59

74

,851

,539

,175

Ad

just

men

ts u

nder

Pill

ar II

Add:10%oftheloanandfacilitiesinexcessofSingleObligorLimits(6.4a3)

-

-

-

-

-

Add:1%ofthecontract(sale)valueincaseofthesaleofcreditwithrecourse(6.4a4)

-

-

-

Tota

l RW

E f

or

cred

it R

isk

(Aft

er B

ank'

s ad

just

men

ts o

f P

illar

II)

121,

885,

428

,79

1 1,

360

,628

,393

1,

238,

60

0,4

39

119

,286

,19

9,9

59

74

,851

,539

,175

CU

RR

EN

T Y

EA

R

B. O

FF B

ALA

NC

E S

HE

ET

EX

PO

SUR

E

GR

OSS

BO

OK

S

PE

CIF

IC

ELI

GIB

LE C

RM

N

ET

VA

LUE

RIS

K W

EIG

HT

(E)

RIS

K W

EIG

HT

VA

LUE

(A

) P

RO

VIS

ION

(B

)

(D

) (A

-B-C

)

EX

PO

SUR

E (

D *

E)



(a)

(

b)

(c)

(

d)

(

e)

(f)

(

g)

(

h)

(i)

Bal

ance

She

et E

xpo

sure

s

-

Cas

h B

alan

ce

-

Bal

ance

wit

h N

epal

Ras

tra

Ban

k

-

Go

ld

-

Inve

stm

ent

in N

epal

ese

Gov

ernm

ent

Sec

urit

ies

-

All

Cla

ims

on

Gov

ernm

ent

of

Nep

al

-

Inve

stm

ent

in N

epal

Ras

tra

Ban

k se

curi

ties

-

All

clai

ms

on

Nep

al R

astr

a B

ank

-

Cla

ims

on

Fo

reig

n G

over

nmen

t S

ecur

itie

s (E

CA

0-1

)

-

Cla

ims

on

Fo

reig

n G

over

nmen

t S

ecur

itie

s (E

CA

-2)

-

Cla

ims

on

Fo

reig

n G

over

nmen

t S

ecur

itie

s (E

CA

-3)

-

Cla

ims

on

Fo

reig

n G

over

nmen

t S

ecur

itie

s (E

CA

-4-6

)

-

Cla

ims

on

Fo

reig

n G

over

nmen

t S

ecur

itie

s (E

CA

-7)

-

Cla

ims

On

BIS

, IM

F, E

CB

, EC

and

on

Mul

tila

tera

l D

evel

op

men

t B

anks

(M

DB

's)

reco

gni

zed

by

the

fram

ewo

rk

-

Cla

ims

on

Oth

er M

ulti

late

ral D

evel

op

men

t B

anks

-

Cla

ims

on

Pub

lic S

ecto

r E

ntit

y (E

CA

0-1

)

-

Cla

ims

on

Pub

lic S

ecto

r E

ntit

y (E

CA

2)

-

Cla

ims

on

Pub

lic S

ecto

r E

ntit

y (E

CA

3-6

)

-

Cla

ims

on

Pub

lic S

ecto

r E

ntit

y (E

CA

-7)

-

Cla

ims

on

do

mes

tic

ban

ks t

hat

mee

t ca

pit

al

adeq

uacy

req

uire

men

ts

-

Cla

ims

on

do

mes

tic

ban

ks t

hat

do

no

t m

eet

cap

ital

ad

equa

cy r

equi

rem

ents

-

Cla

ims

on

fore

ign

ban

k (E

CA

Rat

ing

0-1

)

-

Cla

ims

on

fore

ign

ban

k (E

CA

Rat

ing

2)

-

Cla

ims

on

fore

ign

ban

k (E

CA

Rat

ing

3-6

)

-

Cla

ims

on

fore

ign

ban

k (E

CA

Rat

ing

- 7)

-

Cla

ims

on

fore

ign

ban

k in

corp

ora

ted

in S

AA

RC

reg

ion

operatingwithabuff

erof1%abovetheirrespective

reg

ulat

ory

cap

ital

req

uire

men

t

-

Cla

ims

on

Do

mes

tic

Co

rpo

rate

s

91,6

02,

753

9

1,60

2,75

3

Cla

ims

on

Fo

reig

n C

orp

ora

tes

(EC

A 0

-1)

-

Cla

ims

on

Fo

reig

n C

orp

ora

tes

(EC

A 2

)

-

Cla

ims

on

Fo

reig

n C

orp

ora

tes

(EC

A 3

-6)

-

Cla

ims

on

Fo

reig

n C

orp

ora

tes

(EC

A -

7)

-

Reg

ulat

ory

Ret

ail P

ort

folio

(N

ot

Ove

rdue

) 13

,527

,48

6

40

1,69

4,8

76

415

,222

,36

2

Reg

ulat

ory

Ret

ail P

ort

folio

(O

verd

ue)

-

CR

ED

IT E

XP

OSU

RE

S

DE

PO

SITS

D

EP

OSI

TS

GO

LD

GO

VT.

& N

RB

G

'TE

E O

F SE

C/G

'TE

E

G'T

EE

OF

G'T

EE

OF

SEC

/G'T

EE

TO

TAL

W

ITH

BA

NK

W

ITH

OTH

ER

SEC

UR

ITIE

S G

OV

T. O

F O

F O

THE

R

DO

ME

STIC

M

DB

S O

F FO

RE

IGN

B

AN

KS/

FI

NE

PA

L SO

VE

RE

IGN

S B

AN

KS

B

AN

KS

ELI

GIB

LE C

RE

DIT

RIS

K M

ITIG

AN

TSA

s o

n 1

6 J

uly

, 20

18 (

32

Asa

r 20

75)



Claimsfulfillingallcriterionofregulatoryretail

exce

pt

gra

nula

rity

-

Cla

ims

secu

red

by

resi

den

tial

pro

per

ties

-

Cla

ims

no f

ully

sec

ured

by

resi

den

tial

pro

per

ties

-

Cla

ims

secu

red

by

resi

den

tial

pro

per

ties

(O

verd

ue)

-

Cla

ims

secu

red

by

Co

mm

erci

al r

eal e

stat

e

-

Pas

t d

ue c

laim

s (e

xcep

t fo

r cl

aim

sec

ured

by

re

sid

enti

al p

rop

erti

es)

1,413

,88

6

1,4

13,8

86

Hig

h R

isk

clai

ms

(Ven

ture

cap

ital

, pri

vate

eq

uity

inve

stm

ents

, p

erso

nal l

oan

s an

d c

red

it c

ard

rec

eiva

ble

s)

-

Inve

stm

ents

in e

qui

ty a

nd o

ther

cap

ital

inst

rum

ents

of

in

stit

utio

ns n

ot

liste

d in

the

sto

ck e

xcha

nge

-

Inve

stm

ents

in e

qui

ty a

nd o

ther

cap

ital

inst

rum

ents

of

in

stit

utio

ns li

sted

in t

he s

tock

exc

hang

e

-

Oth

er A

sset

s (a

s p

er a

ttac

hmen

t)

14,9

41,3

72

49

3,29

7,6

29

-

Tota

l (A

)

508

,239

,00

0

Off

Bal

ance

She

et E

xpo

sure

s

Rev

oca

ble

Co

mm

itm

ents

-

Bill

s U

nder

Co

llect

ion

-

Fo

rwar

d E

xcha

nge

Co

ntra

ct L

iab

iliti

es

-

LC C

om

mit

men

ts W

ith

Ori

gin

al M

atur

ity

Up

to

6 m

ont

hs

(do

mes

tic

coun

terp

arty

)

280

,86

2,8

34

28

0,8

62,

834

fore

ign

coun

terp

arty

(E

CA

Rat

ing

0-1

)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

-2)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

3-6

)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

- 7)

-

LC

Co

mm

itm

ents

Wit

h O

rig

inal

Mat

urit

y O

ver

6 m

ont

hs

(do

mes

tic

coun

terp

arty

)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

0-1

)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

2)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

3-6

)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

-7)

-

Bid

Bo

nd, P

erfo

rman

ce B

ond

and

Co

unte

r

gua

rant

ee (

do

mes

tic

coun

ter

par

ty)

337

,620

,453

3

37,6

20,4

53

fore

ign

coun

terp

arty

(E

CA

Rat

ing

0-1

)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

-2)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

3-6

)

-

fore

ign

coun

terp

arty

(E

CA

Rat

ing

- 7)

-

Und

erw

riti

ng c

om

mit

men

ts

-

Lend

ing

of

Ban

k's

Sec

urit

ies

or

Po

stin

g o

f

Sec

urit

ies

as c

olla

tera

l

-

CR

ED

IT E

XP

OSU

RE

S

DE

PO

SITS

D

EP

OSI

TS

GO

LD

GO

VT.

& N

RB

G

'TE

E O

F SE

C/G

'TE

E

G'T

EE

OF

G'T

EE

OF

SEC

/G'T

EE

TO

TAL

W

ITH

BA

NK

W

ITH

OTH

ER

SEC

UR

ITIE

S G

OV

T. O

F O

F O

THE

R

DO

ME

STIC

M

DB

S O

F FO

RE

IGN

B

AN

KS/

FI

NE

PA

L SO

VE

RE

IGN

S B

AN

KS

B

AN

KS

Con

td..

. RIS

K W

EIG

HT

ED

EX

PO

SU

RE

FO

R C

RE

DIT

RIS

K



CR

ED

IT E

XP

OSU

RE

S

DE

PO

SITS

D

EP

OSI

TS

GO

LD

GO

VT.

& N

RB

G

'TE

E O

F SE

C/G

'TE

E

G'T

EE

OF

G'T

EE

OF

SEC

/G'T

EE

TO

TAL

W

ITH

BA

NK

W

ITH

OTH

ER

SEC

UR

ITIE

S G

OV

T. O

F O

F O

THE

R

DO

ME

STIC

M

DB

S O

F FO

RE

IGN

B

AN

KS/

FI

NE

PA

L SO

VE

RE

IGN

S B

AN

KS

B

AN

KS

Rep

urch

ase

Ag

reem

ents

, Ass

ets

sale

wit

h re

cour

se

(inc

lud

ing

rep

o/

reve

rse

rep

o)

-

Ad

vanc

e P

aym

ent

Gua

rant

ee

111

,878

,152

1

11,8

78,15

2

Fin

anci

al G

uara

ntee

-

Acc

epta

nces

and

End

ors

emen

ts

-

Unp

aid

po

rtio

n o

f P

artl

y p

aid

sha

res

and

Sec

urit

ies

-

Irre

voca

ble

Cre

dit

co

mm

itm

ents

(S

hort

ter

m)

-

Irre

voca

ble

Cre

dit

co

mm

itm

ents

(lo

ng t

erm

)

-

ClaimsonforeignbankincorporatedinSAARCregionoperatingwithabuff

erof1%

abov

e th

eir

resp

ecti

ve r

egul

ato

ry c

apit

al r

equi

rem

ent

-

Oth

er C

ont

ing

ent

Liab

iliti

es

-

Tota

l (B

) 7

30,3

61,4

39

-

-

-

0%

-

-

-

-

7

30,3

61,4

39

Gra

nd T

ota

l (C

=A+B

) 7

45,

302,

811

-

493

,297

,629

-

0

%

-

-

-

-

1,23

8,6

00

,439

Con

td..

. RIS

K W

EIG

HT

ED

EX

PO

SU

RE

FO

R C

RE

DIT

RIS

K



FORM NO.5 OTHER ASSETS As on 16 July, 2018 (32 Asar 2075)

RISK WEIGHTED EXPOSURE FOR OPERATION RISK As on 16 July, 2018 (32 Asar 2075)

CURRENT YEAR (NPR)

S.NO. ASSETS GROSS AMOUNT SPECIFIC PROVISION NET BALANCE & VALUATION ADJUSTMENTS

1 Cash and Cash Items in Transit -

2 ExpensenotWrittenoff 1,300,776 1,300,776

3 Fixed Assets 1,174,971,104 477,338,601 697,632,503

4 Interest Receivable on Other Investment 31,903,572 31,903,572

5 Interest Receivable on Loan 414,615,919 414,615,919

6 Non Banking Assets -

7 Reconciliation Account -

8 Draft Paid Without Notice -

9 Sundry Debtors -

10 Advance payment and Deposits -

11 StaffAdvance 150,751,749 150,751,749

12 Stationery -

13 Other 368,413,557 368,413,557

Total 2,141,956,676 477,338,601 1,664,618,074

PARTICULARS FY 2071/72 FY 2072/73 FY 2073/74 FOR PREVIOUS YEAR

Net Interest Income 1,106,300,000 1,503,572,000 2,192,722,934

Commission and Discount Income 119,378,000 160,773,000 210,471,287

Other Operating Income 187,273,000 279,039,000 329,557,777

Exchange Fluctuation Income 80,316,000 115,336,000 130,139,854

Additional/Deduction in Interest Suspense during the period (1,367,239) 7,316,216 157,175,001

Gross income (a) 1,491,899,761 2,066,036,216 3,020,066,853 -

Alfa (b) 15% 15% 15% 15%

Fixed Percentage of Gross Income [c=(a×b)] 223,784,965 309,905,433 453,010,028 309,906,000

Capital Requirement for operational risk (d) (average of c) 328,900,142 255,253,000

Risk Weight (reciprocal of capital requirement of 10%) in times (e) 10 10

Equivalent Risk Weight Exposure [f=(d×e)] 3,289,001,420 2,552,530,000

PILLAR-II ADJUSTMENTS

If Gross Income for all the last three years is negative(6.4 a 8) - -

Total Credit and Investment (net of Specific Provision) - -

Capital Requirement for operational risk (5%) - -

Risk Weight (reciprocal of capital requirement of 10%) in times - -

Equivalent Risk Weight Exposure [g] - -

Equivalent Risk Weight Exposure [h=f+g)] 3,289,001,420 2,552,530,000



RISK WEIGHTED EXPOSURE FOR MARKET RISK As on 16 July, 2018 (32 Asar 2075)

ASHADH END 2074 PREVIOUS YEAR

CURRENCY OPEN POSITION (FCY) RATE OPEN POSITION (LCY) RELEVANT OPEN POSITION RELEVANT OPEN POSITION

INR 235,677,182.78 1.6008 377,260,250 377,260,250 125,522,000

USD 287,087.79 109.8500 31,536,594 31,536,594 28,175,000

GBP 1,783.98 144.9376 258,566 258,566 1,151,000

EUR 905.28 128.0588 115,929 115,929 1,270,000

THB 17,512.10 3.2378 56,700 56,700 38,000

CHF - 109.5338 - - 107,000

AUD 12,019.47 81.3886 978,248 978,248 871,000

CAD 1,204.95 83.4037 100,497 100,497 339,000

SGD 66.00 80.4769 5,312 5,312 4,000

JPY 2,716,383.23 0.9724 2,641,446 2,641,446 2,053,000

HKD 1,240.23 13.9074 17,248 17,248 13,000

DKK 296,820.87 17.0307 5,055,062 5,055,062 2,044,000

SEK - 12.3332 - - -

SAR 18,544.43 28.9109 536,136 536,136 283,000

QAR 3,737.99 29.7601 111,243 111,243 29,000

AED 13,880.84 29.5082 409,599 409,599 133,000

MYR 3,665.33 26.8776 98,515 98,515 209,000

KRW - 0.0948 - - -

CNY 2,876.87 16.2407 46,722 46,722 31,000

KWD 194.50 361.9585 70,401 70,401 213,000

BHD - 289.2872 - - -

Total Open position (a) 419,298,468 162,485,000

Fixed Percentage (b) 5% 5%

Capital Charge for Market Risk [c=(axb)] 20,964,924 8,124,250

Risk weight (reciprocal of capital requirement of 10%) in times (d) 10 10

Equivalent Risk Weight Exposure[e=(cxd)] 209,649,240 81,242,500



BASEL DISCLOSURES1. CAPITAL STRUCTURE & CAPITAL ADEQUACY OF THE BANK

i. Tier 1 Capital and breakdown of its Components

ii. Tier 2 Capital and breakdown of its Components

iii. Details of Subordinated Term Debts Bank doesn’t have any subordinated term debts.

iv. Deductions from CapitalnDeferred Tax Assets of Rs 53.15 Million.n Investment made in Gurans Life Insurance Company Limited of NPR

107.71 million and investment in Sunrise Capital Limited NPR 157.14 million (Investments in equity of institutions with Financial Interest)

n Rs 32.62 million for land and building not in use by bank that includes land purchased at Bharatpur, Chitwan (Rs 25.75 Million) not brought into use and proportionate WDV of buildings not used by bank and rented out to other parties (Rs 6.86 million)

n Intangible Assets of Rs 76.42 Million. v. Total Qualifying Capital

vi. Capital Adequacy of the Bank The capital adequacy of the bank (After Bank's adjustments of Pillar II) has been detailed below:

vii. Summary of the bank’s internal approach to assess the adequacy of its capital to support current and future activities, if applicable: Bank’s current paid up capital amounts to Rs 8.15 Billion. The Bank complies with the Capital Increment plan of NRB which has also helped the Bank to be in steady and strong capital position. The overall strategy of the bank has been formulated with the special consideration to the capital adequacy requirement according to BASEL-III.

viii. Summary of the terms, conditions and main features of all capital instruments, especially in case of subordinated term debts including hybrid capital instruments. Bank does not have any other capital instruments except fully paid equity shares as qualifying capital.

2. RISK EXPOSURES

a. Risk Weighted Exposures All material risks faced by the bank have been addressed in the capital assessment process. However, bank has developed a process to estimate risks with reasonable certainties. All the three risks that have direct impact on the capital adequacy level have been managed in a structured manner with clear roles and responsibilities. In order to make a comprehensive assessment of risks, the process has, at minimum, addressed the forms of risks covered below:

PARTICULARS AMOUNT (NPR MILLIONS)

a. Paid up Capital 8,152.56

b. Share Premium / Capital Reserve 127.16

c. Proposed Bonus Shares -

d. Statutory General Reserve 1,452.92

e. Retained Earnings 941.86

f. Un-auditedCurrentYearCumulativeProfit -

g. Other Free Reserves 17.79

h. Less: Deferred Tax Assets 76.42

i. Less: Fictitious Assets 53.15

j. Less:Investmentinequityofinstitutionswithfinancialinterests 264.85

k. Less: Purchase of land & building in excess of limit and unutilized 32.62

Core (Tier-1) Capital 10,265.25


a. General Loan Loss Provision 616.14

b. Exchange Equalization Reserve 27.14

c. Investment Adjustment Reserve 16.59

Supplementary (Tier-2) Capital 659.87

PARTICULARS PERCENTAGE

a. Common Equity Tier 1 Capital to

Total Risk Weighted Exposures 12.58

b. Tier 1 Capital to


c. Total Capital to



a. Common Equity Tier 1 Capital 10,265.25

b. Core Capital 10,265.25

c. Supplementary Capital 659.87

Total Capital 10,925.13



All risks, including credit, operational and market risks are identified, escalated, monitored and mitigated to the satisfaction of the risk type owner. The risk type owner is responsible for ensuring that all the risks are adequately identified, escalated, monitored and mitigated. The Bank has an adequate system in place for monitoring and reporting risk exposures and assessing how the changing risk profile affects the need for capital. The senior management and board of directors on a regular basis receive the report regarding the risk profile of the bank and its capital needs. All the material risks are identified, measured, monitored and reported by the respective risk type owner.

b. Credit Risk under 11 Categories The Credit Risks under the 11 categories as per the Capital Adequacy Framework, 2015 and Basel –III has been detailed below:

c. Total Risk Weighted Exposure Calculation Table





RWA Before Pillar 2 adjustment 78,350.19

RISK WEIGHTED EXPOSURE AMOUNT (NPR MILLIONS)

a. Risk Weighted Exposure for Credit Risk 74,851.54

b. Risk Weighted Exposure for Operational Risk 3,289.00

c. Risk Weighted Exposure for Market Risk 209.65


Add:1%oftheNIItoRWAforALMPolicyandPractice 21.93

3%additionalriskweightforOperationalRisk 906.02

3%adjustmentonTotalRWEforOverallRisk 2,350.51

Total Risk Weighted Exposure 81,628.64

RISK CLASSIFICATION NET BOOK VALUE RWE (NPR MILLION) (NPR MILLION)

a. Claims on Govt. and Central Bank 14,061.37 -

b. Claims on other Financial Entities - -

c. Claims on Banks 4,858.26 1,491.19

d. Claims on Corporate and Securities Firm 23,962.02 23,962.02

e. Claims on Regulatory Retail Portfolio 22,171.39 16,628.54

f. Claims secured by Residential Properties 8,131.31 4,917.79

g. Claims secured by Commercial Real State 2,051.36 2,051.36

h. Past due Claims 572.57 858.86

i. High Risk Claims 2,557.72 3,836.58

j. Other Assets 3,978.53 2,277.04

k. Offbalancesheetitems 36,941.67 18,828.17

Total 119,286.20 74,851.54



d. Detail of Non-Performing Loans

e. Ratio Of Non-Performing Loans

f. Movement of Non-Performing Assets (Gross) During the year Non-Performing Accounts (NPA) decreased by NPR 39.83 Million.

g. Write Off of Loans & Interest Suspense

h. Movement of Loan Loss Provision and Interest Suspense As per NRB Directives, all interest accruals on loans and advances, irrespective of loan category, are transferred to interest suspense account until the interest accrued and due is realized in cash. Details of Interest Suspense Movement are as follows:

i. Details of Additional Loan Loss Provisions:

RISK CLASSIFICATION GROSS VALUE NET VALUE (IN NPR MILLION) (IN NPR MILLION)

Restructured Loans - -



Doubtful Loans 304.33 -

Total NPA 749.07 252.36

PARTICULARS THIS YEAR PREV YEAR CHANGE (%)

GrossNPA 1.24% 1.37% -0.13%

NetNPA 0.42% 0.41% 0.01%

PARTICULARS THIS YEAR PREV YEAR CHANGE (IN NPR MILLION) (IN NPR MILLION)

Non Performing Assets (Amount) 749.07 709.24 39.83

PARTICULARS THIS YEAR PREV YEAR CHANGE (NPR) (NPR) %

Loan Loss Provision 1,112,849,680 1,062,141,713 4.77

Interest Suspense 346,008,422 556,182,244 (37.79)

PARTICULARS NPR MILLIONS

Current Year 749,066

Previous Year 709,240

Change 39,826

Change% 5.62%

ADDITIONAL LLP FOR THE YEAR NPR

Pass 96,506,730

Watch-List (44,202,282)

Restructured -

Sub-Standard 14,119,162

Doubtful (934,825)

Loss (14,780,819)

Total 50,707,967



j. Segregation of investment portfolio:

3. RISK MANAGEMENT FUNCTION

a. Summary of the bank’s internal approach to assess the adequacy of its capital to support all the risks in business and achieve better risk management techniques in monitoring and managing risks

i. Board and senior management oversight Bank management is responsible for understanding the nature and level of risk being taken by the bank and how this risk relates to adequate capital levels. It is also responsible for ensuring that the form and sophistication of the risk management processes is commensurate with the complexity of its operations. A sound risk management process, thus, is the foundation for an effective assessment of the adequacy of a bank’s capital position. The decisions made by the management are regularly reviewed by the BOD.

ii. Sound capital assessment Another crucial component of an effective ICAAP is the assessment of capital. In order to be able to make a sound capital assessment, the bank has, at minimum, have the following:

n Policies and procedures designed to ensure that the bank identifies, measures, and reports all material risks;

n A process that relates capital to the level of risk;

n A process that states capital adequacy goals with respect to risk, taking account of the Bank’s strategic focus and business plan; and

n A process of internal control reviews and audits to ensure the integrity of the overall management process.

iii. Comprehensive assessment of risks Chief Risk Officer (CRO), along with his team, is responsible for overall risk management of

the Bank which includes managing, assessing, identifying, monitoring and reducing pertinent global, macro and micro-economic level business risks that could interfere with Banks objective and goals and whether the Bank is in substantial compliance with its internal operating policies and other applicable regulations and procedures, external, legal, regulatory or contractual requirements on a continuous basis. Further, CRO ensures integration of all major risk in capital assessment process.

iv. Risk Management Committee (RMC) Board level risk management committee has been set up under NRB Directive for ensuring/reviewing bank's risk appetite is in line with the policies.

Credit Risk The Bank’s Credit Policy Guidelines has adopted a Credit Risk Management philosophy that involves a continual measurement.

Market Risk The Bank has in place Assets Liability Management (ALM) Policy, and Assets Liability Management Committee (ALCO), which monitors risks arising from changes in exchange rates in foreign currencies; liquidity profile of assets and liabilities, investment activities of the bank etc.

Operational Risk Board and senior management of the bank places high priority on effective operational risk management and adherence to sound operating controls. The Bank has developed and implemented various manuals, operating procedures and guidelines for monitoring and controlling Operational Risks in the Bank.

Most significant steps adopted by the Bank for handling Operational Risks are as follows:

Independent reconciliation department accustomed to conducting daily reconciliation of all agency accounts and Inter-Branch accounts. Transaction Stack System is in place on amount limit basis. Exception and MIS reports are generated by the system on a ‘Live’

INVESTMENT AMOUNT (NPR MILLIONS)

Held For Trading -

Held Till Maturity 12,885

Available For Sale 738

Total Investment 13,623



basis, where account activity can be monitored as and when they occur. General Authority schedule is in place to delegate authority to staff across all levels. Independent Internal Audit has been appointed to carry out review of internal controls and compliance. Output in all transactions is checked by a higher authority level. Disaster Recovery Server is in place to ensure full restoration of Bank’s data.

Other Risk In addition to credit, credit concentration, operational and market risk the Bank identifies, assess and monitors other risks such as strategic risk and reputational risks at regular interval.

v. Monitoring Monitoring and reporting of all risks, including credit, operational and market risks are identified, escalated, monitored and mitigated to the satisfaction of the risk type owner. The risk type owner is responsible for ensuring that all the risks are adequately identified, escalated, monitored and mitigated. The Bank has an adequate system in place for monitoring and reporting risk exposures and assessing how the changing risk profile affects the need for capital. The senior management and board of directors on a regular basis receive the report regarding the risk profile of the bank and its capital needs. All the material risks are identified, measured, monitored and reported by the respective risk type owner.

vi. Internal Control Review The internal control structure of the Bank is essential for sound capital assessment process. Effective control of the capital assessment process includes an independent review and involvement of both internal as well as external audits wherever appropriate. The Bank is committed conduct the regular review of its risk management process to ensure its integrity, accuracy, and reasonableness. The effectiveness of the Bank’s internal control system is reviewed regularly by the Board, its committees, Management and Internal Audit.

The Internal Audit monitors compliance with policies and standards and the effectiveness of internal control structures across the Bank through its program of business/unit audits. The Internal Audit function is focused on the areas of greatest risk as determined by a risk-based assessment methodology. Internal Audit reports regularly to the Audit Committee. The findings of all adverse audits are reported to the Chief Executive Officer and Business Heads for immediate corrective actions.

vii. Assets and Liability Committee (ALCO) The ALCO, chaired by Chief Executive Officer, ensures functioning of the banking business in line with the set procedures and processes and recommends for necessary steps to address the risk associated with liquidity, movement in interest rate, exchange rate and equity price and other risks.

viii. Stress Testing Stress Testing is a risk management technique used to evaluate the potential effects on an institution’s financial condition, of a set of specified changes in risk factors, corresponding to exceptional but plausible events. The Bank conducts the stress test on quarterly basis and reports to senior management as well as to Nepal Rastra Bank.

ix. Maker-Checker Policy The Bank has adopted Maker-Checker Policy in all of the transactions. Each and every transaction is entered and authorized in CBS by two different individuals for better control and any deviations are closely monitored. The activities of any personnel can be monitored centrally through an integrated system which helps in minimizing the risk of misconduct.

b. Types of eligible credit risk mitigants used and the benefits availed under CRM

CREDIT RISK AMOUNTMITIGANTS (NPR MILLIONS)

1. Deposit with Bank 745.30

2. Deposits with other banks/FI -

3. Gold 493.30

4. Govt. & NRB Securities -

Total Credit Risk Mitigants 1,238.60



CO

MP

AR

ISIO

N O

F U

NA

UD

ITE

D &

AU

DIT

ED

FIN

AN

CIA

L ST

ATE

ME

NTS

STA

TEM

EN

T O

F FI

NA

NC

IAL

PO

SITI

ON

A

S P

ER

UN

AU

DIT

ED

A

S P

ER

AU

DIT

ED

V

AR

IAN

CE

RE

ASO

N F

OR

VA

RIA

NC

E

FI

NA

NC

IAL

STA

TEM

EN

T FI

NA

NC

IAL

STA

TEM

EN

T IN

AM

OU

NT

IN

%

Ass

ets

CashAndCashEquivalent

2,278,905

2,442,008

163,103

7.16%

BankBalancerestated

Due

Fro

m N

RB

And

Pla

cem

ents

wit

h B

FIs

8

,90

2,6

17

8,9

02,

68

5

68

bo

oki

ng o

f in

tere

st r

ecei

vab

le

LoanAndAdvances

61,644,847

60,213,139

(1,431,708)

-2.32%

NFRSIm

pairm

entreversal

InvestmentSecurities

9,703,144

9,720,458

17,315

0.18%

rectificationofmarketrate

Inve

stm

ent

in S

ubsi

dia

ries

1

57,14

2

157

,142

0

PropertyAndEquipment

729,368

730,248

880

0.12%

additionaldepreciationcharged

GoodwillAndIntangibleAssets

76,415

76,415

(0)

0.00%

OtherAssets

401,814

421,561

19,746

4.91%

reclassification

Tota

l Ass

ets

83,

894

,252

8

2,6

63,6

56

(1,

230

,59

6)

-1.4

7%

-

Cap

ital

And

Lia

bili

ties

Pai

d U

p C

apit

al

8,15

2,55

6

8,15

2,55

6

-

ReservesAndSurplus

4,685,457

3,401,782

(1,283,674)

-27.40%

DecreaseinprofitandNFRSLLPim

pairm

ent

Deposits

69,493,018

67,366,128

(2,126,890)

-3.06%

reclassificatioofBFIdeposit

Borrowings

526,708

526,567

(141)

-0.03%

bookingofinterest

Bo

nd A

nd D

eben

ture

-

-

-

OtherLiabilitiesAndProvisions

1,036,514

3,335,877

2,299,363

221.84%

reclassificatioofBFIdeposit

No

n C

ont

rolli

ng In

tere

st

-

Tota

l Cap

ital

And

Lia

bili

ties

8

3,89

4,2

52

82,

782,

910

(

1,11

1,34

2)

-1.3

2%

-

As

on

16

Ju

ly, 2

018

(3

2 A

sar

2075

)



STA

TEM

EN

T O

F P

RO

FIT

OR

LO

SS

AS

PE

R U

NA

UD

ITE

D

AS

PE

R A

UD

ITE

D

VA

RIA

NC

E

R

EA

SON

FO

R V

AR

IAN

CE

FI

NA

NC

IAL

STA

TEM

EN

T FI

NA

NC

IAL

STA

TEM

EN

T IN

AM

OU

NT

IN

%

InterestIncome

7,666,751

7,647,361

(19,390)

-0.25%

adjustmentofAIRonloansandadvances

InterestExpense

4,776,524

4,776,433

(91)

0.00%

reversalofinterestoverbooked

Net

Inte

rest

Inco

me

2,8

90

,227

2

,870

,928

(

19,2

99

) -0

.67%

FeesandCommissionIncome

567,821

619,914

52,093

9.17%

reclassificationofinsuranceexpense

fro

m p

erso

nal e

xpen

se

FeesandCommissionExpense

89,102

159,339

70,238

78.83%

reclassificationofnonoperatingexpense

Net

Fee

s an

d C

om

mis

sio

n In

com

e 4

78,7

19

46

0,5

75

(18

,14

5)

-3.7

9%

OtherOperatingIncome

224,276

227,688

3,412

1.52%

reclassificationofnonoperatingincome/

exp

ense

Tota

l Op

erat

ing

Inco

me

3

,593

,222

3

,559

,19

1

(34

,031

) -0

.95%

Imp

airm

ent

Cha

rge/

(Rev

ersa

l)

forLoansandOtherLosses

(199,079)

48,593

247,672

-124.41%

NFRSIm

pairm

entreversal

Net

Op

erat

ing

Inco

me

3,7

92,3

01

3

,510

,59

8

(28

1,70

3)

-7.4

3%

PersonnelExpenses

937,966

908,492

(29,475)

-3.14%

reclassificationofinsuranceexpense

to p

erso

nal e

xpen

se

OtherOperatingExpenses

518,974

554,657

35,683

6.88%

reclassificationofnonoperatingexpense

Op

erat

ing

Pro

fit

2,3

35,3

61

2,0

47,

450

(

287,

911

) -1

2.33

%

Non-OperatingIncome/Expenses

(141,981)

(96,180)

45,802

reclassificationtootheroperatingexpense

and

fee

s an

d c

om

mis

sio

n ex

pen

se

Pro

fit

Bef

ore

Tax

2

,193

,379

1

,951

,270

(

242,

110

) -1

1.0

4%

IncomeTax

562,186

474,298

(87,888)

-15.63%

decreaseinprofitanddeferredtax

Pro

fit

/(Lo

ss)

For

the

Per

iod

1

,631

,193

1

,476

,972

(

154

,221

) -9

.45%

OtherComprehensiveIncome

(35,755)

(12,046)

23,709

-66.31%

NFRSIm

pairm

entreversal

Tota

l Co

mp

rehe

nsiv

e In

com

e 1

,595

,438

1

,46

4,9

26

(13

0,5

12)

-8.1

8%

ShareofNon-ControllingInterestonProfitofSubsidiary

Tota

l Co

mp

rehe

nsiv

e In

com

e af

ter

Shar

e o

f N

CI

1,5

95,4

38

1,4

64

,926

(

130

,512

) -8

.18%

DistributableProfit

Net

Pro

fit/

(Lo

ss)

as p

er P

rofi

t o

r Lo

ss

1,6

31,1

93

1,4

76,9

72

(15

4,2

21)

-9.4

5%

ShareofNon-ControllingInterestonProfitofSubsidiary

-

Add/Less:RegulatoryAdjustmentasperNRBDirective(319,425)

(152,332)

167,094

-52.31%

DecreaseinprofitandNFRSLLPim

pairm

ent

Free

Pro

fit/

(Lo

ss)

afte

r R

egul

ato

ry A

dju

stm

ents

1

,311

,76

8

1,3

24,6

40

1

2,87

2

0.9

8%

Con

td..

. CO

MP

AR

ISIO

N O

F U

NA

UD

ITE

D &

AU

DIT

ED

FIN

AN

CIA

L S

TA

TE

ME

NT

S



DISCLOSURE OF INFORMATION UNDER SECTION 109 (4) OF COMPANIES ACT 2063

1. An overview of the business during the Previous Year: Incorporated in the respective segments of annual report.

2. Transaction affected by national and international circumstances: Incorporated in the respective segments of annual report.

3. Achievements of the current year as of the date of preparation of the report and opinion of the Board of Directors on future actions: Incorporated in the respective segments of annual report.

4. Industrial or Professional relations of the Bank: Bank has maintained a cordial and professional relation with its stakeholders, customers and regulators.

5. Changes made in the composition of Board of Directors and reasons thereof: Incorporated in the respective segments of annual report.

6. Main factors affecting the business:a. Stiff and cutthroat competition among its

competitors.b. Instable political situation and lack of

investible fund in the economy due to less expenditure from the government level.

c. Increased cost of fund etc.

7. Response by Board of Directors on the remarks given in the audit report, if any: Besides the normal remarks on the banking transactions, there weren’t any other remarks given in the audit report on FY 2017/18. The remarks have come into notice of the Board of Directors and arrangements have been made to take corrective actions so that such mistake does not repeat in future.

8. The amount recommended for the distribution as dividend: The board has recommended paying 11.5% cash dividend amounting NPR 937,543,923 to the shareholders from the profit and reserves of fiscal year 2017/18.

9. Information on shares forfeited if any during the year: No shares were forfeited during the year.

10. Transactions between the Bank and its subsidiary company and progress made in the business: The progress in the Bank’s transaction has been included in the Director’s Report. Consolidated financial statements including consolidated balance sheet, consolidated profit and loss account and consolidated cash flow statement of its’ subsidiary company, Sunrise Capital Ltd., also reflects the true and fair position of its parent and subsidiary company.

11. Main transactions carried out by the Bank and its subsidiary company during the fiscal year and any important change in the business of the company during the period:a. Sunrise Bank Limited:

Those transactions that are allowed for a “A” class licensed institution like collection of deposits, advancing loans, international financial transactions, electronic transactions, remittance services and other banking activities has been performed by the Bank.

b. Sunrise Capital Limited: Transactions related to merchant banking like public issue, investment management, security guarantee and depository participant services.

12. Information furnished to the Bank by its basic shareholders during the previous fiscal year: No such information has been furnished by its basic shareholders during the review period.

13. Particulars of the ownership of shares taken up by the Directors and office bearers of the company during the previous year and information received by the Bank from them about their involvement, if any, in the transactions of the shares of the Bank: Directors and office bearers, except provided below have not involved in the share transaction of the Bank:



14. Particulars of information furnished by any Director or any of his close relatives about his personal interest in any agreement connected with the company signed during the previous fiscal year:There is no such information furnished by the directors and any of their close relatives.

15. Buy back of own shares: The Bank has not purchased its own shares in the year under review.

16. Whether or not there is an internal control system and if there is any such system, details thereof:a. To run smoothly and to operate day to day

business bank has devised financial policy, employee bye laws, Loan write off policy, credit policy and other different polices on need basis.

b. To control and monitor the activities of the Bank different committees like Risk Management Committee, Audit Committee and Human Resource Management Committee under the membership of various directors has been formulated.

c. Audit Committee analyzes the financial position, internal control and risk management of the Bank on regular basis. The committee also provides recommendation and suggestions on the internal and external audit reports and comments of NRB supervision.

17. Particulars of the total management expenses of the previous financial year:Total management expenses of the previous financial year have been detailed as below:

18. A list of members of the Audit Committee; remunerations, allowances and facilities provided to the members; particulars of functions discharged by the committee and suggestions, if any, offered by the committee:Audit committee of the Bank is comprised of following members:a. Dr. Deepak Prasad Bhattarai-Coordinatorb. Mr. Malchand Dugar- Memberc. Dr. Bhogendra Guragain- Memberd. SAR Associates-Membere. Mr. Ishwar Kumar Pathak- Member

Secretary

Excluding the employee member of the committee other members of the committee are paid NPR 10,000/- per meeting. During the previous year audit committee meeting was held 8 times. From the review of the internal audit report, necessary suggestions are provided through the Board meeting. Similarly, the external audit report and annual financial reports are presented to the Board after being reviewed.

S.N POSITION NAME SHARE CATEGORY NO OF SHARES TOTAL

1. Chairman Motilal Dugar Promotor 3,526,252 4,839,952

Public 1,313,700

2. Director Malchand Dugar Promotor 2,663,727 3,888,278

Public 1,224,551

3. Director Er. Bachha Raj Tater Promotor 1,463,175 2,008,275

Public 545,100

4. Director Dr. Bhogendra Guragain Promotor 665,932 914,022

Public 248,090

5. Director Jyoti Kumar Begani Promotor 438,950 602,481

Public 163,531

6. Director Dr. Deepak Prasad Bhattarai Promotor - 6,788

Public 6,788

7. Director Deepak Nepal Promotor - 4,733

Public 4,733

8. Independent Om Krishna Joshi Promotor - 15,642

Director Public 15,642

PARTICULARS AMOUNT (NPR)

StaffExpenses 908,491,597

Other Operating Expenses 713,996,050



19. Payments due, if any, to the company from any director, managing director, executive chief or basic shareholder of the company or any of their close relatives, or from any firm, company or corporate body in which he is involved: No such amount is due for payment.

20. Remuneration, allowances and facilities to the Directors, Managing Director, Executive Chief and other office bearers:

a. The Directors were paid NPR 1,942,000 as meeting allowances after deduction of tax at source according to the Income Tax Act.

b. The details of the salary, allowances and facilities paid to the Chief Executive Officer and other managerial level staffs are as follows:

Chief Executive Officer of the Bank is provided vehicle facility as well. Besides, as per the prevalent Bonus Act, CEO is eligible for Bonus from the profits of the Bank.

21. Dividends yet to be collected by the shareholders: As of 16th July 2018, dividends yet to be collected by the shareholders were NPR 44,195,398.

22. Details of property purchased or sold as per clause 141: Not Applicable.

23. Details of transactions between associated companies as per clause 175.

n Transaction with Subsidiary Company: Bank has held investment of 78.58% in sunrise capital hence sunrise bank is holding company of the Sunrise Capital. Details of transaction with sunrise capital till the end of Ashad end is as follows.

Sunrise bank has deputed 10 staffs at Sunrise Capital, regarding salary and benefits to them salary and benefits is paid as per the decision of Sunrise Capital only. In case of “lower” emoluments than those prevailing in Sunrise Bank as per their positions, the shortfall is made good by the Bank. Similarly, as a staff member of Sunrise Bank, any facility which is not offered by Sunrise Capital e.g., vehicle loan, are provided through the parent company.

n Bank has invested NPR 19.85 million in the 247,500 shares of Gurans Life Insurance Ltd. Bank hasn’t earned income from such investments and hasn’t invested any additional amount during the year.

24. Any other matter to be mentioned in the Board of Directors report under Companies Act 2063 and other prevalent laws: All such related matters have been incorporated in the respective segments of the annual report.

25. Other details Incorporated in the respective segments of the annual report.

POSITION AMOUNT (NPR ‘000)

CEO 14,913

ManagerialLevelStaffs 105,443

DETAILS OF TRANSACTION AMOUNT (NPR) REMARKS

Shares Held 157,142,000 Bank has investment in 1,571,420

shares of sunrise capital

Deposit Liabilities 172,912,239 Deposits Held by Sunrise Capital in

Various Accounts of Sunrise Bank

Interest Expenses 18,265,399 Interest paid by Sunrise Bank to

Sunrise Capital

Other Operating Income 2,064,322 Reimbursed Expenses by Sunrise

Capital for Rent, Electricity and

Water

Share Registrar Fee 350,000 Expenses by Sunrise Bank for

Share Registrar Service

Others 1,086,117 Paid to Sunrise Capital against

CDS, Dematerialization, Registrar

to Shares and Bonus Shares


INVESTOR'SRELATIONSHIPThe Bank maintains regular communication with shareholders as it believes in sharing the efforts in business for producing the highest possible returns.



DIRECTIVES FROM NEPAL RASTRA BANK WHILE APPROVING THE DIVIDEND DECLARATION/ DISTRIBUTION AND FINANCIAL STATEMENTS PUBLICATION

Based on the financial statements and other documents submitted by the Bank, the provisions of Sub-section 2 of Section 47 of Banks and Financial Institutions Act 2073 are seen to have been complied; therefore as per Subsection 1 of the said Section, approval has been granted for proposed cash dividend of Rs. 937,543,922.87 subject to fulfillment of other prevailing legal provisions and approval of the same by the annual general meeting of the Bank. Additionally, consent has been granted for publication of the financial statements of FY 2017/18 for tabling it for approval at the Bank’s annual general meeting along with the below directives.

1. Arrangement should be made for full compliance of the observations/exceptions noted by the auditors in their report and for ensuring that such observations/exceptions do not repeat in future.

2. To withhold proposed cash dividend of promoter shareholders till compliance of point number 7 of directive number 10 of the Unified Directive 2075 issued by Nepal Rastra Bank is observed regarding holding of promoter shares up to 15% of paid up capital in a Bank & Financial Institution and up to 1 % of paid up capital in other Bank and Financial Institutions.

Above directives should be published as a separate page in the annual report of the Bank.


TAXATION ON DIVIDENDS AND SHARES

CASH AND BONUS DIVIDENDSThe tax on dividend received by the shareholders is subject to withholding tax at the rate of 5% pursuant to Section 88(2) of the Income Tax Act 2002. The tax is final withholding tax as per Section 92(1) (a) of the Act and need not require further assessment while filing annual tax return under Section 96. However, the dividend distributed by the Bank from the dividend earned by the resident company is not subject to tax at the time of distribution as per Section 54(3). Capitalization of profits is deemed as distribution under Section 53(1) (b) of the Act and hence, issuance of bonus shares by the Bank from the profits earned (excluding dividend received) is subject to withholding tax at the rate of 5% under Section 88(2.)

CAPITAL GAINS ON DISPOSAL OF SHARESPursuant to clause (a) of Section 95A (2) of the Income Tax Act, 2002 (amended by Finance Ordinance 2018), the gain on disposal of shares listed in the Securities Board of Nepal computed as per Section 37 of the Act is subject to withholding tax at the rate of 7.5%, if the beneficiary of the gain is resident natural person and at the rate of 10%, in case the beneficiary of the gain is resident entity and 25% to other than resident natural person and resident entity. Shares of Sunrise Bank are listed both in the Securities Board of Nepal and Nepal Stock Exchange Ltd. for the purpose of public trading and therefore the gain on disposal of Bank’s shares is subject to withholding tax in accordance to clause (a) of Section 95A (2). Gain or loss arising from disposal of shares under Section 37 of the Act shall be the amount that is determined by reducing the amount incurred while acquiring the shares with the amount that is received at the time of its disposal. The amount of disposal in case the Sunrise Bank’s shares sold through stock exchange shall be the net amount received from the buyer less brokerage and other costs incurred during the transaction. The costs incurred for the shares by the way of an acquisition through stock exchange shall be the amount paid to the beneficiary plus all costs attributable to the acquisition. Further, the costs incurred for the shares by the way of transfer from the deceased person shall be the market value prevailing immediately before the death of the transferor. The tax being withheld on the gains arising from disposal of shares is an advance tax and the tax credit is available at the time of filing annual tax returns.

INFORMATION ABOUT ANNUAL GENERAL MEETING The 11th Annual General Meeting (AGM) of the Bank has been scheduled to convene on 13th January 2019 at 10:00 hours at AmritBhog Caterers, Kalikasthan, Kathmandu, Nepal to discuss and approve various agendas including the financials and 11.5% cash dividend to shareholders.



VALUE ADDED STATEMENT

VALUE ADDED

DISTRIBUTION

PARTICULARS 2018 2017

Interest & Other Operating Income 8,495 6,094

Cost of Services (5,368) (3,553)

Value Added By Banking Services 3,127 2,541

Non Banking Income 68 14

Provision Against Non Performing Assets (213) (161)

Value Added 2,982 2,394

To employees

Remuneration,providentfundsandotherbenefits 908 689

To government

Income tax 474 510

To providers of capital

Interest on borrowings 10 3

Dividend to shareholders 938 1,063

Total 948 1,066

To expansion and growth

Depreciation & amortizations 112 79

Capital/Retained earnings/Reserves 539 49

Total 652 129

Total Value Added 2,982 2,394



PARTICULARS 1STQTR 2NDQTR 3RDQTR 4THQTR

Maximum Price (NPR) 408 354 267 281

Minimum Price (NPR) 309 258 225 216

Final Price (NPR) 331 263 244 230

No. of Transactions 654,709 862,565 463,011 692,361

Total Trading Days 56 57 56 63

DISCLOSURE RELATED TO SUB RULE (2) OF RULE 26 OF SECURITIES REGISTRATION AND ISSUANCE REGULATION, 2073

1. Report of Board of Directors: Included in the Annual Report under respective heading.

2. Auditor’s Report: Included in the Annual Report under respective heading.

3. Audited Financial Statements: Included in the Annual Report under respective heading.

4. Details relating to Legal Actions:a. Law Suits filed by/against the

Bank during the review period. No law suits except business cases related to loans and loan recovery.

b. Law Suits filed by/against the promoters/directors involving charge of regulatory violations or criminal offensesNo such cases filed.

c. Cases filed against any promoters/directors for financial fraud. No such Information has been received.

5. Analysis of share transaction and progress of Organized Institution:a. Management view on share

transactions of the Bank on Nepal Stock Exchange As the share price determination and share transaction are carried through open market operations at Nepal Stock Exchange under the supervision of Securities Board of Nepal, the management is neutral on the matter.

b. Maximum, minimum and closing share price of organized institution including total transacted number of shares and transacted days during the yearThe details in reference to the website of Nepal Stock Exchange are given in table below:

6. Problems and Challenges Increasing competition among banks, challenge of increasing paid up capital, increasing inflation rate or decreasing area of investment are major challenges faced but with the help of internal control mechanism, better strategies, diversified business, better service standards, employees’ ability enhancement, we are able to cope up with the controllable problems and challenges.

7. Corporate Governance The Bank has adopted strong policies for maintaining corporate governance. In regards to corporate governance, bank is fully compliant with the directions of Nepal Rastra Bank, Banks and Financial Institution Act 2073 and Securities Exchange Act 2063 and is committed to comply in the days to come.

8. Statement of difference between prospectus and audited financial statement by 20% or more

NA

9. Details of special events or circumstances a. Amendment in the bye laws of the organized institution Due to acquisition of NIDC Capital Markets Ltd, issued and paid up

capital of the Bank has changed.

b. Changes in BOD/Senior Management of the organized institution i. New appointment in the Board

NAME: Er. Shailendra Guragain DATE OF APPOINTMENT: 13th January 2019 NAME: Ms. Sharada Sharma Pudasaini DATE OF APPOINTMENT: 13th January 2019

c. Declaration of dividend and change in share composition n Capital of the Bank has increased with declaration of 33.33%

bonus shares vide 9th AGM of the Bank held on 7th Kartik 2073 for fiscal year 2072/73.

n During the previous year Sunrise Bank Limited acquired NIDC Capital Markets Ltd. by issuing 65 per shares against their shares having face value of 100.

n 30% right shares have been issued as decided by the 9th AGM of the bank held on 7th Kartik 2073.



BANK'S PERFORMANCEHorizontal and Vertical Analysis


HORIZONTAL ANALYSISSTATEMENT OF FINANCIAL POSITION

PARTICULARS 16-JUL-18 % 15-JUL-17 % 16-JUL-16

Assets

Cash and Cash Equivalents 2,442 18 2,061 (26) 2,772

Due from Nepal Rastra Bank 5,033 (33) 7,496 97 3,810

Placement with BFIs 3,870 15 3,358 28 2,618

Derivative Financial Instruments - (100) 1 (97) 25

Other Trading Assets - - - - -

Loans and Advances to BFIs 1,000 (10) 1,113 17 956

Loans and Advances to Customers 59,214 18 50,158 18 42,361

Investment Securities 9,720 58 6,169 6 5,845

Current Tax Assets 43 (74) 165 493 28

Investment in Subsidiaries 157 100 79 - -

Investment in Associates - - - - -

Investment Property 119 (26) 161 55 104

Property and Equipment 730 37 534 23 436

Goodwill and Intangible Assets 76 31 59 893 6

Deferred Tax Assets 53 - - - -

Other Assets 325 (36) 505 368 108

Total Assets 82,783 15 71,859 22 59,067

PARTICULARS 16-JUL-18 % 15-JUL-17 % 16-JUL-16

Liabilities

Due to Bank and Financial Institutions 2,127 (45) 3,881 113 1,820

Due to Nepal Rastra Bank 527 - - - -

Derivative Financial Instruments 23 - - - -

Deposits from Customers 67,366 18 57,286 15 49,981

Borrowings - - - - -

Current Tax Liabilities - - - - -

Provisions - - - - -

Deferred Tax Liabilities - (100) 26 203 8

Other Liabilities 1,186 27 931 34 692

Debt Securities Issued - - - - -

Subordinated Liabilities - - - - -

Total Liabilities 71,229 15 62,123 18 52,502

Equity

Share Capital 8,153 16 7,018 77 3,976

Share Premium 127 - - - -

Retained Earnings 942 (30) 1,349 (25) 1,788

Reserves 2,333 71 1,368 71 802

Total Equity Attributable to Equity Holders 11,554 19 9,735 48 6,566

Non Controlling Interest - - - - 0

Total Equity 11,554 19 9,735 48 6,566

Total Liabilities and Equity 82,783 15 71,859 22 59,067



STATEMENT OF PROFIT & LOSS

PARTICULARS FY 2017/18 % FY 2016/17 % FY 2015/16

Interest Income 7,647 41 5,428 75 3,096

Interest Expense 4,776 53 3,113 96 1,592

Net Interest Income 2,871 24 2,314 54 1,504

Fee and Commission Income 620 20 517 22 423

Fee and Commission Expense 159 (1) 161 219 50

Net Fee and Commission Income 461 29 356 (4) 372

Net Interest, Fee & Commission Income 3,332 25 2,671 42 1,876

Net Trading Income - - - - -

Other Operating Income 228 53 148 12 132

Total Operating Income 3,559 26 2,819 40 2,008

Impairment Charge/ (Reversal) for Losses 49 (35) 75 (132) (235)

Net Operating Income 3,511 28 2,744 22 2,243

Operating Expense - - - - -

Personnel Expenses 908 32 689 40 493

Other Operating Expenses 442 41 313 0 312

Depreciation & Amortisation 112 137 48 (25) 64

Operating Profit 2,047 21 1,695 23 1,375

Non Operating Income 68 390 14 957 1

Non Operating Expense 164 91 86 2,560 3

Profit Before Income Tax 1,951 20 1,623 18 1,373

Income Tax Expense 474 (7) 510 21 421

Profit for the Period 1,477 33 1,113 17 951



VERTICAL ANALYSISSTATEMENT OF FINANCIAL POSITION

PARTICULARS 16-JUL-18 % 15-JUL-17 % 16-JUL-16 %

Assets

Cash and Cash Equivalents 2,442 3 2,061 3 2,772 5

Due from Nepal Rastra Bank 5,033 6 7,496 10 3,810 6

Placement with BFIs 3,870 5 3,358 5 2,618 4

Derivative Financial Instruments - - 1 0.1 25 0.1

Other Trading Assets - - - - - -

Loans and Advances to BFIs 1,000 1 1,113 2 956 2

Loans and Advances to Customers 59,214 72 50,158 70 42,361 72

Investment Securities 9,720 12 6,169 9 5,845 10

Current Tax Assets 43 0.1 165 0.2 28 0.1

Investment in Subsidiaries 157 0.2 79 0.1 - -

Investment in Associates - - - - - -

Investment Property 119 0.1 161 0.2 104 0.2

Property and Equipment 730 1 534 1 436 1

Goodwill and Intangible Assets 76 0.1 59 0.1 6 0.1

Deferred Tax Assets 53 0.1 - - - -

Other Assets 325 0.4 505 0.7 108 0.2

Total Assets 82,783 100 71,859 100 59,067 100

PARTICULARS 16-JUL-18 % 15-JUL-17 % 16-JUL-16 %

Liabilities

Due to Bank and Financial Institutions 2,127 3 3,881 5 1,820 3

Due to Nepal Rastra Bank 527 1 - - - -

Derivative Financial Instruments 23 0.1 - - - -

Deposits from Customers 67,366 81 57,286 80 49,981 85

Borrowings - - - - - -

Current Tax Liabilities - - - - - -

Provisions - - - - - -

Deferred Tax Liabilities - - 26 0.1 8 0.1

Other Liabilities 1,186 1 931 1 692 1

Debt Securities Issued - - - - - -

Subordinated Liabilities - - - - - -

Total Liabilities 71,229 86 62,123 86 52,502 89

Equity

Share Capital 8,153 10 7,018 10 3,976 7

Share Premium 127 0.2 - - - -

Retained Earnings 942 1 1,349 2 1,788 3

Reserves 2,333 3 1,368 2 802 1

Total Equity Attributable to Equity Holders 11,554 14 9,735 14 6,566 11

Total Liabilities and Equity 82,783 100 71,859 100 59,067 100



STATEMENT OF PROFIT & LOSS

PARTICULARS FY 2017/18 % FY 2016/17 % FY 2015/16 %

Interest Income 7,647 89 5,428 89 3,096 85

Interest Expense 4,776 56 3,113 51 1,592 44

Net Interest Income 2,871 34 2,314 38 1,504 41

Fee and Commission Income 620 7 517 8 423 12

Fee and Commission Expense 159 2 161 3 50 1

Net Fee and Commission Income 461 5 356 6 372 10

Net Interest, Fee & Commission Income 3,332 39 2,671 44 1,876 51

Net Trading Income - - - - - -

Other Operating Income 228 3 148 2 132 4

Total Operating Income 3,559 42 2,819 46 2,008 55

Impairment Charge/ (Reversal) for Losses 49 1 75 1 (235) (6)

Net Operating Income 3,511 41 2,744 45 2,243 61

Operating Expense - - - - - -

Personnel Expenses 908 11 689 11 493 13

Other Operating Expenses 442 5 313 5 312 9

Depreciation & Amortisation 112 1 48 1 64 2

Operating Profit 2,047 24 1,695 28 1,375 38

Non Operating Income 68 1 14 0 1 0

Non Operating Expense 164 2 86 1 3 0

Profit Before Income Tax 1,951 23 1,623 27 1,373 38

Income Tax Expense 474 6 510 8 421 12

Profit for the Period 1,477 t17 1,113 18 951 26



COUNTRY PARTNER BANK / REMITTANCE COMPANY

Oman Al Jadeed Exchange

Modern Exchange

Asia Express Exchange

Qatar Habib Qatar International Exchange

Al Zaman Exchange

Al Jazeera Exchange

UAE Al Ahalia Exchange

Progoti Exchange

GCC Exchange

Al Ansari Exchange

Noor Ahalia Exchange

Kuwait Bahrain Exchange Company (BEC)

Bahrain Bex Money Bahrain Express Exchange

Israel WIC Worldcom Finance

Italy National Exchange CO.S.R.L

UK Netfox LTD

NEC Money Transfer

India IDBI Bank

Republic Of South Korea Industrial Bank of Korea (IBK)

KB Kookmin Bank

Hanpass

USA / Middle East Trans-Fast Remittance

Japan Easylink Remittance Pvt. Ltd

Worldwide CG Remittance

REMITTANCE NETWORKSunrise Bank has extended remittance business throughout the Persian Gulf countries and in other destinations of Nepali workers. The Remittance Department has been continuously seeking and soliciting new avenues for the Bank's remittance business. The existing international remittance network is given below :

INTERNATIONAL PARTNER



The services offered by the Remittance Department internationally include:

Online remittance which includes :n Remittance Payment against Identification.n SrBL Account Credit Remittances.n Other Bank Account Credit Remittances.

Partial Banking Facility abroad :n Opening Suryodaya Remit Account. n Providing Mobile Banking / Internet

Banking Facility. n Solicitation of Fixed Deposits. n SrBL Visa Cards distribution country wise.n Issuance of Account Mandate & Debit

Authority.n Solicitation of loan customers and

obtaining required legal documents.

Sunrise Capital service from abroad:n Opening of DMAT account from abroad.n Providing DMAT Cheque Book and ASBA

Forms (if share issuer is Sunrise Capital).

Other Functions abroad:n Promoting Sunrise Bank and its products

in the international market targeting Nepali workers.

n Marketing campaign in various countries for various products.

n Banking awareness programs to educate Nepali workers to remit funds through banking channels.

PARTNER BANK / REMITTANCE COMPANY

1. City Express Money Transfer

2. Prabhu Money Transfer

3. IME Ltd

4. Western Union Money Transfer

5. Samsara - Money Gram

6. SDBL Remit

7. Net Remit

8. CG Money Remit (MTA)

9. Easy Link Remittance

10. Best Remit

11. JME Remit

12. Reliable Remit

DOMESTIC REMITTANCE PARTNERS

COUNTRY CONTACT NUMBER EMAIL ID

South Korea +821021770733 [email protected]

South Korea +821074593291 [email protected]

Israel +972549288928 [email protected]

UAE +971529251568 [email protected]

OVERSEAS REPRESENTATIVE STAFFS



CORRESPONDENT NETWORK AND CORRESPONDENT BANKING SERVICE

The Bank maintains a full-fledge Correspondent Banking Department under its Treasury and Correspondent Banking Department at the Head Office in Gairidhara, Kathmandu. The department is dedicated to provide prompt services to all the units of the Bank on international payments, inward remittance, letter of credit advising, settlements and all other correspondent banking-related issues. For reliable transfer of funds and providing prompt services to customers, the Bank has maintained nostro accounts with 18 banks in different currencies. The Bank also has a Relationship Management Application (RMA) arrangement with more than 134 banks that enables communication between various financial institutions via SWIFT thus helping in free flow of information.

The Correspondent Banking Department is in constant communication with all international correspondent banks, SWIFT department, Trade Finance departments, and all the branches. Maintaining a good relationship is the key to providing seamless service as it allows for better responsiveness and flexibility in meeting the needs of clients.

SrBL has a comprehensive network of Correspondent Banks. Its customers can benefit from the wide international reach, relationship-based approach, and the wide range of global correspondent banking services. Further, the customers can remit funds from their account to any of our Correspondent Banks listed below.

CURRENCY CORRESPONDENT BANK COUNTRY CITY SWIFT/BIC

1. AUD SBI Sydney Australia Sydney SBINAU2S

2. DKK Danske Bank A/S Denmark Copenhagen DABADKKK

3. EUR Standard Chartered Bank Germany Frankfurt am Main SCBLDEFX

4. GBP Standard Chartered Bank Great Britain London SCBLGB2L

5. INR Axis Bank Ltd India Mumbai AXISINBB004

6. INR HDFC Bank Ltd India Mumbai HDFCINBB

7. INR Mashreq Bank PSC India Mumbai MSHQINBB

8. INR Standard Chartered Bank India Mumbai SCBLINBB

9. INR IDFC Bank Limited India Mumbai IDFBINBB

10. INR IDBI Bank Limited India Mumbai IBKLINBB

11. CNY Bank of China China Shanghai BKCHCNBHS00

12. CNY Standard Chartered Bank China Shanghai SCBLCNSX

13. JPY Standard Chartered Bank Japan Tokyo SCBLJPJT

14. USD K B Kookmin Bank South Korea Seoul CZNBKRSE

15. USD Habib American Bank United States New York HANYUS33

16. USD Industrial Bank of Korea South Korea Seoul IBKOKRSE

17. USD MashreqBank PSC United States New York MSHQUS33

18. USD Standard Chartered Bank United States New York SCBLUS33

STANDARD SETTLEMENT INSTRUCTIONS (SSI) OF SUNRISE BANK LIMITED (SWIFT: SRBLNPKA)



OUR BRANCH NETWORKPROVINCE NO.1 PROVINCE NO.2

BARAHAPOKHARI BRANCH (GAUPALIKA)Dhartung, Barahpokhari Rural Municipality-04, Khotang,

BHADRAPUR BRANCHHulak Road, Bhadrapur Municipality-05, Jhapa, Tel: +977-023-520132/520133

BIRATCHOWK BRANCHBiratchowk, Sundarharaicha Municipality-10, Morang,Tel: +977-021-546102/546430

BIRATNAGAR BRANCHHanumandas Road, Biratnagar Metropolitan City-08, Morang, Tel: +977-021-440695/440696

BIRTAMOD BRANCHMuktichowk, Birtamod Municipality-4, Jhapa, Tel: +977-023-546080/541069

BUDHABARE BRANCHBudhabare, Buddhashanti Rural Municipality-03, Jhapa, Tel: +977-023-555418/555478

DAMAK BRANCHGanganagari Gorkha Department Store 2nd Floor, Damak Municipality-05, Jhapa, Tel: +977-023-582360/582361

DHANKUTA BRANCHHulak Tole, Dhankuta Municipality-7, Dhankuta, Tel: +977-026-520221/520222

DHARAN BRANCHMahendra Path, Dharan Sub-Metropolitan City-12, Sunsari, Tel: +977-025-532841/532842

DUHABI BRANCHDharan Road, Duhabi Municipality-5, Sunsari Tel: +977-025-541486/541488

GAIGHAT BRANCHPipalchowk,Triyuga Municipality-11, Udayapur, Tel: +977-035-420778/420779/420780

ILAM BRANCHNikunja Path, Ilam Municipality-07, Ilam, Tel: +977-027-521717/521720

ITAHARI BRANCHItahari Central Plaza, Itahari Sub-Metropolitan City-06, Sunsari,Tel: +977-025-586924/587622

JHUMKA BRANCJhumka Bazar, Ramdhuni Municipality-1, Sunsari, Tel: +977-025-562353/562653

KAKARVITTA BRANCHKakarvitta, Mechinagar Municipality-06, Jhapa, Tel: +977-023-562083/562502

MAIWAKHOLA BRANCH (GAUPALIKA)Sanghu Bazar, Maiwakhola Rural Municipality-03, Taplejung, Tel: +977-021-696488

MOLUNG BRANCH (GAUPALIKA)Prapcha Deurali, Molung Rural Municipality-03, Okhaldhunga, Tel: +977-9741428889

SIDDHICHARAN BRANCHRamilodanda, Siddhicharan Municipality-11, Okhaldhunga, Tel: +977-037-520701/520702

SURUNGA BRANCHJhapa Road, Kankai Municipality-03, Jhapa, Tel: +977-023-550880/550881

TERHATHUM BRANCHMyanglung Bazar, Myanglung Municipality-01, Terhathum, Tel: +977-026-460720/460721

UDAYAPUR BRANCHJaljale, Triyuga Municipality-06, Udayapur, Tel: +977-035-411016/9753003729

AURAHI BRANCH (GAUPALIKA)Deuri Parwaha, Aurahi Rural Municipality-2, Dhanusha, Tel: +977-041-620055

BARDIBAS BRANCHMain Road, Bardibas Municipality-01, Mahottari, Tel: +977-044-550563/550564

BINDABASINI BRANCH (GAUPALIKA)Bahuarwabhatta, Bindabasini Rural Municipality-2, Parsa, Tel: +977-9755001213

BIRGUNJ BRANCHAdarshnagar Chowk, Birgunj Metropolitan City-07, Parsa, Tel: +977-051-524784/524785

CHANDRANIGAHAPUR BRANCHChandranigahpur, Chandrapur Municipality-04, Rautahat, Tel: +977-055-540536/540636

DURGA BHAGWATI BRANCH (GAUPALIKA)Gangapipra Bazar, Durgabhagwati Rural Municipality-01, Rautahat, Tel: +977-055-400049

GAUR BRANCHB.P Chowk, Gaur Municipality-03, Rautahat, Tel: +977-055-521413

JANAKPUR BRANCHBajrang Chowk, Janakpur Sub-Metropolitan City-08, Dhanusha,Tel: +977-041-527245/527246

LAHAN BRANCHIn front of Police station, Thana Chowk, Lahan Municipality-08 , Siraha,Tel: +977-033-562403/562423

MIRCHAIYA BRANCHThana Chowk, Mirchaiya Municipality-05, Siraha, Tel: +977-033-550596/684

RAJBIRAJ BRANCHGajendra Chowk, Rajbiraj Municipality-04, Saptari, Tel: +977-031-520727/520721



PROVINCE NO.3

ATTARKHEL BRANCHNepal Medical College (NMC Chowk), Gokarneshwor Municipality-8, Kathmandu, Tel: +977-01-4913704

BAMTIBHANDAR BRANCH (GAUPALIKA)Ratnajyoti Bazar, Umakunda Rural Municipality-02, Ramechhap, Tel: +977-9741428893

BANIYATAR BRANCHJalpa Chowk Tokha, Tokha Municipality-08, Kathmandu, Tel: +977-01-5158066/5158161

BHAINSEPATI BRANCHKhokana Dobato Bhainsepati, Lalitpur Metropolitan City-25, Lalitpur, Tel: +977-01-5592930/5592931

BHAKTAPUR BRANCHSukuldhoka, Bhaktapur Municipality-05, Bhaktapur, Tel: +977-01-6619240/6619241

BHARATPUR BRANCHHakim Chowk, Bharatpur Metropolitan City-10, Chitwan, Tel: +977-056-528121/533261/525155

BOUDHA BRANCHBouddha, Kathmandu Metropolitan City-06, Kathmandu, Tel: +977-01-4916395

BUDHANILKANTHA BRANCHNarayanthan Chowk, Budhanilkantha Municipality-03, Kathmandu, Tel: +977-01-4378275

CHABAHIL BRANCHChabahil (Saraswati Nagar), Kathmandu Metropolitan City-07, Kathmandu, Tel: +977-01-4822466/4822766

GABAHAL BRANCHRatnakar Mahabihar, Lalitpur Metropolitan City-16, Lalitpur, Tel: +977-01-5005014/5005015/5005212

GAUSHALA BRANCHPingalasthan, Kathmandu Metropolitan City-08, Kathmandu, Tel :+977-01-4113667/4113668

GONGABU BRANCHGongabu Chowk, Kathmandu Metropolitan City-26, Kathmandu, Tel: +977-01-4388505/4388506/4388507

GOTHATAR BRANCHPepsi Cola Town Planning, Kathmandu Metropolitan City-32, Kathmandu, Tel: +977-01-4992706

GOTIKHEL BRANCH (GAUPALIKA)Gotikhel Bazar, Mahankal Rural Municipality-03, Lalitpur, Tel: +977-9741428871

HETAUDA BRANCHKantirajpath, Hetauda Sub-Metropolitan City-02, Makwanpur, Tel: +977-057-525921/522731

JYATHA BRANCHJyatha, Kathmandu Metropolitan City-27, Kathmandu,Tel: +977-01-4260654/4259174

KALANKI BRANCHKalanki Chowk, Kathmandu Metropolitan City-14, Kalanki, Tel: +977-01-5234795/5234796

KALIKASTHAN BRANCHKalikasthan, Kathmandu Metropolitan City-29, Kathmandu, Tel: +977-01-4422554/4422555

KALIMATI BRANCHSalt Trading Corporation Ltd Kalimati, Kathmandu Metropolitan City-13, Kathmandu, Tel: +977-01-4278694/4278709

KAMAL POKHARI BRANCHKamalpokhari, Kathmandu Metropolitan City-1, Kathmandu, Tel: +977-01-4421652/4423219/4425343

KHUSIBU BRANCHKaldhara Chowk, Kathmandu Metropolitan City-17, Kathmandu, Tel: +977-01-4382950/4382952

LAGANKHEL BRANCHLagankhel Bus Park, Lalitpur Metropolitan City-12, Lalitpur, Tel: +977-01-5553480/5526178

LUVU BRANCHLuvu Bazar, Mahalaxmi Municipality-08, Lalitpur, Tel: +977-01-5580361/5580461

MAHABHARAT BRANCH (GAUPALIKA)Bankhu Saleeni, Mahabharat Rural Municipality-6, Kavre,Tel: +977-9741468043

MAHARAJGUNJ BRANCHNarayan Gopal Chowk, Kathmandu Metropolitan City-03, Kathmandu, Tel: +977-01-4720346/4721352

MAIN BRANCHGairidhara, Kathmandu Metropolitan City-2, Kathmandu, Tel: +977-01-4004560-64

MANAMAIJU BRANCHJarankhu, Tarakeshwor Municipality-08, Kathmandu, Tel: +977-01-4025515

NARAYANGHAT BRANCHLions Chowk, Bharatpur Metropolitan City-03, Chitwan, Tel: +977-056- 570341/570313/570442/570543/570230/570913/570345/571953/571054/571452

NEW ROAD BRANCHNewroad, Kathmandu Metropolitian City-22, Kathmandu, Tel: +977-01-4239470/4239471/4239472

PAKO BRANCHPako, Kathmandu Metropolitian City-22, Kathmandu, Tel: +977-01-4228380/4242302

PANAUTI BRANCHKushadevi Marga, Panauti Municipality-07, Kavre, Tel: +977-011-440601/440602

PHARPING BRANCHPharping, Dakshinkali Municipality-05, Kathmandu, Tel: +977-01-4710865/4710943



PRITI BRANCH (GAUPALIKA)Chyadalu Priti, Umakunda Rural Municipality-04, Ramechhap, Tel: +977-9748647183

PUTALISADAK BRANCHPutalisadak, Radhakuti Arcade, Kathmandu Metropolitan City-29, Kathmandu, Tel: +977-01-4010595/4421662

SANEPA BRANCHSanepa, Ringroad, Lalitpur Metropolitan City-02, Lalitpur, Tel: +977-01-5542897/5542898

SHANKHAMUL BRANCHDibya Complex Shankhamul Chowk, Kathmandu Metropolitan City-10, Kathmandu, Tel: +977-01-4783996/4783073/4781182

SITAPAILA BRANCHTriratna Tamrakar Complex Sitapaila, Nagarjun Municipality-04, Kathmandu, Tel: +977-01-4034996/4034997

TANDI BRANCHTandi, Ratnanagar Municipality-02, Chitwan, Tel : +977-056-562993/562953

TAUKHEL BRANCHTaukhel Chowk, Godawari Municipality- 03, Lalitpur, Tel: +977-01-5560574/5560635

TINKUNE BRANCHNeupane Tower Tinkune, Kathmandu Metropolitan City-35, Kathmandu, Tel: +977-01-4111554/4111854/4111929

BAGAR BRANCHBagar, KaskiPokhara Metropolitan City-01, KaskiTel: +977-066-520129/520329

BESISAHAR BRANCHJhyang Khola, Besisahar Municipality-08, Lamjung, Tel: +977-066-520129/520329

DAMAULI BRANCHBalmandir Marga, Neemchowk, Vyas Municipality-03, Tanahun,Tel: +977-065-561800

DEURALI BRANCH (GAUPALIKA)Deurali Bazar, Rupa Rural Municipality-5, Kaski, Tel: +977-061-620845

DUMRE BRANCHDumre Bazar, Bandipur Rural Municipality-01, Tanahun, Tel: +977-065-580355/580356

POKHARA BRANCHNewroad, Pokhara Metropolitan City-9, Kaski, Tel: +977-061-537845

SUNDAR BAZAR BRANCHTallo Bazar, Sundarbazar Municipality-07, Lamjung, Tel: +977-066-402061/62

WALING BRANCHPipal Bot, Waling Municipality-08, Syangja, Tel: +977-063-440119

BHAIRAHAWA BRANCHBank Road, Siddharthanagar Municipality-5, Rupandehi,Tel: +977-071-520703/520373/520706

BUTWAL BRANCHMilanchowk, Butwal Sub-Metropolitan City-09, Rupandehi, Tel: +977-071-551572/551573

DHURKOT BRANCH (GAUPALIKA)Dhurkot, Dhurkot Rural Municipality-04, Gulmi, Tel: +977-9741468011

KOHALPUR BRANCHNewroad, Kohalpur Municipality-11, Banke, Tel: +977-081-542064/542067

NARAINAPUR BRANCH (GAUPALIKA)Narainapur, Narainapur Rural Municipality-04, Banke, Tel: +977-081-695065

NEPALGUNJ BRANCHKarkado, Nepalgunj Sub-Metropolitan City-18, Banke, Tel: +977-081-522484/523636

NISDI BRANCH (GAUPALIKA)Dhunganabesi, Nisdi Rural Municipality-05, Palpa,

SUNWAL BRANCHSunwal, Sunwal Municipailty-1, Nawalparasi, Tel: +977-078-570473

TULSIPUR BRANCHNga line, Tulsipur Sub-Metropolitan City-5, Dang, Tel: +977-082-523455

PROVINCE NO.4 PROVINCE NO.5



BIRENDRANAGAR BRANCHHulak Line, Birendranagar Municipality-06, Surkhet, Tel: +977-083-523825/523490

GUTHICHAUR BRANCH (GAUPALIKA)Jharjwala, Guthichaur Rural Municipality-05, Jumla, Tel: +977-9758005524

JUMLA BRANCHKhalanga Bazar, Chandannath Municipality-05, Jumla, Tel: +977-087-520596/520597

SANIBHERI BRANCH (GAUPALIKA)Simli, Sanibheri Rural Municipality-09, Rukum (West), Tel: +977-081-694916

CHAINPUR BRANCHChainpur Bazar, Jayprithivi Municipality-10, Bajhang, Tel: +977-092-421493/421494

CHURE BRANCH (GAUPALIKA)Sahajpur, Chure Rural Municipality-3, Kailali, Tel: +977-9749162992

DADELDHURA BRANCHBagbazar, Amargadhi Municipality-05, Dadeldhura, Tel: +977-096-420723/420724

DARCHULA BRANCHKhalanga Bazar, Mahakali Municipality-04, Darchula, Tel: +977-093-420123/420223

DHANGADHI BRANCHRatopul, Dhangadhi Sub-Metropolitian City-02, Kailali, Tel: +977-091-524850/522898/523897

LAMKI BRANCHLamki Bazar, Lamki Chuha Municipality-01, Kailali, Tel: +977-091-540548/540549

MAHENDRANAGAR BRANCHSpecial Line (Main Market), Bhimdatta Municipality-04, Kanchanpur, Tel: +977-099-520850/520898

MARMA BRANCH (GAUPALIKA)Latinath, Marma Rural Municipality-03, Darchula, Tel: + 977-9741428892

SUKHAD BRANCHSukhad Bazar, Ghodaghodi Municipality-01, Kailali, Tel: +977-091-403012/403013

TIKAPUR BRANCHKanchhi Bazar, Tikapur Municipality-01, Kailali, Tel: +977-091- 560370/561012

PROVINCE NO.6 PROVINCE NO.7 PROVINCE NO.1

B. P Koirala institute of Health and Science, DHARAN

BHADRAPUR BRANCH

BIRATCHOWK BRANCH

BIRATNAGAR AIRPORT

BIRATNAGAR BHATBHATENI (Dharan Road)

BIRATNAGAR BRANCH

BIRTAMODE BRANCH

BUDHABARE BRANCH

DAMAK BRANCH

DHANKUTA BRANCH

DHARAN BRANCH

DUHABI BRANCH

GAIGHAT BRANCH

HOTEL B&Y BIRTAMOD (Birtamod Buspark)

HOTEL HARISSION (Banjara Chowk)

ILLAM BRANCH

ITAHARI BRANCH

JHUMKA BRANCH

KAKARVITTA BRANCH

SURUNGA BRANCH

TERATHUM BRANCH

UDAYPUR BRANCH

PROVINCE NO.2

BARDIBAS BRANCH

BIRGUNJ BRANCH

CHANDRANIGAHPUR BRANCH

GAUR BRANCH

JANAKPUR BRANCH

LAHAN BRANCH

LAHAN, PROVINCE OFFICE-2, Opposite to Army office Gate

MIRCHAIYA BRANCH



ATM LOCATIONS

RAJBIRAJ BRANCH -1

RAJBIRAJ BRANCH -2

PROVINCE NO.3

ATTARKHEL BRANCH

BALAJU CHOWK ATM

BANIYATAR BRANCH

BATTISPUTALI LOUNGE

BHAISIPATI BRANCH

BHAKTAPUR BRANCH

BHARATPUR - HAKIM CHOWK

BOUDHA LOUNGE

BUDANILKANTHA BRANCH

CENTRAL PARK (Central Park Apartment, Bishalnagar)

CHABAHIL BRANCH

CHIRAYU NATIONAL HOSPITAL (Basundhara)

CITY VIEW APARTMENT (Sanepa)

CMC EXTENSION COUNTER (Bharatpur)

CMC HOSTEL (Bharatpur)

GABAHAL BRANCH

GAIRIDHARA -1

GAIRIDHARA -2

GAIRIDHARA -3

GAIRIDHARA -4

GAUSHALA BRANCH

GOTHATAR BRANCH

HETAUDA BRANCH

HOTEL GARUDA LOUNGE (THAMEL)

JAIN BHAWAN LOUNGE (KAMLAPOKHARI)

JYATHA BRANCH

KALANKI BRANCH

KALIKASTHAN BRANCH

KALIMATI BRANCH

KAMALPOKHARI BRANCH

KHUSIBU BRANCH

LAGANKHEL BRANCH

LAZIMPAT LOUNGE

LUVU BRANCH

MAHARAJGUNJ BRANCH

MANAMAIJU BRANCH

NARAYANGHAT -1

NARAYANGHAT -2

NARSINGH CHOWK LOUNGE-1

NARSINGH CHOWK LOUNGE-2

NEW BANESHWOR LOUNGE

NEWROAD BRANCH

NEWROAD POOL

PADMA COLONY

PAKO NEWROAD

PHARPING BRANCH

PUTALISADAK BRANCH

ROADHOUSE (Thamel)

ROSE VILLAGE APARTMENT (Balkot)

Sallaghari Complex, Sallaghari, Bhaktapur

SANEPA BRANCH

SANKHAMUL BRANCH

SITAPAILA BRANCH

SUNCITY APARTMENT (Gothatar)

TAUKHEL BRANCH

THAMEL LOUNGE

TINKUNE BRANCH -1

TINKUNE BRANCH -2

PROVINCE NO.4

BAGAR BRANCH

BANDIPUR ATM

BARAHI CHOWK LAKESIDE POKHARA

BESISAHAR BRANCH

DAMAULI BRANCH

DANCING BOAT POKHARA

DUMRE BRANCH

POKHARA BRANCH

POKHARA LAKESIDE LOUNGE

SUNDARBAZAR BRANCH

SUNWAL BRANCH

WALING BRANCH

PROVINCE NO.5

BHAIRAHAWA BRANCH

BUTWAL BRANCH

KOHALPUR BRANCH

NEPALGUNJ BRANCH

TULSIPUR BRANCH

PROVINCE NO.6

BIRENDRANGAR BRANCH

JUMLA BRANCH

PROVINCE NO.7

CHAINPUR BRANCH

DADELDHURA BRANCH

DARCHULA BRANCH

DHANGADI BRANCH

LAMKI BRANCH

MAHENDRANAGAR BRANCH

SUKHAD BRANCH

TIKAPUR BRANCH


N

Ka

thm

an

du

Mah

en

dra

nag

ar

Dad

eld

hu

ra

Ch

ain

pu

r

Su

khad

Ch

ure

Bh

akt

ap

ur

La

litp

ur

Mar

ma

Gu

thic

hau

r

Jum

la

Dar

chu

la

Dh

ang

adi

Bir

en

dra

nag

ar

Tik

apu

r

Lam

ki

Ne

pal

gu

nj

Ko

hal

pu

r

Nar

ain

apu

rTu

lsip

ur

Bu

twal

Dam

auli

Wal

ing

Dh

urk

ot

Nis

di

Du

mre N

aray

ang

hat

Bir

gu

nj

Bin

dab

asin

i Gau

rBar

dib

as

Du

rga

Bh

agw

ati

Au

rah

i

Jan

akp

ur

Lah

anM

irch

aiya

Bar

ahap

okh

ari

Du

hab

iB

irat

cho

wk

Bir

tam

od

Raj

bir

aj

Bir

atn

agar

Dam

ak

Bh

adra

pu

r

Kak

arvi

tta

Bu

dd

hab

are

Illam

Su

run

ga

Itah

ari

Gai

gh

at

Sid

dh

ich

aran T

erh

ath

um

Mai

wak

ho

la

Pan

auti

He

tau

da

chan

dra

nig

ahap

ur

Tan

di

Pri

ti

Mah

abh

arat

Go

tikh

el

Bam

tibh

and

ar

Ud

ayap

ur

Mo

lun

g

Dh

aran

Jhu

mka

Dh

anku

ta

Po

khar

aB

agar

San

ibh

eri

Be

sisa

har

Bu

dh

anilk

anth

a

Ban

iyat

ar

Jyat

ha

Kh

usi

bu

Gau

shal

a

Pu

talis

adak

Man

amai

ju

New

road

Sita

pai

la Kal

imat

i

Kal

anki P

har

pin

g

Ch

abah

il

Kam

al P

okh

ari

Kal

ikas

than

Go

that

ar

Tin

kun

e

Gab

ahal

Lag

ankh

el

San

ep

a

Bh

ain

sep

ati Lu

vu

San

kham

ul

Bo

ud

ha

Go

ng

abu

Att

arkh

el

Mah

araj

gu

nj

MB

Ga

irid

ha

ra

Su

nd

arb

azar

Bh

arat

pu

r

De

ura

li

Su

nw

al

Bh

aira

haw

a

Tau

khe

l

AR

EA

S O

F A

CTI

VIT

IES

Bra

nche

sA

TM

s10

311

7O

UR

NE

TW

OR

KS


...for abetter future


Sunrise Plaza, Gairidhara

Kathmandu Metropolitian City-2

TEL.: 01-4004560, 4004562,

4004563, 4004564 TOLL.: 16600 122444 FAX.: 01-4422475 SWIFT: SRBLNPKA E-MAIL: [email protected]

DE

SIG

N &

PR

INT

PR

OC

ES

S: w

ww

.The

Squa

re.a

gen

cy