Annual Report 2008-09 - English

Annual Report 2008/2009
AnnuAl
2008 2009
RepoRt
Annual Report 2008-2009
C o n t e n t s
Vision Mission Statement About Us Strategic Objectives Core values and Ethical Principles Chairman's Statement Financial Highlights Shareholder information Last 7 years at a Glance Management review and discussion Corporate Governance Risk Management Board of directors Senior Management Team Management Team domestic network Global network Board of directors report Corporate Social responsibility Financial Statements Principal accounting Policies notes to account 4 4 4 5 5 6 10 10 11 14 18 20 24 30 31 36 38 39 48 53 85 86
Nepal Investment Bank Limited
Our Vision
To be the most preferred provider of Financial Services in Nepal
About Us
Nepal Investment Bank Ltd. (NIBL), previously Nepal Indosuez Bank Ltd., was established in 1986 as a joint venture between Nepali and French partners. The French partner (holding 50%) of the capital) was Credit Agricole Indosuez, a subsidiary of one of the largest banking groups in the world. When Credit Agricole Indosuez decided to divest, a group of companies comprising of bankers, professionals, industrialists and businessmen acquired 50% of the holdings of Credit Agricole Indosuez in Nepal Indosuez Bank in April 2002. The name of the Bank was changed to Nepal Investment Bank Ltd. upon approval of the Banks Annual General Meeting, Nepal Rastra Bank and Company Registrars Office. The shareholding structure comprises of: A group of companies holding 50% of the Capital. Rastriya Banijya Bank holding 15% of the Capital. Rastriya Beema Sansthan holding 15% of the Capital. The general public holding 20% of the Capital.
Mission Statement
We aspire to be the leading Nepali bank, delivering world class service through a blend of state-ofthe-art technology and visionary management in partnership with competent and committed staff, to achieve sound financial health with sustainable value addition to all our stakeholders. We are committed to fulfilling this mission while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance.
We believe that NIBL, being managed by a team of experienced bankers and professionals with a proven track record, can match your particular needs. We are sure that your choice of bank will be guided, among other things, by its reliability and professionalism. Over the past 7 years, we have grown to become one of the biggest commercial banks in Nepal. Our overall growth record in deposits, lending, net profit and capital base is second to none. No.1 lender in Nepal with total loans and advances of NRs. 36.83 billion. No. 1 private sector bank in deposits with NRs. 46.7 billion. Highest paid up capital base of NRs. 2.41 billion. 7th largest taxpayer in Nepal. Highest growth rate among banks in Nepal. 23 years of stable banking. Non Performing Assets (NPA) at 0.58%. Customer base of over 270,000 clients. The highest capital base with NRs. 3.91 billion. Experienced management & sound corporate governance. Net Profit growth of 1480% in last 7 years.
Strategic Objectives
To develop a customer oriented service culture with special emphasis on customer care and convenience. To increase our market share by following a disciplined growth strategy. To leverage our technology platform and pen scalable systems to achieve cost-effective operations, efficient Management Information Systems, improved delivery capability and high service standards. To develop innovative products and services that attract our targeted customers and market segments. To continue to develop products and services that reduce our cost of funds. To maintain a high quality assets portfolio to achieve strong and sustainable returns and to continuously build shareholders value. To explore new avenues for growth and profitability.
Core Values and Ethical Principles

Our core values tell us, our customers and the communities we serve, who we really are; what we are about; and the principles by which we pledge to conduct business. In essence, we believe that success can only be achieved by being true to our core values and principles: Customer Focus: At NIBL, our prime focus is to perfect our customer service. Customers are our first priority and driving force. We wish to gain customer confidence and be their trusted partner. Quality: We believe a quality service experience is paramount to our customers and we are strongly committed to fulfilling this ideal. Honesty and Integrity: We ensure the highest level of integrity to our customers by creating an ongoing relationship of trust and confidence. We treat our customers with honesty, fairness and respect. Belief in our people: We recognize that employees are our most valuable asset and our competitive strength. We respect the worth and dignity of individual employees who devote their careers for the progress of the Bank. Teamwork: We are a firm believer in teamwork and feel that loyal and motivated teams can produce extraordinary results. We are driven by a performance culture where recognition and rewards are based on individual merit and demonstrated track record. Good Corporate Governance: Effective Corporate Governance procedures are essential towards achieving and maintaining public trust and confidence in any company, more so in a bank. At NIBL, we are committed to following practices which result in good corporate governance. Corporate Social Responsibility: As a responsible corporate citizen, we consider it important to act in a responsible manner towards the environment and society. Our commitment has always been to behave ethically and contribute towards the improvement of the quality of life of our people, the community and society at large, of which we are an integral part.
Chairman's Statement
Nepal Investment Bank Limited attained a substantial market share

of 8.9%, 10.2% and 8.1% in terms of Deposits, Loans and Total Bank Assets. PriThivi B. Pand
Dear Shareholders, Your bank has delivered another solid performance during the financial year 2008/09 despite all the continuing political uncertainty and increased competition. Your bank has continued its long term vision to consolidate itself as the leading bank in the country by pursuing a strategy of growth and consolidation while delivering quality services and shareholder returns. Your bank has achieved remarkable growth in all areas, be it in deposits, lending, profit, products, services etc. Because of your Banks stellar performance, The Banker Magazine awarded your Bank The Bank of the Year award for 2008 for the 3rd time since 2003. In the fiscal year 2008/09, number of commercial banks rose to 26 from 25 in the previous year. However, despite intense competition among the Banks and challenging economic atmosphere and political uncertainty, Nepal Investment Bank Limited attained a substantial market share of 8.9%, 10.2% and 8.1% in terms of deposits, loans and total bank assets. This year we have proposed a 20% cash dividend from the profit of fiscal year 2007-08. In order to consolidate the Banks existing customer base as well as attract potential clients, your Bank has been active in launching new products and revising existing products and schemes. In FY 2008-09, the Bank added a total of 11 new branches making a total of 30 branches all over Nepal. Among the 11 new branches 5 were opened within Kathmandu valley and 6 in other areas outside Kathmandu. The Banks target is to open up to 50 branches by 2010 all over Nepal. We now have 766 staff operating among all 30 branches out of which 327 are female staffs and
71 staff members have completed more than 10 years of service in the institution. NIBL has pioneered adopting new technology to streamline banking operations and facilitate services to our esteemed customers. In the FY 2008/09, the Bank deployed an additional 23 ATMs in and outside Kathmandu valley during the year, totaling 57 ATMs in our consortium. The Bank also leads in card issuance as it issued over 220,000 cards and altogether there are now 320,000 card holders in our network now. We are also in the process of adding MasterCard services in addition to our existing Visa brand. The Bank also implemented the Finacle Core Banking and E-banking Solution from Infosys during FY 2008-09. The system change-over commenced in July 2008 and was completed in November 2008. Going forward, I believe that these technological adoptions will pay off in the future in terms of lower cost and a better bottom line. With a strategy to strengthen the Banks position in the workers remittance market, the Bank appointed 45 new remittance disbursement agents during the year raising the total number of remittance disbursement locations to 200 in order to facilitate banking services to Nepali workers overseas. The operating profit of the Bank grew in Rs. 1310 million from Rs. 1013 million recorded the previous year, an increase of Rs 287 million. Provisions for Tax were Rs 397.98 million, making our Bank one of the top ten tax payers in Nepal, with a resulting after tax profit growth of 29.26%. The Bank has registered a record increase in net profit to Rs. 900.6 million from Rs. 696.7 million, one of the highest net profit increments of any bank in Nepal.
9
10
Lending
Deposit
Market share in %
In order to consolidate the Banks existing customer base as well as attract potential clients, your Bank has been active in launching new products and revising existing products and schemes.
Assets
8 8
This impressive performance is due to the continuation of our corporate strategy to diversify into fee based income sources and continue consolidating our share of interest income. Our Card Business, Treasury, Remittance and International Banking divisions have had strong organic growth and contributed significantly to our income. Our deposit base has increased by Rs. 12.2 billion a growth of 35.6% vis--vis last year giving us a total deposit base of Rs. 46.7 billion, which is the highest deposit base amongst private sector commercial banks in the country. Loans made during this period increased by 33.8% to reach Rs. 36.83 billion making us the highest lender among all banks in the country. Our assets are well managed with a prudent risk management outlook, coupled with local expertise to yield quality credit and investment decisions. As a result, our non-performing loans are now at 0.58% of our total loan portfolio compared to 1.12% in the previous year. The global financial crisis and collapse of Lehman Brothers, Northern Rock and Wachovia, among others, has underscored the need for adequate capitalization of financial institutions to weather the systemic risks during times of financial crisis. Understanding these risks, NIBL has been periodically increasing its Tier-1 capital over the years. NIBL now has the highest Tier-1 capital among all commercial banks in Nepal. The Bank registered the highest growth in our core and supplementary capital base of any commercial bank in Nepal at Rs. 3.891 billion which puts us in a proper position to face challenges and risks in the future. We also have the largest paid up capital base at Rs. 2.41 billion. Our capital adequacy stands at 11.24% of our risk weighted assets. In order to support enhanced capital requirements due to record growth in our asset base, the Bank has also
focused on retention of profits and has ventured into the domestic bond market. Our Tier 1 core capital ratio at 8.56% is considerably more than the government requirement of 5.5%. The global economy is still coming in terms with the financial crisis of 2008 and early 2009. The spillover of the financial crisis from Wall Street to Main Street led to a severe economic contraction in major developed and emerging economies. Though economists are arguing that the recession has bottomed out in major developed economies, experts argue that economic recovery will at best be tepid and it will take many years before economic output can reach pre-crisis levels. On the domestic front, the monetary policy prescribed by the Central Bank has not reduced inflationary pressure despite worldwide decreases in general price levels. The average consumer inflation rose to 13.2% in 2008/09 from 7.7% a year ago. The central bank also needs to monitor financial institutions exposure to the real estate market to protect the Banking sector from a domino effect of possible contraction in real estate prices. Moreover, deposit rates need to move towards parity with Indian rates to prevent further capital flight. Nepals GDP expanded by 3.8% in FY 2008-09 compared to 5.3% the previous year. The labor unrest, energy crisis and strikes in the Terai have constrained Nepals economic prospects. The business sector has also been reeling under the worst possible energy crisis. The external sector displayed satisfactory performance in 2008-09. Total exports rose by 13.5% while total imports increased by 28.2%. The depreciation of the Nepali Currency (NPR) vis--vis the United States Dollar (USD) was one of the major factors behind the surge in exports.
Given the state of the economy, the political environment and developments in the banking industry, the year ahead is challenging for the Bank. It is expected that a stable political environment will pave the way for economic growth and prosperity and create a positive investment climate in the country.
Despite the global financial crisis, remittance income witnessed a substantial increment of 47% in 2008/09. The total remittance inflow in 2008/09 was Rs. 209.7 billion which amounts to 22% of Nepals Gross Domestic Product (GDP). Huge remittance inflow accounted for the Balance of Payments (BOP) registering a substantial surplus of Rs.41.4 billion in 2008/09. Due to the significant surplus in the BOP, the gross foreign exchange reserves stood at Rs. 220 billion at the end of the 2008/09 which is about 31.7% higher than during the previous year. After a dip in 2008, China and India are again projected to grow at rapid rates. Political stability coupled with economic reforms to attract foreign investment has been the cornerstone of economic growth in these two emerging giants. However, political instability and lack of serious economic reforms have hampered Nepals growth prospects. Lack of foreign direct investment remains a major hurdle to the countrys growth. Sans foreign investment, policymakers need to devise plans to channel remittance inflows towards productive sectors. Given the state of the economy, the political environment and developments in the banking industry, the year ahead is challenging for the Bank. It is expected that a stable political environment will pave the way for economic growth and prosperity and create a positive investment climate in the country. The Government should also give strong emphasis on agriculture and SME development. Poverty alleviation needs to address the severe regional imbalances within Nepal in terms of socioethnic disparities.
PriThivi B. Pand
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The Bank has a strategy for nationwide expansion of opening over 50 branches by 2010 to serve the peoples banking needs. The Bank is in the process of bringing out a slew of new products and services to cater to the needs of our valued customers and create a niche among its competitors. The Bank is also in its final stage of starting a Proprietary Card Network to facilitate prospective commercial banks, development banks and finance companies for issuing and acquiring domestic card related products. We plan to further increase our customer base and market share. Nepal Investment Bank is looking ahead to the future with confidence. The Bank intends to expand its international operations to tap into remittance flows and improve its range of products. We will continue to strive towards our vision of being the preferred provider of financial services in Nepal, exploring new business opportunities and diversifying into new sectors. I would like to express my gratitude and appreciation to our energetic and hardworking staff and efficient management team. They have provided the splendid performance in 2009 that has led to the growth and good reputation of Nepal Investment Bank. I would like to thank the Nepal Rastra Bank; Ministry of Finance and all other Government Agencies for providing us support in our endeavors. I also wish to express my gratitude to my colleagues on the Board for their valuable contributions.
Provisions for tax were rs 397.98 million, making our Bank one of the top ten tax payers in nepal.
Sincerely, Prithivi B. Pand Chief Executive Director
Financial Highlights
No.1 lender amongst commercial bank with total loan portfolio of Rs. 36.83 billion. Highest paid up capital among financial institutions in Nepal at Rs. 2.41 billion. Total assets growth of Rs. 14.14 billion. 20% cash dividend. 30.22% cost/income Ratio. 29.27% increase in Net Profit. Return on shareholders equity (ROE) of 23.06%. Non-Performing Loans Ratio at 0.58%. Technology investment: Implementation of Finacle core banking & E-banking Solution from Infosys. One of the highest growth rates in terms of deposits, lending, profits and market capitalization for the past 8 years running.
FY 2008-09 53,010 46,698 36,827 7,399 1,477 901 0.58 FY 2007-08 38,873 34,452 27,529 6,874 1,149 697 1.12 Growth in % 36.37% 35.55% 33.78% 7.64% 28.55% 29.27% NPR in millions Growth in nPr 14,137 12,246 9,298 525 328 204 -
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Particulars Total Assets Total Deposits Total Loans and Advances Total Investments Total Operating Profit (before provision for possible loss) Total Net Profit Non-Performing Assets (in %)
Shareholder information
Management Efficiency higlights
Ownership Structure
General Public Promoters
20% 50%
Particulars Return on Assets (ROA) Return on Shareholder's Equity (ROE) Cost to income ratio*
FY 2004-05 1.44% 19.67% 35.66%
FY 2005-06 1.64% 24.77% 32.44%
FY 2006-07 1.82% 26.68% 31.20%
FY 2007-08 1.79% 25.93% 30.33%
FY 2008-09 1.70% 23.05% 30.22%
15% 15%
valuation highlights
Rastriya Banijya Bank Rastriya Beema Sansthan
Particulars Earning Per Share (EPS in NPR) Book Value per Share (in NPR) Market Price Per Share (in NPR) P/E Ratio P/B Ratio Effective Dividend Yield
FY 2004-05 39.5 201 800 20.25 3.98 1.56%
FY 2005-06 59.35 240 1260 21.23 5.25 4.40%
FY 2006-07 FY 2007-08 62.57 234 1729 27.63 7.39 1.74% 57.87 223 2450 42.34 10.99 1.67%
FY 2008-09 37.42 162 1388 37.09 8.57 1.44%
Leverage ratio
Particulars Debt to Equity Ratio FY 2004-05 12.89 FY 2005-06 FY 2006-07 14.35 13.95 FY 2007-08 13.67 FY 2008-09 12.72
* Cost to income ratio is calculated as operating cost over operating income
FY 03
FY 03 639 FY 04 729 FY 05 FY 06 1,415 1,878 2,687 FY 07 1,180
1.98%
FY 04
2.47%
FY 05
2.69%
FY 06
2.07%
Last 7 years at Glance
Non-Performing Assets
Shareholder's Fund Growth (Rs million)
FY 08
FY 07
2.37%
FY 08
+18.65%
1.12%
-0.54%
FY 09 0.58%
FY 09
3,908
FY 03
FY 04
20.93%
795
FY 03
18.29%
FY 04
FY 05
19.67% 24.77% 26.68% 25.93%
940
FY 05
FY 06 FY 07
800
Return on Equity
FY 06
1,260
Market Price Per Share (in Rs)

-2.88%
2,450
-27.67%
FY 09
23.05%
FY 07
FY 08
1,729
FY 08
FY 09
1,388
FY 03
39.56
216
FY 03
FY 04
51.7
247
FY 04
FY 05
39.50
201
FY 05 FY 06 FY 07
FY 06
59.35 62.57 57.87

-21.46%
Book Value Per Share (in Rs)
Earning Per Share ( in Rs)

FY 08
162
FY 07
240 234 223
-15.844%
FY 08
FY 09
37.42
FY 09
11
12
We are one of the largest Infrastructure Financiers in the Economy, supporting projects ranging from Steel and Cement to Mining.
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Management review & discussion

Economic review
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The global economy is slowly starting to come out from the worst global economic slump since the Second World War. After shrinking in the first half of the 2009, major economies like United States, Japan, United Kingdom and Germany are expected to register positive growth in the second half of 2009. Likewise, emerging economies like China and India, whose growth was dampened due to the economic crisis, are again expected to register growth in the coming quarters. According to the International Monetary Funds (IMF) World Economic Outlook published in October 2009, the world economy is projected to grow at 0.8% in the 4th quarter of 2009 compared to negative growth of 0.1% in the 4th quarter of 2008. Improving equity markets around the world and stable commodity prices also point that the global economic slump has ended. The coordinated efforts of major economies (G-20), massive fiscal stimulus programmes and loose monetary policies have prevented the global economy from spiraling further downwards towards another great depression. However, despite improving economic indicators, the global economy still faces significant problems. Though the recession might have ended in major economies, unemployment in these countries is still rising. On the one hand, there is a threat that the nascent recovery could stall due to a premature exit from the accommodative fiscal and monetary policy. On the other hand, monetarists are arguing that global economic growth faces danger of high inflation from the dual forces of massive fiscal stimulus and loose monetary policy. A right
balance in fiscal and monetary policy is required to give momentum to current growth without fueling inflation. 1 On the domestic front, economic growth in 2007/08 largely due to power crisis, decline in capital expenditure and unfavorable weather conditions. As a result, after growing at 5.3% in 2007/08, growth dipped back to 4.7% in 2008/09 according to the annual Monetary Policy of the Nepal Rastra Bank (NRB). Dissecting the growth figures, our agriculture sector expanded by a tepid 2.2% while the non-agriculture sector expanded by 4.8%. The agriculture sector showed tepid performance largely due to unfavorable weather conditions. On the non-agriculture side, the industry sector witnessed a slow growth of 1.8% while service sector grew at 5.8%. The financial intermediation sector, which expanded by 13.8% in 2007/08, grew only at 3.3% during 2008/09. Domestic price levels have witnessed a dramatic surge during the past one year. As a result, the Consumer
13.2%
8% 7.7% 6.4% 4.5%
04-05
05-06
06-07
07-08
08-09
Annual CPI based inflation for last 5 yrs
3 1
5.3% 4.7%
142.7
209.7
3.1%
3.7% 3.2%
97.9 65.5
100.1
04-05
05-06
06-07
07-08
08-09
04-05 05-06 06-07 07-08 08-09
Annual GDP Growth in last years
Annual remittance for last 5 yrs (amount in Rs. Billion)
Snapshot of the nepali Economy

4
2008/09 2007/08
35.66%
32.446%
31.20%
30.33% 30.22%
04-05
05-06
06-07
07-08
08-09
Cost to income ratio for last 5 years
GDP at Producers Price (Rs Billion) ** GDP Growth Rate % Balance of Payment (BOP) Exchange rate Rs/USD (End-Year) Gross Foreign Exchange Reserves US$ Billion Rate of Inflation % Growth in Money Supply (M2) %
586 4.7 37.7 78.05 3.59 13.2 27
560 5.3 29.7 68.5 3.10 7.7 25.2
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Price Index (CPI) based inflation surged to 13.2% in 2008/09 compared to 7.7% in 2007/08. The food and beverage price which surged by 16.7% during 2008/09 accounted for the high inflation rate. 2 Total exports went up by 13.5% in 2008/09. Exports to India increased by 6.2% while export to other countries went up by 26.9% in 2008/09. The depreciation of the Nepali Currency (NPR) vis--vis United States Dollar (USD) helped domestic exporters. Total imports increased by a 28.2% percent during the review period due to substantial increases in imports from other countries. Despite the widening trade deficit, Balance of Payments (BOP) registered a substantial surplus of Rs. 37.7 billion in 2008/09. The huge surplus in BOP is due to the surge in remittance from overseas workers. Total remittance inflow from overseas workers amounted to Rs. 209.7 billion in 2008/09 compared to Rs.142.68 billion in 2007/08. 3 Due to the significant surplus in the BOP, gross foreign exchange reserves stood at Rs. 280 billion at the end 2008/09 an increment of 31.7% compared to last year. In terms of US Dollar, the gross foreign exchange reserves went up by 15.6% to US$ 3.59 billion in mid-July 2009. This level of reserves is adequate to finance merchandise imports of 11.8 months and merchandise and service imports of 9.7 months. In comparison to mid-July 2007, the NPR depreciated by 12.24% vis--vis USD. The exchange rate of one US dollar stood at Rs. 78.05 in mid-July 2009. Broad Money also registered a growth of 27% in 2008/09.
A total of 1 new commercial bank, 5 new development banks and 3 new micro finance institutions were established in 2008/09. Moreover, the number of commercial bank branches increased by 194 to 752 during the review period.
General Manager's review

The Bank has delivered another year of good performance. Our Net Profit has jumped from Rs. 697 million in FY 2007/08 to Rs. 901 million in FY 2008/09 an increment of 29% over last year. This jump in net profit can largely be attributed to the hard work of our staff and patronage from our valued customers. Over the past one year, we have increased our assets base from Rs. 38.9 billion to Rs. 53 billion, a jump of around 36% during the period. Our total lending has also surged from Rs. 27.5 billion to Rs. 36.8 billion making the Bank the No. 1 lender amongst all commercial banks in the country. Our total paid up capital of Rs. 2.41 billion is also the highest amongst all commercial banks in the country. Moreover, the decrease in the Banks Non Performing Loans (NPLs) to 0.58%
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2.69% 2.37%
2.07%
1.12%
0.58%
04-05
05-06
06-07
07-08
08-09
NPA for last 5 years
from 1.12% during the last year underlines the quality of our asset base. 4 Generally when an organization grows in size, its efficiency starts to drop and cost goes up. However, despite our significant growth over the last few years, we have been able to maintain our service levels and decrease our Non Performing Assets indicating healthy and sound growth. Similarly, our decreasing cost-to-income ratio demonstrates that our income is growing at a higher rate than our cost indicating improved efficiency. 5 Because of the growing number of commercial banks and financial institutions, the year ahead is a great challenge for us. Though Nepals domestic economy was largely untouched by the global financial crisis, energy crisis, political uncertainty, and high inflation pose a threat to overall business confidence. These uncertainties and crisis have reduced investment opportunities in our country. Amidst this background, the entry of new commercial banks and financial institutions is expected to undermine profit margin in months ahead. The only option left is to grow within an acceptable risk framework. To support increasing business volume, additional capital has been raised from the debt capital markets as well as from retention of profits. In the review year, the Bank increased the shareholders fund from Rs. 2.69 billion to Rs. 3.91 billion and at the same time maintained the shareholders return on equity at healthy rate of 23.06%.
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In other to aid other financial institutions run their card business, the Bank has started its own National Payment Network (NPN). NPN will facilitate prospective commercial banks, development banks and finance companies for issuing and acquiring domestic cards related products. Furthermore, the Bank is in the final stage of launching Master Card related products. This will provide wider coverage in availing ATM and POS related services to our customers. Two member financial institutions are already operating under our NPN network and two other members are in the process of doing so. Besides providing online payment of all examination fees, we have been providing Student and Exchange Visitors Programme (SEVIS) a visa fees payment service for students going to the US.
remittance
In order to tap into the burgeoning remittance market and strengthen its position in workers remittance inflows, the Bank joined hands with Remitmaster Sdn. Bhd. in Malaysia. Disbursement agents were appointed in 45 different locations during the year raising the total number of the Banks remittance disbursement locations to 200. During the year, Bank Albilad Saudi Arabia started sending transactions through their online system which has been integrated with our Prithivi Express online system. To further broaden its remittance network, the Bank plans to increase the number of remittance disbursement agents in Nepal to 250 by the end of the current fiscal year. Our Bank plans to depute two more staff members in Saudi Arabia and three more in Malaysia and increase the number of our representatives in Qatar and the UAE.
Performance Overview: retail Bank

Our new and innovative deposit products have propelled us to become the largest deposit holder among private sector banks in Nepal. At the end of FY 2008/09, our deposit base stood at Rs. 46.7 billion compared to Rs. 34.5 billion at the end of the previous year. Our customer base has also grown to 268,345 at the end of 2008/09 from 165,649 during previous year. Customer mapping is being done on a regular basis that has helped the Bank to study and identify locations for new branches and installation of new ATMs. Currently, we have 58 ATMs in various locations throughout the country. After opening 11 new branches in the FY 2008/09, our total branch network is at 31.
Corporate Banking
The total loans and advances at the end of 2008/09 stood at Rs. 36.83 billion with a growth of 33.8% during the review year. With our total loan portfolio size, the Bank has become the highest lender in the country. The branch network of the Bank possesses a satisfactory share of the Banks lending and growth. Despite significant increment in our loan size, we have been able to reduce our NPA to 0.58% from 1.12%. No. of credit files has increased from 856 to 1,026 at the year end of 2008/2009 compared to the year end of 2007/2008. In order to diversity our loan portfolio and tap into emerging and profitable sectors. We have been focusing on cement, hydropower and infrastructure projects.
Card Centre
The Bank has issued over 220,000 cards, and continues to be the leader in card issuance in Nepal. As of the end of the review period, there were more than 320,000 card holders in the NIBL network.
Trade Finance
Despite the global economic downturn, our trade finance department did substantial business in 2008/09. The total number of import LCs issued in 2008/09 was
1518, amounting to a total LC volume of Rs. 18,857 million a growth of over 44 percent during the review period. Similarly, the total number of bank guarantees issued in 2008/09 was 2009 compared to 1863 bank guarantees in 2007/08. Furthermore, a total number of 45 counter guarantees amounting to USD 14.5 million were issued in 2008/09. The Bank earned over Rs. 296.18 million as interest income from trust receipt loan, export credit and inward bills in 2008/09. The total commission income from trade finance in the review period was Rs. 80.3 million.
NIBLs card network is also the largest in the country. Hence, to facilitate card users, the Bank has migrated to a new card process switch system called Electra from OPUS.
Human Resources
Nepal Investment Bank has built the human resource side over the years and has trained and skilled staff that have been instrumental in driving the Bank forward to what it is today. The Bank will continue to focus on the training needs of its staff to ensure that it is able to develop its skill base to remain ahead of its competitors in service delivery. The Bank has adopted an effective human resource management strategy that unlocks the potential of employees. As of the end of the FY 2065/066, the Banks total staff strength was 766 against 622 in the previous reporting period. Of the total staff, female staff accounted for 327 which is about 43% of the total staff of the Bank. Seventy-one staff members have served the Bank for 10 or more years. In order to enhance the level of skilled manpower in the Bank, the Bank has been organizing appropriate training both at home and abroad. Considering the paucity of skilled manpower in the Banking industry, training has become an important tool. In the period under review, a total of 307 staff attended 72 different courses both at home & outside. Training / workshops in the areas of credit risk management, information technology, customer service, treasury, marketing, card services and project finance were organized for staff.
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Treasury
This year the Banks profit from Treasury operations was Rs. 185.33 million compared to last years figure of Rs 165.84 million, an increase of 11.75%. The T-bill portfolio of the Bank at the end of 2008/09 was Rs. 2531 million compared to last years figure of Rs. 3155 million. The interest earned on this portfolio was Rs 140.69 Million compared to Rs 99.99 Million in the last fiscal year. It is indeed noteworthy that we have not been directly affected by the global economic crisis, which was caused by US sub-prime lending. All our investments abroad were safe and protected. The crisis has increased the volatility in the market, providing us with an opportunity to gain advantage through cross currency dealings. The drastic cut in the Fed funds rate has resulted in a slight decrease of our FCY interest income. The treasury department is fully equipped with state of the art technology for day- to- day dealings. Among other things, the Banks treasury department is involved in checking foreign currency position, fund management, forward contract execution and inter-bank placement.
Conclusion
Despite the stiff competition from 26 commercial banks, the Bank recorded another solid performance during the financial year 2008/09. Nepal Investment Bank Limited consolidated its position as one of the premiere banks in Nepal. The market share taken by our Bank in deposits and advances are substantial and the Bank is striving to achieve its aim of being the most preferred provider of financial services in Nepal. The Bank now commands 8.9% and 10.2% of the market shares in deposits and loans and advances of the country respectively. The Bank is committed to maintaining its current position and is striving hard to progress even further.
information Technology
To sustain growth in our customer base and branch network, as well as pave the way for future growth and profitability, the Bank has been heavily investing in Information Technology. In the review year, the Bank migrated from existing Pumori software to a new banking software Finnacle a product of Infosys. To facilitate end users and provide faster and reliable service to customers, the Bank also implemented a centralized Management Information System. Moreover, during the review year the Bank deployed additional ATMs at seven different locations in Putalisadak, Battisputali, Boudha, Chetrapati, Sukuldhoka, Maitidevi and Newroad taking the total number of NIBLs ATMs to 58.
Thank You, Jyoti Prakash Pandey General Manager.
Corporate Governance
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Nepal Investment Bank Limited Nepal Investment Bank Limited
Board Structure and Members Nepal Investment Bank Ltd (NIBL)s share structure is divided among four groups. A group of companies holding 50% of the capital, Rastriya Banijya Bank and Rastriya Beema Sansthan holding 15 % each and the remaining 20% is held by the general public. During the last fiscal year, Mr. Rajesh Rajkarnikar, nominee Director from Rastriya Beema Sansthan, vacated the office of Director and in his place, Dr. Shiva Hari Shrestha, Administrator, was nominated as Director on the Board of the Bank by Rastriya Beema Sansthan. Currently the Banks Board of Directors comprises of Mr. Prithivi Bahadur Pand, Mr. Prajanya Rajbhandari, Mr. Deepak Man Sherchan, Mr. Krishna Prasad Sharma, Dr. Shiva Hari Shrestha, Mr. Surendra Bahadur Singh and Mr. Damodar Prasad Sharma Pandey. Among these, Mr. Damodar Prasad Sharma Pandey is an independent board member and Mr. Surendra Bahadur Singh represents the public shareholders. Mr. Prithivi B. Pand is the Chairman of the Banks Board. Internal Control Mechanism and various Committees The Bank has an independent Internal Audit and Compliance Department headed by an experienced auditor. The Department performs its functions under the direct supervision and control of the Audit Committee and submits its reports directly to the latter. To supplement the
in-house internal audit department, the Bank has also hired a firm of Chartered Accountants to conduct internal audit functions in the review year. In addition, the Bank has also constituted a Compliance Committee comprising of various departmental heads to further strengthen compliance and internal control systems of the Bank. Besides these committees, the Bank has a number of high level committees, namely Executive Credit Committee, Human Resource Development Committee, Construction Committee and Asset Liability Management Committee, each with a defined scope and terms of reference. These Committees comprise of Board members and senior Management officials. The Banks Audit Committee, under the chairmanship of a non-executive director, Mr. Damodar Prasad Sharma Pandey, comprises of Mr. Deepak Man Sherchan and Dr. Shiva Hari Shrestha as Member Directors along with the Banks Head of Internal Audit, Mr. Binod Upadhyay, as its Member Secretary. The Committee reviews the Banks financial condition, its internal control and risk management systems, statutory and regulatory compliances, audit programmes etc. After detailed discussion on the findings of the internal audit as well as external audit reports, the Committee initiates necessary corrective action. The Committee periodically apprises the Board of Directors of the issues and the corrective measures initiated. During the year, seven such meetings were held.
name of the Committees
Members
Audit Committee Human Resource Development Committee (HRDC) Executive Credit Committee (ECC) Construction Committee
Damodar Prasad Pandey (Chairman), Deepak Man Sherchan, Shiva Hari Shrestha, Head Internal Audit (Member Secretary) Prithivi Bdr. Pand (Chairman), Krishna Pd. Sharma, Head Human Resource (Member Secretary) Prithivi Bdr. Pand (Chairman), Surendra Bdr. Singh, and Prajanya Rajbhandari Deepak Man Sherchan (Chairman), Prithivi Bdr. Pand, Prajanya Rajbhandari
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We have been assisting the aviation industry and introducing innovative solutions such as e-ticketing via our ebanking platform adding value to our clients and customers.
Risk Management
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Being a financial institution, risk management is an integral part of Nepal Investment Bank Limited (NIBL). With the continuing increase in the scale as well as complexity of the Banking sector and the rapid growth in the volume of financial transactions, risk management has become a core part of business. Moreover the current financial crisis due to financial institutions' high exposure to risky assets, and the collapse of large financial institutions such as Lehman Brothers, Wachovia and Bear Stearns, due to their inability to manage risky assets has further emphasized the need for prudent and effective risk management. The management team and board of NIBL manages the overall risk profile, aiming for a balance between risk and returns. Risk management includes risk identification, measurement and assessment, and its objective is to minimize negative effects that risks can have on the financial result and capital of a bank. Risk management strategies include the transfer of risk, avoidance of risk, reduction of the negative effect of the risk and acceptance of the consequences of a particular risk. The design of our risk management system depends on parameters such as size, capital structure, complexity of functions, technical expertise, and quality of Management Information System (MIS) and is structured to address both banking as well as nonbanking risks to efficiently maximize shareholder value. The risk management system ensures that the Bank takes well-calculated business risks while safeguarding the Banks capital, its financial resources and profitability. The Banks primary business activity is commercial banking whereby substantial risk comprises of credit risk. To a lesser extent, commercial banking activities also expose the Bank to market risk arising from repricing, maturity and currency mismatches of assets and liabilities. These mismatches give rise to interest rate risk, liquidity risk and foreign exchange risk. The Board of Directors of NIBL recognizes that a critical factor in the Banks continued growth, profitability and stability lies in its effective risk management capabilities and risk-
return trade-off. In this respect, the Bank ensures its risk management capabilities and promotes proactive risk management in the Bank.
Operational risk Management

Operational risk is the risk of loss resulting from inadequate internal processes, people, and systems, or from external events. Operational risk itself is not a new concept, and banks have been addressing it in their internal controls and corporate governance structures. However, applying an explicit regulatory capital charge against operational risk is a relatively new and evolving idea. Basel II requires banks to hold capital against the risk of unexpected loss that could arise from the failure of operational systems. The most important types of operational risk involve breakdowns in internal controls and corporate governance. Such breakdowns can lead to financial losses through error, fraud, or failure to perform in a timely manner or cause the interests of the Bank to be compromised in some other way, for example, by its dealers, lending officers or other staff exceeding their authority or conducting business in an unethical or risky manner. Other aspects of operational risk include major failure of information technology systems or events such as major fires or other disasters. The failure to properly manage operational risk can result in a misstatement of an institutions risk/return profile and expose the institution to significant losses. Gross income, used in the Basic Indicator Approach is only a proxy for the scale of operational risk exposure of a bank and in some cases can underestimate the need for capital. NIBL has developed a framework for managing operational risk and evaluating the adequacy of capital covering the Banks appetite and tolerance for operational risk, as specified through the policies for managing this risk, including the extent and manner in which operational risk is transferred outside the Bank. It also includes policies outlining the Banks approach of identifying, assessing, monitoring controlling and mitigating the risk.
Credit Risk Management

Credit risk is the major risk that banks are exposed to during the normal course of lending and credit underwriting. Within Basel II, there are two approaches for credit risk measurement: the standardized approach and the internal ratings based (IRB) approach. Due to various inherent constraints within the Nepali banking system, the standardized approach in its simplified form, Simplified Standardized Approach (SSA), has been prescribed in the initial phase. Credit risk is the probability that a Banks borrower or counter party will fail to meet its payment obligations in accordance with the terms of approval of the credit. This includes non-repayment of capital and/or interest within the agreed time frame, at the agreed rate of interest and in the agreed currency. The goal of credit risk management is to maximize a bank's risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. The effective management of credit risk is a critical component of a comprehensive approach to risk management and is essential to the long-term success of any banking organization. For most banks, loans are the largest and most obvious source of credit risk; however, other sources of credit risk exist throughout the activities of a bank, including in the banking book and the trading book, and both on and off the balance sheet. Banks increasingly face credit risk in various financial instruments other than loans, including acceptances, interbank transactions, trade financing, foreign exchange transactions, and in the extension of commitments and guarantees and the settlement of transactions. NIBL has developed methodologies to assess the credit risk involved in exposures to individual borrowers or counterparties as well as at the portfolio level. The credit review assessment of capital adequacy, at a minimum, covers risk rating systems, portfolio analysis/ aggregation, large exposures and risk concentrations. Internal risk ratings are an important tool in monitoring credit risk and supporting the identification and
measurement of risk from all credit exposures, and are integrated into our overall analysis of credit risk and capital adequacy. The ratings system provides detailed ratings for all assets, not only for problem assets. Our various branches are the business units of our bank. Each branch forwards business proposals to the head of credit division, Head Office. The credit division critically analyzes the proposal from different perspectives in line with statutory, regulatory and internal guidelines. Thereafter, if the business proposal is found to be credit worthy, it is placed in the credit committee. The Credit Committee is comprised of seasoned bankers who evaluate credit proposals. The committee analyzes in depth financial as well as non financial information regarding the borrower such as business history, market situation, future prospects of the market, managerial capabilities, cash flow and then declines or recommends approval of the designated credit authorities. To ensure proper and adequate risk analysis and timely customer service, our credit policy and procedures guide (CPPG) provides various layers in the credit approval process. The CPPG has conferred specific discretion ranging from the General Managers to the Executive Credit Committee, the penultimate credit authority of the Bank. Adoption of international standards via our inhouse Credit Policy and Procedures Guide. Formation of Credit Quality Control (CQC) unit for monitoring the quality of credit, both at the account level and portfolio level. Regular review of the credit portfolio by the senior Management with periodic reporting to the Board of Directors. Separate independent audit and inspection of borrowers by internal auditors in addition to audit and inspection by statutory auditors. Strict adherence to the guidelines of the Central Bank on Loan Classification, Interest Recognition, Asset Classification, Single Obligor Limit, Sectoral Exposure etc. Establishing suitable exposure limits for borrowers and sectors and monitoring the limits on a regular basis. Risk mitigation steps with a special emphasis on collateral.
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Setting counterparty limits based on their financial strength. Training of lending and legal officers on documentation and professional valuations. Developing skills and expertise of lending officers to scientifically assess project viability and customer integrity. Educating the staff on provisions in the Banks and Financial Institution Act and other relevant statues and the regulatory guidelines of the Central Bank. Seeking external legal opinion and advice. Identifying Early Warning Signals (EWS) and taking prompt action thereon. Constant posts sanction monitoring with special independent team for verification of current assets.
adequacy of capital using internal models for the measurement of market risk. Important Risk Management measures of the Bank to address Market Risk includes: A pro-active Asset Liability Management Committee (ALCO) that meets on a weekly basis. Review of ALCO decisions by top Management and Board of Directors. Conduction of gap analysis, timely re-pricing of products and hedging of exposures. Risk management via forward contracts, swaps and currency options. Daily monitoring of Credit to Deposit (CD) ratio. Maintaining the Liquid Assets Ratio with a contingency buffer. Constant monitoring of dealer, broker, counterparty, transaction, product and currency exposure limits. Regular monitoring of competitor behavior and building competitor intelligence. Maintaining strong relationships with correspondent banks. Enhancing fee based income to reduce dependence on fund based income. Non-engagement in large scale transactions on a speculative basis. Separation of front and back offices at the Treasury department.
Market Risk Management

Market risk is defined as the risk of losses in onbalance sheet and off-balance sheet positions arising from adverse movements in market prices. The major constituents of market risks are: a. The risks pertaining to interest rate related instruments. b. Foreign exchange risk (including gold positions) throughout the Bank. c. The risks pertaining to investment in equities and commodities. Market risk is also the uncertainty in the future value of the Banks on-balance sheet and offbalance sheet financial items resulting from interest rates, foreign currency, equity, and commodity risks. The Asset Liability Management Committee (ALCO) serves as the primary oversight and decision making body that provides strategic directions for the Banks management of market risk. The key elements in the market risk management framework are principles and policies, risk limits and risk measures. The prescribed approach for the computation of capital charge for market risk is very simple and thus may not be directly aligned with the magnitude of risk. Likewise, the approach only incorporates risks arising out of adverse movements in exchange rates while ignoring other forms of risks like interest rate risk and equity risks. NIBL has taken measures to address these various forms of risk and at the same time perform stress tests to evaluate the
Foreign Exchange Risk Management

Foreign Exchange rate risk arises from exchange rate movements which affect the profit of the Bank from its foreign exchange open positions. Because of a banks exposure to foreign currency, foreign exchange risk management is a fundamental component in market risk management of the Bank. It involves prudent management of foreign currency positions in order to control, within set parameters, the impact of changes in exchange rates on the financial position of the Bank. The frequency and direction of rate changes, the extent of the foreign currency exposure and the ability of counterparties to honor their obligations to the Bank are significant factors in foreign exchange risk management. This risk is managed by setting pre-determined limits on open foreign positions, the monitoring of the open positions against these limits and the setting and monitoring of our stoploss mechanism. In order to manage the foreign exchange risk and protect the Banks financial position, the
Bank follows the following procedures: Establish and implement sound and prudent foreign exchange risk management policies. Develop and implement appropriate and effective foreign exchange risk management and control procedures.
Liquidity Risk Management

Liquidity is crucial to the ongoing viability of any financial institution. The capital positions can have a telling effect on an institutions ability to obtain liquidity, especially in a crisis. NIBL has adequate systems for measuring, monitoring and controlling liquidity risk. We evaluate the adequacy of capital given their own liquidity profile and the liquidity of the markets in which they operate. We also make use of stress testing to determine their liquidity needs and the adequacy of capital. The objective of liquidity management is to ensure that the bank has sufficient funds to meet its contractual and regulatory financial obligations at all times. Liquidity risk is the probability of loss arising from a situation where (1) there will not be enough cash and/or cash equivalents to meet the needs of depositors and borrowers, (2) sale of illiquid assets will yield less than their fair value, or (3) illiquid assets will not be sold at the desired time due to a lack of buyers. Liquidity risk relates to the ability of the Bank to maintain sufficient liquid assets at a reasonable cost to meet its financial obligations as and when they fall due. Liquidity risk arises from situations in which a party interested in trading an asset cannot do it because nobody in the market wants to trade that asset. Liquidity risk becomes particularly important to parties who are about to hold or currently hold an asset, since it affects their ability to trade. The Banks liquidity policy is to ensure that all contractual commitments can be met by readily available sources of funding. In addition, liquid assets are maintained in relation to cash flows to provide further sources of funding in the event of a crisis. The Bank also has excellent access to financial markets to ensure the availability of funds.
assessing how the Banks changing risk profile affects the need for capital. The Banks senior management or board of directors receives on a regular basis reports on the Banks risk profile and capital needs. These reports allow senior management to: Evaluate the level and trend of material risks and their effect on capital levels; Evaluate the sensitivity and reasonableness of key assumptions used in the capital assessment measurement system; Determine that the Bank holds sufficient capital against the various risks and is in compliance with established capital adequacy goals; and Assess its future capital requirements based on the Banks reported risk profile and make necessary adjustments to the Banks strategic plan accordingly. NIBL conducts periodic reviews of its risk management process to ensure its integrity, accuracy, and reasonableness. Key areas that are reviewed include: Appropriateness of the Banks capital assessment process given the nature, scope and complexity of its activities. Identification of large exposures and risk concentrations. Accuracy and completeness of data inputs into the Banks assessment process. Reasonableness and validity of scenarios used in the assessment process. Stress testing and analysis of assumptions and inputs.
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SUPErviSOrY rEviEW:
Nepal Rastra Bank regularly reviews the process by which a bank assesses its capital adequacy, risk positions, resulting capital levels and quality of capital held by NIBL. Supervisors also evaluate the degree to which NIBL has in place a sound internal process to assess capital adequacy. The emphasis of the review is on the quality of the Banks risk management and controls. The periodic review can involve any or a combination of: On-site examinations or inspections. Off-site review. Discussions with bank management. Review of work done by external auditors (provided it is adequately focused on the necessary capital issues). Periodic reporting.
Monitoring and reporting

The Bank has established an adequate system for monitoring and reporting risk exposures and
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Board of directors
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Board of directors
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Prithivi B Pand Chairman & CED Mr. Pand has over 20 years experience in the field of banking in Nepal with both the public and private sectors. After obtaining a degree in Chartered Accountancy from India in 1978, he worked at various departments of the departments of the Nepal Rastra Bank (Central Bank of Nepal) till 1990, during which he was seconded to the IMF head-office in Washington for two years. He was appointed in 1990 as the general manager of Rastriya Banijya Bank the largest commercial bank in Nepal. After financial liberalization started in 1991, Mr. Pand established Himalayan Bank, the first private sector commercial bank in Nepal and a jointventure with Habib Bank. He served as a Stakeholder and Executive Director for a period of 10 years propelling it to the top tier of Nepali banks. In 2001 leading a diverse private equity group he took on management responsibilities from the Credit Agricole Group of Nepal Indosuez Bank to manage Nepal Investment Bank which has resulted in the Banks phenomenal growth in capital, assets, liabilities and profits. deepak Man Sherchan Director Mr. Deepak Man Sherchan is an architect by profession. He holds a B. Tech Architecture degree from I.I.T Kharagpur, West Bengal, India and has also received a diploma in real estate development from Harvard Design School, USA. Mr. Sherchan is the Managing Director and Chief Architect of C.B.C. (P) Ltd. He is also actively involved in the field of education and local development. He is the Chairman of Malpi International School, Malpi International College, Tukuche Village Development Committee and is associated with many professional and educational institutions.
Prajanya Rajbhandari Director Mr. Prajanya Rajbhandari is an industrialist and holds an engineering degree from Punjab University. He has held directorships at National Structures, Everest Poultry and Enviroplast. Mr. Rajbhandari has actively served in organizations like Nepal Jaycees, ROTARY and FNCCI in various capacities.
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Mr. Krishna Prasad Sharma Director Mr. Krishna Prasad Sharma, Deputy General Manager of Rastriya Banijya Bank has extensive experience of working in the banking sector for over 24 years. Mr Sharma holds a Master Degree in Management and Social Science and also a BSc in Agriculture Science. He holds the position of Chairman of NLG Insurance Company and RBB Retirement Fund, and the position of director at National Life Insurance Company.He has also served as a director in the Credit Information Centre, Purbanchal Grameen Bikas Bank, Paschimanchal Grameen Bikas Bank, and Sudur Paschimanchal Grameen Bikas Bank.
damodar Prasad Sharma Pandey Director Mr. Damodar Prasad Sharma Pandey has 23 years of experience in various departments within the Nepal Rastra Bank; serving as an Executive Director in the Department of Mint. Furthermore, he has significant experience working in Bank Supervision, Economic Research, Banking Operations, Finance and in the Credit Information Bureau. Mr. Pandey has a B.A. from the University of Southampton, U.K. and an M.Sc. in mathematical statistics from Lucknow, India. He has also served as the Chairman of Paschimanchal Grameen Bikash Bank, Director at the Deposit Insurance and Credit Guarantee Corporation and a director of the National Productivity and Economic Development Centre.
Surendra Bahadur Singh Director Public Shareholders Mr. Surendra Bahadur Singh has a Diploma in Hotel Management from the Institute of Tourism & Hotel Management, Klessheim, Salzburg, Austria and specialized in Hotel Management from the International School of Tourism, Rome, Italy and completed his MBA degree from Tribhuvan University, Nepal. He started his career at Rastriya Banijya Bank. He has also worked at Malla Travels & Tours and at Nabil Bank. Mr. Singh has 2 decades of work experience in the tourism industry and has served as the General Manager of Himalaya Hotel and the Grand Hotel.
dr. Shiva hari Shrestha Director Dr. Shiva Hari Shrestha is the General Manager of Rastriya Beema Sansthan. He previously worked for over 20 years in various capacities at Nepal Industrial Development Corporation (NIDC). He holds a Ph. D. in Economics and has been involved in various training programs in Nepal Rastra Bank, Management Association of Nepal (MAN) and the World Bank. Dr. Shiva Hari Shrestha has an M.P.A in Public Administration from Tribhuvan University and also an M.A in Economics from Tribhuvan University, Nepal.
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We have supported the hotel and Tourism sectors through debt Financing and Corporate Restructuring.
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Senior Management Team
30 30 Jyoti P Pandey General Manager After completing his M.B.A in India, Mr. Pandey joined Nepal Indosuez Bank in 1988 and became Head of the International Banking Department. In 1992, he joined Himalayan Bank and worked as the Head of Marketing, Branch Manager and Head of the Credit Department over a period of 9 years. In 2002, Mr. Pandey joined Nepal Investment Bank as its Deputy General Manager and now handles general bank operations comprising of Human Resources, Administration, Client Relations, Retail, Trade Finance and Corporate Banking.
Mr. Bijendra Suwal Assistant General Manager Mr. Suwal has comprehensive and extensive experience in banking technology software and hardware. After completing his degree in Bachelor of Science, he started his professional career as a programer at Data Systems International (DSI), a pioneer software company in Nepal. Mr. Suwal started his banking career by joining NABIL Bank in 1992 as a programer rising to Department Head in 3 years. He joined Nepal Indosuez Bank in 2000 as IT Manager. Now, he is working as an Assistant General Manager and heading the Information Technology Department.
Rajan Amatya Assistant General Manager Having completed a degree in Management, Mr. Amatya started his career with Nepal Bank Limited, the largest commercial bank in Nepal rising to Assistant Branch Manager over a period of 11 years. He then joined Nepal Indosuez Bank in 1986 and has worked in the Cash Department, International Trade Finance Department. Presently he is the head of Retail Banking.
Management Team
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Head-Corporate Banking Anuj Timilsina
Head- Trade Finance deepak K. Shrestha
Head Legal deepak Shrestha
Head Operation rabin Sijapati
Head Branch Co-ordination Cell Shreechandra Bhatta
Head-Cards & Remittance Bikash Thapa
Head Accounts and Budgeting Sachin Tibrewal
Head Cash & Transfer Sanjeev Karki
Head- Reconciliation Tul Jung Pandey
Head- Human Resources Prabir SJB Rana
Head- Credit Administration Sammit Bhattarai
Head Research & Development Shivanth Bahadur Pand
Head- Internal Audit and Compliance Binod Upadhyaya
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Branch Manager Birgunj Ratna Kumar Limbu
Branch Manager Pokhara dhiraj Thapa
Branch Manager Seepadole Uttam Bdr. K.C.
Branch Manager Butwal ajay K. Kafle
Branch Manager Janakpur Sajan Shah
Branch Manager Biratnagar Bishal Thapa
Branch Manager Bhairawaha Gokarna P. duwadi
Branch Manager Kalimati Bhaskar n. Joshi
Branch Manager New Baneshwor Sujan Ranjit
Branch Manager Tulsipur dhiraj Singh
Branch Manager Narayangarh Prakash dhungana
Branch Manager Banepa Kumar Thapa
Branch Manager Nepalgunj Mantri Lal Gupta
Branch Manager Thamel Ramraj Upadhyay
Branch Manager Birtamod Sanjit Pokhrel
Branch Manager Battisputali Bandana Thapa
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Branch Manager Dhangadi Subin Sijapati
Branch Manager Gongabu Purshottam Chalise
Branch Manager Surkhet Sanket dhungel
Branch Manager Jumla Eka Raj Mahat
Branch Manager Boudha Shobha Shrestha
Branch Manager Hetauda Shekhar Singh
Branch Manager Palpa Baburam Kandel
Branch Manager Lukla Keshab Mainali
Branch Manager Tripureshwore Lok ram Bhattarai
Branch Manager Dhumbarahi Radhika Singh
Branch Manager Damauli naresh J Pandey
Branch Manager Bhotahity Mahesh L. Shrestha
Branch Manager Putalisadak Manju Basnet
Branch Manager Pulchowk Barun Shrestha
Branch Manager New Road nikita Maskey
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We believe that Energy and Water Resources are the key to rapid economic growth in the future; we are among the leading banks in financing local Power Projects in nepal.
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domestic network
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KATHMANDU HEAD OFFICE: Durbar Marg P.O. Box 3412, Tel: 4228229, 4242530 (DISA) Fax: 977-1-4226349, 4228927,Swift: NIBL NP KT SEEPADOLE BRANCH: Suryabinayak, Bhaktapur Tel: 6615617, 6612832 Fax: 6616617 BIRGUNJ BRANCH: Adarshanagar P.O. Box 101,Tel (051) 523327, 525277 Fax: (051) 525297 PULCHOWK BRANCH: Pulchowk, Lalitpur Tel: 5010188, 5010042 Fax: 5010142 BANEPA BRANCH: Banepa, Kavre Tel: (011) 664315,662401 Fax: (011) 662402 JEETPUR BRANCH: Jeetpur, Bara Tel: (053) 520297 Fax: (053) 520877 NEWROAD BRANCH: Newroad, Kathmandu Tel: 4242858, 4230374 Fax: 4227050 BIRATNAGAR BRANCH: Golcha Chowk, Biratnagar Tel: (021) 534523, 534524, 534525 Fax: (021) 534526 BUTWAL BRANCH: Traffic Chowk, Butwal Tel: (071) 549991, 549992, 549993 Fax: (071) 549888 BHAIRAHAWA BRANCH: Maitri Road, Bhairahawa Tel: (071) 526991, 526992 Fax: (071) 526990 POKHARA BRANCH: Chiple Dunga,Pokhara Tel: (061) 538919, 539276 Fax: (061) 538920 PUTALISADAK BRANCH: Putalisadak, Kathmandu Tel: 4445302, 4445303 Fax: 4445304 NARAYANGARH BRANCH: Pulchowk, Narayangarh Tel: (056) 532921,532922 Fax: (056) 532925 JANAKPUR BRANCH: Mills Area, Janakpur Tel: (041) 527331 Fax: (041) 527332 NEPALGUNJ BRANCH: Dhamboji, Nepalgunj Tel: (081) 525978,525682 Fax: (081) 521664 THAMEL BRANCH: Chaksibari, Thamel Tel: 4218431,4218434,4218485,4218486 Fax: 4218434 KALIMATI BRANCH: Kalimati Chowk, Kalimati Tel: 4672493,4672494,4672495,4672548 Fax: 4272612 BIRTAMOD BRANCH: Traffic Chowk, Birtamod Tel:(023) 543810,543811 Fax: (023)543815 BATTISPUTALI BRANCH: Battisputali, Kathmandu Tel: 4471690,4471790 Fax: 4470202 DHANGADI BRANCH: Chauraha Chowk, Dhangadi Tel:(091) 523620,523706 Fax: (091) 524090 GONGABU BRANCH: Gongabu Chowk, Kathmandu Tel: 4365318,4365077 Fax: 4365302 SURKHET BRANCH: Neta Chowk, Surkhet Tel: (083) 524330, 524331 Fax: 524332 JUMLA BRANCH: Khalanga Bazaar, Jumla Tel: (087) 520132 Fax: 520304 BOUDHA BRANCH: Boudha, Kathmandu Tel: 4480121,4480122 Fax: 4480123 HETAUDA BRANCH: Bank Road, Hetauda Tel: (057) 526001, 525946 Fax: (057) 526005 PALPA BRANCH: Tansen,Palpa Tel: (075) 520832,520833 Fax:(075)-520891
JUMLA
KAILALI SURKHET
BANKE DANG
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KASKI
TANAHUN PALPA
RUPANDEHI
KATHMANDU
MAKWANPUR
BHAKTAPUR KAVRE LALITPUR
SOLUKHUMBU
PARSA BARA SARLAHI

LUKLA BRANCH: Chaurikharka, Lukla Tel:(038) 550120 Fax: (038) 550220 DHUMBARAHI BRANCH: Pipalbot Chowk, Kathmandu Tel: 4009006, 4009007 Fax: 4009009 NAYA BANESHWOR BRANCH: Naya Baneshwor, Kathmandu Tel:4785529,4782289,4782520 Fax: 4785537 BHOTAHITI BRANCH: Bhotahiti, Kathmandu Tel: 4230797, 4230788 Fax: 4230771
DHANUSHA
UDAYAPUR
JHAPA
MORANG
TULSIPUR BRANCH: Tulsipur, Dang Tel:(082)521613,521614 Fax: 521615 TRIPURESHWOR BRANCH: Tripureshwor, Kathmandu Tel: 4259780, 4259980 Fax: 4260105 DAMAULI BRANCH: Safasadak, Damauli Tel: (065) 562500, 562600 Fax: (065) 562700
MAHARGUNJ BRANCH: Maharajgunj, Kathmandu Tel:4016151, 4016152 Fax:4016155 LALBANDHI BRANCH: Lalbandhi, Sarlahi Tel: (046) 501583, 501584 Fax:(046) 501585
Global network
Westpac Banking Corporation, Sydney Royal Bank of Canada, Toronto JP Morgan Chase, London danske Bank, Copenhagen JP Morgan Chase, Frankfurt Commerz bank, Frankfurt A.M. Credit Agricole, Paris SnS Bank, Amsterdam Standard Chartered Bank, Frankfurt Bayerische hypo-Und vereins, Hamburg Standard Chartered Bank, London habib allied international Bank Plc, London Standard Chartered Bank,Kolkatta hdFC, Mumbai
ICICI Bank, Mumbai Citibank, New Delhi Standard Chartered Bank, Mumbai Bank of Tokyo, Mitsubishi Standard Chartered Bank, Tokyo Svenska handelsbanken,Stockholm, Sweden United Overseas Bank Ltd. Singapore Citibank, New York Bank Of China, Beijing Commerzbank, Frankfurt Standard Chartered Bank, New York Mashreque Bank, New York JP Morgan Chase,New York
Board of director's report
For The Financial Year 2065/66 (FY 2008/2009)

Presentation by the Chairman to the 23rd Annual General Meeting
Dear Shareholder,
It is our pleasure to welcome you at this 23rd Annual General Meeting of Nepal Investment Bank Ltd (NIBL). On this occasion, We present to you the Banks activities, Balance Sheet and Profit & Loss account for financial year 2065/66.
2. impact, if any, of the national and international Situation upon the Business of the Company
During the review period, the financial downturn resulting from the US housing crisis became a global problem. Extraordinary measures by governments around the world helped save the global financial system from collapse. Western Europe and Asia have been hit hard by the collapse in global trade. Nepal has been mostly insulated from the effects of the financial crisis owing partly to sound macroeconomic management and also because of the underdeveloped nature of the financial markets that are not well connected to international markets. Although the global economic slowdown has not yet affected Nepal, some impact is inevitable on exports, remittances, tourism receipts, and external assistance for infrastructure, especially if it is prolonged. GDP growth is forecast to slow to 3.0% in FY2009 and then pick up somewhat to 3.5% in FY2010 (Asian Development Bank). On the demand side, consumption will stay buoyed by remittances, which are likely to continue rising as a result of new labor agreements with several host countries. However, the slowdown in the outward flow of migrant workers and the increasing repatriation of some workers from certain host countries suggest that remittance inflows will likely slow, especially in FY2010. The BOP surplus of Rs. 39.06 billion in the eleven months of this fiscal year was better than the Rs 24.67 billion posted in the corresponding period of last fiscal year largely due to an increase in workers remittance which increased by 51% against the corresponding period last year. The gross foreign exchange reserves grew by about 28% and stood at Rs. 272 billion compared with the level of last year end (Rs. 213 billion 25%).
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1. review of Banks Performance for FY 2065-66:

The fiscal year 2065-66 was another successful year for the Bank. Despite the continuing political uncertainty and increased competition, our Bank achieved remarkable growth in all areas, be it in deposits, lending, profit, products, services etc. An overview of the Banks performance during the review year is presented hereunder:
NPR in Million
S.no. Particulars
FY 2064-65 38,873 34,452 27,529 6,874 1,149 697 1.12 69.49 30.53 165,649 8.8 10.4
FY 2065-66 53,010 46,698 36,827 7,399 1,477 901 0.58 49.88 27.31 268,345 8.9 10.2
Growth in nPr 14,137 12,246 9,298 525 328 204 102,696 -
Growth in % 36.4 35.6 33.8 7.6 28.6 29.3 (0.54) (19.61)** (3.22)** 62.0 0.1 (0.2)
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Total Assets Total Deposit Total Loans and Advances Total Investments Total Operating Profit (before provision for possible loss) Total Net Profit Non-performing Assets (in %) Return on Paid-up Capital (in %)* Return on Shareholders Fund (in %)* Total Customer Base (in Nos.) Market Share in Deposit (in %) Market Share in Lending (in %)
* Average ** Figures in negative due to increase in paid-up capital
40 40
Review of the first eleven months of 2008/09 indicates a slowdown in the expansion of domestic credit compared with the same period last year (this year 17% against 17.6% last year). Higher resource mobilization relative to expenditure of GON resulted in surplus cash thereby bringing a slowdown in domestic credit expansion. In the first 11-months of 2008/09, deposit mobilization of commercial banks increased by Rs 88.1 billion (about 21%) amounting to Rs 509.6 billion against Rs 67.7 billion (about 20%) in the corresponding period of the previous year. The external sector displayed a satisfactory performance in the first eleven months of 2008/09 as total exports rose by 15.4%. Total imports soared by 26.3% in the first eleven months of 2008/09 against an increase of 14.3% last year. Medium-term growth and development prospects in Nepal rest largely on continued macroeconomic stability, a smooth and rapid political transition and the impact of the global slowdown. The global slowdown and the fragile political situation pose significant downside risks. Lower international oil prices augur well, as the economy is fully dependent on imported fuel. An upswing in oil prices could disrupt supply, which combined with power shortages would have a detrimental impact on the economy. The entry of a large number of financial institutions in the past couple of years poses a major challenge to the Banking industry.
4. Industrial and Professional relations of the Company

The Bank has established a cordial and professional relationship with all the stakeholders. We believe that this cordial relationship with all the stakeholders developed on the basis of professionalism and transparency will be fruitful, and prove to be a successful medium for future progress of the Bank.
5. Changes made in the Board of directors, and reasons therefore

During the review year, Mr. Rajesh Rajkarnikar, nominee Director from Rastriya Beema Sansthan, vacated the office of Director and in his place, Dr. Shiva Hari Shrestha, Administrator, was nominated as Director on the Board of the Bank by Rastriya Beema Sansthan. On behalf of the shareholders, We would like to convey our sincere thanks to the outgoing Director for his invaluable contribution and support to the Management of the Bank, and also welcome the incoming Director who has joined the Bank.
6. Main Business
Factors
affecting
the
The main factors affecting the Banks business are: The existing political uncertainty is affecting all sectors of the economy and the financial system is no exception. Heightened competition in the Banking sector has led to shrinking margins.
3. achievements/new Products & Services/ new Branches during Current Fiscal Year 2066-67
The Bank opened its 31st branch in Dang (Tulsipur) in the current FY 2066-67.
7. Board Of directors reaction to the remarks made, if any, in the audit Report
There are no adverse remarks in the audit report except comments on routine matters arising in the normal course of business. The Board of Directors has taken note of such comments and
41 41
recommendations, and has already initiated requisite steps to regularize the same.
8. The amount recommended for distribution as dividend

The 322nd meeting of the Board of Directors of the Bank has proposed 20% cash dividend from the profit of fiscal year 2065/2066 on the Banks paid up capital.
14. Particulars of information Furnished by any director/ Close relative about his Personal interest in any Agreement Signed by the Company during the Previous Financial Year
There is no any such agreement and consequently, no disclosure in this respect has been made.
9. number of Shares Forfeited, if any, and Particulars thereof

During the year, no shares have been forfeited.
15. Particulars of Buy-Back of Shares, if any

There was no buy-back of shares during the year under review.
10. Progress made in the Business of the Company and its Subsidiary Company during the Previous Financial Year
The Bank does not have any subsidiary company. As regards to the progress of the Company during the previous financial year, please refer to Section 1 above.
16. Whether or not there is an internal Control System, and if there is any such System, details thereof
The Bank has an independent Internal Audit and Compliance Department headed by an experienced auditor. The Department performs its functions under the direct supervision and control of the Audit Committee and submits its reports directly to the latter. To supplement the in-house internal audit department, the Bank has also hired a firm of Chartered Accountants to conduct internal audit functions in the review year. In addition, the Bank has also constituted a Compliance Committee comprising of various departmental heads to further strengthen compliance and internal control system of the Bank. Besides these Committee, the Bank has a number of high level committees, namely Executive Credit Committee, Human Resource Development Committee, Construction Committee and Asset Liability Management Committee, each with a defined scope and terms of reference. These Committees comprise of Board members and senior Management officials.
11. Main Transactions Between the Company and its Subsidiary Company during the Financial Year and important Changes, if any, therein
The Bank does not have any subsidiary company.
12. information Furnished to the Company by its Basic Shareholders during the Previous Financial Year
None.
13. Particulars of the Ownership of Shares Taken up by the directors and Office-bearers of the Company during the Previous Financial Year
None.
17. Particulars of the Total Management Expenses of the Previous Financial Year
42 42 Employee Expenses NPR 225.72 million during the Previous FY: Administrative Expenses NPR 413.88 million during the Previous FY: Total:
21. dividend yet to be Collected by Shareholders

Dividends declared by the Bank but not claimed by the shareholders till the end of FY 2065-66 stood at NPR 40,39,727.
nPr 639.60 million
22. any Other Matters

a. New Branches, Products and Services During FY 2065-66: In the review period, a total of 11 new branches were added taking the total branch strength to 30 against the target of opening 50 branches by calendar year 2010. Of the 11 new branches, 5 were opened in Kathmandu at Gongabu, Bouddha, Dhumbarahi, Naya Baneshwor and Bhotahity. The remaining 6 were opened in Dhangadi, Surkhet, Jumla, Hetauda, Palpa and Lukla. The 31st branch in Tulsipur was opened in the current fiscal year 2066-67. With a view to provide services to our customers and increasing our branch network, we will be establishing an additional 19 branches in different parts of the country by the end of calendar year 2010. All branches will be connected on-line with each other. The Bank implemented the Finacle Core Banking & E-banking Solution from Infosys during the review period. The system changeover commenced in Shrawan 2065 and was completed in Kartik 2065. After the system changeover was completed, focus shifted on system stabilization and this process is now completed. In the fiscal year under review, the Bank added a total of 23 ATM machines in and outside Kathmandu Valley taking the number of ATM machines to 57. An additional 11 ATM machines are also being added in the next 2-3 months. The Bank has issued over 220,000 cards, and continues to be the leader in card issuance in Nepal. There are altogether more than 320,000 cards holders in the NIBL network now. To strengthen its position in workers remittance market, the Bank appointed 45 new remittance disbursement agents during the year raising
18. names of the Members of the audit Committee, remuneration etc. being received by them and Functions discharged/Suggestions Offered by the Committee
The Banks Audit Committee, under the chairmanship of a non-executive director, Mr. Damodar Prasad Sharma Pandey, comprises of Mr. Deepak Man Sherchan and Dr. Shiva Hari Shrestha as Member Directors along with the Banks Head of Internal Audit, Mr. Binod Upadhyay, as its Member Secretary. The Committee reviews the Banks financial condition, its internal control and risk management systems, statutory and regulatory compliances, audit programmes etc. After detailed discussion on the findings of the internal audit as well as external audit reports, the Committee initiates necessary corrective action. The Committee periodically apprises the Board of Directors of the issues and the corrective measures initiated. During the year, seven such meetings were held. The Chairman of the Committee is paid NPR 6,000 and member Directors are paid NPR 5,000 each, per meeting, by way of Audit Committee meeting fee.
19. Payments due, if any, to the Company from any director, Executive Chief or Basic Shareholder of the Company, or their Close relatives, or their related Entities
No such payments are due to the Company.
20. amount paid as remuneration, allowances and Facilities to the directors, the Executive Chief and other Office-bearers
As per Annexure A below.
the total number of remittance disbursement locations to 200. b. Human Resources: In an increasingly aggressive corporate world, our people play a vital role and are one of the key business enablers. Rapid growth and branch expansion among the Banks has resulted in shortage of banking professionals in this sector. It is due to this fact that in the past year there were a number of movements of staff from one institution to the other. The emergence of new financial institutions has also had an impact in this area. Nepal Investment Bank has built up on the human resource side over the years and has trained and skilled staff that have been instrumental in driving the Bank to what it is today. The Bank will continue to focus on the training needs of its staff to ensure that it is able to develop its skill as per changing times and remain ahead of its competitors in service delivery. The Bank has adopted effective human resource management strategies that realise the potential of employees and earn their respect and loyalty. As of the end of the FY 2065/066, the Banks total staff strength was 766 against 622 in the corresponding reporting period. Of the total staff, female staff accounted for 327 which is about 43% of the total staff of the Bank. Seventy-one staff members have served the Bank for 10 or more years. In order to develop the professional skill of staff to provide skilled manpower in the Bank, the Bank has been organizing appropriate training both at home and abroad. Considering the paucity of skilled manpower in the Banking industry, training has become an important tool. In the period under review, a total of 307 staff attended 72 different courses both at home & outside. Trainings / workshops in the areas of credit risk management, information technology, customer service, treasury, marketing, card services and project finance were organized for staff.
Further, the training issue is likely to be addressed in a more organized manner locally upon establishment of the Banking Training Institute (BTI) in the near future. The institute is promoted by all commercial banks, Nepal Rastra Bank, Asian Development Bank and Rural Microfinance Development Centre Ltd (RMDC). The BTI will be conducting short-term courses, banking examinations and issue diplomas and evolve into a world class institute. All financial institutions are expected to benefit from the establishment of this institute. c. Social and Community Works: At NIBL, we believe that our prosperity is directly linked with the well-being of the society in which we work. Being a responsible corporate entity, we are very aware of our social responsibilities. As part of our duty towards society, we have made numerous attempts to address social needs. To this effect, the Bank has contributed to various social causes during the fiscal year. To name a few, the Bank donated Rupees Five Lakhs to the Kantipur Rastriya Bipatti Sahayog Kosh and Rupees Two Lakhs to Annapurna Post Badipidit Sahayog Kosh for the relief of the flood victims of Koshi river. Likewise, the Bank donated Rupees Three Lakhs to B. P. Koirala Eye Foundation, a non-profit organization which provides eye related treatments to general people and Rupees Six Lakhs Sixty Thousand to UNHCR for securing the rights and well-being of the Bhutanese refugees in Nepal. NIBL contributed Rupees One Lakh to Spinal Injury Rehabilitation Centre (SIRC) for providing rehabilitation services to patients with spinal injuries, Rupees One Lakh to Hospital and Rehabilitation Centre for Disabled Children (HRDC), Rupees Five Lakhs to Nepali Federation of Women Living for empowerment and liberation of women in the country and Rupees One Lakh to Centre for Economic and Social Studies, Nepal. Being a Nepali Bank, NIBL each year invests in programmes that are geared towards promoting awareness amongst the Nepali people for the conservation and preservation of Nepali culture, heritage and environment. In the reporting year, NIBL sponsored Rupees One Lakh to Tenzing Hillary
43 43
44 44
Everest Marathon for promoting awareness amongst the people around the world for conservation and preservation of the global environment and Rupees One Lakh to Western Region Development Forum for the development and promotion of traditional Nepali Culture of the region. The Bank has been equally supportive of the development and promotion of various sports in the country. For instance, the Bank has been supporting various sports institutions like Nepal Golf Association, All Nepal Lawn Tennis Association, Nepal Basketball Association, Nepal Football Association, Nepal Squash Association through sponsorships. d. Future Plans New Product and Services: The Bank is in the process of rolling out a host of new products and services to cater to the needs and aspirations of our valued customers and also to differentiate itself from its competitors. Extensive Branch Network: In order to reach out to the un-banked, NIBL will continue to expand its branch network in the current fiscal year also. By the end of calendar year 2010, the Bank expects to have a total of 50 branches country-wide. Debit/Credit Cards: - The Bank is looking at expanding the Cards market extensively in order to capitalize on the opportunity now and remain a strong player in the market. A lot of effort is being put in the expansion of members in the Banks National Payment Network that will assist the Bank in increasing its customer base and revenue. The Bank has until now concentrated in the Debit card market but it will slowly also expand its Credit card market. Greater ATM Penetration: In line with the Banks strategy to extend coverage to our customers, the Bank plans to install more ATMs both inside and outside the Valley. IT Enabled Services: The Bank aims to provide the latest value added services to its customers through the use of cutting-edge technology. To meet this end, the Bank is working on a number of projects like SMS/Mobile Banking, Mobile Top-up through SMS Banking, various bill payment and e-commerce projects including Public Switch Telephone Network (PSTN) bill payment, CDMA Recharge PIN Purchase,
e-Ticketing and School Bill Payment through e-Banking. Remittance: The Bank plans to increase the number of remittance disbursement agents in Nepal to 250 by the end of current fiscal year. Further, the Bank plans to depute additional staff representatives in Saudi Arabia and Malaysia and increase the number of our representatives in Qatar and UAE. Other business: Increase in competition in the Banking industry has made Banks look for additional areas for investments to continue to keep up the revenue stream. NIBL is contemplating commencing insurance and micro-finance business, which are expected to help us in improving our revenue streams and shrinking margins.
23. acknowledgments
On behalf of the Board, we wish to thank the external auditors for their timely completion of audit and professional suggestions. We also extend sincere thanks to our shareholders for their continued support and encouragement. We sincerely convey our thanks to the Government of Nepal, Ministry of Finance and Nepal Rastra Bank for their continued support and guidance. We would also wish to thank the Management and staff of Nepal Investment Bank Ltd. for their dedication and hard work. Lastly, we thank all our customers for giving the Bank an opportunity to serve them and without whose support, the development of the Bank and growth in business would not have been possible. Thank you, Prithivi B. Pand Chairman and Chief Executive Director Prajanya Rajbhandari Director Krishna Prasad Sharma Director Date: Bhadra 16 , 2066.
Annexure A
Amount Paid as Remuneration, Allowances and Facilities to the Directors, the Executive Chief and Other Office-bearers
S.n. Particulars nPr in Thousands. 1 2 3 4 Basic Salary Allowances Dashain Allowance Provident Fund Total number Rs.7,204 Rs.6,260 Rs.1,122 Rs.720 1 CEd Other Executives/ Managers Rs.22,458 Rs.15,940 Rs.2,532 Rs.21,711 38 45 45
a) directors:
2 3 4 5 6 7
1 Prithivi B. Pand
Chairman / Chief Executive Director Prajanya Rajbhandari Director Deepak Man Sherchan Director Krishna Prasad Sharma Director Dr. Shiva Hari Shrestha Director Surendra B. Singh Director Damodar Prasad Sharma Pandey Professional Director
Besides Salary and Allowances, following facilities are provided to CED and Other Executives/ Managers: 1. Water/ Electricity & Telephone Bills are reimbursed as per actual to CED & GM. 2. Vehicle with driver and fuel is provided to CED & GM. For other Executives and Managers, vehicle loan/ facilities provided as per Human Resource Policy of the Bank. 3. Bonus - as per Bonus Act. 4. Accident Insurance, Medical Insurance, Life Insurance - as per Service Regulations and Human Resource Policy of the Bank. 5. Newspapers & Periodicals are provided to CED & GM.
Directors: 1. Meeting Fee- Chairman Rs. 6,000 and Directors Rs. 5,000 per meeting. 2. Mobile Phone bill reimbursement on actual basis.
b) annual Salary, allowances and other Facilities provided to CEd and other Executives /Managers
46
The Agriculture sector employs the largest workforce in nepal; we have financed Farms, Tea Estates, Poultry, agricultural Commodities and Fertilizers.
47
Corporate Social Responsibility

48
nepal investment Bank Limited

We are at an age of capital philanthropy, and it is fast becoming an inevitable part of every business. However, even beyond this, NIBL believes in doing good in society not just out of obligation but for the impact derived from making a difference. Since its inception, NIBL has been investing in a variety of social causes, the returns of which ordinary Nepalis and the nation gain from. Issues that we have supported range from environmental conservation to health care to education to aiding victims of natural disasters. Some highlights from our CSR efforts are listed here.
"USaid hiv/ aidS awareness Campaign

The Bank gave away Rs 20,00,000 for the HIV/ AIDS awareness cause, initiated by USAID. In order to spread awareness at the grass root level, USAID organized a short film competition titled Youre No Exception", which invited emerging Nepali film makers to submit creative concepts for eight- to nine-minute short films. The selected nine directors produced eight short films in Nepali and regional languages. Each filmmaker had the opportunity to work with an established professional actor, who played a key part in the movies.
nepal Golf association

The Bank provided Rs 1, 00,000 to Nepal Golf Association to support its annual golf tournament. The association is a signature name in terms of golf promotion in Nepal.
Til Ganga Eye Centre

We gave away Rs 40, 000 to Tilganga Eye Centre to aid their research on ophthalmic diseases in Nepal. Til Ganga Eye Centre is affiliated with Til Ganga Institute of Ophthalmology, which is the implementing body of the Nepal Eye Programme, a nonprofit, community based non-government organization. With an aim to act as a model for treatment research and training, independent of, but in co operation with all other eye care centres and organizations in Nepal.
Centre for Economic and Social Studies, nepal

The Bank supported the publication of Economic journal by Centre for Economic and Social Studies, Nepal with Rs 1, 00, 000. The journal was established on the initiative of Dr Govinda, Dr Pushpa Raj Kandel, Dr Bijay Kumar Poudel, Dr Masta Bahadur Garanja and Dhruba Gautam.
People with Spinal Cord injury:

We supported the first National Consultation of People with Spinal Cord Injury held on August 2009 with Rs 1, 00,000. The consultation aimed to
49
draw the attention of the concerned authorities to formulate and bring necessary laws to support and avail employment opportunities to people suffering with Spinal Cord Injury.
People with Spinal Cord Injury works for the welfare of the spinal cord injury victims, who are yet to receive appropriate health care facilities in Nepal. It is actively involved in campaigning the cause.
Kantipur rastriya Bipatti Sahayog Kosh/ annapurna Post Badhipidit Sahayog Kosh
The Bank gave away Rs 5, 00,000 and Rs 2, 00,000 to Kantipur Rastriya Bipatti Sahayog Kosh and Annapurna Post Badhi Pidit Sahayog Kosh respectively to aid with Pradhanmantri Rahat Koshs fund for Koshi flood victims. According to a report published by Government of Nepal, the devastating upsurge on August, 2008 affected approximately 42, 807 locals from Sunsari district, displacing nearly 40,000 households.
B.P Koirala Eye Foundation

The Bank donated Rs 3, 00,000 to B P Koirala Eye Foundation to support its campaign against ophthalmic diseases.
Western region development Forum

We provided Rs 1, 00,000 to Western Region Development Forum for its annual cultural programme. The Development Forum is the local administrative authority for the overall development of the region. The cultural programme aimed to raise awareness about the relationship between culture and development.
Economic Students Society (ECOSS)

We supported Economic Students Society with Rs 5, 000 to help conduct an interaction programme on Current Global Financial Crisis and its Impact on Nepali Economy. The primary goals of the organization include facilitating dialogue between academics, professionals and stakeholders and publishing articles pertaining to national and international economic issues.
Federation of Contractors association of nepal

NIBL donated Rs 2, 00,000 to the Federation of Contractors Association of Nepal (FCAN) to support the enhancement of contractors in Nepal. FCAN was established in 1990 with the objective of cataloguing contractors and helping them develop their professional skills further. All registered contractors in Nepal are affiliated to FCAN.
national Trust for nature Conservation

The Bank supported the publication of National Trust for Nature Conservation's annual calendar with Rs. 45,000.
Media Forum For research and development nepal (MFrd)

50
The Bank contributed Rs. 20,000 to Media Forum for Research and Development Nepal (MFRD). MFRD is a leading national level not for profit media organization involved in promoting the use of mass media in raising public awareness with regards to community development and social mobilization. Though the organization was conceptualized as early as 2003, it only came into formal being in 2006 after being officially registered as an NGO. Since then, MFRD has been working for the protection of human rights, the peace process, good governance and in the fields of institutional capacity building and consultation.
all nepal Lawn Tennis association

The Bank donated Rs, 2, 00,000 for the annual All Nepal Lawn Tennis tournament. The event organized by All Nepal Lawn Tennis Association affiliated with the Nepal Olympic Committee, promotes tennis which is slowly catching up as a popular sport in Nepal.
hydro Solution Power Map of nepal

The Bank gave Rs. 10,000 for the publication of Power Map of Nepal, a first of its kind all-inclusive map of Nepal's water resources, geographic and district demarcation, as well as all the power stations, all illustrated within a single frame. The map published by Hydro Solution, also embraces hydroelectric power projects, whose license has been approved by the Government of Nepal. It also indicates the major transmission lines of India in the border area.
Mahendra Bhawan/ rato Bangala

The Bank gave Rs 20, 000 to Mahendra Bhawan School, Gyaneshwor to support its overall educational programme. The school was established in 1914 with the motto 'Pure Heart' by Ms. Elizabeth Franklin. The school stands out as one of the oldest and prominent schools of Kathmandu and is actively involved in various extra-curricular activities. Similarly, the Bank aided the year book of Rato Bangala School with Rs 7, 000. Rato Bangala School, one of the first schools in Nepal to introduce alternative teaching practices, is committed to grooming analytical and creative minds. The year book encourages creativity by providing a space where childrens' creative work is published. The school believes in building a positive environment which cultivates critically thinking individuals who want to learn and grow into co-operative, loving, confident, concerned global citizens.
Tenzing hillary Everest Marathon

The Bank supported the Tenzing Hillary Everest Marathon 2009 with Rs 1, 00,000. Tenzing Hillary Everest Marathon is an International High Altitude Adventure Sports event held at Mt. Everest Base Camp every year on May 29. The marathon takes place in the Highland Sherpa Trails of Khumbu Valley, to commemorate the historical ascent of Mount Everest by Late Tenzing Norgay Sherpa and Sir Edmund Hillary on May 29, 1953 by Tenzing Norgay Sherpa and Sir Edmund Hillary on May 29, 1953.
Shree vishwoshanti Pitrigyan Mahaayagya

The Bank donated Rs 25, 000 to support Shree Vishwoshanti Pitrigyan Mahayagya, a religious ritual performed to promote world peace and pay tribute to the deceased .
Mobile Expo 2008

The Bank donated Rs 50, 000 to support the Mobile Expo 2008 organized by Direction Nepal Pvt Ltd. The expo was strategically designed to enable its visitors to gain fresh information and insight into the latest innovations in global mobile technologies. Likewise, the organizers also believe the expo can serve as the perfect forum for mobile service operators, authorized dealers, distributors, service centres and vendors, among others, to significantly boost their businesses through vibrant and dynamic interaction with their target segment.
51
aSMan
The Bank aided ASMAN (Association of St. Mary's Alumnae Nepal) with Rs 25, 000. ASMAN is a non-governmental, non-profit organization devoted to the cause of aiding and supporting underprivileged Nepali women and children since 1990. They are devoted to working in the areas of health, education, cultural awareness and development. The association brings together former students of St. Mary's High School, the most prestigious girls' school in the country.
Federation of nepali Chambers of Commerce and Industry

The Bank supported Vision 2020: Hydropower, a seminar organized by FNCCI with Rs 15, 000. The seminar explored the issues of water resources in Nepal, their geo-physical position and measures to extract optimum benefit from them. The seminar was attended by 200 participants, who presented thematic papers on the topics of Hydropower development.
UnhCr
This year too we supported UNHCR with Rs 6, 60,000 as a part of our ongoing support programme for educational supplies to Bhutanese refugees in Nepal. UNHCR is mandated by the United Nations to lead and co-ordinate international action to protect refugees and to resolve refugee problems worldwide. The organization has been working on securing the rights and well-being of Bhutanese refugees in Nepal for two decades now.
rotary Club, dillibazar

The Bank supported the various social projects of Rotary Club Dillibazar with Rs 20, 000. The club, established in 1998 under the initiative of Mr. Lachhe Bahadur KC, is a pioneer when it comes to social service projects at the grass root level. It is actively involved in conducting free health camps, dental camps, and career and literacy programmes among other projects.
Alliance Francaise
The Bank supported the educational and cultural projects of Alliance Francaise with funds worth Rs.1, 27, 000. Alliance Francaise in Kathmandu organizes special French courses for enthusiastic students and is a notable name in terms of organising cultural events.
Healthcare is one of the most needed sectors in nepal, we have been financing hospitals, Clinics and Pharmaceuticals for the last 24 years, creating a healthier nation.
Chartered Accountants
GP.o. Box: 3423 Kosi Compound, Dillibazar Kathmandu, Nepal Tel: 977-1-4419364 Tel: 977-1-4423550 Fax: 977-1-4413038 Email: info@jb.com.np Web: jb.com.np
AUDITORS REPORT TO THE SHAREHOLDERS OF NEPAL INVESTMENT BANK LIMITED 1. We have audited the accompanying Balance Sheet of Nepal Investment Bank Limited as of Ashad 31, 2066 (corresponding to 15 July, 2009), the related Profit and Loss Account and the Cash Flow Statement for the year then ended. These financial statements are the responsibility of the management of the Bank. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with Nepal Standards on Auditing. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As per the requirement of the Company Act, 2063 and Bank and Financial Institution Act, 2063, we also report that: i. We have obtained all the information and explanations, which, to the best of our knowledge and belief were necessary for the purpose of our audit;
ii. In our opinion, proper books of accounts as required by law have been kept by the Bank so far as appears from our examination of such books; iii. In our opinion, the returns received from branches of the Bank were adequate for the purpose of the audit; iv. In our opinion, the Balance Sheet, Profit & Loss account and Cash Flow Statement dealt with in this report have been prepared in the format prescribed by Nepal Rastra bank and are in agreement with the books of accounts maintained by the Bank; v. In our opinion, so far as appeared from our examination of the books, adequate provision for possible loan losses, adequate capital fund and risk bearing fund have been made in accordance with the directives of Nepal Rastra Bank; vi. In our opinion, so far as appeared from our examination of the books, the business of the Bank has been conducted satisfactorily; vii. To the best of our information and according to explanations provided to us and from our examination of the books of account of the Bank necessary for the purpose of our audit, we have not come across cases where the Board of Directors or any employees of the Bank have acted contrary to the provisions of law, or committed any misappropriation or caused loss or damage to the Bank, violated any directives of Nepal Rastra Bank or acted in a manner to jeopardize the interest and security of the Bank, its depositors and investors. 4. In our opinion, the financial statements give a true and fair view of the financial position of the Bank as of Ashad 31 2066, and of the results of its operations and its cash flows for the year then ended in accordance with Nepal Accounting Standard and comply with the provisions of the Company Act 2063, the Bank and Financial Institution Act 2063, and the directives issued by Nepal Rastra Bank.
Prabhu R. Bhandary Managing Partner for Joshi & Bhandary Chartered Accountants Date: August 25, 2009 Place: Kathmandu
NEPAL INVESTMENT BANK LIMITED
Balance Sheet
as at 31 Ashad 2066 (15 July 2009)
Capital & Liabilities 54 1. Share Capital 2. Reserve & Fund 3. Debentures and Bonds 4. Borrowings 5. Deposits Liabilities 6. Bills Payable 7. Proposed and Dividend Payable 8. Income Tax Liabilities 9. Other Liabilities Total Liabilities
Schedule 1 2 3 4 5 6
Current Year Rs 2,407,068,900 1,500,770,808 1,050,000,000 38,800,000 46,698,100,065 82,338,018 485,453,507 38,296,736 709,975,092 53,010,803,126
Previous Year Rs 1,203,915,400 1,482,870,648 1,050,000,000 34,451,726,191 78,838,643 93,468,245 24,082,669 488,404,288 38,873,306,084
Assets 1. Cash Balance 2. Balance with NRB 3. Balance with Banks/ Financial Institution 4. Money at Call and Short Notice 5. Investments 6. Loan, Advances & Bills Purchased 7. Fixed Assets 8. Non-Banking Assets 9. Other Assets Total Assets
Schedule 8 9 10 11 12 13 14 15 16
Current Year Rs. 1,833,462,494 4,411,133,083 1,673,408,313 7,399,811,700 36,241,206,558 1,060,752,482 375,000 390,653,496 53,010,803,126
Previous Year Rs. 1,464,482,719 1,820,006,035 470,452,814 6,874,023,625 26,996,652,258 970,091,759 750,000 276,846,874 38,873,306,084
Contingent Liabilities Directors' Declaration Statement of Capital Fund Statement of Risk Weighted Assets Principal Indicators Principal Accounting Policies Notes to Accounts Details of Loan Against Promoters Shares Fourth Quarterly Unaudited Results Variance Between Audited & Unaudited results
Schedules 1 to 17 form integral parts of the Balance Sheet.
Schedule 17 Schedule 29 Schedule 30 (A1) Schedule 30 (B) (C) (D) (E) Schedule 31 Schedule 32 Schedule 33 Schedule 34 Schedule 35 Schedule 36
Prithivi Bahadur Pand Chairman & Chief Executive Director Krishna Prasad Sharma Director Binod Upadhaya Head- Internal Audit & Compliance
Prajanya Rajbhandari Director Surendra Bahadur Singh Director Jyoti P. Pandey General Manager
Deepak Man Sherchan Director Damodar Prasad Sharma Pandey Director Rabin Sijapati Chief Operating Officer
Dr. Shiva Hari Shrestha Director Sachin Tibrewal Head - Accounts & Budgeting
As per our report of even date
Auditor Prabhu Ram Bhandary, FCA Managing Partner For, Joshi & Bhandary Chartered Accountants
Profit and Loss Account

for the period July 16, 2008 to July 15, 2009 (Shrawan 1 2065 to Ashad 31 2066)
Particulars 1. Interest Income 2. Interest Expenses Net Interest Income 3. Commission and Discount 4. Other Operating Income 5. Exchange Profit Total Operating Income 6. Staff Expenses 7. Other Operating Expenses 8. Exchange Loss Operating Profit Before Provision for Possible Loss 9. Provision for Possible Losses Operating Profit 10. Non-operating Income/ Loss 11. Loss Provision Written Back Profit from Regular Operations 12. Profit/ Loss from extra-ordinary activities Net Profit after considering all activities 13. Provision for Staff Bonus 14. Income Tax Provision - Current Year - Upto Previous Year - Deferred Tax Income / (Expense) Net Profit/ Loss
Schedules 18 to 28 form integral part of this Profit & Loss Account.
Schedule 18 19 20 21 22 23 24 22 25 26 27 28
Current Year Rs 3,267,941,142 (1,686,973,130) 1,580,968,012 262,791,664 87,574,794 185,327,111 2,116,661,581 (225,721,490) (413,883,755) 1,477,056,336 (166,201,383) 1,310,854,953 2,953,012 114,653,009 1,428,460,974 1,428,460,974 (129,860,089) (389,580,266) 7,477,673 (15,879,221) 900,619,072
Previous Year Rs 2,194,275,722 (992,158,398) 1,202,117,324 215,292,193 66,376,659 165,838,748 1,649,624,924 (187,149,985) (313,153,795) 1,149,321,144 (135,989,237) 1,013,331,907 7,047,735 101,576,771 1,121,956,413 1,121,956,413 (101,996,038) (321,287,519) (1,941,340) 696,731,516
55
Profit & Loss Appropriation Account

for the period July 16, 2008 to July 15, 2009
Particulars 56 Income 1. Accumulated Profit up to last year 2. This year's profit 3. Exchange Fluctuation Reserve 4. Transfer from Capital Adjustment Fund Total Expenses 1. Accumulated loss up to last year 2. This year's Loss 3. General Reserve Fund 4. Contingent Reserve 5. Institutional Development Fund 6. Dividend Equilization Fund 7. Employees Related Funds 8. Proposed Dividend 9. Proposed Issue of Bonus Shares 10. Special Reserve Fund 11. Exchange Fluctuation Reserve 12. Capital Adjustment Fund 13.Debenture Redemption Fund Total 14. Accumulated Profit (Loss)
Current Year Rs.
Previous Year Rs.
67,478,694 900,619,072 968,097,766 (180,123,815) (481,413,780) (150,002,000) (811,539,595) 156,558,171
121,354,299 696,731,516 818,085,815 (139,800,000) (90,293,655) (401,305,133) (1,945,000) (117,263,333) (750,607,121) 67,478,694
Statement of Changes in Equity
F.Y. 2065/66 (2008/09)
Particulars 655,856,397 180,123,815 835,980,212 27,839,640 31,500 27,839,640 31,500 -
Accumulated General Reserve Share Capital Profit/(Loss)
Capital Reserve
Share Premium
Exchange Fluctuation Fund Other Reserves 330,359,285 150,002,000 480,361,285
Debenture Redemption Fund
Deferred Tax
Total 2,285,480,916 -
Opening Balance (as at 16 July 2008) 1,203,915,400 67,478,694 Changes in accounting policy Restated Balance Surplus on Revaluation of properties Deficit on Revaluation of Investment Currency translation differences " Net Gains & Losses not recognised in the income statement " Net profit for the period - 900,619,072 Transfer to General Reserve - (180,123,815) Declaration of Dividend (proposed) - (481,413,780) Issue of Share Capital 1,203,153,500 Deficit on revaluation of currencies Surplus on Revaluation of Investment Transfer to Exchange Fluctuation Fund Capital Adjustment Fund Debenture Redemption Fund - (150,002,000) Deferred Tax - (17,820,561) Closing Balance ( as at July 15 2009) 2,407,068,900 138,737,610
17,820,561 17,820,561
900,619,072 (481,413,780) 1,203,153,500 3,907,839,708
57
Cash Flow Statement

For the period July 16, 2008 to July 15,2009
Previous Year Rs. 58
Particulars (A) Cash Flow from Operating Activities 1. Cash Receipts 1.1 Interest Income 1.2 Commission and Discount Income 1.3 Exchange Gain 1.4 Recovery of Loan Written Off 1.5 Other Income 2. Cash Payments 2.1 Interest Expenses 2.2 Staff Expenses 2.3 Office Overhead Expenses 2.4 Income Tax Paid 2.5 Other Expenses Cash Flow Before Changes in Working Capital Increase/(Decrease) of Current Assets 1. (Increase)/Decrease in Money at Call and Short Notice 2. (Increase)/Decrease in Short-term Investment 3. (Increase)/Decrease in Loan and Bills Purchase 4. (Increase)/Decrease in Other Assets Increase/(Decrease) of Current Liabilities 1.Increase/(Decrease) in Deposits 2.Increase/(Decrease) in Certificate of deposits 3.Increase/(Decrease) in Short-Term Borrowings 4.Increase/(Decrease) in Other Liabilities (B) Cash Flow from Investing Activities 1.(Increase)/Decrease in Long-term Investment 2.(Increase)/Decrease in Fixed Assets (including Software)/ NBA 3.Interest from Long-term Investment 4.Dividend Income (C) Cash Flow from Financial Activities 1.Increase/(Decrease) in Long-term Borrowings ( Bond, Debentures etc.) 2. Increase/(Decrease) in Share Capital 3.Increase/(Decrease) in Other Liabilities 4.Increase/(Decrease) in Refinance/facilities received from NRB (D) Income/Loss from change in exchange rate in cash and bank balances (E) Current Year's Cash Flow from All Activities (F) Opening Balance of Cash and Bank Balances (G) Closing Balance of Cash and Bank Balances
Current Year Rs.
2,641,783,322 2,194,275,722 215,292,193 165,838,748 66,376,659 (1,707,405,447) (992,158,398) (187,149,985) (230,597,064) (297,500,000) 934,377,875 (9,775,296,207) 362,970,000 (349,051,138) (9,760,204,833) (29,010,236) 10,005,780,260 9,962,870,496 42,909,764 (303,659,210) (24,692,500) (279,799,210) 832,500 452,224,650 250,000,000 202,224,650 1,313,427,368 2,441,514,200 3,754,941,568
3,803,634,711 3,267,941,142 262,791,664 185,327,111 87,574,794 (2,589,446,318) (1,686,973,130) (225,721,490) (301,385,498) (375,366,201) 1,214,188,393 (9,885,946,540) (519,363,075) (9,297,852,674) (68,730,791) 12,273,134,884 12,246,373,874 38,800,000 (12,038,990) (240,162,782) (4,325,000) (237,443,757) 1,605,975 801,848,367 801,848,367 4,163,062,322 3,754,941,568 7,918,003,890
SHARE CAPITAL & OWNERSHIP

( As at July 15, 2009) Schedule 1
Previous Year Rs.
Particulars 1. Share Capital 1.1 Authorized Capital A) 40,000,000 Ordinary Shares of Rs. 100 each 1.2 Issued Capital A) 24,090,977 Ordinary Shares of Rs. 100 each (of which 13,562,684 Right Share & 9,928,293 bonus shares) 1.3 Paid Up Capital A) 24,070,689 Ordinary Shares of Rs. 100 each (of which 13,542,396 Right Share & 9,928,293 bonus shares)
Current Year Rs.
2,000,000,000 1,203,915,400
4,000,000,000 2,409,097,700
59
1,203,915,400
2,407,068,900
SHARE OWNERSHIP
( As at July 15, 2009)
Share Capital 963,132,300
% 80%
Particulars A. Promoters 1.1 Nepal Government 1.2 Foreign Institutions 1.3 "A" Class Liscensed Institutions 1.4 Insurance Company 1.5 Organized Institutions 1.6 Individuals 1.7 Others B. General Public Total
% 80%
Share Capital 1,927,278,300
180,587,300 180,587,300 601,957,700 240,783,100 1,203,915,400
15% 15% 50% 0% 0% 20% 100%
15% 15% 50% 0% 0% 20% 100%
361,364,600 361,364,600 1,204,549,100 479,790,600 2,407,068,900
Details of Shareholders holding 0.5 percent or above shares are mentioned below:
Organized Institution (Group A) Maha Laxmi Investment P. Ltd. Chhaya Investment P.Ltd K.U.P. Investment P. Ltd. Sophia Investment P. Ltd Annapurna Investment P. Ltd Kamala Investment P. Ltd. Noble Investment P.Ltd Prestine Investment P. Ltd. Surya Infosys P. Ltd. Star Holding P. Ltd. P. Shanghai Investment P. Ltd Apollo Investment Lotus Investments Pancha Kanya Investment Co R. Shangai Investment P. Ltd. Singhe Carpets P. Ltd. Shrestha Brothers Investment P. Ltd. Mercantile Investments P. Ltd. Shakya Investments S. Shakya Investment S.R. Investment P. Ltd. "A" Class Liscensed Institution (Group B) - Rastriya Banijya Bank Insurance Company (Group C) - Rastriya Beema Sansthan
% 8.83 8.2 7.81 7.42 1.56 1.56 1.56 1.56 1.56 1.17 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.63 0.63 0.55 0.55 15 15
Amount (Rs. in '000) 212,678 197,622 188,209 178,800 37,643 37,643 37,643 37,643 37,643 28,231 18,821 18,821 18,821 18,821 18,821 18,821 18,821 15,058 15,058 13,175 13,175 361,365 361,365
60
RESERVE FUNDS
Previous Year Rs. 655,856,397 401,305,133 330,390,785 31,500 330,359,285 67,478,693 27,839,640 1,482,870,648
Particulars 1. General Reserve Fund 2. Proposed Bonus Shares 3. Capital Reserve Fund 4. Capital Redemption Reserve 5. Capital Adjustment Fund 6. Other Reserve Fund a. Contingent Reserve b. Institution Development Fund c. Dividend Equalization Fund d. Special Reserve Fund e. Assets Revaluation Reserve f. Debenture Redemption Fund 7. Accumulated Profit/ Loss 8. Exchange Fluctuation Reserve Total
Current Year Rs. 835,980,212 480,392,785 31,500 480,361,285 156,558,171 27,839,640 1,500,770,808
DEBENTURES AND BONDS

Previous Year Rs. 300,000,000
Particulars 7.5 % Debentures of Rs. 1000 each issued on 24.11.2003 (2060.08.08) and maturing on 24.11.2010 (2067.08.07) Outstanding Balance of Redemption Reserve Rs. 257,142,429 6 % Debentures of Rs. 1000 each issued on 26.06.2006 (2063.03.12) and maturing on 25.06.2013(2070.03.11) Outstanding Balance of Redemption Reserve Rs.110,121,857 6.25 % Debentures of Rs. 1000 each issued on 26.06.2007 (2064.03.12) and maturing on 25.06.2014(2071.03.11) Outstanding Balance of Redemption Reserve Rs. 74,406,571 8 % Debentures of Rs. 1000 each issued on 09.07.2008 (2065.03.25) and maturing on 08.07.2015 (2072.03.24) Outstanding Balance of Redemption Reserve Rs. 38,690,428 Total
Current Year Rs. 300,000,000 61 250,000,000
250,000,000
250,000,000
250,000,000
250,000,000
250,000,000 1,050,000,000
1,050,000,000
BORROWINGS
Previous Year Rs. -
Particulars A. Local 1. Nepal Government 2. Nepal Rastra Bank 3. Repo Obligation 4. Inter Bank and Financial Institutions 5. Other Financial Institutions 6. Others Total B. Foreign 1. Banks 2. Others Total Total (A+B)
Current Year Rs.
38,800,000
38,800,000
38,800,000
DEPOSITS
Previous Year Rs. 62 3,138,669,428 2,549,721,664 221,437,320 102,141,210 363,682,270 1,638,809,096 196,594,867 27,056,901 588,947,764 49,613 2,864,706 144,150,246 400,614,486 35,741,351 5,527,362 607,062,707 197,868,529 409,194,178 3,745,732,135
Particulars 1. Non-Interest bearing accounts A. Current Deposits 1. Local Currency 1.1 Nepal Government 1.2 "A" Class Licensed Institutions 1.3 Other Licensed Institutions 1.4 Other Organized Institutions 1.5 Individuals 1.6 Others 2. Foreign Currency 2.1 Nepal Government 2.2 "A" Class Licensed Institutions 2.3 Other Licensed Institutions 2.4 Other Organized Institutions 2.5 Individuals 2.6 Others B. Margin Deposits 1. Employess Guarantee 2. Guarantee Margin 3. Letters of Credit Margin C. Others 1. Local Currency 1.1 Financial Institutions 1.2 Other Organized Institutions 1.3 Individuals 2. Foreign Currency 2.1 Financial Institutions 2.2 Other Organized Institutions 2.3 Individuals Total Non-Interest Bearing Accounts
Current Year Rs.
3,756,570,350 2,952,365,333 391,996,113 82,099,111 245,424,330 1,894,533,204 223,010,104 115,302,471 804,205,017 79,212,781 663,861,746 54,971,786 6,158,704 727,990,479 237,599,202 490,391,277 4,484,560,829
DEPOSITS (contd...)
Previous Year Rs.
Particulars 2. Interest bearing accounts A. Savings Deposits 1. Local Currency 1.1 Organized Institutions 1.2 Individuals 1.3 Others 2. Foreign Currency 2.1 Organized Institutions 2.2 Individuals 2.3 Others B. Fixed Deposits 1. Local Currency 1.1 Organized Institutions 1.2 Individuals 1.3 Others 2. Foreign Currency 2.1 Organized Institutions 2.2 Individuals 2.3 Others C. Call Deposit 1. Local Currency 1.1 "A" Class Licensed Institutions 1.2 Other Licensed Institutions 1.3 Other Organized Institutions 1.4 Individual 1.5 Others 2. Foreign Currency 2.1 "A" Class Licensed Institutions 2.2 Other Licensed Institutions 2.3 Other Organized Institutions 2.4 Individual 2.5 Others D. Certificate of Deposit 2.1 Organized Institutions 2.2 Individuals 2.3 Others Total Interest Bearing Accounts Total Deposit
Current Year Rs. 63 17,066,252,467 15,949,380,505 738,863,616 14,729,221,590 481,295,299 1,116,871,962 81,677,754 1,026,322,913 8,871,295 11,633,380,218 8,144,902,245 6,229,532,225 1,747,561,040 167,808,980 3,488,477,973 3,486,197,755 2,280,218 13,513,906,551 13,016,982,339 836,913,734 3,409,196,988 7,516,567,599 1,080,216,606 174,087,412 496,924,212 486,030,368 10,061 10,883,783 42,213,539,236 46,698,100,065
13,688,766,549 13,060,106,606 1,489,154,480 11,538,536,206 32,415,920 628,659,943 354,823,088 273,385,867 450,988 7,944,232,558 5,789,307,926 4,552,458,360 1,235,699,566 1,150,000 2,154,924,632 2,099,969,600 54,955,032 9,072,994,949 8,714,204,410 50,964,624 3,880,022,114 4,190,638,066 588,286,666 4,292,940 358,790,539 3,633 7,023,075 315,069,033 33,249,798 3,445,000 30,705,994,056 34,451,726,191
BILLS PAYABLE
( As at July 15, 2009)
Schedule 6
Previous Year Rs. 64 39,871,051 38,967,592 78,838,643
Particulars 1. Local Currency 2. Foreign Currency Total
Current Year Rs. 47,250,276 35,087,742 82,338,018
OTHER LIABILITIES
Previous Year Rs. 12,805,893 101,996,038 47,572,648 27,739,118 82,660,617 46,051,203 250,000 169,328,771 25,970,232 1,941,340 141,417,199 488,404,288
Particulars 1. Pension/ Gratuity Fund 2. Employees Provident Fund 3. Employees Welfare Fund 4. Provision for Staff Bonus 5. Interest Payable on Deposits 6. Interest Payable on Borrowings 7. Unearned Discount & Commission 8. Sundry Creditors 9. Branch Adjustment Account 10. Statutory Auditor's Fee 11. Others 11.1 Matured Time Deposit 11.2 Deferred Tax Liabilities 11.3 Others Total
Current Year Rs. 12,352,678 129,860,089 47,521,866 38,126,172 85,130,289 129,467,451 300,000 267,216,547 37,529,465 17,820,561 211,866,521 709,975,092
CASH BALANCE
Previous Year Rs. 1,434,574,550 29,908,169 1,464,482,719
Particulars 1. Local Currency (including coin) 2. Foreign Currency Total
Current Year Rs. 1,763,936,871 69,525,623 1,833,462,494
BALANCE WITH NEPAL RASTRA BANK

Previous Year Rs.
Particulars
Foreign Currency in Rs. Local Currency Indian Rs. Conv. F.C. 4,302,970,881 4,302,970,881 108,162,202 108,162,202
Total
Current YearRs. Grand Total 4,411,133,083 4,411,133,083 65
1,820,006,035 1,820,006,035 -
1. Nepal Rastra Bank a. Current Account b. Other Account
108,162,202 108,162,202
BALANCE WITH BANKS/FINANCIAL INSTITUTIONS

Previous Year Rs.
Particulars Local Currency
Foreign Currency in Rs. Indian Rs. Conv. F.C. 290,781 290,781
Total 290,781 290,781
Current YearRs. Grand Total 201,811,480 201,811,480 1,471,596,833 1,471,596,833 1,673,408,313
70,818,811 70,818,811 399,634,003 399,634,003 470,452,814
1. Local Licensed Institutions a. Current Account b. Other Account 2. Foreign Banks a. Current Account b. Other Account Total
201,520,699 201,520,699
- 212,221,422 1,259,375,411 - 212,221,422 1,259,375,411 201,520,699 212,221,422 1,259,666,192
1,471,596,833 1,471,596,833 1,471,887,614
Note : Total Balance as per the confirmations received from respective Banks (including Nepal Rastra Bank ) Rs.5,084,277,848.
MONEY AT CALL AND SHORT NOTICE

Previous Year Rs. -
Particulars 1. Local Currency 2. Foreign Currency Total
Current Year Rs. -
INVESTMENTS
Previous Year Rs. 66 3,155,000,000 3,664,478,125 59,945,500 6,879,423,625 5,400,000 6,874,023,625
Particulars
Purpose Trading Others 2,531,300,000 -
Current YearRs.
1. Nepal Government Treasury Bills 2. Nepal Government Savings Bond 3. Nepal Government Other Securities 4. Nepal Rastra Bank Bonds 5. Foreign Securities 6. Local Licensed Institutions 7. Foreign Banks 8. Corporate Shares 9. Corporate Bonds and Debentures 10. Other Investment Total Investment Provision Net Investment
4,807,541,200 64,270,500 7,403,111,700 3,300,000 7,399,811,700
2,531,300,000 4,807,541,200 64,270,500 7,403,111,700 3,300,000 7,399,811,700
INVESTMENT IN SHARES DEBENTURES AND BONDS

( As at July 15, 2009)
Schedule 12 (A)
Previous Year Rs.
Particulars Purchase Price 1. Investment in Shares 1.1 Sudur Paschimanchal Grameen Bikas Bank 30,000 Ordinary Shares of Rs.100 paid up 1.2 Paschimanchal Grameen Bikas Bank 15,000 Ordinary Shares of Rs.100 paid up 1.3 Purbanchal Grameen Bikas Bank 30,000 Ordinary Shares of Rs.100 paid up 1.4 Rural Micro Finance Development Centre Ltd. 338,100 Ordinary Shares of Rs.100 paid up 1.5 Swabalamban Bikas Bank 66,000 Ordinary Shares of Rs.100 paid up 1.6 Credit Information Centre Ltd. 12,355 Ordinary Shares of Rs.100 paid up 1.7 Taragaon Regency Hotel Ltd. Ordinary 150,000 Shares of Rs.100 paid up 1.8 Nepal Clearing House Ltd. Ordinary 25,000 Shares of Rs.100, Rs. 5 paid up 2. Investments in Debentures and Bonds Total Investment 3. Provision for Loss 3.1 Up to Previous year 3.2 Adjustments this year Total Provision Net Investment
Current Year Rs. Market Price Provision Rs.
3,000,000 1,500,000 3,000,000 33,810,000 2,400,000 1,235,500 15,000,000
3,000,000 1,500,000 3,000,000 33,810,000 6,600,000 1,235,500 15,000,000 125,000 64,270,500 5,400,000 (2,100,000) 3,300,000 60,970,500
NA NA NA NA 581 NA 78
NA NA NA NA NA NA 3,300,000
59,945,500
5,400,000 5,400,000 54,545,500
Note: Following Company has not declared and distributed dividend for the last three years: - Sudur Paschimanchal Grameen Bikas Bank - Purbanchal Grameen Bikas Bank - Paschimanchal Grameen Bikas Bank
CLASSIFICATION OF LOAN AND BILLS PURCHASE AND PROVISIONING

Schedule 13
( As at July 15, 2009)
Previous year Rs. Domestic Foreign Other Priority Insured Un-insured Other Total Foreign Total Priority Insured 2,820,576 13,509,719 10,689,143 363,892,841 4,661,540 2,691,376 5,742,930 188,835,454 565,824,141 1,610,174 1,610,174 376,192,158 4,661,540 2,691,376 5,742,930 191,656,030 580,944,034 3,453,358 3,453,358 1,068,914,307 1,068,914,307 2,820,576 2,820,576 1,071,734,883 34,882,636,566 34,845,644,188 36,992,378 211,086,818 10,765,503 11,485,860 188,835,455 35,093,723,384 161,017,422 161,017,422 161,017,422 36,112,568,295 36,075,575,917 36,992,378 213,907,394 10,765,503 11,485,860 191,656,030 36,326,475,689 Un-insured Domestic
Particulars
Advances
Bills Purchased/ Discounted
current year Rs.
27,219,833,753 27,176,973,284 42,860,469 309,470,983 61,737,243 20,724,497 227,009,243 27,529,304,736
- 345,335,730 155,345,990 500,681,720 36,613,250,015 - 345,335,730 155,345,990 500,681,720 36,576,257,637 36,992,378 213,907,394 10,765,503 11,485,860 191,656,030 - 345,335,730 155,345,990 500,681,720 36,827,157,409 1,553,460 1,553,460 5,006,818 5,006,818 381,198,976 4,661,540 2,691,376 5,742,930 191,656,030 585,950,852
274,449,428 5,357,559 15,434,311 10,401,937 227,009,243 532,652,478
173,495,470 4,701,842 24,572,650 43,084,601 236,817,951 482,672,514
6,263,335 686,093 2,395,963 9,345,391
264,234,005 5,357,559 13,265,780 9,715,844 224,613,280 517,186,468
200,821 200,821
270,698,161 5,357,559 13,265,780 10,401,937 227,009,243 526,732,680
2,763,306 2,168,530 4,931,836
987,962 987,962
3,751,268 2,168,530 5,919,798
274,449,429 5,357,559 15,434,310 10,401,937 227,009,243 532,652,478 112,553,009
80,234,271 4,164,328 1,058,225,164 48,637,673 34,527,899,243
130,214,237
1,409,354 159,407,248 54,211,355 35,745,531,655
165,851,383 - (1,478,479) 565,498 (912,981) 53,298,374 - 341,882,373 153,792,530 495,674,903 36,241,206,558
49,979,966 26,996,652,258
1. Performing Loan 1.1 Pass Loan 1.2 Restructured 2. Non Performing Loan 2.1 Substandard 2.2 Doubtful 2.3 Loss (A) Total Loan 3. Loan Loss Provision 3.1 Pass 3.2 Restructured 3.3 Substandard 3.4 Doubtful 3.5 Loss (B) Total Loan Provision 4. Provisioning up to Previous Year 4.1 Pass 4.2 Restructured 4.3 Substandard 4.4 Doubtful 4.5 Loss (C). Total Previous Year Provision (D). Written Back Provision (E) This Year's Addition Provision Changes in this Year Net Loan (A-B)
67
SECURITIES AGAINST LOAN, ADVANCES AND BILLS PURCHASED

( As at July 15, 2009) Schedule 13 (A)
Previous Year Rs. 27,529,304,736 24,533,059,089 275,965,744
Particulars (A) Secured 1. Collateral of Movable/Immovable Assets 2. Local Licensed Institutions Guarantee 3. Government Guarantee 4. Internationally rated Foreign Banks Guarantee 5. Export Documents 6. Fixed Deposit Receipts (a) Own FDR (a) FDR of other Licensed Institutions 7. Government Bonds 8. Counter Guarantee 9. Personal Guarantee 10. Other Securities (B) Unsecured Total
Current Year Rs. 36,827,157,409 33,045,926,034 149,838,588 148,758,006 1,080,582 13,150,315 8,641,047 3,609,601,425 36,827,157,409
68
10,805,202 16,415,689 2,693,059,012 27,529,304,736
FIXED ASSETS
Previous Year
Particulars Building Vehicles
Assets Machinery
Office Equipment
Others
Current Year Total
610,726,903 204,806,035 (14,819,470) 800,713,468 182,794,633 70,301,655 (8,985,249) -
244,111,039 556,602,429 413,489,330
970,091,759
1. At Cost A. Previous Year's Balance B. Addition during the Year (+) C. Revaluation / Written back during the Year (+) D. This Year Sold (-) E. This Year Written off (-) TOTAL GROSS VALUE ( A+B+C-D-E ) 2. DEPRECIATION A. Previous Year's Balance B. Depreciation during the Year (+) C. Total Depreciation on Sold / Written Off Assets (-) D. Depreciation on Revaluation / Written back TOTAL DEPRECIATION ( A+B-C-D) 3. REMAINING BOOK VALUE ( 1-2 ) 4. Land 5. Capital Construction 6. LEASEHOLD ASSETS TOTAL BOOK VALUE ( 3+4+5+6)
173,934,633 12,465,430 186,400,063 11,397,527 3,492,026 14,889,553 171,510,510
137,723,272 26,228,065 (9,271,300) 154,680,037 33,230,813 19,935,872 (4,356,437) 48,810,248 105,869,789
130,855,686 358,199,877 38,876,908 114,589,505 - (4,087,767) 169,732,594 468,701,615 39,221,234 160,261,465 12,987,326 60,169,040 - (4,087,709) -
800,713,468 192,159,908 (13,359,067) 979,514,309 244,111,039 96,584,264 (8,444,146) 332,251,157 647,263,152 413,489,330 1,060,752,482
52,208,560 216,342,796 117,524,034 252,358,819
171,510,510
105,869,789
117,524,034 252,358,819
Non-Banking Assets
Previous Year Rs. Total Amount 1,500,000 1,500,000 Loss Provision Net
Name and Address of Borrower or Party 1.Binayak Feed Industries, Bhaktapur Grand Total
Net Non Banking Date of acquisition Total Amount of Assets Rs. of Non Banking In percentage In amount Non-Banking Assets Assets 18/01/2007 1,500,000 1,500,000 75% 75% 1,125,000 1,125,000 375,000 375,000
69
750,000 750,000 750,000 750,000
OTHER ASSETS
(As at July 15, 2009) Schedule 16
Previous Year Rs. 990,932 25,099,443 15,846,569 (2,074,352) 62,879,046 66,676,775 20,782,689 7,182,739 79,463,033 4,632,615 60,120,242 14,710,176 276,846,874
Particulars 1. Stock of Stationery 2. Income Receivable on investments 3. Accrued Interest on Loan Less: Interest Suspense amount 4. Receivable Commission 5. Sundry Debtors Less : Provision 6. Staff Loan and Advances 7. Prepayments 8. Cash in Transit 9. Other Transit items (including cheques) 10. Drafts Paid without Notice 11. Expenses Not Written off 12. Branch Adjustment account 13. Others 13.1 Receivable from Nepal Rastra Bank 13.2 Premium deposit against Staff Housing Loan 13.3 Others 13.4 Deferred Tax Assets Total
Current Year Rs. 1,740,297 107,854,451 153,600,871 (153,600,871) 17,165,694 (2,074,352) 15,091,342 81,289,286 13,615,079 65,858,520 105,204,521 4,994,365 63,218,516 36,991,640 390,653,496
106,677,388 (106,677,388)
OTHER ASSETS (Additional Statement)

(As at July 15, 2009) Schedule 16 (A)
Previous Year Rs. 70 106,677,388 -
Particulars Up to 1 Year 1. Accrued Interest on Loan 2. Drafts Paid without Notice 3. Branch Adjustment A/c 46,179,754 1 to 3 Years 4,423,544
Current Year Rs. Above 3 Years 102,997,573
Total 153,600,871
CONTINGENT LIABILITIES
(As at July 15, 2009) Schedule 17
Previous Year Rs. 4,223,147,037 3,282,807,332 940,339,705 2,855,680,061 347,985,700 1,048,983,322 1,458,711,039 2,170,350 857,189,953 945,790,546 478,864,346 767,491,609 9,209,500 10,139,543,402
Particulars Claims on Institution but not accepted by the Institution Letters of credit (full amount) (a) Less than 6 months maturity (b) More than 6 months maturity 3. Rediscounted Bills 4. Unmatured Guarantees/ Bonds (a) Bid Bonds (b) Performance Bonds (c) Other Guarantee/ Bonds 5. Unpaid Shares in Investment 6. Forward Exchange Contract Liabilities 7. Bills under Collection 8. Acceptance and Endorsements 9. Underwriting Commitments 10. Irrevocable Loan Commitments "11. Guarantee issued against counter guarantee of Internationally Rated Banks" 12. Advance Payment Guarantee 13. Financial Guarantee 14. Contingent Liabilities on Income Tax 15. Others (Loan under Repurchase Agreement) Total 1. 2.
Current Year Rs. 6,136,742,629 4,924,898,407 1,211,844,222 2,409,149,575 583,820,503 1,602,430,478 222,898,594 59,504,763 405,480,033 799,418,295 3,567,971,517 1,537,290,444 1,342,961,931 9,209,500 16,267,728,687
INTEREST INCOME
for the period July 16, 2008 to July 15,2009 Schedule 18
Previous Year Rs. 1,907,261,454 1,249,470,914 657,790,540 99,991,095 99,991,095 99,991,095 8,892,605 8,892,605 161,035,500 4,118,853 156,916,647 17,095,068 11,895,446 5,199,622 2,194,275,722
Particulars A. On Loan, Advances and Overdrafts 1. Loan and Advances 2. Overdraft B. On Investment 1. Nepal Government Securities a. Treasury Bills b. Development Bonds c. National Savings Certificates 2. Foreign Securities 3. Nepal Rastra Bank Bonds 4. Debenture and Bonds a.Banks & Financial Institutions b.Other Organization 5. Interst on Inter Bank Lending C. On Agency Balances 1. Local Banks & Financial Institutions 2. Foreign Banks D. On Money At Call and Short Notice 1. Local Banks & Financial Institutions 2. Foreign Banks* E. On Others 1. Certificate of Deposits 2. Inter-Bank/ Financial Institutions Loan 3. Others Total
Current Year Rs. 2,906,054,774 1,569,180,560 1,336,874,214 140,697,625 140,697,625 140,697,625 6,826,224 6,826,224 175,142,952 83,053,093 92,089,859 39,219,567 14,536,307 24,683,260 3,267,941,142 71
*Interest received on investment (placements) made in foreign banks is shown under this heading
INTEREST EXPENSES
Previous Year Rs. 72 916,372,736 402,825,021 309,920,132 92,904,889 285,919,261 278,368,890 7,550,371 227,628,454 214,505,554 13,122,900 75,785,662 53,703,668 22,081,994 992,158,398
Particulars A. On Deposit Liabilities 1. Fixed Deposits 1.1 Local Currency 1.2 Foreign Currency 2. Savings Deposits 1.1 Local Currency 1.2 Foreign Currency 3. Call Deposit 1.1 Local Currency 1.2 Foreign Currency 4. Certificate of Deposits B. On Borrowings 1. Debenture and Bonds 2. Loan from Nepal Rastra Bank 3. Inter Bank/ Financial Institutions Borrowing 4. Other Corporate Institution 5. Other Loans C. On Others Total
Current Year Rs. 1,596,672,381 436,489,351 340,950,079 95,539,272 380,818,232 376,776,488 4,041,744 779,364,798 769,645,427 9,719,371 90,300,749 73,230,918 17,069,831 1,686,973,130
Commission And Discount

Previous Year Rs. 961,695 961,695 169,705,452 35,917,161 39,135,473 455,481 21,652,542 72,324,874 198,079 21,841 44,625,046 215,292,193
Particulars A. Bills Purchase and Discount 1. Local 2. Foreign B. Commission 1. Letters of Credit 2. Guarantees 3. Collection Fee 4. Remittance Fee 5. Credit Cards/ Debit Cards 6. Share Underwriting/ Issues 7. Government Transactions 8. Agency Commission 9. Exchange Fee C. Others Total
Current Year Rs. 878,308 878,308 205,298,181 45,478,281 49,833,164 171,204 18,328,924 91,089,863 189,279 207,466 56,615,175 262,791,664
Other Operating Income

Previous Year Rs. 8,397,861 551,469 21,479,521 13,682,499 22,265,309 66,376,659
Particulars 1. Rental on Safe Deposit Lockers 2. Issue and Renewals of Credit Cards 3. Issue and Renewals of ATM Cards/ Debit Cards 4. Telex/ T.T. 5. Service Charges 6. Renewal Fees 8. Others Total
Current Year Rs. 73 9,999,769 1,217,089 23,970,845 26,381,479 26,005,612 87,574,794
Exchange Gain/Loss
Previous Year Rs. 7,761,166 158,077,582 165,838,748
Particulars (A) Revaluation Gain/ (Loss) (B) Trading Gain (except Exchange Fee) Total Income/ (Loss)
Current Year Rs. (7,351,506) 192,678,617 185,327,111
EXPENSES RELATING TO EMPLOYEES

Previous Year Rs. 83,530,575 59,121,476 7,387,244 4,330,860 398,611 114,385 8,854,968 8,783,605 14,628,261 116,100 3,945,092 4,531,741 6,035,328 187,149,985
Particulars 1. Salary 2. Allowances 3. Contribution to Provident Fund 4. Training Expenses 5. Uniform 6. Medical 7. Insurance 8. Pension and Gratuity Provision 9. Others a. Training Course Remuneration b. Leave Compensation c. Staff Lunch d. Other incentives Total
Current Year Rs. 96,218,358 76,287,140 8,622,679 4,162,374 520,561 251,051 10,512,211 13,457,093 15,690,023 1,058,257 697,359 7,481,159 6,453,247 225,721,490
OTHER OPERATING EXPENSES

Previous Year Rs. 74 42,294,900 13,489,475 2,689,817 1,395,731 1,093,037 201,049 8,235,651 16,857,413 8,311,688 11,345,185 24,898,837 316,006 18,352,321 337,285 349,611 1,185,570 1,082,000 103,570 853,967 250,000 250,000 70,301,655 12,255,076 2,916,584 3,821,739 11,064,540 63,026,475 7,749,861 9,865,541 5,500 4,401,831 33,870,589 1,550,736 565,312 1,968,024 3,049,081 313,153,795
Particulars 1. House Rent 2. Electricity and Water 3. Repair and Maintenance (a) Building (b) Vehicles (c) Others 4. Insurance 5. Postage, Telex, Telephone, Fax 6. Office Equipment, Furniture and Repair 7. Travelling Allowances and Expenses 8. Stationery and Printing 9. Periodicals and Books 10. Advertisements & Business Promotion 11. Legal Expenses 12. Donations 13. Expenses Relating to Board of Directors (a) Meeting Fees (b) Other Expenses 14. Annual General Meeting Expenses 15. Expenses Relating to Audit (a) Audit Fees (b) Other Expenses 16. Commission on Remittances 17. Depreciation on Fixed Assets 18. Amortization of Expenses( Software) 19. Share/Debenture expenses 20. Technical Services Fee 21. Entertainment 22. Written Off Expenses 23. Security Expenses 24. Credit Guarantee Premium 25. Commission and Discount 26. Others (a) Fees for Services Others (b) Lease Rent (c) Fuel for Vehicle (d) Losses shortages written off (e) Bank Charges & Fee (f) Special Fee (Security Tax) (g) Debit/Credit Card Expenses (h) Vehicle Renewal and other taxes (i) Membership Fee (j) Office Cleaning & Maintenance (k) Misc. Expenses Total
Current Year Rs. 50,310,973 14,104,240 3,407,473 1,074,632 2,063,854 268,987 9,147,598 18,305,256 10,983,266 17,612,631 26,271,390 461,122 29,758,886 1,148,000 1,375,333 1,246,879 1,143,000 103,879 596,013 300,000 300,000 96,584,388 15,913,870 4,364,712 6,291,452 20,720,008 84,980,265 9,122,962 15,636,275 1,000 6,782,475 46,568,106 1,900,156 427,000 2,356,036 2,186,255 413,883,755
Provision for Possible Loss

Previous Year Rs. 130,214,237 5,400,000 375,000 135,989,237
Particulars 1. Increase in Loan Loss Provision 2. Increase in Provision for Loss on Investment 3. Provision for Non Banking Assets 4. Provision for Other Assets Total
Current Year Rs. 165,851,383 350,000 166,201,383
75
Non-Operating Income/Loss
Previous Year Rs. 6,215,235 832,500 832,500
Particulars 1. Profit (Loss) on Sale of Investment 2. Profit (Loss) on Sale of Assets 3. Dividend (net) a. Commercial Banks b. Grameen Banks c. Financial Institutions d. Other Organized Institutions (1) Subsidiary Companies (2) Others 4. Subsidies Received from Nepal Rastra Bank a. Reimbursement of losses of specified branches b. Interest Subsidy c. Exchange Counter 5. Others Total Non-Operating Income /(Loss)
Current Year Rs. 1,347,037 1,605,975 1,605,975
7,047,735
2,953,012
Loss Provision Written Back

Previous Year Rs. 80,234,271 2,942,500 18,400,000 101,576,771
Particulars 1. Loan Loss Provision Written Back 2. Provision against Non Banking Assets Written Back 3. Investment Provision Written Back 4. Provision Against Other Assets Written Back Total
Current Year Rs. 112,553,009 2,100,000 114,653,009
Profit/ Loss from Extra Ordinary Activities

Previous Year Rs. 76 Nepal Investment Bank Limited
Particulars 1. Recovery of write off Loan 2. Voluntary Retirement Scheme Expenses 3. Loan Write-Offs (28 (A) 4. Other Expenses/ Income Total
Current Year Rs. -
Statement of Loan Written-Off

(F.Y. 2008/2009) Schedule 28(A)
S.N.
Types of Loan
Written off Amount -
Type of Security
Basis of valuation of collateral
Loan Approved by Initiations made Name/ Designation for recovery
Remarks
1 2 3 4 5
Working Capital Loan Project Loan Fixed Capital Loan Personal Loan Other Loan Total
Statement of Loans and Advances Extended to Directors/ Chief Executive/ Promoter/ Employees and Shareholders Holding More Than 1 Percent Shares.
The Statement of amount, included under total amount of Bills Purchased and Discounted, Loans, Advances and Overdraft, provided to the Directors, Chief Executive, Promoters, Employees, Shareholders holding more than 1 percent shares and to the individual members of their undivided family OR against the guarantee of such persons OR to the organizations or companies in which such individuals are managing agent, are as follows:
Name of Promoter/Director/ Chief Executive
Last Years Balance This Year Recovery This year Principal Interest Principal Interest Addition -
Balance as of Ashad end Principal Interest -
(A) Directors (B) Chief Executive (C) Promoters (D) Employees (E) Shareholders holding more than 1% Total
CAPITAL ADEQUACY TABLE

As at Ashad end 2066 (July 15,2009) Schedule 30(A1)
Rs in'000
1. 1 a b c
RISK WEIGHTED EXPOSURES Risk Weighted Exposure for Credit Risk Risk Weighted Exposure for Operational Risk Risk Weighted Exposure for Market Risk Total Risk Weighted Exposures (a+b+c) CAPITAL Core Capital (Tier 1) Paid up Equity Share Capital Irredeemable Non-cumulative preference shares Share Premium Proposed Bonus Equity Shares Statutory General Reserves Retained Earnings Un audited current year cumulative profit Capital Redemption Reserve Capital Adjustment Reserve Dividend Equalization Reserves Debenture Redemption Reserve Other Free Reserve Less: Goodwill Miscellaneous expenditure not written off Investment in equity in licensed Financial Institutions Investment in equity of institutions with financial interests Investment in equity of institutions in excess of limits Investments arising out of underwriting commitments Reciprocal crossholdings Other Deductions Supplementary Capital (Tier 2) Cumulative and/or Redeemable Preference Share Subordinated Term Debt Less : 20% discount value to 5YTM Bond/ Debenture Hybrid Capital Instruments General loan loss provision Exchange Equalization Reserve Investment Adjustment Reserve Assets Revaluation Reserve Other Reserves Total Capital Fund (Tier I and Tier II)
Current Period 42,975,192 1,941,891 395,182 45,312,265 Current Period 3,879,969 2,407,069 835,980 156,558 480,361 1,215,385 1,050,000 (230,000) 367,514 27,840
Previous Period 36,518,503 1,488,193 230,072 38,236,768 Previous Period 2,658,915 1,203,915 401,305 655,856 67,479 330,359 1,232,321 1,050,000 (120,000) 274,449 27,840 32 3,891,235 Previous Period 6.95% 10.18%
77
1.2 a b c d e f g h i j k l a. b c d e f g h a b c d e f g h
32 5,095,353 Current Period 8.56% 11.24%
1.3 CAPITAL ADEQUACY RATIOS Tier 1 Capital to Total Risk Weighted Exposures Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures
Note: Previous period figures are as per Basel II Parallel Run.
RISK WEIGHTED EXPOSURE FOR CREDIT RISK

As at Ashad end 2066 (July 15,2009) Schedule 30(B)
Rs in'000
A. Balance Sheet Exposures Book Value a

Cash Balance Balance With Nepal Rastra Bank Gold Investment in Nepali Government Securities All Claims on Government of Nepal Investment in Nepal Rastra Bank securities All Claims on Nepal Rastra Bank Claims on Foreign Government and Central Bank (ECA rating 0-1 Claims on Foreign Government and Central Bank (ECA-2) Claims on Foreign Government and Central Bank (ECA -3) Claims on Foreign Government and Central Bank (ECA-4-6) Claims on Foreign Government and Central Bank (ECA -7) Claims On BIS, IMF, ECB, EC and on Multilateral Development Banks (MDB's) recognized by the framewor Claims On Other Multilateral Development Banks Claims on Public Sector Entity (ECA 0-1) Claims on Public Sector Entity (ECA 2) Claims on Public Sector Entity (ECA 3-6) Claims on Public Sector Entity (ECA 7) Claims on domestic Banks that meet capital adequacy requirements Claims on domestic Banks that do not meet capital adequacy requirements Claims on foreign bank (ECA Rating 0-1) Claims on foreign bank (ECA Rating 2) Claims on foreign bank (ECA Rating 3-6) Claims on foreign bank (ECA Rating 7) Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their respective regulatory capital requirement Claims on Domestic Corporates Claims on Foreign Corporates (ECA Rating 0-1) Claims on Foreign Corporates (ECA Rating 2) Claims on Foreign Corporates (ECA Rating 3-6) Claims on Foreign Corporates (ECA Rating 7) Regulatory Retail Portfolio (Not Overdue) Claims fulfilling all criterion of regulatory retail except granularity Claims secured by residental properties Claims not fully secured by residental properties Claims secured by residental properties (Overdue) Claims secured by Commercial Real Estate Past due claims (except for claim secured by residental properties) High Risk Claims Investment in equity and other capital instruments of institutions listed in the Stock exchange Investment in equity and other capital instruments of institutions not listed in the Stock exchange Other Assets (as per attachment) Total 1,833,462 4,411,133 2,531,300 45,539 156,272 2,452,409 388,000 3,438,729 29,250,976 7,362,274 213,907 21,600 42,671 2,503,129 54,651,402
Specific Provision b
-
Eligible CRM c
-
Net Value d=a-b-c

1,833,462 4,411,133 2,531,300 45,539 156,272 2,452,409 388,000 3,438,729 28,835,429 6,426,095 13,817 18,300 42,671 1,412,003 52,005,160
Current Period Risk Weighted Risk Exposures Weight f=d*e

0% 0% 0% 0% 0% 0% 0% 0% 20% 50% 100% 150% 0% 100% 20% 50% 100% 150% 20% 100% 20% 50% 100% 150% 20% 100% 20% 50% 100% 150% 75% 100% 60% 150% 100% 100% 150% 150% 100% 150% 100% 9,108 156,272 490,482 194,000 687,746 28,835,429 4,819,572 20,726 18,300 64,006 1,412,003 36,707,642
Previous Period Risk Weighted Exposures

14,164 365,242 124,444 1,989,012 22,500,790 3,261,842 84,938 55,718 17,400 1,243,056 29,656,607
16,708 1,639 200,090 3,300 1,091,126 1,312,863
398,839 934,540 1,333,379
RISK WEIGHTED EXPOSURE FOR CREDIT RISK

(Contd..)
Schedule 30(B)
B. Off Balance Sheet Exposures Book Value a

Revocable Commitments Bills Under Collection Forward Exchange Contract Liabilities LC Commitments With Original Maturity Up to 6 months domestic counterparty foreign counterparty (ECA Rating 0-1) foreign counterparty (ECA Rating 2) foreign counterparty (ECA Rating 3-6) foreign counterparty (ECA Rating 7) L C Commitments With Original Maturity Over 6 months domestic counterparty foreign counterparty (ECA Rating 0-1) foreign counterparty (ECA Rating 2) foreign counterparty (ECA Rating 3-6) foreign counterparty (ECA Rating 7) Bid Bond, Performance Bond and Counter guarantee domestic counterparty foreign counterparty (ECA Rating 0-1) foreign counterparty (ECA Rating 2) foreign counterparty (ECA Rating 3-6) foreign counterparty (ECA Rating 7-9) Underwriting commitments Lending of Bank's Securities or Posting of Securities as collateral Repurchase Agreements, Assets sale with recourse Advance Payment Guarantee Financial Guarantee Acceptances and Endorsements Unpaid portion of Partly paid shares and Securities Irrevocable Credit Commitments (short term) Irrevocable Credit Commitments (long term) Other Contingent Liabilities Total Total RWE for Credit Risk (A)+(B) 405,480 59,505 220,618 4,234,574 469,706 207,353 953,702 50,789 2,409,150 224,110 1,311,740 1,440 1,342,962 799,418 3,567,972 9,210 16,267,729 70,919,131
Specific Provision b
-
Eligible CRM c
-
Net Value d=a-b-c

405,480 59,505 208,956 3,811,551 445,480 205,906 924,782 49,678 (140,140) 2,409,150 224,110 1,311,740 1,440 1,325,444 719,476 3,567,972 9,210 15,539,738 67,544,898
Risk Weight
0% 0% 10% 20% 20% 50% 100% 150% 50% 20% 50% 100% 150% 50% 20% 50% 100% 150% 50% 100% 100% 100% 100% 100% 100% 20% 50% 100%
Current Period Risk Weighted Exposures f=d*e

5,950 41,791 762,310 445,480 102,953 184,957 49,678 1,204,575 44,822 655,870 1,440 1,325,444 719,476 713,594 9,210 6,267,550 42,975,192
Previous Period Risk Weighted Exposures
Rs in'000
1,312,863
11,663 423,023 24 ,226 1,447 28,920 1,111 140,140 17,518 79,942 727,990 2,061,370
773,641 446,661 663,560 94,181 3,259 1,440 2,098,183 945,791 1,825,971 9,209 6,861,896 36,518,503
80
FORM NO.3 ELIGIBLE CREDIT RISK MITIGANTS

Schedule 30(C) Rs in'000
Credit Exposures (c)
Deposits with Bank (a)
Deposits with other banks/FI (b)
Gold
Govt. & G'tee of NRB Govt. of Securities (d) Nepal (e)
Sec/G'tee of Other Sovereigns (f)
G'tee of domestic banks (g)
G'tee of MDBs (h)
Sec/G'tee of Foreign Banks (i)
Total Previous Period Total -
92,351
- 190,925
9,119
106,445
Balance Sheet Exposures Cash Balance Balance With Nepal Rastra Bank Gold Investment in Nepali Government Securities All Claims on Government of Nepal Investment in Nepal Rastra Bank securities All Claims on Nepal Rastra Bank Claims on Foreign Government and Central Bank (ECA rating 0-1) Claims on Foreign Government and Central Bank (ECA-2) Claims on Foreign Government and Central Bank (ECA-3) Claims on Foreign Government and Central Bank (ECA-4-6) Claims on Foreign Government and Central Bank (ECA-7) Claims on Other Multilateral Development Banks Claims on Public Sector Entity (ECA 0-1) Claims on Public Sector Entity (ECA 2) Claims on Public Sector Entity (ECA 3-6) Claims on Public Sector Entity (ECA 7) Claims on domestic banks that meet capital adequacy requirements Claims on domestic banks that do not meet capital adequacy requirements Claims on foreign bank (ECA Rating 0-1) Claims on foreign bank (ECA Rating 2) Claims on foreign bank (ECA Rating 3-6) Claims on foreign bank (ECA Rating 7) claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their respective regulatory capital requirement Claims on Domestic Corporates Claims on Foreign Corporates (ECA 0-1) Claims on Foreign Corporates (ECA 2) Claims on Foreign Corporates (ECA 3-6) Claims on Foreign Corporates (ECA 7) Regulatory Retail Portfolio (Not Overdue) Claims fulfilling all criterion of regulatory retail except granularity Claims secured by residential properties Claims not fully secured by residential properties Claims secured by residential properties (Overdue) Claims secured by Commercial real estate Past due claims (except for claim secured by residental properties) 56,407 1,081 355,569 4,031 517,668
398,839 279,856 934,540 265,658 -
Schedule 30(C) Rs in'000
FORM NO.3 ELIGIBLE CREDIT RISK MITIGANTS (contd...)

Deposits with Bank (a) (c) Deposits with other banks/FI (b) Gold Govt. & NRB Securities (d) G'tee of Govt. of Nepal (e) Sec/G'tee of Other Sovereigns (f) G'tee of domestic banks (g) G'tee of MDBs (h) Sec/G'tee of Foreign Banks (i) Total Previous Period Total 11,663 423,023 24,226 1,447 28,920 1,111 140,140 11,663 423,023 24,226 1,447 28,920 1,111 140,140 354,941
Credit Exposures
High Risk claims Investments in equity and other capital insturments of institutions listed in the stock exchange Investments in equity and other capital insturments of institutions not listed in the stock exchange Other Assets (as per attachment) Off Balance Sheet Exposures Forware Exchange Contract Liabilities LC Commitments With Original Maturity Up to 6 months domestic counterparty foreign counterparty (ECA Rating 0-1) foreign counterparty (ECA Rating 2) foreign counterparty (ECA Rating 3-6) foreign counterparty (ECA Rating 7) LC Commitments With Original Maturity Over 6 months domestic counterparty foreign counterparty (ECA Rating 0-1) foreign counterparty (ECA Rating 2) foreign counterparty (ECA Rating 3-6) foreign counterparty (ECA Rating 7) Bid Bond, Performance Bond and Counter guarantee domestic counterparty foreign counterparty (ECA Rating 0-1) foreign counterparty (ECA Rating 2) foreign counterparty (ECA Rating 3-6) foreign counterparty (ECA Rating 7) Underwriting commitments Lending of Bank's Securities or Posting of Securities as Collateral Repurchase Agreements, Assets sale with recourse Advance Payment Guarantee Financial Guarantee Acceptances and Endorsements Unpaid portion of Partly paid shares and Securities Irrevocable Credit commitments Other Contingent Liabilities 17,518 79,942
17,518 79,942 -
47,017 69,848 128,020 -
The total amount of Eligible CRM shall be adjusted for the supervisory haircuts and floors. In this regard banks should disclose the total value of eligible collateral in the respective column of type of CRM and while summing up the total value necessary adjustments have to be made.
81
Risk Weight Exposure for Operational Risk
Schedule 30(D)
Rs in'000
82
Particulars Net Interest Income Commission and Discount Income Other Operating Income Exchange Fluctuation Income Additional Interest Suspense during the period Gross Income (a) Alfa (b) Fixed Percentage of Gross Income (c) =(a)*(b) Capital Requirement for operational risk (d) (average of c) Risk Weight (reciprocal of capital requirement of 10%) in times (e) Equivalent Risk Weight Exposure (f)=(d)*(e)
Current Period 2005/06 2006/07 681,795 115,943 35,905 125,747 959,390 15% 143,908 899,457 163,899 47,320 135,355 12,499 1,258,530 15% 188,779
Previous Period 2007/08 1,202,117 215,292 66,377 165,839 16,237 1,665,862 15% 249,879 194,189 10 1,941,891
148,819 10 1,488,193
Market Risk
Schedule 30(E)
S.No.
Currency
Open Position (FCY) 7,200 31,330 14,625 74,437 21,434 83,785 144,835 24,549 4,440 282,730,084 10,925,590 1 2,367 5,330 88,958 49,424 105,060 3,820,898
Current Period Open Position) (Rs) 146,088 1,919,913 997,415 5,291,016 238,132 1,181,369 15,679,888 3,108,396 44,178 452,368,134 8,998,316 21 48,429 108,785 870,899 1,623,904 237,436 296,501,681
Relevant Open Position (Rs) 146,088 1,919,913 997,415 5,291,016 238,132 1,181,369 15,679,888 3,108,396 44,178 452,368,134 8,998,316 21 48,429 108,785 870,899 1,623,904 237,436 296,501,681 790,363,999 5.00% 39,518,200 10 395,182,000 395,182
Previous Period Relevant Open Position (Rs) 176,138 2,064,373 1,395,435 3,948 36,300 40,017,993 6,453,503 188,994 180,115,047 6,217,928 185,484 510,441 149,925 440,786 1,145,891 193,295 220,847,820 460,143,301 5.00% 23,007,165 10 230,071,650 230,072
83
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
AED AUD CAD CHF CNY DKK EUR GBP HKD INR JPY MYR QAR SAR SEK SGD THB USD
Total Open Position (a) Fixed Percentage (b) Capital Charge for Market Risk [c=(axb)] Equivalent Risk Weight Exposure [e=(cxd)] Equivalent Risk Weight Exposure in '000
5 Years Principal Indicators
Schedule 31
84 Particulars Indicators F/Y 2004/2005 (F/Y 061/62) 20.26 39.50 800 20.25 12.50 12.50 7.36 34.65 2.43 8.95 38.22 2.22 1.42 73.33 1.71 F/Y 2005/2006 (F/Y 062/63) 23.99 59.35 1,260 21.23 55.46 20.00 7.32 38.77 2.52 8.06 41.84 2.66 1.61 69.63 1.43 F/Y 2006/2007 (F/Y 063/64) 25.07 62.57 1,729 27.63 30.00 5.00 7.33 37.39 2.71 6.77 49.76 2.82 1.79 72.56 1.38 F/Y 2007/2008 (F/Y 064/65) 25.33 57.87 2,450 42.33 40.83 7.50 6.93 37.41 2.79 6.03 54.50 2.53 1.77 79.91 1.27 F/Y 2008/2009 (F/Y 065/66) 22.97 37.42 1,388 37.10 20.00 20.00 7.89 35.29 3.53 4.73 57.53 2.45 1.68 78.86 1.19
Percent of Net Profit/ Gross Income Earning Per Share Market Value Per Share Price Earning Ratio Dividend (including bonus) on share capital Cash Dividend on Share Capital Interest Income/ Loan & Advances Staff Expenses/ Total operating Expenses Interest Expenses on Total Deposit and Borrowings 10.Exchange Gain/ Total Income 11.Staff Bonus/ Total Staff Expenses 12.Net Profit/Loan and Advances 13.Net Profit/Total Assets 14.Total Credit/Deposit 15.Total Operating Expenses**/ Total Assets 16.Adequacy of Capital Fund on Risk Weighted Assets a. Core Capital b. Supplementary Capital c. Total Capital Fund 17.Liquidity (CRR) 18.Non-performing credit/ Total credit 19.Weighted Average Interest Rate Spread 20.Book Net-worth 21.Total Shares 22.Total Staffs 23.Book Value Per Share
1. 2. 3. 4. 5. 6. 7. 8. 9.
Percent Rs. Rs. Ratio Percent Percent Percent Percent Percent Percent Percent Percent Ratio Percent Percent
Percent Percent Percent Percent Ratio Percent Rs. in '000 No. No. Rs.
8.52 3.06 11.58 9.78 2.69 4.30 1,180,173 5,877,385 353 201
7.97 4.01 11.97 13.61 2.07 3.90 1,415,440 5,905,860 390 240
7.90 4.26 12.17 10.47 2.37 3.99 1,878,124 8,013,526 514 234
7.71 3.57 11.28 10.91 1.12 4.00 2,686,786 12,039,154 622 223
8.56 2.68 11.24 10.32 0.58 3.94 3,907,840 24,070,689 766 162
** Total Operating Expenses = Staff Expenses+ Office Operating Expenses
PRINCIPAL ACCOUNTING POLICIES

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
a. The financial statements have been prepared in conformity with generally accepted accounting principles, Nepal Accounting Standards, Company Act 2063, Bank & Financial Institution Act, 2063 and Nepal Rastra Bank Directives. b. The financial statements are prepared on historical cost convention except where otherwise stated. c. The Bank follows accrual system of accounting for the preparation of financial statements except where otherwise stated. d. All the formats of the financial statements are in accordance with the directives of Nepal Rastra Bank.
Schedule 32
4. LOAN LOSS PROVISION & BAD DEBTS WRITTEN OFF

a. Provision for loan losses has been made in accordance with Nepal Rastra Banks directives. b. Provision for loan losses have been deducted from the loan and advances as per the directives of Nepal Rastra Bank & accordingly loan & advances net of provision has been presented in the Balance Sheet. c. While writing off of Bad Debts it will be charged to Profit & Loss account and Provision made for the same will be written back as per NRB directives. Procedure for writing off of bad debts will be according to the provision made under Loans Write Off bylaws of the Bank, which has been duly approved by Nepal Rastra Bank. The Bank has taken a policy of settlement of the bad loan by waiver of reasonable amount of interest. Case to case basis settlement is made based on the justification of each case.
2. INTEREST AND COMMISSION INCOME

a. Interest on loans and advances are recognized on cash basis as per Nepal Rastra Banks (NRB) directives. (Refer NOTES TO ACCOUNT # 6) b. Commission and fees are recognized as income on cash basis except commission exceeding Rs 100,000 earned on guarantees covering more than a year is accounted for on accrual basis over the period of the guarantee.
exceeds the market value of such assets, the assets are valued at the market price of assets and the difference amount is charged to profit and loss account in the year of acquisition according to then NRB directives. b. From F.Y. 2062/63 Non Banking Assets will be valued at amount equivalent to the outstanding amount of principal due at the time of acquisition and interest receivable of such loan will be set off against interest suspense. Where the total outstanding amount of principal in the year of acquisition of asset exceeds the market value of such assets, the assets are valued at the market price of assets and the difference amount is charged to profit and loss account in the year of acquisition. c. Where the amount realized upon disposal of the acquired assets vary at a future date, the difference will be adjusted to the Profit & Loss Account in the year of disposal.
85
9. INVESTMENT
a. Investments on securities listed in the Stock Exchange are valued at the lower of cost or market price. b. Investments on securities, which are not listed in the Stock Exchange, are valued at cost and provisions are made as per NRB directives.
5. DEPRECIATION
Fixed Assets are depreciated over estimated life of assets on straight-line basis from the following month of the purchase date. Maintenance and repairs expenses are charged to profit and loss account as incurred.
3. FOREIGN CURRENCY TRANSACTIONS

a. Foreign currency assets and liabilities held at Balance Sheet date have been translated at buying rate of exchange on that date. b. Profit or loss arising from difference in buying and selling rates on foreign currency transactions are recorded as Trading Gain or Loss. c. Profit or loss arising from the fluctuation of foreign currencies is recorded as Revaluation Gain or Loss as and when such fluctuation takes place. Out of total Revaluation Gain if any, 25% is transferred to Exchange Fluctuation Fund at the end of the year as per NRB directives.
10. RETIREMENT BENEFITS

Provision for liability of gratuity is made on accrual basis, by calculating actual liability of gratuity for entire staff, at the end of the financial year.
6. EXPENSES NOT WRITTEN OFF

Cost of computer software are classified under Expenses Not Written off as disclosed in Schedule 16 and relates to cost of computer software which are being amortized over a period of five years from the date of acquisition.
11. INCOME TAX

Provision for Income Tax is made on the total income at the rate applicable for that year in accordance with the Income Tax Act. Any excess or shortfall in tax provision is adjusted to the profit and loss account in the year, when tax assessment is completed. Further, deferred tax liability has been calculated in accordance with the provisions of Nepal Accounting Standard.
7. NON CAPITALIZED ITEMS

Capital items of value below Rs.10,000 are expensed off in the year of purchase itself.
8. NON BANKING ASSETS

a. Non Banking Assets acquired till F.Y. 2061/62 are valued at amount equivalent to the outstanding amount of principal and interest due at the time of acquisition. Where the total outstanding amount of principal and interest in the year of acquisition of asset
12. CONTINGENT LIABILITY

Any liability of contingent nature, if material, is disclosed in separate schedule, forming the part of Balance Sheet.
NOTES TO ACCOUNTS
86
Schedule 33
1. STAFF PROVIDENT FUND & GRATUITY PROVISION

3. EXCHANGE FLUCTUATION FUND

During the year, there is a loss on revaluation of foreign exchange amounting to Rs 73,51,506. Hence, no amount has been transferred to foreign exchange fluctuation fund due to loss on revaluation of foreign exchange .
Staff Provident Fund has been transferred to NIBL Retirement Fund as provided by Income Tax Act 2058. Gratuity provision provided in balance sheet refers to the gratuity liability as at 15.07.2004, gratuity payable onwards has been transferred to NIBL Retirement Fund account as provided by Income Tax Act 2058.
4. CHANGES IN DEPOSIT LIABILITIES

The total deposit of the Bank has increased by Rs 12,246.36 million to Rs 46,698.09 million, from the previous years balance of Rs 34,451.73 million as following:
Rs in Million
2. INCOME-TAX LIABILITY
No provision for the additional income tax liability of Rs 9,209,500 for the financial years 1997/98 to 2000/01 has been made, as it is disclaimed/ disputed and appeals have been filed at the Revenue Tribunal/ Appellate Court by the Bank against the re-assessment of the Banks income by Income Tax authority. Income tax provision amounting to Rs 389,580,266 made for the F.Y. 2065-66 (2008/2009) is subject to tax audit. After final assessment of tax liability for FY 2061/62 and FY 2062/63 by Income Tax authority, excess tax provision for these years amounting to Rs.74,77,673 has been written back in this year and is shown under prior period tax in the Profit & Loss Account. Deferred tax liability of Rs 1,78,20,561, for deductible temporary differences up to F.Y. 2065/66, has been shown under other liabilities in the Balance Sheet. The figure has been arrived at by applying the prevailing income tax rate to the Net Temporary Difference figure of Rs.5,94,01,870. Deferred tax expense for FY 2065/66 amounting to Rs 1,58,79,221 has been charged to Profit & Loss Account.
Particulars
FY 2007/2008 (2064/65) 3,138.67 607.06 13,688.77 7,944.23 9,072.99 34,451.73
FY 2008/2009 (2065/66) 3,756.57 727.99 17,066.25 11,633.38 13,513.90 46,698.09
Increase/ (Decrease) Percentage
Current Deposits Margin Deposits Saving Deposits Fixed Deposits Call Deposits Total Deposits
19.69 19.92 24.67 46.44 48.94 35.55
5. LOANS DISBURSED, RECOVERY AND WRITTEN OFF

During the year, total loan amounting to Rs 200,954.49 million has been disbursed and Rs 191,656.64 million has been recovered.
6. INTEREST SUSPENSE
Interest income from loans and advances are shown in cash basis, total interest receivable from loan and advances as at 15.07.2009 amounting to Rs 153.60 million has been transferred to Interest Suspense Account as per Nepal Rastra Banks directives.
7. TABLE OF LIQUIDITY DETAILS

Assets Cash Balance Balance with Banks Investment made with Foreign Banks Investment in HMG Bonds Investment in NRB Bonds InterBank Lending Loans & Advances Total Assets 1-90 Days 1,833,462 6,084,541 1,850,981 0 0 0 15,238,386 25,007,370 91-180 Days 0 0 1,986,560 744,900 0 0 5,403,365 8,134,825 181-270 Days 0 0 0 672,900 0 0 5,233,398 5,906,298 271-365 Days 0 0 582,000 1,113,500 0 0 3,351,734 5,047,234 Above one Year
Rs in '000
Total Amount 1,833,462 6,084,541 4,807,541 2,531,300 0 0 36,827,157 52,084,001 87
0 388,000 0 0 0 7,600,274 7,988,274
Liabilities Borrowings Current Deposits Saving Deposits Fixed and Call Deposits Debentures Total Liabilities Net Financial Assets Cumulative Net Financial Assets 38,800 3,756,570 14,719,996 14,994,219 0 33,509,585 (8,502,215) (8,502,215) 0 0 0 3,536,580 0 3,536,580 4,598,245 (3,903,970) 0 0 0 627,076 0 627,076 5,279,222 1,375,252 0 0 0 4,775,906 0 4,775,906 271,328 1,646,580 0 0 2,346,265 1,213,386 1,050,000 4,609,651 3,378,623 5,025,203 38,800 3,756,570 17,066,261 25,147,167 1,050,000 47,058,798 5,025,203 0
8. NON BANKING ASSETS

Non Banking Assets has not been sold during the year. Provision on Non Banking assets has been made as required by NRB Directives.
loss provision as required by Nepal Rastra Bank directives. Provision amounting Rs 114,653,009 has been written back during the year.
rata basis) has been transferred from Profit and Loss appropriation account to Debenture Redemption Fund this year.
9. EXPENSES NOT WRITTEN OFF

Cost of computer software classified under Expenses Not Written off disclosed in Schedule 16 relates to cost of computer software which are being amortized over a period of five years from the date of acquisition. During the year, Rs 1,59,13,870 has been amortized by charging to Profit and Loss account. Of this amount, Rs 44,32,243 relates to the erstwhile banking software PumoriPlus which has been fully written off due to its discontinuance and replacement by a new software Finacle.
11. PROVISION FOR OTHER ASSETS

None.
13. COMPARATIVE FIGURES FOR 2007/2008

Previous years figures have been regrouped or rearranged wherever required to make them comparable with the current years figures.
12. DEBENTURE ISSUE

Total Debenture outstanding of Rs 1050 million includes debenture of Rs 300 million issued on 24.11.2003, Rs 250 million issued on 26.06.2006, Rs 250 million issued on 26.06.2007 and Rs 250 million issued on 09.07.2008. Out of total Rs 480.36 million in Debenture Redemption Fund Rs 150.00 million (Rs 42.85 million for Rs 300 million Debenture (2067), Rs 35.72 million for Rs 250 million Debenture (2070), Rs 35.72 million for Rs 250 million Debenture (2071) and Rs 35.72 million for 250 million Debenture (2072) on 7 years pro
14. ROUNDING OFF

Figures have been rounded off to the nearest rupee.
10. PROVISION FOR LOAN LOSS & LOSS PROVISION WRITTEN BACK
During the year Rs 166,201,383 has been charged to Profit and Loss account for loan
Details of Promoters Shares Pledged by Promoter Shareholders of the Bank

As at Ashad end 2066 Schedule 34
S. No. 88 1 2 3 4 5 6 7 8
Promoter's Name
Promoters Share Owenership Total No. Percentage of Total of Shares Paid up Captal 282,307 376,425 376,425 376,425 188,211 188,211 376,425 150,577 1.17 1.56 1.56 1.56 0.78 0.78 1.56 0.63
Loan Detail Name of the Banks & Financial Institutions Citizens Bank International Limited Global Bank Limied Nepal Bank/Sanima Bikash Bank Ltd. Nepal Bangaladesh Bank Ltd. Himalayan Bank Limited Himalayan Bank Limited Sanima Bikash Bank Ltd. Bank of Kathmandu Limited. Loan Amount Total Number of Pledge Shares 282,307 219,501 250,688 92,280 62,607 62,607 376,425 100,385
Remarks
Star Holdings P. LTD. Annapurna Investment P. Ltd Prestine Investment P. Ltd. Kamala Investment P. Ltd. Panchakanaya Investment P. Ltd. Shrestha Brothers Investment P. Ltd Surya Infosys P .Ltd. Mercantile Investment P. Ltd.
Unaudited Financial Results (Quarterly)

as at Fourth Quarter (15/07/2009) of the Fiscal Year 2008/2009 Schedule 35
Rs. In '000
89
S.No.
Particulars
This Quarter Ending 53,739,438 2,407,069 1,996,140 1,050,000 38,800 46,697,983 40,791,621 5,906,362 39,414 1,510,032 53,739,438 7,918,004 7,403,112 36,827,157 1,126,540 375 464,250 Up to This Quarter 3,267,104 (1,686,274) 1,580,830 241,853 76,206 213,320 2,112,209 (225,570) (402,754) 1,483,885 (155,484) 1,328,401 (3,086) 100,124 1,425,439 1,425,439 (129,586) (381,278) 914,575 At the End of This Quarter 12.10% 0.82% 193.45%
Previous Quarter Ending 49,676,622 2,407,069 1,732,406 1,050,000 39,725 42,476,024 37,233,720 5,242,304 42,066 1,929,332 49,676,622 6,137,251 30,000 7,526,631 34,417,570 1,046,137 750 518,283 Up to Previous Quarter 2,320,272 (1,190,105) 1,130,167 202,381 51,781 165,514 1,549,843 (153,782) (323,715) 1,072,346 (124,140) 948,207 713 73,829 1,022,749 1,022,749 (92,977) (278,931) 650,840 At the End of This Quarter 11.48% 1.02% 163.76%
Corresponding Quarter Previous Year (Audited) 39,405,959 1,203,915 1,482,871 1,050,000 34,451,726 30,601,002 3,850,724 24,083 1,193,363 39,405,959 3,754,942 6,874,024 27,529,305 970,092 750 276,847 Up to Corresponding Quarter Previous Year (Audited) 2,194,276 (992,158) 1,202,118 215,292 66,377 165,839 1,649,625 (187,150) (313,154) 1,149,321 (135,989) 1,013,332 7,048 101,577 1,121,957 1,121,957 (101,996) (323,229) 696,732 At the End of Corresponding Quarter Previous Year (Audited) 11.28% 1.12% 172.12%
1 1.1 1.2 1.3 1.4 1.5
1.6 1.7 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 4 4.1 4.2 4.3
Total Capital and Liabilities (1.1 to 1.7) Paid Up Capital Reserve and Surplus Debenture and Bond Borrowings Deposit (a+b) a. Domestic Currency b. Foreign Currency Income Tax Liability Other Liabilities Total Assets (2.1 to 2.7) Cash and Bank Balance Money at Call and Short Notice Investments Loans and Advances (Gross) Fixed Assets Non Banking Assets (Net) Other Assets Profit & Loss Account Interest Income Interest Expense A. Net Interest Income (3.1-3.2) Fees, Commission and Discount Other Operating Income Foreign Exchange Gain/Loss (Net) B. Total Operating Income (A.+3.3+3.4+3.5) Staff Expenses Other Operating Expenses C. Operating Profit Before Provision (B.-3.6-3.7) Provision for Possible Losses D. Operating Profit (C.-3.8) Non Operating Income/Expenses (Net) Write Back of Provision for Possible Loss E. Profit from Regular Activities (D+3.9+3.10) Extra-ordinary Income/Expenses (Net) F. Profit before Bonus and Taxes (E.+3.11) Provision for Staff Bonus Provision for Tax G. Net Profit/Loss (F.-3.12-3.13) Ratios Capital Fund to RWA* Non Performing Loan (NPL) to Total Loan Total Loan Loss Provision to Total NPL
Note : Previous quarter figure has been regrouped and rearranged whereever necessary. Capital Fund to RWA for current quarter and previous quarter is calculated in accordance with the norms of BASEL II framework. The above figures are provisional and subject to change upon review by Statutory Auditors and Nepal Rastra Bank.
Comparision Of Unaudited & Audited Financial Statement

as of Ashad end FY 2065/66 Schedule 36
Rs. In '000
90
S.No.
Particulars
As per Unaudited F/S 53,739,438 2,407,069 1,996,140 1,050,000 38,800 46,697,983 40,791,621 5,906,362 39,414 1,510,032 53,739,438 7,918,004 7,403,112 36,827,157 1,126,540 375 464,250 3,267,105 (1,686,274) 1,580,830 241,853 76,206 213,320 2,112,209 (225,570) (402,754) 1,483,885 (155,484) 1,328,401 (3,086) 100,124 1,425,439 1,425,439 (129,585) (381,278) 914,575
As per Audited F/S 53,600,054 2,407,069 1,500,771 1,050,000 38,800 46,698,100 40,791,621 5,906,479 38,297 1,867,017 53,600,054 7,918,004 7,403,112 36,827,157 1,060,752 375 390,653 3,267,941 (1,686,973) 1,580,968 262,792 87,575 185,327 2,116,662 (225,721) (413,884) 1,477,056 (166,201) 1,310,855 2,953 114,653 1,428,461 1,428,461 (129,860) (397,982) 900,619
Variance In Amount 139,384 495,370 (117) 0 (117) 1,117 (356,986) 139,384 (0) (0) 65,787 73,597 (836) 699 (138) (20,939) (11,369) 27,993 (4,453) 151 11,130 6,829 10,717 17,546 (6,039) (14,529) (3,022) (3,022) 275 16,704 13,956
Reasons for Variance In % 0% 0% 25% 0% 0% 0% 0% 0% 3% -24% 0% 0% 0% 0% 0% 6% 0% 16% 0% 0% 0% -9% -15% 13% 0% 0% -3% 0% -7% 1% 196% -15% 0% 0% 0% -4% 2%
1 1.1 1.2 1.3 1.4 1.5
1.6 1.7 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13
Notes:
Total Capital and Liabilities (1.1 to 1.7) Paid Up Capital Reserve and Surplus Debenture and Bond Borrowings Deposit (a+b) a. Domestic Currency b. Foreign Currency Income Tax Liability Other Liabilities Total Assets (2.1 to 2.7) Cash and Bank Balance Money at Call and Short Notice Investments Loans and Advances (Gross) Fixed Assets Non Banking Assets (Net) Other Assets Profit & Loss Account Interest Income Interest Expense A. Net Interest Income (3.1-3.2) Fees, Commission and Discount Other Operating Income Foreign Exchange Gain/Loss (Net) B. Total Operating Income (A.+3.3+3.4+3.5) Staff Expenses Other Operating Expenses C. Operating Profit Before Provision (B.-3.6-3.7) Provision for Possible Losses D. Operating Profit (C.-3.8) Non Operating Income/Expenses (Net) Write Back of Provision for Possible Loss E. Profit from Regular Activities (D+3.9+3.10) Extra-ordinary Income/Expenses (Net) F. Profit before Bonus and Taxes (E.+3.11) Provision for Staff Bonus Provision for Tax G. Net Profit/Loss (F.-3.12-3.13)
See note 1 below
See note 2 below See note 3 below
See note 4 below See note 5 below See note 6 below See note 7 below See note 8 below See note 8 below See note 9 below
See note 10 below See note 11 below See note 12 below
See note 13 below
Due to Change in Net Profit and proposed dividend Due to Change in Net Profit Interest accrued but not due netted off with Interest suspense in Audited B/S Software shown in other assets in Audited Financial Statements Interest accrued but not due netted off with Interest suspense in Audited B/S After year end adjustments After year end adjustments Netting of commission paid to NRB & Bank Charges Netting of commission paid to NRB Due to addition in loan loss provision upon finalization of financial statements Amortization of software of Rs 4.5 Million shown as expense in unaudited resullt and Dividend recevied of 1.6 million shown as income in audited results. 12 Excess provision on loan & Investment written back upon finalization of financial statements 13 Due to change in loss provision and booking of deffered tax liability in audited financial statements
1 2 3 4 5 6 7 8 9 10 11
Five Years Financial Summary
Rs. In '000
Balance Sheet 2061/62 Assets Cash & Bank Balance Money at Call & Investment Loans & Advances (Gross) Net Fixed Assets Other Assets Total Assets Liabilities Borrowings (including Debentures) Customers' Deposit Other Liabilities Provision For Loan Loss Total Liabilities Net Assets Shareholders' Fund Paid-Up Capital Reserve Fund Profit & Loss Account Total Shareholders' Fund Interest Income Loans, Advances & Overdrafts Others Interest Expenses Exchange Gain Commission Income Other Operating Income Other Non-Operating Income Total Income Staff Expenses Operating Expenses Non-Operating Expenses Staff Bonus Total Expenses Profit Before Provision & Tax Loss Provision Income Tax Net Profit/(Loss) After Tax 2004/2005 1,340,481 4,074,189 10,453,164 320,592 202,226 16,390,652 350,000 14,254,574 278,796 327,108 15,210,479 1,180,173 587,739 567,511 24,924 1,180,173 769,195 117,605 (354,549) 102,518 93,551 56,567 6,192 791,079 97,004 182,915 37,075 316,994 474,085 140,409 101,529 232,147 2062/63 2005/2006 2,335,521 5,672,869 13,178,152 343,450 201,090 21,732,082 550,000 18,927,306 437,392 401,944 20,316,642 1,415,440 590,586 778,904 45,950 1,415,440 964,689 208,053 (490,947) 125,747 115,942 46,607 391 970,482 120,664 190,605 50,491 361,760 608,722 103,808 154,378 350,536 2063/64 2006/2007 2,441,514 6,868,650 17,769,100 759,456 234,797 28,073,517 800,000 24,488,856 423,866 482,673 26,195,394 1,878,124 801,353 955,417 121,354 1,878,124 1,302,122 282,865 (685,530) 135,355 163,899 114,096 1,426 1,314,233 145,371 243,431 72,338 461,139 853,094 129,719 221,977 501,399 2064/65 2007/2008 3,754,942 6,874,024 27,529,305 970,092 277,597 39,405,959 1,050,000 34,451,726 684,794 532,652 36,719,173 2,686,786 1,203,915 1,415,392 67,479 2,686,786 1,907,261 287,014 (992,158) 165,839 215,292 167,953 7,048 1,758,249 187,150 313,154 101,996 602,300 1,155,950 135,989 323,229 696,732 2065/66 2008/2009 7,918,004 7,399,812 36,827,157 1,060,752 391,028 53,596,754 1,088,800 46,698,100 1,316,063 585,951 49,688,914 3,907,840 2,407,069 1,344,213 156,558 3,907,840 2,906,055 361,886 (1,686,973) 185,327 262,792 202,228 2,953 2,234,268 225,721 413,884 129,860 769,465 1,464,802 166,201 397,982 900,619
91
Charts
8%
Call Account 13,514 Margin Account 728 Current Account 3,757
2%
11% 12%
Other Reserves 419 Dividend 481
Foreign Exchange Profit 185 Other income 205 Comission income 263
29% 36% 25%
Saving Account 17,066
10% 8%
59%
Expenses 2,327
5% 7%
5%
Diposite mix
Fixed deposit 11,633
Application of income
Provision 296 Income Tax 398
83%
Interest income 3,268
Total income
-0.09% +12.76% +19.7%
-3%
901
3,908
1.79%
1.77%
27%
1.68%
1.61%
25%
26% FY 065 FY 066 23%
697
2,687
1.42%
501
351
232
FY 062
1,108
FY 063
1,415
FY 064
1,878
FY 065
FY 062
FY 063
FY 064
FY 065
FY 066
FY 066
FY 062
FY 063
FY 062
20% FY 064 FY 063
FY 065
Profit after Tax (Rs. in million)
Share holders fund (Rs. in million)
Return on Total assets
FY 066
Return to Shareholders
FY 064
SECTORAL LOAN DETAILS

(F/Y 2065-66) Rs. in Million
Previous Year Rs.
Particulars Industry/ Sector Agriculture Mining Manufacturing Construction Metal Products, Machinery And Electronics Equipment And Assemblage Production And Assemble Of Transportation Equipment Transport, Communication And Public Utilities Wholesalers And Retailers Finance, Insurance And Real Estate Service Industries Consumption Loan Others Total
Current Year Rs.
142.71 8,353.73 1,335.39 325.44 51.17 1,191.57 4,077.65 2,799.93 3,123.34 269.18 5,859.19 27,529.30
176.10 10,753.67 1,889.89 297.71 110.92 1,701.85 4,572.56 4,479.26 3,294.07 455.68 9,095.45 36,827.16
GROSS VALUE ADDED STATEMENT

FOR THE FISCAL YEAR 2065-66 Rupees in Million
Rs.
Previous Year Rs.
PARTICULARS % SOURCE OF VALUE ADDITION: Income from Operating and Non-operating activities Less:Operating, Administrative and Non-Operating expenses Gross value added before depreciation APPLICATION OF VALUE ADDITION: TO Employees TO Government TO Repair & Maintenance TO Capital Provider: Interest on Borrowings Dividend to Shareholders TO Expansion, Reserves, & Retention Less: Last year's accumulated profit TOTAL Rs.
This Year Rs.
2,750.41 1,295.21 1,455.19 289.15 323.28 70.30 75.79 491.60 326.44 (121.35)
100.00 19.87 22.21 4.83
3,921.24 2,080.17 1,841.07 355.58 397.98 96.58 90.30 481.41 486.68 (67.48)
100.00 19.31 21.62 5.25
567.38 205.09 1455.19
38.99 14.10 100.00
571.71 419.21 1,841.07
31.05 22.77 100.00
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Annual Report 2008/2009

Annual Report 2008-2009

Nepal Investment Bank Limited

Core Values and Ethical Principles

Annual Report 2008-2009

Nepal Investment Bank Limited attained a substantial market share

Annual Report 2008-2009

Nepal Investment Bank Limited

Annual Report 2008-2009

Sincerely, Prithivi B. Pand Chief Executive Director

Nepal Investment Bank Limited

FY 2004-05 1.44% 19.67% 35.66%

FY 2005-06 1.64% 24.77% 32.44%

FY 2006-07 1.82% 26.68% 31.20%

FY 2007-08 1.79% 25.93% 30.33%

FY 2008-09 1.70% 23.05% 30.22%

FY 2004-05 39.5 201 800 20.25 3.98 1.56%

FY 2005-06 59.35 240 1260 21.23 5.25 4.40%

FY 2008-09 37.42 162 1388 37.09 8.57 1.44%

* Cost to income ratio is calculated as operating cost over operating income

Last 7 years at Glance

Annual Report 2008-2009

Market Price Per Share (in Rs)

59.35 62.57 57.87

Book Value Per Share (in Rs)

Earning Per Share ( in Rs)

240 234 223

Nepal Investment Bank Limited

Annual Report 2008-2009

Management review & discussion

Nepal Investment Bank Limited

8% 7.7% 6.4% 4.5%

Annual CPI based inflation for last 5 yrs

Annual GDP Growth in last years

Annual remittance for last 5 yrs (amount in Rs. Billion)

Snapshot of the nepali Economy

Cost to income ratio for last 5 years

586 4.7 37.7 78.05 3.59 13.2 27

560 5.3 29.7 68.5 3.10 7.7 25.2

Annual Report 2008-2009

General Manager's review

NPA for last 5 years

Nepal Investment Bank Limited

Performance Overview: retail Bank

Annual Report 2008-2009

Thank You, Jyoti Prakash Pandey General Manager.

Nepal Investment Bank Limited Nepal Investment Bank Limited

name of the Committees

Annual Report 2008-2009

Operational risk Management

Nepal Investment Bank Limited

Credit Risk Management

Annual Report 2008-2009

Nepal Investment Bank Limited

Market Risk Management

Foreign Exchange Risk Management

Liquidity Risk Management

Annual Report 2008-2009

Monitoring and reporting

Nepal Investment Bank Limited

Annual Report 2008-2009

Nepal Investment Bank Limited