Nibl Ar 2009-10 English

AnnuAl RepoRt 2009/10

SOUNDSTRONGSTABLE

our VisionTobethemostpreferredprovideroffinancialservicesinNepal.

Mission StatementWe aspire to be the leading Nepali bank, delivering worldclass service through a blend of state-of-the-art technologyand visionary management in partnership with competentand committed staff, to achieve sound financial health withsustainable value addition to all our stakeholders. We arecommitted to fulfilling thismissionwhileensuring thehighestlevels of ethical standards, professional integrity, corporategovernanceandregulatorycompliance.

nepal Investment Bank Annual Report 2009/10 1

ContentsFinancialHighlights 2Last8yearsataglance 3Chairman'sStatement 4ManagementReview 8CorporateGovernance 14RiskManagement 16BoardofDirectors 20SeniorManagementTeam 22

ManagementTeam 25DomesticNetwork 26GlobalNetwork 28BoardofDirectorsReport 31CorporateSocialResponsibility 40FinancialStatements 45PrincipalAccountingPolicies 76NotestoAccount 78

2 nepal Investment Bank Annual Report 2009/10

1. No.1lenderinNepalwithtotalloansandadvancesoverNPR40billion.2. No.1privatesectorbankindepositswithoverNPR50billion.3. HighestnetprofitofNPR1.26billion.4. HighestpaidupcapitalamongthefinancialinstitutioninNepalatRs.2.41billion.

Thehighestcapitalbase(includingdebentures)withNPR.64billion5. 5thLargestTaxpayerinNepal.6. 25%cashdividend.7. Customerbaseofover370,000.8. Returnonshareholder’sequity(ROE)of28%9. Non-PerformingLoansRatioat0.62%.10. Returnonshareholder’sequity(ROE)of28%

Financial Highlights

Shareholder Information

NPR in millions

S. No. Particulars 2008-09 2009-10 Growth in Growth npR in %

1. TotalAssets 53,010 57,305 4,295 8.12. TotalDeposit 46,698 50,094 3,396 7.33. TotalLoansandAdvances 36,827 40,948 4,121 11.24. TotalInvestments 7,399 8,635 1,236 16.75. TotalOperatingProfit 1,477 2,021 544 36.8 (beforeprovisionforpossibleloss)6 TotalNetProfit 901 1,265 364 40.6

7. Non-performing Assets (%) 0.58 0.62 - 0.04

*Costtoincomeratioiscalculatedasoperatingcostoveroperatingincome

Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

ReturnonAssets(ROA) 1.64% 1.82% 1.79% 1.70% 2.2%ReturnonShareholder'sEquity(ROE) 24.77% 26.68% 25.93% 23.05% 28%

Cost to income ratio* 32.44% 31.20% 30.33% 30.22% 26.09%

Management Efficiency Highlights

Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

EarningPerShare(EPSinNPR) 59.35 62.57 57.87 37.42 52.55BookValueperShare(inNPR) 240 234 223 162 190MarketPricePerShare(inNPR) 1260 1729 2450 1388 705P/ERatio 21.23 27.63 42.34 37.09 13.42

Effective Dividend Yield 4.40% 1.74% 1.67% 1.44% 3.55%

Valuation Highlights

Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

DebttoEquityRatio 38.86 42.60 39.08 12.72 23.71

Leverage Ratio

Nepal Investment Bank Annual Report 2009/10 3

Last 8 Years at Glancetotal lending Growth (In millions of rupees)

Shareholder's Fund growth (In millions of rupees)

Return on Equity

Non- Performing Assets earning per ShareMarket price per Share

Book Value per Share

Total Profit Growth (In millions of rupees)

Total Deposit Growth (In millions of rupees)

+11.25%

+17.34%+21.48%

+0.04% +40.43%-49.21%

+17.28%

+40.56% +7.27%

10,4

53

13,1

78 17,7

69

27,5

29

36,8

27

7,39

9

5,92

2

40,3

18

05 06 07 08 090403 10

232

350

501

697

901

1,26

5

05 06 07 08 090403 10

14,2

55 18,9

27 24,4

89

34,4

52

46,6

98

11,5

25

7,93

2

50,0

94

05 06 07 08 090403 10

201 24

0

234

223

162

247

216

190

05 06 07 08 090403 10

1,18

0

1,41

5 1,87

8

2,68

7

3,90

8

729

639

4,58

5

05 06 07 08 090403 10

19.6

7%

24.7

7%

26.6

8%

25.9

3%

23.0

5%

20.9

3%

18.2

9%

28%

05 06 07 08 090403 10

2.69

%

2.07

%

2.37

%

1.12

%

0.58

%

2.47

%

1.98

%

0.62

%

05 06 07 08 090403 10

800

1,26

0

1,72

9

2,45

0

1,38

8

940

795

705

05 06 07 08 090403 10

37.4

2

59.3

5

39.5

0

62.5

7

57.8

7

51.7

39.5

6

52.5

5

05 06 07 08 090403 10

4 Nepal Investment Bank Annual Report 2009/10

Chairman's Statement


Dear Shareholders,

The year 2009/10 has been an eventful year for NepalInvestment Bank Limited in terms of achievements andperformance. We have continued our strategy of growthand consolidation while delivering quality services andshareholdersreturns.

In spite of the growing number of banks,we’ve succeededin retaining our growth. This year, Nepal Investment BankLimited emerged as the number one taxpayer among theNepaliBankscontributingRs.790millionalsomakingusthefifthlargesttaxpayersinthecountry.

NIBL achieved the highest industry growth in terms ofdeposits,assetsandcapitalbase.OurDepositbasegrewfromRs 46.69billiontoRs 50.09billionmakingusthelargestprivatesectorbank indeposits.Wealsoadded83,000newclients,thehighestadditionofCustomersinNepal.NIBLalsoearnedthehighestnetprofitamongallcommercialbanksofRs.1.26billion.NIBLalsohasthehighestloanportfolioamountingtoRs40.95billion.Similarly,ourTier1capitalisalsothelargestofanybankinNepalatRs4.55billion.OurAssetsgrewfromRs 53.01billiontoRs 57.30billion,thehighestvolumegrowthandhighestlevelinNepal.

WehaveventuredintotheRemittancesectorwithexclusivepartnershipswithMaybankinMalaysiaandBankAlBiladinSaudiArabia.Wehaveasubstantialpresence in theMiddleEastmakingNIBLoneofthelargestplayersintheRemittanceindustry.BankAlbiladhasawardedNIBLtheBestRemittancePartnerAward 2010. The awardwas givenon thebasis ofNIBL’s steady performance level, outstanding support andexcellentcustomerrelations.

Ourcapitalbaseisnowsignificantlyhigherthanournearestcompetitors andweare in aposition to growour assets ata higher rate than our competitors. NIBL has maintaineda consistent rating of Nepal [A] from Indian Credit RatingAgency,ICRA,anaffiliateofMoody’sInvestorGroup,reflectingourstrongcreditworthinessandourpositionasthefirstandonlybankinNepaltohaveacreditrating,whichaddsextratransparencytoourshareholders.

Thisyearalonethebankadded10morebrancheswith(18)newATMkiosksalongside.Atpresent,thebankhassumtotalof 40 branches and (70) ATMs throughout the country. FortheFY2067/68,themainstrategyrelatingtobrancheswillbeconsolidationandincreasedprofitability.

The bank has also introduced three new products: NIBLSpecial Fixed Deposit with interest rate of 11% and SavingBonanza with 7.5% and Karmachari Bachat Khata with 6%interestrate.

NIBL added a record of 110,954 customers in the past15 months. The Bank added (300) domestic remittancedisbursementagentsduringthisperiod.NIBLadded14,000new users to the ebanking platform totaling the highestbase of ebanking customers in Nepal at 28,000. New andinnovativefeatureswereaddedtotheebankingproductsuchasonlineairlineticketbookingandpayments,OnlineandATMpre/postpaidbillpaymentsforTelecomcompaniesincludingPSTNlandlinepaymentsthroughoutNepal.NIBLalsotiedupwithNepalDerivativesExchangeallowingebankingusers toconductderivativetransactions.

NIBLalso releasedanelectronicpaymentgateway,enablingsecure VISA, MasterCard and PayPal transactions ande-commerce on the internet for the ebanking customers.American Life Insurance Company, ALICO has also tied upwithNIBL tooffer its life InsuranceProducts throughNIBL’sBancansuranceprogram.

NIBLalsoqualifiedtojointheGlobalTradeFinanceProgramofferedbytheInternationalFinanceCorporationIFC,enablingthebanktoconductinternationalfinancearrangementswithawiderrangeofcorrespondentbanksgreatlybenefittingourcorporate clients. NIBL has received a trade finance facilityof$5million,the largestextendedtoanyNepalibankwhichwill enhance our support for local enterprises and boostinternationaltradeopportunities.

NIBL also entered into an arrangement with ChinaDevelopment Bank CDB to promote project relationshipsin infrastructure finance in terms of project cooperation,financialconsultancy,creditgrantsandcurrencyswaps.This

NIBLachievedthehighestindustrygrowthintermsofdeposits,assetsandcapitalbasethisyear.


arrangementwillenableNIBLtofinancehydropowerprojectsin Nepal and enable the bank’s corporate clients to accessinternationalcapitalmarkets.

We recognize the important role of human resources tosuccessfullymeetourbusinessgoals.TheBankiscommittedto provide quality learning and working environment forourstaffandtohelpthemdeveloptheirknowledge&skillsrequiredintheircareer.

With the increase in thenumberofbranchesandcustomerbase,thebankiscommittedtopromptandreliablecustomerservice.TheBank’stotalworkforcehasreached877comparedto766inthepreviousyear.Ofthetotalstaffstrength,41%arefemalestaffersand80staffmembershavecompletedmorethan10yearsofserviceintheinstitution.

Wecontinuetoplacegreatvalue inqualityandserviceandour development objectives ensure staffs are motivatedwithhigh levelsofproductivityand loyalty.Duringtheyear,533 participants attended 75 training courses/ workshopsin various areas such as SME Lending, Risk Management,AntiMoneyLaundering,Signatureverification&counterfeitnotes,CustomerService,OperationsandNRBguidelines.SixstaffmembersattendedworkshopsinIndiaandabroad.TheBankalso supports team-buildingactivities like sports, yogameditationandparticipation in the art of livingprogram topromotewellnessamongstaff.

Wesuccessfullyconductedthe2ndNIBLHeritageMarathon,aninitiativegearedtowardstheconservationofourculturalheritage.TheHeritageMarathonwhoseintentionistosupportheritageandarchitecturalpreservationofKathmanduValley,raisedover70lakhsrupees.TheBankhasdonatedthisfundto help build cremation pyres at Bhas Meshwor, AryaghatPashupatinath and for restoration work at the BhaidevalTempleatPatanDurbarSquare.

The Bank sponsored the Extreme Everest Expedition, acleanupcampaignthatclearedoutover1800kilosofgarbagefrom8,000metersaboveMountEverest,oftenreferredtoasthedeathzone.Theeventrousedwideinternationalconcern,

and was extensively reported by all local media as well asrenowned international media like BBC, Reuters and AFP.Apart from cleaning up the death zone, the campaign alsosuccessfully rescued the body of twomountaineers - SwissclimberGianniGoltz,whodiedlastyear,andRussianclimberSergeyDuganov.ThevisualdocumentationoftheexpeditionhighlightingtheroleofNIBL’scontributionwillalsocomeoutthefollowingyear.

The Bank also gave away five lakhs rupees to support thesecondMicrofinanceSummit2010.The summit focusedonconvergingtheroleofvariedstakeholdersfrompolicymakers,regulators, to commercial banks and other microfinancepractitioner, to reach to the broader spectrum of ruraldemography.Thesummitalsoworkedonprovidingimprovedfinancial services to3millionpeople, especiallywomen,by2010.

Nepal InvestmentBankLimitedfocusesonlookingaheadtothefuturewithgreatconfidence.Wewillcontinuetostrivetowardsourvisionofbeingthepreferredprovideroffinancialservice in Nepal, exploring new business opportunities andalwaysdiversifyingintonewsectors.

Iwould like toexpressmygratitudeandappreciation toourenergetic and hardworking staff and efficient managementteam.Theyhaveprovidedoutstandingperformancethroughouttheyearsthathasledthegrowthandreputationofourbank.Iwould like to thank theNepal Rastra Bank, theMinistry ofFinance and all other concerned government agencies forprovidingustheirfullsupportinourendeavors.

IalsowouldliketoexpressmygratitudetomycolleaguesontheBoardfortheirsupportandvaluablecontribution.

Sincerely,prithivi B. pandéChiefExecutiveDirector


TheBankhasalsointroducedthreenewproducts:NIBLSpecialFixedDeposit,SavingBonanzaandKarmachariBachatKhata.


Economic recovery continued to strengthen during the firsthalf of 2010, but global financial stability suffered a majorsetback with the turmoil in sovereign debt markets in thesecond quarter of 2010. Global activity expanded at anannual rate of about 5¼ percent––about ½ percent higherthananticipated intheJulyWorldEconomicOutlook(WEO)Update.Theextentofeconomicrecoverydiffersimportantlyacross regions, with Asia in the lead. The United Statesand Japan experienced a noticeable slowdown during thesecondquarterof2010,whilegrowthacceleratedinEuropeand stayed strong in emerging and developing economies.Financialconditionshavebeguntonormalize,butinstitutionsandmarketsarestillfragile.Ingeneral,volatilityinfinancial,currency,andcommoditymarketsremainselevated.

IMFchiefeconomistOlivierBlanchardforecastthattheworldeconomywouldgrowby3.0-4%thisyearandbyabout thesame amount next year. At the beginning of October theIMF forecast in its six-monthly assessment that the globaleconomywouldgrowby4.8%thisyearandby4.2%in2011.Wecanexpectdifferencesbetweengrowth in regions,witheconomies inadvancedcountriesgrowingby1.0-2%and inemergingcountriesby6-8%ormore.

Oil prices are expected to be less volatile in the next 2years.DemandforoilfromcountriesintheOrganisationforEconomicCo-operationandDevelopment(OECD)isforecasttodeclinesomewhat,butthiswillbetemperedbyariseinoildemand fromnon-OECDcountries,particularly thePeople’sRepublicofChina(PRC).Giventhecountervailingoildemandtrendsandthestrengtheningof theUSdollar,oilpricesareseenfluctuatingwithinanarrowband.

Unemployment in advanced economies has receded onlymodestlyfrompeakrates.Estimatesarethatmorethan210millionpeopleacrosstheglobeareunemployed,anincreaseofmorethan30millionsince2007.

Financial turbulence led to sharp currencymovements inthefirsthalfof2010.Theeurodepreciatedbyabout15%inrealeffectiveterms,althoughithaspartiallyrecoveredandiscurrentlytradingatalevelbroadlyinlinewithmedium-termfundamentals,according to IMFstaffestimates.TheUSdollarappreciatedinrealeffectivetermsasriskaversionroseduringMay–June,but ithas since returned to levels

seenearlierintheyear,onthestrongsideofmediumtermfundamentals. The yenweakened briefly in April but hasbeen appreciating since and now stands more than 25%above2007levels,promptingtheauthoritiestointervenein exchange markets due to concerns about disruptiveyen movements. At current levels, the yen remainsbroadly in line with medium-term fundamentals. With afew exceptions, emerging Asian currencies, including theChinese renminbi, appreciated modestly in real effectiveterms. However, many remain undervalued relative tomedium-termfundamentals.

On the domestic front, the budget speech of 2009/10had targeted economic growth of 5.5% according to thepreliminaryestimateof theCentralBureauof Statisticsandthegrossdomesticproduct(GDP)islikelytoexpandat4.5%inthecurrentfiscalyear2009/10.(table 1)

Thedoubledigitinflationrecordedinthelasttwoconsecutivefiscalyearshasmoderatedto8.9%inthefirstthreemonthsof thecurrentFiscalYear.Expected inflation for thecurrentyearis7percent.Theincreaseinthepriceoftheagriculturalcommodities due to slash in the production caused byunfavorable weather condition and poor supply condition,powercrisis, increaseinsalaryandwages,andahigherrisein the price of food grains in India are attributed to exertpressureoninflationinNepal.However,thepricelevelinthelatermonths has shown some improvements. InMay/Juneof2010,they-o-yconsumerpriceindexgrewby9.6%,whichhadgrownby12.3%inMay/June2009.They-o-ypriceindexoffoodandbeveragegroup increasedby11.3%andthatofnon-foodandservicegroupgrewby7.3percent.Inthesameperiodof theprevious year, thepricesof these twogroupshadincreasedby19%and5.1%respectively.Thepriceoffoodandbeveragegroupiswitnessingadecliningtrendasagainstanincreasingtrendinpricesofnon-foodandservicegroup.(table 2)

The performance of the external sector of the Nepaleseeconomy, which had remained satisfactory even in theperiodofglobalfinancialcrisisoriginatedin2008,remainedweakin2009/10.Inthe11monthsof2009/10,theoverallBOPdeficitstoodatRs.15.07billionduethehighercurrentaccount deficit of Rs.34.59 billion. Such deficits are onaccount of the slowdown in exports and acceleration in

Management Review


importsduringtheperiod.TheBOPregisteredasurplusofRs. 39.06billion in the sameperiodof theprevious year.Ontheotherhand,remittanceroseby15.2%toUS$2.83billioninthereviewperiodascomparedtoUS$2.46billionin the corresponding period of the previous year. Thegrowth rateofprivate sector remittancedecelerateddueto the decline in the number of people going abroad forforeignemploymentinconsequenceoftheglobalfinancialcrisis for somemonths, the foreign employment and theinflowofremittancebothareimprovinginrecentmonthson account of increasing demand of labor inworld labormarket. (table 3)

Nepalese currency vis-à-vis the US dollar appreciated by4.85%inmid-July2010comparedtothatofmid-July2009.Ithaddepreciatedby12.24%inthecorrespondingperiodofthepreviousyear.TheexchangerateofoneUSdollarstoodatRs.74.44 inmid-July2010comparedtoRs.78.05 inmid-July2009.

UptoJuly2010thetotalnumbersofCommercialBanksare27, Development Banks are 79, Finance Companies are 79,MicroFinanceInstitutionsare18,NRBLicensedCooperatives(undertaking limited banking transactions) are 16, NRBLicensedNGOs(undertakingmicrofinancetransactions)are45,andInsuranceCompaniesare25.

General Manager's ReviewTheBankhasdeliveredanother yearof goodperformance.OurnetprofithasjumpedfromRs.901millioninFY2008/09toRs.1.26billion in FY2209/10making theBank theNo. 1profitmakeramongstallcommercialbanks inthecountry–anincrementof40.4%overlastyear.Thisjumpinnetprofitcan largely be attributed to the hardwork of our staff andpatronagefromourvaluedcustomers.Overthepastoneyear,wehaveincreasedourassetsbasefromRs.53billiontoRs.57billion, a jumpof around8.1%during theperiod.Our totallendinghasalsosurgedfromRs.36.8billiontoRs.40.9billion.OurtotalpaidupcapitalofRs.2.41billionisalsothehighestamongstallcommercialbanksinthecountry.(table 4)

Because of the growing number of commercial banks andfinancialinstitutions,theyearaheadisagreatchallengeforus.Though Nepal’s domestic economy was largely untouched bytheglobalfinancialcrisis,energycrisis,politicaluncertainty,andhighinflationposethreattooverallbusinessconfidence.Theseuncertaintiesandcrisishavereducedinvestmentopportunitiesinourcountry.Amidstthisbackground,theentryofnewcommercialbanksandfinancialinstitutionsisexpectedtoundermineprofitmarginsinthemonthsahead.Theonlyoptionleftwithusistogrowwithinanacceptableriskframework.Tosupportincreasingbusiness volume, additional capital has been raised from thedebtcapitalmarketsaswellasfromretentionofprofits.

1 2


In the review year, the Bank increased the shareholdersfund from Rs. 3.91 billion to Rs. 4.58 billion and at thesametimemaintainedtheshareholder’sreturnonequityat a healthy rate of 28 percent. Similarly, our cost-to-incomeratiohasalsodecreasedshowingthatourincomeisgrowingatahigherratethanourcostindicatingimprovedefficiency.(table 5)

performance overview: Retail BankOurnewandinnovativedepositproductshavepropelledusto become the largest deposit holder amongprivate sectorbanks inNepal.At theendofFY2008/09,ourdepositbasestoodatRs.50.09billioncomparedtoRs.46.7billionattheendofthepreviousyear.Ourcustomerbasehasalsogrownto355,511attheendof2009/10from268,345duringpreviousyear,aconsiderablegrowthof32.5percent.

Customer mapping is being done on a regular basis thathashelpedtheBanktostudyandidentifylocationsfornewbranches and installation of new ATMs. Currently, we have67 ATMs in various locations throughout the country. Afteropening10newbranchesintheFY2009/10,ourtotalbranchnetworkisat40.

Card CentreThe Bank has issued over 250,000 cards, and continues tobetheleaderincardissuanceinNepal.Asoftheendofthe

reviewperiod,thereweremorethan400,000cardholdersinournetwork-VISAAssociateandNPNmembers.

WehavesuccessfullylaunchedourproprietaryNetwork–NationalPaymentNetworkand15financialinstitutionshavealreadyjoinedtheNetwork.Furthermore,theBankisinthefinalstageoflaunchingMasterCardrelatedproducts.ThiswillprovidewidercoverageinavailingATMandPOSrelatedservicestoourcustomers.

RemittanceIn order to tap into the burgeoning remittance market andstrengthenitspositioninworkers’remittanceinflows,theBankjoined hands with Transfast International, USA and SamsaraFinancialServices,UK.Disbursementagentswereappointedin300differentlocationsduringtheyearraisingthetotalnumberoftheBank’sremittancedisbursementlocationsto500.Duringtheyear,UAEExchangestartedsending transactions throughPrithiviExpressonlinesystem.Tofurtherbroadenitsremittancenetwork,theBankplanstoincreasethenumberofremittancedisbursementagentsinNepalto700bytheendofthecurrentfiscalyear.OurBankplanstodeputeonemorestaffmemberin Saudi Arabia and onemore inMalaysia and increase thenumberofourrepresentativesinQatarandtheUAE.

Corporate BankingThetotalloansandadvancesattheendof2009/10stoodatRs. 40.94 billionwith a growth of 11.2% during the review

3 4


year.Withourtotalloanportfoliosize,theBankhasbecomethehighestlenderinthecountry.ThebranchnetworkoftheBankpossessesasatisfactoryshareoftheBank’slendingandgrowth. Inorder todiversityour loanportfolioandtap intoemergingandprofitablesectors.Wehavebeen focusingoncement,hydropowerandinfrastructureprojects.

trade FinanceNepal InvestmentBankLtd.alsoqualifiedto jointheGlobalTradeFinanceProgramofferedby the InternationalFinanceCorporation(IFC),enablingtheBanktoconductinternationalfinance arrangementswith awider range of correspondentbanks greatly benefiting the Bank’s corporate clients. NIBLhas received a trade finance facility of USD 5 million, thelargestextendedtoanyNepaliBankanditwillenhanceoursupport for local enterprises and boost international tradeopportunities.

TreasuryThisyeartheBank’sprofitfromtreasuryoperationswasRs.224.057millioncomparedto lastyear’sfigureofRs.185.33million,anincreaseof20.90%.TheT-billportfoliooftheBankat the end of 2009/10 was Rs. 3911 million compared tolastyear’sfigureofRs.2531million.TheinterestearnedonthisportfoliowasRs.167.87millioncomparedtoRs.140.69millioninthelastfiscalyear.

Thetreasurydepartment is fullyequippedwithstateof theart technology forday-to-daydealings.Amongotherthings,theBank’streasurydepartmentisinvolvedincheckingforeigncurrency position, fund management, forward contractexecutionandinter-bankplacement.

Information TechnologyNIBL aims to add value toboth clients and to shareholdersvia a technology based portfolio of products different fromthose used by the bank’s competitors. Branch network ofthe Bank has reached 40, which allows our Bank to coverareasspreadoverMechitoMahakalizonesandsurroundingdistricts.Forthecomingfiscalyear,wewillbemainlyfocusingon consolidation, control and to increase profitability ofbranches.

The existing eBanking offers a list of features that may bedevelopedasanindividualproductorevenbrands.TheBankhas developed a system that alerts the customers of theirtransactionanddailybalances,whichcouldbeoneoftheveryimportantvalueaddedservices.

NIBLhasbeenutilizingastateoftheartsoftwaretechnologywhichenablesustoreducethenumberofmanualwork,whichinturnismadeautomated,offeringmoreefficientoutcomes.TheBankhasachievedhighestlevelofautomationinvariousmanualoperationsandreportingmechanisms.Costreductioninitiative will be undertaken by offering central back officeoperationsfortheprocesseslikeclearingandremittancestoleverageonthesystemcapabilities.

TheBankintendstoestablisha24hourcallcenterinordertofacilitatethememberbanksandtheircustomers.Andaftersuccessfulmigration,NIBLhasaggressivelymarketedNationalPaymentNetwork(NPN)members.

NepalInvestmentBankwillbelaunchingElectronicPaymentGateway(EPG)foronlinepurchaseswhichwillbethefirstofitskindinNepal.Further,theplantodeveloployaltyprogramslikeEMI,CashBackofferstoincreasethebank’scardbase.

Moreover,duringthereviewyeartheBankdeployedadditionalATMsatninedifferent locations inGongabu,Birgunj,Parsa,Palpa, Lalbandhi, Dhumbarai, Bhotaiti, New Baneswor and

5


Snapshot of the Nepali Economy

2009 / 10 2008 / 09

GDPatProducersPrice(RsBillion) 619 586GDPGrowthRate 3.50% 4.7Exchangerate(USD) 74.44 78.05GrossForeignExchangeReservesUSDBillion 3.58 3.59RateofInflation% 10.5 13.2GrowthinMoneySupply(M2)% 14.5 27

Lagankhel, taking the total number of NIBL’s ATMs to 67.NIBL’scardnetworkisalsothelargestinthecountry.

Human ResourcesNepalInvestmentBankhasrecognizedtheimportantroleofhuman resources to successfully meet the Bank’s businessgoals.TheBankiscommittedtoprovidequalitylearningandworking environment for the staff and help them developtheirknowledge,skillsandattituderequiredtoperformwellintheircareer.TheBankhasbeenabletoinculcateastrongperformance based culture where staff is rewarded forachievementofannualperformancetargets.Ultimately, thequality of NIBL’s human resources should be the source ofcompetitiveadvantageforthebank.

Withtheincreaseinthenumberofbranchrepresentationandcustomerbase, theBankhastoensurethatwecontinuetoprovidepromptandreliablecustomerservice.TheBank’stotalworkforcehasreached877comparedto766inthepreviousyear.Ofthetotalstaffstrength,41%arefemalestaffersand80staffmembershavecompletedmorethan10yearsofserviceintheinstitution.

NIBLalsocontinuetoplacegreatvalueinqualityandserviceand the bank’s development objectives ensure that the

staffs are motivated with high levels of productivity andloyalty.Duringtheyear,533participantsattended75trainingcourses/workshopsonvariousareas likeSMELending,RiskManagement,AntiMoneyLaundering,Signatureverification&counterfeitnotes,CustomerService,OperationsandNRBguidelines.Sixstaffmembersattendedworkshopsabroad.

TheBankalsosupportsteam-buildingactivitieslikesports,yoga,meditationfocusingonjobsatisfactionandpersonalgrowth.

NIBLbelievesthatthestaffmembersareourmostvaluableasset and their development, motivation, recognition,reward and welfare are very important to the successof this Bank. Therefore, the bank looks into attracting,retaining, andmotivating staffwho can deliver efficientservicetotheclients.

ConclusionThefiscalyear2009-10wasanothersuccessfulyearfortheBank. Despite the difficult market conditions, continuingpolitical stalemate, increased competition, liquidityproblems, the Bank were able to deliver strong overallperformance.Nepal InvestmentBank Limited consolidatedits position as one of the premier banks in Nepal. Themarket share taken by our Bank in deposits and advancesare substantial and the Bank is striving to achieve its aimof being themost preferred provider of financial servicesinNepal.TheBank iscommittedtomaintaining itscurrentposition and is striving hard to progress even further.

ThankYou,Jyoti Prakash PandeyGeneral Manager


ThemarketsharetakenbyNIBLindepositsandadvancesaresubstantialandtheBankisstrivingtoachieveitsaimofbeing

themostpreferredprovideroffinancialservicesinNepal.


Board Structure and MembersNepalInvestmentBankLtd(NIBL)’ssharestructureisdividedamong four groups. A group of companies holding 50%of the capital, Rastriya Banijya Bank and Rastriya BeemaSansthan holding 15% each and the remaining 20%, heldby thegeneralpublic.During the lastfiscalyear,Mr.RajeshRajkarnikar,nomineeDirectorfromRastriyaBeemaSansthan,vacatedtheofficeofDirectorandinhisplace,Mr.BinodAryal,Administrator,wasnominatedasDirectorontheBoardoftheBankbyRastriyaBeemaSansthan.

Currently, the Bank’s Board of Directors comprises of Mr.PrithiviBahadurPandé,Mr.PrajanyaRajbhandari,Mr.DeepakManSherchan,Mr.KrishnaPrasadSharma,Mr.BinodAryal,Mr.SurendraBahadurSingh,Mr.JanardanDevPantandMr.DamodarPrasadSharmaPandey.Amongthese,Mr.DamodarPrasad Sharma Pandey is an independent board memberand Mr. Surendra Bahadur Singh represents the publicshareholders. Mr. Prithivi B. Pandé is the Chairman of theBank’sBoard.

Internal Control Mechanism and various CommitteesTheBankhasanindependentInternalAuditandComplianceDepartment headed by an experienced auditor. TheDepartment performs its functions under the directsupervisionandcontroloftheAuditCommitteeandsubmitsitsreportsdirectlytothelatter.Tosupplementthein-house

Name of the Committees Members

AuditCommittee DeepakManSherchan,DamodarPrasadSharmaPandey, BinodAryal,HeadInternalAudit(MemberSecretary)

HumanResourceDevelopment PrithiviBdr.Pandé(Chairman),KrishnaPd.Sharma, Committee(HRDC) DeepakManSherchan,BinodAryal

ExecutiveCreditCommittee(ECC) PrithiviBdr.Pandé(Chairman),SurendraBdr.Singh,and PrajanyaRajbhandari

ConstructionCommittee DeepakManSherchan

internalauditdepartment,theBankhasalsohiredafirmofCharteredAccountantstoconductinternalauditfunctionsinthereviewyear.Inaddition,theBankhasalsoconstituteda‘ComplianceCommittee’comprisingofvariousdepartmentalheadstofurtherstrengthencomplianceandinternalcontrolsystemsoftheBank.Besidesthesecommittees,theBankhasanumberofhighlevelcommittees,namelyExecutiveCreditCommittee, Human Resource Development Committee,Construction Committee and Asset Liability ManagementCommittee,eachwithadefinedscopeandtermsofreference.These Committees comprise of Boardmembers and seniormanagementofficials.

The Bank’s Audit Committee, under the chairmanship ofa non-executive director, Mr. Damodar Prasad SharmaPandey, comprises ofMr. DeepakMan Sherchan andMr.Binod Aryal as Member Directors along with the Bank’sHeadofInternalAudit,Mr.BinodUpadhyay,asitsMemberSecretary. The Committee reviews the Bank’s financialcondition, its internal control and risk managementsystems, statutory and regulatory compliances, auditprogrammes,etc.Afterdetaileddiscussiononthefindingsof the internal audit as well as external audit reports,the Committee initiates necessary corrective action. TheCommitteeperiodicallyapprisestheBoardofDirectorsofthe issues and the correctivemeasures initiated. Duringtheyear,sevensuchmeetingswereheld.

Corporate Governance


TheBankhasestablishedanadequatesystemformonitoringandreportingriskexposuresandassessinghowtheBank’s

changingriskprofileaffectstheneedforcapital.


Beingafinancial institution, riskmanagement is an integralpart of Nepal Investment Bank Limited (NIBL). With thecontinuingincreaseinthescaleaswellascomplexityofthebankingsectorandtherapidgrowthinthevolumeoffinancialtransactions, risk management has become a core part ofbusiness.Moreover,thecurrentfinancialcrisisduetofinancialinstitutions'highexposuretoriskyassets,andthecollapseoflargefinancialinstitutionssuchasLehmanBrothers,WachoviaandBearStearnsduetotheirinabilitytomanageriskyassetshas further emphasized the need for prudent and effectiveriskmanagement.ThemanagementteamandboardofNIBLmanagestheoverallriskprofile,aimingforabalancebetweenriskandreturns.

Riskmanagement includes risk identification,measurementand assessment, and its objective is to minimize negativeeffectsthatriskscanhaveonthefinancialresultandcapitalof a bank. Riskmanagement strategies include the transferofrisk,avoidanceofrisk,reductionofthenegativeeffectoftheriskandacceptanceoftheconsequencesofaparticularrisk. The design of our risk management system dependsonparameters such as size, capital structure, complexityoffunctions, technical expertise, and quality of ManagementInformationSystem (MIS)and is structured toaddressbothbanking aswell as nonbanking risks to efficientlymaximizeshareholdervalue.

The risk management system ensures that the Bank takeswell-calculated business risks while safeguarding the Bank’scapital, its financial resources and profitability. The Bank’sprimary business activity is commercial banking wherebysubstantial risk comprises of credit risk. To a lesser extent,commercialbankingactivitiesalsoexposetheBanktomarketriskarisingfromrepricing,maturityandcurrencymismatchesofassetsandliabilities.Thesemismatchesgiverisetointerestraterisk,liquidityriskandforeignexchangerisk.TheBoardofDirectorsofNIBLrecognizesthatacriticalfactorintheBank’scontinuedgrowth,profitabilityandstabilityliesinitseffectiveriskmanagementcapabilitiesandrisk-returntrade-off. Inthisrespect,theBankensuresitsriskmanagementcapabilitiesandpromotespro-activeriskmanagementintheBank.

Operational Risk ManagementOperational risk is the risk of loss resulting from inadequateinternalprocesses,people,andsystems,orfromexternalevents.

Operationalriskitselfisnotanewconcept,andbankshavebeenaddressingitintheirinternalcontrolsandcorporategovernancestructures.However,applyinganexplicitregulatorycapitalchargeagainstoperationalriskisarelativelynewandevolvingidea.BaselIIrequiresbankstoholdcapitalagainsttheriskofunexpectedlossthatcouldarisefromthefailureofoperationalsystems.

Themostimportanttypesofoperationalriskinvolvebreakdownsininternalcontrolsandcorporategovernance.Suchbreakdownscan lead to financial losses through error, fraud, or failure toperforminatimelymannerorcausetheinterestsoftheBankto be compromised in some other way, for example, by itsdealers,lendingofficersorotherstaffexceedingtheirauthorityorconductingbusinessinanunethicalorriskymanner.

Other aspects of operational risk include major failure ofinformationtechnologysystemsoreventssuchasmajorfiresorotherdisasters.Thefailuretoproperlymanageoperationalriskcanresultinamisstatementofaninstitution’srisk/returnprofile and expose the institution to significant losses.Grossincome,used in theBasic IndicatorApproach isonlyaproxyforthescaleofoperationalriskexposureofabankandinsomecasescanunderestimatetheneedforcapital.

NIBL has developed a framework formanaging operationalrisk and evaluating the adequacy of capital covering theBank’sappetiteandtoleranceforoperationalrisk,asspecifiedthrough the policies for managing this risk, including theextent andmanner in which operational risk is transferredoutsidetheBank.ItalsoincludespoliciesoutliningtheBank’sapproachofidentifying,assessing,monitoringcontrollingandmitigatingtherisk.

Credit Risk ManagementCreditrisk isthemajorriskthatbanksareexposedtoduringthenormalcourseof lendingandcreditunderwriting.WithinBaselII,therearetwoapproachesforcreditriskmeasurement:the standardized approach and the internal ratings based(IRB) approach. Due to various inherent constraints withinthe Nepali banking system, the standardized approach in itssimplified form, Simplified Standardized Approach (SSA), hasbeenprescribedintheinitialphase.

Credit risk is the probability that a Bank’s borrower orcounter partywill fail tomeet its payment obligations in

Risk Management


accordancewith the termsofapprovalof thecredit.Thisincludes non-repayment of capital and/or interest withintheagreedtimeframe,attheagreedrateof interestandintheagreedcurrency.Thegoalofcreditriskmanagementis to maximize a bank's risk-adjusted rate of returnby maintaining credit risk exposure within acceptableparameters. The effectivemanagement of credit risk is acritical component of a comprehensive approach to riskmanagementand isessential to the long-termsuccessofanybankingorganization.

Formostbanks,loansarethelargestandmostobvioussourceof credit risk; however, other sources of credit risk existthroughouttheactivitiesofabank, includinginthebankingbookandthetradingbook,andbothonandoffthebalancesheet.Banks increasingly facecredit risk invariousfinancialinstrumentsotherthanloans,includingacceptances,interbanktransactions, tradefinancing, foreignexchangetransactions,andintheextensionofcommitmentsandguaranteesandthesettlementoftransactions.

NIBL has developed methodologies to assess the credit riskinvolvedinexposurestoindividualborrowersorcounterpartiesaswell asat theportfolio level. The credit reviewassessmentof capitaladequacy,ataminimum,covers risk ratingsystems,portfolio analysis/aggregation, large exposures and riskconcentrations. Internal risk ratings are an important tool inmonitoring credit risk and supporting the identification andmeasurementofriskfromallcreditexposures,andareintegratedintoouroverallanalysisofcreditriskandcapitaladequacy.Theratingssystemprovidesdetailedratingsforallassets,notonlyforproblemassets.

Our various branches are the business units of our bank.Each branch forwards business proposals to the head ofcredit division, Head Office. The credit division criticallyanalyzestheproposalfromdifferentperspectivesinlinewithstatutory,regulatoryandinternalguidelines.Thereafter,ifthebusiness proposal is found to be creditworthy, it is placedinthecreditcommittee.TheCreditCommitteeiscomprisedof seasoned bankers who evaluate credit proposals. Thecommitteeanalyzesindepthfinancialaswellasnonfinancialinformationregardingtheborrowersuchasbusinesshistory,marketsituation,futureprospectsofthemarket,managerialcapabilities, cash flow and then declines or recommendsapprovalofthedesignatedcreditauthorities.Toensureproperandadequateriskanalysisandtimelycustomerservice,ourcredit policy and procedures guide (CPPG) provides variouslayersinthecreditapprovalprocess.TheCPPGhasconferredspecificdiscretionrangingfromtheGeneralManagerstotheExecutiveCreditCommittee,thepenultimatecreditauthorityoftheBank.

• Adoptionofinternationalstandardsviaourin-houseCreditPolicyandProceduresGuide.

• FormationofCreditQualityControl(CQC)unitformonitoringthequalityofcredit,bothattheaccountlevelandportfoliolevel.

• RegularreviewofthecreditportfoliobytheseniormanagementwithperiodicreportingtotheBoardofDirectors.

• Separateindependentauditandinspectionofborrowersbyinternalauditorsinadditiontoauditandinspectionbystatutoryauditors.

• StrictadherencetotheguidelinesoftheCentralBankonLoanClassification,InterestRecognition,AssetClassification,SingleObligorLimit,SectoralExposureetc.

• Establishingsuitableexposurelimitsforborrowersandsectorsandmonitoringthelimitsonaregularbasis.

• Riskmitigationstepswithaspecialemphasisoncollateral.

• Settingcounterpartylimitsbasedontheirfinancialstrength.

• Trainingoflendingandlegalofficersondocumentationandprofessionalvaluations.

• Developingskillsandexpertiseoflendingofficerstoscientificallyassessprojectviabilityandcustomerintegrity.

• EducatingthestaffonprovisionsintheBanksandFinancialInstitutionActandotherrelevantstatutesandtheregulatoryguidelinesoftheCentralBank.

• Seekingexternallegalopinionandadvice.• IdentifyingEarlyWarningSignals(EWS)andtaking

promptactionthereon.• Constantpostssanctionmonitoringwithspecial

independentteamforverificationofcurrentassets.

Market Risk ManagementMarket risk is defined as the risk of losses in on-balancesheet and off-balance sheet positions arising from adversemovementsinmarketprices.Themajorconstituentsofmarketrisksare:

a. Theriskspertainingtointerestraterelatedinstruments.b. Foreignexchangerisk(includinggoldpositions)

throughouttheBank.c. Theriskspertainingtoinvestmentinequitiesand

commodities.

MarketriskisalsotheuncertaintyinthefuturevalueoftheBank’son-balancesheetandoff-balancesheetfinancialitemsresulting from interest rates, foreign currency, equity, andcommodityrisks.TheAssetLiabilityManagementCommittee(ALCO)servesastheprimaryoversightanddecisionmaking


body that provides strategic directions for the Bank’smanagementofmarketrisk.Thekeyelementsinthemarketriskmanagementframeworkareprinciplesandpolicies,risklimitsandriskmeasures.

Theprescribedapproachforthecomputationofcapitalchargeformarket risk is very simple and thusmaynot bedirectlyalignedwith themagnitude of risk. Likewise, the approachonly incorporatesrisksarisingoutofadversemovements inexchangerateswhileignoringotherformsofriskslikeinterestrateriskandequityrisks.NIBLhastakenmeasurestoaddressthese various forms of risk and at the same time performstressteststoevaluatetheadequacyofcapitalusinginternalmodelsforthemeasurementofmarketrisk.

ImportantRiskManagementmeasuresoftheBanktoaddressMarketRiskincludes:

• Apro-activeAssetLiabilityManagementCommittee(ALCO)thatmeetsonaweeklybasis.

• ReviewofALCOdecisionsbytopmanagementandBoardofDirectors.

• Conductionofgapanalysis,timelyre-pricingofproductsandhedgingofexposures.

• Riskmanagementviaforwardcontracts,swapsandcurrencyoptions.

• DailymonitoringofCredittoDeposit(CD)ratio.• MaintainingtheLiquidAssetsRatiowithacontingency

buffer.• Constantmonitoringofdealer,broker,counterparty,

transaction,productandcurrencyexposurelimits.• Regularmonitoringofcompetitorbehaviorandbuilding

competitorintelligence.• Maintainingstrongrelationshipswithcorrespondent

banks.• Enhancingfeebasedincometoreducedependenceon

fundbasedincome.• Non-engagementinlargescaletransactionsona

speculativebasis.• Separationoffrontandbackofficesatthetreasury

department.

Foreign exchange Risk ManagementForeign exchange rate risk arises from exchange ratemovementswhichaffecttheprofitoftheBankfromitsforeignexchange open positions. Because of a bank’s exposure toforeign currency, foreign exchange risk management is afundamental component inmarket riskmanagementof theBank. It involves prudent management of foreign currencypositions in order to control, within set parameters, theimpactofchangesinexchangeratesonthefinancialposition

of the Bank. The frequency and direction of rate changes,the extent of the foreign currency exposure and the abilityofcounterpartiestohonortheirobligationstotheBankaresignificantfactorsinforeignexchangeriskmanagement.Thisrisk is managed by setting pre-determined limits on openforeignpositions,themonitoringoftheopenpositionsagainstthese limits and the setting andmonitoring of our stoplossmechanism. In order to manage the foreign exchange riskandprotecttheBank’sfinancialposition,theBankfollowsthefollowingprocedures:

• Establishandimplementsoundandprudentforeignexchangeriskmanagementpolicies.

• Developandimplementappropriateandeffectiveforeignexchangeriskmanagementandcontrolprocedures.

Liquidity Risk ManagementLiquidity is crucial to the ongoing viability of any financialinstitution. The capital positions can have a telling effecton an institution’s ability to obtain liquidity, especially in acrisis.NIBLhasadequatesystemsformeasuring,monitoringand controlling liquidity risk.We evaluate the adequacy ofcapitalgiventheirownliquidityprofileandtheliquidityofthemarkets inwhich theyoperate.Wealsomakeuseof stresstestingtodeterminetheir liquidityneedsandtheadequacyofcapital.

The objective of liquidity management is to ensure thatthe bank has sufficient funds to meet its contractual andregulatory financial obligations at all times. Liquidity risk istheprobabilityoflossarisingfromasituationwhere(1)therewillnotbeenoughcashand/orcashequivalentstomeettheneedsofdepositorsandborrowers,(2)saleofilliquidassetswillyieldlessthantheirfairvalue,or(3)illiquidassetswillnotbesoldatthedesiredtimeduetoalackofbuyers.LiquidityriskrelatestotheabilityoftheBanktomaintainsufficientliquidassetsatareasonablecosttomeetitsfinancialobligationsasandwhen they fall due. Liquidity riskarises fromsituationsinwhichaparty interested in tradinganasset cannotdo itbecause nobody in the market wants to trade that asset.Liquidityriskbecomesparticularly importanttopartieswhoareabouttoholdorcurrentlyholdanasset,since itaffectstheirabilitytotrade.

The Bank’s liquidity policy is to ensure that all contractualcommitmentscanbemetbyreadilyavailablesourcesoffunding.Inaddition,liquidassetsaremaintainedinrelationtocashflowstoprovidefurthersourcesoffundingintheeventofacrisis.TheBankalsohasexcellentaccesstofinancialmarketstoensuretheavailabilityoffunds.


Monitoring and ReportingTheBankhasestablishedanadequatesystemformonitoringand reporting risk exposures and assessing how the Bank’schangingriskprofileaffectstheneedforcapital.TheBank’sseniormanagementorboardofdirectorsreceivesonaregularbasis reports on the Bank’s risk profile and capital needs.Thesereportsallowseniormanagementto:

• Evaluatethelevelandtrendofmaterialrisksandtheireffectoncapitallevels;

• Evaluatethesensitivityandreasonablenessofkeyassumptionsusedinthecapitalassessmentmeasurementsystem;

• DeterminethattheBankholdssufficientcapitalagainstthevariousrisksandisincompliancewithestablishedcapitaladequacygoals;and

• AssessitsfuturecapitalrequirementsbasedontheBank’sreportedriskprofileandmakenecessaryadjustmentstotheBank’sstrategicplanaccordingly.

NIBLconductsperiodicreviewsofitsriskmanagementprocesstoensureitsintegrity,accuracy,andreasonableness.Keyareasthatarereviewedinclude:

• AppropriatenessoftheBank’scapitalassessmentprocessgiventhenature,scopeandcomplexityofitsactivities.

• Identificationoflargeexposuresandriskconcentrations.• Accuracyandcompletenessofdatainputsintothe

Bank’sassessmentprocess.• Reasonablenessandvalidityofscenariosusedinthe

assessmentprocess.• Stresstestingandanalysisofassumptionsandinputs.SUPERVISORYREVIEW:NepalRastraBankregularlyreviewstheprocessbywhichabankassessesitscapitaladequacy,riskpositions,resultingcapitallevelsandqualityofcapitalheldbyNIBL.SupervisorsalsoevaluatethedegreetowhichNIBLhasinplaceasoundinternalprocesstoassesscapitaladequacy.TheemphasisofthereviewisonthequalityoftheBank’sriskmanagementandcontrols.Theperiodicreviewcaninvolveanyoracombinationof:

• On-siteexaminationsorinspections.• Off-sitereview.• Discussionswithbankmanagement.• Reviewofworkdonebyexternalauditors(provideditis

adequatelyfocusedonthenecessarycapitalissues).• Periodicreporting.


prithivi B pandéChairman&CED

Mr.Pandéhasover20yearsexperienceinthefieldofbankinginNepalwithboththepublicandprivatesectors.AfterobtainingadegreeinCharteredAccountancyfromIndiain1978,heworkedatvariousdepartmentsofthedepartmentsoftheNepalRastraBank(CentralBankofNepal)fortill1990,duringwhichhewassecondedtotheIMFhead-officeinWashingtonfortwoyears.

Hewasappointedin1990asthegeneralmanagerofRastriyaBanijyaBank–thelargestcommercialbankinNepal.Afterfinancialliberalizationstartedin1991,Mr.Pandéestablished‘HimalayanBank’,thefirstprivatesectorcommercialbankinNepalandajointventurewithHabibBank.HeservedasaStakeholderandExecutiveDirectorforaperiodof10yearspropellingittothetoptierofNepalibanks.

In2001leadingadiverseprivateequitygrouphetookonmanagementresponsibilitiesfromtheCreditAgricoleGroupofNepalIndosuezBanktomanageNepalInvestmentBankwhichhasresultedintheBank’sphenomenalgrowthincapital,assetsandprofits.

Deepak Man SherchanDirector

Mr.DeepakManSherchanisanarchitectbyprofession.HeholdsaBTechArchitecturedegreefromIITKharagpur,WestBengal,India,andhasalsoreceivedadiplomainrealestatedevelopmentfromHarvardDesignSchool,USA.Mr.SherchanistheManagingDirectorandChiefArchitectofCBC(P)Ltd.

Prajanya RajbhandariDirector

Mr.PrajanyaRajbhandariisanindustrialistwhoholdsanengineeringdegreefromPunjabUniversity.HehashelddirectorshipsatNationalStructures,EverestPoultryandEnviroplast.Mr.RajbhandarihasactivelyservedinorganizationslikeNepalJaycees,ROTARYandFNCCIinvariouscapacities.

Board of Directors

Surendra Bahadur SinghDirectorPublicShareholders

Mr.SurendraBahadurSinghhasaDiplomainHotelManagementfromtheInstituteofTourism&HotelManagement,Klessheim,Salzburg,Austria,andspecializedinHotelManagementfromtheInternationalSchoolofTourism,Rome,ItalyandcompletedhisMBAdegreefromTribhuvanUniversity.


Mr. Krishna prasad SharmaDirector

Mr.KrishnaPrasadSharma,DeputyGeneralManagerofRastriyaBanijyaBankhasextensiveexperienceofworkinginthebankingsectorforover24years.MrSharmaholdsaMasterDegreeinManagementandSocialScienceandalsoaBScinAgricultureScience.HeholdsthepositionofChairmanofNLGInsuranceCompanyandRBBRetirementFund,andthepositionofdirectoratNationalLifeInsuranceCompany.HehasalsoservedasadirectorintheCreditInformationCentre,PurbanchalGrameenBikasBank,PaschimanchalGrameenBikasBank,andSudurPaschimanchalGrameenBikasBank.

Janardan Dev PantDirector

Mr.JanardanDevPantisDirectorofNepalInvestmentBankLimited.HeisChairmanofQuantumCapitalLimited,amanagementandinvestmentcompany.HeisaDirectorofNirdhan.PantbeganhisCommercialBankingcareerwithHimalayanBankLimited(HBL)intheCreditDepartment,andspent11yearsinvariousmanagerialpositionsandoneyearinSunriseBankLtd.PriortohiscareerwithHBL,PantheldOfficeChiefpositioninDistrictIrrigationOffice,Rupendehi,GovernmentofNepalandTechnicalOfficerwithNepalIndustrialDevelopmentCorporation.HeearnedaB.S.CivilEngineeringdegreefromAdamsonUniversityandanMBA-FinancefromOklahomaCityUniversity.

Dr. Binod AryalDirector

Mr.BinodAryalservesasanAdministrator,atRastriyaBeemaSansthan.Mr.AryalwhohasbeenassociatedwithToyotaMotorsinthecapacityofSeniorGeneralManagerfrom2006to2010hasanextensiveexperienceintheautomobileindustryinNepal.Mr.AryaliscurrentlypursuingPhDdegreeinPublicTransportanditsimpactonpollutionfromKathmanduUniversity.HealsoservesasaboardmemberofUpperTamakoshiHydropowerandSt.Xavier’sCollege.

DamodarPrasadSharmaPandeyDirector

Mr.DamodarPrasadSharmaPandeyhas23yearsofexperienceinvariousdepartmentswithintheNepalRastraBank;servingasanExecutiveDirectorintheDepartmentofMint.Furthermore,hehassignificantexperienceworkinginBankSupervision,EconomicResearch,BankingOperations,FinanceandintheCreditInformationBureau.Mr.PandeyhasaB.A.fromtheUniversityofSouthampton,U.K.andanM.Sc.inmathematicalstatisticsfromLucknow,India.HehasalsoservedastheChairmanofPaschimanchalGrameenBikashBank,DirectorattheDepositInsuranceandCreditGuaranteeCorporationandadirectoroftheNationalProductivityandEconomicDevelopmentCentre.


Senior Management team

Rajan AmatyaDeputyGeneralManager

Mr. Anuj timilsina AssistantGeneralManager

Mr. Bijendra SuwalAssistantGeneralManager

Ms. Manju BasnetAssistantGeneralManager

Mr. Jyoti P PandeyGeneralManager

AftercompletinghisMBAinIndia,Mr.PandeyjoinedNepalIndosuezBankin1988andbecameHeadoftheInternationalBankingDepartment.In1992,hejoinedHimalayanBankandworkedastheHeadofMarketing,BranchManagerandHeadoftheCreditDepartmentoveraperiodof9years.In2002,Mr.PandeyjoinedNepalInvestmentBankasitsDeputyGeneralManagerandnowhandlesgeneralbankoperationscomprisingofHumanResources,Administration,ClientRelations,Retail,TradeFinanceandCorporateBanking.


Withtheincreaseinthenumberofbranchesandcustomerbase,thebankiscommittedtopromptandreliablecustomerservice.



Head-CorporateBanking Anuj timilsina

Head-TradeFinance Deepak K. Shrestha

Head–Legal Deepak Shrestha

Head–Operation Rabin Sijapati

Head–BranchCo-ordinationCellShreechandra Bhatta

Management team

Head-Cards&Remittance Bikash thapa

Head–Finance Sachin Tibrewal

Head–Cash&Transfer Sanjeev Karki

Head-Reconciliation Tul Jung Pandey

Head-HumanResources Prabir SJB Rana

Head-Treasury Santosh Ghimire

Head-CreditAdministration Sammit Bhattarai

Head–Research&Development Shivanth Bahadur pandé

Head-InternalAuditandCompliance Binod Upadhyaya

Head-GeneralService Usha Pandey

Head-Share Rekha pant

Branch ManagersUttam Bdr. K.C

SeepadoleBranch

Ratna Kumar LimbuBirjungBranch

Prakash SubediPulchowkBranch

Kumar thapaBanepaBranch

Niraj BhattaJeetpurBranch

Nikita MaskeyNewroadBranch

Bishal thapaBiratnagarBranch

Ajay K. KafleButwalBranch

Gokarna P. DuwadiBhairahawaBranch

Dhiraj ThapaPokharaBranch

Manju BasnettPutalisadakBranch

Prakash DhunganaNarayangarhBranch

Vivek Kumar JhaJanakpurBranch

Krishna Raj JoshiNepalgunjBranch

Ramraj UpadhyayThamelBranch

Bhaskar n. JoshiKalimatiBranch

Sanjit pokhrelBirtamodBranch

Bandana thapaBattisputaliBranch

Subin SijapatiDhangadiBranch

Purushottam ChaliseGongabuBranch

Sanket DhungelSurkhetBranch

eka Raj MahatJumlaBranch

Shobha ShresthaBoudhaBranch

Shekhar SinghHetaudaBranch

Baburam KandelPalpaBranch

Keshab Prasad MainaliLuklaBranch

Sujan RanjitNayaBaneshworBranch

Radhika SinghDhumbarahiBranch

Mahesh lal ShresthaBhotahityBranch

Dhiraj SinghTulsipurBranch

Lok Ram BhattaraiTripureshworBranch

Naresh Jung PandeyDamauliBranch

Rakesh MallyKrishnanagarBranch

Kailash R. AcharyaGaighatBranch

Suraj Jung thapaLazimpatBranch

Pragyan DhunganaParsaBranch

Ajar BajracharyaMaharajgunjBranch

Sajan SahLalbandiBranch

Navin Bir BasnyetLagankhelBranch

Mahesh thapaWalingBranch

Barun ShresthaRegionalBranchManagerLalitpur


Domestic Network

KATHMANDUHEADOFFICE: DurbarMarg P.O.Box3412,Tel:4228229,4242530(DISA) Fax:977-1-4226349,4228927,Swift:NIBLNPKT

SEEPADOLEBRANCH: Suryabinayak,BhaktapurTel:6615617,6612832Fax:6616617

BIRGUNJBRANCH: Adarshanagar P.O.Box101,Tel(051)523327,525277Fax:(051)525297,534271

PULCHOWKBRANCH: Pulchowk,LalitpurTel:5010188,5010042Fax:5010142

BANEPABRANCH: Banepa,KavreTel:(011)664315,662401Fax:(011)662402

JEETPURBRANCH: Jeetpur,BaraTel:(053)520297Fax:(053)520877

NEWROADBRANCH: Newroad,KathmanduTel:4242858,4230374Fax:4227050

BIRATNAGARBRANCH: GolchaChowk,BiratnagarTel:(021)534523,534524,534525Fax:(021)534526

BUTWALBRANCH: TrafficChowk,ButwalTel:(071)549991,549992,549993Fax:(071)549888

BHAIRAHAWABRANCH: MaitriRoad,BhairahawaTel:(071)526991,526992Fax:(071)526990

POKHARABRANCH:ChipleDunga,xPokharaTel:(061)538919,539276Fax:(061)538920

PUTALISADAKBRANCH: Putalisadak,KathmanduTel:4445302,4445303Fax:4445304

NARAYANGARHBRANCH: Pulchowk,NarayangarhTel:(056)571921,571922,571923,571924Fax:(056)571925

JANAKPURBRANCH: MillsArea,JanakpurTel:(041)527331Fax:(041)527332

NEPALGUNJBRANCH: Dhamboji,NepalgunjTel:(081)525978,525682Fax:(081)521664

THAMELBRANCH: Chaksibari,ThamelTel:4218431,4218434,4218485,4218486Fax:4218434

KALIMATIBRANCH:KalimatiChowk,KalimatiTel:4672493,4672494,4672495,4672548Fax:4272612

BIRTAMODBRANCH: TrafficChowk,BirtamodTel:(023)543810,543811Fax:(023)543815

BATTISPUTALIBRANCH: Battisputali,KathmanduTel:4471690,4471790Fax:4470202

DHANGADIBRANCH:ChaurahaChowk,DhangadiTel:(091)523620,523706Fax:(091)524090

GONGABUBRANCH: GongabuChowk,KathmanduTel:4365318,4365077Fax:4365302

SURKHETBRANCH:NetaChowk,SurkhetTel:(083)524330,524331Fax:524332


JUMLABRANCH:KhalangaBazaar,JumlaTel:(087)520132Fax:520304

BOUDHABRANCH: Boudha,KathmanduTel:4480121,4480122Fax:4480123

HETAUDABRANCH:BankRoad,HetaudaTel:(057)526001,525946Fax:(057)526005

PALPABRANCH: Tansen,PalpaTel:(075)520832,520833Fax:(075)520891

LUKLABRANCH: Chaurikharka,LuklaTel:(038)550120Fax:(038)550220

NAYABANESHWORBRANCH: NayaBaneshwor,KathmanduTel:4785529,4782289,4782520Fax:4785537

DHUMBARAHIBRANCH: PipalbotChowk,KathmanduTel:4009006,4009007Fax:4009009

BHOTAHITIBRANCH: Bhotahiti,Kathmandu Tel:4230797,4230788 Fax:4230771

TULSIPURBRANCH: Tulsipur,DangTel:(082)521613,521614Fax:521615

TRIPURESHWORBRANCH: Tripureshwor,KathmanduTel:4259780,4259980Fax:4260324

DAMAULIBRANCH:Safasadak,DamauliTel:(065)562500,562600Fax:(065)562700

KRISHNANAGARBRANCH:Krishnanagar,Kapilvastu Tel:(076)520764,520765,520766 Fax:(076)520354

GAIGHATBRANCH:Gaighat,UdayapurTel:(035)420952,420953Fax:(035)420954

LAZIMPATBRANCH:Lazimpat,KathmanduTel:4005058,4005069,4005068Fax:4005065

PARSABRANCH:Parsa,ChitwanTel:(056)583623,583624Fax:(056)583625

MAHARAJGUNJBRANCH:Maharajgunj,KathmanduTel:4016151,4016152Fax:4016155

LALBANDHIBRANCH:Lalbandhi,SarlahiTel:(046)501583,501584Fax:(046)501585

LAGANKHELBRANCH:Lagankhel,LalitpurTel:5552980Fax:5552990


Global Network

Westpac Banking Corporation,Sydney

Royal Bank of Canada,Toronto

Jp Morgan Chase,London

Danske Bank,Copenhagen

Jp Morgan Chase,Frankfurt

Commerz Bank,FrankfurtA.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,NewDelhi

Standard Chartered Bank,Mumbai

Bank of Tokyo,Mitsubishi

Standard Chartered Bank,Tokyo

Svenska Handelsbanken,Stockholm,Sweden

united overseas Bank ltd.Singapore

Citibank,NewYork

Bank of China,Beijing

Commerzbank,Frankfurt

Standard Chartered Bank,NewYork

Mashreque Bank,NewYork

Jp Morgan Chase,NewYork


Inspiteoffacingtremendouscompetitionintermsofdepositandlendingrates,NIBLhasstillmaintaineditsmarketshare.


Board of Director's ReportFor the Financial Year 2066/67 (FY 2009/2010)Presentation by the Chairman to the 24th Annual General Meeting

Dear Shareholder,Itisourpleasuretowelcomeyouatthis24thAnnualGeneralMeetingofNepalInvestmentBankLtd(NIBL).Onthisoccasion,IpresenttoyoutheBank’sactivities,BalanceSheetandProfit&Lossaccountforfinancialyear2009-10.

1. Review of Bank’s performance for FY 2009-10:Thefiscalyear2009-10wasanothersuccessfulyearfortheBank.Despitethedifficultmarketconditions, continuingpolitical stalemate, increasedcompetition, liquidity problems, our Bank was able to deliver strongoverallperformance.AnoverviewoftheBank’sperformanceduringthereviewyearispresentedhereunder:

2. Impact, if any, of the national and international situation upon the business of the companyMostofthecountriesacrosstheworldhavefacedthecontagionimpactsof global financial crisis. The growth rate of world output is expectedto be negative in 2009 for the first time after the SecondWorldWar.Governments and central banks of economically problematic countriesmade efforts tominimize the effects of crisis through the adoption ofconventionalaswellasnon-conventionalmeasures.

The updated version of World Economic Outlook issued by theInternational Monetary Fund on July 8, 2009, has mentioned that theseverityofrecessionhasended.Worldeconomyisgraduallybeginningtocomeoutofseverityofrecession.Buttheimprovementisunevenamongthecountriesandtherecoveryisreportedtobesluggish.

BasedonthepreliminaryestimateoftheCentralBureauofStatistics,thegrossdomesticproduct(GDP)haswitnessedagrowthof3.5percentatbasicpriceand4.6percentatproducer'spricein2009/10.Suchgrowthrateswere3.9percentand4.9percentrespectivelyin2008/09.Theannualinflationisindouble-digitsthoughitmoderatedto 10.5 percent in 2009/10 compared to 13.2percentin2008/09.

Thebalanceofpayments(BOP)postedalossofRs.2.62billionin2009/10asagainstasurplusofRs.44.76billionlastyear.

Theworkers'remittancesgrewmeagerlyby10.5percent to Rs. 231.73 billion compared to itssignificantgrowthof47.0percentayearago.

Thegrossforeignexchangereservesdroppedby7.0percenttoRs.266.57billioninmid-July2010fromalevelofRs.286.54billionasatmid-July2009.Suchreserveshadgrownby34.8percentlastyear.

Recent increase in the number of commercialbanks in Nepal as well as commercial banks’branchescoupledwiththeglobalfinancialcrisisanddifficultmarketconditionsathomeisposingdiverseproblemstoourdomesticbankingsector.Withtheincreaseinthenumberofcommercialbanks and other financial institutions, thebanking sector in Nepal is facing tremendouscompetitionintermsofdepositandlendingrates-resultinginlowerspreadanddirectlyeffectingprofitability.Hence,managingtheinterestrateson deposit and loans and advances is a majorchallengefacedbybankingindustry.

Moreover,thethreatgoingforwardisthatduetotheglobalfinancialcrisisandeconomiccontractionin major labor destinations of migrant Nepaliworkers, remittance flow will either subside ortherewon’tbesignificant increaseinremittanceflowlikebefore.Thiswillinturnaffectthedepositgrowthinourbankingsystem.

NPRinMillion

*Average

S.No. Particulars FY FY Growth in Growth 2008-09 2009-10 npR in %1. TotalAssets 53,010 57,305 4,295 8.12. TotalDeposit 46,698 50,094 3,396 7.33. TotalLoansandAdvances 36,827 40,948 4,121 11.24. TotalInvestments 7,399 8,635 1,236 16.75. TotalOperatingProfit(before 1,477 2,021 544 36.8 provisionforpossibleloss)6. TotalNetProfit 901 1,265 364 40.47. Non-performingAssets(in%) 0.58 0.62 - 0.048. ReturnonPaid-upCapital(in%)* 49.8 52.6 - 2.89. ReturnonShareholders’Fund(in%)* 27.3 27.8 - 0.510. TotalCustomerBase(inNos.) 268,345 355,511 87,166 32.511. MarketShareinDeposit(in%) 8.3 7.9 - (0.4)

12. MarketShareinLending(in%) 9.3 8.9 - (0.4)


3. Achievements/New Products & Services/ New Branches during current fiscal year 2067-68 Therewerenosignificanteventstillthedateofthisreport.

4. Industrial and professional relations of the CompanyThe Bank has established a cordial and professionalrelationship with all the stakeholders.We believe that thiscordial relationship with all the stakeholders developed onthebasisofprofessionalismandtransparencywillbefruitful,andprovetobeasuccessfulmediumfor futureprogressoftheBank.

5. Changes made in the Board of Directors, and reasons thereforeDuring the review year, Mr. Binod Aryal, nominee Directorfrom Rastriya Beema Sansthan, vacated the office ofDirectorandinhisplace,Mr.BinodAryal,Administrator,wasnominatedasDirectorontheBoardoftheBankbyRastriyaBeemaSansthan.

ThepromotersrepresentingGroup‘A’appointedMr.JanardanD.PantasDirectorrepresentingtheGroup,therebyfillingupthevacancyfromtheGroup,whichwaslyingvacantsincepastfewyears.

Onbehalfoftheshareholders,Iwouldliketoconveymysincerethanks to theoutgoingDirector forhis invaluablecontributionandsupportforthedevelopmentoftheBank,andalsowelcometheincomingDirectorswhohavejoinedtheBank.

6. Main factors affecting the businessThemainfactorsaffectingtheBank’sbusinessare:• Thecontinuingpoliticalstalemateisaffectingallsectorsof

theeconomyandthefinancialsystemisnoexception.• Heightenedcompetitioninthebankingsectorhasledto

shrinkingmargins.• Theongoingliquiditycrisishasledtochallengeinasset

liability management and has significantly pushed upcostoffundsandincreasedinterestraterisk.

• Thedoubledigit inflationhas caused sharp increase inoverheads.

• Duetomushroomingfinancialinstitutions,staffretentionhasbecomeamajorhumanresourcechallenge.

7. Board Of Directors’ reaction to the remarks made, if any, in the Audit ReportThere are no adverse remarks in the audit report exceptcomments on routinematters arising in the normal courseof business. The Board of Directors has taken note of suchcomments and recommendations, andhas already initiatedrequisitestepstoregularizethesame.

8. The amount recommended for distribution as dividendThe338thmeetingoftheBoardofDirectorsoftheBankhasproposed 25% cash dividend from the profit of fiscal year2009-10ontheBank’spaidupcapital.

9. Number of shares forfeited, if any, and particulars thereofDuring the year, no shares have been forfeited. The Bankissued20,288numberofunsubscribedrightshareswithfacevalueofNPR100onwhichapremiumofNPR11,849,422wascollected.

10. Progress made in the business of the Company and its subsidiary company during the previous financial yearTheBankdoesnothaveanysubsidiarycompany.Asregardsthe progress of the Company during the previous financialyear,pleaserefertoSection1above.

11. Main transactions between the Company and its subsidiary company during the financial year and important changes, if any, thereinTheBankdoesnothaveanysubsidiarycompany.

12. Information furnished to the Company by its basic shareholders during the previous financial yearNone.

13. Particulars of the ownership of shares taken up by the Directors and office-bearers of the Company during the previous financial yearNone.

ThisyearalonetheBankaddedtenmorebranchesofwhichfourarewithintheValleyandsixareoutsidetheValley.Withtheseadditions,theBanknowhasanetworkof40branchesthroughoutNepal.


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 yearThere is no any such agreement and consequently, nodisclosureinthisrespecthasbeenmade.

15. Particulars of buy-back of shares, if anyThere was no buy-back of shares during the year underreview.

16. Whether or not there is an Internal Control System, and if there is any such system, details thereofTheBankhasanindependentInternalAuditandComplianceDepartment headed by an experienced auditor. TheDepartment performs its functions under the directsupervisionandcontroloftheAuditCommitteeandsubmitsitsreportsdirectlytothelatter.Tosupplementthein-houseinternal audit department, the Bank also outsources auditservicefromindependentauditfirmstoreviewspecificareasof operation. In addition, the Bank has also constituted a‘ComplianceCommittee’comprisingofvariousdepartmentalheadstofurtherstrengthencomplianceandinternalcontrolsystemoftheBank.BesidestheseCommittee,theBankhasanumberofhighlevelcommittees,namelyExecutiveCreditCommittee, Human Resource Development Committee,Construction Committee and Asset Liability ManagementCommittee,eachwithadefinedscopeandtermsofreference.These Committees comprise of Boardmembers and seniorManagementofficials.

17. Particulars of the total management expenses of the previous financial yearEmployeeExpensesduringthePreviousFY: NPR279.85millionAdministrativeExpensesduringthePreviousFY: NPR433.59millionTotal: NPR713.44million

18. Names of the members of the Audit Committee, remuneration etc. being received by them and functions discharged/suggestions offered by the CommitteeThe Bank’s Audit Committee, under the chairmanship of anon-executive director, Mr. Damodar Prasad Sharma Pandey,

comprisesofMr.DeepakManSherchanandMr.BinodAryalasMemberDirectorsalongwiththeBank’sHeadofInternalAudit,Mr.BinodUpadhaya,asitsMemberSecretary.TheCommitteereviews theBank’s financial condition, its internal control andriskmanagementsystems,statutoryandregulatorycompliances,auditprogramsetc.Afterdetaileddiscussiononthefindingsoftheinternalauditaswellasexternalauditreports,theCommitteeinitiatesnecessarycorrectiveaction.TheCommitteeperiodicallyapprisestheBoardofDirectorsoftheissuesandthecorrectivemeasuresinitiated.Duringtheyear,sevensuchmeetingswereheld.TheChairmanof theCommittee ispaidNPR10,000andmemberDirectorsarepaidNPR8,000each,permeeting,bywayofAuditCommitteemeetingfee.

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 entitiesNosuchpaymentsareduetotheCompany.

20. Amount paid as remuneration, allowances and facilities to the Directors, the Executive Chief and other office bearers AsperAnnexure“A”below.

21. Dividend yet to be collected by shareholdersDividends declared by the Bank but not claimed bythe shareholders till the end of 2009-10 stood at NPR16,822,327.

22. Any other mattersa. New Branches, Products and Services During FY 2066-67:• Branch network: This year alone the Bank extended

tenmorebranches,ofwhichfourarewithintheValley(namely Tripureshwor, Lazimpat, Maharajgunj andLagankhel)andsixareoutsidetheValley(namelyTulsipur,Damauli, Krishnanagar, Gaighat, Parsa and Lalbandi).With this addition, theBanknowhas a networkof 40branchesthroughoutNepal.

• new products:TheBankintroducedtwonewproducts-NIBLSpecialFixedDepositwithinterestrateof11%andSavingBonanzawith7.5%.Boththeseproductsreceivedgoodresponsefromthecustomers.


• Ebanking: NIBL now has 14,000 new users in theebanking platform giving the highest base of ebankingcustomers in Nepal at 28,000. There have been newand innovativeaddedfeatures intheebankingproductsuch as online airline ticket booking and payments,alongside enabled Online and ATM pre/post paidbill payments for Telecom companies including PSTNlandlinepaymentsthroughoutNepal.NIBLalsotiedupwithNepalDerivativesExchangeallowingtheebankingusers to conductderivative transactions.NIBL releasedan electronic payment gateway, enabling secure VISA,MasterCardandPayPaltransactionsande-commerceontheinternetforebankingcustomers.

• Cards:TheBanksuccessfullymigratedtonewswitchingsystemElectraCardSystem.Ourcardbasehasincreasedtomore than250,000cardstill theyearend.WehavesuccessfullylaunchedourproprietaryNetwork–NationalPayment Network and 15 financial institutions havealready joined the Network.We have added 18 moreATMsmakingatotalof70NIBLownedATMs.Wehave200 plus ATMs and 400,000 plus cards in our network-VISAAssociateandNPNmembers.

• Remittance: The Bank has started remittance businessfrom USA and UK and also expanded its remittancebusiness team in Saudimarket andMalaysia. This hasregisteredstronggrowthandsuccessinthefirstyearofoperation,makingNIBLthelargestNepaliBankremittingmoney back to Nepal. Bank Albilad has awarded NIBLtheBestRemittancePartnerAward2010.Theawardwasgiven on the basis of NIBL’s steady performance level,outstanding support and excellent customer relations.TheBankadded300domesticremittancedisbursementagents during this periodmaking the total number ofremittance disbursement agents to 500 throughoutNepal.

• Business Tie-ups:AllAmericanLifeInsuranceCompany,ALICOhasalsotiedupwithNIBLtoofferitslifeinsuranceproducts through NIBL’s Bancansurance program. NIBLhasenteredintoanarrangementwithChinaDevelopmentBank (CDB) to promote project relationships ininfrastructure finance in terms of project cooperation,financialconsultancy,creditgrantsandcurrencyswaps.This arrangementwill not only enable NIBL to financehydropower projects in Nepal butwill also enable the

Bank’s corporate clients access to international debtmarkets.

• other Achievements: NIBL also qualified to join theGlobalTradeFinanceProgramofferedbytheInternationalFinanceCorporation(IFC),enablingtheBanktoconductinternational finance arrangementswith awider rangeofcorrespondentbanksgreatlybenefitingourcorporateclients.NIBLhasreceivedatradefinancefacilityofUSD5million,thelargestextendedtoanyNepaliBankanditwillenhanceoursupportforlocalenterprisesandboostinternationaltradeopportunities.

b. Human Resources:We recognize the important role of human resources tosuccessfullymeetourbusinessgoals.TheBank is committedtoprovidequality learningandworkingenvironment forourstaffandhelpthemdeveloptheirknowledge,skills&attituderequiredtoperformwellintheircareer.TheBankhasbeenabletoinculcateastrongperformancebasedculturewherestaffisrewarded for achievement of annual performance targets.Ultimately,thequalityofourhumanresourcesshouldbethesourceofcompetitiveadvantageforus.

With the increase in thenumberofbranch representationandcustomerbase,theBankhastoensurethatwecontinuetoprovidepromptandreliablecustomerservice.TheBank’stotalworkforcehasreached877comparedto766inthepreviousyear.Ofthetotalstaffstrength,41%arefemalestaffersand80staffmembershavecompletedmorethan10yearsofserviceintheinstitution.

We continue to place great value in quality and serviceand our development objectives ensure that our staffersaremotivatedwith high levels of productivity and loyalty.During the year, 533 participants attended 75 trainingcourses/workshopsonvariousareaslikeSMELending,RiskManagement,AntiMoneyLaundering,Signatureverification&counterfeitnotes,CustomerService,OperationsandNRBguidelines. SixstaffmembersattendedworkshopsinIndiaandabroad.TheBankalsosupportsteam-buildingactivitieslikesports,yoga,meditationfocusingonjobsatisfactionandpersonalgrowth.

Our staff members are our most valuable asset and theirdevelopment, motivation, recognition, reward and welfare


areveryimportanttothesuccessofthisBank.Ouraimistoattract, retain, andmotivate staff who can deliver efficientservicetoourclients.

c. Social and Community Works: Nepal InvestmentBankLimitedsuccessfullyconductedNIBLHeritage Marathon 2009, an initiative gesture towards theconservation of our cultural heritage. Our second NepalInvestmentBank(NIBL)HeritageMarathon2009,whosemainobjectivewas tohelppreserveheritageandarchitectureofKathmanduValley, raisedover70 lakh rupess far exceedingourtargetoffifty lakhsrupees.TheBankdonatedthis fundto help build cremation pyres at Bhasmeshwor AryaghatPashupatinath and for restoration work at the BhaidevalTempleatPatanDurbarSquare.

The Bank also gave away 25 lakh rupees for Extreme EverestExpedition, the cleanup campaign that cleared out 1800 kilosof garbage fromabove8,000meters,often referred toas thedeathzone.Theeventrousedwide internationalconcern,andwasextensivelyreportedbyalllocalmediaaswellasrenownedinternationalmedialikeBBC,ReutersandAFP.Apartfromcleaningupthedeathzone,thecampaignalsosuccessfullyrescuedthebody of twomountaineers - Swiss climber Gianni Goltz, whodied lastyear,andRussianclimberSergeyDuganov.ThevisualdocumentationofthesameisdueforpremierinDecember.

The Bank also gave away five lakh rupees to support thesecondMicrofinanceSummit2010.The summit focusedonconvergingtheroleofvariedstakeholdersfrompolicymakers,regulators, to commercial banks and other microfinancepractitioners, to reach the broader spectrum of ruraldemography.Thesummitalsoworkedonprovidingfinancialservicesto3millionpeople,especiallywomen,by2010.

NIBLsponsoredonelakhrupeestoSpinalIinjuryRehabilitationCenter for their golf tournament. The Spinal InjuryRehabilitationCentre(SIRC)isauniquecharitablefacilityandtheonlyrehabilitationcentreinNepalthatcatersexclusivelytotheneedsofthespinallyinjured.

TheBankhasalsobeensupportingtheenvironmentalcauses.Justthisyear,wegaveaway50,000rupeestoNationalTrust

forNatureConservation.Similarly,theBankalsodonatedonelakhrupeestoNepalCarpetExporter’sAssociation.

TheBankgaveawaythreelakhrupeestoAllNepalLawnTennisAssociation to aidwith their annual lawn tennismatch. OurBankhasalsobeenkeenonpromotingNepaliartandartists.Thisyearalonewegaveawayone lakhrupeestoSiddharthaArt Gallery. Siddhartha Art Gallery strives to promote bothcontemporaryNepaleseartandartistsfromaroundtheglobe.

d. Future Plans• NIBLaimstoaddvaluetobothclientsandtoshareholders

via a technology based portfolio of products differentfrom those used by our competitors. Branch networkof theBankhas reached40,which allowsourBank tocover areas spread overMechi toMahakali zones andsurrounding districts. For the coming fiscal year, wewillbemainlyfocusingonconsolidation,controlandtoincreaseprofitabilityofbranches.

• TheexistingeBankingoffersa listof features thatmaybedevelopedasan individualproductorevenbrands.Wehavedevelopedasystemthatalertsthecustomersoftheirtransactionanddailybalances,whichcouldbeoneoftheveryimportantvalueaddedservices.

• OurBankhasbeenutilizinga stateof theart softwaretechnologywhichenables us to reduce thenumberofmanualwork,whichinturnismadeautomated,offeringmoreefficientoutcomes.TheBankhasachievedhighestlevel of automation in various manual operations andreportingmechanisms. Cost reduction initiativewill beundertakenbyofferingcentralbackofficeoperationsfortheprocesses likeclearingand remittances to leverageonthesystemcapabilities.

• We intend to establish a 24 hour call center in orderto facilitate the member banks and their customers.And after successful migration, we have aggressivelymarketed National Payment Network (NPN)members.However,anentirelyseparatecellisrequiredinordertomakeitanindependententity.

• WewillbelaunchingElectronicPaymentGateway(EPG)foronlinepurchaseswhichwillbethefirstofitskindinNepal.Further,weplantodeveloployaltyprogramslikeEMIandCashBackofferstoincreaseourcardbase.

NIBLdonatedthefundraisedbyNIBLHeritageMarathon2009tohelpbuildcremationpyresatBhasmeshworghat,PashupatinathandforrestorationworkattheBhaidevalTemple,PatanDurbarSquare.


• Increase in competition in the banking industry hasmade Banks look for additional areas for investmentsto continue to keep up the revenue stream. NIBL iscontemplatingcommencinginsuranceandmicro-financebusiness,whichareexpectedtohelpusinimprovingourrevenuestreamsandshrinkingmargins.

• NIBLwould complete25 yearsofbankingoperation inNepalin2011.Wehavecomealongwayfrombeingthefirst bank to be entirely funded by Nepali investors tobeingoneoftheleadingcommercialbanksofNepal.The25thAnniversarywillbemarkedby special celebrationand schemes, which will be incorporated in the nearfuture.

• Lastly,theBankhascontinuedits longtermstrategytobetheleadingbankinthecountrybypursuingastrategyofgrowthanddeliveryofqualityservices.

23. AcknowledgmentsOnbehalfoftheBoard,Iwishtothanktheexternalauditorsfor their timely completion of audit and professionalsuggestions.Ialsoextendsincerethankstoourshareholdersfortheircontinuedsupportandencouragement.Wesincerelyconveyour thanks to theGovernmentofNepal,MinistryofFinance andNepal Rastra Bank for their continued support

and guidance. Iwould alsowish to thank themanagementand staffofNepal InvestmentBank Ltd for their dedicationandhardwork.

Lastly, we thank all our customers for giving the Bank anopportunity toserve themandwithoutwhosesupport, thedevelopmentoftheBankandgrowthinbusinesswouldnothavebeenpossible.

Thankyou,

prithivi B. pandéChairmanChiefExecutiveDirector

Prajanya RajbhandariDirector

Binod AryalDirector

Date: Asoj 5, 2067 (September 21, 2010)


NIBLwillcomplete25yearsofbankingoperationinNepalin2011.Wewill

havejourneyedtobecomeoneoftheleadingcommercialbanksinNepal.


NIBLaimstoaddvaluetobothclientsandtoshareholdersviaaninnovativeblendoftechnologybasedproductsdifferentfromthoseusedbyourcompetitors.


b) Annual Salary, Allowances and other Facilities provided to CED and other Executives /Managers

Amount Paid as Remuneration, Allowances and Facilities totheDirectors,theExecutiveChiefandOtherOffice-bearersa)Directors:

a) Directors: 1 PrithiviB.Pandé Chairman/ ChiefExecutive Director2 PrajanyaRajbhandari Director3 DeepakManSherchan Director4 JanardanD.Pant Director5 KrishnaPrasadSharma Director6 BinodAryal Director7 SurendraB.Singh Director8 DamodarPrasadSharmaPandey Professional

Directors:1. MeetingFee-ChairmanRs.10,000andDirectorsRs. 8,000permeeting2. MobilePhonebillreimbursementonactualbasis.3. Fuelfacility–50ltrspermonth.

Annexure A

BesidesSalaryandAllowances,followingfacilitiesareprovidedtoCEDandOtherExecutives/Managers:

1 Water/Electricity&TelephoneBillsarereimbursedasperactualtoCED&GM.

2. VehiclewithdriverandfuelisprovidedtoCED&GM.Forother Executives and Managers, vehicle loan/ facilitiesprovidedasperHumanResourcePolicyoftheBank.

3. Bonus-asperBonusAct.4. AccidentInsurance,MedicalInsurance,LifeInsurance-as

perServiceRegulationsandHumanResourcePolicyoftheBank

5. Newspapers&PeriodicalsareprovidedtoCED&GM

S.N. Particulars CED other Executives/ Managers1 BasicSalary 7,564 24,4762 Allowances 7,920 23,4003 DashainAllowance 1,290 3,9734 ProvidentFund 756 2,448

Total Number 1 40

NPR in Thousand


Corporate Social Responsibility

Ours is the age when Corporate Social Responsibility hasbecome part and parcel of corporate business. However,Nepal InvestmentBank Limiteddoesnot see this corporateresponsibilityasamereobligatorydutybutanopportunitytohelpbuildthenationandgivebacktosociety.

Sincetheearlydaysof its inception,NepalInvestmentBankLimited has been investing heavily on the issues of socialcauses, whose profit will go to each individual and evennationat large.Wehavetriedto lendourhandsondiverseissuesfromenvironmentconservation,healthcare,educationtonaturaldisastervictims.

WehavebrieflylistedsomeofthemajoreventssupportedbyNepalInvestmentBankLimited.

nIBl Heritage Marathon 2009Nepal InvestmentBankLimitedsuccessfullyconductedNIBLHeritage Marathon 2009, an initiative gesture towards theconservation of our cultural heritage. Our second NepalInvestmentBank(NIBL)HeritageMarathon2009,whosemainobjectivewas tohelppreserveheritageandarchitectureofKathmanduValley, raisedover70 lakh rupess far exceedingour targetoffifty lakhsrupees.Thebankdonatedthis fundtohelpbuildcremationpyresatBhasmeshwor,Pashupatinathand for restoration work at the Bhaideval Temple at PatanDurbarSquare.

NIBL Heritage Marathon 2009`

NIBL sponsored three extra cremati on pyres at Bhasmeshwor, Pashupati

Five added Dhunge Dhara

Reconstructi on of Pavement

Bhaideval Temple at Patan Durbar Square (Before and Aft er)


Extreme Everest ExpeditionThe bank also gave away 25 lakh rupees for ExtremeEverest Expedition, the cleanup campaign that clearedout1800kilosofgarbagefromabove8,000meters,oftenreferred to as the death zone. The event roused wideinternational concern, and was extensively reported byall localmedia aswell as renowned internationalmedialike BBC, Reuters and AFP. Apart from cleaning up thedeath zone, the campaign also successfully rescued thebody of twomountaineers - Swiss climberGianni Goltz,whodiedlastyear,andRussianclimberSergeyDuganov.ThevisualdocumentationofthesameisdueforpremieratDecember.

Micro Finance Summit 2010BankalsogaveawayfivelakhrupeestosupportthesecondMicrofinanceSummit2010.Thesummitfocusedonconvergingtheroleofvariedstakeholdersfrompolicymakers,regulators,to commercial banks and other microfinance practitioner,toreachtothebroaderspectrumofruraldemography.Thesummitalsoworkedonprovidingfinancialservicesto3millionpeople,especiallywomen,by2010.

Spinal Injury Rehabilitation CenterNIBLsponsoredonelakhrupeestoSpinalinjuryRehabilitationCenterfortheirgolftournament.TheSpinalInjuryRehabilitation

NepalInvestmentBankLimiteddoesnotseethiscorporateresponsibilityasamereobligatorydutybutanopportunityto

givebacktosociety.

Rescuing the body of two mountaineers

Restoration project at Sundari Chowk Restored Sundari Chowk courtyard

Cleanup campaign at Mt. Everest


Nepal Carpet Exporter’s AssociationThebankdonatedonelakhrupeestoNepalCarpetExporter’sAssociation, which is a non-profit trade organization ofexportersofhand-wovenandknottedcarpetsandarearugs.NCEAwasestablishedtoprotecttheinterestsandaspirationsofNepalesecarpetexporters throughaprocessofeffectivepolicylobbyingandworldwidemarketpromotionofNepalesecarpet.

Thebankdonated50,000rupeestoNationalTrustforNatureConservation.NTNCwasestablishedin1982byaLegislativeActasanautonomousandnot-for-profitorganization,mandatedtoworkinthefieldofnatureconservationinNepal.

Nepalese Society For Children's LiteratureNIBLsupportedNepaleseSociety forChildrensLiteraturebydonatingone lakh rupees.NESCHILwasestablished withaview to promote children's literature and reading activitiesinNepalbringingtogetherthewriters,illustrators,editorsofchildren'sbooksaswellaspublishers,librarians,teachers,andexpertsinchildren'sactivities.

press ChautariNIBL sponsored 50,000 rupees to Press Chautari. PressChautari.comisadedicatedinternetbasedonlinemediasitetobringusnews,events,interactions,discussionsandforumsto theNepalese fromabroadandNepal, it isbased inNewYork, US. Their primary objective is to make this site as a“completemediaaccess”forallNepalesepeoplearoundtheglobeandpromoterelationshipsandexplorethepotentialitiesforgrowthandopportunities.

Donation for Curable BlindnessThe bank gave away 77,000 rupees to the center for Lion’sEyeCureCentertosupporttheirmissiontoeradicatecurableblindness.LionsEyeCareCenterwasestablishedinresponseto alarming statistics revealed in a national survey in 1981which discovered approximately 80,000 people in Nepalwhowere needlessly blind fromCataract alone. To combatthisproblem;LionsEyeCareCenterhashadnotablesuccess.Overtheperiod2000/2003,LECChasconducted46surgicaleyecampsperformingsightrestoringoperationsonthetotal3099,peopleintheRuralRegionsofNepal.Sincelasttenyears,it has also expanded its hospital facilities to accommodateinpatientsandintroduceregularoperatingfacilities.

Spinal injury Rehabilitation Center

Centre (SIRC) is a unique charitable facility and the onlyrehabilitation centre in Nepal that caters exclusively to theneedsof the spinally injured.At SIRC, thepatientundergoesanintensivelyengagedperiodofrehabilitationwhichincludesspecializedtherapy,counseling,vocationaltraining,andmedicalcare.Theeventwasobservedbygolfersaswellasnongolfers.Bankhasalsobeensupportingtheenvironmentalcauses.Justthis year, we gave away 50,000 rupees to National Trust forNatureConservation.Similarly,thebankalsodonatedonelakhrupeestoNepalCarpetExporter’sAssociation.

All nepal lawn tennis AssociationThebankgaveawaythreelakhrupeestoAllNepalLawnTennisAssociationtoaidwiththeirannuallawntennismatch.

Siddhartha Art GalleryNIBL sponsored one lakh rupees to Siddhartha Art Gallery.SiddharthaArtGallerystrivestopromotebothcontemporaryNepalese art and artists from around the globe. Hostingexhibitions in various mediums including photography,pottery, installationartandprintmaking,thegalleryappealstodifferentartistictastesand interests.Committedtowardssocialresponsibility,theyfocusonsocio-culturalandpoliticalissues,have initiatedcommunityartprojectsanddonatetomanycausessuchasEarthquakeReliefFund,constructionofmaternitywardsforunderprivilegedmothersandrenovationsofhistorictemples.

Thebanksponsored25lakhrupeesforExtremeEverestExpedition,thecleanupcampaignthatclearedout1800kilosofgarbagefrom8,000metersaboveEverestwithfundsraisedfromourMarathon.


National Senior Citizen Organization, NepalAs a part of its corporate socialresponsibility project the bankaidedtheNationalSeniorCitizenOrganization Network Nepal(NSCONN)with 25,000 rupees. Theorganization is dedicated towardsthe protection and enhancement of elderlycitizen’srightsinNepalandisworkingextensivelyonincludingtheissueofseniorcitizen’srightasanintegralpartoftheto-be-draftedconstitution.

South Asian Institute of ManagementThe bank donated 50,000 rupees to South Asian Instituteof Management (SAIM) to support their ManagementDevelopment Program. SAIM is an independent, academicinstitution established in Kathmandu, Nepal in 2005 toprovide need-based management education and engagein management development, research and consultingto facilitate the growth and development of managers,entrepreneurs, and business leaders in South Asia whichis emerging as themost dynamicAsian regional economiccenter for global trade, investment and technologyinnovation.

nepal Agricultural Research CouncilNIBL has been actively involved in agricultural promotiontoo.This yearalone,wegaveaway25,000 rupees toNepalAgricultural Research Council. Nepal Agricultural ResearchCouncil (NARC)was established in 1991 as an autonomousorganizationunder"NepalAgriculturalResearchCouncilAct-1991"toconductagriculturalresearchinthecountrytouplifttheeconomiclevelofthepeople.

Nepal Body Building & Fitness AssociationGiven the context of our society, where sedentary lifestyleisbecominganobligation, theneed forphysicalactivities ispivotal. Taking this into consideration, the need to balancethese obligations with physical activities is more importantthanever.Hhence,NIBLhasbeenactivelypromotinghealthylifestyle. With the same motive, the bank donated 50,000rupeestoNepalBodyBuilding&FitnessAssociation

GAEKWAD Golf TournamentNepal Investment Bank contributed one lakh rupees toGAEKWAD Golf Tournament 2009. The two-day event wasorganized by GAEKWAD Baroda Golf Club (GBGC). GBGC issituatedintheLukshmiVillasPalacegroundsatVadodara,theindustrialandculturalcapitalofGujarat.OwnedandoperatedbyGaekwadServicesLtd, it isaffiliatedwiththeCCIClubofIndia,Mumbai. Apart from the golf tournament, the eventalsohelpspromotetourism.


TO THE SHAREHOLDERS OF NEPAL INVESTMENT BANK LIMITED

1. We have audited the accompanying Balance Sheet of Nepal Investment Bank Limited as on Ashadh 32, 2067 (July 16, 2010) and the related Profit and Loss Account and Cash Flow Statement for the year then ended. These financial statements are the responsibility of the bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the generally accepted auditing standards in Nepal and the directives issued by the Nepal Rastra Bank. Those 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. On examination of the financial statements as aforesaid, we report that:

a) We have obtained all information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our examination.

b) In our opinion, proper books of account as required by law have been kept by the Bank, in so far as appears from our examination of those books of account and the financial statements dealt with by this report are in agreement with the books of accounts.

c) In our opinion, the statements received from the respective branches are adequate for the audit purpose.

d) In our opinion and to the best of our information and according to the explanations given to us and from our examination of the books of accounts of the Bank, we have not come across the cases where the Board of Directors or any member thereof or any employee of the Bank has acted deliberately contrary to the provisions of the law relating to accounts or caused loss or damage to the Bank or committed any misappropriation or violated any directive of Nepal Rastra Bank or acted in a manner to jeopardize the interest and security of the Bank and its depositors.

e) In our opinion, adequate capital fund and provisions for losses have been made and the business of the Bank has been conducted within its authority.

4. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements referred to above, read together with the notes attached thereon give a true and fair view:

a) In the case of the Balance Sheet, of the state of affairs of the Bank as on Ashadh 32, 2067 (July 16, 2010) and

b) In the case of the Profit and Loss Account and the Cash Flow Statement, the profit of the Bank and its cash flow for the year ended on that date.

Sundar Man Shrestha, FCAChartered AccountantFor Sundar & Co.

Date: September 17, 2010


Contingent Liabilities Schedule 17 Directors’ Declaration Schedule 29 Statement of Capital Fund Schedule 30 (A1) Statement of Risk Weighted Assets Schedule 30 (B) (C) (D) (E) Principal Indicators Schedule 31 Principal Accounting Policies Schedule 32 Notes to Accounts Schedule 33 Details of Loan Against Promoters Shares Schedule 34 Comparision Between Audited & Unaudited results Schedule 35 Fourth Quarterly Unaudited Results Schedule 36

Schedules 1 to 17 form integral parts of the Balance Sheet.

Auditor Sundar Man Shrestha, FCAFor, Sundar & CompanyChartered Accountants

As per our report of even date

Prithivi Bahadur Pande Chairman & Chief Executive Director

Krishna Prasad Sharma Director


Sachin Tibrewal Head- Finance

Surendra Bahadur Singh Director

Binod AryalDirector

Prajanya Rajbhandari Director

Deepak Man Sherchan Director

Damodar Prasad Sharma Pandey Director

Jyoti P. Pandey General Manager

Capital & Liabilities Schedule Current Year Rs. Previous Year Rs.

1. Share Capital 1 2,409,097,700 2,407,068,9002. Reserve & Fund 2 2,176,295,392 1,500,770,8083. Debentures and Bonds 3 1,050,000,000 1,050,000,0004. Borrowings 4 37,314,826 38,800,0005. Deposits Liabilities 5 50,094,725,497 46,698,100,0656. Bills Payable 6 38,143,836 82,338,0187. Proposed Dividend 602,274,425 481,413,7808. Income Tax Liabilities 37,195,255 38,296,7369. Other Liabilities 7 860,366,551 714,014,819

Total Liabilities 57,305,413,482 53,010,803,126

Assets Schedule Current Year Rs. Previous Year Rs.

1. Cash Balance 8 1,525,441,872 1,833,462,4942. Balance with NRB 9 3,237,217,030 4,411,133,0833. Balance with Banks/ Financial Institution 10 2,053,230,931 1,673,408,3134. Money at Call and Short Notice 11 - -5. Investments 12 8,635,530,125 7,399,811,7006. Loan, Advances & Bills Purchased 13 40,318,308,062 36,241,206,5587. Fixed Assets 14 1,136,247,319 1,060,752,4828. Non-Banking Assets 15 - 375,0009. Other Assets 16 399,438,143 390,653,496

Total Assets 57,305,413,482 53,010,803,126

Balance SheetAs at Ashad end 2067 (July 16, 2010)


Particulars Schedule Current Year Rs. Previous Year Rs.

1. Interest Income 18 4,653,521,338 3,267,941,1422. Interest Expenses 19 (2,553,847,497) (1,686,973,130) Net Interest Income 2,099,673,841 1,580,968,0123. Commission and Discount 20 242,886,274 183,041,7784. Other Operating Income 21 168,312,660 113,974,0995. Exchange Profit 22 224,056,830 185,327,111 Total Operating Income 2,734,929,605 2,063,311,0006. Staff Expenses 23 (279,851,360) (225,721,490)7. Other Operating Expenses 24 (433,596,280) (360,533,174)8. Exchange Loss 22 - - Operating Profit Before Provision for Possible Loss 2,021,481,965 1,477,056,3369. Provision for Possible Losses 25 (93,056,584) (166,201,383) Operating Profit 1,928,425,381 1,310,854,95310. Non-operating Income/ Loss 26 10,606,049 2,953,01211. Loss Provision Written Back 27 50,000,462 114,653,009 Profit from Regular Operations 1,989,031,892 1,428,460,97412. Profit/ Loss from extra-ordinary activities 28 - - Net Profit after considering all activities 1,989,031,892 1,428,460,97413. Provision for Staff Bonus (180,821,081) (129,860,089)14. Income Tax Provision - Current Year (532,898,521) (389,580,266) - Upto Previous Year - 7,477,673 - Deferred Tax Income / (Expense) (9,362,702) (15,879,221)

Net Profit (Loss) 1,265,949,588 900,619,072

Profit & Loss Account for the period July 16, 2009 to July 16, 2010 (Shrawan 1 2066 to Ashad 32 2067)

Schedules 18 to 28 form integral part of this Profit & Loss Account.








Binod AryalDirector






Particulars Current Year Rs. Previous Year Rs.

Income 1. Accumulated Profit up to last year 156,558,171 67,478,6942. This year’s profit 1,265,949,588 900,619,0723. Exchange Fluctuation Reserve - -4. Transfer from Capital Adjustment Fund - -Total 1,422,507,759 968,097,766Expenses 1. Accumulated loss up to last year - -2. This year’s Loss - -3. General Reserve Fund (253,189,918) (180,123,815)4. Contingent Reserve - -5. Institutional Development Fund - -6. Dividend Equilization Fund - -7. Employees Related Funds - -8. Proposed Dividend (602,274,425) (481,413,780)9. Proposed Issue of Bonus Shares - -10. Special Reserve Fund - -11. Exchange Fluctuation Reserve (3,127,914) -12. Capital Adjustment Fund - -13. Debenture Redemption Fund (150,002,429) (150,002,000)14. Investment Adjustment Reserve (300,000) -

Total (1,008,894,686) (811,539,595)

Accumulated Profit (Loss) 413,613,074 156,558,171

Profit & Loss Appropriation Account for the period July 16, 2009 to July 16, 2010 (Shrawan 1 2066 to Ashad 32 2067)








Binod AryalDirector






Previous Year Rs. Particulars Current Year Rs.

(a) Cash Flow from Operating Activities 3,803,634,711 1. Cash Receipts 5,288,777,102 3,267,941,142 1.1 Interest Income 4,653,521,338 262,791,664 1.2 Commission and Discount Income 242,886,274 185,327,111 1.3 Exchange Gain 224,056,830 - 1.4 Recovery of Loan Written Off - 87,574,794 1.5 Other Income 168,312,660 (2,589,446,318) 2. Cash Payments (3,676,688,443) (1,686,973,130) 2.1 Interest Expenses (2,553,847,497) (225,721,490) 2.2 Staff Expenses (279,851,360) (301,385,498) 2.3 Office Overhead Expenses (299,626,882) (375,366,201) 2.4 Income Tax Paid (543,362,704) - 2.5 Other Expenses - 1,214,188,393 Cash Flow Before Changes in Working Capital 1,612,088,659 (9,885,946,540) Increase/(Decrease) of Current Assets (5,072,285,698) - 1. (Increase)/Decrease in Money at Call and Short Notice - (519,363,075) 2. (Increase)/Decrease in Short-term Investment (943,343,425) (9,297,852,674) 3. (Increase)/Decrease in Loan and Bills Purchase (4,120,157,626) (68,730,791) 4. (Increase)/Decrease in Other Assets (8,784,647) 12,273,134,884 Increase/(Decrease) of Current Liabilities 2,835,062,947 12,246,373,874 1. Increase/(Decrease) in Deposits 3,396,625,432 - 2. Increase/(Decrease) in Certificate of deposits - 38,800,000 3. Increase/(Decrease) in Short-Term Borrowings (1,485,175) (12,038,990) 4. Increase/(Decrease) in Other Liabilities (560,077,311) (240,162,782) (b) Cash Flow from Investing Activities (490,858,185) (4,325,000) 1. (Increase)/Decrease in Long-term Investment (292,375,000) (237,443,757) 2. (Increase)/Decrease in Fixed Assets (including Software)/ NBA (202,812,635) 3. Interest from Long-term Investment 1,605,975 4. Dividend Income 4,329,450 801,848,367 (c) Cash Flow from Financial Activities 13,878,222 - 1. Increase/(Decrease) in Long-term Borrowings ( Bond, Debentures etc.) - 801,848,367 2. Increase/(Decrease) in Share Capital/share premium 13,878,222 - 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 - 4,163,062,322 (e) Current Year’s Cash Flow from All Activities (1,102,114,057) 3,754,941,568 (f) Opening Balance of Cash and Bank Balances 7,918,003,890

7,918,003,890 (g) Closing Balance of Cash and Bank Balances 6,815,889,833

Cash Flow Statement for the period July 16, 2009 to July 16, 2010








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1. Share Capital 1.1 Authorized Capital 4,000,000,000 A) 40,000,000 Ordinary Shares of Rs. 100 each 4,000,000,000 1.2 Issued Capital 2,409,097,700 A) 24,090,977 Ordinary Shares of Rs. 100 each 2,409,097,700 (of which 13,562,684 Right Share & 9,928,293 bonus shares) 1.3 Paid Up Capital 2,407,068,900 A) 24,090,977 Ordinary Shares of Rs. 100 each 2,409,097,700 (of which 13,562,684 Right Share & 9,928,293 bonus shares) - 1.4 Proposed Bonus Shares - - 1.5 Calls in Advance -

2,407,068,900 Total 2,409,097,700

SHARE CAPITAL & OWNERSHIP( As at July 16, 2010)

Share Capital % Particulars % Share Capital

1,927,278,300 80% A. Promoters 80% 1,927,278,300 1.1 Nepal Government 1.2 Foreign Institutions 361,364,600 15% 1.3 “A” Class Liscensed Institutions 15% 361,364,600 361,364,600 15% 1.4 Insurance Company 15% 361,364,600 1,204,549,100 50% 1.5 Organized Institutions 50% 1,204,549,100 - 0% 1.6 Individuals 0% - - 0% 1.7 Others 0% - 479,790,600 20% B. General Public 20% 481,819,400 - -

2,407,068,900 100% Total 100% 2,409,097,700

SHARE OWNERSHIP( As at July 16, 2010)

Schedule 1

Details of Shareholders holding 0.5 percent or above shares are mentioned below:

Organized Institution (Group A) % Amount (Rs. in '000)

Maha Laxmi Investment P. Ltd. 8.83 212,678 Chhaya Investment P.Ltd 8.2 197,622 K.U.P. Investment P. Ltd. 7.81 188,209 Sophia Investment P. Ltd 7.42 178,800 Annapurna Investment P. Ltd 1.56 37,643 Kamala Investment P. Ltd. 1.56 37,643 Noble Investment P.Ltd 1.56 37,643 Prestine Investment P. Ltd. 1.56 37,643 Surya Infosys P. Ltd. 1.56 37,643 Star Holding P. Ltd. 1.17 28,231 P. Shanghai Investment P. Ltd 0.78 18,821 Apollo Investment P. Ltd 0.78 18,821 Lotus Investments P. Ltd 0.78 18,821 Pancha Kanya Investment Co P. Ltd 0.78 18,821 R. Shangai Investment P. Ltd. 0.78 18,821 Singhe Carpets P. Ltd. 0.78 18,821 Shrestha Brothers Investment P. Ltd. 0.78 18,821 Mercantile Investments P. Ltd. 0.63 15,058 Shakya Investments P. Ltd 0.63 15,058 S. Shakya Investment P. Ltd 0.55 13,175 S.R. Investment P. Ltd. 0.55 13,175

“A” Class Liscensed Institution (Group B)

- Rastriya Banijya Bank 15 361,365

Insurance Company (Group C)

- Rastriya Beema Sansthan 15 361,365



835,980,212 1. General Reserve Fund 1,089,170,129 - 2. Capital Reserve Fund - - 3. Capital Redemption Reserve - - 4. Capital Adjustment Fund - - 5. Share Premium 11,849,422 480,392,785 6. Other Reserve Fund 630,695,214 - a. Contingent Reserve - - b. Institution Development Fund - - c. Dividend Equalization Fund - 31,500 d. Special Reserve Fund 31,500 - e. Assets Revaluation Reserve - - f. Deferred Tax Reserve - 480,361,285 g. Debenture Redemption Fund 630,363,714 - h. Other Reserves - - i. Investment Adjustment Reserve 300,000 156,558,171 7. Accumulated Profit/ Loss 413,613,074 27,839,640 8. Exchange Fluctuation Reserve 30,967,553

1,500,770,808 Total 2,176,295,392


300,000,000 7.5 % Debentures of Rs. 1000 each issued on 24.11.2003 (2060.08.08) 300,000,000 and maturing on 24.11.2010 (2067.08.07) Outstanding Balance of Redemption Reserve Rs. 300,000,000 250,000,000 6 % Debentures of Rs. 1000 each issued on 26.06.2006 (2063.03.12) 250,000,000 and maturing on 25.06.2013(2070.03.11) Outstanding Balance of Redemption Reserve Rs.145,837,143 250,000,000 6.25 % Debentures of Rs. 1000 each issued on 26.06.2007 (2064.03.12) 250,000,000 and maturing on 25.06.2014(2071.03.11) Outstanding Balance of Redemption Reserve Rs. 110,121,857 250,000,000 8 % Debentures of Rs. 1000 each issued on 09.07.2008 (2065.03.25) 250,000,000 and maturing on 08.07.2015 (2072.03.24) Outstanding Balance of Redemption Reserve Rs. 74,404714 1,050,000,000 Total 1,050,000,000

RESERVE FUNDS( As at July 16, 2010)

DEBENTURES AND BONDS( As at July 16, 2010)

Schedule 2

Schedule 3



38,800,000 A. Local - 1. Nepal Government - - 2. Nepal Rastra Bank - 3. Repo Obligation 38,800,000 4. Inter Bank and Financial Institutions 37,314,826 5. Other Financial Institutions - 6. Others - 38,800,000 Total 37,314,826 B. Foreign 1. Banks 2. Others - Total -

38,800,000 Total (A+B) 37,314,826


1. Non-Interest bearing accounts 3,756,570,350 A. Current Deposits 4,025,820,180 2,952,365,333 1. Local Currency 3,317,685,897 391,996,113 1.1 Nepal Government 236,953,142 82,099,111 1.2 “Ka” Class Licensed Institutions 125,652,293 245,424,330 1.3 Other Licensed Institutions 146,794,222 1,894,533,204 1.4 Other Organized Institutions 2,483,012,383 223,010,104 1.5 Individuals 215,223,151 115,302,471 1.6 Others 110,050,707 804,205,017 2. Foreign Currency 708,134,284 - 2.1 Nepal Government - - 2.2 “Ka” Class Licensed Institutions 55,981,005 79,212,781 2.3 Other Licensed Institutions 416,159,761 663,861,746 2.4 Other Organized Institutions 140,910,431 54,971,786 2.5 Individuals 69,572,350 6,158,704 2.6 Others 25,510,737 727,990,479 B. Margin Deposits 779,474,631 - 1. Employess Guarantee - 237,599,202 2. Guarantee Margin 266,480,083 490,391,277 3. Letters of Credit Margin 512,994,548 - 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 -

4,484,560,829 Total Non-Interest Bearing Accounts 4,805,294,811

BORROWINGS( As at July 16, 2010)

DEPOSITS( As at July 16, 2010)

Schedule 4

Schedule 5



2. Interest bearing accounts

17,066,252,467 A. Savings Deposits 14,324,255,897

15,949,380,505 1. Local Currency 13,692,072,691 738,863,616 1.1 Organized Institutions 50,720,466 14,729,221,590 1.2 Individuals 13,627,035,432 481,295,299 1.3 Others 14,316,793 1,116,871,962 2. Foreign Currency 632,183,206 81,677,754 2.1 Organized Institutions 171,749,990 1,026,322,913 2.2 Individuals 395,953,229 8,871,295 2.3 Others 64,479,987 11,633,380,218 B. Fixed Deposits 16,825,148,284 8,144,902,245 1. Local Currency 14,247,276,492 6,229,532,225 1.1 Organized Institutions 9,928,496,879 1,747,561,040 1.2 Individuals 4,227,854,037 167,808,980 1.3 Others 90,925,576 3,488,477,973 2. Foreign Currency 2,577,871,792 3,486,197,755 2.1 Organized Institutions 2,551,787,442 2,280,218 2.2 Individuals 26,084,350 - 2.3 Others - 13,513,906,551 C. Call Deposit 14,140,026,504 13,016,982,339 1. Local Currency 13,402,464,249 836,913,734 1.1 “Ka” Class Licensed Institutions 674,224,593 3,409,196,988 1.2 Other Licensed Institutions 2,832,671,909 7,516,567,599 1.3 Other Organized Institutions 6,627,164,807 1,080,216,606 1.4 Individual 2,510,073,754 174,087,412 1.5 Others 758,329,186 496,924,212 2. Foreign Currency 737,562,255 - 2.1 “Ka” Class Licensed Institutions - - 2.2 Other Licensed Institutions - 486,030,368 2.3 Other Organized Institutions 698,070,476 10,061 2.4 Individual 6,810,004 10,883,783 2.5 Others 32,681,775 - D. Certificate of Deposit - - 2.1 Organized Institutions - - 2.2 Individuals - - 2.3 Others - 42,213,539,236 Total Interest Bearing Accounts 45,289,430,685

46,698,100,065 Total Deposit 50,094,725,497

DEPOSITS Continue………… ( As at July 16, 2010)

Schedule 5



47,250,276 1. Local Currency 37,586,297 35,087,742 2. Foreign Currency 557,539

82,338,018 Total 38,143,836


12,352,678 1. Pension/ Gratuity Fund 12,271,971 - 2. Employees Provident Fund - - 3. Employees Welfare Fund - 129,860,089 4. Provision for Staff Bonus 180,821,081 47,521,866 5. Interest Payable on Deposits 88,410,081 38,126,172 6. Interest Payable on Borrowings 38,015,890 85,130,289 7. Unearned Discount & Commission 112,883,429 129,467,451 8. Sundry Creditors 150,315,282 - 9. Branch Adjustment Account - 17,820,561 10. Deferred Tax Liabilities 27,183,263 4,039,727 11. Dividend Payable 16,822,327 249,695,986 12. Others 233,643,227 37,529,465 12.1 Matured Time Deposit 59,478,370 300,000 12.2 Statutory Auditor’s Fee 300,000 211,866,521 12.3 Others 173,864,857

714,014,819 Total 860,366,551


1,763,936,871 1. Local Currency (including coin) 1,487,577,926 69,525,623 2. Foreign Currency 37,863,946

1,833,462,494 Total 1,525,441,872

Previous Year Rs. Particulars Foreign Currency in Rs. Current Year Rs. Local Currency Indian Rs. Conv. F.C. Total Grand Total

4,411,133,083 1. Nepal Rastra Bank 3,125,323,770 - 111,893,260 111,893,260 3,237,217,030 4,411,133,083 a. Current Account 3,125,323,770 - 111,893,260 111,893,260 3,237,217,030

- b. Other Account -

BILLS PAYABLE( As at July 16, 2010)

OTHER LIABILITIES( As at July 16, 2010)

CASH BALANCE( As at July 16, 2010)

BALANCE WITH NEPAL RASTRA BANK ( As at July 16, 2010)

Schedule 6

Schedule 7

Schedule 8

Schedule 9


Previous Year Rs. Particulars Foreign Currency in Rs. Current Year Rs. Local Currency Indian Rs. Conv. F.C. Total Grand Total

201,811,480 1. Local Licensed Institutions 73,370,529 - 1,188,369 1,188,369 74,558,898 201,811,480 a. Current Account 73,370,529 - 1,188,369 1,188,369 74,558,898 - b. Other Account - 1,471,596,833 2. Foreign Banks - 768,121,695 1,210,550,338 1,978,672,033 1,978,672,033 1,471,596,833 a. Current Account - 768,121,695 1,210,550,338 1,978,672,033 1,978,672,033 - b.other Account -

1,673,408,313 Total 73,370,529 768,121,695 1,211,738,707 1,979,860,402 2,053,230,931

BALANCE WITH BANKS/FINANCIAL INSTITUTIONS( As at July 16, 2010)

Schedule 10


- 1. Local Currency - - 2. Foreign Currency -

- Total -

Previous Year Rs. Particulars Purpose Current Year Rs. Trading Others

2,531,300,000 1. Nepal Government Treasury Bills - 3,911,850,000 3,911,850,000 - 2. Nepal Government Savings Bond - 290,000,000 290,000,000 - 3. Nepal Government Other Securities - - - - 4. Nepal Rastra Bank Bonds - - - - 5. Foreign Bonds - - - - 6. Local Licensed Institutions - 370,000,000 370,000,000 4,807,541,200 7. Foreign Banks - 4,000,334,625 4,000,334,625 64,270,500 8. Corporate Shares - 66,645,500 66,645,500 - 9. Corporate Bonds and Debentures - - - - 10. Other Investment - - -

7,403,111,700 Total Investment - 8,638,830,125 8,638,830,125 3,300,000 Provision - 3,300,000 3,300,000

7,399,811,700 Net Investment - 8,635,530,125 8,635,530,125

MONEY AT CALL AND SHORT NOTICE( As at July 16, 2010)

INVESTMENTS( As at July 16, 2010)

Schedule 11

Schedule 12

Note : Total Balance as per the confirmations received from respective Banks (including Nepal Rastra Bank ) Rs. 4,810,027,992.45


Previous Year Rs. Particulars Current Year Rs. Cost Price Market Price Provision Rs.

1. Investment in Shares 3,000,000 1.1 Sudur Paschimanchal Grameen Bikas Bank 30,000 Ordinary 3,000,000 3,000,000 - Shares of Rs.100 paid up 1,500,000 1.2 Paschimanchal Grameen Bikas Bank 16,500 Ordinary 1,500,000 1,500,000 - Shares of Rs.100 paid up, of which 1500 are bonus shares 3,000,000 1.3 Purbanchal Grameen Bikas Bank 30,000 Ordinary 3,000,000 28,950,000 - Shares of Rs.100 paid up 33,810,000 1.4 Rural Micro Finance Development Centre Ltd. 338,100 33,810,000 33,810,000 - Ordinary Shares of Rs.100 paid up 6,600,000 1.5 Swabalamban Bikas Bank 84,150 Ordinary 6,600,000 48,891,150 - Shares of Rs.100 paid up, of which 18,150 are bonus shares 1,235,500 1.6 Credit Information Centre Ltd. 14,120 Ordinary 1,235,500 1,235,500 - Shares of Rs.100 paid up, of which 1,765 are bonus shares 15,000,000 1.7 Taragaon Regency Hotel Ltd. Ordinary 150,000 15,000,000 11,700,000 3,300,000 Shares of Rs.100 paid up 125,000 1.8 Nepal Clearing House Ltd. Ordinary 25,000 2,500,000 2,500,000 - Shares of Rs.100 paid up - 2. Investments in Debentures and Bonds - - - 64,270,500 Total Investment 66,645,500 131,586,650 3,300,000 3. Provision for Loss 5,400,000 3.1 Up to Previous year 3,300,000 (2,100,000) 3.2 Adjustments this year -

3,300,000 Total Provision 3,300,000 - -

60,970,500 Net Investment 63,345,500 -

INVESTMENT IN SHARES DEBENTURES AND BONDS( As at July 16, 2010)

Schedule 12 (A)

Notes:

1. In case of investment in shares which are not listed, the market value has been taken as book value of shares.

2. Following Company has not declared and distributed dividend for the last three years:

- Sudur Paschimanchal Grameen Bikas Bank Ltd.

- Taragaon Regency Hotel Ltd.

- Nepal Clearing House Ltd.

S.No. Particulars Cost Price Previous Current Current Previous Remarks Rs. Market Market Year Year Price Price Profit/ Profit/ Rs. Rs. (Loss) Rs. (Loss) Rs.

1 Nepal Government Treasury Bills 2 Nepal Government Savings Bond 3 Nepal Government Other Securities 4 Nepal Rastra Bank Bonds 5 Foreign Bonds 6 Local Licensed Institutions’ Shares 7 Local Licensed Institutions’ Debentures & Bond 8 Local Organized Instituions’ Shares, Debentures & Bonds 9 Foreign Bank Placements 10 Inter Bank Lending 11 Other Investment

Total Investments

INVESTMENTS (Held for Trading)( As at July 16, 2010)

Schedule 12.1


S.No. Particulars Cost Price Previous Current Current Year Previous Remarks Rs. Market Market Adjustment In Year Price Price Investment Profit/ Rs. Rs. Reserve Rs. (Loss) Rs.

1 Nepal Government Treasury Bills 2 Nepal Government Savings Bond 3 Nepal Government Other Securities 4 Nepal Rastra Bank Bonds 5 Foreign Bonds 6 Local Licensed Institutions’ Shares 7 Local Licensed Institutions’ Debentures & Bond 8 Local Organized Instituions’ Shares, 66,645,500 103,261,650 131,586,650 300,000 0 Debentures & Bonds9 Foreign Bank Placements 10 Other Investment

Total Investments 66,645,500 103,261,650 105,636,650 300,000 -

S.No. Particulars Cost Price Amount Amount Current Previous Remarks Rs. Impaired Impaired till Year till Previous date Profit/ Profit/ Year Rs. Rs. (Loss) Rs. (Loss) Rs.

1 Nepal Government Treasury Bills 3,911,850,000 2 Nepal Government Savings Bond 290,000,000 3 Nepal Government Other Securities - 4 Nepal Rastra Bank Bonds - 5 Foreign Bonds - 6 Local Licensed Institutions’ Shares - 7 Local Licensed Institutions’ Debentures & Bond - 8 Local Organized Instituions’ Shares, Debentures & Bonds - 9 Foreign Bank Placements 4,000,334,625 10 Other Investment 370,000,000

Total Investments 8,572,184,625 - - - -

INVESTMENTS (Available for Sale)( As at July 16, 2010)

INVESTMENTS (Held to Maturity)( As at July 16, 2010)

Schedule 12.3

Schedule 12.2


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36,827,157,409 (A) Secured 40,948,440,033 33,045,926,034 1. Collateral of Movable/Immovable Assets 36,897,102,378 - 2. Local Licensed Institutions Guarantee - - 3. Government Guarantee - - 4. Internationally rated Foreign Banks Guarantee - - 5. Export Documents - 149,838,588 6. Fixed Deposit Receipts 183,801,677 (a) Own FDR 183,801,677 (b) FDR of other Licensed Institutions - 13,150,315 7. Government Bonds 2,945,928 - 8. Counter Guarantee - 8,641,047 9. Personal Guarantee 21,034,929 3,609,601,425 10. Other Securities 3,843,555,121 - (B) Unsecured -

36,827,157,409 Total 40,948,440,033

Assets Current Year Previous Year PARTICULARS Building Vehicles Machinery Office Equipment Others Total

- 1. At Cost - 800,713,468 A. Previous Year’s Balance 186,400,063 154,680,036 - 169,732,595 468,701,615 979,514,309 192,159,908 B. Addition during the Year (+) 3,675,000 45,275,764 - 54,450,795 94,317,386 197,718,946 - C. Revaluation / Written back during the Year (+)” - - - - - - (13,359,067) D. This Year Sold (-) - (17,070,833) - - (188,018) (17,258,851) - E. This Year Written off (-) - - 979,514,309 TOTAL GROSS VALUE ( A+B+C-D-E ) 190,075,063 182,884,966 - 224,183,391 562,830,984 1,159,974,404 2. DEPRECIATION 244,111,039 A. Previous Year’s Balance 14,889,553 48,810,248 - 52,208,560 216,342,796 332,251,157 96,584,264 B. Depreciation during the Year (+) 3,728,001 24,031,988 - 17,318,130 71,470,828 116,548,948 (8,444,146) C. Total Depreciation on Sold / - (11,395,677) - - (188,014) (11,583,690) - Written Off Assets (-) - - D. Depreciation on Revaluation/ - - - - - - Written back 332,251,157 TOTAL DEPRECIATION ( A+B-C-D) 18,617,554 61,446,559 - 69,526,690 287,625,611 437,216,415 647,263,152 3. REMAINING BOOK VALUE ( 1-2 ) 171,457,508 121,438,407 - 154,656,700 275,205,373 722,757,989 413,489,330 4. Land 413,489,330 - 5. Capital Construction - - 6. LEASEHOLD ASSETS - 1,060,752,482 Total book value( 3+4+5+6) 171,457,508 121,438,407 - 154,656,700 275,205,374 1,136,247,319

SECURITIES AGAINST LOAN, ADVANCES AND BILLS PURCHASED( As at July 16, 2010)

FIXED ASSETS ( As at July 16, 2010)

Schedule 13 A

Schedule 14



1,740,297 1. Stock of Stationery 937,093 107,854,451 2. Income Receivable on investments 59,386,690 153,600,871 3. Accrued Interest on Loan 184,871,197 - (153,600,871) Less: Interest Suspense amount (184,871,197) - - 4. Receivable Commission - 17,165,694 5. Sundry Debtors 18,263,661 15,091,342 (2,074,352) Less : Provision (2,074,352) 16,189,309 81,289,286 6. Staff Loan and Advances 100,602,317 13,615,079 7. Prepayments 42,959,127 - 8. Cash in Transit - - 9. Other Transit items (including cheques) - - 10. Drafts Paid without Notice - 104,631,146 11. Expenses Not Written off 111,013,405 65,858,520 (38,772,626) Less: Amortization (56,193,075) 54,820,330 - 12. Branch Adjustment account - 105,204,521 13. Others 124,543,277 4,994,365 13.1 Receivable from Nepal Rastra Bank 5,117,279 63,218,516 13.2 Premium deposit against Staff Housing Loan 76,295,332 36,991,640 13.3 Others 43,130,666 - 13.4 Deferred Tax Assets -

390,653,496 Total 399,438,143

Previous Year Rs. Particulars Current Year Rs. Up to 1 Year 1 to 3 Years Above 3 Years Total

153,600,871 1. Accrued Interest on Loan 49,350,342 4,870,186 130,650,669 184,871,197 - 2. Drafts Paid without Notice

3. Branch Adjustment A/c

Previous Year Rs. Date of Total Loss Provision Net Non Total Loss Net Name and Address of Borrower or Party acquisition of Amount of In percentage In amount Banking Amount Provision Non Banking Non-Banking Assets Rs. Assets Assets

1,500,000 1,125,000 375,000 Binayak Feed Industries, Bhaktapur 18/01/2007 - - - -

1,500,000 1,125,000 375,000 Grand Total - - - -

OTHER ASSETS( As at July 16, 2010)

OTHER ASSETS (Additional Statement)( As at July 16, 2010)

Non-Banking Assets( As at July 16, 2010)

Schedule 16

Schedule 16 (A)

Schedule 15



- 1. Claims on Institution but not accepted by the Institution - 6,136,742,629 2. Letters of credit (full amount) 5,240,220,961 4,924,898,407 (a) Less than 6 months maturity 3,578,893,287 1,211,844,222 (b) More than 6 months maturity 1,661,327,674 - 3. Rediscounted Bills - 2,409,149,575 4. Unmatured Guarantees/ Bonds 2,731,695,865 583,820,503 (a) Bid Bonds 516,603,148 1,602,430,478 (b) Performance Bonds 1,780,298,423 222,898,594 (c) Other Guarantee/ Bonds 434,794,294 - 5. Unpaid Shares in Investment - 59,504,763 6. Forward Exchange Contract Liabilities 69,449,078 405,480,033 7. Bills under Collection 256,907,093 799,418,295 8. Acceptance and Endorsements 1,062,466,778 - 9. Underwriting Commitments - 3,567,971,517 10. Irrevocable Loan Commitments 3,574,696,141 1,537,290,444 “11. Guarantee issued against counter guarantee of Internationally Rated Banks” 1,320,552,365 1,342,961,931 12. Advance Payment Guarantee 1,636,215,202 - 13. Financial Guarantee - 9,209,500 14. Contingent Liabilities on Income Tax - - 15. Others (Loan under Repurchase Agreement) -

16,267,728,687 Total 15,892,203,483


2,906,054,774 A. On Loan, Advances and Overdrafts 4,303,311,186 1,569,180,560 1. Loan and Advances 2,110,212,027 1,336,874,214 2. Overdraft 2,193,099,159 140,697,625 B. On Investment 169,619,945 140,697,625 1. Nepal Government Securities 169,619,945 140,697,625 a. Treasury Bills 167,872,786 - b. Development Bonds 1,747,159 - c. National Savings Certificates - - 2. Foreign Securities - - 3. Nepal Rastra Bank Bonds - - 4. Debenture and Bonds - - a.Banks & Financial Institutions - - b.Other Organization - - 5. Interest on Inter Bank Lending - 6,826,224 C. On Agency Balances 429,399 - 1. Local Banks & Financial Institutions - 6,826,224 2. Foreign Banks 429,399 175,142,952 D. On Money At Call and Short Notice 120,237,282 3,053,093 1. Local Banks & Financial Institutions 731,370 172,089,859 2. Foreign Banks* 119,505,912 39,219,567 E. On Others 59,923,526 - 1. Certificate of Deposits - 14,536,307 2. Inter-Bank/ Financial Institutions Loan 36,930,920 24,683,260 3. Others 22,992,606

3,267,941,142 Total 4,653,521,338

CONTINGENT LIABILITIES( As at July 16, 2010)

INTEREST INCOME for the period July 16, 2009 to July 16,2010

Schedule 17

Schedule 18

*Interest received on investment (placements) made in foreign banks is shown under this heading



1,596,672,381 A. On Deposit Liabilities 2,402,466,678 436,489,351 1. Fixed Deposits 1,248,185,647 340,950,079 1.1 Local Currency 1,147,123,783 95,539,272 1.2 Foreign Currency 101,061,864 380,818,232 2. Savings Deposits 450,806,780 376,776,488 1.1 Local Currency 446,820,533 4,041,744 1.2 Foreign Currency 3,986,247 779,364,798 3. Call Deposit 703,474,251 769,645,427 1.1 Local Currency 697,576,759 9,719,371 1.2 Foreign Currency 5,897,492 - 4. Certificate of Deposits - 90,300,749 B. On Borrowings 151,380,819 73,230,918 1. Debenture and Bonds 73,313,452 - 2. Loan from Nepal Rastra Bank - 17,069,831 3. Inter Bank/ Financial Institutions Borrowing 78,067,367 - 4. Other Corporate Body - 5. Other Loans - C. On Others -

1,686,973,130 Total 2,553,847,497


878,308 A. Bills Purchase and Discount 712,091 - 1. Local - 878,308 2. Foreign 712,091 158,730,075 B. Commission 208,832,991 45,478,281 1. Letters of Credit 61,527,062 49,833,164 2. Guarantees 53,463,224 171,204 3. Collection Fee 134,907 18,328,924 4. Remittance Fee 24,763,972 44,521,757 5. Credit Cards/ Debit Cards 65,954,790 - 6. Share Underwriting/ Issues - - 7. Government Transactions - 189,279 8. Agency Commission 2,796,619 207,466 9. Exchange Fee 192,417 23,433,395 C. Others 33,341,192

183,041,778 Total 242,886,274

INTEREST EXPENSES for the period July 16, 2009 to July 16,2010

Commission And Discount for the period July 16, 2009 to July 16,2010

Schedule 19

Schedule 20



9,999,769 1. Rental on Safe Deposit Lockers 11,741,468 1,217,089 2. Issue and Renewals of Credit Cards 1,583,668 23,970,845 3. Issue and Renewals of ATM Cards/ Debit Cards 33,063,143 26,381,479 4. Telex/ T.T. 28,208,250 25,314,555 5. Service Charges 56,721,219 1,084,750 6. Renewal Fees 7,119,800 26,005,612 8. Others 29,875,112

113,974,099 Total 168,312,660


(7,351,506) (A) Revaluation Gain/ (Loss) 12,511,650 192,678,617 (B) Trading Gain (except Exchange Fee) 211,545,180

185,327,111 Total Income/ (Loss) 224,056,830


110,096,807 1. Salary 131,072,050 62,408,691 2. Allowances 95,741,426 8,622,679 3. Contribution to Provident Fund 9,861,850 4,162,374 4. Training Expenses 3,162,162 520,561 5. Uniform 697,222 251,051 6. Medical 112,001 10,512,211 7. Insurance 12,046,802 13,457,093 8. Pension and Gratuity Provision 15,126,638 15,690,023 9. Others 12,031,209 1,058,257 a. Training Course Remuneration 0 697,359 b. Leave Compensation 418,614 7,481,159 c. Staff Lunch 7,591,270 6,453,247 d. Other incentives 4,021,325

225,721,490 Total 279,851,360

OTHER OPERATING INCOME for the period July 16, 2009 to July 16,2010

EXCHANGE GAIN /LOSS for the period July 16, 2009 to July 16,2010

EXPENSES RELATING TO EMPLOYEES for the period July 16, 2009 to July 16,2010

Schedule 21

Schedule 22

Schedule 23



165,851,383 1. Increase in Loan Loss Provision 93,056,584 - 2. Increase in Provision for Loss on Investment - 350,000 3. Provision for Non Banking Assets - 4. Provision for Other Assets -

166,201,383 Total 93,056,584


50,310,973 1. House Rent 62,354,547 14,104,240 2. Electricity and Water 16,651,723 3,407,473 3. Repair and Maintenance 5,101,955 1,074,632 (a) Building 2,427,040 2,063,854 (b) Vehicles 2,325,936 268,987 (c) Others 348,979 9,147,598 4. Insurance 10,203,763 18,305,256 5. Postage, Telex, Telephone, Fax 19,356,837 10,983,266 6. Office Equipment, Furniture and Repair 12,010,718 17,612,631 7. Travelling Allowances and Expenses 15,056,440 26,271,390 8. Stationery and Printing 26,118,590 461,122 9. Periodicals and Books 460,623 29,758,886 10. Advertisements & Business Promotion 31,080,130 1,148,000 11. Legal Expenses 1,455,600 1,375,333 12. Donations 147,909 1,246,879 13. Expenses Relating to Board of Directors 1,845,992 1,143,000 (a) Meeting Fees 1,730,200 103,879 (b) Other Expenses 115,792 596,013 14. Annual General Meeting Expenses 1,023,927 300,000 15. Expenses Relating to Audit 300,000 300,000 (a) Audit Fees 300,000 - (b) Other Expenses - - 16. Commission on Remittances - 96,584,388 17. Depreciation on Fixed Assets 116,548,948 15,913,870 18. Amortization of Expenses( Software) 17,420,450 4,364,712 19. Share/Debenture expenses 758,699 - 20. Technical Services Fee - 6,291,452 21. Entertainment 6,626,782 - 22. Written Off Expenses - 20,720,008 23. Security Expenses 26,826,641 - 24. Credit Guarantee Premium - - 25. Commission and Discount - 31,629,686 26. Others 62,246,008 9,122,962 (a) Fees for Services Others 17,105,980 15,636,275 (b) Fuel for Vehicle/Generator 19,462,209 1,000 (c) Losses shortages written off - 1,900,156 (d) Vehicle Renewal and other taxes 19,642,883 427,000 (e) Membership Fee 464,900 2,356,036 (f) Office Cleaning & Maintenance 2,566,076 2,186,257 (g) Misc. Expenses 3,003,960

360,533,174 Total 433,596,280

PROVISION FOR POSSIBLE LOSS for the period July 16, 2009 to July 16,2010

OTHER OPERATING EXPENSES for the period July 16, 2009 to July 16,2010

Schedule 25

Schedule 24



- 1. Profit (Loss) on Sale of Investment - 1,347,037 2. Profit (Loss) on Sale of Assets 6,276,599 1,605,975 3. Dividend (net) 4,329,450 a. Commercial Banks 1,605,975 b. Grameen Banks 4,329,450 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

2,953,012 Total Non-Operating Income /(Loss) 10,606,049


112,553,009 1. Loan Loss Provision Written Back 48,875,462 2. Provision against Non Banking Assets Written Back 1,125,000 2,100,000 3. Investment Provision Written Back - - 4. Provision Against Other Assets Written Back -

114,653,009 Total 50,000,462


- 1. Recovery of write off Loan - - 2. Voluntary Retirement Scheme Expenses - - 3. Loan Write-Offs (28 (A)) - - 4. Other Expenses/ Income -

- Total -

NON-OPERATING INCOME/LOSS for the period July 16, 2009 to July 16,2010

LOSS PROVISION WRITTEN BACK for the period July 16, 2009 to July 16,2010

PROFIT/ LOSS FROM EXTRA ORDINARY ACTIVITIES for the period July 16, 2009 to July 16,2010

Schedule 26

Schedule 27

Schedule 28


Name of Promoter/Director/ Chief Executive Last Years Balance This Year Recovery This year Balance as of Ashad end Principal Interest Principal Interest Addition Principal Interest(A) Directors - - - - - - - (B) Chief Executive - - - - - - - (C) Promoters - - - - - - -

(D) Employees - - - - - - -(E) Shareholders holding more than 1% - - - - - - -

Total - - - - - - -

S.N. Types of Loan Written off Type of Basis of Loan Approved Initiations Remarks Amount Security valuation by Name/ madee of collateral Designation for recovery

1 Working Capital Loan - 2 Project Loan - 3 Fixed Capital Loan - 4 Personal Loan - 5 Other Loan -

Total -

STATEMENT OF LOAN WRITTEN-OFF for the period July 16, 2009 to July 16,2010

Statement of Loans and Advances Extended to Directors/ Chief Executive/ Promoter/ Employees and Shareholders Holding More Than 1 Percent Shares. for the period July 16, 2009 to July 16,2010

Schedule 28(A)

Schedule 29

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:


1.1 RISK WEIGHTED EXPOSURES Current Period Previous Period

a Risk Weighted Exposure for Credit Risk 50,041,481 42,975,192b Risk Weighted Exposure for Operational Risk 2,517,313 1,941,891c Risk Weighted Exposure for Market Risk 464,836 395,182 Adjustment under Pillar II Add: 1% of the total RWE as per NRB Directives 530,236 - Add:5% of the total deposit due to insufficient liquid assets(6.4 a 6) - -

Total Risk Weighted Exposures(After Bank’s adjustment of Pillar II) 53,553,866 45,312,265

1.2 CAPITAL Current Period Previous Period

Core Capital (Tier 1) 4,554,094 3,879,969 a Paid up Equity Share Capital 2,409,098 2,407,069 b Irredeemable Non-cumulative preference shares - - c Share Premium 11,849 - d Proposed Bonus Equity Shares - - e Statutory General Reserves 1,089,170 835,980 f Retained Earnings till last year 156,558 67,479 g Audited current year cumulative profit 257,055 89,079 h Capital Redemption Reserve 630,364 480,361 i Capital Adjustment Reserve - - j Dividend Equalization Reserves - - k Other Free Reserve - - l Less.Goodwill m Less.Fictitious assets - - n Less. Investment in equity in licensed Financial Institutions - - o Less. Investment in equity of institutions with financial interests - - p Less. Investment in equity of institutions in excess of limits - - q Less. Investments arising out of underwriting commitments - - r Less. Reciprocal crossholdings - - s Less. Other Deductions - - Adjustments under Pillar II Less: Shortfall in Provision(6.4 a 1) - - Less: Loans and Facilities extended to Related Parties and Restricted lending(6.4 a 2) - - Supplementary Capital (Tier 2) 1,096,951 1,215,385 a Cumulative and/or Redeemable Preference Share - - b Subordinated Term Debt 1,050,000 1,050,000 Less : 20% discount value to 5YTM Bond/ Debenture (390,000) (230,000)c Hybrid Capital Instruments - - d General loan loss provision 405,652 367,514 e Exchange Equalization Reserve 30,968 27,840 f Investment Adjustment Reserve 300 - g Assets Revaluation Reserve - - h Other Reserves 32 32

Total Capital Fund (Tier I and Tier II) 5,651,045 5,095,353

1.3 CAPITAL ADEQUACY RATIOS Current Period Previous Period

Core Capital to Total Risk Weighted Exposures (Tier I) 8.50% 8.56%

Total Capital Fund to Total Risk Weighted Exposures (Tier I & Tier II) 10.55% 11.24%

FORM NO.1 CAPITAL ADEQUACY TABLE for the period July 16, 2009 to July 16,2010

Schedule 30


A. Balance Sheet Exposures “ Book “ Specific “ Eligible “ Net “Risk “ Risk Weighted Previous Period Value Provision CRM Value Weight Exposures Risk Weighted a “ b “ c “ d=a-b-c “ e” f=d*e “ Exposures

Cash Balance 1,525,442 - - 1,525,442 0% - -Balance With Nepal Rastra Bank 3,237,217 - - 3,237,217 0% - -Investment in Nepalese Government Securities 4,201,850 - - 4,201,850 0% - -All Claims on Government of Nepal - - - - 0% - -Investment in Nepal Rastra Bank securities - - - - 0% - -All Claims on Nepal Rastra Bank - - - - 0% - -Claims on Foreign Government and Central Bank (ECA rating 0-1) - - - - 0% - -Claims on Foreign Government and Central Bank (ECA-2) - - - - 20% - -Claims on Foreign Government and Central Bank (ECA -3) - - - - 50% - -Claims on Foreign Government and Central Bank (ECA-4-6) - - - - 100% - -Claims on Foreign Government and Central Bank (ECA -7) - - - - 150% - -Claims On BIS, IMF, ECB, EC and on Multilateral Development - - - - 0% - - Banks (MDB’s) recognized by the frameworkClaims On Other Multilateral Development Banks - - - - 100% - -Claims on Public Sector Entity (ECA 0-1) - - - - 20% - -Claims on Public Sector Entity (ECA 2) - - - - 50% - -Claims on Public Sector Entity (ECA 3-6) - - - - 100% - -Claims on Public Sector Entity (ECA 7) - - - - 150% - -Claims on domestic Banks that meet capital adequacy requirements 390,401 - - 390,401 20% 78,080 9,108Claims on domestic Banks that do not meet capital adequacy requirements 54,158 - - 54,158 100% 54,158 156,272Claims on foreign bank (ECA Rating 0-1) 2,489,001 - - 2,489,001 20% 497,800 490,482Claims on foreign bank (ECA Rating 2) 818,646 - - 818,646 50% 409,323 194,000Claims on foreign bank (ECA Rating 3-6) - - - - 100% - -Claims on foreign bank (ECA Rating 7) - - - - 150% - -Claims on foreign bank incorporated in SAARC region operating with a 2,671,360 2,671,360 20% 534,272 687,746 buffer of 1% above their respective regulatory capital requirementClaims on Domestic Corporates 26,136,111 16,436 650,182 25,469,493 100% 25,469,493 28,835,429Claims on Foreign Corporates (ECA 0-1) - - - - 20% - -Claims on Foreign Corporates (ECA 2) - - - - 50% - -Claims on Foreign Corporates (ECA 3-6) - - - - 100% - -Claims on Foreign Corporates (ECA 7) - - - - 150% - -Regulatory Retail Portfolio (Not Overdue) 3,608,832 1,290 586,532 3,021,010 75% 2,265,758 4,819,572Claims fulfilling all criterion of regulatory retail except granularity - - - - 100% - -Claims secured by residental properties 1,189,846 - - 1,189,846 60% 713,908 -Claims not fully secured by residental properties - - - - 150% - -Claims secured by residental properties (Overdue) 423 423 - - 100% - -Claims secured by Commercial Real Estate 5,762,865 - 5,762,865 100% 5,762,865 -Past due claims (except for claim secured by residental properties) 253,612 206,332 - 47,280 150% 70,920 20,726High Risk Claims 3,996,751 - - 3,996,751 150% 5,995,127 -Investment in equity and other capital instruments of institutions 16,500 3,300 - 13,200 100% 13,200 18,300 listed in the Stock exchangeInvestment in equity and other capital instruments of institutions 50,146 - - 50,146 150% 75,218 64,006 not listed in the Stock exchangeOther Assets (as per attachment) 2,159,847 624,162 - 1,535,685 100% 1,535,685 1,412,003

Total 58,563,007 851,942 1,236,714 56,474,352 43,475,808 36,707,642

FORM NO.2 RISK WEIGHTED EXPOSURE FOR CREDIT RISK for the period July 16, 2009 to July 16,2010

Schedule 30 (B) Rs. in '000


B. Off Balance Sheet Exposures “ Book “ Specific “ Eligible “ Net “Risk “ Risk Weighted Previous Period Value Provision CRM Value Weight Exposures Risk Weighted a “ b “ c “ d=a-b-c “ e” f=d*e “ Exposures

Revocable Commitments - - - - 0% - - Bills Under Collection - - - - 0% - - Forward Exchange Contract Liabilities 69,449 - - 69,449 10% 6,945 5,950 LC Commitments With Original Maturity Up to 6 months - domestic counterparty 102,831 - 23,429 79,403 20% 15,881 41,791 foreign counterparty (ECA Rating 0-1) 3,060,600 - 359,298 2,701,302 20% 540,260 762,310 foreign counterparty (ECA Rating 2) - - - - 50% - - foreign counterparty (ECA Rating 3-6) 415,462 - 25,413 390,049 100% 390,049 445,480 foreign counterparty (ECA Rating 7) - - - - 150% - - L C Commitments With Original Maturity Over 6 months - domestic counterparty 146,157 - 21,982 124,174 50% 62,087 102,953 foreign counterparty (ECA Rating 0-1) 1,448,557 - 80,472 1,368,085 20% 273,617 184,956 foreign counterparty (ECA Rating 2) - - - - 50% - - foreign counterparty (ECA Rating 3-6) 66,614 - 2,401 64,213 100% 64,213 49,678 foreign counterparty (ECA Rating 7) - - - - 150% - - Bid Bond, Performance Bond and Counter guarantee - - domestic counterparty 2,731,696 - 131,847 2,599,849 50% 1,299,924 1,204,575 foreign counterparty (ECA Rating 0-1) 150,086 - - 150,086 20% 30,017 44,822 foreign counterparty (ECA Rating 2) 1,133,552 - - 1,133,552 50% 566,776 655,870 foreign counterparty (ECA Rating 3-6) 36,914 - - 36,914 100% 36,914 1,440 foreign counterparty (ECA Rating 7) - - - - 150% - - Underwriting commitments - - - - 50% - - Lending of Bank’s Securities or Posting of Securities as collateral - - - - 100% - - Repurchase Agreements, Assets sale with recourse - - - - 100% - - Advance Payment Guarantee 1,636,215 - 28,386 1,607,829 100% 1,607,829 1,325,444 Financial Guarantee - - - - 100% - - Acceptances and Endorsements 1,062,467 - 106,247 956,220 100% 956,220 719,476 Unpaid portion of Partly paid shares and Securities - - - - 100% - - Irrevocable Credit Commitments (short term) 3,574,696 - - 3,574,696 20% 714,939 713,594 Irrevocable Credit Commitments (long term) - - 50% - - Other Contingent Liabilities - - - - 100% - 9,210 Unpaid Guarantee Claims - - 200% - - Total 15,635,296 - 779,475 14,855,822 6,565,673 6,267,550 Total RWE for Credit Risk Before Adjustment (A)+(B) 74,198,304 851,942 2,016,188 71,330,174 50,041,481 42,975,192 Adjustments under Pillar II Add: 10% of the loan and facilities in excess of - - - - - Single Obligor Limits(6.4 a 3)Add: 1% of the Contract(sale) value in case of the sale - - - - - of Credit with recourse(6.4 a 4)

Total RWE for Credit Risk (After Bank’s Adjustment of Pillar II) 74,198,304 851,942 2,016,188 71,330,174 50,041,481 42,975,192

FORM NO.2 RISK WEIGHTED EXPOSURE FOR CREDIT RISK CONTINUE..... for the period July 16, 2009 to July 16,2010

Schedule 30 (B) Rs. in '000


Credit Exposures Deposits Deposits Gold Govt. & NRB G’tee Sec/G’tee G’tee of G’tee of Sec/G’tee of Total Previous with with other Securities of Govt. of Other domestic MDBs Foreign Period Bank banks/FI of Nepal Sovereigns banks Total (a) (b) (c) (d) (e) (f) (g) (h) (i)

Balance Sheet Exposures - - Cash Balance Balance With Nepal Rastra Bank Gold Investment in Nepalese 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 requirementsClaims on domestic banks that do not meet - - capital adequacy requirementsClaims 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 requirementClaims on Domestic Corporates 95,701 - 184,642 1,568 368,272 - - - - 650,182 398,839 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) 88,101 - 497,053 1,378 - - 586,532 934,540 Claims fulfilling all criterion of regulatory - - retail except granularityClaims 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)High Risk claims - - Investments in equity and other capital insturments of - - institutions listed in the stock exchangeInvestments in equity and other capital insturments of - - institutions not listed in the stock exchange

Other Assets (as per attachment) - -

FORM NO.3 ELIGIBLE CREDIT RISK MITIGANTS for the period July 16, 2009 to July 16,2010

Schedule 30 (c) Rs. in '000


Credit Exposures Deposits Deposits Gold Govt. & NRB G’tee Sec/G’tee G’tee of G’tee of Sec/G’tee of Total Previous with with other Securities of Govt. of Other domestic MDBs Foreign Period Bank banks/FI of Nepal Sovereigns banks Total (a) (b) (c) (d) (e) (f) (g) (h) (i)

Off Balance Sheet Exposures - -Forware Exchange Contract Liabilities - -LC Commitments With Original Maturity Up to 6 months domestic counterparty 23,429 23,429 11,663 foreign counterparty (ECA Rating 0-1) 359,298 359,298 423,023 foreign counterparty (ECA Rating 2) - - - foreign counterparty (ECA Rating 3-6) 25,413 25,413 24,226 foreign counterparty (ECA Rating 7) - - -LC Commitments With Original - - Maturity Over 6 months domestic counterparty 21,982 21,982 1,447 foreign counterparty (ECA Rating 0-1) 80,472 80,472 28,920 foreign counterparty (ECA Rating 2) - - - foreign counterparty (ECA Rating 3-6) 2,401 2,401 1,111 foreign counterparty (ECA Rating 7) - -Bid Bond, Performance Bond 131,847 131,847 140,140 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 CollateralRepurchase Agreements, Assets - - sale with recourseAdvance Payment Guarantee 28,386 28,386 17,518Financial Guarantee - - -Acceptances and Endorsements 106,247 106,247 79,942Unpaid portion of Partly paid - - shares and SecuritiesIrrevocable Credit commitments - -

Other Contingent Liabilities - -

FORM NO.3 ELIGIBLE CREDIT RISK MITIGANTS CONTINUE..... for the period July 16, 2009 to July 16,2010

Schedule 30 (c) Rs. in '000

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.


Current Period Previous Period Particulars 2006/07 2007/08 2008/09

Net Interest Income 899,457 1,202,117 1,580,968 Commission and Discount Income 163,899 215,292 183,042 Other Operating Income 47,319 66,377 113,974 Exchange Fluctuation Income 135,355 165,839 185,327 Additional Interest Suspense during the period 12,499 16,237 46,923 Gross Income (a) 1,258,530 1,665,862 2,110,234 Alfa (b) 15% 15% 15% Fixed Percentage of Gross Income (c) =(a)*(b) 188,779 249,879 316,535 Capital Requirement for operational risk (d) (average of c) 251,731 194,189Risk Weight (reciprocal of capital requirement of 10%) in times (e) 10 10Equivalent Risk Weight Exposure (f)=(d)*(e) 2,517,313 1,941,891

RISK WEIGHT EXPOSURE FOR OPERATIONAL RISK Schedule 30 (D) Rs. in '000


Current Period Previous PeriodS.No. Currency Open Position Open Position Relevant Open Relevant Open (FCY) (NPR) Position (NPR) Position (NPR)

1 AED 50 974 974 146,0882 AUD 68,843 4,465,865 4,465,865 1,919,9133 CAD 22,983 1,634,320 1,634,320 997,4154 CHF 18,483 1,311,721 1,311,721 5,291,0165 CNY 9,580 103,081 103,081 238,1326 DKK 52,903 674,513 674,513 1,181,3697 EUR 80,661 7,725,687 7,725,687 15,679,8888 GBP 39,459 4,516,115 4,516,115 3,108,3969 HKD 430 4,094 4,094 44,17810 INR 501,426,717 802,282,748 802,282,748 452,368,13411 JPY 15,755,461 13,371,660 13,371,660 8,998,31612 MYR 1,240 27,454 27,454 2113 QAR 600 11,778 11,778 48,42914 SAR 1,882 36,868 36,868 108,78515 SEK 42,070 424,068 424,068 870,89916 SGD 49,380 2,661,591 2,661,591 2,623,90417 THB - - - 237,43618 USD 1,213,672 90,418,598 90,418,598 296,501,681 Total Open Position (a) 929,671,134 790,363,999 Fixed Percentage (b) 5.00% 5.00% Capital Charge for Market Risk [c=(axb)] 46,483,557 39,518,200 Reciprocal of Capital Requirement (d) 10 10 Equivalent Risk Weight Exposure [e=(cxd)] 464,835,567 395,181,999

Equivalent Risk Weight Exposure in ‘000 464,836 395,182

Market Risk Schedule 30 (E) Rs. in '000


Particulars Indicators F/Y 2005/2006 F/Y 2006/2007 F/Y 2007/2008 F/Y 2008/2009 F/Y 009/2010 (F/Y 062/63) (F/Y 063/64) (F/Y 064/65) (F/Y 065/66) (F/Y 066/67)

1. Percent of Net Profit/ Gross Income Percent 23.99 25.07 25.33 22.97 23.672. Earning Per Share Rs. 59.35 62.57 57.87 37.42 52.553. Market Value Per Share Rs. 1,260 1,729 2,450 1,388 705 4. Price Earning Ratio Ratio 21.23 27.63 42.33 37.10 13.425. Dividend (including bonus) on share capital Percent 55.46 30.00 40.83 20.00 25.006. Cash Dividend on Share Capital Percent 20.00 5.00 7.50 20.00 25.007. Interest Income/ Loan & Advances Percent 7.32 7.33 6.93 7.89 10.51 8. Staff Expenses/ Total operating Expenses Percent 38.77 37.39 37.41 38.50 39.23 9. Interest Expenses on Total Deposit and Borrowings Percent 2.52 2.71 2.79 3.53 4.99 10. Exchange Gain/ Total Income Percent 8.60 6.77 6.03 4.79 4.19 11. Staff Bonus/ Total Staff Expenses Percent 41.84 49.76 54.50 57.53 64.61 12. Net Profit/Loan and Advances Percent 2.66 2.82 2.53 2.45 3.09 13. Net Profit/Total Assets Ratio 1.61 1.79 1.77 1.68 2.19 14. Total Credit/Deposit Percent 69.63 72.56 79.91 78.86 81.74 15. Total Operating Expenses**/ Total Assets Percent 1.43 1.38 1.27 1.09 1.23 16. Adequacy of Capital Fund on Risk Weighted Assets a. Core Capital Percent 7.97 7.90 7.71 8.56 8.50 b. Supplementary Capital Percent 4.01 4.26 3.57 2.68 2.05 c. Total Capital Fund Percent 11.97 12.17 11.28 11.24 10.55 17. Liquidity (CRR) Percent 13.61 10.47 10.91 10.32 7.7718. Non-performing credit/ Total credit Ratio 2.07 2.37 1.12 0.58 0.62 19. Weighted Average Interest Rate Spread Percent 3.90 3.99 4.00 3.94 4.36 20. Book Net-worth Rs. in ‘000 1,415,440 1,878,124 2,686,786 3,907,840 4,585,393 21. Total Shares No. 5,905,860 8,013,526 12,039,154 24,070,689 24,090,977 22. Total Staffs No. 390 514 622 766 87723. Book Value Per Share Rs. 240 234 223 162 190

5 YEARS PRINCIPAL INDICATORS Schedule 31 Rs. in '000

** Total Operating Expenses = Staff Expenses+ Office Operating Expenses


PRINCIPAL ACCOUNTING POLICIES SCHEDULE 32

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.

2. INTEREST AND COMMISSION INCOMEa. Interest on loans and advances are recognized on cash basis

as per Nepal Rastra Bank’s (NRB) directives. (Refer NOTES TO ACCOUNT # 6)

b. Commission and fees are recognized as income on cash basis except commission exceeding NPR 100,000 earned on guarantees covering more than a year is accounted for on accrual basis over the period of the guarantee.

3. FOREIGN CURRENCY TRANSACTIONSa. 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.

4. LOAN LOSS PROVISION & BAD DEBTS WRITTEN OFF

a. Provision for loan losses has been made in accordance with Nepal Rastra Bank’s 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.

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.

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.

7. NON CAPITALIZED ITEMS Capital items of value below Rs.10,000 are expensed off in

the year of purchase itself.

8. NON BANKING ASSETSa. 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 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.

9. INVESTMENTa. 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.

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. Leave encashment expenses is recognized on cash basis.

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.

12. CONTINGENT LIABILITY Any liability of contingent nature, if material, is disclosed in

separate schedule, forming the part of Balance Sheet.


1. STAFF PROVIDENT FUND & GRATUITY PROVISIONStaff 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.

2. INCOME-TAX LIABILITYIncome tax provision amounting to NPR 532,898,521 made for the F.Y. 2066-067 (FY 2009/2010) is subject to tax audit.

Deferred tax liability of NPR 27,183,263 for deductible temporary differences up to F.Y. 2066/67, 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 NPR. 90,610,877 which has been arrived at as follows:

Deferred tax asset: NPR

Provision for other assets: 2,074,352Gratuity Fund 12,352,678Provision for Non-banking assets: (11,25,000)

Total Deferred Asset: 13,302,030

Deferred tax liability:

Asset base as per income tax provisions: (673,665,412)Asset base as per Company Accounts: 777,578,319Total Deferred Liability: 103,912,907

Net Deferred Liability due to net timing difference: 90,610,877

3. EXCHANGE FLUCTUATION RESERVEDuring the year, there is a gain on revaluation of foreign exchange amounting to NPR 12,511,650.00 Hence, an amount of NPR.3,127,913.50 equivalent to 25% of such gain has been transferred to exchange fluctuation reserve as required by NRB Directives.

SCHEDULE 32NOTES TO ACCOUNTS

4. CHANGES IN DEPOSIT LIABILITIESThe total deposit of the bank has increased by NPR 3,396.66 million to NPR 50,094.70 million, from the previous year’s balance of NPR 46,698 million as following:

5. LOANS DISBURSED, RECOVERY AND WRITTEN OFFDuring the year, total loan amounting to NPR 112,332.46 million has been disbursed and NPR 108,211.17 million has been recovered.

6. INTEREST INCOMEa) Interest income from loans and advances is shown on cash basis, except on consortium project financing, which has been capitalized during the construction period.

b) Total interest receivable from loan and advances as at 16.07.2010 amounting to NPR 184.87 million has been transferred to Interest Suspense Account as per Nepal Rastra Bank’s directives.

Particulars FY FY Increase/ 2008/2009 2009/2010 (Decrease) (2065/66) (2066/67) Percentage

Current Deposits 3,756.57 4,025.82 7.16Margin Deposits 727.99 779.47 7.07Saving Deposits 17,066.25 14,324.26 -16.07Fixed Deposits 11,633.38 16,825.15 44.63Call Deposits 13,513.90 14,140.03 4.63

Total Deposits 46,698.10 50,094.73 7.27

Rs. in million


7. TABLE OF LIQUIDITY DETAILS (NPR in ‘000)Assets 1-90 91-180 181-270 271-365 Above Total Amount Days Days Days Days one Year Cash Balance 1,525,442 - - - - 1,525,442 Balance with Banks 5,290,448 - - - - 5,290,448 Investment made with Foreign Banks 2,160,185 894,000 238,400 335,250 372,500 4,000,335 Investment in Govt. Bonds - 1,385,900 626,250 1,899,700 - 3,911,850 Investment in NRB Bonds 290,000 290,000 Investment - - - - 66,646 66,646 Inter Bank Lending 370,000 - - - - 370,000 Loans & Advances 15,108,110 7,326,073 5,530,164 3,521,951 9,462,143 40,948,440 Total Assets 24,454,185 9,605,973 6,394,814 5,756,901 10,191,288 56,403,161 Liabilities Borrowings 37,315 - - - - 37,315 Current Deposits 1,441,588 480,529 780,794 480,529 1,681,852 4,805,295 Saving Deposits 4,297,277 1,432,425 2,148,638 1,432,426 5,013,489 14,324,256 Fixed and Call Deposits 17,094,671 5,188,628 2,591,811 4,406,542 1,683,522 30,965,175 Debentures - 300,000 - - 750,000 1,050,000 Total Liabilities 22,870,851 7,401,583 5,461,224 6,319,497 9,128,865 51,182,040 Net Financial Assets 1,583,333 2,204,391 933,569 (562,597) 1,062,423 5,221,119 Cumulative Net Financial Assets 1,583,333 3,787,724 4,721,293 4,158,697 5,221,119 -

8. NON BANKING ASSETSNon banking assets amounting to NPR 1,500,000 was sold during the year at NPR 1,850,000. The resulting gain thereon and the provision of NPR.1,125,000 made therefore have been transferred to Profit and Loss account during the year.

9. EXPENSES NOT WRITTEN OFFCost 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,

NPR 17,420,450 has been amortized by charging to Profit and Loss account.

10. PROVISION FOR LOAN LOSS & LOSS PROVISION WRITTEN BACK

During the year NPR 93,056,585 has been charged to Profit and Loss account for loan loss provision as required by Nepal Rastra Bank directives.

Provision amounting NPR 48,875,462 has been written back during the year.

11. PROVISION FOR OTHER ASSETSNone.

12. DEBENTURE ISSUETotal Debenture outstanding of NPR 1050 million includes debenture of NPR 300 million issued on 24.11.2003, NPR 250 million issued on 26.06.2006, NPR 250 million issued on 26.06.2007 and NPR 250 million issued on 09.07.2008.

Out of total NPR 640.40 million in Debenture Redemption Fund, NPR 300.00 million is for NPR 300 million Debenture (2067), NPR 145.84 million is for NPR 250 million Debenture (2070), NPR 110.12 million is for NPR 250 million Debenture (2071) and

NPR 74.40 million is for NPR 250 million Debenture (2072).All debentures have been issued having maturity period of 7 years from the date of issue. This year NPR 42.86 million, NPR 35.72 million, NPR 35.72 million, and NPR 35.72 million respectively has been transferred from Profit and Loss appropriation account to Debenture Redemption Fund for respective debentures.

13. INVESTMENT IN GOVERNMENT BONDS & TREASURY BILLSa. During the year, NPR 290 million was invested in Government bonds which has been shown under investments at face value. The amount of NPR.37,31,830 paid as premium on such bonds has been booked as premium paid in advance and is amortized over the period of the bonds.

b. Investment in treasury bills at discount has been shown at face value under investment. The amount of discount is booked as unearned interest and is amortized over the period of the treasury bills.

14. STAFF BONUSExpense on staff bonus is recognized at ten percent of net profit before income tax and after bonus provision.

15. VEHICLE RENEWAL & OTHER TAXESVehicle renewal & other taxes of NPR 19,642,883 shown in Schedule 24 include NPR 16,865,926 paid towards land & building tax., which has been paid pursuant to the provisions of Local Self Governance Act.

16. COMPARATIVE FIGURES FOR 2008/2009Previous year’s figures have been regrouped or rearranged wherever required to make them comparable with the current year’s figures.

17. ROUNDING OFFFigures have been rounded off to the nearest rupee.


S.No. Promoter’s Name Promoters Share Owenership Loan Detail Remarks Total No. of Percentage Name of the Loan Total Shares of Total Paid Banks & Financial Amount Numbers of up Captal Institutions Pledge Shares

1 Star Holdings P. LTD. 282,307 1.17 Citizens Bank International Limited 282,3072 Annapurna Investment P. Ltd 376,425 1.56 Global Bank Limied 344,976 3 Prestine Investment P. Ltd. 376,425 1.56 Sanima Bikash Bank Ltd. 158,408 4 Kamala Investment P. Ltd. 376,425 1.56 Nepal Bangaladesh Bank Ltd. 92,280 5 Panchakanaya Investment P. Ltd. 188,211 0.78 Himalayan Bank Limited 62,6076 Shrestha Brothers Investment P. Ltd. 188,211 0.78 Himalayan Bank Limited 62,6077 Surya Infosys P .Ltd. 376,425 1.56 Sanima Bikash Bank Ltd. 284,1458 Mercantile Investment P. Ltd. 150,577 0.63 Bank of Kathmandu Limited. 150,577

DETAILS OF PROMOTERS SHARES PLEDGED BY PROMOTER SHAREHOLDERS OF THE BANK for the period July 16, 2009 to July 16,2010

Schedule 34


S/N Particulars As per As per Variance Reasons for Variance Unaudited F/S Audited F/S In Amount In %

1 Total Capital and Liabilities (1.1 to 1.7) 57,935,545 57,935,545 - 0% 1.1 Paid Up Capital 2,409,098 2,409,098 - 0% 1.2 Reserve and Surplus 2,778,570 2,176,295 602,274 22% Appropriation of Dividend1.3 Debenture and Bond 1,050,000 1,050,000 - 0% 1.4 Borrowings 37,315 37,315 - 0% 1.5 Deposit (a+b) 50,094,725 50,094,725 - 0% a. Domestic Currency 45,249,631 45,249,631 - 0% b. Foreign Currency 4,845,094 4,845,094 - 0% 1.6 Income Tax Liability 37,195 37,195 - 0% 1.7 Other Liabilities 1,528,642 2,130,917 (602,274) -39% Appropriation of Dividend2 Total Assets (2.1 to 2.7) 57,935,545 57,935,545 - 0% 2.1 Cash and Bank Balance 6,815,890 6,815,890 - 0% 2.2 Money at Call and Short Notice - - - 0% 2.3 Investments 8,635,530 8,635,530 - 0% 2.4 Loans and Advances (Gross) 40,948,440 40,948,440 - 0% 2.5 Fixed Assets 1,136,247 1,136,247 - 0% 2.6 Non Banking Assets (Net) - - - 0% 2.7 Other Assets 399,438 399,438 - 0% 3 Profit & Loss Account 3.1 Interest Income 4,653,521 4,653,521 - 0% 3.2 Interest Expense (2,553,847) (2,553,847) - 0% A. Net Interest Income (3.1-3.2) 2,099,674 2,099,674 - 0% 3.3 Fees, Commission and Discount 242,886 242,886 - 0% 3.4 Other Operating Income 168,313 168,313 - 0% 3.5 Foreign Exchange Gain/Loss (Net) 224,057 224,057 - 0% B. Total Operating Income (A.+3.3+3.4+3.5) 2,734,930 2,734,930 - 0% 3.6 Staff Expenses (279,851) (279,851) - 0% 3.7 Other Operating Expenses (433,596) (433,596) - 0% C. Operating Profit Before Provision (B.-3.6-3.7) 2,021,482 2,021,482 - 0% 3.8 Provision for Possible Losses (93,057) (93,057) - 0% D. Operating Profit (C.-3.8) 1,928,425 1,928,425 - 0% 3.9 Non Operating Income/Expenses (Net) 10,606 10,606 - 0% 3.10 Write Back of Provision for Possible Loss 50,000 50,000 - 0% E. Profit from Regular Activities (D+3.9+3.10) 1,989,032 1,989,032 - 0% 3.11 Extra-ordinary Income/Expenses (Net) - - - 0% F. Profit before Bonus and Taxes (E.+3.11) 1,989,032 1,989,032 - 0% 3.12 Provision for Staff Bonus (180,821) (180,821) - 0% 3.13 Provision for Tax (542,261) (542,261) - 0%

G. Net Profit/Loss (F.-3.12-3.13 1,265,950 1,265,950 - 0%

COMPARISION OF UNAUDITED & AUDITED FINANCIAL STATEMENT AS OF ASHAD END FY 2066/67As at Ashad end 2067

Schedule 35 Rs. in '000

Notes:


S/N Particulars This Quarter Previous Corresponding Ending Quarter Quarter Previous Ending Year (Audited)

1 Total Capital and Liabilities (1.1 to 1.7) 57,935,545 57,584,489 53,596,7541.1 Paid Up Capital 2,409,098 2,409,098 2,407,0691.2 Reserve and Surplus 2,778,570 2,381,881 1,500,7711.3 Debenture and Bond 1,050,000 1,050,000 1,050,0001.4 Borrowings 37,315 2,235,512 38,8001.5 Deposit (a+b) 50,094,725 47,667,851 46,698,100 a. Domestic Currency 45,249,631 42,727,436 40,791,738 b. Foreign Currency 4,845,094 4,940,415 5,906,3621.6 Income Tax Liability 37,195 48,778 38,2971.7 Other Liabilities 1,528,642 1,791,369 1,863,7172 Total Assets (2.1 to 2.7) 57,935,545 57,584,489 53,596,7542.1 Cash and Bank Balance 6,815,890 6,804,796 7,918,0042.2 Money at Call and Short Notice - - -2.3 Investments 8,635,530 7,899,698 7,399,8122.4 Loans and Advances (Gross) 40,948,440 41,368,692 36,827,157 a. Real Estate Loan 9,407,342 9,518,477 5,756,691 b. Home / Housing Loan 1,469,473 1,503,184 1,222,480 c. Margin Type Loan 526,465 565,620 701,919 d. Term Loan 4,934,933 4,410,222 4,439,268 e. Overdraft Loan/ TR Loan / WC Loan 20,640,294 21,400,481 20,787,666 f. Others 3,969,932 3,970,708 3,919,1332.5 Fixed Assets (Net) 1,136,247 1,101,512 1,060,7522.6 Non Banking Assets (Net) - - 375

2.7 Other Assets 399,438 409,791 390,653

3 Profit & Loss Account Up to This Up to Previous Up to Corresponding Quarter Quarter Quarter Previous Year (Audited)

3.1 Interest Income 4,653,521 3,229,057 3,267,9413.2 Interest Expense (2,553,847) (1,777,252) (1,686,973) A. Net Interest Income (3.1-3.2) 2,099,674 1,451,805 1,580,9683.3 Fees, Commission and Discount 242,886 189,210 183,0423.4 Other Operating Income 168,313 124,338 113,9743.5 Foreign Exchange Gain/Loss (Net) 224,057 164,899 185,327 B. Total Operating Income (A.+3.3+3.4+3.5) 2,734,930 1,930,253 2,063,3113.6 Staff Expenses (279,851) (208,946) (225,721)3.7 Other Operating Expenses (433,596) (307,963) (360,533) C. Operating Profit Before Provision (B.-3.6-3.7) 2,021,482 1,413,344 1,477,0563.8 Provision for Possible Losses (93,057) (77,343) (166,201) D. Operating Profit (C.-3.8) 1,928,425 1,336,001 1,310,8553.9 Non Operating Income/Expenses (Net) 10,606 5,757 2,9533.10 Write Back of Provision for Possible Loss 50,000 24,223 114,653 E. Profit from Regular Activities (D+3.9+3.10) 1,989,032 1,365,981 1,428,4613.11 Extra-ordinary Income/Expenses (Net) - - - F. Profit before Bonus and Taxes (E.+3.11) 1,989,032 1,365,981 1,428,4613.12 Provision for Staff Bonus (180,821) (124,180) (129,860)3.13 Provision for Tax (542,261) (372,540) (397,982)

G. Net Profit/Loss (F.-3.12-3.13 1,265,950 869,261 900,619

UNAUDITED FINANCIAL RESULTS (QUARTELY)as at Fourth Quarter (16/07/2010) of the Fiscal Year 2009/2010

Schedule 36 Rs. in '000


4 Ratios At the End of At the End of At the End of This Quarter This Quarter Corresponding Quarter Previoys Year (Audited)

4.1 Capital Fund to RWA 11.81% 10.89% 11.24%4.2 Non Performing Loan (NPL) to Total Loan 0.62% 0.48% 0.58%4.3 Total Loan Loss Provision to Total NPL 248% 318% 274%4.4 Cost of Funds (LCY) 7.0% 5.9% 4.9%4.5 CD Ratio (As per NRB Directives) 81% 87% 82%4.6 Average Yield 11.2% 9.7% 8.9%4.7 Net Interest Spread 4.2% 3.8% 4.0%4.8 Return on Equity 28% 27% 28%4.9 Return on Assets (annualized) 2.2% 2.0% 1.7%

UNAUDITED FINANCIAL RESULTS (QUARTELY)as at Fourth Quarter (16/07/2010) of the Fiscal Year 2009/2010

Schedule 36

Note: 1) Previous quarters' figures have been regrouped and rearranged whereever necessary.

2) The above figures are subject to change as per the directions, if any, of Nepal Rastra Bank and/or Statutory Auditor.


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Strategic Objectives• Todevelopacustomerorientedserviceculturewith

specialemphasisoncustomercareandconvenience.• Toincreaseourmarketsharebyfollowingadisciplined

growthstrategy.• Toleverageourtechnologyplatformandpenscalable

systemstoachievecost-effectiveoperations,efficientManagementInformationSystems,improveddeliverycapabilityandhighservicestandards.

• Todevelopinnovativeproductsandservicesthatattractourtargetedcustomersandmarketsegments.

• Tocontinuetodevelopproductsandservicesthatreduceourcostoffunds.

• Tomaintainahighqualityassetsportfoliotoachievestrongandsustainablereturnsandtocontinuouslybuildshareholders’value.

• Toexplorenewavenuesforgrowthandprofitability.

Core Values and ethical principlesOurcorevaluestellus,ourcustomersandthecommunitiesweserve,whowereallyare;whatweareabout;andtheprinciplesbywhichwepledgetoconductbusiness.Inessence,webelievethatsuccesscanonlybeachievedbybeingtruetoourcorevaluesandprinciples.

• Customer Focus:AtNIBL,ourprimefocusistoperfectourcustomerservice.Customersareourfirstpriorityanddrivingforce.Wewishtogaincustomerconfidenceandbetheirtrustedpartner.

• Quality:Webelieveaqualityserviceexperienceisparamounttoourcustomersandwearestronglycommittedtofulfillingthisideal.

• Honesty and Integrity:Weensurethehighestlevelofintegritytoourcustomersbycreatinganongoingrelationshipoftrustandconfidence.Wetreatourcustomerswithhonesty,fairnessandrespect.

• Belief in our people:Werecognizethatemployeesareourmostvaluableassetandourcompetitivestrength.WerespecttheworthanddignityofindividualemployeeswhodevotetheircareersfortheprogressoftheBank.

• teamwork:Weareafirmbelieverinteamworkandfeelthatloyalandmotivatedteamscanproduceextraordinaryresults.Wearedrivenbyaperformanceculturewhererecognitionandrewardsarebasedonindividualmeritanddemonstratedtrackrecord.

• Good Corporate Governance:EffectiveCorporateGovernanceproceduresareessentialtowardsachievingandmaintainingpublictrustandconfidenceinanycompany,moresoinabank.AtNIBL,wearecommittedtofollowingpracticeswhichresultingoodcorporategovernance.

• Corporate Social Responsibility:Asaresponsiblecorporatecitizen,weconsideritimportanttoactinaresponsiblemannertowardstheenvironmentandsociety.Ourcommitmenthasalwaysbeentobehaveethicallyandcontributetowardstheimprovementofthequalityoflifeofourpeople,thecommunityandsocietyatlarge,ofwhichweareanintegralpart.

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About Nepal Investment Bank ltd.Nepal Investment Bank Ltd. (NIBL), previously Nepal IndosuezBank Ltd.,wasestablished in1986as a joint venturebetweenNepali and Frenchpartners. The Frenchpartner (holding 50%)ofthecapital)wasCreditAgricoleIndosuez,asubsidiaryofoneofthelargestbankinggroupsintheworld.WhenCreditAgricoleIndosuezdecidedtodivest,agroupofcompaniescomprisingofbankers,professionals, industrialistsandbusinessmenacquired50%oftheholdingsofCreditAgricoleIndosuezinNepalIndosuezBankinApril2002.ThenameoftheBankwaschangedtoNepalInvestmentBankLtd.uponapprovaloftheBank’sAnnualGeneralMeeting,NepalRastraBankandCompanyRegistrar’sOffice.Theshareholdingstructurecomprisesof:

• Agroupofcompaniesholding50%oftheCapital.• RastriyaBanijyaBankholding15%oftheCapital.• RastriyaBeemaSansthanholding15%oftheCapital.• Thegeneralpublicholding20%oftheCapital.

WebelievethatNIBL,beingmanagedbyateamofexperiencedbankers and professionals with a proven track record, canmatch your particular needs.We are sure that your choice ofbankwill be guided, among other things, by its reliability andprofessionalism.

Over the past 8 years, we have grown to become one of thebiggestcommercialbanksinNepal.Ouroverallgrowthrecordindeposits,lending,netprofitandcapitalbaseissecondtonone.

• HighestgrowthrateamongbanksinNepal.• Experiencedmanagement&soundcorporategovernance.• No.1lenderinNepalwithtotalloansandadvancesofNPR

40.32billion.• No.1PrivatesectorbankinDepositswithNPR50.1billion.• HighestNetProfitofNPR1.26billion.• Highestpaidupcapitalamongthefinancialinstitutionin

NepalatRs.2.41billion.Thehighestcapitalbase(includingdebentures)withNPR5.64billion

• 5thLargestTaxpayerinNepal.• Customerbaseofover370,000.• MaintainedaconsistentratingfromIndianCreditRating

Agency,ICRA,anaffiliateofMoody’sInvestorGroup,receivingaratingofNepal[A].

www.nibl.com.np

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