2 Nabil Bank Limited

Birds of Nepal: As diverse as Nepal itself!

From the resident birds that stay all year around

to the breeding ones that spend most of the
growing season in Nepal to raise their young;

From migrant birds who pass through Nepal with

the seasons, to birds that winter to escape colder
conditions up north...

Nepal is home to an impressive number

of species of birds.

cover
From the beginning till now...From now to days ahead! All the pictures of birds were taken in Nepal by
From the very day of its establishment in 1984, Nabil stands Mr. Mahesh Bajracharya.
firmly at the forefront of the banking industry in Nepal. Our modern banking
approach has fostered a strong partnership with multitude of institutions and
individuals, adding values, enriching lives and reaping benefits for all.
We complement each others progress. We value every relationship. The tradition
continues to this day and will continue in the days ahead!
Annual Report 2014/15 1

Pond Heron
Table of
Contents
01. Overview 5-24
1. About Nabil Bank
2. Vision, Mission &
Values Statement
3. Financial Highlights
4. Message from Chairman
5. Board of Directors
6. CEOs Message
7. Macro-economic environment
02. Operating &
Financial Review 25-49
1. Commentary on key items of 4.2 Application of Value Generation
Statement of Financial Position
of past 5 years
1.1 Shareholders Fund
1.2 Deposit Mobilisation
1.3 Gross Lending Portfolio
1.4 Gross Investment Portfolio
1.5 Distribution of Dividend
2. Commentary on key items of
Income Statement of past 5 years
2.1 Net Interest Income
2.2 Fees, Commission and Other
Operating Income
2.3 Foreign Exchange Income
2.4 Staff Expense
2.5 Other Office Operating Expenses
2.6 Net Provision Expense
2.7 Profitability
3. Achievements of Current Year
3.1 Equity
3.2 Deposits
3.3 Loans
3.4 Investments
3.5 Net Interest Income
3.6 Fees, Commission and Other
Operating Income
3.7 Foreign Exchange Income
3.8 Staff Expense
3.9 Office Operating Expense
3.10 Provision for Possible Losses
3.11 Non-Operating Income
3. 12 Income/ (Expense) from Extra
Ordinary Activities
3.13 Staff bonus, Corporate
Tax and Net Profit
4. Value Generation and Distribution
4.1 Value Generation
5. Segmental Performance Analysis
5.1 Primary Segment
5.2 Secondary Segment
6. Interim position and performance
(unaudited)
6.1 Interim Financial Position
6.2 Interim Financial Performance
7. Nabil Investment Banking Ltd.
7.1 Overview
7.2 Commentary on key items of
Statement of Financial Position
of past 5 years
7.3 Commentary on key items of
Income Statement of past 5 years
03. Products
and Services 50-59
1. Corporate Banking SBU
2. Infrastructure and Project
Financing SBU
3. SME and Microfinance SBU
4. Retail Lending SBU
5. Deposit Relationship Management
SBU
6. Cards and Electronic Banking SBU
7. Remittance Business Center SBU
8. Bancasurrance SBU
9. Treasury SBU
10. Other Services
04. Governance 60-76
1. The Board of Directors
1.1 Structure of the Board
1.2 Information to the Board
1.3 Directors Appointment and
Induction
1.4 Changes in the Board
1.5 Relations with Shareholders
2. Board Committees
2.1 Audit Committee (AC)
2.2 Risk Management Committee (RMC)
2.3 Committee relating to Staff Services
and Facilities
3. Internal Controls
3.1 Addressing Operations Risk
3.2 Addressing Credit Risk
3.3 Addressing Exchange Risk
3.4 Addressing Data Security Risk 6.3 Taxation on dividends and bonus
3.5 Statutory and Regulatory
Compliances
4. Employees
5. Corporate Sustainability
6. Corporate Social Responsibility
05. Financial Statements
and Other Information 77-180
1. Statement of directors
responsibility
2. Disclosure of information under
Section 109(4) of Companies Act 2006
3. Disclosure Related to Sub Rule (1)
of Rule 22 of Securities Registration
and Issuance Regulation, 2065
4. Independent Auditors Report-group
5. group Financials
6. Independent Auditors Report
-Nabil bank
7. Financial Statements -Nabil bank
06. Shareholder
Information 181-183
1. Structure of Share Capital
2. Representation in the Board of
Directors
3. Shareholders Profile
4. Stock symbol
5. Annual general meeting
5.1 Ordinary resolution
5.2 Special resolution
6. Shareholder enquiries and
communication
6.1 Communication
6.2 Enquires
shares
6.3.1 Taxation on dividends
6.3.2 Capital gains on disposal of shares
07. Nabil Investment
Banking Limited 184-214
7.1 Directors Report
7.2 Information under section 109(4) of
Companies Act, 2063
7.3 independent auditor report
-Nabil invest
7.4 Financials of Nabil Investment
Banking Limited
4 Nabil Bank Limited
Perching firmly since 1984
Creating history in the modern
Nepalese banking industry.

orange billed thrush

 Annual Report 2014/15 5

01
overview
ABOUT
NABIL BANK
Nabil is the first private sector bank in Nepal established in 1984 A.D. The
bank was set up in joint venture with foreign partner then Dubai Bank Ltd. and
local partner institutions Nepal Industrial Development Corporation, Rastriya
Beema Sansthan Ltd. and Nepal Stock Exchange Ltd.

In the initial years, Banking service was
at its primitive stage in the country and
was perceived as involving complicated
paperwork, inefficient processes and
ineffective delivery which used to dissuade
the mass from approaching banks. Nabil
invested in information technology, human
resource development and effective delivery
channels from the beginning and is rightly
credited as being the pioneer in customer
centric modern banking services in the
country. To this date the bank continues to
focus in technology, human resource and
product innovation to ensure that the want
and needs of the mass is delivered through
efficient delivery channels. We innovate
and thus reap the fruits of innovation
through increasing trust and confidence
of customers towards the banks. Today
we lead the private banking sector of the
country in terms of balance sheet size,
customer base, geographic outreach,
business portfolio and profitability.
At 16 July 2015 Nabil serves its expanding
clientele base with a network of 52 branch
offices, 89 ATM machines, 1450 Nabil
Remit agents, 969 point of sale terminals
and over 170 international correspondent
banking relationships.
At 16 July 2015 Nabil has a balance sheet
of Nrs.116 billion, net worth over Nrs.9
billion, customer deposits of Nrs.104
billion, gross customer lending of Nrs.67
billion and profit after tax of Nrs.2.1 billion.
In USD terms these figures translate to
balance sheet of USD 1,141 million, net
worth over USD 93 million, customer
deposits of USD 1,025 million, gross
customer lending of USD 661 million and
profit after tax of USD 21 million.
Nabils strong foundations, inexorable
endeavors and clear vision have capacitated
us to become resilient even at some of the
most testing times in our nations history
and scale the current heights.
Over the years the culture and values
Nabil has inculcated, the human resource
it has groomed, the systems it has
implemented, and the continuous oversight
from the Board continue to provide strong
support for the bank moving forth on an
unparalleled path of success.
6 Nabil Bank Limited

Spreading wings and Soaring into the air

as a first rate bank across all strata
of the nation

Red Billed Blue Magpie


VISION,
MISSION & VALUES
STATEMENT
VISION STATEMENT
At Nabil, our Vision is to be a bank for
all across all geopolitical zones and
socioeconomic stratums of the nation that
can provide myriads of financial solutions and
create values for all our stakeholders, to stand
in the community with our economic and civic
roles. We look forward to emerging as a first
rate bank across all stratums of the nation.
MISSION STATEMENT
We at Nabil work together up to our vision
and to bring it into reality. Our mission is
Therefore to prove that Nabil is driven by the
spirit for realizing those visionary
aspirations. With that end in view, we work
in partnership with our stakeholders and
the community at large. Our roadmap to
reaching where we have set our mind on is
by maneuvering our strategic action plans
through a well-teamed and synergistic
workforce into industrial end products our
customized services. Our approaches are to
differentiate our products by reengineering
them with the best technologies and
management philosophy keeping in focus
our customers satisfaction over and above
everything else at all times. We have
set our goals and objectives to hone the
skills of inspired HR force and tailor our
products and services to that end. With
an all-inclusive approach Nabil engages in
customizing ranges of products catering to
the entire gamut of society from financing
megaprojects to underprivileged individuals
and promoting enterprises across all segments
of society by adding values to nation building
endeavours. We are branching out on a
national scale through our wide-ranging
Annual Report 2014/15 7
points of representation representing different
geographic and economic zones along with
our broad global network as a 1st CHOICE
PROVIDER OF COMPLETE FINANCIAL
SOLUTIONS.
VALUES STATEMENT
We surge to turn our services and products
into economic values for our treasured
customers, taking care of their financial
needs. We know the world is changing and
to keep pace with that we customize our
services and re-engineer our products in
sync with changing time and technology. We
are always geared up for translating great
aspirations of our stakeholders into economic
and social values. We know our customers
expect unparalleled service standards; our
community looks forward to seeing the bank
emerging as responsible corporate entities
that cherish social and economic harmonies
in the community. We go beyond just making
profits. Our shareholders value financial
returns together with the safety of their
investments.
At Nabil, values for its employees are always
well-defined, for it always knows that staffs
are great movers, therefore recognizing their
financial, corporate and social values get their
spirits always going to the creative end.
Nabil fosters corporate governance, realizing
the values our regulators always cherish
through financial disciplines. Besides,
Bank has set C.R.I.S.P. (Customer Focused,
Result Oriented, Innovative, Synergistic and
Professional) as its values, which it lives by in
day to day operation of the banks business.
8 Nabil Bank Limited

House Sparrow
 Annual Report 2014/15 9

Customer Focused
Caring & Serving
delighting the customer with our services, Nabil
came up with the concept of customer care and
delight in the banking industry of Nepal. This
paradigm shift in banking helped customers to
ask the bank for a specific product of their need
for the fullest satisfaction. Nabil accordingly
has been providing the services that best suit
customers needs and that has helped us keep
our customers at the core of our activities .
10 Nabil Bank Limited

FINANCIAL
HIGHLIGHTS
As of Mid July
Annual Report 2014/15 11
12 Nabil Bank Limited

Long tailed minivet female

 Annual Report 2014/15 13

Result Oriented
Sharing sweet fruits
All our actions and services are intended to
yield desired results- for all our stakeholders.
Nabil always architects business ideas, designs
products and serve the customer with all
the determination that bears sweet fruits and
brings desired results.
14 Nabil Bank Limited

CHAIRMANS
MESSAGE
I feel privileged to share the results of the bank for the year 2014/15.
The results are satisfactory considering the stressed environment in
the country under political, business and economic fronts. After the
second Constitution Assembly election held on 19th November 2013
and formation of government by the two largest parties, the business
sentiment improved which gave some respite and hope after fluid
political situation during the last 7 years. This gave a much needed
relief to the business community which was reflected in the securities
market as well, even though the political mist was not fully lifted as
there are still some loose ends to tie up regarding implementation of
the federal framework of the country under the new constitution. With
a positive move in the economy opening the year followed by a timely
budget in the country, business activities went well till the 3rd quarter of
the year. As the process for constitution writing went on, some political
parties then started calling for strikes and closures which, however,
did not do major damage. The countrys GDP growth remained at a
moderate level of 4.58%. There was good credit growth and the Bank
was able to make good credit expansion and deposit growth.
However, the country was hit by the massive earthquake on April
25, 2015 and its powerful aftershocks continued to rock the nation
afterwards. The loss of life, injuries and property damage were severe
which left a deep wound in the economy. It pulled down the growth
of the economy which is estimated to have slipped to 3.04% from the
initial projection of 4.58%. Normal life including business activities of
the entire country remained at a standstill for a longtime. The situation
further worsened when the constitution drafting process was initiated
after the consensus of the major political parties and some fringe parties
which were against the process resorted to a strike. This brought about
a disruption of supply of essential items including fuel and caused
closure of businesses for a long time. The initiatives taken by the central
bank like extension of time for payment of dues, etc. have been more
than welcome and are bearing fruit which is further expected to support
the system without any major dents.
With the growth that the Bank achieved during the first nine months of
the year, it was possible to post satisfactory results under the areas like
expansion of clientele base, overall growth in the top line, profitability
position and reward to all the stakeholders. We have equally taken
account of changing environment and have adopted mechanisms
whereby more control can be maintained for overall goodness of the
bank. Taking the technological advancements in positive stride, our
systems and processes were continuously updated to exercise effective
internal control. Being associated with the bank for about 30 years
intermittently and being the longest serving member in the Board, I also
feel honored to be a part of this institution which heralded banking into
a new era in the country.
The bank has embraced all the changes and is ready to meet the need
of time including capital requirement as per the new standard. The
institution that it is today is all because of the untiring efforts put in
by the visionary board, dedicated staff, and continued guidance from
the regulatory authority and the patronage of our diverse customers.
Induction of new services in the country like Credit Card, Consumer
Finance on a larger scale, Infrastructure Project Financing under a
dedicated unit, felicitating Public Shareholder for their silent but
Annual Report 2014/15 15
valuable contributions are some of the initiatives the Bank takes
pride in. The contribution of predecessors is unforgettable. The strong
foundation of the bank is one of the facets that have been put in place
by the Nabil cadre over the last 31 years. On this occasion I would like
to take a few of those names whose invaluable contribution has driven
the Bank to present stature. They have been my companions who
played key roles in the success story of Nabil Bank. They are Late Sashi
Narayan Shah, the first chairman of the Board, Late Kalyan Bikram
Adhikary, former governor of Nepal Rastra Bank, Late G.S. Srivastav and
Mr. S. C. Kabadkar, both former Executive Directors of the Bank and my
fellow board members and Late Supriya Gupta, a veteran banker and
former Board member. They deserve deep respect and appreciation for
their contribution to the success of this Bank.
Intending to keep the aspirations of our shareholders high, the Bank has
proposed one of the highest dividends of 36.84% to its shareholders
including 6.84% in cash when the entire industry is having to deal
with the challenge of injecting for fresh capital. The contribution
towards business expansion, employment creation and significant tax
contribution to the government are some of the feathers in our cap.
The Bank has also made us proud by winning some awards this year.
Nabil was conferred with the Best Presented Accounts Award by the
Institute of Chartered Accountants of Nepal for the sixth consecutive
year which reflects the disclosure compliant culture of the Bank. The
South Asian Federation of Accountants has also awarded us with
a Merit Certificate which also gives us the encouragement to excel
further. The Bank has been awarded with highest tax payer under
banking sector by Inland Revenue Office, Nepal for its contribution to
government revenue.
Moving ahead in search of excellence, we are bound to come across
challenging scenarios under business and operating conditions. We will hold
ground and will move forward always striving to ensure safety and security
of every ground we cover. We will maintain the best governance practices to
earn trust from all business partners, regulators and other stakeholders. We
will try our best to maintain the tempo and shall give our fullest for the overall
betterment of the institution, stakeholders and the industry.
I should not shy away in recognizing the contribution of my fellow
board members. The success of any institution is only possible when
all members in the board work in unison which was amply evidenced
for which they deserve a round of applause. I would also like to express
my sincere gratitude towards our customers and business partners
for their trust and cooperation that has enabled us to become their
Bank of first choice. Similarly, standing on the verge of the 32nd year
of operation, it would not have been possible without the continuous
support and guidance from the regulators for which I would like to thank
Nepal Rastra Bank, Securities Exchange Board of Nepal and Office of
Company Registrar. The position achieved by Nabil today is because of
the concerted efforts from all its family members. So, on behalf of the
Board, I would like to express my appreciation to the employees and
the management and thank them for all their efforts year after year and
expect the same to continue in the years ahead.
Shambhu Prasad Poudyal
Chairman
16 Nabil Bank Limited
BOARD OF
DIRECTORS
Mr. Shambhu
Prasad Poudyal
Chairman
Represents Group C Shareholders
Mr. Poudyal, aged 71, has been
in the Board of Directors since
2004 A.D. Prior to this also he
has held directorship in the bank
during 1986 A.D.-1994 A.D. He
has a rich experience in the field
of banking and insurance. He has
worked at Nepal Rastra Bank, the
Central Bank of Nepal for seventeen
years. During 1999 A.D.-2002 A.D.
he was the Executive Chairman of
Rastriya Beema Sansthan, a public
sector corporation carrying out both
life and general (non-life) insurance
business and is one of the largest
insurers in the country. He is also a
former Chairman of Nepal Housing
and Development Finance Co. Ltd.
He was also actively engaged in
social non-profit making institutions
like Nepal Mountaineering
Association in the capacity of
Vice President, Nepal Red Cross
Society (Kathmandu Branch) and
Nepal Family Planning Association
(Kathmandu Branch) in the
capacity of Executive Member.
Mr. Dayaram
Gopal Agrawal
Board Member
Represents Group A Represents Group A
Shareholders
Mr. Agrawal, aged 51,
has been in the Board of
Directors since 2004 A.D.
Prior to this also he has
held directorship in the
bank during 1994 A.D.
-2003 A.D. Mr. Agrawal
is an entrepreneur, a
social activist and a media
person. He has been in
the business for the last
three decades.
Mr. Nirvana Mr. Ashish Sharma
Chaudhary Board Member
Board Member Represents Group C
Shareholders
Shareholders
Mr. Sharma, aged 37,
Mr. Chaudhary, aged 34, has been in the Board of
has been in the Board Directors since 2012 A.D.
of Directors since 2010 He holds an MBA degree
A.D. Mr. Chaudhary holds from the Asian Institute of
an MBA Degree from Technology, Thailand. He
Kathmandu University, is the Chairman of United
Nepal. He is the Managing Insurance Company
Director of Chaudhary Ltd., a general insurance
Group, a Nepali business company. He has been
conglomerate. He also associated with different
holds directorship business and social
in United Insurance organizations.
Company Ltd. He
has previously held
directorship in United
Finance Company Ltd.

Mr. Mohiuddin Ahmed
Board Member
Represents Group A Shareholders
Mr. Ahmed, aged 78, has been
in the Board of Directors since
2011 A.D. In the past also he
held directorship in the Bank
intermittently and has represented
Class A shareholders. Mr.
Ahmed holds Masters Degree
in International Relations and
Bachelors Degree in Economics
from the University of Dhaka. He is
a former Ambassador of Bangladesh
to Nepal, Senegal, Sierra Leone,
Ghana and Gambia. He has also
represented his country Bangladesh
while in foreign affairs service and
has served in India, Indonesia and
the United Kingdom in various
capacities. He also held directorship
in Janata Bank, Bangladesh.
Mr. Pratap Kumar Pathak
Board Member
Independent / Professional Director
Mr. Pathak, aged 59, has recently
been appointed in the Board of
Directors on 25th August 2015.
He holds a MPA Degree with
specialization in Managerial
Finance. He has served in the
government sector in different
capacities and recently held the
post of Expert Consultant of the
Ministry of Youth and Sports. In the
past he also served as the Financial
Comptroller General under the
Ministry of Finance. He also held
the post of Chief District Officer
of Nepal Government in different
intervals.
Annual Report 2014/15 17
Mr. Virender Paul Dani
Board Member
Represents Group A Shareholders
Mr. Dani, aged 67, has recently
been appointed in the Board of
Directors on 25th August 2015. He
is a senior banking and insurance
executive with an extensive
knowledge in dealing with retail and
corporate clients. During 2003 A.D.
-2008 A.D. he was the Managing
Director and CEO of Nepal SBI
Bank Ltd. He is a former Senior
Vice President of SBI Life Insurance
Co. Ltd., Mumbai.
18 Nabil Bank Limited
CEOS
MESSAGE
Nabil Banks results in the financial year 2014-15 have been strong and ought
to give satisfaction to all stakeholders considering that the country and its
economy had to endure a virtual roller-coaster ride during the year. Firstly, the
continuing political stalemate and unstable government, despite of a second
attempt at drawing up a constitution, dampened economic activities and
then the devastating earthquakes of 25 April and 12 May 2015 followed by
continuous powerful aftershocks, that took almost 9000 lives, injured 22,000
people and destroyed or damaged 700,000 houses and affected millions of
people, threw everything else out of gear. The damage to the nations psyche in
the aftermath of the natural disaster was deep and unprecedented. The economy
was in shambles with extensive business disruption, tourist inflow drying up,
work on infrastructure projects and housing construction coming to a standstill
and the government and private sector machinery incapacitated by a sense of
shock by the enormity of the devastation and its aftereffects and their attention
diverted towards search, rescue, relief and recovery efforts. The saving grace
was the relative macro-economic stability, propped up by low government debt
and strong foreign exchange reserves bolstered by a massive inflow of workers
remittances and international aid and a healthy revenue growth.
Notwithstanding the shock from the aftermath of the earthquake, the Bank was
able to post a significant growth in its balance-sheet helped by the momentum
picked up the earlier three quarters of the fiscal year. Its pleasing to see that
despite of the immense challenges, the Bank continued to lead the league table
by posting the highest profit among all private commercial banks at NPR 2,094
million, which, however, is a decline of 9.7% from the previous year. The decline
in profit is partly attributable to conservative provisioning on some stressed
assets and a drop in margins due to excess industry liquidity which had the
effect of reducing yields on government securities and high level of idle investible
surplus funds that had to be carried despite of the Banks success in lowering
interest cost and increasing low cost CASA deposits.
Against all the odds, the Bank was able to maintain healthy profitability with a
Return on Equity (ROE) of 22.7% and Return on Asset (ROA) of 2.1% bolstered
by good asset quality reflected in Gross Non-Performing Assets (Gross NPA) of
only 1.82% and Net Non-Performing Assets (Net NPA) of only 0.38% and a
strong capital base with a Capital Adequacy Ratio (CAPAD) of 11.57% which is
well above the regulatory requirement of 10%. The high ROE of 22.7% in this
challenging environment for a large, established bank like us, is an important
measure of our effective use and deployment of shareholder capital which, Im
sure, all shareholders can take satisfaction from. Despite the economic turmoil
and continuing political fluidity, we believe that we have delivered strong and
consistent results, which can be gauged from the fact that over the last decade,
we have increased our balance-sheet size by 519%, revenue by 250% and Net
Profit by 230%.
We achieved these results through well-balanced and well-diversified lines of
business, viz., Corporate Banking, Infrastructure and Project Financing, Mid-
Corporate & SME Banking, Retail Banking and Trade Finance.
During the year, the Bank has expanded its customer base with a view to
reaching untapped markets and reducing concentration risk on its liability book.
The Bank is also one of the pioneers in the country to introduce microchip
embedded credit and debit cards which has significantly enhanced security
and increased the acceptance of our cards in the international arena. The
magnetic-stripe-based cards of all customers have been replaced with new
secure cards. During the year, we also introduced new internet-based online
services to our corporate customers which enabled large corporates to manage
vendor payments without the need to issue physical cheques and also helped
them in more efficient cash management from the comfort of their offices. Other
new innovative products and services were also introduced during the year to
enhance customer experience and ease.
The Bank also had an extensive Information System Audit carried out by
international experts which not only provided us the much needed re-assurance
of the robustness of our system but helped us in strengthening it further for
ensuring a secure and friendly banking experience to our customers. Service
delivery efficiency has also been improved to a large extent with the adoption
Annual Report 2014/15 19
of process automation with the added benefit of better cost management. We
continuously worked towards upgrading our systems, processes and corporate
practices to be in line with international standards. Our major work processes
have now been centralized to enhance control, reduce duplication, reduce
manual intervention and generally bring about work efficiency, thereby, reducing
human-induced errors and costs and improving the standard of services. This is
supplemented by continuous training and development of employees to better
equip them with the required skills in performing their jobs more effectively and
efficiently.
Internal Control measures have been further enhanced to keep pace with the
ever-stringent and necessary Anti-Money Laundering/Countering Financing of
Terrorism (AML/CFT) compliance regulations. We continue to strengthen our risk
management practices which ultimately help us reaffirm our position among the
leaders in the banking industry.
The current year has been even more challenging due to political disturbances
in the Terai/Madhesh region after the promulgation of the constitution, leading
to disruption in the flow of goods at border points for months resulting in severe
shortages of fuel and other daily necessities. The economy has taken a beating
with the distinct posibility of GDP growth estimates being revised to well below
1% considering the on-going protest, supply disruptions, political uncertainty,
lacklustre credit demand and poor capital spending by the Government. Inflation
has shot up to more than 10% and the purchasing power of the common man
reduced considerably. Businesses have been affected badly and credit demand
remains subdued. The constitutional issues that were the primary cause of
the political disturbances remain unresolved and tangible improvement in the
investment climate is yet to be seen. We can only hope that we will see better
days ahead with the wise counsel of our political leadership and the government
taking necessary steps to pave the way ahead for an inclusive, vibrant economic
revival by learning from the past; and overcoming the binding constraints and
evident hurdles.
Our success, like in any organization, requires more than a sound, executable
business strategy. Im personally committed to ensuring that good corporate
governance and ethical values are embedded in our culture across the Bank.
Nabil Bank has its foundation in the primary values we have held since we were
established in July 1984. These include being customer-focused and always
acting with respect and integrity, being result-oriented and ensuring satisfactory
delivery, being innovative for better customer experience, bringing about synergy
in everything we do and always being professional in our approach to doing
business. They also encompass our core strengths, including prudent risk
management, a strong balance-sheet and a focus on cost management with the
ultimate aim of creating value for all our stakeholders.
Our success would not have been possible without the excellent support
and continuous guidance provided by our Chairman and Board of Directors
comprising of a group of experienced professionals in diverse fields of expertise.
They have not only helped build the right, and yet flexible, strategic architecture
of the Bank but also ensured that there is an appropriate degree of board
oversight to guide Management in achieving its goals. I would like to record my
thanks to them for their wise counsel and support; and for their commitment to
the highest standards of corporate governance.
Lastly, I would like to thank our wonderful team of Nabilians. Their sense of
ownership, responsibility, dedication and commitment to hard work are the
foundations of our success. I believe that we have a great team, a superb franchise,
a great strategy, and a unique and robust platform as Nepals premier bank.
I look forward to delivering superior results with the support of all our
stakeholders, including our customers, regulators, vendors, investors, the Board
of Directors, employees and the community at large, with a view to adding
sustained value to this enterprise.
Sashin Joshi
Chief Executive Officer
Crimson Sunbird
20 Nabil Bank Limited
 Annual Report 2014/15 21

Innovative
Being active & innovative
We run ahead in indentifying the need of
customers and designing the most advanced
products and services to meet the demands of
the time.
22 Nabil Bank Limited
MACRO-ECONOMIC
ENVIRONMENT
A. Domestic Economy
Nepals economic growth over the last decade has not been
satisfactory. The countrys economic growth rate in the
last decade averaged just 4.1 percent at basic prices. The
countrys Gross Domestic Product for fiscal year 2014-15
missed the initial growth forecast of 4.6% at basic prices and
is estimated to stagnate at 3.0%.The estimated growth rate
for the current year is the lowest in eight years. The downward
revision is primarily due the economic damage caused by the
earthquake that struck the country in April 2015, coupled with
the unfavorable climatic condition on agriculture sector. The
countrys economy is estimated to have expanded by 5.1% in
the previous fiscal year.
Sector Contribution to GDP
Contribution to GDP Growth (%) Share of GDP (%)
Sector 2014-15 2013-14 2014-15 2013-14
Agriculture 1.9 2.9 31.7 32.5
Services 3.9 6.3 53.2 52.4
Industry 2.6 6.2 15.1 15.1
Source: Current Macro-Economic and Financial
Situation of Nepal published by NRB.
The Earthquake Effects
The earthquake brought about a severe setback in social and
economic environment of the country. Road infrastructures
leading to the Nepal China trading route were severely
destroyed and major customs points remain completely shut
down. In the Kathmandu Valley, Cultural heritage sites and old
settlements were damaged. The countrys tourism industry was
impacted immediately and the entire service sector retracted,
with growth projections revised downwards to 3.9% from earlier
forecast of 6.0% prior to the quake. The total economic loss
from earthquake damage was estimated at USD 7.7 billion.
Immediate outlook for the fiscal year 2015-16 will surely
bear the impact of earthquake as infrastructures have been
damaged and distribution networks have been disrupted. Large
arable fields in the central hilly region have been left barren
amidst turbulent social scenario brought about by the quake.
Tourism business is likely to be missed this year as bookings for
the major tourist arrival season, which runs through the next
few months, have been cancelled amidst fear of continuous
aftershocks and adverse media reports. Revival of tourism sector
is likely to take longer time.
The Reconstruction Phase
With the onset of the reconstruction phase, the financial sector
is likely to benefit from both increased government expenditure
and increased domestic borrowing by the government.
International communities and development partner institutions
have also shown great support to help Nepal, as was evident
from the immediate relief aid provided after the earthquake
and the reconstruction funding commitment of USD 4.4 billion
announced at the conference hosted by the government in June
2015. There has also been a sudden upsurge in the remittance
flowing into the country in the months following the earthquake.
Inflation
Annual average consumer price inflation increased by 7.2%
in the fiscal year 2014-15, compared to 9.1% a year earlier.
Inflation remained lower than the projected 8.0% in the
monetary policy mainly due to the decline in petroleum price,
the control of monetary aggregates at the desired level through
effective liquidity management and lower level of inflation
in neighboring countries. Inflation in the running fiscal year
2015-16 is likely to be higher than the previous year with
expectations of higher government expenditure and increase in
demand fuelled by the recent upsurge in inward remittances.
Credit to Private Sector
Credit to the private sector from Banks and Financial Institutions
increased by 19.8% in fiscal year 2014-15 compared to an
increase of 18.7% a year earlier. Likewise gross loans and
advances of BFIs increased by 17.5% this year compared to an
increase of 14.4% a year earlier.
BFIs credit exposure to the production, construction, wholesale
and retail trade sectors recorded a remarkable growth in
the review year, with corresponding increments of 14.8%,
27.9% and 21.8% respectively. Financial deepening increased
remarkably this year as private sector credit to GDP reached
64.7% from 59.3% recorded a year earlier.

Interest Rates
Surplus liquidity in the banking system continuously exerted
pressure on interest rates across deposit and loan products,
dragging down the rates throughout the year. Weighted average
interest rate spread of commercial banks in local currency
portfolio inched down to 4.61% in fiscal year 2014-15
from 5.21% a year earlier. Likewise the average base rate of
commercial banks also declined to 7.88% from 8.36% a year
earlier due the reduction in deposit cost.
External Sector
Total trade deficit widened by 10.8% to NRS.689 billion in
the fiscal year 2014-15, down from 29.7% a year earlier. The
trade deficit widened at a slower pace due to slow down in the
import growth in the aftermath of the devastating earthquake
in the last quarter of the review year. Merchandise exports
decreased by 7.3% compared to an increase of 19.6% in the
previous year. Likewise merchandise imports increased by 8.4%
compared to an increase of 28.3% in the previous year. The
growth of imports remained low mainly due to the decrease
in the price of petroleum products. Exports-imports ratio also
declined to 11.0 % down from 12.9% a year earlier.
Foreign Exchange Reserve Position
The gross foreign exchange reserves in USD terms increased by
17.4% to USD 8.15 billion at end of fiscal year 2014-2015,
compared to an increase of 23.6% in the previous year. Based
on total imports of merchandise goods and services for the year,
this level of foreign exchange reserves is sufficient for financing
merchandise imports of 13.0 months, and merchandise and
services imports of 11.2 months.
Banking
As per the published provisional annual financial statements
of commercial banks, their total deposit and gross loan have
increased respectively by 21.5% and 22.3% in fiscal year
2014-15, up from previous years growth rate of 18.0% and
19.3%.The industry net profit also increased by 25%, on year-
on-year comparison.
The central bank has directed all commercial banks to raise
their paid up equity capital to NRS.8 billion by mid July 2018.
This is expected to increase banks risk bearing capacity and
make them more resilient. Banks are also expected to undergo
merger to meet the paid up capital requirement as well as
to increase their competitiveness. This is expected to drive
competition in the banking industry in the coming years.
Annual Report 2014/15 23
Overall macroeconomic situation in the fiscal year 2014-
15 showed that there are some structural problems in the
economy despite the sound macroeconomic fundamentals.
The significant surplus in BOP, comfortable reserve position
and single digit inflation; all indicate a stable macroeconomic
situation despite of the continuing tensions among major
political parties. However, the slump in economic activities is
the matter of concern. The devastating earthquake that struck in
the fourth quarter has severely affected the economic development
of the country. Under the current circumstances where political
polarization has prevailed and some political parties have taken to
streets voicing their demand, uncertainty still prevails over whether
the functioning of national economy would be smooth or not.
The way forward hold both promise for better Nepal as well
as challenges that could cramp the economic growth. Under
the given circumstances, the GDP growth rate will not be
encouraging unless the political will and commitment of political
parties reconcile to speed up the reconstruction of earthquake
damage. The political stability in the course of promulgation
of the new constitution of the country and the implementation
of a federal structure will largely guide the nations economic
development for the next few years.
B. Global Economy
Global growth remains moderate, with uneven prospects across
the main countries and regions. Global growth is projected at
3.3% in 2015, marginally lower than in 2014, with a gradual
pickup in advanced economies and a slowdown in emerging
market and developing economies. In 2016, growth is expected
to strengthen to 3.8 percent.
World Economic Outlook
Projections
2013 % 2014 % 2015 % 2016 %
World Output 3.4 3.4 3.3 3.8
Advanced Economies 1.4 1.8 2.1 2.4
United States 2.2 2.4 2.5 3.0
Euro Area -0.4 0.8 1.5 1.7
Japan 1.6 -0.1 0.8 1.2
United Kingdom 1.7 2.9 2.4 2.2
Emerging and Developing Asia 7.0 6.8 6.6 6.4
China 7.7 7.4 6.8 6.3
India 6.9 7.3 7.5 7.5
Source: IMF World Economic Outlook Update July 2015
24 Nabil Bank Limited
World economy witnessed a setback to activity in the first
quarter of 2015, mostly around North America. Consequently
global growth forecast for 2015 has been revised down to
3.3% in July from 3.5% in April. Economic activity in advanced
economies is on the path of gradual acceleration backed by easy
financial conditions, more neutral fiscal policy in the euro area,
lower fuel prices, and improving confidence and labor market
conditions.
The outlook for advanced economies is better than last year,
while emerging market and developing economies are projected
to follow a slower path. Prospects for some large emerging
market economies, including China, Russia and Brazil and
major oil-exporting countries remain weaker. The slowdown
reflects the dampening impact of lower commodity prices
and tighter external financial conditions particularly in Latin
America and oil exporters, the rebalancing in China, and
structural bottlenecks, as well as economic distress related
to geopolitical factorsparticularly in the Commonwealth of
Independent States and some countries in the Middle East and
North Africa.
Advanced Economies
Growth in advanced economies is projected at 2.1% in 2015,
up from 1.8% in 2014. Growth is expected to follow a slower
pace than was originally projected in April, after the US
economy witnessed unexpected output contraction in the first
quarter. However, the initial fall in activity is likely to prove a
temporary setback and the key drivers of better consumption
and investment in the US viz. easy financial condition,
strengthening housing market, lower fuel prices and better labor
market conditions continue to remain intact.
In the euro area, growth projections for a number of
economies have been revised upwards with strong recovery in
domestic demand and inflation starting to pick up. Unfolding
developments in Greece indicate a much slower recovery in
activity that was expected earlier. In general the recovery in euro
area seems on the right track with continuation of monetary
easing.
Japanese economy expanded better than earlier expectations in
the first quarter of 2015. The growth is supported by a rise in
capital investment but domestic demand still remains sluggish.
Economic growth in 2015 is expected remain more modest due
to the weak momentum in real wages and consumption.
Emerging Markets and Developing Asia
Growth in these markets is projected to slow from 6.8% in
2014 to 6.6% in 2015 and 6.4% in 2016. The gradual
slowdown is mostly on account of rebalancing in China, as
the country is facing difficulties in its transition to new growth
model, as witnessed in the recent financial market turbulence
there.
Growth in the Chinese economy is expected to slow down to
6.8% in 2015 and 6.3% in 2016, down from 7.4% in 2014.
Amidst weaker investment growth the economy continues
to shift towards consumption and services economy from
investment economy.
India and the rest of emerging Asian economies are generally
projected to continue growing at a robust pace as they benefit
from falling oil prices, even though some countries might suffer
from Chinas economic rebalancing and global manufacturing
weakness. The Indian economy is expected to post a better
growth of 7.5% in both the years 2015 and 2016 from 7.3% in
2014. The growth will be backed by higher investments, lower
fuel prices and increased domestic consumption.
 Annual Report 2014/15 25

OPERATING AND 02
FINANCIAL REVIEW
Commentary The banks balance sheet has expanded at a Compounded
Annual Growth Rate (CAGR) of 17.33% in the last five years,

On Key Items Of
recording a point to point absolute growth of 122.40%, since
mid July 2010. There has been remarkable growth in terms of

Statement Of
shareholders fund, deposits, loans and investments which are
the major elements in a banks balance sheet.

Financial Position Shareholders Fund

Of Past 5 Years
In the last five years Nabil Bank has continuously strengthened
its financial position, expanded its customer base and diversified
its business to different sectors of economy. These are the key
variables that have scaled the bank to new heights over the
years. Information presented herein below highlight upon the
growth in the banks financial position, and the banks market
presence based on the fourth quarter provisional financial
statements published by individual banks, unless specifically
stated otherwise.
Total shareholders fund of the bank has increased at a CAGR
of 19.85% in the past five years, and has reached Nrs.9.49
billion at mid July 2015. It was Nrs.3.84 billion at mid July
2010, and has since grown to 2.47 times that size. Across
industry the bank is ranked second in terms of the size of its
shareholders fund at mid July 2015.
Industry wide the total shareholders fund of private commercial
banks has increased at a CAGR of 17.16% in this period.
Total net worth of government owned banks was negative by
Nrs.4.03 billion at mid July 2010 and have since increased to
Nrs.25.60 billion at mid July 2015.

(Nrs in million)

AT MID JULY 2015 2014 2013 2012 2011 2010 CAGR

Year 5 Year 4 Year 3 Year 2 Year 1 Base Year
CAPITAL & LIABILITIES
1. Share Capital 4,755 3,657 3,046 2,436 2,030 2,029 18.6%
2. Reserves & Surplus 4,731 3,984 3,645 3,008 2,537 1,808 21.2%
3. Debentures & Bonds 300 300 300 300 300 300 0.0%
4. Borrowings - - - 311 1,651 75 -100%
5. Deposits 104,238 75,389 63,610 55,024 49,696 46,411 17.6%
6. Bills Payable 243 214 530 179 416 425 -10.6%
7. Proposed Dividend 250 1,371 975 812 609 435 -10.5%
8. Income Tax Liabilities 1 3 65 51 44 25 -47.8%
9. Other Liabilities 1,468 2,357 1,071 1,072 859 644 17.9%
Total 115,986 87,275 73,241 63,193 58,141 52,152 17.3%
ASSETS
1. Cash Balance 1,820 1,468 1,140 1,051 745 636 23.4%
2. Balance with Nepal Rastra Bank 12,925 7,068 4,789 3,682 1,474 549 88.1%
3. Balance with Banks/Financial Institutions 1,259 1,457 (47) (457) 218 215 42.4%
4. Money at Call and Short Notice 324 738 1,634 826 2,453 3,118 -36.4%
5. Investment 30,972 18,277 16,332 14,049 13,081 13,703 17.7%
6. Loans, Advances and Bills Purchased 65,502 54,692 46,370 41,606 38,034 32,269 15.2%
7. Fixed Assets 812 843 872 888 935 780 0.8%
8. Non Banking Assets - - - - - - 0.0%
9. Other Assets 2,372 2,732 2,150 1,549 1,202 882 21.9%
Total 115,986 87,275 73,241 63,193 58,141 52,152 17.3%
26 Nabil Bank Limited

Of the banks total shareholders fund, paid up share capital and reserves have
increased to Nrs.4.75 billion and Nrs.4.73 billion at mid July 2015 respectively
from NRs.2.02 billion and Nrs.1.81 billion at mid July 2010. The increments
have been achieved entirely out of profit retention in form of stock dividends and
various reserve headings. This is inclusive of the appropriation of profit of financial
year 2014-15 into various reserve headings and the proposed distribution of stock
dividend at 30% of paid up capital.

With the increments in shareholders fund and the changing business environment
the banks Return on Equity (ROE) has come down to 22.73% for financial year
2014-15, from 30.27% for financial year 2009-2010. Across industry the bank
is ranked second in terms of ROE at mid July 2015.

Recent regulation from the central bank has instructed commercial banks to
raise their paid up capital to minimum Nrs.8.00 billion by mid July 2017, and
to publish their capital plan. The bank has formulated its capital to reach the
stipulated paid up requirement through issuance of 30% stock dividend for each
of the financial years 2015-16 and 2016-17.

Deposit Mobilization
In the last five years total deposit of the bank has increased at a CAGR of
17.57%, and has reached Nrs.104.24 billion at mid July 2015. It was Nrs.46.41
billion at mid July 2010, and has since grown to 2.25 times that size. Across
industry the bank holds the highest deposit among private commercial banks, and
overall ranked second at mid July 2015.
 Annual Report 2014/15 27

Industry wide total deposit of commercial banks has expanded at a CAGR of

18.30% in this period. The banks market share has declined from 7.35% at mid
July 2010 to 7.13% at mid July 2015.

Through this period the banks deposit mix has improved consistently, reflecting
on the banks Current and Savings Accounts (CASA) mobilization drive. CASA
has grown at a CAGR of 20.71% and its contribution in total deposit volume has
increased from 48.27% at mid-July 2010 to 55.09% at mid-July 2015. Nabils
CASA ratio to total deposit is better than that of the industry, which stands at
48.74%.

Gross Lending Portfolio

Gross loans and advances of the bank have expanded at a CAGR of 15.25% in
the last five years, and have reached Nrs.67.16 billion at mid July 2015. It was
Nrs.33.03 billion at mid July 2010, and has since grown to 2.03 times that
size. Across industry the bank holds the third largest lending portfolio at mid July
2015.

Industry wide the gross loans and advances of commercial banks have expanded
at a CAGR of 18.41% in this period. The banks market share has declined from
7.15% at mid July 2010 to 6.15% at mid July 2015.

In the past years the bank has expanded its exposures on the SME and Mid-
Corporate business segments, which have been thriving amidst high consumption
demand fuelled by heavy remittance inflow. Besides, the bank has also increased
its exposures on the retail lending segment, which are normally structured for
repayments in equated monthly installments. These segments, while being
diversified and entailing lower risk, have also supported our customer base and
fee based income. In the Corporate segment the bank has mostly encouraged
organic growth from proven relationships, solicited selective new relationships,
and forayed into financing the mega-infrastructure projects through consortiums.
The banks strategic relationship approaches have aided its asset quality and also
achieved the desired volume growth during the last five years.

The banks gross Non Performing Loans (NPL) volume stand at Nrs.1.22 billion
at mid July 2015 up from Nrs.0.49 billion at mid July 2010. This represented a
NPL to gross loans ratio of 1.82% and 1.47% for these respective periods. The
coverage of total loan loss provision to gross NPL has remained above 100%
throughout and the banks NPL ratio is well within the manageable limit.

Gross Investment Portfolio

Gross investment portfolio of the bank has expanded at a CAGR of 17.76% in
the last five years, and has reached Nrs.30.98 billion at mid July 2015. It was
Nrs.13.68 billion at mid July 2010, and has since grown to 2.26 times that
size. Across industry the bank holds the largest investment book among private
commercial banks, and overall second rank across industry at mid July 2015.
 28 Nabil Bank Limited

Industry wide the gross investment of commercial banks has expanded at a

CAGR of 15.61% in this period. The banks market share has also increased from
10.07% at mid July 2010 to 11.04% at mid July 2015.

Owing to limited options for maintaining a profitable investment portfolio in the

domestic market, the growth in book is often guided by the position of surplus
fund and the availability of instruments. Domestic market almost entirely depends
on securities floated by the central bank for their local currency book and on fixed
term placement in foreign banks for their foreign currency book.

Nabil banks effort has been towards striking a profitable investment book, and
competitive bidding below the cost of fund was mostly avoided. However, the
surmounting pressure of sustained liquidity surplus in recent years has forced
the bank to take its investment decisions from a cost compensating approach
rather than a profit generating approach. It is evident from the sudden shot in the
investment volume as of mid July 2015. However, there was a decline of 53 basis
points in investment yield that year, evidencing of margin decline across industry.

Distribution Of Dividend
One of the parameters of success for banks lies in its ability to create wealth APPROPRIATION OF EPS
(IN NRS.)
and distribute fair and reasonable dividend. Nabils history shows that it has
been able to provide an attractive return over the past years. Through the 40
40
last four financial years from 2010-11 to 2013-14 the bank has distributed 30
45

cash dividends at the rate of 30%, 40%, 40% and 45%. Likewise, the bank 7
25
has distributed stock dividends at the rate of 40%, 20%, 25% and 20% 20 30
36 20
respectively for those years. For the financial year 2014-15 the bank has 23 26
20
proposed for distribution of stock and cash dividends of 30% and 6.84% 11

respectively. 2011 2012 2013 2014 2015

(Mid July)

The bank has distributed cumulative cash dividends of Nrs.4.02 billion out of PROFIT RETENTION STOCK DIVIDEND CASH DIVIDEND

profits generated in the last five years, inclusive of the 6.84% cash dividend
proposed for financial year 2014-15.
 Annual Report 2014/15 29

COMMENTARY ON KEY ITEMS OF

INCOME STATEMENT OF PAST 5 YEARS
In the last five years the banks results has been remarkable in terms of profitability and market positioning. The bank has
maintained its leadership position among private commercial banks and has strengthened its revenue lines as well as its cost
management through this period. Information presented herein below highlight upon the growth in the banks financial results,
and the banks market presence based on the fourth quarter provisional financial statements published by individual banks,
unless specifically stated otherwise.
(NRS IN MILLION)

PERIOD ENDING MID JULY 2015 2014 2013 2012 2011 2010 CAGR
YEAR 5 YEAR 4 YEAR 3 YEAR 2 YEAR 1 BASE YEAR
1. Interest Income 5,762 5,636 5,702 6,127 5,254 4,048 7.32%
2. Interest Expense 2,236 1,940 2,186 3,155 2,955 1,960 2.67%
Net Interest Income 3,526 3,696 3,516 2,971 2,299 2,088 11.05%
3. Fee, Commission and Discount Income 721 732 603 567 471 385 13.36%
4. Exchange Income 512 530 489 447 276 291 11.95%
Total Operating Income 4,759 4,958 4,608 3,986 3,046 2,764 11.48%
5. Staff Expense 743 628 647 501 454 367 15.17%
6. Other Operating Expense 613 543 469 431 401 334 12.90%
Operating Profit before Provision for Possible Losses 3,403 3,787 3,492 3,054 2,191 2,063 10.53%
7. Provision for Possible Losses 167 238 27 414 109 356 -14.03%
Operating Profit 3,236 3,549 3,465 2,640 2,081 1,707 13.64%
8. Non Operating Income /(Expense) 44 35 13 14 7 6 47.04%
9. Provision for Possible Losses Write Back 2 15 25 0 7 40 -44.50%
Profit from Regular Activities 3,282 3,599 3,503 2,654 2,095 1,753 13.36%
10. Income/(Expense) from Extra-ordinary Activities (3) 34 -17 -3 3 34 -161.11%
Profit from All Activities 3,279 3,633 3,486 2,651 2,098 1,788 12.90%
11. Provision for Staff Bonus 298 330 316 242 191 163 12.90%
12. Provision for Income Tax 888 983 950 720 570 486 12.80%
Net Profit/(Loss) 2,094 2,320 2,219 1,689 1,338 1,139 12.95%

NET INTEREST INCOME

(NRs. in Million)

In the last five years period the banks Net Interest Income 6127
5702 5636 5762
(NII) has increased at a CAGR of 11.05% and has reached 5254
Nrs.3,526 million in financial year 2014-15. It was Nrs.2,088
4048
million in the year 2009-10. 3516 3696 3526
2971
2088 2299
Industry wide, NII of commercial banks has increased at a
CAGR of 13.21% in this period. The banks market share has
declined marginally from 7.42% at mid July 2010 to 6.75%
2010 2011 2012 2013 2014 2015
at mid July 2015. At mid July 2015 the bank is the highest
(Mid July)
NII generating private commercial bank and is ranked third
overall behind two government owned banks. GROSS INTEREST INCOME NET INTEREST INCOME

Domestic financial market witnessed a downturn in interest

rate curve in the last three years, as market mostly remained
liquid throughout. Yield on lending and investment books
faltered alike. Consequently, cost management gained priority
30 Nabil Bank Limited
and played a key role in driving NII growth of commercial
banks. Nabils own focus on interest free deposits and low cost
savings accounts further improved its deposit mix and hence
supported better cost management. As a result, the five year
CAGR of Nabils interest expense was maintained at 2.67%,
while that of its deposit volume was 17.6%. Likewise, the five
year CAGR of Nabils interest income was 7.32%, while that of
its gross loan volume was 15.25%.
The ratio of NII to Gross Interest Income over the past five
financial years from 2010-11 to 2014-15 period is recorded at
44%, 48%, 62%, 66% and 61% respectively.
Fees, Commission and
Other Operating Income
The banks fee based income has increased at a CAGR of
13.36% in the last five years and has reached Nrs.721 million
in financial year 2014-15. It was Nrs.385 million in the year
2009-10.
The industry wide CAGR for the same period is recorded at
15.67%. At mid July 2015 the bank is ranked fifth in terms of
fee based income, and has improved its market positioning over
the period.
The bank has maintained strategic focus on increasing the
contribution of fee based income in gross revenues and has
been on continuous lookout for new revenue streams. The bank
has also been working to develop competitive edges in major fee
income generating segments. Some of the major product lines
the bank has launched in the recent years are bancassurance,
bullion, merchant banking and e-banking. Besides, the bank
has developed its strengths in major segments such as trade
finance transactions, consortium management, foreign study
(NRs. in Million)
732
603
567
471
385
2010 2011 2012 2013 2014
(Mid July)
FEES AND COMMISSION INCOME
loans, card and ATM / POS channels, inward remittance from
South Korea and increased offering of ancillary banking services
through more branch offices.
Foreign Exchange Income
The banks foreign exchange income generation has increased
at a CAGR of 11.95% in the last five year and has reached
Nrs.512 million in financial year 2014-15. It was Nrs.291
million in the year 2009-10.
The industry wide CAGR for the same period is recorded at
18.62%. At mid July 2015 the bank is ranked second in terms
of foreign exchange income, and the gap with market leader
has reduced substantially in the last five years. Through this
period the bank has significantly enhanced its transaction
banking services by offering new products and soliciting more
institutional clients.
(NRs. in Million)
530 512
489
447
291 276
2010 2011 2012 2013 2014 2015
(Mid July)
FOREIGN EXCHANGE INCOME
Staff Expense
In the last five years period the banks staff expense has
increased at a CAGR of 15.17% and has reached Nrs.743
million in financial year 2014-15. It was Nrs.367 million in the
year 2009-10.
Industry wide, staff expense of commercial banks has increased
721
at a CAGR of 11.20% in this period. At mid July 2015 Nabil is
ranked fifth highest overall and second highest among private
commercial banks in terms of staff expense.
 abil is perceived as the banking brand in terms of career
N
development, pay and benefits in local labor market.
2015
Consequently the bank has been able to attract and retain
talents in developing a team has been able to spearhead its
strategic execution amidst highly competitive market conditions.
The bank has a policy to revise employee benefits every two
 Annual Report 2014/15 31

743
third highest among private commercial banks in terms of
(NRs. in Million)

647
other operating expense. The bank has a strategic focus in
628
upgrading its systems and work processes. Consequently there
501
454 have been substantial investments in upgrading its information
367 technology infrastructures, and centralization / automation of
316 330 298
242
work processes. This has supported the banks operational cost
163 191 management and enhanced effectiveness of its control system.
Apart from these, unavoidable cost items generally followed
the growth path in alignment with inflation and increased
2010 2011 2012 2013 2014 2015 consumption demand of rising business operations.
(Mid July)

STAFF EXPENSE PROVISION FOR STAFF BONUS Net Provision Expense

Five year CAGR of the banks net provision expenses remained
years and career development opportunities through regular
negative by 12.19%. It is because the net expense was
promotions. Besides, being the first private sector bank, the
Nrs.316 million for financial year 2009-10 which is the base
bank has substantial cost towards post retirement employee
year, and has remained mostly below that level in the following
benefits. All these factors lead to a comparatively higher staff
years, except for the year 2011-12, when it shot up to Nrs.414
expenses for the bank.
million. For the most recent financial year 2014-15, the net
provision expense stood Nrs.165 million.
Apart from staff expenses, the bank also distributes lucrative
staff bonus, which is linked to annual profits. For the financial
However, the banks NPL volume has increased from Nrs.487
year 2014-15 the bank has distributed total staff bonus
million at mid July 2010 to Nrs.1,221 million at mid July
amounting to Nrs.298 million, and its CAGR in the past five
2015, representing the NPL to gross loans ratio of 1.47% and
years is recorded at 12.90%.

414
Other Office Operating Expenses
(NRs. in Million)

In the last five years period the banks other office operating 316

expenses has increased at a CAGR of 12.90% and has reached

223
Nrs.613 million in financial year 2014-15. It was Nrs.334
165
million in the year 2009-10. 102

Industry wide, other office operating expense of commercial 3

banks has increased at a CAGR of 16.18% in this period. At

mid July 2015 Nabil is ranked fifth highest overall and the 2010 2011 2012 2013 2014 2015
(Mid July)
(NRs. in Million)

NET PROVISION EXPENSE FOR POSSIBLE LOSSES

613
543
469 1.82% for the respective periods. The coverage of total loan loss
431
401 provision to gross NPL has remained above 100% throughout
334
and the banks NPL ratio is well within the manageable limit.

Profitability
As per the provisional financial statements for the final quarter
2010 2011 2012 2013 2014 2015
of financial year 2014-15 published by all commercial banks,
(Mid July)
Nabil is ranked as the market leader in terms of operating profit.
OFFICE OPERATING EXPENSE Nabil has been ranked second to a government bank in terms of
net profit, where the government banks net profit has shot up
32 Nabil Bank Limited
(NRs. in Million)
3787
3492
3054
2063 2191
2320
2219
1689
1338
1139
2010 2011 2012 2013 2014
(Mid July)
OPERATING PROFIT BEFORE PROVISION NET PROFIT
due to a major investment disposal transaction that constitutes
its non-operating income.
Net Profit and Operating Profit before provision of Nabil
increased at a CAGR of 12.95% and 10.53% respectively
in the last five years and stands at Nrs.2,094 million and
Nrs.3,403 million for the financial year 2014-15. These were
Nrs.1,139 million and Nrs.2,063 million respectively for the
financial year 2009-10.
The five year industry CAGR of net profit is recorded at
13.05%, but asymmetries exists due to contributions of huge
one off profit recognitions out of investment disposals and NPL
recoveries at government owned banks. A better reference can
be taken of the industry CAGR of operating profit before loss
provisioning which is recorded at 14.62% as compared to
Nabils 10.53%. The industry growth rate indicates a highly
competitive market wherein mid-sized banks are coming up
strongly and posting impressive profit growth.
Throughout the last five financial years, from 2010-11 to
2014-15, Nabil has maintained its market leader positioning
in terms of highest operating profit before provision. Likewise,
for the same period Nabil has remained the highest net profit
generating bank among private commercial banks. In between,
government banks have taken over the leading position in terms
of net profit, chiefly out of their non-operating income from
recovery of loan loss provisioning and investment disposals.
Nabil continues to lead the industry as the highest profit
generating private sector bank in the country.
In the latter years, economic growth of the country has not
paced up as was expected after the end of a decade long
insurgency, competitive environment has built up within
the banking industry, and banking regulations have posed
significant impacts on interest margins. Due to the adverse
3403 external environment, banks have not been able to engage as
catalyst of economic development up to their potential. This
has hampered the growth of domestic banking industry, both in
terms of business volumes and revenue generation. Despite of
2094
adversities, the performance recorded by Nabil through the five
years has been satisfactory.
Achievements of
2015
the Current Year
This section presents managements review of the banks
financial performance for financial year 2014-15 the review
year compared against that of the previous year. This review
highlights changes in the banks equity position, major sources
and uses of funds, and performance across broad operating
lines for the review year.
The domestic economic climate and investors sentiment both
were not very encouraging during the review year. It was yet
another year in the constitution drafting process and political
contentions over certain constitutional issues, including the
federal restructuring of the country, supported fluid politics.
Furthermore, the massive earthquake that struck the nation
in April left the countrys socio-economic climate completely
devastated for the rest of the review year.
Nabil Banks performance in the review year, amidst adverse
external environment, is noted satisfactory. The bank has been
able to expand its balance sheet size by a remarkable 32.9% in
the review year, led mostly by growth in deposits. Profitability
has declined in the review year, as margins got squeezed amidst
serious liquidity surplus in the domestic financial market.
Equity
The banks equity, comprising of paid up capital and reserves, has
increased by 24.1% and reached Nrs.9,486 million at end of the
review year. It was Nrs.7,641million at previous year end. The
growth has been entirely out of profit retention.Out of the net profits
(in NRS. in million)
Capital Mid July Growth
2015 2014 Volume %
Paid Up Equity 4,755 3,657 1,098 30.0%
Reserve Fund 4,731 3,984 746 18.7%
Total 9,486 7,641 1,845 24.1%
 Annual Report 2014/15 33

for review year, only 11.95% amounting to Nrs.250 million has been
proposed for distribution as cash dividend, whereas the remaining
88.05% amounting to Nrs.1,844 million has been retained in equity,
with appropriations into proposed bonus shares, various statutory
reserve headings, and retained earnings.
Deposits
The banks deposit liabilities has increased by a remarkable
38.3% and has reached Nrs.104,238 million at end of the
review year. The banks deposits has increased by Nrs.28,849
million in the review year from Nrs.75,389 million at previous
year end. The growth rate in banks deposits has been better
than that of the industry, recorded at 21.5%, and the banks
market share has also increased to 7.13% from previous years
6.26%. The bank is ranked second in terms of total deposit
volume at end of the
review year.
Deposits comprised
of 83.94% in local
currency and remaining
16.06% in foreign
currency. In the review
year deposits has
increased across all
boards. Current and
Savings accounts
(CASA), fixed accounts,
and call accounts
have all increased by
31.0%, 34% and 57%
respectively. With a higher rise in call deposit volume, CASA
contribution in total deposits has reduced to 55.1% from
58.16% a year earlier.
In the review year deposit cost declined marginally to 2.54%
from 2.66% a year earlier. This was mainly on account of
maturity of high coupon fixed deposits and re-pricing of call
deposits. Table at the bottom depicts the position of average
deposit volume and corresponding cost for the review year.
Loans
Gross loans and advances of the bank has increased by 19.50%
and has reached Nrs.67,162 million at end of the review year.
There has been an absolute growth of Nrs.10,959 million in
the review year from Nrs.56,203 million at previous year end.
The growth rate in banks lending portfolio has been slightly
lower than that of the industry, recorded at 22.33%, and the
banks market share has also declined marginally to 6.15%
from previous years 6.30%. The bank is ranked third in terms
of total lending volume at the end of the review year.
Amidst not so encouraging external environments, the bank
maintained its approach towards consolidation, asset quality
and organic expansion during the review year as well. Book
expansion mostly remained selective and the focus was towards
SME and retail segments, which assures of a better risk profile,
lower capital charge, and effective market penetration.
In the review year loan yield declined substantially to 8.42%
from 10.05% a year earlier. The decline of 163 basis points
in loan yield indicated of the effects of acute price competition
amidst surplus liquidity scenario.
(NRS. in million)

Deposit Mid July Growth

2015 2014 Volume %
Local Currency 87,496 63,942 23,554 36.8%
Foreign Currency 16,742 11,447 5,295 46.3%
Total 104,238 75,389 28,849 38.3%

deposits
(NRS. in million)

Period ending mid July 2015 2014

Volume Interest Cost Volume Interest Cost
Local Currency
- Current and Savings accounts 44,570 1,079 2.4% 33,784 762 2.3%
- Fixed and Call accounts 28,029 1,074 3.8% 25,464 1,100 4.3%
Total 72,599 2,153 3.0% 59,249 1,862 3.1%
Foreign Currency
- Current and Savings accounts 5,362 12 0.2% 4,984 11 0.2%
- Fixed and Call accounts 9,040 46 0.5% 7,611 42 0.5%
Total 14,402 57 0.4% 12,596 52 0.4%
Total Deposits 87,000 2,211 2.5% 71,844 1,914 2.7%
34 Nabil Bank Limited

(NRS. in million)

Loans Mid July Growth

2015 2014 Volume %
Local Currency 63,099 54,074 9,025 16.7%
Foreign Currency 4,063 2,129 1,934 90.8%
Total 67,162 56,203 10,959 19.5%

LOANS
(NRS. in million)

Period ending mid July 2015 2014

Volume Interest Cost Volume Interest Cost
Business Loan 49,077 3,990 8.1% 40,217 3,944 9.8%
Retail Loan 14,124 1,398 9.9% 11,766 1,239 10.5%
Total 63,202 5,387 8.5% 51,983 5,182 10.0%

Investments at depressing low yields. The banks position with regards to

Gross investments of the bank recorded remarkable growth of
69.48% and reached Nrs.30,979 million at end of the review
year. There has been an absolute growth of Nrs.12,700 million
in the review year from Nrs.18,279 million at previous year
end. The growth rate in banks investment portfolio has been
much higher than that of the industry, recorded at 24.00%, and
the banks market share has also increased to 11.04% from
previous years 8.08%. The bank is ranked second in terms of
gross investment volume at end of the review year.
Growth under local currency books was recorded at 77.21% or
Nrs. 6,684million.The bank had no option than to bid for short
term government securities and liquidity mopping instruments
additional investments in short term instrument was mostly on
a cost compensation standing rather than an income generation
standing.
Growth under foreign currency books was recorded at 62.52%
or Nrs.6,016 million. Foreign currency book expanded in
alignment with the growth in foreign currency deposits. A
profitable book expansion is very challenging in this segment
as almost entire funds are parked in foreign bank deposits,
while the interest rates in global markets have generally been
low.In the review year the bank continued its focus to expand
placement destinations in Asia, and strike a risk-return balance
in its foreign currency investment portfolio.

(in NRS. in million)

Investments Mid July Growth

2015 2014 Volume %
Local Currency 15,340 8,656 6,684 77.2%
Foreign Currency 15,639 10,361 5,278 50.9%
Total 30,979 19,017 11,962 62.9%

investments
(in NRS. in million)

Period ending mid July 2015 2014

Volume Interest Cost Volume Interest Cost
Nepal Government Bond 2,217 150 6.8% 3,069 205 6.7%
Nepal Government Treasury Bills 7,713 37 0.5% 4,251 49 1.1%
Deposits and Placements in Foreign Banks 13,707 134 1.0% 13,392 144 1.1%
Equity Instruments 375 42 11.1% 333 31 9.3%
Other investments 665 21 3.2% 301 16 5.3%
Total 24,676 384 1.6% 21,346 445 2.1%
 Annual Report 2014/15 35

In the review year investment yield declined substantially to
1.41% from 1.94% a year earlier. The decline of 53 basis
points in overall investment yield is mostly on account of lower
yield in treasury bills and liquidity mopping instruments. Almost
the entire volume gain has also been in this segment alone.
Net Interest Income
Amidst surplus liquidity scenario that prevailed throughout the
year, deposit increments mostly ate up on banks NII, because
these could not be utilized to fund credit expansion. The bank
faced acute price competition and had to lower its lending rates,
which put a dent on its interest income. The impact remained
visible as the NII growth recorded negative despite a healthy
volume growth under both lending and investment books.
The banks Net Interest Income (NII) declined by 4.60% and
stood at Nrs.3,527 million at end of the review year. There was
an absolute decline of Nrs.170 million from previous years total
NII of Nrs.3,696 million. The decline was underpinned by a fall
in yield of loans and investments by 163 basis points and 53
basis points respectively. While, there was a fall in deposit cost
as well by 12 basis points, it was not enough to compensate
for the adverse impact of yield reduction. As shown in the table,
the gross interest income increased by Nrs.126 million while
the gross interest expense increased by Nrs.296 million, netting
a NII decline of Nrs.170 million for the review year.

Net Interest Income

(NRS. in million)

Period ending mid July Changes

2015 2014 amount %
Interest Income 5,762 5,636 126 2.2%
Interest Expense 2,236 1,940 296 15.3%
Net Interest Income 3,526 3,696 (170) -4.6%

Yield on Earning Assets

(NRS. in million)

Period ending mid July 2015 2014 Changes

Aggregate Volume of interest earning assets 88,665 72,995 21.5%
- average loan and advances (including staff Loan) 64,364 51,983 23.8%
- average investments* 24,301 21,013 15.6%

Interest Income on earning assets 5,762 5,596 3.0%
- on loans and advances 5,420 5,182 4.6%
- on investments* 343 414 -17.3%

Weighted Average Yield 6.5% 7.7% -1.2%
- yield on loans and advances 8.4% 10.0% -1.5%
- yield on investments* 1.4% 2.0% -0.6%

* excluding investments in equity instruments

36 Nabil Bank Limited

Cost of Resources
(NRS. in million)

Period ending mid July 2015 2014 Changes

Aggregate volume of interest bearing liabilities 87,300 72,144 21.0%
- average deposits 87,000 71,844 21.1%
- average borrowings 300 300 0.0%

Interest expense on liabilities 2,236 1,940 15.3%
- on deposits 2,211 1,914 15.5%
- on borrowings 26 26 -0.3%

Weighted Average Cost 2.56% 2.69% -0.13%
- cost of deposit 2.5% 2.7% -0.1%
- cost of borrowing 8.5% 8.5% 0.0%

Aggregate yield on interest earning assets declined by 119 basis
points and stood at 6.50% for the review year. It was 7.69%
for the previous year. Yield on loans, which occupy 72.59% of
the total earning assets base, declined by 163 basis points in
the review year. Likewise, yield on investments, which occupy
27.41% of the total earning assets base, declined by 53 basis
points, excluding equities.
Aggregate cost of interest bearing liabilities declined marginally
by 13 basis points,and stood at 2.56% for the review year. It
was 2.69% for the previous year. Cost of deposit liabilities, the
single major component in the banks interest bearing liabilities
book, declined by 12 basis points in the review year. Towards
cost management the bank focused more on CASA mobilization
and revised interest rates where necessary.
Fees, Commission and Other Operating Income
Fees, Commission and
Other Operating Income
Fee based income declined by 1.49% and stood at Nrs.721
million at the end of the review year. There was an absolute
decline of Nrs.11 million from previous years total fee based
income of Nrs.732 million. Major fee based revenue streams
such as loan management, remittance transactions, foreign
trade transactions and card services did not perform as per
expectations. There were two major factors behind it.
First and the major factor was the April earthquake and the
impacts in had on the real economy. Transaction volume in
foreign trade and credit cards declined sharply in the fourth
quarter, as imports almost came to a standstill and tourists
arrival dropped. Fresh demand for loans was negligible. Besides,
the public life in general and the scale of economic activities
also fell sharply in the fourth quarter, resulting is very low
generation of fee income even from ancillary banking services
such as instruments handling, balance certificates, good for
payments, etc.
(NRS. in million)

Period ending mid July Changes

2015 2014 amount %
Total Fee Income 721 732 (11) -1.49%
Major areas: - -
Loan Management 164 167 (3) -1.63%
Cards & E-banking Services 149 136 13 9.63%
Letter of Credit 96 95 1 0.93%
Remittance 90 90 0 0.31%
Bank Guarantees 80 73 7 9.28%
Communication 24 19 5 24.11%
Cards Issuance & Renewal 20 36 (16) -45.09%
Agency Services 10 14 (4) -25.36%
Other Services 87 102 (14) -14.00%
 Annual Report 2014/15 37

The second factor, was the regulatory changes that came into
effect in the review year, which among other things, changed
the existing structure of fees and charges levied by bank
on various services relating to deposit account operations,
anywhere branch banking services, loan management fees, card
services, instrument handling, etc. Among these, the impact
of changes to anywhere branch banking services and loan
management fees were significant in Nabils fee based revenues.
Foreign Exchange Income
Forex income declined by 3.31% and stood at Nrs.512 million
at end of the review year. There was an absolute decline of
Nrs.18 million from previous years Nrs.530 million. The
earthquake effect was also seen in the banks forex income
generation, as lower volume of foreign trade transactions and
lower card transactions from tourists impacted the volume, and
hence income, from foreign exchange trading. There also
remained tough competition for high value customers / deals
through offering rebate on exchange rates, which the bank also
had to respond accordingly and hence trading margins were hit.
Staff Expense
Staff expense increased by 18.47% and stood Nrs.743 million
at end of the review year. There was an absolute growth of
Nrs.116 million from previous years Nrs.627 million. The major
growth driver was the revisions in pay and benefits across all
corporate level effected in the review year. The bank has a
policy of revising employee pay and benefits once every two
years and the review year was the year of revision. Similarly,
staff uniform allowance which was previously being provided
once every two years has been restructured into annual
allowance, on a proportionate need basis. The growth in overall
staff expense is normal and the increments were justified in
order to cover for inflation and to develop and retain a team that
has been successfully executing the banks strategies.

Foreign Exchange Income

(NRS. in million)

Period ending mid July Changes

2015 2014 amount %
Total exchange income 512 530 (18) -3.3%
- Revaluation 182 108 73 67.7%
- Trading 331 422 (91) -21.6%

Staff Expense
(NRS. in million)

Period ending mid July Changes

2015 2014 amount %
Total staff expense 743 628 116 18.5%
Major areas: - -
Salary 222 208 14 6.7%
Allowances 270 238 32 13.3%
Pension and Gratuity 99 68 31 45.9%
Leave 63 40 23 56.7%
Dashain 34 33 1 1.6%
Providend Fund 21 19 2 9.6%
Training 11 7 4 56.0%
Uniform 10 0 10 9857.6%
Others 13 13 (0) -0.3%
38 Nabil Bank Limited

office Operating Expense

(NRS. in million)

Period ending mid July Changes

2015 2014 amount %
Total operating expense 613 543 70 12.9%
Major areas:
Amortization & Depreciation 113 118 (5) -3.8%
Rent Charges 86 72 14 20.1%
Security Service 50 50 0 0.2%
Stationery & Supplies 47 23 24 104.6%
Contract Service 41 38 3 7.2%
Consultancy Service 38 32 5 16.7%
Fuel & Lubricants 32 36 (3) -9.7%
Communication 31 31 0 0.5%
Deposit Insurance 21 17 4 23.6%
Donations 20 0 20 35117.0%
Electricity & Water 17 18 (0) -0.9%
Fixed Assets Repair 20 19 1 5.6%
Assets Insurance 12 14 (3) -20.4%
Advertisements 13 15 (2) -16.2%
Janitorial Services 11 10 0 4.6%
Other Expenses 61 50 11 22.0%

Office Operating Expense
Office operating expense increased by 12.86% and stood
Nrs.613 million at end of the review year. There was an
absolute growth of Nrs.70 million from previous years Nrs.543
million. Significant growth was observed across headings like
rent, stationery, contract service, consultancy service, deposit
insurance, etc.
Disaster Relief Fund as part of its corporate social responsibility
to support the reconstruction of earthquake damages. Other
expense items generally followed a normal trend in line with
the prevailing inflation and consumption demand. Expense
management has been a focus area and the bank has been
managing its expenses by adopting better technologies for
streamlining and automating its work processes.

The bank added four new branches and four new ATMs in the
review year, which attracted rental charge and other associated
operating costs. The bank also replaced its entire magnetic
striped cards in circulation and those held in inventory with
chip based cards, which incurred significant expenses under
the stationery heading. This was required as part of the up-
gradation of the banks card services into a more advanced and
more secured platform.
The bank also donated Nrs.20 million into the Prime Ministers
Provision for Possible Losses
In the review year the bank incurred Nrs.165 million net
additional expenses towards provisioning of possible losses.
There was an absolute decline of Nrs.58 million from previous
years Nrs.223 million. The banks focus on organic expansion
of its lending book, together with selective growth into SME
and retail segments, supported a better risk profile and hence
lowered the loan loss provisioning expenses for the review year.

Provision for Possible Losses

(NRS. in million)

Period ending mid July Changes

2015 2014 amount %
Total provision expense (Net) 165 223 (58) -26.1%
- on loan impairment 148 236 (87) -37.1%
- on investment impairment 4 (14) 18 -131.6%
- on other assets 12 1 11 971.2%
 Annual Report 2014/15 39

Non-Operating Income Staff Bonus, Corporate

Non-operating income of the bank is generated almost
entirely from dividends received from its investments in equity
instruments. In the review year, dividend income increased
by 37.69%, recording an absolute growth of Nrs.12 million
from previous years Nrs.32 million. The loss on disposal of
fixed assets represents normal transactions wherein the bank
disposes old asset items and writes off the carrying value.
Income / (Expense) from
Extra Ordinary Activities
Extra ordinary activities for the bank generally relate to write
off of chronic NPLs from its book.During the review year the
bank had written off Nrs.10 million of chronic NPLs and also
recovered Nrs.8 million from previous written off loan accounts.
Although written off, the bank normally retains its right to
recourse for recovery of the written off loan.
Tax and Net Profit
Provisions for staff bonus and corporate tax liability declined by
9.73% and 9.71% respectively, and stood at Nrs.298 million
and Nrs.888 million for the review year. This is an absolute
decline of Nrs.32 million and Nrs.95 million from previous
years level of Nrs.330 million and Nrs.983 million respectively.
The banks net profit and operating profit before provisions
declined by 9.73% and 10.15% respectively, and stood at
Nrs.2,094 million and Nrs.3,403 million for the review year.
This is an absolute decline of Nrs.226 million and Nrs.384
million from previous years level of Nrs.2,320 million and
Nrs.3,787 million respectively. As discussed in the preceding
paragraphs in this section of the annual report, the banks
financial performance for the review year was largely guided by
adverse external environment arising out of the earthquake and
the surplus liquidity. The banks management rather maintained
focus on re-aligning its risk portfolio and liquidity management,
which under the circumstances can be considered satisfactory.

Non Operating Income

(NRS. in million)

Period ending mid July Changes

2015 2014 amount %
Total non operating income / (loss) 44 35 10 27.6%
- on sale of fixed assets 1 3 (2) -80.5%
- dividend income 44 32 12 37.7%

Income/ (Expense) from Extra Ordinary Activities

(NRS. in million)

Period ending mid July Changes

2015 2014 amount %
Net Income/ (Expense) (3) 34 (37) 108.6%
Recovery from written off loan 8 37 (29) -79.4%
Loan written off expense (10) (2) (8) 356.7%
Others (0) (1) 0 -40.2%
40 Nabil Bank Limited

Value Generation retained by the Bank in the form of capital and reserves. To
comply with the regulators direction and the capital plan

and Distribution
Value Generation
The bank created total value of NRs. 4,327 million. The value
generated by the bank has declined by 6.5% or NRs. 300
Million as compared to the corresponding period last year.
Financial intermediation which is the core business of the bank
contributed 71.5% in the total value generation. Similarly,
financial services which comprise of providing various auxiliary
services not directly relating to financial intermediation,
contributed 28.5%.
subsequently put forward by the Bank, 30% stock dividend was
distributed which resulted in an increase in capital. Since only a
small fraction of the earnings were distributed as cash dividend,
it can be observed that the share of the shareholder investors in
the value application has come down by almost 82%. In totality,
the shareholders share comes to NRs. 1,347.56 million
including both cash and stock dividend. The Bank understands
that sustainability and continuity of the business is equally
important to the investors as is getting a reasonable return and
it believes it has been able to address the expectations of the
shareholders amply.

Value generation from financial intermediation has declined by
8.1% in the review year. In the same period the banks total
interest earning assets base has increased by NRs.14.51 billion
or 19.9%. The growth rate in value generation out of financial
intermediation is thus low because of the decrease in net
interest margin. The banks net interest margin reduced to 4.0%
in the review year down from 5.0% of previous year.
Value generation from financial services has also declined by
2.3% in the review year. This typically reflects the position
of decline in fee, commission, other operating and foreign
exchange income.
Application of Value Generation
The Bank has been consistent in applying the value generated
from its operations towards the interest of all the stakeholders.
Distribution of value generation has been just, equitable and in
support of running a sustainable business into the far future.
In line with the NRB directive to increase the capital of the
Bank to NRs. 8 billion, most of the value generated has been
There are no significant deviations in the value application
towards other stakeholder groups as compared against previous
year. Nabil believes in the philosophy that investment in staff is
a prudent investment that will provide them more satisfaction
and yield better returns in the immediate future. Employees can
be seen receiving a 21.1% share of the value generated in the
form of employee benefits and statutory bonus. By providing a
fair share to its employees, the bank has surely become the 1st
choice employer for the countrys aspiring youth who want to
pursue a career in the countrys financial services sector.
In the review year, the Bank was recognized as the highest
tax payer in the banking industry and the Bank takes pride
in such recognition from the government. Accordingly, a
significant share i.e. 20.7% of the value generated can be
seen being allocated towards government exchequer in the
form of corporate tax payments. The Bank believes that such
contribution will be helpful in taking the nation to developed
heights.

Total Value Addition

(NRs. in Million)

Period ending mid July Changes

2015 2014 amount %
Interest Income 5,762 5,636 126 2.2%
Interest Expense (2,211) (1,914) (296) 15.5%
Operating Cost (510) (425) (84) 19.9%
Other Income from financial intermediation 51 69 (17) -25.1%
Value addition from financial intermediation 3,094 3,365 (272) -8.1%
Income from financial services 1,233 1,262 (28) -2.3%
Total Value Addition 4,327 4,627 (300) -6.5%
 Annual Report 2014/15 41

Application of Value Addition

(NRS. in million)

Period ending mid July 2015 2014 changes

Amount Share % Amount Share % Amount %
To Employee 1,042 24.1% 958 20.7% 84 8.7%
To Governments 897 20.7% 981 21.2% (85) -8.6%
To Long term Financier 26 0.6% 26 0.6% (0) -0.3%
To Investor 250 5.8% 1,371 29.6% (1,121) -81.7%
To Provide for maintenance and expansion 2,112 48.8% 1,291 27.9% 821 63.6%
- Depreciation and Amortisation 113 2.6% 118 2.5% (5) -3.8%
- Provision for Loan and Investment Loss 165 3.8% 223 4.8% (58) -26.1%
- Deferred Tax (9) -0.2% 2 0.0% (11) -691.1%
- Capital / Retained Earning / Reserves 1,844 42.6% 948 20.5% 895 94.4%
Total Value Addition 4,327 100.0% 4,627 100.0% (300) -6.5%

Segmental 73.0%, 20.2%, 3.0% and 3.8% respectively. Interest earnings

and foreign exchange gains/losses generated while conducting

Performance
businesses under different segments are reported under the
respective segment.

Analysis The Banks business is mainly concentrated in Banking

For the purpose of assessing segmental performance, the Bank
has identified business segment as its primary segment and
geographical segment as its secondary segment.
The different businesses operated by the bank can be grouped
into distinct business segments based on the nature of products
and services. The nature of product offerings in each segment is
distinct from others, and they also vary in terms of the involved
risk and reward. As such, business segmentation has significant
influence on the banks business risks and its pricing strategies.
Branches and business units can also be grouped into distinct
geographic segments based on their location. However, this
factor does not have significant influence on the banks business
risks and its pricing strategies. The bank takes account of social,
economic and political factors while assessing the impact of
geographic location in its businesses.
Primary Segment
The bank has identified four primary segments based on the
nature of business operations. These are Banking, Treasury,
Cards and Other businesses. Their shared contribution ratio to
the net profit of the bank for the review year was recorded at
segment that contributes close to three quarters in the banks
gross earnings and net profit. The core business of deposit
mobilization and lending activities, along with other auxiliary
banking services that fall outside of card operations, treasury
operations and other businesses are reported under the Banking
segment.
Treasury segment contributes about one fifth to the banks gross
earnings and hence net profit. The banks entire investment
book and a majority of the foreign currency transactions are
reported under treasury segment. The bank operates its treasury
segment as a profit center that is responsible for overall liquidity
management, open market operations and investment portfolio
management. Card segment comprise of all card related
operations including debit and credit card issuance, merchant
relationships, e-banking, m-banking and ATM management. The
bank is among the pioneers in this segment and has recognized
this as a major growth segment for fee based income. The
bank has been investing substantially in upgrading its cards
and electronic channels, particularly with regards to enhancing
transaction security, expanding payment network, adding new
services, and increasing client base.
42 Nabil Bank Limited

PRIMARY- BUSINESS SEGMENT

(NRS. in million)

Period ending mid July Banking Treasury Cards Others Total

Revenue
Interest Income (Including Transfer Pricing) 7,507 2,414 19 - 9,940
Fee Income 530 4 357 142 1,033
Forex Income 136 346 15 15 512
Non Operating Income 8 44 - - 51
Total Revenue 8,181 2,807 391 158 11,537
Expense
Interest Expense (Including Transfer Pricing) 4,278 2,132 3 - 6,414
Staff Expense 733 5 22 11 770
Operating Expense 606 4 267 20 898
Provision for possible Loss / (write back) 159 4 2 - 165
Non Operating Expense / (income) 10 0 0 - 10
Total Expense 5,786 2,146 294 32 8,257
Segment Result 2,395 661 97 126 3,279
Staff Bonus - - - - 330
Income Tax - - - - 983
Net Profit for the Year - - - - 2,094
% Share 73.0% 20.2% 3.0% 3.8% 100.0%
% Growth over last year -9% -5% -34% -25% -10%

Others segment comprise of agency nature businesses like
insurance, remittance and bullion operations. The bank
recognizes these as growth segments that can contribute
towards achieving a higher proportion of fee based revenues in
the overall revenue mix.
Secondary Segment
The bank has identified five secondary segments based on
the geographic locations of its offices. These are Eastern,
Central, Western, Mid-Western and Far-Western. Their shared
contribution ratio to the net profit of the bank for the review
year was recorded at 9.8%, 77.6%, 7.9%, 2.8% and 1.9%
respectively. Interest earnings and foreign exchange gains/losses
generated while conducting businesses under different segments
are reported under the respective segment.
This regional segmentation follows the name of five
development regions of the county. For segmentation purpose,
all business transactions of offices and business units located in
a particular development region are grouped together. Central
region has the largest contribution in overall profitability of the
bank. All strategic business units are located in the Central
region and it has the highest number of branch offices in
comparison to other geographic regions. Countrys capital
being located in Central region, this hosts the highest economic
activities and demand for both loan and deposit products are
concentrated in this region.
 Annual Report 2014/15 43

SECONDARY- GEOGRAPHIC SEGMENT

(NRS. in million)

Period ending mid July Eastern Central Western Mid Western Far Western Total
Revenue
Interest Income (Including Transfer Pricing) 763 8,368 507 190 112 9,940
Fee Income 51 915 44 13 9 1,033
Forex Income 12 487 11 1 1 512
Non Operating Income - 51 - - - 51
Total Revenue 827 9,821 563 204 122 11,537
Expense
Interest Expense (Including Transfer Pricing) 369 5,743 183 79 40 6,414
Staff Expense 56 635 54 16 9 770
Operating Expense 51 766 54 18 10 898
Provision for possible Loss 28 122 15 (1) 1 165
Non Operating Expense - 10 - - - 10
Total Expense 504 7,275 306 111 61 8,257
Segment Result 323 2,545 258 93 61 3,279
Staff Bonus - - - - - 298
Income Tax - - - - - 888
Net Profit for the Year - - - - - 2,094
% Share 9.8% 77.6% 7.9% 2.8% 1.9% 100.0%
% Growth over last year -14% -11% 3% -1% -11% -10%

Interim Position Quarterly deposit growth was recorded at 7%, 10%, 3%

and 14% respectively over that in the immediately preceding

and Performance
quarter. These corresponded to an absolute volume increment of
Nrs.5.2 billion, Nrs.8.2 billion, Nrs.2.5 billion and Nrs.12.9

(Unaudited)
billion in the respective quarters.

Quarterly growth under gross loans and advances was

Interim Financial Position
The growth in the banks balance sheet during financial year
2014-15 was largely guided by the movement in deposit
mobilization. Starting from the first quarter and moving on to
the fourth quarter, the banks total assets increased by 5%,
8%, 3% and 12% respectively over that in the immediately
preceding quarter. These corresponded to absolute volume
increments of Nrs.4.8 billion, Nrs.7.7 billion, Nrs.2.8 billion
and Nrs.14.2 billion in the respective quarters.
recorded at 10%, 5%, 2% and 1% respectively over that in
the immediately preceding quarter.These corresponded to an
absolute volume increment of Nrs.5.6 billion, Nrs.2.9 billion,
Nrs.1.6 billion and Nrs.855 million in the respective quarters.
Gross investment volume recorded a decline of 16% or
Nrs.2.95 billion in Q1, followed by a growth of 56% or Nrs.8.6
billion in Q2. Likewise, the investment volume declined by 7%
or Nrs.1.7 billion in Q3, before bouncing back with a growth of
39% or Nrs.8.7 billion in Q4.
44 Nabil Bank Limited

(NRs. in Million)

FOR QUARTER ENDING Mid Oct 14 Mid Jan 15 Mid Apr 15 Mid Jul 15
Q1 Q2 Q3 Q4
Capital and Liabilities
Paid up capital 3,657 3,658 3,658 3,658
Reserve and surplus 5,861 5,096 5,604 6,083
Debenture and bond 300 300 300 300
Borrowings - - - -
Deposits 80,608 88,772 91,293 104,238
- domestic currency 68,300 75,645 74,230 87,707
- foreign currency 12,308 13,127 17,063 16,531
Income tax liability 203 75 33 1
Other liabilities 4,050 4,476 4,277 3,373
Total 94,678 102,377 105,165 117,652

Assets
Cash and bank balance 12,295 9,245 12,158 16,004
Money at call and short notice 1,402 1,004 868 324
Investments (gross) 15,327 23,914 22,219 30,979
Loans and advances (gross) 61,798 64,698 66,307 67,162
- Real estate loan 4,927 4,674 4,792 4,910
- Home loan (upto 100 Million) 5,437 5,468 5,725 5,851
- Margin loan - - - -
- Term loan 8,814 8,976 9,676 10,556
- Working capital loan 36,486 38,843 39,165 38,870
- Others loan 6,135 6,736 6,949 6,975
Fixed assets 823 806 803 812
Non banking assets - - - -
Other assets 3,033 2,711 2,811 2,372
Total 94,678 102,377 105,165 117,652

Note: Annual financial results per interim financial statements (un-audited) differ from that of the year-end financial
statements (audited) and the differences are explained for in Schedule 4A of Financial Statements.

Interim Financial Performance
Business performance in the financial year 2014-15 in general
was largely affected by the fluid domestic politics. Performance
was further hampered by the huge earthquake that hit the
nation on April 25, 2015. Besides, persistent liquidity surplus in
the financial system, coupled with some changes in the banking
regulations, significantly impacted the revenue generation for the
year, which ultimately remained below the original expectations.
Quarterly growth in profitability remained flat as is evident from
the tabulated data. In absolute terms, the net profit declined by
26% in Q1, increased by 20% in Q2 and thereafter declined by
16% and 6% respectively in Q3 and Q4, based on comparison
with that of immediately preceding quarter.
Net interest income, which makes up almost three quarters
of the total operating income, has in fact posted a declining
quarterly trend line. In absolute terms the NII has declined
by 4% in Q1, by 3% in Q2 and by 5% in Q3 before finally
recording a marginal growth of 1% in Q4, based on comparison
with that of immediately preceding quarter. A sluggish growth
rate of lending book, coupled with a downward yield curve
amidst highly liquid market, has had its impact in net interest
income generation during the year. Besides, the need to
maintain local currency interest spread within the regulatory
cap of 5% also forced the bank to lower its margin. Likewise,
the total operating income also followed the declining quarterly
trend line of NII. In absolute terms it declined by 4% in Q1,
 Annual Report 2014/15 45

INTERIM FINANCIAL PERFORMANCE

NRs. in Million

FOR QUARTER ENDING Mid Oct 14 Mid Jan 15 Mid Apr 15 Mid Jul 15 total
Q1 Q2 Q3 Q4
Interest Income 1,375 1,440 1,463 1,484 5,762
Interest Expense 450 547 614 626 2,236
Net Interest Income 925 893 849 858 3,526
Fees,Commission and Discount & Other 127 125 110 119 480
Other Operating Income 78 68 49 45 240
Foreign Exchange Gain 118 108 122 165 512
Total Operating Income 1,248 1,195 1,130 1,187 4,759
Staff Expenses 180 159 158 247 743
Other Operating Expenses 135 120 149 205 608
Operating Profit Before Provision 933 916 824 735 3,408
Provision for Possible Losses 149 (12) 36 (6) 167
Operating Profit 784 929 788 741 3,241
Non Operating Income / (Expenses) 15 17 9 3 44
Write Back of Provision for Possible Loss 1 (1) 0 2 2
Profit from Regular Activities 800 945 797 746 3,288
Extra Ordinary Income / (Expenses) (7) (0) (2) 6 (3)
Profit before Bonus and Taxes 793 945 795 752 3,285
Provision for Staff Bonus 72 86 72 68 299
Provision for Tax 216 252 214 205 887
Net Profit 505 606 509 479 2,099

by 4% in Q2 and by 5% in Q3 before finally recording a
marginal growth of 5% in Q4, based on comparison with that
of immediately preceding quarter. Apart from the effects of
declining NII, changes in banking regulations also curtailed
fee based revenue generation from some of the major fee
income avenues. Besides, the general economic activities and
operations of banks branches remained at a subdued level
immediately after the earthquake in the fourth quarter, which
resulted in loss of fee and forex revenue for the bank.
Operating expenses, including staff expenses followed a normal
growth pattern in line with the average price inflation and
the increased consumption of good and services required for
business growth. Both the staff expense and other operating
expenses shot up in the fourth quarter recording an absolute
growth of 57% and 38% respectively over that of the third
quarter. In the fourth quarter the bank revised pay and benefits
across all corporate levels, as part of its regular policy exercise,
leading to a sharp rise in staff expenses for the quarter.
The bank incurred substantial stationery expenses towards
replacement of the entire debit and credit cards in circulation
with more secured chip based cards in the final quarter. The
bank also donated Nrs.20 million into the Prime Ministers
Disaster Relief Fund in support of the earthquake recovery.
Loan loss provision expense, a major item impacting profitability,
was mostly contained to a minimum level in the last three
quarters. However, adverse provisioning in a couple of accounts
in the first quarter itself resulted in substantial provision expense,
which then stayed on till year end in our profit and loss account,
dragging down the final bottom line result for the year.
46 Nabil Bank Limited

Nabil Investment The transactions between Bank and its subsidiary during
the review year 2014-15 have been presented in point 13.3

Banking Ltd.
Overview
Nabil Bank has established Nabil Investment Banking Ltd.
(Nabil Invest in short) as its subsidiary as per the Companies
Act, 2006 on 07th of February 2010. It is a Merchant Banker
licensed by Securities Board of Nepal under the Securities
Businessperson (Merchant Banker) Rules, 2064. Nabil Bank as
at the Balance Sheet date holds 74.29% controlling interest in
the total paid up capital of Nabil Invest. The other institutional
shareholder CG Finco Private Limited holds the rest 25.71% of
the capital. The financial year of the subsidiary has a common
financial year with that of Nabil Bank (parent company) that
ended on July 16, 2015.
The principal activities of Nabil Invest are to provide merchant
banking and investment banking services that include
management of public offerings, portfolio management,
underwriting of securities, administration and record keeping
of securities of its clients (RTS), management of mutual fund,
depository participants, and corporate advisory.
The subsidiary has entered into Management Service Agreement
and Service Level Agreement with the Bank. Under the
Management Service Agreement, the staff deputed by the Bank
has been working as the CEO of the subsidiary company. Likewise,
under the Service Level Agreement, the Bank has been providing
various administrative services necessary for service operations
of the subsidiary. Such administrative services include general
administration, accounting, finance and planning, information
technology, cheque clearing, human resource administration, legal
advisory and fund management service.
of Schedule 33 Notes to Accounts of financial statements
annexed herewith.
Commentary On Key Items Of Statement
Of Financial Position Of Past 5 Years
At the end of the review year, the total balance sheet size
has slightly come down mostly due to a 15.2% reduction in
the profits of the subsidiary. The balance sheet of subsidiary
has inflated due to outstanding payable amount NRs.2.90
billion, that has to be refunded to applicants after allotment of
securities under public offerings.
Commentary On Key Items Of Income
Statement Of Past 5 Years
Income from merchant banking activities and that from mutual
fund operations have posted a growth of 37% and 15%
respectively. The only decrease in the income book is observed
under other income which comprises of incomes such as gain
on sale of securities, dividend income etc. With a decrease of
3% in the gross income, the net profit of the subsidiary declined
by a total 15.2%. Under the merchant banking activities of the
company, a new income stream has been added in the review
year from auction of shares management. Both commission and
auction management fees are received in such an arrangement.
The company has also started providing depository participant
services from the review year which has created a new revenue
stream for the company. Major revenue streams in merchant banking
are securities issue management, portfolio management services,
registrar to shares service and auction of shares management, all of
which are growth segments. The Company has proposed distribution
of 20% cash dividend from the review years profit.

BALANCE SHEET
(NRS. in million)

at mid July 2015 2014 2013 2012 2011 2010

Year 5 Year 4 Year 3 Year 2 Year 1 Base Year
Capital and Liabilities
Share Capital 105 105 105 105 105 70
Reserves & Surplus 46 41 24 13 7 (1)
Other Liabilities and Provisions 2,918 2,986 162 135 9 3
Total 3,069 3,132 291 253 121 72
Assets
Cash and Bank Balance 2,921 2,980 118 128 26 70
Investments 92 93 98 107 83 -
Net Fixed Assets 15 17 6 7 6 2
Other assets 41 42 69 11 6 0
Total 3,069 3,132 291 253 121 72
 Annual Report 2014/15 47

INCOME STATEMENT
(NRS. in million)

Period ending mid July 2015 2014 2013 2012 2011 2010
Year 5 Year 4 Year 3 Year 2 Year 1 Base Year
Income from Merchant Banking Activity 21 15 12 4 - -
Income from Mutual Fund operations 28 24 4 - - -
Interest Income 18 18 22 15 13 -
Other Income 6 18 13 10 6 -
Gross Income 74 75 52 29 19 -
Personnel Expenses (11) (10) (6) (4) (2) -
Office Operating Expenses (23) (18) (11) (8) (6) -
Interest Expenses - (1) (4) - - -
Gross Expenses (34) (29) (21) (13) (8) (1)
Operating Profit 39 46 31 16 12 (1)
Provision for Staff Bonus (4) (4) (3) (1) (1) -
Profit before tax 36 42 28 14 11 (1)
Tax Expense (9) (11) (7) (4) (3) -
Profit after tax 27 32 21 11 8 (1)
Opening Retained Earning 39 23 13 7 (1) -
Dividend Payout (21) (16) (11) (5) - -
Deferred Tax Reserve (1) - - - - -
Closing Retained Earning 45 39 23 13 7 (1)
48 Nabil Bank Limited

common teal
 Annual Report 2014/15 49

Synergistic
Working together, creating synergy
Our culture is all about working together for
better and faster result from the activities,
creating harmony among all stakeholders.
In our drive to take the bank atop coheres
all in togetherness for common good of the
stakeholders.
50 Nabil Bank Limited
03
Products
And Services
Nabil has structured its delivery platform by constituting specific
Strategic Business Units (SBUs) to ensure single window
customer dealing in specific product segments. Most of the
banks product and service offerings are channeled through
these SBUs for effective and efficient delivery. All SBUs are
equipped with the resources and expertise required for driving
business in their respective markets. Within respective markets
the SBUs undertake market research, product enhancement,
delivery channel optimization, relationship marketing, and
relationship management. The banks product and services are
being offered through the following SBUs.
Corporate Banking SBU
Corporate Banking (CB) is a one window banking designed
for catering the entire gamut of financial services to large
corporates. CB offers entire banking services required for
corporate establishments such as manufacturing and processing
industries, export and import trading, real estate development,
hotels, agro production, service industries, and others.
Deepak Shrestha
Head-Corporate Banking and Infrastructure
The Bank believes in contributing
to nation building through value
creation by helping businesses
grow and supporting new
initiatives
CB offers capital investment in form of multi-year term loan;
working capital in form of overdraft and structured time loans;
trade transactions in form of letter of credit, bank guarantees,
import loans, pre-shipment / post-shipment loans, bills and
documentary negotiation / collection / advising; and open
account arrangements. Having been banker to most of the
large corporate houses in the country for over three decades,
Nabil has developed the expertise to foresee requirements of
businesses and tailor products that meet those requirements.
Infrastructure and
Project Financing SBU
Infrastructural and Project Financing (IPF) is a one window
banking designed for catering to large capital intensive
development projects such as hydropower generation, power
transmission lines, telecommunication infrastructures, cement
manufacturing, civil aviation, cable cars, and others. While IPF
offers all the products on offer at CB SBU, it additionally caters
to specific requirements of mega-projects development such as
loan syndication and banking consortium; high value import LC
and multi-year import bills discounting for machinery import on
consortium risk sharing basis; and loans denominated in foreign
currency against imported machinery, airplanes, etc. Nabil is
a pioneer infra funding bank and is a major bank chosen by
foreign joint-ventures operating in infrastructure development in
Nepal.

SME and Microfinance SBU
SME is a one window banking designed for catering the entire
gamut of financial services to smaller and mid-sized businesses
which largely occupies the middle level of the supply chain.
These are mostly entrepreneurs engaged in small scale imports
/ exports, trading in FMCG and construction materials, cottage
and small scale industries, agro-production and processing,
other trading and service businesses, etc. While SME offers
all the products on offer at CB SBU, it additionally caters
to specific requirements of small businesses such as easy
working capital financing against business inventory and trade
receivables, business funding against mortgage of properties,
equity mortgage loans, etc. Nabils large branch network is
strategically located to support SME businesses across the
country and entrepreneurs can reach any of the banks branches
for their funding requirements.
Microfinance product line is specially designed to extend
financing to income generating initiatives of the socially
disadvantaged population; most of those residing in rural areas
where commercial banks branches are rare. To reach out to this
segment the bank has partnered with selected Micro-Finance
Institutions that are licensed by the central bank to operate as
financial intermediary. The bank provides wholesale credit to
these MFIs in form of loan refinancing, thus creates credit cycle
for the target population. The bank has also injected equity in
GYANESHWAR ACHARYA
Head-SME, Mid Corporate and Microfinance
Small and Medium Enterprises play a catalytic role
in the overall economic growth and social well-
being of the country through entrepreneurship and
job creation. The Bank is committed to supporting
entrepreneurs by providing innovative financial
solutions
Annual Report 2014/15 51
some of the major MFIs since their inception and has been on
their Board to support capacity development. On a smaller scale
the bank also supports individual projects such as micro-hydro
through direct lending within the microfinance definition.
Retail Lending SBU
Retail Lending is a one window banking designed to extend easy
financing to fulfill social requirements of a larger population
mass, such as those requiring to purchase a house or a vehicle
and those requiring funds for abroad studies or for immediate
social obligations. Major features of this segment include
competitive interest rates, standardized documentation, fast
processing, flexible tenor and structured repayment options
backed by regular cash flow. Retail lending products are offered
across all branch offices and customers can visit any branch
to place their funding requirements. Within the retail lending
segment the bank offers a range of products and regularly
introduces various schemes within those products, to make our
offerings attractive for the larger mass.
Nabil Housing
This product is for financing of home, an ideal home dreamt
of by our clients. Financing is available for purchase of land,
building construction, furnishing, refurbishment, and purchase
of individual homes and apartments.
Nabil Properties
This product offers clients with a simple option to obtain credit
against mortgage of properties. Clients have the access to
credit towards funding their social obligations like marriages,
travelling, education, equity infusion in businesses, etc.
Nabil Auto
This product is for financing of motor vehicles, both for private
and commercial use. Clients can avail easy financing for
purchase of cars, van, jeeps, taxi, trucks, bus, etc. either for
personal use or use by offices such as schools, hotels, hospitals,
transport operators, small businesses, among others. The bank
has also entered into agreement with major automobile dealers
to support low interest offerings and fast processing to clients.
Nabil Sikshya
This product is for financing of higher education to aspiring
Nepali students choosing foreign universities and colleges as
their next study destinations. Specially packaged study loans
cover funding for tuition, accommodation, travel and insurance
required for the full course period. Nabil has promoted its
52 Nabil Bank Limited
education loan as a social initiative within a financially feasible
framework. Nabil is the largest caterer of education loan in
Nepal and is among the two banks authorized by the Australian
High Commission to extend funding for students from Nepal
who apply at Australian institutions for higher education.
Personal Overdraft
This product offers overdraft limit to clients against mortgage of
land and building, within the threshold of regulatory framework.
This is a quick solution to our customers immediate and
contingent funding requirements. Loan processes are simplified
and expedited and includes features of convenient payback
facilities together with revolving credit line.
Deposit Relationship Management SBU
Deposit relationship management has been structured into
a centrally developed and locally delivered gamut of liability
products. The central core of this SBU is continuously engaged
in product development and innovation in delivery channels.
The bank offers a range of deposit products and regularly
introduces various schemes and value offers within those
products, to make the offerings alluring for the larger mass.
These are often marketed through mass media and delivered
across branch offices and web based platforms. Customers can
visit any branch office and select a suitable deposit product
from a range of products, which are broadly grouped into
current, savings and fixed accounts.
Ramesh Prasad Lohani
Head-DRM Unit
A key secret to our success is our customers Trust
and Confidence we have gained over many years by
meeting their expectations through the use of modern
technology and by ensuring security, safety and
efficiency
Current Account
This is a non interest bearing account that can be opened by
individuals, corporates, not-for profit institutions, multilateral
agencies and other institutions offices in Nepali Rupee and
other Convertible Foreign Currencies. This is a business purpose
account where fund deposits and withdrawals are unlimited.
Account holders are provided with check book to conduct
transactions. Overdraft limits are also assigned to current
accounts for borrowing customers.
Call Deposit Account
This is an interest bearing account targeted to high value
institutional clients for maintaining deposit in Nepali Rupee
and other Convertible Foreign Currencies. Clients can park high
volume of fund into this account for any time period without
term fixation. Interest rates on these deposits are generally
fixed on negotiation basis under prevailing market conditions.
Account holders are provided with check book to conduct
transactions. Account should inform the bank in advance for
deposits and withdrawals in bulk volume.
General Savings Account
This is an interest bearing savings account that can be opened
across any of the branch offices in Nepali Rupee and other
Convertible Foreign Currencies. Account holders can obtain
check book, internet banking and mobile banking accessibility,
bank statements, debit cards, etc. as required. Deposit and
withdrawal of funds can be performed at any of the branch
offices.
Lok Bachat Account
This is an interest bearing savings account that can be opened
across any of the branch offices in Nepali Rupee. Customers are
required to avail a Visa Electron Debit Card under this product
that will provide account accessibility through a large network
of ATMs and POS terminals across Nepal and India. Account
holders can obtain entire services and facilities from bank
counters as per their requirements.
Bachat Yojana Account
This is a premium savings deposit product that yields a better
coupon rate. This account is targeted to clients having relatively
large sums of money and would want a better coupon rate.
This account offers exciting freebies and waiver on charges for
various other banking services such as debit card, anywhere
branch banking services, stop payments, good for payments,
safe deposit lockers, etc.

Student Savings Account
This is an interest bearing savings account designed for students
who seek a modern approach to availing baking services and
support in their quest for obtaining education loans. This
product offers students with host of exciting benefits like better
coupon rate, instant access to internet and mobile banking,
discounts on foreign fund transfer requests, privileges in
processing of their education loan requests, online payments of
foreign examination fees, etc.
Bal Bachat Account for busy and tech-savvy individuals who can open a fixed
This is an interest bearing savings account designed for parents
to open a bank account in the name of their minor children
and start saving now to support their childs future. Initiating a
regular savings habit earlier on their parenthood is worthwhile
so as to enable them to support their childrens future funding
requirement for higher education, marriages, travelling, medical
treatment, etc. There is a Standing Instruction option that can
execute a monthly transfer of specified amount from parents
account to the childs account automatically. This product is
equally aimed at introducing banking amongst children from
their early ages.
Jestha Bachat Account offices, ATMs, POS machines, and internet and mobile banking
This is an interest bearing savings account designed for the
Senior Citizens who belong to the age group of 50 years and
above. The scheme offers attractive interest on daily balance.
Under this scheme, interest is paid every month which helps
the senior citizens to manage their monthly expenses more
conveniently. Account holders can also avail various freebies
and discounts on other banking services.
Nari Bachat Account Nepalese market has been one of the principal members of Visa
This is an interest bearing savings account designed for female
customers. This account celebrates womanhood and offers
alluring freebies, including a exclusively customized debit card
and discounts on shopping across numerous merchant outlets.
Account holders can also avail various benefits and discounts on
other banking services.
Time Deposit Account replaced data storage from magnetic stripe to electronic chip
This is an interest bearing fixed term account that can be
opened by individuals and institutions alike in Nepali Rupee
and other Convertible Foreign Currencies. Funds are locked for
specified time period until maturity and coupon rate is higher
than savings account. Time deposit accounts can be opened for
a period ranging from two weeks to more than a year. The bank
also provides credit against pledge of time deposits.
Annual Report 2014/15 53
Jestha Muddati Account
This is an interest bearing fixed term account specially designed
for Senior Citizens who belong to the age group of 50 years and
above. Payment of interest on deposit is structured on monthly
basis to support the regular expense requirement of senior
citizens.
Smart Fixed Deposit Account
This is an interest bearing fixed term account specially designed
deposit account through web based platform, without having
to visit banks branch. This is a paperless fixed deposit product
and offer exciting features for account holders.
Besides, the bank also offers various savings product targeted
to specific segments such as remittance savings, corporate
staff savings, salary savings, bachat yojana, super savings, and
employee savings. Customers can also fill up online account
opening form and upload a recent photo ID and other required
documents for opening a bank account. Account holders of the
bank are assured of safety and competitive returns, while also
having accessibility to a wide payment network involving branch
platforms across Nepal and India can also requests for executing
worldwide fund transfer.
Cards and Electronic Banking SBU
Card processing of the bank has been centralized into a profit
center SBU that enables development and delivery of card
related services across branch network and electronic platforms.
Nabil Bank being a pioneer in introducing credit cards in
Inc. and MasterCard International since early 1990s. The bank
also has association with UnionPay International Co. Ltd. and
Smart Choice Technologies (P) Ltd.
For enhanced transaction security the bank replaced entire
cards in circulation with chip cards based on EMV technology
in the financial year 2014-15. This technology upgrade has
embedded in the card, and hence has enhanced data security
by manifolds. The bank has also upgraded and replaced its
entire non-EMV compliant POS terminals with EMV compliant
POS terminals at its merchant locations for safety of our
merchants and security of every card transactions.
54 Nabil Bank Limited
In the domestic banking industry the bank offers the widest
range of services in cards and electronic banking. In credit card
segment the bank issues co-branded cards with Visa for NPR
currency and with MasterCard for NPR and USD currency.
Similarly, in debit card segment the bank issues co-branded
NPR denominated cards with both Visa and SCT. The bank also
issues pre-paid debit cards for both NPR and USD currency
under co-branding with Visa. Under acquiring services, the bank
accepts transactions from network of MasterCard, Visa, Union
Pay and SCT.
Co-branding with Visa
The bank issues USD denominated pre-paid cards and NPR
denominated debit cards, pre-paid cards and credit cards under
co-branding with Visa Inc. Such NPR denominated cards are
accepted across a wide network of ATMs and POS terminals
located in Nepal and India. USD denominated pre-paid cards
are accepted globally across the Visa payment network (except
for NPR and INR payments) and have grown popular for
convenience and security of payment transactions.
Co-branding with Master Card
The bank issues both NPR and USD denominated credit cards
under co-branding with MasterCard International. While NPR
credit cards are accepted across Nepal and India for payments
in NPR and INR currency, the USD cards are accepted globally
across the MasterCard payment network for payments in foreign
currencies other than INR.
Co-branding with SCT
The bank issues NPR debit cards under co-branding with
SmartChoice Technologies (P) Ltd. These cards are accepted
across SCT payment networks in Nepal and offer additional
benefit of withdrawal across all connected ATMs of various
institutions for a nominal withdrawal fee.
Nabil Installment
This is a unique product bundling offer, wherein credit card
customers can purchase products such as travel package,
electronic goods, home furniture, smart phones, jewelry, etc.
offered by selected partner merchants and make the payment in
equated monthly installments. This service package is available
to all NPR credit card holders without any additional interest
charges. Only the installment amount is billed to credit card
at each monthly billing date, and the card holder can continue
using the available credit limit. Repayment period extend up to
eighteen months and thus adds value to our card holders.
Nabil M-Bank
This is a mobile banking solution under both the menu based
and application based systems. This solution allows clients
to access various banking services using their mobile phones
and without having to visit a branch office. Clients can make
balance enquiry, obtain account statements, place requisition
for check books, and execute limited third party fund transfer
within Nabil bank accounts. Clients can make use of mobile
platforms for payment of mobile bills, top up talk time,
telephone bills, internet bills, esewa balance, cable television
bills, etc. This service is available both from NTC and Ncell
mobile networks.
Nabil Net
This is a internet based banking platform offered by the
bank. Customers can make use of this service for various
purpose ranging from fund transfers, balance inquiry, account
statements, credit card payment, mobile bills payment, internet
bill payment, etc. The bank has enhanced its security features
on NabilNet transactions with the implementation of two factor
authentication (2FA) process called Mobitoken. Two factor
authentication involves verification of user id and password in
the first stage and thereafter, in the second stage, the entry and
verification of a One Time Password (OTP) that is generated
by the system and delivered to the account holders registered
mobile number or email address. Clients are required to
complete both stages of transaction authentication for every
transaction requests to be successful.
Nabil eSecure
This is a secured mode of payment for transactions that
originate in the internet platform and are paid using the cards
issued by Nabil under both Visa and MasterCard brands. Nabil
eSecure mode isVerified by Visa and MasterCard
SecureCode under 3D verification technology, which makes
online transaction secured. Cardholders are required to register
their card for Nabil eSecure once, and then can execute
transactions at merchant websites. Transactions processed
through Nabil eSecure are protected by card member chosen
passwords. Cardholders are requested to visit only trusted
merchant websites for online payment of goods and services.
Cardholders can purchase railway tickets, airlines tickets, hotel
reservations, tour packages and many more by making use of
hassle free Nabil eSecure mode of payment.

ATMs
Nabil has a large domestic network of 90 ATMs in the
Kathmandu and outside valley. These ATMs serve customers
365 days a year. Nabil ATMs accept debit, credit and pre-paid
cards of Visa, Visa Electron, Plus, MasterCard, Maestro, Cirrus,
Union Pay International and SCT. Further extension of ATMs
in various locations inside and outside valley is in the banks
ongoing business plan.
Remittance Business Center SBU
Remittance business segment has been structured into a
centrally developed and locally delivered range of remittance
products. The central core of this SBU is continuously engaged
in product development, network enhancement and innovation
in delivery channels. Remittance business is catered from across
the branch offices and also through the extensive network of
payout agents deployed across the nation.
Sunil Pokharel
Head-Retail Banking
We do not strive merely to ensure customer satisfaction
but to exceed expectations
Western Union
Nabil Bank is the only Principal Bank Agent of Western Union
International for Nepal. Western Union provides fast, reliable
and convenient ways to transfer money. Through Western
Union, the customers can receive the fund through more
than 500,000 Western Union Agent locations in more than
200 countries and territories. One does not need to have an
account with Nabil Bank to receive funds. The bank has built
up extensive agent network throughout the country for effective
payout of Western Union remittance.
Annual Report 2014/15 55
Western Union (WU), Nabil Bank Ltd. & eSewa Pvt. Ltd. has
also launched Mobile Money Transfer (MMT) Service to WU
customers in Nepal. Sender can send money directly to their
beneficiarys mobile in Nepal or beneficiary can load money in
his/her mobile wallet by submitting MTCN no., senders name,
expected amount etc. Beneficiaries can transfer their amount
in different member banks of eSewaPvt. Ltd or can use it in
payments of utilities. For this, he or she needs to be registered
withe eSewa.
Nabil Remit
This is a proprietary brand the bank has developed in order to
provide domestic remittance services for money transfers within
Nepal. NABILREMIT is a web-based online money transfer
system introduced by Nabil Bank Ltd. to ease the fund transfer
from one place of the country to the other. NABILREMIT has
one of the largest networks of over 1,400 NabilRemit agents
located across the nation. Over the year NabilRemit has become
one of the largest and most popular local remittance brands in
the country.
Draft Drafts and Swift Transfers
The bank issues demand drafts and executes fund transfer
instructions for transfer of funds across the globe using the
platform provided by SWIFT. The bank has wide correspondent
banking arrangement with international banks in order to
execute fund transfer requests from clients so as to facilitate
individual fund transfer requirements, international trade
transactions and treasury operation of bi-lateral and multilateral
agencies.
Bancasurrance SBU
Bancassurance is one of the new concept products which
the bank has focused with the SBU concept. Centralized
business development and support team is continuously engaged
in business development and process innovation in close co-
ordination with the insurers and the clients. Insurance policies on
the other hand are available across all branches and lending SBUs
so as to facilitate clients with choice and effective selection. The
SBU coordinates with insurers for expeditious settlement of claims
in compliance with the standard procedures.
The bank offers insurance services to clients for coverage of
both property and life under agency relationships with major
insurers in Nepal. Credit clients can conveniently choose a
policy for risk coverage on properties pledged to bank. Likewise
all clients can choose to select from a range of different life
insurance policies as per their requirement and investment
56 Nabil Bank Limited
plans. This arrangement between the Bank and insurance
companies to sell insurance products to the Banks customers
brings mutual benefits to insurer, bank and the clients at the
same time.
Treasury SBU
The banks treasury offers complete solution for foreign currency
transaction requirement of its customers. The bank is well
equipped with real time transaction window for transacting in
global financial markets. Extensive network of correspondent
banking arrangements worldwide support clients requirement
of transactions with foreign counterparties, be it for individual
requirements, trade transactions or for treasury operations of
bi-lateral and multi-lateral foreign agencies. The bank
undertakes all forex transactions as permitted by the regulation,
competitive spot and forward currency exchange rates, and non
deliverable forward contracts for licensed financial institutions.
Krishna Dutta Bhattarai
Chief Financial Officer
In the pursuit of Good Governance and international
best practice we believe in providing the highest level
of disclosure possible to our investors and other
stakeholders
Other Services
Anywhere branch banking services (ABBS)
The bank has capitalized on its technology resources to offer
uninterrupted transactions across a wide network of its branch
offices, ATM network, and POS machine network. The objective
is to ensure that Nabils products and services are easily
accessible to its customers no matter where they are located.
Clients can benefit from hassle free transaction banking services
from each and every branch offices, irrespective of the branch
where they opened an account.
Extended Banking Hours
Nabil has offered 365 days banking services and extended
counter services from select branches to cater to the banking
needs of customers who do not have time to visit a branch
during regular banking hours. Teendhara and Lalitpur branches
in Kathmandu valley provides 365 days banking services and
extended counter services, while many more branches across
the country provides extended counter services.
Bullion Operations
Nabil is a wholesale importer of gold on consignment basis and
has developed a credible name in the domestic bullion supply
chain.The bank offers bullion import services to merchants as
well as licensed financial institutions.
Annual Report 2014/15 57
58 Nabil Bank Limited

common teal
 Annual Report 2014/15 59

Professional
Home to insistent professionalism
& perfect practices
Our unrelenting professionalism and perfect
bank practices in the banking services has
helped us gain and maintain accuracy while
serving customers. It has always fostered
partnerships that give the chances of win-
win to both parties which thereby have led
to proliferation of business activities in the
country.
BOD meeting session at Nabil Bank

Governance
The Board of
Directors
Structure of the Board
Nabil Bank Ltd. has a unitary Board Structure with seven
members. The Board is headed by the Chairman and comprises
of six other member directors. All the Board members are non
executive Directors. Individual directors exercise their authority
in the Board meetings and the Board acts in the collective
interests of the shareholders. The core objective of the Board
has always been to form policies and guide Management
for long term sustainability of the Bank with reasonable
returns to shareholders and enhance shareholders value. The
Board decides on corporate strategies, approves capital and
operational plan and consistently reviews the Managements
performance ensuring that corporate objectives are always kept
in focus.
The directors are from diverse business and service backgrounds
with varieties of knowledge, experience and expertise. The
entire Board comprises of non-executive directors who, jointly
or severally, do not take part in day to day management of
the Banks business operations. The Board members bring
about an external perspective on company affairs and provide
constructive suggestions to the CEO. The Board sets strategic
path for the organization, identifies business objectives,
reviews Managements performance and provides guidance
to the Management towards achieving the targeted goals and
objectives.
The Board is collectively responsible for long term sustainability
of the Bank. To this end, the Board exercises its authority
within the framework of regulatory provisions, Companies
Act, Bank and Financial Institutions Act, Memorandum and
Articles of Association and other relevant laws and regulations.
The Board delegates executive responsibility for running
the Banks business to the Chief Executive Officer. The CEO
heads the executive management team and is empowered to
further delegate authority and assign responsibility through the
organizational structure.
Annual Report 2014/15 61
04
The Board, considering the job requirement and in compliance
to regulatory provisions, can constitute committees of the Board
ascribing specific responsibilities and delegating any of its
authorities and powers to such committees. However, the Board
keeps certain approving authority to itself including, but not
limited to, the approval of strategic plans, performance targets,
policy documents, annual budgets, annual financial statements
and the authority or the delegation of authority to approve
credit and market risk limits. A total of 18 Board Meetings were
held during the year. The following table shows attendance of
individual directors at the meetings.
Attendance Sitting Fees
K.B. Manandhar 13/18 160,000
S.P. Poudyal 18/18 203,000
D.G. Agrawal 17/18 180,000
N. Chaudhary 11/18 120,000
Ashish Sharma 15/18 152,000
Shanker Pandey 10/18 96,000
J.P. Kanoria 12/18 124,000
Lal Mani Joshi 2/18 24,000
Total 1,059,000
Information to the Board
Nabil has a culture of open and relevant communication
between the Board of Directors and the Banks Executive
Management. The Board receives reports and presentations
from conveners of board committees and the CEO. Such reports
include key issues related to credit exposures, risk portfolio,
liquidity, financial performance, business expansion, audit
and compliance. The Board regularly reviews management
performance against approved budget targets and goals.
All Board Committees have a Member Secretary from senior
management team who is engaged in the concerned area of
business within the Bank. For effective discussions of the items
in agenda, other members from the banks management, whose
responsibilities relate to the matter in agenda, are also invited
as required.
Individual directors are provided with the agenda and
accompanying reports and documents well in advance of the
62 Nabil Bank Limited
Board and Committee meetings. Board members have timely
access to adequate information so as to enable them to conduct
appropriate review of the agenda and actively participate in
discussions during the meetings. They may seek independent
professional advice wherever they feel so is needed. Directors
can also make offsite visits to branches to obtain a better
understanding of local business conditions, participate in
business promotion and corporate social responsibility related
activities and interact with customers and employees.
Directors Appointment and Induction
Appointment, retirement and re-election of directors are
conducted as per the provisions laid out in prevailing
Companies Act, Bank and Financial Institutions Act, Articles
of Association of the Bank and other relevant laws and
regulations. One professional director is appointed from the
roaster of professional experts published by the central bank.
None of the directors have a service contract with the Bank.
Upon appointment, the directors are administered Oath of
Secrecy and Fidelity. Newly appointed directors are inducted
on the Board as per provisions and procedures laid out in the
Companies Act, Bank and Financial Institutions Act and other
relevant laws and regulations. Throughout their directorship, the
directors have access to adequate information and opportunities
of interaction with other directors and senior executives to
obtain an understanding of the Banks business, strategies,
operations and risk culture.
Changes in the Board
The Board has always balanced a reasonable mix of professional
expertise, experience and vision in its composition. In the
context of change in local and global business environment,
our businesses are exposed to new kinds of risks. The evolution
and emergence of risks calls for immaculate planning and
thorough understanding of the risks and the challenges in risk
management. It also necessitates the Board to step ahead
judiciously and prudently, for which the Board needs to keep
itself well equipped with the required set of skills and acumen
at all times. The Board has consistently demonstrated adequate
knowledge and expertise in its decisions. Mr. K.B. Manandhar,
Mr. Shankar Prasad Pandey and Mr. Lal Mani Joshi have
stepped down from the board. Mr. Pratap Kumar Pathak has
joined as Independent/Professional Director and Mr. Virender
Paul Dani also joined as a member of the Board on 25th August
2015.
Relation with the Shareholders
The Board has always encouraged active participation of
shareholders in every Annual General Meeting. The meeting has
always been a very important platform for the Board to interact
with many shareholders, both individual and institutional,
communicating the objectives and strategic plans, clarifying on
shareholders concerns and sharing the collective vision.
Directors, most of whom represent institutional shareholders,
engage in regular dialogues with institutional shareholders,
continuously conveying on business strategies and apprising
them of the Banks performance based on mutual understanding
of organizational objectives.
Board Committees
Regulatory provisions stated in NRB Unified Directive
No.6, Section 5 has allowed licensed banks and financial
institutions to constitute board committees relating to Audit,
Risk Management, and Human Resource Management.
Each committee can include minimum three members and a
maximum five members. Committees relating to areas other
than these three can only be formed for a specific purpose and
for a specified period of time.
The Bank had following board committees during the year:
1. Audit Committee
2. Risk Management Committee
3. Committee relating to Staff Services and Facilities
Audit Committee
The Committee is formed and functions in compliance to
the regulatory provisions of NRB Unified Directives and the
provisions of Sections 164 and 165 of Company Act 2063.
The coordinator and other members of the committee are
non-executive directors. The role of committee secretary is
performed by the Head of Internal Audit department. Internal
Auditors and Statutory Auditors have direct access to the Audit
Committee.
The committee constituted of Directors Mr. S.P. Poudyal, Mr.
Nirvana Chaudhary, Mr. S.P. Pandey and Mr. Ashish Sharma
until it was reconstituted on 24th June 2015. As of 16thJuly
2015, the composition of the Committee is as follows:
1. Director Mr. Nirvana Chaudhary, Coordinator
2. Director Mr. D.G. Agrawal, Member

3. Director Mr. Ashish Sharma, Member
4. Director Mr. Mohiuddin Ahmed, Member (Alternate Director
Mr. J.P. Kanoria has been nominated to attend BAC meetings in
absence of Mr. M Ahmed)
Committee Role and Responsibility
The committees role is extensive and strongly supports the
board in dealing with aspects of good corporate governance,
internal control, risks management, financial reporting, legal
and regulatory compliance and ethical conduct of business.
Major responsibility of the committee includes:
1. Reviewing the Banks overall system of internal controls.
2. Reviewing observations and recommendations made in audit
reports issued by internal auditors, statutory auditors and
regulators.
3. Reviewing the banks financial statements, ensuring its
accuracy and the required level of compliance in relation to
financial reporting standards.
4. Reviewing compliance in relation to the banks internal policy
and prevailing regulatory and legal provisions.
5. Reviewing risk management systems and security position of
the bank in respect of exposure to credit risk, operations risk
and market risk.
6. Advising and recommending the Board on management
actions required for achieving the desired level of
effectiveness and compliance in response to above reviews.
7. Recommending the Board on appointing statutory auditor,
auditors remuneration and reviewing that the auditors
actions in course of banks audit, do not contravene with
applicable laws and provisions.
Committee Attendance Record
Total ten committee meetings were conducted during the year.
Directors Attendance Sitting Fees
D.G. Agrawal 1/1 12,000
Ashish Sharma 9/10 92,000
S.P. Poudyal 9/10 115,000
N. Chaudhary 10/10 107,000
Shanker Pandey 8/9 80,000
TOTAL 406,000
Note: Director Mr. D. G Agrawal was member of the committee after its
reconstitution on 24th June 2015 whereas Director Mr. Shanker Pandey was
member prior to that date. Committee Secretary attended all ten meetings
(except one meeting which was attended by Officiating H IA) held during
the year.
Annual Report 2014/15 63
Committee Activities
Committee meeting reviews and discusses a number of internal
audit reports, statutory audit report and regulators inspection
report. The committee updates the Board of its actions by
sending copies of its minutes, which are discussed in Board
meetings. Committee issues recommendations for strengthening
banks system of internal controls and its effectiveness in
practice.
A number of agenda items were discussed in audit committee
meetings and numerous recommendations were issued towards
strengthening the banks overall risk management systems. For
effective discussions on specific agenda, members from senior
management team of the bank were also invited to committee
meetings on need basis.
Agenda Discussed in Audit Committee Meetings
1. Monthly Report on Past Dues Corporate Loans & Retail
Lending.
2. Monthly Status Report on Nostro Accounts.
3. Audit Report of Central Processing Center.
4. Audit Report of Remittance Business Center.
5. Audit Report of Treasury Unit.
6. Audit Report of Reconciliation of Nostro Accounts.
7. Audit Report of Card Division & E- Banking.
8. Audit Report of PLU Unit.
9. Audit Report of Compliance Position of the Bank.
10. Audit report of Operations of Branches - 47 reports.
11. Audit report of Corporate & SME Banking of Branches - 42
reports.
12. Audit report on PLU of Branches - 46 reports.
13. Audit report of Import L/C at CTO.
14. Audit report on Export L/C at CTO.
15. Audit report of Guarantee Business at CTO.
16. Audit report of Bancassurance Unit.
17. Audit report of Nabil Investment Banking
18. Audit Report of SME & Micro Lending Unit.
19. Audit Report of HR Department.
20. Semi-Annual verification of Cash and Cash Value Items of
all Branches.
21. Investigation & Inspections/ Special Assignments.
22. Other Agendas:
Review of Compliances and Branch/ Unit Responses on
Audit reports - 139 reports.
Memorandum on adoption of policies for selection of
Statutory Auditors and short listing of Auditors
64 Nabil Bank Limited
Memorandum on submission of Annual Financial
Statements and Preliminary Statutory Audit Reports
(with Management Response) of the Bank for FY
2070/71 (2013-14).
Memorandum on Disclosure of information, (in regard
to Audit Committee) in line with stipulation of the
Company Act 2063, in Directors Report of the Bank
for FY 2070-71
Memorandum on NRB Inspection Report (Preliminary)
2071.
Quarterly certification of Unaudited Financial Results of
the Bank.
Monthly certification of Capital Adequacy Ratio and
Risk Weighted Assets of the Bank.
Half yearly review of Investment Portfolio of the Bank.
Memorandum on Annual Audit Plan for FY 2071/72.
Memorandum on Quarterly Audit Programme of FY
2071/72.
Memorandum on Budget for FY 2072/73 (2015/16).
Memorandum on Payment of Arrear Interest to Saving
Account Holders.
Memorandum on Information System (IS) Audit of the
Bank conducted by Paladion Networks Pvt. Ltd.
Recommendations Issued To Management
1. Monthly review of past due loan accounts and appropriate
measures were advised to the Management to deal with and
keep a watch on overdue loan accounts.
2. Monthly review on status on old and un-reconciled items in
the nostro accounts of the Bank and appropriate directions were
given to the Management for timely reconciliation and to keep
the un-reconciled items under control.
3. Review the compliance of the branches/units in regard
to NRB directives, Banks credit policy, internal rules &
guidelines and compliance of prevailing laws of the country.
Issue necessary instructions/directions for addressal of the non
compliances/irregularities.
4. Review and discussions made on the NRB inspection report
of the Bank and advised appropriate measures to be taken by
the Management for full compliance of the irregularities pointed
out in the report.
5. Review and discussions made on the preliminary statutory
audit report along with the Management response and annual
financial statements of the Bank and suggested appropriate
measures to be taken by the Management for compliance and
recommended the Board for adoption of annual accounts of the
Bank.
6. Review and discussions made on the risk mitigation (such
as business, operations, market, regulatory, external etc.),
internal check and control and security position in respect
of all operations /activities conducted by the Bank such
as : Corporate/Infrastructure & Project Financing, Branch
Operations, PLU Business, CTO, SME & Micro Lending,
Treasury and Correspondent Banking, Cash and CVD
verification, Nabil Investment Banking, Remittance Business
Unit, HR Department, Central Accounts and Administration,
Reconciliation of Nostro Accounts of the Bank, Compliance
Position of the Bank.
2.2 Risk Management Committee
Risk Management Committee is constituted in line with the
spirit of Risk Management Guidelines (RMG) of Nepal Rastra
Bank and the NRB Unified Directives. The RMG highlights
on risk governance and identifies the need of a strong risk
management framework, well defined risk management
processes and effective risk assessment and measurement
mechanism.
The committee constituted of Directors Mr. S.P. Pandey and Mr.
Ashish Sharma until it was reconstituted on 8th April 2015.
As on 16 July 2015, the constitution of the committee is as
follows:
1. Director Mr. Ashish Sharma, Convener
2. Director Mr. D.G. Agrawal, Member
3. Convener-Audit Committee, Member
4. Chief Operating Officer (COO), Member
Banks Chief Risk Officer is the Committee Secretary.
Committee Roles and Responsibilities
The committee oversees overall risk governance framework of
the Bank. It ensures that proper risk management policy and
procedures are in place and effectively practiced at all levels
within the Bank. In doing so it ensures that Internal Audit
reviews the overall business operations to assess whether
or not the Banks policies and procedures are adequate and
implemented. It reviews the effectiveness of Management
Information System and Internal Control Systems of the Bank.
The committee, on an ongoing basis, defines and reviews
risk appetite of the bank in relation to overall business risk
with specific focus on credit risk, market risk, operation risk,
liquidity risk and price risk. The committee advises the Board

on the overall risk tolerance levels of the bank throughout the
strategic implementation process. Risk appetite of the Bank is
determined based on the following:
strength of capital base
quality and growth of earning assets base
brand reputation and
perceived customer value
balanced approach to business risks and returns
risks diversification
A major role of the committee is to assess business and profit
risks of all lines of businesses of the bank. The committee
ensures that managerial and operational level officials of the
Bank, responsible in risk management and decision making
processes, possess adequate knowledge of their specific job
area and of the corporate risk culture.
The activities of ALCO like portfolio assessment, returns from
the business, asset quality, growth in overall business vis--
vis market growth (competitors position) are also reviewed by
the Committee and necessary instructions are issued to the
management and necessary recommendations are made to
the board as deemed appropriate. Quarterly stress report and
monthly report comprising overall position of the bank, changes
in the market condition are reviewed and necessary instructions
are issued to the management. If the need is felt for any
recommendation to the board, the same is also appropriately
done. The Committee also reviews trends in portfolio quality
and the adequacy of provisioning for possible credit losses.
Risk Governance
Bank practices risk governance applying the principles of good
governance to the identification, assessment, management
and communication of risk. The Bank equally takes account
of participation, transparency, and accountability within the
procedures and structures by which risk related decisions are
made and implemented.
Within the bank, risk management committee is responsible
for overseeing the risk governance structure and monitoring the
effectiveness of risk management and internal control systems.
As advised by the committee, the management ensures
presence of strong risk governance culture in the bank which
guides its risk strategies. Chief Risk Officer, member secretary
of the committee, ensures that emerging risks and changing
behavior of key risks are brought forward for discussions in the
committee meetings. Invitees who head major functional and
Annual Report 2014/15 65
business areas participate in committee meetings and highlight
the key risks faced in their specific areas. This helps the Board,
together with the committee, to ensure that a strong risk
management frame work is maintained.
Attendance Sitting Fees
D.G. Agrawal 1/4 12,000
S. P. Pandey 3/4 35,000
A. Sharma 3/4 35,000
S.P. Poudyal1 3/4 28,000
Total 110,000
Committee Secretary attended all four meetings held during the year.
1
The convener of Audit Committee should be a member of risk management
committee as per regulatory requirement. Accordingly, Mr. S.P. Poudyal
attended the meetings held during the year.
Agenda Discussed in Risk
Management Committee Meetings
The Committee discussed on the following
agenda in its meeting.
1. Review of risk management practices implemented in the
Bank including regulatory compliance.
2. Review of lending authority & delegation of authority for
specific credit issues 2004.
3. Review of performance and business risk.
4. Stress testing reports of the Bank.
5. Status of non-performing loan accounts and recovery
strategies pursued.
6. Minutes of Asset Liability Committee (ALCO) meetings.
7. Status of implementation of AML & combating Financing
Terrorism Framework.
8. Credit Concentration reports, including top exposures at
borrower, group and sector level.
Recommendation Issued to Management
The committee took note of the following and issued appropriate
instructions to the management.
1. Budget achievements and capital strength of the Bank.
2. Development in market conditions and likely impact on the
Banks earning.
3. Recovery efforts and strategy pursued to regularize in large
non-performing loan accounts.
4. Requirement of regular reporting mechanism on Risk
Management to the RMC.
5. Stress testing scenarios and satisfactory liquidity and capital
position of the Bank.
6. Need to analyze concentration risk in deposit portfolio.
66 Nabil Bank Limited
7. Satisfactory conduct of ALCO.
8. Scheduling RMC meetings before Board meetings, to the
extent practical, such that RMC can apprise the Board of its
feedback on various risks related reports.
9. Need to cover review of specific risks which otherwise may
not be routinely covered in ALCO meetings or in standard
performance reviews.
After the conclusion of each meeting, the Committee
communicates necessary actions to be taken to the
management and also reports its decisions to the Board.
Committee relating to Staff Services
and Facilities
The Board constituted this committee in March 2014 in
line with the Unified Directives of Nepal Rastra Bank. The
committee consisted of following members as on 16 July 2015:
Director Mr. Nirvana Chaudhary, Coordinator
Director Mr. Dayaram Gopal Agrawal, Member
Chief Financial Officer Mr. Krishna Dutta Bhattarai, Member
Head Human Resource Mr. Roshan Koirala,
Member Secretary
Role and Responsibilities
a. To assist Board of the Bank to formulate Remuneration
Policy.
b. To study and analyze market salary structure and submit
report to the Board in regard to possible consequences in the
bank due to change in remuneration structure of the market.
c. To recommend the Board, as per remuneration policy, with
the justification for increasing remuneration of CEO and
employees of the Bank within prevailing rules, guidelines.
d. To develop Job description, Goal and KPIs and review
Performance Appraisal System accordingly.
e. To formulate guidelines, rules relating to HR functions such
as recruitment & selection, placement, transfer, performance
appraisal, reward and punishment and labor relations.
f. To review Employees by-laws, Employee composition, and prepare
succession planning and recommend the same to the Board.
The committee met six times during the review year and
following is attendance of the same.
Attendance Sitting Fees
N. Chaudhary 6/6 85,000
D.G. Agrawal 6/6 68,000
S.P. Poudyal 5/6 56,000
Total 209,000
Internal
Controls
Board of directors of the bank is overseeing effective
implementation and monitoring internal control system in line
with prudent banking norms and best business practices. Banks
Audit Committee reviews the reports from internal auditors,
statutory auditors and NRB Inspection Team and provides
the Board with independent assurance on the effectiveness
of control environment. Similarly the review of processes and
procedures is being done in timely manner for appropriate
arrangement of control measures.
Banking is a risk business where it deals with different types
of risks. The importance of risk management in later days
has even increased as the quantum of risk and time saw a
paradigm shift. Risk and reward are inherently linked and
each of our decisions involve a trade-off between these two
elements. While we accept the need to take risk for achieving
business objectives, we are also aware of the fact that we need
to mitigate adverse consequences of taking risks. For this we
have implemented key procedures designed to provide effective
internal controls across the organization. We have centralized
most of the activities so that these get performed by experts
in the center and are done under the supervision of competent
persons. Similarly a mechanism has been put in place to
generate daily, monthly and quarterly report and review of same
for any deviation.
Addressing Operations Risk
The Board has delegated the authority to CEO for regular
operation of banks business activities. The CEO is empowered
to further delegate the authority and assign responsibility
including specific business targets to individual or unit level
officials. The functional responsibility line is clearly defined
in the organization structure. The primary responsibility
for effective practice of internal control procedures rests
on branches, business units, support units and operational
managers. Internal Auditors, as per their approved annual work
plan, conduct detail inspection and verification on effectiveness
of internal control procedures at all branches and units at least
once each year. Internal audit not only points out the deficiency
in the control mechanism it equally recommends measures that
reduces the risk and enhances the operational efficiencies.

The management depending on the appropriateness of
the recommendations ensures that Internal Auditors
recommendations are implemented within an appropriate and
reasonable time frame. Banks Policy specifies 60 days period
for closure of each audit report from the date of its issue. This
involves review of audit report and the response of branch / unit
audited thereon, at the levels of concerned functional / business
heads, Internal Audit department and Audit Committee. Closure
of audit report is approved by the CEO upon full satisfaction that
the audit irregularities have been duly addressed and complied
with, which also gets reported to the Internal Audit Department
for necessary review subsequently.
Bank has an executive committee (Xcom) headed by
CEO, comprising of SBU heads and heads of other functional
departments. Weekly Xcom meeting reviews the Banks performance
and the developments in operating environment at length. It also
discusses measures to be taken for improvement of operating system
and procedures. Sustainability and contingency plan for continuity
of business and operation of bank under any circumstances
are discussed and measures to be put in place are considered
following the discussion and decision of Xcom as well as at the
recommendation of concerned units. The Bank has Continuity
of Business Plan (COBP) Guidelines in place to ensure that the
concerned staffs are prepared to defy the risks arising from internal
or external factors such as natural, man-made or technical disasters,
and continue the normal business operations at the earliest with
minimum loss of any kind. The issues related to Asset and Liability
management including risks are discussed at ALCO (Assets and
Liabilities Committee) meeting that takes place every month.
The bank has in place the Standard Instruction Manuals (SIM)
for every function in the bank which, in essence, is standardized
detailed procedural guidelines for specific areas of banking
business. Activities at all level conform to the procedures in
SIM. Budgeting and variance reporting mechanism is also in
place with regard to Banks performance review on monthly
basis. Finance Department and Xcom members under ones
area review the variances and progress against budgets. A
Monthly Business Letter is prepared for information and perusal
of the board which discusses business developments on all
activities of the bank basically on four facets viz. financials;
product/service; process/control and human resource activities.
The report among other includes market developments, overall
economic issues that may have impact on the business and
other miscellaneous issues. Financial Administration Bylaws specifies
Annual Report 2014/15 67
Binay Kumar Regmi
Chief Operating Officer
We are committed to providing efficient services through
innovation, automation and state-of-the-art technology
centralized functional control over all expenses of the Bank. All
expenses within the budget are approved by different officials as per
the delegated authority. Expenses beyond their authority are approved
by the CEO upon recommendation of management level Financial
Directive Committee or concerned division head.
Addressing Credit Risk
Credit Risk arising out of lending portfolio is major risk in the
bank and that too is main earning avenue in the bank. Business
generation unit and Credit risk units are independent. Credit
marketing unit conducts marketing activities and forwards
credit proposal for approval. Then onwards credit risk unit
independently analyzes each credit proposal in light of inherent
and external risks involved in the business and approves each
credit proposal within their authority, if the unit is satisfied with
the risk associated with the business and safety/security aspects
mentioned in the proposal.
Besides, the bank has Credit Administration and Support unit
(CAS) and exposure accounting unit (Central Loan Administration
Department - CLAD) which are independent to Credit Marketing
and Credit Risk. CAS directly reports to CRO (Chief Risk Officer)
and CLAD reports to COO (Chief Operating Officer). These are
independent from credit marketing and credit risk functions and are
assigned with specific responsibilities of conducting periodic onsite
inspection of credit customers, examining credit documentation
and ensuring all the terms of credit approvals are complied with
throughout the life of a credit account.
ANIL KHANAL
Chief Risk Officer
We believe that developing a Risk Culture which cross-
cuts through the entire organization is key to successful
Risk Management
68 Nabil Bank Limited
Addressing Exchange Risk
The Board has delegated foreign currency dealing and
investment decision limits to CEO. The CEO has further
delegated the authority it to line managers. In order to have
independent reporting for dealing and exposure accounting in
compliance with internal control mechanism, treasury function
has been segregated into Treasury Front Office (TFO) and
Treasury Back Office (TBO). TFO reports to CFO. Treasury back
office, having reporting line to COO, is responsible to ensure
that treasury front office operates within the authorized limits
and is in compliance to the Banks investment policy. All the
transactions under each deal done by TFO and their exposure
accounting, maturity profile, follow up and record keeping is
done by TBO.
Addressing Data Security Risk
IT Policy specifies centralized functional control over all
IT operations including defining access authority in Core
Banking Software, MIS and hardware facilities including data
center. Access authority to any staff is given at the request of
department head and approval from COO. Similarly, the Bank
has Disaster Recovery Site (DRS) located at different seismic
and geographic zone and is outsourced, which gets tested in a
periodical interval. Data in the DRS are replicated on online real
time basis. Similarly, decisions on procuring IT equipment and
services are reviewed by IT Department for technical conformity
beforehand. The Bank publishes notices, keeps the same in
website, periodically for public awareness in order to safeguard
from probable fraudulent activities through our internet banking
platform. Similar instructions are regularly issued to all the
employees as well.
Statutory and Regulatory Compliances
Anti-Money Laundering (AML) Unit, under Head Legal,
Operational Risk and AML, who is also the Compliance Officer
of the Bank, ensures the proper compliance of Know Your
Customer (KYC), AML and Combating Financing in Terrorism
(CFT) Framework of the Bank. The implementations status
of the KYC and AML/CFT Framework of the Bank is reported
quarterly to the Board through the CRO and the CEO, and to
Financial Information Unit (FIU) on a semi-annual basis. The
Bank also has a high level AML/KYC committee to develop and
implement the related strategies as required. KYC and AML/
CFT Policy of Nabil Bank Limited, 2015, developed in line
with the statutory and regulatory requirements, is in place to
safeguard the Bank from the potential risks of money laundering
and financing in terrorism. Mechanisms are in place to detect,
monitor, report and discourage suspicious and potentially risky
transactions and accounts. The related statutory reporting
requirements like Threshold Transaction Report (TTR),
Suspicious Transaction Report (STR) and other reporting to
concerned authorities, as required, are properly practiced in
the Bank. The process of report generation and monitoring of
accounts and transactions are in progressive automation.
Mechanisms are in place to comply with all regulatory reporting
requirements. Such requirements, among other things, include
periodic reporting on capital adequacy (as per Basel II & III),
balance of payment, cash reserve requirement, credit portfolio,
foreign currency assets, deposit portfolio, gap reporting (ALM),
statutory liquidity ratio and monthly provisional statements
of financial position and income statements. Functional
managers are accountable for complying with the reporting
requirements. The Audit Committee ensures that required
disclosures are made properly in the financial statements.
The Committee obtains reasonable assurance from statutory
auditors on the reliability of financial information presented in
the annual financial statements and recommends the Board
for its adoption. CFO ensures that quarterly interim financial
statements of the Bank are filed with the regulatory authority,
the Security Exchange Board of Nepal and published in national
daily newspaper for public information within the prescribed
time periods.
Centralized functional control is exercised over all transactions
involving tax deductions at source. All such transactions are
administered and authorized directly under COO. Payroll tax is
administered by Human Resource department. Tax deducted
at source is timely deposited with Large Tax Payers Office.
Responsibilities are clearly defined and distributed to COO,
CFO and H-HR as appropriate. The Audit Committee has been
reviewing the effectiveness of Internal Control Systems and has
been reporting to the Board on a regular basis.

Employees
Management of human capital strength of any organization is
gaining paramount importance for effective implementation
of business strategies to achieve the corporate goals. For
this, guidance and careful attention from the supervisors has
become indispensable. In our organizational set up, all senior
staff members enjoin to act as HR managers in their areas of
operations by implementing policies and guidelines of the Bank.
They ensure that strong ethical practices while conducting
Banks businesses are put in place by nurturing talent and
sharing knowledge. On the other hand, the HR Department is
responsible for monitoring and ensuring that Banks HR policies
are interpreted consistently across the Bank.
Employee Bylaws acts as a framework that guides Human
Resource Management practices within the Bank. This
document is approved by the Board and also by the
regulatory authority. Principles of ethical work culture, open
communication, objective career development, transparency
in remuneration and pay - performance correlation support HR
practices employed within the Bank.
As at 16th July 2015 the Bank has a total of 705 permanent
and 598 contract employees in its employment. Contract
employees include 595 outsourced staff (clerical staff - 127
and support staff - 468) and 3 staff under direct contract with
the Bank (security consultant -1, support staff - 1 and CEO).
The increasing HR strength has been smoothly incorporated
into the organizational structure which has enabled the Bank to
maintain the good practices that has been adopted consistently
over time. A high performance culture that has evolved within
Team-Nabil has been shaped by the drive of the employees to
deliver. Our managers are also always encouraged to promote
open communication at all levels, both vertical and lateral.
Our core corporate values CRISP Customer Focused, Result
Oriented, Innovative, Synergistic and Professional are embedded
in our daily work culture. Being a service provider, we believe
every action of ours should create some value to our customers.
For us to align our actions with our belief, communication within
is the key. Communication strengthens sharing of knowledge,
ideas and viewpoints. Issues affecting individual job areas and
the overall financial performance of the Bank are regularly
communicated to our staff.
The Bank has implemented a staff Code of Conduct which
follows this very essential theme and is abided by all staff in
action. The strength of our HR rests in its diversity and fair
Annual Report 2014/15 69
treatment. Our culture respects individual differences and
learning aptitudes. We do not allow discrimination on any
grounds, be it social, religious, hierarchical or gender. Any kind
of discrimination or any form of harassment is dealt with as per
disciplinary provisions in the Employee By- Laws.
At Nabil, employees perceive that their views are heard, their
concerns are attended and their career progression is based on
objective performance assessment. Towards this end, the Bank
has implemented point scoring based appraisal rating system
that endeavors objective assessment of employees performance
through 12 dimensions. Moreover, appraisal allows appraisee
staff to put their comment on appraisal.
We have a recognized Staff Union in the Bank. The
management and the union execute a collective bargaining
exercise once every two years. Collective Bargaining exercises
have been harmonious throughout and has never resulted
disruption in normal banking operations and customer service.
Recruitment and Development
The Bank employs a fair recruitment policy. All new
appointments and promotions are planned and approved as
part of the annual HR budget. Fresh appointments are made at
support, assistant and management trainee levels. However, the
Board has the authority to make appointments at other levels in
order to bring in appropriate set of skills in existing or new areas
of businesses. Based on the requirements of business expansion
the Bank may outsource its staff requirement to external
party. All appointed staff, whether permanent or contracted,
will adhere to employment standards as stipulated by the
Employees Bylaws of the Bank.
Staff placements are assigned as best suited for ones abilities
and growth potential. Performance appraisal system is fair and
career progression is based on objective assessment of ones
performance and team work. Besides Training and Development
activities, Placement, transfer, job rotation, job enrichment, job
enlargement, succession planning and cross functional teams
are some of the tools we employ for employee development.
Individual training and development needs form an important
component of annual performance appraisal of all staff.
Staff Category Male Female Total
Senior Manager* 4 - 4
Middle Manager 36 7 43
Officers 139 38 177
Assistants 221 153 374
Support Staff 92 15 107
Total 705
*Employees bearing corporate title AGM and above excluding CEO
70 Nabil Bank Limited
Remuneration and Benefits
The quality of our Human Capital defines the scale of our
business success. Our business stands on trust, relationships
and ethical conduct. Our strategy is in being proactive to
attract, recruit, develop and retain the best people. We need
to constantly ensure that we have the required set of skills,
knowledge and expertise in our Human Pool. We believe
staff commitment and motivation towards the job is achieved
over time, which is affected by multiple factors among which
financial benefits is a very important one.
Market forces constantly pose a challenge to our HR strategy
and retaining the best brains is not easy. Remuneration is one
of the major factors affecting ones decision about joining,
continuing or leaving an organization and we appreciate this
fact. However, our experiences over the years suggest that other
important factors do affect in making the choice of employment.
Accordingly we attract the best people who wish to work in an
organization having solid corporate values, ethical work culture,
reputed brand performance and the one offering excellent
work experience and career development opportunities. Our
remuneration policy covers the following:
- Salary structure comprises of fixed basic pay and variable
incremental pay. Salary structure is maintained based on
documented position grades of individual employee as per his
her annual performance appraisal ratings. The grade earned in
annual performance appraisal ratings has an incremental impact
in the basic pay.
- Salary structure is reviewed every two years with reference
to national economic scenario, banks business performance
and market practice. Any one or both of the basic and variable
components may be revised as appropriate.
- The bonus element of annual pay is tied up to the overall
performance of the Bank at the end of each financial year.
This instills a winning spirit in our employees, drives business
performance and coincide their own interests with the interest
of our shareholders.
- Banks contribution to employees Gratuity Fund and Provident
Fund is proportionately linked to the number of years in
employment and the last drawn salary at the time of making
such contribution.
- Besides, our employees receive the benefit of housing loan,
vehicle loan and personal loan facilities at concessional rates
as per their individual eligibility in line with the Integrated Staff
Loan Policy approved by the Board.
Tax on Remuneration Income
All pay and benefits paid to the employees are taxed at source
as per the provisions of Income Tax Act 2002.Payment to
employees in the form of salary, allowances, leave encashment,
overtime payment, incentives, commission, bonus, gifts,
retirement benefits etc. constitute their taxable income from
employment. In line with the provisions in Income Tax Act
(amended by Finance Ordinance 2014), employees taxable
income is taxed applying the tax rates presented in the table
below:
Tax Rate Annual Income Slab
Single Couple
1%# 250,000.00 300,000.00
15% 250,001-350,000 300,001-400,000
25% 350,001-2,500,000 400,001-2,500,000
35%* Above 2,500,000 Above 2,500,000
# Social Security Tax.
* The Act provisions 40% surcharge on tax calculated on taxable income
above NRs.2,500,000 applying tax rate of 25% resulting effective tax
rate of 35% for that slab.
The Act allows certain deductions from taxable income, the
most relevant in case of our employees being contribution to
approved retirement fund up to NRs.300, 000 or 1/3rd of
total assessable income whichever is lower and life insurance
premium expenses of self and spouse uptoNRs.20, 000.
Additionally, donation up to NRs.100, 000 or 5% of total
assessable income, whichever is lower, is also available for
deduction.
The Act offers female employees (unmarried) the benefit of 10%
tax rebate on their total tax liability for a given year. Similarly,
in case of physically disabled employees the base slab for 1%
taxation is raised by additional 50% to NRs.375, 000 for single
and NRs.450, 000 for couple.
Taxation on Retirement Benefits
(Gratuity and Provident Fund)
Income Tax Act 2002 applies the following tax rates in payment
of post-retirement benefits i.e. when the Gratuity and Pension
Fund is paid to the employee upon his / her retirement from the
employment.
Tax Rate Accumulated Fund NRs.
Tax Free Higher of 500000 or
50% of Total Fund
5% Balance Amount

Prior to pronouncement of Income Tax Act 2002, the fund
accumulated in gratuity and provident fund was tax free.
All such amount held in gratuity and provident fund and
contributed by employer before the Act came into effect will
not be taxed at the time of making payment to concerned
employees.
Contribution to National
Level Welfare Fund
The prevailing Bonus Act 1974 (2030 B.S.) requires the bank
to deposit 30% of the residuary amount, after distribution of
bonus from the allocated amount for staff bonus, at National
Level Welfare Fund (NLWF) operated by the Government of
Nepal. Remaining 70% is to be deposited at Welfare Fund
established in accordance with Section 37 of the Labour Act
1992 (2048 B.S.).
The Bank has deposited a total of NRs.389.45 million with
NLWF in respect of staff bonus allocated for up to Financial
Year 2013/14. In respect of undistributed staff bonus for
current financial year (2014/15), the Bank will be depositing
NRs.51.155 million at NLWF.
Corporate
Sustainability
The review year has been full of challenges, some natural,
some man-made. Powerful earthquakes of 25 April 2015 and
12 May 2015 took lives of about 9 thousand and more than
22 thousand were left behind with different types of injuries.
More than half a million of houses have been damaged and direct
property damage is estimated to be about USD 7.7 billion. This
is huge amount for the economy size of about USD 21 billion.
Similarly uneven rain and poor crop production also impacted
economy to a remarkable extent. Strike and closure, disturbances
at political front were some of the man-made challenges. As
the country adopted new constitution the changes in structural
frame work and their implications are likely to derail the regular
process impacting economy. Similarly some of the parties, out of
the constitution drafting process, resorted to further strike closure,
causing disruption of supply of goods and obstruction in main
customs points at Terai boarders with India. These actions are
likely to give more trouble to the country.
Under such a chaotic environment it has been felt a challenge
for sustainable business. During the trying times of the
Annual Report 2014/15 71
aftermath of the earthquakes, the need to have a strong
corporate foothold was felt as the operations of the Bank too
were impacted largely. With overwhelming support from all
the communities including neighbors country struggled to get
back on track. This however compelled political parties to
forge an alliance for handing out constitution which was taking
time and was in limbo for more than a half decade. The pace
of handing out constitution took momentum and about 90%
representatives in the house agreed to bring it out. As the
process took moment and likelihood of bringing out constitution
got increased, political parties most of them having their bases
at Terai went into streets opposing the process which despite of
their resentment, constitution was passed by the overwhelming
majority of nearly 90% votes in the house. This further fueled
the anger of opposing parties and they declared total closure of
customs points for indefinite period bordering with India which
not impacted import from India it impacted third country import
as well and the country went into serious trouble as supply of
essential goods including fuel, medicines and foods got affected
very badly.
These all are likely to impact the business of banks and we
too despite our standing ahead in these 32 years of operation
will also be bear the brunt of this. Nonetheless bank has
adopted a go-slow approach till the situation returns to normal.
Having stronghold in the industry for more than 32 years it
has given us numerous lessons to adopt sustainable business
practices as journeys in the past too were not easy. We adopted
business strategy that gives comfort to the bank balancing
between risk and return. It is impertinent that all encompassing
business strategies are adopted on our way ahead to ensure
that we remain the 1st choice provider of complete financial
solutions. We believe that we have been benefited from the
positive perception that the public holds in our regards and
our sustainable business branding. Our employees are more
than responsible for the times we were able to hold the boat
even though they were experiencing the same turbulence that
shook the nation. Giving back to the people, inside or outside
the organization and protecting and nurturing the society and
the environment where we operate in, thus has been sculpted
in our values which act as the strong pillars for our business
sustainability. The bank has identified following areas through
which it has fulfilled the responsibilities of a good corporate
citizen which in turn has helped the bank to ensure its
sustainability.
72 Nabil Bank Limited
Transparency and Good
Corporate Governance
Nabil conducts all its transactions and businesses in a
transparent way. The bank has duly complied with and
has consistently applied at all times all the disclosure
requirements provisioned by various regulatory bodies and
national regulations such as Nepal Rastra Bank, Companies
Act, Securities Exchange Act and Rules, Banks and Financial
Institutions Act, and Nepal Accounting Standards. In addition,
all the necessary information is provided to the statutory
auditors, banks internal auditors and other appropriate
monitoring agencies so as to enable them to make a fair
assessment of our operation and to form an independent
opinion in respect of banks financial position and performance.
Similarly the bank has disclosed all the pertinent information to
all its stakeholders.
BPA Award 2014
It is for our efforts towards adequate disclosures and good
corporate governance that we have been awarded the
certificate of merit for Best Presented annual report awards
for corporate governance disclosures provided by South Asian
Federation of Accountants under the private sector banks
category for last five years. Similarly, Institute of Chartered
Accountants of Nepal has awarded us the Best Presented
Accounts Award 2014 for the best presentation and proper
disclosures in financial statements of the bank.We have been
bestowed with such award continuously for last six years.
Environmental Sustainability
At Nabil, we are committed to protect our environmental
resources by optimizing its consumption. Moreover, whenever
possible we have tried to use the environmental friendly
products with the aim of reducing the emission of hazards to
the environment. We believe that the total effect of efforts put
forward by each individual or corporate can be significant to
conserve the nature and natural resources.
Therefore, at Nabil, every effort possible is done to reduce
paper, energy, fossil fuel and water consumption and much
more so as to protect environment.
Staff and distinguished guests joining hands
for a cleaner Bagmati
We are quite aware of the fact that a better working
environment within an organization for an indeterminate period
can be guaranteed only by the greener and healthy earth. It
means that the sustainability of the organization is closely tied
with the health of the environment that we operate in. Thus
in addition to reducing the direct consumption of resources,
Nabil has also prioritized the development of renewable
energy projects. As such Nabil has Committed NRs.6.8 billion
rupees for investment in hydropower and renewable energy
development.It has been there in the forefront and has set up a
separate division in the bank that takes up the financing under
cleaner energy power projects.
Similarly the bank is expanding its credit exposure in the
agriculture and forest related sectors. As a small effort to
promote environmental sustainability, Nabil has made tree
plantation and preservation a major part of its anniversary
celebrations also.
 Annual Report 2014/15 73

Labor Practices and Decent Work

Human resources play a key role in the achievements of
the short terms, medium terms and long terms goals of the
organization. Therefore, Nabil has placed utmost priority in
selection, development and retention of high quality human
resources. Aligning with its principle of prioritizing people first
followed by systems and processes, Nabil has invested its
considerable resources in fulfilling its human resource needs for
Honorable Finance Minister Mr. Bishnu Poudel
the growth and sustainability of the business. Bank provides
various kinds of trainings to the employees each year that help
handing over the Highest Tax Payer Award to
them to develop their job competency. the Banks CEO Mr. Sashin Joshi

that middle and low income group constitute major portion

Nabil has employees byelaws which ensures fairer and equal
of our communities but only a small portion of this group has
treatment to all the employees. This is a guiding document
access to the financial services market. As one of the leading
which guides the HR policies and practices of the bank.
commercial banks, we acknowledge that we have a role in
Through implementation of HR Byelaws Nabil has ensured
bringing this segment into the formal banking ambit.
that the fair labour practices are adopted and decent working
Furthermore, in order to cater to the specific financial
conditions are maintained.
requirements of budding entrepreneurs and growth aspirants,
a separate SME and Microfinance division has also been
During the review period, Nabil incurred remuneration of
established. The branch network and ATM network has also
NRs.743 million towards its employees while it also set aside
been expanded to serve the areas requiring banking facilities.
NRs.298 million as bonus.
Our SME project is implemented through all our branch offices.
With our focused approach, relationship managers in the
Partnership with the Government
branches share best business practices and management skills
Contribution to government in any form is extremely essential
with the customers and motivate them for achieving better and
to build the nation. We recognize this responsibility towards
higher growth in order to ensure success of such entrepreneurial
the nation in addition to our own satisfaction and longevity.
ventures.
Being a banking institution, Nabil aligns its operations with the
directions of the Central Bank. Other legislations requiring us
As a financing partner, our contribution has expanded economic
to follow are also properly complied with. For example it helps
activities at local level, fostered investment, generated
in preventing money laundering activities by putting Know
employment, and increased consumptions. Our Microfinance
Your Customer and Anti Money Laundering Policies in place.
project is operated through selected partner organizations
Moreover, the recognition we hold from the national treasury as
viz. microfinance institutions (MFIs), cooperatives and non-
one of the highest contributors in the form of payments in taxes
governmental organizations working as financial intermediaries.
gives us a great satisfaction. The proliferation of commercial
We have also invested in promoter equity in selected MFIs
activities we have facilitated through extending credit and
and extended our managerial expertise through representation
arranging foreign trade also generate significant tax revenues to
on their Board. We have also extended credit to Youth Self
the government. In the review year alone, we have deposited
Employment Project of the government. Our target end users are
NRs. 917 million in the governments coffer in the form of
economically disadvantaged population and they receive micro
income tax. With all our efforts and contributions, Nabil strives
credit through our partner organizations to which we extend
to operate as a great multiplier to the national economy.
credit in bulk. These initiatives are intended for self-employed
income generating activities or small businesses with which the
Giving Back To the Society
aspirants having skills and energy are not deprived of financial
Nepal still being in the developing phase, reach of the financial
resources and upgrade their living standard.
services has not been to all levels of the society and all areas
of the country as required. Moreover, it is a well accredited fact
74 Nabil Bank Limited

Personal Lending Unit in the bank is well equipped to take care
of the funding requirement against personal needs like home,
vehicle, and education etc. Since financing these activities
makes the lives of common people easier, it gives satisfaction
to the organization also. Through the advertisement, the Bank
aims to encourage more people to use banking channels for
their financial transactions under its financial literacy promoting
program. Customers are properly communicated about the
benefits of using formal banking channels, associated risks and
ways to mitigate them to enhance their banking experience.
Through numerous remittance agents located within and outside
the country, the Bank seeks to provide access to the financial
services in previously un-served areas.
Nabil believes that all these efforts have brought a larger
number of people into the banking net and hopes to increase
the accessibility of its services by people from all walks of life.
Furthermore,an agreement has also been entered into with
Adhikar Sampanna Bagmati Savyata Yikekrit Bikash Samiti,
Guheshwari for the maintenance and protection of the trees for
conservation of environment along the river side at Bagmati
belt, Minbhawan in the area of 2,750 sq. feet. A program for
cleaning and maintenance of the area was also organized during
the year.
At one with the People
We provided financial assistance of Nrs. 275,000 to Self Help
Group for Cerebral Palsy (SGCP) for commencing Outreach
program in Parsa district to provide medical service, counseling
and training programs for children suffering from Cerebral
Palsy and to their parents. SGCP was established 28 years ago
with the objective to provide proper care, comfort and relief to
the children and adults suffering from Cerebral Palsy.Cerebral
palsy is considered a neurological disorder caused by a non
progressive brain injury or malformation that occurs while the
childs brain is under development. Cerebral palsy primarily

Corporate Social
affects body movement and muscle coordination.

Responsibility
Nabil has served the interests of its stakeholders through
immeasurable ways. The varieties of needs and demands of
the customers have been fulfilled by the different tailor made
products. Similarly, the best working conditions have been
provided to fulfill the organizational responsibility towards its
employees. Likewise, we provide the best possible returns
to the shareholders in form of dividends and disclose all our
accounts in a transparent way. Thus, it reflects that the Bank
is responsible in sharing the value it has created to all those
involved in the value creation process and to the community
where the Bank is allowed to operate.

As a part of its CSR initiatives, several programs were organized

Mr. Ramesh Prasad Lohani, Assistant General Manager of
throughout the nation at different branches of the Bank. These
Nabil bank and Mr. Bimal Lal Shrestha, Chief Executive Officer
activities included charities to local institutions, old age homes,
of Self Help Group Cerebral Palsy signing an MoU in an event
orphanages, betterment of differently abled children, donation
organized at SGCP to properly manage the fund for conducting
of school bags and educational materials, tree plantation etc.
outreach program for CP children in Parsa District.
Some of the major CSR events in the year are highlighted below.

At one with the Earth

The Bank has given continuity to the agreement entered into SGCP runs rehabilitation center, special education program
with the Kathmandu Metropolitan City for the maintenance of and Outreach program to children with neurological disorders
trees planted and preservation of greenery along the roadside of and their parents. Outreach program is a home based program
Tudikhel West. for cerebral palsy afflicted children which have no access

Nabil Bank and Himalayan Television team celebrating New
Year 2015 at Self Help Group for Cerebral Palsy, Dhapakhel
to rehabilitative services. The trained home visitor provides
door-to-door service to the CP children and also teaches basic
therapy skills and stimulation techniques to the parents.
We celebrated New Year 2015 with the children afflicted with
cerebral palsy at Self Help Group for Cerebral Palsy (SGCP). Nabil
banks team along with Himalaya Television team jointly celebrated
New Year with the special children. The children performed various
activities including games, musical program, dance, etc.
Nabil Bank has provided financial assistance of Rs. 120,000 to
Shree Gargi Kanya Gurukul Pratisthan for second year in a row
for girls education. The support is aimed for helping the school
which is committed to develop future woman leaders of the
nation and is committed to serve the country better in the days
to come by educating/empowering women.
Mr. Ramesh Prasad Lohani, Assistant General Manager of the
bank handing over the cheque to Prof Mana Kafle, Senior
Social Worker and Vice President and Prof
Dr. Kamala Subedi, Secretary of the academy.
Annual Report 2014/15 75
The school aims to make girls not only proficient in Sanskrit
literature including Vedas, Upanisads, Smrities, Puranas,etc
but also proficient in English language, Science, Computers,
Fine arts, Dance, Music, Yoga, Meditation, etc. Through
a combination of ancient wisdom with modern vision, the
Gurukul is dedicated to producing future scholars who can play
a leadership role in society. The school teaches the girls from
all sections of society from all over Nepal like Dalits, Tharus,
Sherpas, Newars, Magars, Chhettris, Brahmins, Gurungs,
Tamangs, Rais, Madhesis, etc. without any discrimination of
caste and creed.
The Bank partnered with District Public Health Office,
Kathmandu to support a Medical Health Camp jointly organized
by Kantipur General Hospital, Kathmandu Dental College
Teaching Hospital and Research Centre and Kantipur School
of Dentistry. Dental, gynecological, general medical check-
up services along with physiotherapy and pharmacological
services were provided at JitpurPhedi Health Post. Oral health
and reproductive health orientation programme for the female
community health volunteers was also organized on the
occasion. Furthermore, Nabil Bank also conducted financial
literacy program by distributing banking awareness pamphlets
to create awareness to the people in the locality.
Free Oral Health Camp at Jitpur Phedi
At one with the Nation
The powerful earthquake that rocked the nation and its numerous
aftershocks had far reaching impact in all our lives. In order to
provide some relief to the victims of the earthquake, the whole staff
of the Bank united and contributed to provide relief materials. The
staff made an effort to distribute galvanized corrugated sheets,
76 Nabil Bank Limited
Chairman Mr. Shambhu Prasad Poudyal, Director Mr. Dayaram
Gopal Agrawal, Officiating Chief Executive Officer Mr. Anil
Kumar Khanal, Assistant General Manager Mr. Ramesh Prasad
Lohani along with other Bank staff from Kathmandu distributed
the relief matter.
mosquito nets and solar torch lights in Sunakhani VDC, Ward
No. 3, Dolakha which was one of the worst affected areas. To
meet the urgent shelter demands, Nabil bank staff provided the
said construction material to build 205 temporary homes for the
people who lost their homes in the earthquake. They have also
distributed galvanized corrugated sheets, mosquito nets and solar
torch lights to the earthquake victims of Bhimtar VDC, Ward No. 9,
Sindhupalchowk for 112 families.
The Bank also contributed Nrs 20.10 million to the Prime
Ministers Disaster Relief Fund to aid in providing relief and
support in the reconstruction/rehabilitation of the earthquake
victims.
Banks Chairman Mr. Shambhu Prasad Poudyal, Director Mr.
Nirvana Chaudhary along with Officiating CEO Mr. Anil Kumar
Khanal jointly handing over the cheque of Rs 20.10 million
to Honorable Prime Minister Sushil Koirala at PMs residence,
Baluwatar Kathmandu.
Apart from this, the Bank continues to contribute to the
Governments coffer in the form of various taxes. Nabil was
recognized as the highest tax payer in the banking industry in
the review year and is proud of its contribution in the nation
building process. Besides direct contribution in the form of
taxes, it is among leading institutions that arranges finance to
national priority projects like those in renewable energy sector,
hydropower plants and cement industries etc. which form the
basic building blocks of the nation.

FINANCIAL
STATEMENTS AND
OTHER INFORMATION
Statement of
Directors
Responsibility
The statement of directors responsibilities which should
be read in conjunction with the Auditors Report addressed
to the shareholders of the Bank is introduced in order to
distinguish the respective responsibilities of the Board from
that of auditors in relation to the preparation and presentation
of financial statements of the Bank. The Board of Directors
are responsible for preparing the Annual Report, the separate
financial statements of the Bank and the consolidated financial
statements of the Bank and its subsidiary(ies) in accordance to
the prevailing laws and regulations of Nepal.
Section 108 read together with Section 109 of the Companies Act
2006 of Nepal prescribes the ultimate responsibilities of the Board
of Directors to prepare the financial statements of the Company to
its shareholders for presentation in AGM. Further, Section 2(4) of
Directive 20 of NRB Unified Directive 2072 prescribes preparation
and presentation of consolidated financial statements of the Bank
and its subsidiary (ies) in addition to the preparation of separate
financial statements in line with Directive No. 4.
Though the accounting standard for consolidation of financial
statements has not been implemented yet in Nepal, the Bank takes
the guidance of IFRS 10 Consolidated Financial Statements for
its preparation. NAS 1 Presentation and Preparation of Financial
Statements and Section 109(2) of Companies Act 2006 require
companies to prepare financial statements that reflect a fair
presentation of its financial position, financial performance and
cash flows of the relevant period.
In preparing the consolidated and separate financial
statements, the directors are required to:
-select suitable accounting policies and then apply them
consistently;
Annual Report 2014/15 77
05
-make judgments and estimates that are reasonable and
prudent; and
-state whether they have been prepared in accordance with NAS.
The directors are required to prepare the financial statements
on going concern basis unless it is not appropriate. Since the
directors are satisfied that the Group and the Bank have the
resources to continue the business for the foreseeable future and
there are no indicators that casts doubt on the Banks and its
subsidiarys going concern assumption, the financial statements
are continued to be prepared on going concern basis. The
directors are also entrusted with the fundamental responsibility
of keeping adequate accounting records that are sufficient to
show and explain the Banks transactions and disclose with
reasonable accuracy at any time, the financial position of the
Bank which also enables them to ensure that its financial
statement comply with the applicable NAS. Section 1(6) of
Directive 6 of NRB Unified Directives 2072 also specifies the
requirement of maintaining records of transactions up-to-date
and intact at all times. Moreover, it also restricts the directors to
add/modify official accounting records in their personal capacity.
Further, the directors have general responsibility for taking
such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and
other irregularities. As such, the Bank and its subsidiary have
implemented policies, procedures and mechanisms that are
intended to mitigate the risks that may arise due to control
lapses. Any fraud detected during the relevant financial period
is reported in Notes to Accounts along with the impact of such
frauds in the financial statements. The Bank has constituted
Audit Committee that comprises of four non-executive directors
and the Head-Internal Audit, who is the secretary of the
Committee. The Audit Committee functions independently and
reports directly to the Board of Directors.
Chairman
On behalf of the Board
78 Nabil Bank Limited
Disclosure of
Information
under Section
109(4) Of
Companies Act
2006
a. Business review of last year - This has been disclosed under
sections Achievements of Current Year under Operating and
Financial Review of the Directors Report.
b. Any impact caused to the business of the Company due to
national and international condition
The situation of excess liquidity along with shrinking avenues
of investment and credit growth still remains a major challenge
to the banking industry as well as the Nepalese economy. The
massive earthquake that hit the nation during the year has
been major setback to the economy with its effects estimated
at NRs. 706 billion. Exports have shrunk even more so due to
the unrest in the Terai region where important customs points
were blocked by the agitating parties. As a result, the already
expanding trade deficit has increased by 10.76% to reach NRs.
689.37 billion. Less than adequate GDP growth and intense
competition have also been some of the impediments in the
growth of the business. Prolonged power crisis, rising cost of
petroleum products due to depreciation of NPR and effects
of rising inflation all have contributed to increase in cost of
operations.
c. Current years (2015/16) achievement until the date
of preparation of Report from the Directors and Board of
Directors view on future activities of the Company: The
government has come up with an initial estimate of the effects
of the destructive earthquake on April 2015 on the national
economy. Yet the actual effect on the various sectors of the
economy is still to be seen. Looking at it from the banking
perspective, impact on the sectors like tourism, hydropower,
building and construction along with its effect on the business
in the affected areas are likely to have a bearing on the risks
and rewards of the banking industry as a whole. Nonetheless,
the eagerness shown by the government towards reconstruction
and rehabilitation in light of the commitment for help shown by
the neighboring nations as well as various donor organizations
will have a significant impact on the whole economy along with
the banking industry as well.
The Bank has received the highest tax payer award for providing
the highest tax contribution among the commercial banks of
the country. The Bank believes that its stakeholders are proud
of such an important contribution to the nation building process.
Another more important fact is that the year 2015/16 has
become the year of the new constitution and the various factors
inbuilt in the constitution are likely to have a direct as well as
an indirect impact on the banking business as a whole.
Banking sector has been facing the challenges of surplus
liquidity coupled with limited investment opportunities in the
current fiscal year as well which is not unlike the situation that
prevailed in the review year. The interest rates are likely to be
further affected which will make business operation as well as
expansion more competitive and more challenging. As a strong
and active bank operating amidst stringent policy changes, it
expects to come across more opportunities than challenges.
In this sense, the year 2015/16 is likely to be year full of
challenges and possibilities for the banking industry.
In the first three months of FY 2015/16, the Banks performance
has been reasonable despite the challenging political, social
and environmental conditions. The Banks net profit at the end
of first quarter stands at NRs. 653.5 million which posted an
increase of 29.44% from same duration last year. Operating profit
(before loss provision) in the first quarter is NRs. 860.6 million,
which has declined by 7.8% in comparison to the profit during
the same period of review year 2014/15. Total deposits of the
Bank increased by 5.51% to reach NRs. 109,860 million and
loans and advances increased by 0.40% to reach NRs.67,430
million in the first quarter of the current year. Decreasing interest
rates in the current scenario of surplus liquidity is likely to create
further pressure on operating profit generation in the current year.
Moreover, due to the impact of the devastating earthquake and
the unrest in the Terai area, the Banks asset quality also might
be affected. Major challenges the Bank expects to face during the
current year is improvement in asset quality, managing liquidity,
achieving organic credit growth and adding more revenue streams.
d. Industrial and professional relations of the Company The
Bank maintains cordial relationships with all its stakeholders
including the staff members. The Bank has been imparting
a feeling of belongingness by maintaining harmony amongst
employees of all hierarchy. It has always encouraged the
management and the employees union to interact for
improvement of Banks systems and processes. Such an open
culture where every individual employee senses his/her role on
attaining Banks common objective is believed to be an essential
ingredient for corporate success. The Bank has put in all efforts
 Annual Report 2014/15 79

to drive all employees to work together in the unison with
common mission to make the Bank as 1st Choice Provider of
Complete Financial Solutions.
e. Changes in the Board of Directors and the reason thereof
Disclosed in Changes in the Board under
Governance section of the Directors Report.
f. Main factors that affect business activities:
1. Increased Competition
2. Adverse political environment that affects stability in the business
3. Low interest rates on investments
g. Any remarks and observation stated in the Independent
Auditors Report and Board of Directors response thereon No
material remarks.
h. Amount recommended for distribution of dividend
NRs.6.84 per share cash dividend and NRs.30 per share stock
dividend (i.e. 3 per 10 shares held).
i. Details of shares forfeited (number of share, face value,
amount received by the Company prior to forfeiture, amount
received by the Company after putting such forfeited shares
into subscription and amount refunded on account of forfeited
shares) - The bank has not forfeited any shares.
j. Review of the progresses made by the Company and its
subsidiary(s) in the current fiscal year 2014/15 and the
position of the same at the end of fiscal year Disclosed in
Achievement of Current Year and Financial position of Nabil
Invest and Financial performance of Nabil Invest under
Operating and Financial Review.
k. Main activities carried out by the Company and its
subsidiary(s) in last fiscal year and any significant
changes in the business activities of the Company and its
subsidiary during the same period:
Nabil Bank Commercial banking activities like credit
disbursement, investment, deposit mobilization,
remittance, card and other financial services.
Subsidiary company Investment banking activities like
portfolio management service, corporate advisory service and
mutual fund scheme management along with merchant banking
activities like issue management, underwriting, registrar to shares
and depository participants service of CDS and Clearing Ltd.
l. Any information given to the Company by its principal
shareholder (who holds 1% or more shares of the Company)
during the financial year No such information provided by the
principal shareholders.
m. Shares held by the directors and officials of the Company
and information received by the Company on their involvement
in trading of shares: Shares held by the directors and officials of
the company and their involvement in trading:

DESIGNATION SHAREHOLDER NO. DIRECTORS AND OFFICIALS OWNERSHIP

Director 2663 Mr. Shambhu Prasad Poudyal 5,896
Director 90 Mr. Dayaram Gopal Agrawal 3,515
Director 5975 Mr. Nirvana Chaudhary 325,761
Director 17089 Mr. Ashish Sharma 63
CEO 4845, 7069 Mr. Sashin Joshi 5,764
Manager 5076 Mr. Rajeshwor Lal Shrestha 288
Manager 5761 Mr. Yagya Prasad Sharma 370
Manager 4852 Mr. Yugesh Lal Bijukchhe 736
Senior Manager 2174 Ms. Neena Thapa 994
Assistant General Manager 4866 Mr. Deepak Shrestha 1,114
Senior Manager 4733 Mr. Rajendra Bahadur Malla 6,117
Manager 4821 Mr. Iswar Man Shrestha 6,828
Manager 4773 Mr. Babu Ratna Bajracharya 894
Manager 8898 and 11391 Mr. Jaya Krishna Shrestha 2,632

SHARES ACQUIRED DURING 2014/15
Officer 4817 Mr. Ilesh Upadhyaya 415
Officer 19573 Mr. Rajesh Kumar Shrestha 150
Officer 21934 Mr. Mohan Raj Joshi 19
Officer 22066 Mr. Khagendra Poudel 141

SHARES DISPOSED DURING 2014/15

Officer 5367 Mr. Kamal Prasad Lacaul 1,122
Officer 5817 Mr. Manoj Aryal 530
Officer 17521 Mr. Prakash Basukala 399
80 Nabil Bank Limited
n. Information provided on personal interest of Board of
Directors and their relatives (nearest kin) regarding contract or
agreement done with the Company during the year There is
no record of such event/transaction.
o. Buyback of share by the Company, reason thereof for
buyback, number of shares bought back, face value of share
and amount paid during the buyback
The Bank has not bought back any share.
p. Information on existence of Internal control system and if
there is, its detail Disclosed in point Internal Control under
Governance.
q. Details of management expenses incurred during the year
Disclosed in Schedule 23 Staff Expense and Schedule 24
Other Operating Expense of financial statement.
r. Name list of members in the audit committee, remuneration,
allowance and benefits they have received, the details
of activities of the committee and the details of any
recommendation by them:
As of 16th July 2015, the committee constituted of the
following: (to be confirmed)
Director Nirvana Chaudhary, Coordinator
Director Dayaram Gopal Agrawal, Member
Director Ashish Sharma, Member
Director Mohiuddin Ahmed, Member
Director J.P. Kanoria, Member (in absence of Dir. M. Ahmed)
The Bank provided sitting fees as follows for the audit
committee meetings organized during the year:
Coordinator- NRs. 15,000
Member- NRs. 12,000
Apart from sitting fees and per diem for outstation visit of
foreign directors, all directors receive NRs.15, 000 (net of TDS)
on monthly basis for newspaper/communication allowance
which was approved by 25th AGM held on 22nd September
2009.
Details of committee activities and the recommendation are
presented in Board Committees under
Governance.
s. Dues payable to the Company by any director, MD, CEO,
principal shareholders (holding share more than 1%) or
their relatives or firms orinstitutions in which they have their
involvement (interest) Disclosed in Schedule 29 of the
financial statements.
t. Remuneration, allowances and benefits paid to director,
MD, CEO and officials Disclosed in Point 13 Related Parties
Disclosures of Schedule 33 Notes to Accounts of the financial
statement.
u. Uncollected dividend by the shareholder Rs.110,141,802.
v. Information on asset bought or sold as per Section 141 N/A
w. Details of related party transaction as per Section 175
(transactions between associated companies)
Disclosed in Point 13 Related Parties Disclosures of
Schedule 33 Notes to Accounts of the financial
statement.
x. Any other details to be disclosed in the Report from the
Directors in accordance with Companies Act, 2006 or other
prevailing laws Disclosed in appropriate part of this Report
and financial statements.
y. Any other pertinent details Disclosed in appropriate part of
this Report and financial statements.
 Annual Report 2014/15 81

disclosure during each quarter of the preceding year along with total
volume of trading of shares and number of days traded.

Related to Sub 6. Problems and Challenges

Unhealthy competition induced by increasing liquidity in the

Rule (1) of Rule banking sector along with reduced investment opportunities,
fluid political conditions among declining business sentiment,

22 of Securities impact of the earthquake on the nations economy, acute

discomfort in the transportation and supply system, trade

Registration deficit, fluctuating exchange rates and increasing inflation

rates have been recognized by the Bank as external problems

and Issuance
and challenges and to tackle the challenges apart from those
outside of control of the Bank, the Bank has adopted business
diversification, customer focused quality service along with

Regulation, 2065 effective risk management strategy.

7. Corporate Governance
1. Report of the Board of Directors- Disclosed in the Directors
Description of managements initiatives towards good corporate
Report part of this report.
governance:
a. The Bank has a Board of Directors along with committees
2. Auditors Report- Disclosed in appropriate part of this Report
of the board namely Audit Committee, Risk Management
and financial statements.
Committee and Committee Relating To Staff Services And
Facilities. Management level Executive Committee as well as
3. Audited Financial Reports- Disclosed in appropriate part of
Asset and Liability Management Committee are also operational.
this Report and financial statements.
b. Internal audit is conducted by the internal auditors of
the Bank to manage the internal control processes. Regular
4. Legal Proceedings
meetings of the audit committee are conducted to ensure the
(a) A law-suit filed by or against the body corporate during the
execution and review of suggestions presented in the audit
quarterly period- No mentionable suits have been filed by the
report.
bank except for regular law suit concerning loan recovery and
c. Various internal policies, regulations and directives have been
tax liabilities arising in normal course of banking business.
put in place to minimize operational risk as well as to regulate
(b) A law-suit filed by or against the promoter or director of
the transactions.
the body corporate involving statutory regulations or criminal
d. Employees Code of Conduct has been issued to ensure
offence- The bank does not have knowledge of any such claims.
maintenance of corporate governance. The compliance of the
(c) A law-suit, if any, filed against the promoter and director
same is also periodically reviewed.
for committing economic crimes- The bank does not have
knowledge of any such claims.
8. If there is a deviation of 20% or more between the details
5. Analysis of Stock Performance of the Body Corporate as per the audited financial statements and those forecasted
(a) Managements view on the performance of the stocks of the in the prospectus, details of such deviation -No prospectus has
body corporate in the Stock Exchange-The Banks share price been issued during the fiscal year 2014-15.
is guided by market operations of the capital market. The Bank
does not comment on its share transactions 9. Details on special events and circumstances as specified in
(b) High, Low and Closing price of the stocks of the company Sub rule (5) of Rule 22 -None

PQuarter (Month) Maximum Price Minimum Price Closing Price Total Shares Total Days
per share (NRs.) per share (NRs.) per share (NRs.) Traded Traded
First quarter( mid October 2014) 2,680 2,140 2,340 220,692 56
Second quarter( mid January 2015) 2,376 1,564 1,869 157,467 57
Third quarter( mid April 2015) 2,062 1,830 1,920 130,018 57
Fourth quarter( mid July 2015) 2,010 1,575 1,910 98,036 45
independent auditors report
-group
84 Nabil Bank Limited
 Annual Report 2014/15 85

Group
financials
Consolidated Balance Sheet
As at 16 July 2015 (31 Ashadh 2072)
(in NPR)

Capital & Liabilities This Year Previous Year

1. Share Capital 4,754,950,200 3,656,602,080
2. Reserves & Surplus 4,764,561,194 4,014,637,138
3. Non Controlling Interest 38,741,506 37,472,096
4. Debentures & Bonds 300,000,000 300,000,000
5. Borrowings - -
6. Deposits 103,957,095,808 75,360,769,196
7. Bills Payable 243,433,464 213,579,243
8. Proposed Dividend 250,260,537 1,371,225,780
9. Income Tax Liabilities 964,391 2,510,756
10. Other Liabilities 4,385,990,637 5,336,167,790
Total 118,695,997,737 90,292,964,080

Assets This Year Rs. Previous Year Rs.

1. Cash Balance 1,820,201,446 1,468,154,377
2. Balance with Nepal Rastra Bank 12,984,904,257 7,068,078,842
3. Balance with Banks/Financial Institutions 3,846,621,869 4,417,202,556
4. Money at Call and Short Notice 323,541,000 737,854,000
5. Investment 30,978,933,625 18,283,592,425
6. Loans, Advances and Bills Purchased 65,501,925,164 54,684,093,633
7. Fixed Assets 827,282,530 859,996,370
8. Non Banking Assets - -
9. Other Assets 2,412,587,846 2,773,991,877
Total 118,695,997,737 90,292,964,080

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Place: Kathmandu
86 Nabil Bank Limited

Consolidated Profit and Loss Account

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

1. Interest Income 5,778,165,636 5,652,370,171
2. Interest Expense 2,233,742,466 1,938,750,424
Net Interest Income 3,544,423,170 3,713,619,747
3. Commission and Discount 500,560,120 480,959,859
4. Other Operating Income 271,608,285 304,257,855
5. Exchange Income 512,477,284 529,995,584
Total Operating Income 4,829,068,859 5,028,833,045
6. Staff Expense 754,703,900 637,866,371
7. Other Operating Expense 630,050,041 557,216,961
8. Exchange Loss - -
Operating Profit before Provision for Possible Losses 3,444,314,918 3,833,749,713
9. Provision for Possible Losses 169,025,826 237,955,213
Operating Profit 3,275,289,092 3,595,794,500
10. Non Operating Income /(Expense) 29,544,181 23,666,157
11. Provision for Possible Losses Write Back 2,095,609 14,667,229
Profit from Regular Activities 3,306,928,882 3,634,127,886
12. Income/(Expense) from Extra-ordinary Activities (2,924,675) 34,002,205
Profit from All Activities 3,304,004,207 3,668,130,091
13. Provision for Staff Bonus 301,711,292 334,473,575
14. Provision for Income Tax 897,224,651 994,144,118
Current Tax 907,267,292 991,801,293
Prior Period Tax - 735,675
Deferred Tax (10,042,641) 1,607,150
15. Share of Non-Controlling Interest in the Profit of Susbsidiary 6,905,483 8,139,838
Net Profit/(Loss) 2,098,162,781 2,331,372,560

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Place: Kathmandu
 Annual Report 2014/15 87

Consolidated Profit & Loss Appropriation Account

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)

(in NPR)

Particulars This Year Previous Year

Income
1. Accumulated Profit up to Last Year (Restated Balance) 492,933,551 724,583,471
2. Current Years Profit 2,098,162,781 2,331,372,560
3. Exchange Equalization Fund - -
4. Capital Adjustment Reserve - -
5. Deferred Tax Reserve - 1,607,150
6. Investment Adjustment Reserve - -
7. Dividend Equalisation Fund - -
8. Contingent Reserve 449,733 300,000
Total 2,591,546,065 3,057,863,182
Expense
1. Accumulated Loss up to Last Year - -
2. Current Years Loss - -
3. General Reserve 419,000,000 464,000,000
4. Contingent Reserve 1,000,000 1,000,000
5. Institution Development Fund - -
6. Dividend Equalization Fund - -
7. Employees Related Reserve - -
8. Proposed Cash Dividend 250,260,537 1,371,225,780
9. Proposed Stock Dividend (Bonus Shares) 1,097,296,200 609,433,680
10. Special Reserve Fund - -
11. Exchange Fluctuation Fund 45,500,000 27,100,000
12. Capital Redemption Reserve 60,000,000 60,000,000
13. Capital Adjustment Fund - -
14. Deferred Tax Reserve 10,042,641 -
15. Investment Adjusment Reserve 797,448 32,170,171
Total 1,883,896,826 2,564,929,631
16. Accumulated Profit/(Loss) 707,649,239 492,933,551

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Place: Kathmandu
Consolidated Statement of Changes in Equity
For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars Share Capital Accumulated General Proposed Capital Share Contingent Dividend Capital Exchange Interest Deferred Investment Total
Profit/Loss Reserve Bonus Reserve Premium Reserve Equalization Redemption Equalization Spread Tax Adjustment Amount (RS.)
Share Fund Fund Reserve Fund Reserve Reserve Reserve
Balance as on 17 July 2014 3,047,168,400 492,933,550 3,084,500,000 609,433,680 - 74,000 14,573,570 - 60,000,000 177,400,000 2,578,000 43,384,737 139,266,841 7,671,312,778
Changes in Accounting Policy - - - - - - - - - - - - - -
Bonus Share issued 609,433,680 - - (609,433,680) - - - - - - - - - -
Fraction Share Adjustment
from Cash Dividend 1,051,920 - - - - - - - - - - - - 1,051,920
Increase in Deferred Tax Expense (73,560.00) (73,560)
Restated Opening Balance 3,657,654,000 492,933,550 3,084,500,000 - - 74,000 14,573,570 - 60,000,000 177,400,000 2,578,000 43,311,177 139,266,841 7,672,291,138
Surplus on Revaluation of Properties - - - - - - - - - - - - - -
Deficit on Revaluation of Properties - - - - - - - - - - - - - -
Currency Translation Difference - - - - - - - - - - - - - -
Net Gains and Losses not recognised
in the Income Statement - - - - - - - - - - - - - -
Net Profit for the period - 2,098,162,781 - - - - - - - - - - - 2,098,162,781
Adjustments: - - - - - - - - - - - - - -
Issuance of Share Capital - - - - - - - - - - - - - -
Deficit on Revaluation of Properties - - - - - - - - - - - - - -
Surplus on Revaluation of Properties - - - - - - - - - - - - - -
Cash Dividend - (250,260,537) - - - - - - - - - - - (250,260,537)
Proposed Stock Dividend - (1,097,296,200) - 1,097,296,200 - - - - - - - - - -
General Reserve Fund - (419,000,000) 419,000,000 - - - - - - - - - - -
Contingent Reserve - (1,000,000) - - - - 1,000,000 - - - - - - -
Equivalent amount of medical expense under
Hospitalization Scheme - 449,733 - - - - (449,733) - - - - - - -
Dividend Equalization Fund - - - - - - - - - - - - - -
Capital Redemption Reserve (Debenture Redemption) - (60,000,000) - - - - - - 60,000,000 - - - - -
Exchange Fluctuation Reserve - (45,500,000) - - - - - - - 45,500,000 - - - -
Interest Spread Reserve - - - - - - - - - - - - - -
Deferred Tax Reserve - (10,042,641) - - - - - - - - - 10,042,641 - -
Investment Adjustment Reserve - (797,448) - - - - - - - - - - 115,458 (681,990)
Balance as on 16 July 2015 3,657,654,000 707,649,239 3,503,500,000 1,097,296,200 - 74,000 15,123,837 - 120,000,000 222,900,000 2,578,000 53,353,818 139,382,299 9,519,511,393

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Place: Kathmandu
 Annual Report 2014/15 89

Consolidated Cash Flow Statement

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072) (in NPR)

Particulars This Year Previous Year

(a) Cash Flow from Operating Activities 7,044,098,092 6,704,844,483
1. Cash Received 6,882,809,668 6,751,116,334
1.1 Interest Income 5,588,838,994 5,435,943,505
1.2 Commission and Discount Income 502,307,281 467,761,471
1.3 Income from Foreign Exchange Transaction 512,477,284 506,331,999
1.4 Recovery of Loan Written Off 7,577,824 36,821,504
1.5 Other Incomes 271,608,285 304,257,855
2. Cash Payment (4,728,838,488) (4,373,005,544)
2.1 Interest Expenses (2,233,637,671) (1,942,436,297)
2.2 Staff Expenses (1,073,824,960) (944,648,497)
2.3 Office Operating Expenses (511,054,344) (432,277,969)
2.4 Income Tax Paid (909,964,125) (1,053,044,808)
2.5 Other Expenses (357,387) (597,974)
Cash Flow before changes in Working Capital 2,153,971,181 2,378,110,790
(Increase)/Decrease in Current Assets (23,210,829,651) (10,847,074,919)
1. (Increase)/Decrease in Money at Call and Short Notice 414,313,000 896,452,157
2. (Increase)/Decrease in Other Short Term Investment (13,026,706,096) (2,617,410,860)
3. (Increase)/Decrease in Loans, Advances and Bills Purchase (10,961,185,057) (8,560,114,044)
4. (Increase)/Decrease in Other Assets 362,748,502 (566,002,172)
Increase/(Decrease) in Current Liabilities 28,100,956,563 15,173,808,612
1. Increase/(Decrease) in Deposits 28,596,326,612 11,861,874,861
2. Increase/(Decrease) in Certificates of Deposits - -
3. Increase/(Decrease) in Short Term Borrowings (7,554,561) (21,653,811)
4. Increase/(Decrease) in Other Liabilities (487,815,488) 3,333,587,562
(b) Cash Flow from Investment Activities 455,267,028 835,683,894
1. (Increase)/Decrease in Long-term Investment 326,151,361 692,498,078
2. (Increase)/Decrease in Fixed Assets (84,671,768) (100,360,524)
3. Interest income from Long term Investment 184,823,822 222,863,799
4. Dividend Income 28,963,613 20,682,541
5. Other - -
(c) Cash Flow from Financing Activities (1,801,073,324) (484,491,413)
1. Increase/(Decrease) in Long term Borrowings (Bonds, Debentures etc) - -
2. Increase/(Decrease) in Share Capital* 1,051,920 1,116,650
3. Increase/(Decrease) in Other Liabilities - -
4. Increase/(Decrease) in Refinance/facilities received from NRB - -
5. Dividend Paid (1,802,125,244) (485,608,063)
(d) Income/(Loss) from change in exchange rate in Cash & Bank balance - -
(e) Current Years Cash Flow from All Activities 5,698,291,797 7,056,036,964
(f) Opening Cash and Bank Balance 12,953,435,775 5,897,398,811
(g) Closing Cash and Bank Balance 18,651,727,571 12,953,435,775

*Only fraction share adjusted with Cash Dividend is disclosed as increment.

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Place: Kathmandu
independent auditors report
-nabil bank
Annual Report 2014/15 91
92 Nabil Bank Limited

financial statements -nabil bank

Balance Sheet
As at 16 July 2015 (31 Ashadh 2072)
(in NPR)

CAPITAL & LIABILITIES Schedule This Year Previous Year

1. Share Capital 1 4,754,950,200 3,656,602,080
2. Reserves & Surplus 2 4,730,641,287 3,984,384,416
3. Debentures & Bonds 3 300,000,000 300,000,000
4. Borrowings 4 - -
5. Deposits 5 104,237,910,083 75,388,790,862
6. Bills Payable 6 243,433,464 213,579,243
7. Proposed Dividend 250,260,537 1,371,225,780
8. Income Tax Liabilities 964,391 2,510,756
9. Other Liabilities 7 1,467,541,449 2,357,452,783
Total 115,985,701,411 87,274,545,920

Assets Schedule This Year Rs. Previous Year

1. Cash Balance 8 1,820,201,446 1,468,154,377
2. Balance with Nepal Rastra Bank 9 12,924,604,257 7,068,078,842
3. Balance with Banks/Financial Institutions 10 1,258,934,331 1,457,249,561
4. Money at Call and Short Notice 11 323,541,000 737,854,000
5. Investment 12 30,972,487,414 18,276,752,741
6. Loans, Advances and Bills Purchased 13 65,501,925,164 54,691,648,194
7. Fixed Assets 14 812,440,482 843,137,744
8. Non Banking Assets 15 - -
9. Other Assets 16 2,371,567,317 2,731,670,461
Total 115,985,701,411 87,274,545,920

Contingent Liabilities Schedule 17

Directors Declaration Schedule 29
Table of Capital Fund Schedule 30(A1)
Credit Risk Schedule 30(B)
Credit Risk Mitigation Schedule 30(C)
Operation Risk Schedule 30(D)
Market Risk Schedule 30(E)
Principal Indicators Schedule 31
Principal Accounting Policies Schedule 32
Notes to Accounts Schedule 33
Statement of Promoters Loan Schedule 34
Comparison of Unaudited and Audited Financial Statement Schedule 35

Schedules 1 to 17 form an integral part of this Balance Sheet.

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Place: Kathmandu
 Annual Report 2014/15 93

Profit and Loss Account

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars Schedule This Year Previous Year

1. Interest Income 18 5,762,345,126 5,636,158,253
2. Interest Expense 19 2,236,063,893 1,939,745,260
Net Interest Income 3,526,281,233 3,696,412,993
3. Commission and Discount 20 480,279,523 466,314,790
4. Other Operating Income 21 240,460,391 265,326,606
5. Exchange Income 22 512,477,284 529,995,584
Total Operating Income 4,759,498,431 4,958,049,973
6. Staff Expense 23 743,484,326 627,573,275
7. Other Operating Expense 24 613,018,342 543,158,113
8. Exchange Loss - -
Operating Profit before Provision for Possible Losses 3,402,995,763 3,787,318,585
9. Provision for Possible Losses 25 167,070,826 237,955,213
Operating Profit 3,235,924,937 3,549,363,372
10. Non Operating Income /(Expense) 26 44,364,181 34,781,157
11. Provision for Possible Losses Write Back 27 2,095,609 14,667,229
Profit from Regular Activities 3,282,384,727 3,598,811,758
12. Income/(Expense) from Extra-ordinary Activities 28 (2,924,675) 34,002,205
Profit from All Activities 3,279,460,052 3,632,813,963
13. Provision for Staff Bonus 298,132,732 330,252,563
14. Provision for Income Tax 887,513,712 983,003,928
Current Tax 896,878,251 980,684,051
Prior Period Tax - 735,675
Deferred Tax (9,364,539) 1,584,202
Net Profit/(Loss) 2,093,813,608 2,319,557,472

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

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Place: Kathmandu
94 Nabil Bank Limited

Profit & Loss Appropriation Account

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)

(in NPR)

Particulars This Year Previous Year

Income
1. Accumulated Profit up to Last Year (Restated Balance) 463,687,204 707,175,161
2. Current Years Profit 2,093,813,608 2,319,557,472
3. Exchange Equalization Fund - -
4. Capital Adjustment Reserve - -
5. Deferred Tax Reserve - 1,584,202
6. Investment Adjustment Reserve - -
7. Dividend Equalization Fund - -
8. Contingent Reserve 449,733 300,000
Total 2,557,950,545 3,028,616,835

Expense
1. Accumulated Loss up to Last Year - -
2. Current Years Loss - -
3. General Reserve 419,000,000 464,000,000
4. Contingent Reserve 1,000,000 1,000,000
5. Institution Development Fund - -
6. Dividend Equalization Fund - -
7. Employees Related Reserve - -
8. Proposed Cash Dividend 250,260,537 1,371,225,780
9. Proposed Stock Dividend (Bonus Shares) 1,097,296,200 609,433,680
10. Special Reserve Fund - -
11. Exchange Fluctuation Fund 45,500,000 27,100,000
12. Capital Redemption Reserve (Debenture Redemption) 60,000,000 60,000,000
13. Capital Adjustment Fund - -
14. Deferred Tax Reserve 9,364,539 -
15. Investment Adjusment Reserve 797,448 32,170,171
Total 1,883,218,724 2,564,929,631
16. Accumulated Profit/(Loss) 674,731,821 463,687,204

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Place: Kathmandu
Statement of Changes in Equity
For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)

(in NPR)

Particulars Share Capital Accumulated General Proposed Capital Share Contingent Dividend Capital Exchange Interest Deferred Investment Total
Profit/Loss Reserve Bonus Reserve Premium Reserve Equalization Redemption Equalization Spread Tax Adjustment Amount (RS.)
Share Fund Fund Reserve Fund Reserve Reserve Reserve
Balance as on 16 July 2014 3,047,168,400 463,687,204 3,084,500,000 609,433,680 - 74,000 14,573,570 - 60,000,000 177,400,000 2,578,000 43,252,840 138,392,362 7,641,060,056
Changes in Accounting Policy -
Bonus Share issued 609,433,680 (609,433,680) -
Fraction Share Adjustment from
Cash Dividend 1,051,920 1,051,920
Increase in Deferred Tax Expense (73,560) (73,560)
Restated Opening Balance 3,657,654,000 463,687,204 3,084,500,000 - - 74,000 14,573,570 - 60,000,000 177,400,000 2,578,000 43,179,280 138,392,362 7,642,038,416
Surplus on Revaluation of Properties -
Deficit on Revaluation of Properties -
Currency Translation Difference -
Net Gains and Losses not recognised
in the Income Statement -
Net Profit for the period 2,093,813,608 2,093,813,608
Adjustments: -
Transfer of Reserve Heading -
Deficit on Revaluation of Properties -
Surplus on Revaluation of Properties -
Cash Dividend (250,260,537) (250,260,537)
Proposed Stock Dividend (1,097,296,200) 1,097,296,200 -
General Reserve Fund (419,000,000) 419,000,000 -
Contingent Reserve (1,000,000) 1,000,000 -
Medical expenses under
Hospitalization Scheme 449,733 (449,733)
Dividend Equalization Fund - - -
Capital Redemption Reserve
(Debenture Redemption) (60,000,000) 60,000,000 -
Exchange Fluctuation Reserve (45,500,000) 45,500,000 -
Interest Spread Reserve - -
Deferred Tax Reserve (9,364,539) 9,364,539 -
Investment Adjustment Reserve (797,448) 797,448 -
Balance as on 16 July 2015 3,657,654,000 674,731,821 3,503,500,000 1,097,296,200 - 74,000 15,123,837 - 120,000,000 222,900,000 2,578,000 52,543,819 139,189,810 9,485,591,487

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Annual Report 2014/15 95

Place: Kathmandu
96 Nabil Bank Limited

Cash Flow Statement

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)

(in NPR)

Particulars This Year Previous Year

(a) Cash Flow from Operating Activities 7,332,430,808 3,734,149,574
1. Cash Received 6,815,560,667 6,681,328,098
1.1 Interest Income 5,573,018,484 5,419,731,587
1.2 Commission and Discount Income 482,026,684 453,116,402
1.3 Income from Foreign Exchange Transaction 512,477,284 506,331,999
1.4 Recovery of Loan Written Off 7,577,824 36,821,504
1.5 Other Incomes 240,460,391 265,326,606
2. Cash Payment (4,691,797,439) (4,341,335,894)
2.1 Interest Expenses (2,235,959,098) (1,943,431,133)
2.2 Staff Expenses (1,058,384,374) (931,533,070)
2.3 Office Operating Expenses (498,671,965) (422,196,923)
2.4 Income Tax Paid (898,424,615) (1,043,576,794)
2.5 Other Expenses (357,387) (597,974)
Cash Flow before changes in Working Capital 2,123,763,228 2,339,992,204
(Increase)/Decrease in Current Assets (23,219,814,082) (10,873,624,200)
1. (Increase)/Decrease in Money at Call and Short Notice 414,313,000 896,452,157
2. (Increase)/Decrease in Other Short Term Investment (13,026,181,506) (2,618,733,560)
3. (Increase)/Decrease in Loans, Advances and Bills Purchase (10,968,739,618) (8,559,767,855)
4. (Increase)/Decrease in Other Assets 360,794,042 (591,574,942)
Increase/(Decrease) in Current Liabilities 28,428,481,662 12,267,781,570
1. Increase/(Decrease) in Deposits 28,849,119,221 11,778,982,663
2. Increase/(Decrease) in Certificates of Deposits - -
3. Increase/(Decrease) in Short Term Borrowings - -
4. Increase/(Decrease) in Other Liabilities (420,637,559) 488,798,907
(b) Cash Flow from Investment Activities 472,719,770 856,621,118
1. (Increase)/Decrease in Long-term Investment 326,151,361 687,623,078
2. (Increase)/Decrease in Fixed Assets (82,039,026) (85,663,300)
3. Interest income from Long term Investment 184,823,822 222,863,799
4. Dividend Income 43,783,613 31,797,541
5. Other - -
(c) Cash Flow from Financing Activities (1,794,893,324) (479,856,413)
1. Increase/(Decrease) in Long term Borrowings (Bonds, Debentures etc) - -
2. Increase/(Decrease) in Share Capital* 1,051,920 1,116,650
3. Increase/(Decrease) in Other Liabilities - -
4. Increase/(Decrease) in Refinance/facilities received from NRB - -
5. Dividend Paid (1,795,945,244) (480,973,063)
(d) Income/(Loss) from change in exchange rate in Cash & Bank balance - -
(e) Current Years Cash Flow from All Activities 6,010,257,254 4,110,914,279
(f) Opening Cash and Bank Balance 9,993,482,780 5,882,568,501
(g) Closing Cash and Bank Balance 16,003,740,034 9,993,482,780

* Only fraction shares adjusted with Cash Dividend is disclosed as increment.

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary As per our Report of even date
Chief Executive Officer Chairman Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai Ashish Sharma M. Ahmed P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director Director
Chartered Accountants

Date: October 4, 2015

Place: Kathmandu
 Annual Report 2014/15 97

Share Capital & Ownership Schedule 1

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Share Capital
1.1 Authorized Capital 3,700,000,000 3,100,000,000
a) 37,000,000 Ordinary Shares of Rs. 100 each 3,700,000,000 3,100,000,000
b) ...Non-redeemable Preference Shares of Rs.. each
c) Redeemable Preference Shares of Rs.. each
1.2 Issued Capital 3,657,654,000 3,047,168,400
a) 36,576,540 Ordinary Shares of Rs. 100 each 3,657,654,000 3,047,168,400
b) ...Non-redeemable Preference Shares of Rs.. each
c) Redeemable Preference Shares of Rs.. each
1.3 Paid Up Capital 3,657,654,000 3,047,168,400
a) 36,576,540 Ordinary Shares of Rs. 100 each 3,657,654,000 3,047,168,400
b) ...Non-redeemable Preference Shares of Rs.. each
c) Redeemable Preference Shares of Rs.. each
1.4 Proposed Bonus Shares 1,097,296,200 609,433,680
1.5 Calls in Advance - -
1.6 Total (1.3 + 1.4 + 1.5) 4,754,950,200 3,656,602,080

Share Ownership
As at 16 July 2015
(in NPR)

Particulars % This Year Previous Year

1. Local Ownership 50.00 1,828,827,000 1,523,584,200
1.1 Government of Nepal - - -
1.2 Ka Class Licensed Institutions - - -
1.3 Other Licensed Institutions 0.57 20,990,500 107,628,100
1.4 Other Entities 9.67 353,695,500 294,611,000
1.5 General Public 30.00 1,097,296,200 914,150,520
1.6 Others * 9.76 356,844,800 207,194,580
2. Foreign Ownership 50.00 1,828,827,000 1,523,584,200
Total 100.00 3,657,654,000 3,047,168,400
* Other includes holding of Nepal Trust, Nepal Stock Exchange and promoter shares divested by NIDC Development Bank Ltd.
98 Nabil Bank Limited

Details of Shareholders Holding 0.5% Shares

(in NPR)

particulars THIS YEAR

AMOUNT (in NPR) %
1 NB International Limited 50.00 1,828,827,000.00
2 Rastriya Beema Sansthan 9.67 353,695,500.00
3 Nepal Industrial Development Corporation 0.57 20,990,500.00
4 Mr. Arjun Bandhu Regmi 1.16 42,451,500.00
5 Mr. Nirvana Kumar Chaudhary 0.89 32,576,100.00
6 Mr. Barun Chaudhary 0.85 31,057,100.00
7 Mrs. Sarika Chaudhary 0.78 28,593,400.00
8 Nepal Trust 0.59 21,670,800.00
9 Mr. Rahul Chaudhary 0.59 21,642,300.00

Reserves & Surplus Schedule 2

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. General Reserve 3,503,500,000 3,084,500,000
2. Capital Reserve 74,000 74,000
a. Share Premium 74,000 74,000
3. Capital Redemption Reserve (Debenture Redemption) 120,000,000 60,000,000
4. Capital Adjustment Reserve - -
5. Other Reserve and Fund 209,435,466 198,723,212
a. Contingent Reserve 15,123,837 14,573,570
b. Institution Development Fund - -
c. Dividend Equalization Fund - -
d. Special Reserve Fund - -
e. Assets Revaluation Reserve - -
f. Deferred Tax Reserve 52,543,819 43,179,280
g. Other Free Reserve (Interest Spread Reserve) 2,578,000 2,578,000
h. Other Reserve (Investment Adjustment Reserve) 139,189,810 138,392,362
6. Accumulated Profit/(Loss) 674,731,821 463,687,204
7. Exchange Fluctuation Fund 222,900,000 177,400,000
Total 4,730,641,287 3,984,384,416
 Annual Report 2014/15 99

Debentures & Bonds Schedule 3

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. 8.50% Bond of Rs. 1000 each 300,000,000 300,000,000
Issued in July / August 2008 with maturity in July / August 2018
(Redemption Reserve till date: Rs.120,000,000.00)
2. .% Bond/Debentures of Rs..each - -
Issued on with maturity on .
(Redemption Reserve till date:Rs.)
Total (1+2) 300,000,000 300,000,000

Borrowings Schedule 4

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

A. Local
1. Government of Nepal - -
2. Nepal Rastra Bank (SLF) - -
3. Repo Liability - -
4. Inter-Bank and Financial Institutions - -
5. Other Organized Institutions - -
6. Others - -
Total - -
B. Foreign
1. Banks - -
2. Others - -
Total - -
Total (A+B) - -
100 Nabil Bank Limited

Deposits Schedule 5

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Interest Free Deposits
A. Current Deposits 12,848,379,756 9,545,929,798
1. Local Currency 10,474,092,875 7,256,913,383
1.1 Nepal Government - -
1.2 Ka Class Licensed Institutions 336,325,410 178,110,500
1.3 Other Licensed Financial Institutions 341,546,110 354,389,780
1.4 Other Organized Institutions 8,679,343,392 6,062,115,454
1.5 Individuals 1,116,877,963 662,297,649
1.6 Others - -
2. Foreign Currency 2,374,286,881 2,289,016,415
2.1 Nepal Government - -
2.2 Ka Class Licensed Institutions 5,020,320 10,903,900
2.3 Other Licensed Financial Institutions - -
2.4 Other Organized Institutions 2,257,950,021 2,178,060,435
2.5 Individuals 111,316,540 100,052,080
2.6 Others - -
B. Margin Deposits 1,787,077,128 1,541,424,046
1. Employees 8,391,898 7,193,935
2. Guarantee 356,892,733 350,142,418
3. Letter of Credit 742,460,517 670,063,597
4. Others 679,331,980 514,024,096
C. Others 74,393,161 160,253,715
1. Local Currency 74,393,161 160,253,715
1.1 Financial Institutions - -
1.2 Other Organized Institutions 66,817,000 119,207,775
1.3 Individual 7,576,161 41,045,940
2. Foreign Currency - -
2.1 Financial Institutions - -
2.2 Other Organized Institutions - -
2.3 Individual - -
Total (A+B+C) 14,709,850,045 11,247,607,559

Continued...
 Annual Report 2014/15 101

Continued...

Deposits Schedule 5

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

2. Interest Bearing Deposits
A. Savings Deposits 42,715,056,067 32,601,836,671
1. Local Currency 40,084,453,099 29,851,940,967
1.1 Institutions 751,620,160 627,280,200
1.2 Individuals 39,332,832,939 29,224,660,767
1.3 Others - -
2. Foreign Currency 2,630,602,968 2,749,895,704
2.1 Institutions 1,065,274,198 1,260,754,704
2.2 Individuals 1,565,328,770 1,489,141,000
2.3 Others - -
B. Fixed Deposits 15,871,934,806 11,854,875,045
1. Local Currency 14,034,681,996 10,893,035,125
1.1 Institutions 7,480,487,600 3,952,195,520
1.2 Individuals 6,554,194,396 6,940,839,605
1.3 Others - -
2. Foreign Currency 1,837,252,810 961,839,920
2.1 Institutions 1,713,872,990 900,296,440
2.2 Individuals 123,379,820 61,543,480
2.3 Others - -
C. Call Deposits 30,941,069,165 19,684,471,587
1. Local Currency 21,301,102,058 14,252,743,798
1.1 Ka Class Licensed Institutions - -
1.2 Other Licensed Financial Institutions 271,542,580 305,371,640
1.3 Other Organized Institutions 18,970,895,778 12,117,082,268
1.4 Individuals 2,058,663,700 1,830,289,890
1.5 Others - -
2. Foreign Currency 9,639,967,107 5,431,727,789
2.1 Ka Class Licensed Institutions - -
2.2 Other Licensed Financial Institutions - -
2.3 Other Organized Institutions 9,624,817,437 5,414,672,239
2.4 Individuals 15,149,670 17,055,550
2.5 Others - -
D. Certificate of Deposit - -
1. Organized Institutions - -
2. Individuals - -
3. Others - -
Total (A+B+C+D) 89,528,060,038 64,141,183,303
Total Deposits (1+2) 104,237,910,083 75,388,790,862
102 Nabil Bank Limited

Bills Payable Schedule 6

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Local Currency 46,868,336 71,373,825
2. Foreign Currency 196,565,128 142,205,418
Total 243,433,464 213,579,243

Other Liabilities Schedule 7

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Gratuity Fund 63,141,191 69,310,823
2. Employees Provident Fund - -
3. Employees Welfare/ Leave Fund 123,091,223 101,569,076
4. Provision for Staff Bonus 298,132,732 330,252,563
5. Interest Payable on Deposits 25,202 1,378
6. Interest Payable on Borrowings 171,531 90,560
7. Unearned Discount and Commission 55,549,016 53,801,855
8. Sundry Creditors 796,513,185 1,255,633,738
9. Branch Reconciliation Account - -
10. Provision for Audit Expense 975,000 1,100,000
11. Deferred Tax Liabilities - -
12. Dividend Payable 110,141,802 534,861,266
13. Others 19,800,567 10,831,524
Total 1,467,541,449 2,357,452,783

Cash Balance Schedule 8

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Local Currency (Including Coins) 1,714,231,392 1,433,071,574
2. Foreign Currency 105,970,054 35,082,803
Total 1,820,201,446 1,468,154,377
 Annual Report 2014/15 103

Balance With Nepal Rastra Bank Schedule 9

As at 16 July 2015

(in NPR)

Particulars Local Foreign Currency

Currency INR Convertible FCY Total This Year Previous Year
1. Nepal Rastra Bank 12,875,332,573 - 49,271,684 49,271,684 12,924,604,257 7,068,078,842
a. Current Account 12,875,332,573 - 49,271,684 49,271,684 12,924,604,257 7,068,078,842
b. Other Account - - - - - -

Note: Balance as per the confirmation statements is Rs.13,022,127,205.64. Reconcilation is presented in Schedule 33 Notes to Accounts.

Balance with Banks / Financial Institutions Schedule 10

As at 16 July 2015

(in NPR)

Particulars Local Foreign Currency

Currency INR Convertible FCY Total This Year Previous Year
1. Local Licensed Institutions 149,528,697 - - - 149,528,697 254,279,705
a. Current Account 149,528,697 - - - 149,528,697 254,279,705
b. Other Account - - - - - -
2. Foreign Banks - 539,929,808 569,475,826 1,109,405,634 1,109,405,634 1,202,969,856
a. Current Account - 539,929,808 569,475,826 1,109,405,634 1,109,405,634 1,202,969,856
b. Other Account - - - - - -
Total 149,528,697 539,929,808 569,475,826 1,109,405,634 1,258,934,331 1,457,249,561

Note: Balance as per the confirmation statements is Rs.1,821,745,811.52. Reconcilation is presented in Schedule 33 Notes to Accounts.

Money at Call and Short Notice Schedule 11

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Local Currency 160,000,000 -
2. Foreign Currency 163,541,000 737,854,000
Total 323,541,000 737,854,000
104 Nabil Bank Limited

Investments Schedule 12

As at 16 July 2015

(in NPR)

Particulars Purpose
Trading Others This Year Previous Year
1. Nepal Government Treasury Bills - 7,992,935,745 7,992,935,745 5,706,470,899
2. Nepal Government Saving Bonds - - - -
3. Nepal Government Other Securities - 2,183,994,157 2,183,994,157 2,583,715,343
4. Nepal Rastra Bank Bonds (Term Deposits) - 4,750,000,000 4,750,000,000 -
5. Foreign Bonds - 253,902,471 253,902,471 240,311,307
6. Local Licensed Institutions - - - 13,125,720
7. Foreign Banks - 15,383,504,757 15,383,504,757 9,380,662,377
8. Organized Institutions Shares - 265,032,600 265,032,600 248,034,800
9. Organized Institutions Bonds and Debentures - - - -
10. Other Investments - 150,105,075 150,105,075 107,124,214
Total Investment - 30,979,474,805 30,979,474,805 18,279,444,660
Provision - 6,987,391 6,987,391 2,691,919
Net Investment - 30,972,487,414 30,972,487,414 18,276,752,741
 Annual Report 2014/15 105

Investment in Shares, Debentures and Bonds Schedule 12 (A)

As at 16 July 2015

(in NPR)

Particulars Cost Price Market Price Provision This Year Previous Year
1. Investment in Shares 265,032,600 2,458,845,244 6,987,391 258,045,209 245,342,881
1.1 Rural Microfinance Development Center Limited 50,720,000 365,437,600 - 50,720,000 50,720,000
[557,920 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 50,720)]
1.2 Nirdhan Utthan Bank Limited 16,711,200 465,524,280 - 16,711,200 16,711,200
[332,280 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 165,168)]
1.3 Chhimek Laghu Bitta Bikash Bank Limited 24,377,900 475,257,090 - 24,377,900 7,380,100
[339,955 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 266,154)]
1.4 Deprosc MicroFinance Development Bank Limited 9,726,700 297,640,800 - 9,726,700 9,726,700
[222,120 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 103,290)]
1.5 Sanakisan Bikash Bank Limited 6,070,800 107,654,730 - 6,070,800 6,070,800
[69,815 ordinary shares of Rs. 100 paid up
(Including Bonus shares 9,107)]
1.6 Swabalamban Bikash Bank Limited 12,490,500 461,900,260 - 12,490,500 12,490,500
[264,245 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 139,340)]
1.7 Nepal Grameen Bikas Bank Limited 8,000,000 Not Listed 6,987,391 1,012,609 5,308,081
(80,000 ordinary shares of Rs. 100 paid up)
1.8 NADEP Laghubitta Bittiya Sanstha Ltd. 40,000,000 Not Listed - 40,000,000 40,000,000
(400,000 ordinary shares of Rs. 100 each)
1.9 Mahila Sahayatra MicroFinance Bittiya Sanstha Ltd. 4,000,000 Not Listed - 4,000,000 4,000,000
(40,000 ordinary shares of Rs. 100 paid up)
1.10 Jeevan Laghu Bittiya Bikas Bank Ltd. 10,000,000 Not Listed - 10,000,000 10,000,000
(100,000 ordinary shares of Rs. 100 paid up)
1.11 Karja Suchana Kendra Limited 1,235,500 Not Listed - 1,235,500 1,235,500
[36,599 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 24,244)]
1.12 National Banking Training Institute 1,200,000 Not Listed - 1,200,000 1,200,000
(12,000 ordinary shares of Rs. 100 paid up)
1.13 Nepal Clearing House Limited 2,500,000 Not Listed - 2,500,000 2,500,000
(25,000 ordinary shares of Rs. 100 paid up)
1.14 Nabil Investment Banking Limited 78,000,000 Not Listed - 78,000,000 78,000,000
(780,000 ordinary shares of Rs. 100 each)
1.15 Visa Inc. - 176,925,736 - - -
(6,166 units of Class C Common Stock)
1.16 MasterCard Incorporated - 108,504,747 - - -
(11,140 units Class B Common Stock - CB1)

Continued...
106 Nabil Bank Limited

Investment in Shares, Debentures and Bonds Schedule 12 (A)

As at 16 July 2015

(in NPR)

Particulars Cost Price Market Price Provision This Year Previous Year
2. Investment in Debentures and Bonds 253,902,471 261,748,750 - 253,902,471 240,311,307
2.1 ICICI Bank Bonds 253,902,471 261,748,750 - 253,902,471 240,311,307
(Bonds of face value USD 2,500,000
at coupon rate 6.375% maturing
on 30 April 2022)
3. Other Investments 150,105,075 185,227,421 - 150,105,075 107,124,214
3.1 Mutual Fund - Nabil Balance Fund 1 105,000,000 141,750,000 - 105,000,000 105,000,000
(10,500,000 units of Rs. 10 each)
3.2 Mutual Fund - NMV Sulav Investment Fund 1 13,049,980 13,049,980 - 13,049,980 -
(1,304,998 units of Rs. 10 each)
3.3 Mutual Fund - NIBL Samridhi Fund 1 17,389,120 17,563,011 - 17,389,120 -
(1,738,912 units of Rs. 10 each)
3.4 Mutual Fund - Laxmi Value Fund - Scheme 1 12,864,430 12,864,430 - 12,864,430 -
(1,286,443 units of Rs. 10 each)
3.5 SWIFT Investment (denominated in ) 1,801,545 Not Listed - 1,801,545 2,124,214
Total Investment 669,040,146 2,905,821,415 6,987,391 662,052,755 592,778,402
4. Provision for Loss
3.1 Up to Previous Year 2,691,919 - - 16,291,166
3.2 Addition/(Writeback) This Year 4,295,472 - - (13,599,247)
Total Provision 6,987,391 - - 2,691,919

Note: 1. S.No.1.1 to 1.6 Market Value is based on the closing market price of Ordinary Shares recroded at Nepal Stock Exchange on 16.07.2015.
The banks investment is in Promoter Shares that are seldom traded.
2. S.No.1.15 & 1.16 Market Value is based on the closing market price recorded at Nasdaq on 16.07.2015.
3. S.No.3.1 to 3.4 Market Value is based on the closing market price recroded at Nepal Stock Exchange on 16.07.2015.
4. Nepal Grameen Bikas Bank Ltd. (formerly Sudur Paschimanchal Grameen Bikash Bank Limited, Madhya Paschimanchal Grameen Bikash Bank Limited,
Purwanchal Grameen Bikas Bank Ltd.) and Nepal Clearing House Limited have not declared and distributed cash dividend in the last three years.


 Annual Report 2014/15 107

Held for Trading Investments Schedule 12.1

As at 16 July 2015

(in NPR)

Particulars Market Price As At Profit / Loss Remarks

Cost Price ( RS.) 16-Jul-2015 16-Jul-2014 This Year (RS.) Previous Year (RS.)
1. Nepal Government Treasury Bills - - - - -
2. Nepal Government Saving Bonds - - - - -
3. Nepal Government Other Securities - - - - -
4. Nepal Rastra Bank Bonds - - - - -
5. Foreign Bonds - - - - -
6. Shares of Local Licensed Institutions - - -
7. Debentures and Bonds of Local
Licensed Institutions - - - - -
8. Shares, Debentures and Bonds of
Local Organised Institutions - - - - -
9. Placement in Foreign Banks - - - - -
10. Inter Bank Lending - - - - -
11. Other Investments - - - - -
Total Investments - - - - -

Held to Maturity Investments Schedule 12.2

As at 16 July 2015

(in NPR)

Particulars Impaired Amount till Profit / Loss Remarks

Cost Price (RS.) 16-Jul-2015 16-Jul-2014 This Year (RS.) Previous Year (RS.)
1. Nepal Government Treasury Bills 7,992,935,745
2. Nepal Government Saving Bonds -
3. Nepal Government Other Securities 2,183,994,157
4. Nepal Rastra Bank Bonds (Term Deposit) 4,750,000,000
5. Foreign Bonds (denominated in $) 253,902,471 - - - 11,772,918
6. Shares of Local Licensed Institutions -
7. Debentures and Bonds of Local
Licensed Institutions -
8. Shares, Debentures and Bonds of
Local Organised Institutions -
9. Placement in Foreign Banks 15,383,504,757 - -
10. Other Investments -
Total Investments 30,564,337,130 - - - 11,772,918
108 Nabil Bank Limited

Available for Sale Investments Schedule 12.3

As at 16 July 2015

(in NPR)

Particulars market price as at This Year Investment Last Year Remarks

Cost Price 16-Jul-2014 (A) 16-Jul-2015 (B) Adjustment Reserve (B -A) Profit/ Loss
1. Nepal Government Treasury Bills -
2. Nepal Government Saving Bonds -
3. Nepal Government Other Securities -
4. Nepal Rastra Bank Bonds -
5. Foreign Bonds -
6. Shares of Local Licensed Institutions 182,097,100 1,786,891,438 2,173,414,760 56,422,194 -
7. Debentures and Bonds of Local
Licensed Institutions -
8. Shares, Debentures and Bonds of
Local Organised Institutions 82,935,500 - - 78,000,000 -
9. Placement in Foreign Banks -
10. Other Investments 150,105,075 379,590,037 185,227,421 4,767,616 -
Total Investments 415,137,675 2,166,481,475 2,358,642,181 139,189,810 -

Note: Market Price represents only listed securities valued at their last traded price or reference price.
Calculation of Investment Adjustment Reserve is presented in Schedule 33, Notes to Accounts
 Schedule 13
Classification of Loans, Advances and Bills Purchased & Provisioning
As at 16 July 2015

(in NPR)

Particulars Loans & Advances Bills Purchased & Discounted This Year Previous Year
Domestic Foreign Total Domestic Foreign Total
Deprived Sector Other
Insured Uninsured
1. Performing Loans - 2,841,084,610 58,859,537,647 4,041,773,285 65,742,395,542 179,142,956 19,313,069 198,456,025 65,940,851,567 54,947,001,177
1.1 Pass - 2,841,084,610 56,392,176,368 4,041,773,285 63,275,034,263 179,142,956 19,313,069 198,456,025 63,473,490,288 54,947,001,177
1.2 Watch List - - 2,467,361,279 - 2,467,361,279 - - - 2,467,361,279 -
2. Non-Performing Loans - 33,350,881 1,186,037,265 771,982 1,220,160,128 15,000 644,218 659,218 1,220,819,346 1,256,075,230
2.1 Restructured / Rescheduled - - - - - - - - - -
2.2 Sub-Standard - - 58,293,461 - 58,293,461 - - - 58,293,461 97,637,368
2.3 Doubtful - - 404,682,173 - 404,682,173 - - - 404,682,173 443,961,526
2.4 Loss - 33,350,881 723,061,631 771,982 757,184,494 15,000 644,218 659,218 757,843,712 714,476,336
A. Total Loan (1+2) - 2,874,435,491 60,045,574,912 4,042,545,267 66,962,555,670 179,157,956 19,957,287 199,115,243 67,161,670,913 56,203,076,407
3. Loan Loss Provision
3.1 Pass - 28,410,846 564,679,536 40,417,729 633,508,111 1,791,430 193,131 1,984,561 635,492,672 550,447,850
3.2 Watch List - - 49,347,226 - 49,347,226 - - - 49,347,226 -
3.3 Restructured / Rescheduled - - - - - - - - - -
3.4 Sub-Standard - - 14,721,052 - 14,721,052 - - - 14,721,052 24,508,896
3.5 Doubtful - - 202,341,087 - 202,341,087 - - - 202,341,087 222,232,852
3.6 Loss - 33,350,881 723,061,631 771,982 757,184,494 15,000 644,218 659,218 757,843,712 714,238,615
B. Total Provisioning - 61,761,727 1,554,150,532 41,189,711 1,657,101,970 1,806,430 837,349 2,643,779 1,659,745,749 1,511,428,213
4. Provisioning up to previous year
4.1 Pass - 21,930,604 503,392,334 21,024,110 546,347,048 3,843,498 257,304 4,100,802 550,447,850 467,325,467
4.2 Restructured / Rescheduled - - - - - - - - - -
4.3 Sub-Standard - - 24,508,896 - 24,508,896 - - - 24,508,896 51,289,328
4.4 Doubtful - 1,703,571 220,529,281 - 222,232,852 - - - 222,232,852 52,320,157
4.5 Loss - 29,951,600 683,463,548 404,176 713,819,324 58,541 360,750 419,291 714,238,615 704,760,354
C. Total Previous Years Provision - 53,585,775 1,431,894,059 21,428,286 1,506,908,120 3,902,039 618,054 4,520,093 1,511,428,213 1,275,695,306
D. Written Back This Year - 2,095,609 2,095,609 2,095,609 1,067,982
E. Addition This Year 8,175,952 122,256,473 19,761,425 150,193,850 219,295 219,295 150,413,145 236,800,889
F. Changes This Year - 8,175,952 122,256,473 19,761,425 150,193,850 (2,095,609) 219,295 (1,876,314) 148,317,536 235,732,907
Net Loan (A-B) - 2,812,673,764 58,491,424,380 4,001,355,556 65,305,453,700 177,351,526 19,119,938 196,471,464 65,501,925,164 54,691,648,194
Annual Report 2014/15 109
110 Nabil Bank Limited

Securitywise Loans, Advances and Bills Purchased Schedule 13 (A)

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

A. Secured 67,018,834,706 56,049,776,742
1. Movable/Immovable Assets 60,312,865,287 51,567,286,653
2. Guarantee of Local Licensed Institutions - -
3. Government Guarantee - -
4. Internationally Rated Bank Guarantee - 79,047,800
5. Export Documents 205,225,661 394,744,486
6. Fixed Deposit Receipts 1,005,228,889 421,315,406
a. Own 632,976,257 421,315,406
b. Other Licensed Institutions 372,252,632 -
7. Government Securities 6,925,597 9,901,573
8. Counter Guarantee - -
9. Personal Guarantee 4,527,293 5,287,379
10. Other Securities 5,484,061,979 3,572,193,445
B. Unsecured 142,836,207 153,299,665
Total 67,161,670,913 56,203,076,407

Note: Credit Card loans is presented under Unsecured Loans.

 Schedule 14
Fixed Assets
As at 16 July 2015

(in NPR)

Particulars ASSETS This Previous

Building Vehicles Machinery Office Equipment Software Others Year Year
1. Cost Price
a. Previous Year Balance 337,533,344 223,725,803 - 614,286,438 74,029,029 - 1,249,574,614 1,140,545,259
b. Addition during the Year - 23,634,000 45,452,612 9,660,586 - 78,747,198 146,726,490
c. Revaluation/Write Back This Year - - -
d. Sold during the Year - (19,142,707) (2,075,278) - - (21,217,985) (31,939,709)
e. Write off during the Year - - (3,758,658) - - (3,758,658) (5,757,426)
Total Cost (a+b+c+d+e) 337,533,344 228,217,096 - 653,905,114 83,689,615 - 1,303,345,169 1,249,574,614
2. Depreciation
a. Up to Previous Year 88,435,129 114,523,030 - 422,034,757 48,896,718 - 673,889,634 598,389,871
b. For This Year 12,454,911 22,851,358 50,884,196 14,255,311 - 100,445,776 102,281,092
c. Revaluation/Write Back This Year - - -
d. Depreciation on Sold Assets - (12,928,742) (1,997,041) - - (14,925,783) (21,097,540)
e. Depreciation on Writen Off Assets - - (3,419,139) - - (3,419,139) (5,683,789)
Total Depreciation 100,890,040 124,445,646 - 467,502,773 63,152,029 - 755,990,488 673,889,634
3. Book Value (WDV*) (1-2) 236,643,304 103,771,450 - 186,402,341 20,537,586 - 547,354,681 575,684,980
4. Land - - - - - 241,517,149 241,517,149 241,517,149
5. Pending Capitalization - - - - - - - -
6. Leasehold Assets - - - - - 23,568,652 23,568,652 25,935,615
Total (3+4+5+6) 236,643,304 103,771,450 - 186,402,341 20,537,586 265,085,801 812,440,482 843,137,744

*Written down value

Annual Report 2014/15 111
112 Nabil Bank Limited

Non Banking Assets Schedule 15

As at 16 July 2015

(in NPR)

Name & Address of Date of assuming Total Non Loss Provision Net Non
Borrower or Party Non Banking Assets Banking Assets % Banking Assets Previous Year
None
Grand Total

Other Assets Schedule 16

As at 16 July 2015

(in NPR)

Particulars This Year Previous Year

1. Stock of Stationery 9,440,905 6,649,319
2. Income receivable on Investment 76,384,776 100,710,966
3. Accrued Interest on Loan 581,099,487 - 513,111,074
Less: Interest Suspense Account (581,099,487) (513,111,074)
4. Commission Receivable - -
5. Sundry Debtors 688,720,076 1,225,739,457
6. Staff Loans & Advances 1,288,882,222 1,132,250,869
7. Pre - Payments 35,027,454 30,578,263
8. Cash in Transit - -
9. Other Transit items (including Cheques) - -
10. Drafts paid without notice - -
11. Expenses not written off - -
12. Branch Reconciliation Account - -
13. Deferred Tax Assets 52,543,819 43,179,280
14. Others 220,568,065 192,562,307
Total 2,371,567,317 2,731,670,461

Other Assets (Additional Statement) Schedule 16 (A)

As at 16 July 2015

(in NPR)

Particulars This Year Previous Year

Up to 1 Year 1 to 3 Year Above 3 Years total
1. Accrued Interest on Loan 262,374,940 83,443,142 235,281,405 581,099,487 513,111,074
2. Drafts Paid without notice - -
3. Branch Reconciliation Account
4. Domestic and Foreign Agency Balance - -
 Annual Report 2014/15 113

Contingent Liabilities Schedule 17

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Claims on Institution but not accepted by the Institution 51,986,500 58,273,064
2. Letter of Credit (Full Amount) 6,886,214,956 9,772,537,040
a. Maturity up to 6 Months 4,473,782,726 6,192,423,719
b. Maturity more than 6 Months 2,412,432,230 3,580,113,321
3. Rediscounted Bills - -
4. Guarantees/Bonds 5,271,969,914 4,320,546,878
a. Bid Bonds 145,234,247 208,098,250
b. Performance Bonds 5,126,735,667 4,112,448,628
c. Other Guarantees/Bonds - -
5. Unpaid portion of Partly paid shares - -
6. Forward Exchange Contract Liabilities 11,160,238,680 5,084,448,020
7. Bills under Collection 306,078,189 332,824,629
8. Acceptance & Endorsement 1,530,565,246 1,472,160,990
9. Underwriting Commitment - -
10. Irrevocable Loan Commitment 9,809,832,031 4,885,238,406
11. Guarantee issued against Counter Guarantee of Internationally Rated Banks 3,144,130,727 4,887,658,757
12. Advance Payment Guarantee 2,289,308,859 1,725,150,072
13. Financial Guarantee - -
14. Contingent Liabilities on Income Tax 30,915,378 30,908,989
Total 40,481,240,480 32,569,746,845
114 Nabil Bank Limited

Interest Income Schedule 18

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

A. Loans, Advances and Overdraft 5,373,719,674 5,182,022,393
1. Loans & Advances 3,786,360,809 3,528,028,455
2. Overdraft 1,587,358,865 1,653,993,938
B. Investment 195,238,807 269,463,435
1. Government Securities 179,454,094 253,848,422
a. Treasury Bills 29,086,398 48,743,108
b. Development Bonds 150,367,696 205,105,314
c. National Saving Certificates - -
2. Foreign Securities 15,784,713 15,615,013
a. ICICI Bank Bond 15,784,713 15,615,013
b. .. - -
3. Nepal Rastra Bank Bonds - -
4. Debenture & Bonds - -
a. Bank/Financial Institutions - -
b. Other Organizations - -
5. Interbank Investment - -
a. Bank/Financial Institutions - -
b. Other Organizations - -
C. Agency Balances 1,782,601 1,232,284
1. Local Banks/Financial Institutions - -
2. Foreign Banks 1,782,601 1,232,284
D. Money at Call and Short Notice 5,621,699 242,536
1. Local Banks/Financial Institutions 5,620,559 242,511
2. Foreign Banks 1,140 25
E. Others 185,982,345 183,197,605
1. Certificate of Deposits (NRB Term Deposit) 8,283,025 -
2. Inter-Bank/Financial Institutions Loan - -
3. Placements in Foreign Banks 131,839,783 143,304,938
4. Staff Loans 45,859,537 39,892,667
Total 5,762,345,126 5,636,158,253
 Annual Report 2014/15 115

Interest Expense Schedule 19

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

A. Deposits 2,210,563,865 1,914,170,809
1. Fixed Deposits 670,970,171 586,503,957
1.1 Local Currency 662,625,938 574,177,566
1.2 Foreign Currency 8,344,233 12,326,391
2. Savings Deposits 1,090,910,654 783,760,778
2.1 Local Currency 1,079,149,173 773,235,065
2.2 Foreign Currency 11,761,481 10,525,713
3. Call Deposits 448,683,040 543,906,074
3.1 Local Currency 411,479,496 514,576,071
3.2 Foreign Currency 37,203,544 29,330,003
4. Certificate of Deposits - -
B. Borrowings 25,500,028 25,574,451
1. Debentures & Bonds 25,500,000 25,569,863
2. Loan from Nepal Rastra Bank - -
3. Inter Bank /Financial Institutions Borrowing 28 4,588
4. Other Organized Institutions - -
5. Others - -
C. Others - -
Total 2,236,063,893 1,939,745,260

Commission & Discount Schedule 20

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

A. Bills Purchase & Discount 1,570,388 1,734,697
1. Local 629,920 518,947
2. Foreign 940,468 1,215,750
B. Commission 427,052,977 409,858,918
1. Letters of Credit 95,666,333 94,787,377
2. Guarantees 79,931,821 73,143,348
3. Collection Fees 1,508,115 1,863,087
4. Remittance Fees 90,215,975 89,938,086
5. Cards and E-Banking 149,368,704 136,245,235
6. Share Underwriting/Issue - -
7. Government Transactions - -
8. Agency Commission 10,362,029 13,881,785
9. Exchange Fee - -
C. Others 51,656,158 54,721,175
Total 480,279,523 466,314,790
116 Nabil Bank Limited

Other Income Schedule 21

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

1. Safe Deposit Lockers Rental 8,939,851 7,931,025
2. Issue & Renewals of Credit Cards 3,503,228 6,344,133
3. Issue & Renewals of Debit Cards 16,231,902 29,595,871
4. Telex / T. T. / Communication Fees 24,113,797 19,428,742
5. Service Charges 164,046,175 166,764,779
6. Renewal Fees - -
7. Others 23,625,438 35,262,056
Total 240,460,391 265,326,606

Exchange Gain/ (Loss) Schedule 22

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

a. Revaluation 181,760,375 108,374,723
b. Trading (except Exchange Fees) 330,716,909 421,620,861
Total Gain/(Loss) 512,477,284 529,995,584

Personnel Expense Schedule 23

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

1. Salary 222,343,045 208,442,107
2. Allowances 269,669,128 238,086,375
3. Contribution to Provident Fund 21,329,493 19,456,032
4. Training Expenses 11,428,342 7,326,161
5. Uniform 10,080,000 101,229
6. Medical 1,211,234 832,839
7. Insurance 8,336,697 8,597,247
8. Pension and Gratuity Contribution 98,666,539 67,638,185
9. Others 100,419,848 77,093,100
a. Leave Expenses 63,448,093 40,485,806
b. Dashain Expenses 33,704,840 33,189,671
c. Other Expenses 3,266,915 3,417,624
Total 743,484,326 627,573,275
 Annual Report 2014/15 117

Office Operating Expense Schedule 24

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

1. House Rent 86,030,333 71,637,604
2. Electricity & Water 17,425,144 17,590,703
3. Repair & Maintenance 5,094,037 6,282,675
a. Building 1,870,958 3,271,925
b. Vehicles 3,223,079 3,010,750
c. Others - -
4. Insurance 11,516,367 14,473,024
5. Postage, Telex, Telephone & Fax 31,233,297 31,088,286
6. Office Equipment and Furniture Repair 15,278,830 13,017,892
7. Travelling Allowances & Expenses 6,291,535 6,070,803
8. Printing & Stationery 47,329,545 23,134,574
9. Books & Periodicals 819,839 850,651
10. Advertisements 12,895,698 15,395,134
11. Legal Expenses 1,299,095 1,151,283
12. Donations 20,073,715 57,000
13. Expenses relating to Board of Directors 4,184,246 2,985,087
a. Meeting Fees 1,877,000 1,192,000
b. Other Expenses 2,307,246 1,793,087
14. Annual General Meeting Expenses 1,784,450 1,169,487
15. Expenses relating to Audit 1,175,000 1,100,000
a. Audit Fees 1,175,000 1,100,000
b. Other Expenses - -
16. Commission on Remittances - -
17. Depreciation on Fixed Assets 113,316,856 117,831,211
18. Amortization of Pre-Operating Expenses - -
19. Share Issue expenses - -
20. Technical/Consultancy Services Fee 37,809,562 32,402,648
21. Entertainment - -
22. Written Off Expenses - -
23. Security Expenses 49,759,062 49,676,672
24. Deposit & Credit Guarantee Premium 21,070,621 17,052,412
25. Commission & Discount - -
26. Others 128,631,110 120,190,967
a. Fuel Expenses 32,248,070 35,718,247
b. Tea/ Coffee/ Snacks 6,507,563 5,812,658
c. Contract Service Expense 40,857,413 38,106,496
d. Small Purchase 2,153,806 1,109,229
e. Customer Relations and Sponsorship 2,743,621 3,819,201
f. Membership Fees 824,100 856,400
g. Janitorial 10,524,554 10,058,536
h. Others 32,771,983 24,710,200
Total 613,018,342 543,158,113
118 Nabil Bank Limited

Provision for Possible Losses Schedule 25

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

1. Loans and Advances 150,413,145 236,800,889
2. Investments 4,295,472 -
3. Non-Banking Assets - -
4. Other Assets 12,362,209 1,154,324
Total 167,070,826 237,955,213

Non-Operating Income/(Loss) Schedule 26

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

1. Profit/(Loss) on Sale of Investments - -
2. Profit/(Loss) on Sale of Fixed Assets 580,568 2,983,616
3. Dividend 43,783,613 31,797,541
4. Subsidies Received from Nepal Rastra Bank - -
a. Compensation Agreement for Losses of Specified Branches - -
b. Interest Indemnity - -
c. Exchange Counter - -
5. Others - -
Total Non-Operating Income/(Loss) 44,364,181 34,781,157

Provision for Possible Losses Write Back Schedule 27

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

1. Loans and Advances 2,095,609 1,067,982
2. Non-Banking Assets - -
3. Investments - 13,599,247
4. Other Assets - -
Total 2,095,609 14,667,229
 Annual Report 2014/15 119

Income/(Expense) from Extra-Ordinary Activities Schedule 28

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)
(in NPR)

Particulars This Year Previous Year

1. Recovery of Write off Loan 7,577,824 36,821,504
2. Voluntary Retirement Scheme Expenses - -
3. Bad Loan Written Off (10,145,112) (2,221,325)
4. Other Income/(Expense) (357,387) (597,974)
Total (2,924,675) 34,002,205

Details of Loan Written-Off Schedule 28 (A)

For the period 17 July 2014 to 16 July 2015 (1 Shrawan 2071 to 31 Ashadh 2072)

(in NPR)

Types of Loan Written off Types of Basis of loan Efforts made for Remarks
amount (RS.) Security of security approved by recovery of Loans
1. Working Capital Loan
2. Project Loan
Regular follow ups,
3. Fixed Capital Loan notice publication and
4. Personal Loan 9,490,450 blacklisting with Credit
5. Credit Card Loan 654,661 Information Center Ltd.

6. Others
Total Loan 10,145,112
Statement of Loans and Advances extended to Directors/ Chief Executive/
Schedule 29
Promoters/ Employees and Shareholders with more than 1% Shares
As at 16 July 2015
(in NPR)
120 Nabil Bank Limited

Name of Promoter/Director/ Outstanding up to Last Year Recovered in Current Year Additional Lending Outstanding as of 16 July 2015
Chief Executive officer Principal Interest Principal Interest in this year Principal Interest
A. Directors - - - - - - -
1. . - - - - - - -
2. ..... - - - - - - -
3. . - - - - - - -
B. Chief Executive Officer - - - - - - -
1. . - - - - - - -
2. ..... - - - - - - -
3. . - - - - - - -
C. Promoters - - - - - - -
1. . - - - - - - -
2. ..... - - - - - - -
3. . - - - - - - -
D. Employees (inclusive of Family Members) 20,926,388 19,062 1,397,407 6,325 349,454 18,896,528 52,401
1. Ganja Bahadur Dahal / Kalyani Dahal 645,650 - - 349,454 995,103 -
2. Gita Adhikari & Dilli Ram Adhikari 900,094 6,325 53,170 6,325 - 846,924 -
3. Subash Channdra/ Chandra Prasad and
Nanda Kumar Bhattarai 18,037,922 - 1,187,561 - - 16,850,360 52,401
4. Ashok Kumar Thapa Chhetri 360,817 - 156,675 - - 204,142 -
E. Shareholders 39,934,514 - 14,588,139 - - 25,346,375 -
1. Mr. Arjun Bandhu Regmi 39,934,514 - 14,588,139 - - 25,346,375 -
2. ..... - - - - - - -
3. . - - - - - - -
Total 60,860,902 19,062 15,985,546 6,325 349,454 44,242,903 52,401

Note: 1. Presented in S.No. D above are loans extended to family members of employees. Loan given to employees against fixed deposits / government securities, credit facilities under Employees
By-Laws, and Education Loan for abroad studies (approval obtained from NRB) are not presented under Loans extended to Employees (inclusive of Family Members).
2. Mr. Arjun Bandhu Regmis share holding in the Bank stood at 1.16% at 16 July 2015. Above loan is extended to M/S Synchro Media Pvt. Ltd. where he is a majority shareholder.
 Annual Report 2014/15 121

Table of Capital Fund Schedule 30 (A)

(in NPR)

Particulars As at 16 July 2015 As at 16 July 2014

1.1 Risk Weighted Exposures
a. Credit Risk 78,774,890,311 66,294,544,686
b. Operation Risk 6,896,370,460 5,902,879,583
c. Market Risk 374,092,980 208,692,670
Total Risk Weighted Exposures Before Adjustment 86,045,353,751 72,406,116,939
Adjustment under Pillar - II
ADD: 2% of the total RWE added under Supervisory Review as per 6.4.a.9
for Overall Risk Management of Capital Adequacy Framework 2007,
NRB Unified Directive 1,720,907,075 1,448,122,339
ADD:.. % of the total RWE due to non compliance to Disclosure Requirement
Add: % of the total deposit due to insufficient Liquid Assets
Total Risk Weighted Exposures 87,766,260,826 73,854,239,278
1.2 Capital As at 16 July 2015 As at 16 July 2014
Core Capital (Tier 1) 8,937,834,021 7,149,441,284
a. Paid up Equity Share Capital 3,657,654,000 3,047,168,400
b. Irredeemable Non-cumulative preference shares
c. Share Premium 74,000 74,000
d. Proposed Bonus Equity Shares 1,097,296,200 609,433,680
e. Statutory General Reserves 3,503,500,000 3,084,500,000
f. Retained Earnings 674,731,821 463,687,204
g. Un-audited current year cumulative profit
h. Capital Redemption Reserves
i. Capital Adjustment Reserves
j. Dividend Equalization Reserves - -
k. Debenture Redemption Reserves 120,000,000 60,000,000
L. Other Free Reserves 55,121,819 45,830,840
m. Less: Goodwill
n. Less: Fictitious Assets
o. Less: Deferred Tax Assets (52,543,819) (43,252,840)
p. Less: Investment in equity of licensed Financial Institutions
q. Less: Investment in equity of institutions with financial interests (78,000,000) (78,000,000)
r. Less: Investment in equity of institutions in excess of limits
s. Less: Investments arising out of underwriting commitments
t. Less: Reciprocal crossholdings
u. Less: Other Deductions
Adjustment Under Pillar - II
Less: Shortfall In Provision
Less: Loans & Facilities extended to Related Parties & Restricted Lending (40,000,000) (40,000,000)
Supplementary Capital (Tier 2) 1,216,622,163 1,110,210,020
a. Cumulative and/or Redeemable Preference Share
b. Subordinated Term Debt (net of redemption reserve) 180,000,000 240,000,000
c. Hybrid Capital Instruments
d. General loan loss provision 659,408,516 539,844,088
e. Exchange Equalization Reserves 222,900,000 177,400,000
f. Investments Adjustment Reserves 139,189,810 138,392,362
g. Assets Revaluation Reserves
h. Other Reserves 15,123,837 14,573,570
Total Capital Fund (Tier 1 and Tier 2) 10,154,456,184 8,259,651,304
1.3 Capital Adequacy Ratio As at 16 July 2015 As at 16 July 2014
Tier 1 Capital to Total Risk Weighted Exposures 10.18% 9.68%
Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures 11.57% 11.18%
 Schedule 30 (B)
Credit Risk
As at 16 July 2015

(in NPR)

As at 16 July 2015 As at 16 July 2014

122 Nabil Bank Limited

Assets Book Value Specific Eligible Net Value Risk Risk Weighted Net Value Risk Weighted
Provision CRM Weight Exposure Exposure
A. Balance Sheet Exposures a b c d=a-b-c e f=d*e
Cash Balance 1,820,201,446 - - 1,820,201,446 0% - 1,468,154,377 -
Balance With Nepal Rastra Bank 12,924,604,257 - - 12,924,604,257 0% - 7,068,078,842 -
Gold - - - - 0% - - -
Investment in Nepalese Government Securities 8,976,929,902 - - 8,976,929,902 0% - 8,290,186,242 -
All Claims on Government of Nepal 279,990,121 - - 279,990,121 0% - 279,990,121 -
Investment in Nepal Rastra Bank Securities 5,950,076,678 - - 5,950,076,678 0% - - -
All claims on Nepal Rastra Bank 1,076,933 - - 1,076,933 0% - 10,422,600 -
Claims on Foreign Government and Central Bank (ECA Rating: 0-1) - - - - 0% - - -
Claims on Foreign Government and Central Bank (ECA Rating: 2) - - - - 20% - - -
Claims on Foreign Government and Central Bank (ECA Rating: 3) - - - - 50% - - -
Claims on Foreign Government and Central Bank (ECA Rating: 4-6) - - - - 100% - - -
Claims on Foreign Government and Central Bank (ECA Rating: 7) - - - - 150% - - -
Claims On BIS, IMF, ECB, EC and on Multilateral Development Banks
(MDBs) recognized by the Framework - - - - 0% - - -
Claims 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 2,647,289,221 - - 2,647,289,221 20% 529,457,844 1,665,325,010 333,065,002
Claims on domestic banks that do not meet capital adequacy
requirements 71,266,260 - - 71,266,260 100% 71,266,260 195,467,256 195,467,256
Claims on foreign bank (ECA Rating 0-1) 2,118,696,895 - - 2,118,696,895 20% 423,739,379 2,585,513,399 517,102,680
Claims on foreign bank (ECA Rating 2) 1,953,648,383 - - 1,953,648,383 50% 976,824,192 421,091,767 210,545,884
Claims 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 buffer of 1% above their respective regulatory capital requirement 12,689,337,133 - - 12,689,337,133 20% 2,537,867,427 8,394,479,746 1,678,895,949
Claims on Domestic Corporates 46,537,862,808 18,741,126 36,181,055 46,482,940,626 100% 46,482,940,626 37,155,694,639 37,155,694,639

Continued...
 Continued...

Schedule 30 (B)
Credit Risk
As at 16 July 2015

(in NPR)

As at 16 July 2015 As at 16 July 2014

Assets Book Value Specific Eligible Net Value Risk Risk Weighted Net Value Risk Weighted
Provision CRM Weight Exposure Exposure
A. Balance Sheet Exposures a b c d=a-b-c e f=d*e
Claims 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) 6,314,092,784 865,063 512,173,859 5,801,053,862 75% 4,350,790,396 3,319,522,632 2,489,641,974
Regulatory Retail Portfolio Except for Granularity - - - - 100% - - -
Claims secured by residential properties 7,387,029,029 1,419,874 - 7,385,609,154 60% 4,431,365,493 6,377,485,534 3,826,491,320
Claims not fully secured by residential properties - - - - 150% - - -
Claims secured by residential properties (Overdue) 88,999,953 26,271,622 - 62,728,331 100% 62,728,331 16,926,259 16,926,259
Claims secured by Commercial real estate 676,897,820 1,500,000 - 675,397,820 100% 675,397,820 1,678,757,387 1,678,757,387
Past due claims (except for claim secured by residential properties) 1,651,718,399 950,050,414 3,210,000 698,457,985 150% 1,047,686,978 1,237,145,358 1,855,718,038
High Risk claims 1,979,639,180 1,319,841 28,637,991 1,949,681,347 150% 2,924,522,021 1,171,662,165 1,757,493,248
Investments in equity and other capital instruments of
institutions listed in the stock exchange 525,720,596 - - 525,720,596 100% 525,720,596 453,497,245 453,497,245
Investments in equity and other capital instruments of
institutions not listed in the stock exchange 68,737,045 6,987,391 - 61,749,654 150% 92,624,481 64,514,946 96,772,419
Staff loan secured by residential property 1,196,895,707 - - 1,196,895,707 60% 718,137,424 889,421,028 533,652,617
Interest Receivable/claim on government securities 8,981,497 - - 8,981,497 0% - 27,836,616 -
Cash in transit and other cash items in the process of collection - - - - 20% - - -
Other Assets 3,223,790,904 1,366,684,343 - 1,857,106,561 100% 1,857,106,561 4,608,852,745 4,608,852,745
TOTAL 119,093,482,950 2,373,839,675 580,202,905 116,139,440,370 67,708,175,828 87,380,025,915 57,408,574,661

Continued...
Annual Report 2014/15 123
 Continued...

Schedule 30 (B)
Credit Risk
124 Nabil Bank Limited

As at 16 July 2015

(in NPR)

As at 16 July 2015 As at 16 July 2014

Assets Book Value Specific Eligible Net Value Risk Risk Weighted Net Value Risk Weighted
Provision CRM Weight Exposure Exposure
B. Off Balance Sheet Exposures Gross Book a b c d=a-b-c e f=d*e
Revocable Commitments - - - - 0% - - -
Bills Under Collection 306,078,189 - - 306,078,189 0% - 332,824,629 -
Forward Exchange Contract 11,160,238,680 - - 11,160,238,680 10% 1,116,023,868 5,084,448,020 508,444,802
LC Commitments With Original Maturity Up to 6 months
domestic counterparty 4,473,782,726 - 507,438,174 3,966,344,552 20% 793,268,910 5,847,316,833 1,169,463,367
foreign counterparty (ECA Rating: 0-1) - - - - 20% - - -
foreign counterparty (ECA Rating: 2) - - - - 50% - - -
foreign counterparty (ECA Rating: 3-6) - - - - 100% - - -
foreign counterparty (ECA Rating 7 ) - - - - 150% - - -
LC Commitments With Original Maturity Over 6 months
domestic counterparty 2,412,432,230 - 306,444,336 2,105,987,895 50% 1,052,993,947 3,176,392,937 1,588,196,468
foreign counterparty (ECA Rating: 0-1 ) - - - - 20% - - -
foreign counterparty (ECA Rating: 2 ) - - - - 50% - - -
foreign couterparty (ECA Rating: 3-6 ) - - - - 100% - - -
foreign counterparty (ECA Rating: 7) - - - - 150% - - -
Bid Bond, Performance Bond and Counter guarantee
domestic counterparty 5,271,969,914 - 522,178,116 4,749,791,799 50% 2,374,895,899 3,821,437,982 1,910,718,991
foreign counterparty (ECA Rating: 0-1) 1,419,702,887 - 1,135,762,310 283,940,577 20% 56,788,115 252,610,678 50,522,136
foreign counterparty (ECA Rating: 2) 233,631,553 - 116,815,777 116,815,777 50% 58,407,888 127,687,142 63,843,571
foreign counterparty (ECA Rating: 3-6) 669,274,190 - - 669,274,190 100% 669,274,190 355,920,850 355,920,850
foreign counterparty (ECA Rating: 7) - - - - 150% - - -
Underwriting commitments - - - - 50% - - -

Continued...
 Continued...

Schedule 30 (B)
Credit Risk
As at 16 July 2015

(in NPR)

As at 16 July 2015 As at 16 July 2014

Assets Book Value Specific Eligible Net Value Risk Risk Weighted Net Value Risk Weighted
Provision CRM Weight Exposure Exposure
B. Off Balance Sheet Exposures Gross Book a b c d=a-b-c e f=d*e
Lending of Banks Securities or Posting of Securities as collateral - - - - 100% - - -
Repurchase Agreements - - - - 100% - - -
Advance Payment Guarantee 2,289,308,859 - 958,981,754 1,330,327,105 100% 1,330,327,105 652,580,657 652,580,657
Financial Guarantee - - - - 100% - - -
Acceptances and Endorsements 1,530,565,246 - - 1,530,565,246 100% 1,530,565,246 1,472,160,990 1,472,160,990
Unpaid portion of Partly paid shares and Securities - - - - 100% - - -
Irrevocable Credit commitments (short term) 9,809,832,031 - 63,427,355 9,746,404,676 20% 1,949,280,935 4,833,315,392 966,663,078
Irrevocable Credit commitments (long term) - - - 50% - -
Other Contingent Liabilities 30,915,378 - - 30,915,378 100% 30,915,378 30,908,989 30,908,989
Guarantee claimed but not accepted / honoured 51,986,500 - - 51,986,500 200% 103,973,000 58,273,064 116,546,127
TOTAL 39,659,718,384 - 3,611,047,821 36,048,670,563 11,066,714,483 26,045,878,161 8,885,970,025
Total RWE for credit Risk (A) +(B) 158,753,201,335 2,373,839,675 4,191,250,726 152,188,110,933 78,774,890,311 113,425,904,076 66,294,544,686
Adjustment Under Pillar - II
Add: 10% of the loan and facilities in
excess of Single Obligor Limit
Add: 1% of the contract(Sale) value in case
of the sale of credit with recourse
Total RWE for Credit Risk (After Banks Adjustment of Pillar - II) 158,753,201,335 2,373,839,675 4,191,250,726 152,188,110,933 78,774,890,311 113,425,904,076 66,294,544,686
Annual Report 2014/15 125
 126 Nabil Bank Limited

Credit Risk Mitigation Schedule 30 (c)

As at 16 July 2015

(in NPR)

Credit exposures Deposits Deposits Gold Govt.& Gtee of Sec/Gtee of Gtee of Gtee of Sec/Gtee of Total
with Bank with other NRB Govt. of Other domestic MDBs Foreign
banks/FI Securities Nepal Sovereigns banks Banks
(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:0-1) -
Claims on Foreign government and Central Bank (ECA: 2) -
Claims on Foreign government and Central Bank (ECA: 3) -
Claims on Foreign government and Central Bank (ECA: 4-6) -
Claims on Foreign government and Central Bank (ECA: 7) -
Claims On BIS, IMF, ECB, EC and on Multilateral Development Banks
(MDBs) recognized by the Framework -
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) -

Continued...
 Continued...

Credit Risk Mitigation Schedule 30 (c)

As at 16 July 2015
(in NPR)

Credit exposures Deposits Deposits Gold Govt.& Gtee of Sec/Gtee of Gtee of Gtee of Sec/Gtee of Total
with Bank with other NRB Govt. of Other domestic MDBs Foreign
banks/FI Securities Nepal Sovereigns banks Banks
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Claims on domestic banks that meet capital adequacy requirements -
Claims on domestic banks that do not meet capital
adequacy requirements -
Claims on foreign bank (ECA Rating: 0-1) -
Claims on foreign bank (ECA Rating: 2) -
Claims on foreign bank (ECA Rating: 3-6) -
Claims on foreign bank (ECA Rating: 7) -
Claims on foreign bank incorporated in SAARC region
operating with a buffer of 1% above their respective
regulatory capital requirement -
Claims on Domestic Corporates / Individuals 36,181,055 - 36,181,055
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) 505,248,262 6,925,597 512,173,859
Regulatory Retail Portfolio (Overdue)
Regulatory Retail Portfolio Except for Granularity -
Claims secured by residential properties -
Claims not fully secured by residential properties -
Claims secured by residential properties (Overdue) -

Continued...
Annual Report 2014/15 127
 Continued...

Credit Risk Mitigation Schedule 30 (c)

As at 16 July 2015
(in NPR)

Credit exposures Deposits Deposits Gold Govt.& Gtee of Sec/Gtee of Gtee of Gtee of Sec/Gtee of Total
128 Nabil Bank Limited

with Bank with other NRB Govt. of Other domestic MDBs Foreign
banks/FI Securities Nepal Sovereigns banks Banks
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Claims secured by Commercial real estate -
Past due claims
(except for claim secured by residential properties) 3,210,000 3,210,000
High Risk claims 28,637,991 - 28,637,991
Investments in equity and other capital instruments
of institutions listed in the stock exchange -
Investments in equity and other capital instruments
of institutions not listed in the stock exchange -
Staff loan secured by residential property -
Interest Receivable/claim on government securities -
Cash in transit and other cash items in the process of collection -
Other Assets -
Off Balance Sheet Exposures
Revocable Commitments -
Bills Under Collection -
Forward Exchange Contract Liabilities -
LC Commitments With Original Maturity
Up to 6 months domestic counterparty 507,438,174 507,438,174
foreign counterparty (ECA Rating: 0-1) -
foreign counerparty (ECA Rating: 2) -
foreign counterparty (ECA Rating: 3-6) -
foreign counterparty (ECA Rating: 7) -
LC Commitments With Original Maturity
Over 6 months domestic counterparty 306,444,336 306,444,336
foreign counterparty (ECA Rating: 0-1) -
foreign counterparty (ECA Rating: 2) -
foreign counterparty (ECA Rating: 3-6) -
foreign counterparty (ECA Rating: 7) -
Bid Bond, Performance Bond and Counter guarantee
domestic counterparty 522,178,116 522,178,116
foreign counterparty (ECA Rating: 0-1) 1,135,762,310 1,135,762,310
foreign counteparty (ECA Rating: 2) 116,815,777 116,815,777
foreign counterparty (ECA Rating: 3-6) -

Continued...
 Continued...

Credit Risk Mitigation Schedule 30 (c)

As at 16 July 2015
(in NPR)

Credit exposures Deposits Deposits Gold Govt.& Gtee of Sec/Gtee of Gtee of Gtee of Sec/Gtee of Total
with Bank with other NRB Govt. of Other domestic MDBs Foreign
banks/FI Securities Nepal Sovereigns banks Banks
(a) (b) (c) (d) (e) (f) (g) (h) (I)
foreign counterparty (ECA Rating: 7) -
Gurantee claimed but not honored -
Underwriting commitments -
Lending of Banks Securities or Posting of Securities as Collateral -
Repurchase Agreements -
Advance Payment Guarantee 18,452,141 940,529,613 958,981,754
Financial Guarantee -
Acceptances and Endorsements -
Unpaid portion of Partly paid shares and Securities -
Irrevocable Credit commitments (short term) 59,827,952 3,599,403 63,427,355
Irrevocable Credit commitments (long term) -
Other Contingent Liabilities 4,191,250,726
Annual Report 2014/15 129
130 Nabil Bank Limited

Operations Risk Schedule 30 (D)

As at 16 July 2015

(in NPR)

Particulars Year 1 Year 2 Year 3 last Year

Net Interest Income 3,696,412,993 3,515,938,047 2,978,248,622
Commission and Discount Income 459,164,723 393,050,514 364,075,214
Other Operating Income 267,837,635 209,905,066 201,084,866
Exchange Fluctuation Income 529,995,584 489,051,079 447,070,485
Additional Interest Suspense during the period 130,814,746 11,144,071 98,947,274
Gross income (a) 5,084,225,681 4,619,088,777 4,089,426,461
Alfa (b) 15% 15% 15%
Fixed Percentage of Gross Income [c=(ab)] 762,633,852 692,863,317 613,413,969
Capital Requirement for operational risk (d) (average of c) 689,637,046 590,287,958
Risk Weight (reciprocal of capital requirement of 10%) in times (e) 10 10
Equivalent Risk Weight Exposure [f=(de)] 6,896,370,460 5,902,879,583
Adjustment Under Pillar - II
If Gross Income for all the last three years is negative
Total Credit and Investment (Net of Specific Provision) - -
Capital Requirement for operational risk (5%) - -
Risk Weight (reciprocal of capital requirement of 10%) in times 10 10
Equivalent Risk Weight Exposure (g) - -
Equivalent Risk Weight Exposure (h=f+g) 6,896,370,460 5,902,879,583

Note:
Year 1 - FY 2070/071
Year 2 - FY 2069/070
Year 3 - FY 2068/069
 Annual Report 2014/15 131

Market Risk Schedule 30 (e)

As at 16 July 2015

(in NPR)

CURRENCY This Year Previous Year

Open Position Open Position Relevant Open Relevant Open
(FCY) (NPR) Position Position
INR 262,851,597 420,759,694 420,759,694 381,764,364
USD 2,936,310 298,475,946 298,475,946 19,047,256
GBP 20,456 3,247,926 3,247,926 2,314,534
EUR 20,102 2,224,499 2,224,499 2,545,179
THB 13,580 40,333 40,333 55,016
CHF 33,795 3,603,224 3,603,224 1,255,764
AUD 774 57,938 57,938 776,897
CAD (90,957) (7,151,020) 7,151,020 1,920,090
SGD 17,436 1,296,700 1,296,700 2,447,908
JPY 161,898 132,967 132,967 946,887
HKD 16,190 212,251 212,251 43,435
DKK 219,426 3,269,443 3,269,443 2,403,360
SEK 80 954 954 -
SAR 97,594 2,644,797 2,644,797 670,106
QAR 24,880 694,650 694,650 117,851
AED 102,385 2,834,017 2,834,017 219,210
MYR 19,303 515,583 515,583 105,395
KRW 4,326,000 383,284 383,284 -
CNY 31,984 523,584 523,584 752,091
KWD 349 117,152 117,152 -
BHD - - - -
Total Open Position (a) 733,883,922 748,185,963 417,385,344
Fixed Percentage (b) 5% 5%
Capital Charge for Market Risk [c=(ab)] 37,409,298 20,869,267
Risk Weight
(reciprocal of capital requirement of 10%) in times (d) 10 10
Equivalent Risk Weight Exposure [e=(cd)] 374,092,980 208,692,670
132 Nabil Bank Limited

Principal Indicators Schedule 31

financial year
Particulars Indicators 2010/11 2011/12 2012/13 2013/14 2014/15
1. Net Profit/Gross Income % 22.29 23.74 32.66 33.49 29.93
2. Earnings Per Share Rs. 65.91 83.23 91.05 76.12 57.24
3. Market Value per Share Rs. 1,252 1,355 1,815 2,535 1,910
4. Price Earning Ratio Times 17.72 16.21 19.08 33.38 33.37
5. Dividend (including bonus) on share capital % 30.00 60.00 65.00 65.00 36.84
6. Cash Dividend on Share Capital % 30.00 40.00 40.00 45.00 6.84
7. Interest Income/Loans & Advances % 12.50 12.85 11.64 10.16 8.50
8. Employee Expense/Total Operating Expense % 11.91 12.26 19.59 20.99 20.70
9. Interest Expense on Total Deposit and Borrowings % 6.15 5.74 3.67 2.69 2.56
10. Exchange Gain/Total Income % 4.60 6.26 7.20 7.91 7.33
11. Staff Bonus/ Total Employee Expenses % 42.05 48.26 48.90 50.67 40.10
12. Net Profit/Loans & Advances % 3.73 4.14 5.04 4.54 3.31
13. Net Profit/ Total Assets % 2.43 2.80 3.25 2.65 2.06
14. Total Credit/Deposit % 78.29 77.91 74.90 74.55 64.43
15. Total Operating Expenses/Total Assets % 6.91 6.73 4.84 3.56 3.53
16. Adequacy of Capital Fund on Risk Weighted Assets
a. Core Capital % 8.83 9.30 9.98 9.68 10.18
b. Supplementary Capital % 1.75 1.71 1.61 1.50 1.39
c. Total Capital Fund % 10.58 11.01 11.59 11.18 11.57
17. Liquidity (CRR) % 4.90 8.60 9.32 11.32 14.15
18. Non Performing Loans/Total Loans % 1.77 2.33 2.13 2.23 1.82
19. Base Rate % - - 7.04 5.67 5.78
20. Weighted Average Interest Rate Spread % 4.37 4.95 5.48 5.03 3.97
21. Book Net Worth per Share Rs. 225 269 275 251 259
22. Total Shares Outstanding Number 20,297,694 20,297,694 24,368,414 30,471,684 36,576,540
23. Total Permanent Employees Number 657 650 742 724 706
24. Return on Equity % 29.02 30.25 32.78 27.91 22.73
25. Return on Assets % 2.43 2.80 3.25 2.65 2.06
26. Dividend Payout Ratio % 42.45 71.80 68.32 85.59 64.36
27. Earnings Yield % 5.64 6.17 5.24 3.00 3.00
28. Dividend Yield % 2.40 4.43 3.58 2.56 1.93
29. Cost to Income Ratio % 63.50 57.16 48.60 44.95 51.35
30. Total Assets to Shareholders Fund times 12.73 10.09 9.56 9.69 11.91
31. Shareholders Fund to Liability including
Contingent Liability % 6.61 7.71 8.33 8.13 6.64
32. Number of Offices Number 49 52 51 51 55
33. Number of ATMs Number 68 78 81 85 89

Note: 1. Gross Income in S.N. 1 comprises of Gross Interest Income, Commission and Discount, Other Operating Income and Exchange Income.
2. EPS in S.No.2 is computed in line with Nepal Accounting Standard (NAS) 26 Earning Per Share. Accordingly previous years EPS have been restated where required.
Detail policy is disclosed in Schedule 32 Principal Accounting Policies.
3. Market Value per Share in S.N. 3 is the closing price of ordinary shares quoted in Nepal Stock Exchange on Wednesday, the 16th July 2015.
4. The Interest Income in S. N. 7 is the interest income from loans and advances (excluding staff loans) only. The loans and advances are the average loans and
advances for the entire financial year. The average balance during the year was Rs.60,133,333,318.10.
5. Total Operating Expense in S.N. 8 comprises Gross Interest Expense, Staff Expense and Other Operating Expense.
6. The Deposits and Borrowings in S.N.9 are the average deposits and borrowings (including debentures) for the entire financial year.
The average balances of deposits and borrowing during the year was Rs.87,000,336,345.05 and Rs.300,018,630.14 respectively.
7. Total Income in S.N. 10 is same as Gross Income in S.N. 1 comprising of Gross Interest Income, Commission and Discount, Other Operating Income and Exchange Income.
8. The Loans and Advances in S.N. 12 is same as Loans and Advances in S.N. 7 and is the average balance for the entire financial year.
9. Total Assets in S.N. 13 and S.N. 15 are average balance of assets computed by averaging outstanding balance of previous financial year and current financial year.
10. Credit and Deposit in S.N. 14 is the outstanding balance as of balance sheet date.
11. CRR in the S.N. 17 is computed on the basis of cash and cash equivalents and deposits outstanding on the balance sheet date.
The CRR (as per NRB Directives) for the last week of the current financial year is 16.98%.
12. Return on Equity in S.N. 25 is computed by taking average Equity including Proposed Dividend of previous year till the date of AGM and average after-tax
net profit of current year. Figures of previous years have been restated accordingly wherever necessary.
13. Earnings Yield represent earning (attributable to equityholders) per market value of share.
14. Dividend Yield represent dividend per market value of share.
134 Nabil Bank Limited
Schedule: 32
Principal
Accounting Policies
1. Corporate information
1.1 Reporting Entity:
Nabil Bank Limited (hereinafter referred to as the Bank) is a joint
venture public limited company, incorporated on 11th May 1984 as
per the then Companies Act 1964 of Nepal, and domiciled in Nepal.
It is a Ka class licensed institution licensed under the Bank and
Financial Institutions Act, 2006 and commenced its commercial
banking operations from 12th July 1984 as per the then Commercial
Banking Act, 1964. The registered office of the Bank is located at Nabil
Centre, Durbar Marg, Kathmandu, Nepal. Its ordinary shares (Class C),
institutional investor shares (Class B) and promoter shares (Class A) are
listed on the Nepal Stock Exchange Limited (the sole stock exchange in
Nepal) for public trading.
1.2 Reporting Period:
Financial Year is based on Nepali Calendar and the reported period
covers the period between 1st of Shrawan 2071 and 31st of Asadh
2072. This corresponds to English Calendar period between 17th July
2014 to 16th July 2015.
1.3 Subsidiary:
Nabil Investment Banking Ltd. (herein after referred to as the
Subsidiary) is a subsidiary company of the Bank. It was incorporated
on 07th of February 2010 as a public limited company as per the
Companies Act 2006. It is a Merchant Banker licensed by Securities
Board of Nepal under the Securities Businessperson (Merchant Banker)
Regulations, 2008. The Bank, as at the Balance Sheet date, holds
74.29% controlling interest in the Subsidiary.
The financial year of the Subsidiary is common to that of the Bank
(parent company). The current Financial Year ended on 16thJuly, 2015.
1.4 The Bank and the Subsidiary are
collectively referred to as the Group.
2. Principal Activities:
2.1 The principal activities of the Bank are to provide full-fledged
commercial banking services including, agency services, trade
finance services, card services, e-commerce products and services
and commodity trading services to its customers through its strategic
business units, branches, extension counters, ATMs and network of
agents.
2.2 The principal activities of the Subsidiary are to provide merchant/
investment banking services that include management of public
offerings, portfolio management, underwriting of securities, fund
managementof mutual fund schemes, depository participants service
under Central Depository Service (CDS)and administration and record
keeping of securities of its clients.
3. Approval of Financial Statements
by Board of Directors
3.1 The accompanied financial statements including consolidated
financial statements have been authorized by the Board of Directors,
vide its resolution dated October 04, 2015 and recommended for its
approval by the Annual General Meeting of the shareholders.
4. Responsibility for
Financial Statements
4.1 The Board of Directors, per paragraph 6 of NAS 01, Presentation
of Financial Statements read in conjunction to Section 108 of the
Company Act 2006, is responsible for the preparation of financial
statements of the Bank. The Board of Directors acknowledges this
responsibility as set out in the Annual Report of the Board of Directors.
4.2 These financial statements include the following components:
a. Balance Sheet (including Consolidated Balance Sheet) disclosing the
information on financial position of the Group and the Bank;
b. Profit and Loss Account (including Consolidated Profit and Loss
Account) disclosing the financial performance of the Group and the
Bank for the period under review;
c. Cash Flow Statement (including Consolidated Cash Flow Statement)
disclosing the information on the ability of the Group and the Bank to
generate cash and cash equivalents;
d. Statement of Changes in Equity (including Consolidated Statement
of Changes in Equity) showing all changes in equity of the Group and
Bank;and
e. Notes to the Financial Statements comprising a summary of principal
accounting policies of the Group and the Bank and other relevant
explanatory notes that is of material importance to the readers of the
financial statements to facilitate informed decision making.

5. Statement of Compliance
5.1 The consolidated financial statements of the Group and separate
financial statements of the Bank have been prepared in accordance with
Nepal Accounting Standards (NAS) as issued by the Nepal Accounting
Standard Board (NASB) and in accordance with International Financial
Reporting Standards IFRS 10 Consolidated Financial Statements,
except otherwise stated by Nepal Rastra Bank (NRB) Directives, Bank &
Financial Institutions Act 2006 and Company Act 2006.
5.2 NAS comprise of all accounting standards as well as interpretations
issued by the NASB that were effective at the time of preparation and
presentation of financial statements. As of the balance sheet date,
NASB has pronounced nineteen accounting standards in effect and
seven accounting standards for voluntary application.
5.3 NRB Directives comprise of NRB Unified Directives and circulars
issued by NRB (the licensing and regulatory authority) relevant to
the preparation and presentation of financial statements. Financial
Statements have been presented in the schedules and formats
prescribed in NRB Unified Directives, these being Statutory Forms.
5.4 The Group and the Bank do not adopt accounting treatments that
are inconsistent with NRB Directives and NAS and comply with these
in all material respects. In case of any inconsistency prevailing between
the provisions in NRB Directives and NAS, NRB Directives have been
complied with to the extent of such inconsistencies. Deviations with
these, if any, have been explained in Schedule 33 Notes to Accounts
against disclosure of specific items of financial statements.
6. Basis of Preparation
6.1 Assets and liabilities reported in the consolidated financial
statements of the Group and the separate financial statements of the
Bank are presented in functional currency i.e. Nepalese Rupees (NRs.)
and are prepared on historical cost convention except for translated
foreign currency value.
6.2 Preparation of financial statements in conformity with NAS requires
the use of certain critical accounting estimates and also requires
management to exercise judgment in process of applying the Groups
and the Banks accounting policies.
7. Basis of Consolidation
7.1 The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards 10
Consolidated Financial Statements. In preparing the consolidated
financial statements, the financial statements of the Bank and the
Subsidiary are combined line by line by adding together like items of
assets, liabilities, equity, income and expenses.
7.2 The consolidated financial statements of the Bank for the year
ended on July 16, 2015 comprise of the accounts of the Bank and
the Subsidiary. The Bank consolidates the financial statements of the
Subsidiary only when it controls the Subsidiary. An investor controls
investee when it is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns
through its power over the investee.
Annual Report 2014/15 135
Para 8 of IFRS 10 outlines three conditions to be fulfilled in order to
establish control:
(a) power over the investee;
(b) exposure, or rights, to variable returns from its involvement with
the investee; and
(c) the ability to use its power over the investee to affect the amount
of the investors returns.
In the case of the Bank and the Subsidiarys investor-investee
relationship,
(a) Power over the Subsidiary exists from the voting rights granted by
the equity share. The Bank holds 74.29% of controlling interest in
the Subsidiary.
(b) The Subsidiarys capital composes only of equity instruments
and the Banks returns from the involvement in equity instruments
have the potential to vary with the performance of the Subsidiary.
The Bank has thus exposure, or rights, to variable returns from its
involvement with the Subsidiary.
(c) The Bank has deputed its staff as CEO of the Subsidiary. The
Bank thus has the ability to exercise its power over the Subsidiary to
affect the amount of the Banks return.
7.3 The financial statements of the Subsidiary are included in the
consolidated financial statement from the date that control effectively
commences until the date that the control effectively ceases.
7.4 All intra Group transactions and balances, income and expenses
and any unrealised gains / losses arising from such inter-company
transactions and balances are eliminated in full while preparing the
consolidated financial statements.
8. Significant Accounting Policies
8.1 The principal accounting policies applied by the Group and the
Bank in the preparation of these financial statements are presented
below. These policies have been consistently applied to all the years
presented unless stated otherwise.
A. Equity
Equity is the residual interest of the equity holders in the assets after
deducting all its liabilities. It comprises of all funds contributed by equity
holders, retained earnings and reserves representing appropriation of
retained earnings.
- The Group discloses all residual interest in the form of Share Capital
and Reserves & Surplus on the face of balance sheet except proposed
cash dividend, which is separately disclosed as Proposed Dividend
on the face in line with the format prescribed by NRB. The proposed
cash dividend continues to remain as a part of equity until the date of
ratification by AGM.
136 Nabil Bank Limited
- As per Section 44 of Bank and Financial Institutions Act 2006, all
licensed institutions are required to transfer minimum 20% of net
profit after tax to the General Reserve until it becomes double of paid
up capital.The Bank consistently transfers the fund from the profit in
the General Reserve to comply with this requirement. There is no such
statutory requirement for the Subsidiary.
- As per Section 45 of the aforesaid Act, all licensed institutions are
required to transfer minimum 25% of the Total Revaluation Gain (except
gain from revaluation of Indian Currency) in the Exchange Fluctuation
Reserve. The Bank consistently maintains the Reserve by transferring
the fund from the profit to comply with this requirement. There is no
such statutory requirement for the Subsidiary.
- As per Directives 4 of NRB Unified Directives, all licensed institutions
are required to maintain Deferred Tax Reserve equivalent to the amount
of Deferred Tax Asset. The Bank consistently maintains equivalent
reserve to the amount of deferred tax asset to comply with the
requirement of the Directives. The Subsidiary also adopts uniform policy.
- As per Directives 4 of NRB Unified Directives, all licensed institutions
are required to maintain Debenture Redemption Reserve in respect
of borrowing raised through debenture issuance. Beginning 6th year
of debenture issuance the Bank has been appropriating 20% of the
carrying value of debenture to this reserve fund, as per approval
obtained from NRB. The Subsidiary has not raised any borrowing
through debenture issuance.
- The Group maintains Investment Adjustment Reserve for Available for
Sale Investment which is not made available for distribution to its equity
holders.
- The Bank has constituted a Contingent Reserve in line with Scheme
for Payment of Staff Hospitalization Charges that is primarily intended
to fund staffs medical treatment for cases of severe ailments that are
not covered by medical insurance policy. According to this Scheme, the
Bank appropriates NRs.1,000 thousand from Retained Earning towards
this reserve on annual basis and transfers back to Retained Earning
to the extent of amount that is funded to the staff in the year of such
funding. No such reserve is being maintained by the Subsidiary.
B. Assets
Assets are resources controlled by the entity as a result of past events
and from which future economic benefits are expected to flow to the
entity. Groups assets include all assets controlled by the Group from
which it expects derivation of economic benefits in the future to the
Group. The assets of the Group comprise of cash, balances held with
the central bank and financial institutions, investments (including
derivative investment), loans and advances, fixed assets, non-banking
assets and the assets aggregated under other assets.
i. Loans and Advances including Bills Purchased
- Loans and advances include direct finance provided to the customers.
These comprise of business loans of short term and long term nature,
project and infrastructure loans, consumer loans, credit card loans, bills
purchased and discounted and loans to deprived sectors.
- Loans and advances are recognised when the loans are actually
disbursed and are derecognized at the time of their settlement.
- Bills purchased or discounted are recognised as loans when the bills
are actually purchased or discounted and are derecognized at the time
of their settlement by presentation and/or endorsement.
- These are presented at net of loan loss provisions and are not stated
on amortised cost basis.
ii. Investment
- Investment includes short term and long term placements, money
at call and short notice, derivative investments, government securities
(development bonds and Treasury Bills), bonds, debentures, mutual
fund investments and share investments in subsidiary companies and
other organised institutions.
- All investments are initially recognised at cost, being fair value of the
consideration given, including acquisition charges associated with the
investment. The investments held by the Bank are classified in following
3 categories:
i. Held till Maturity (HTM) Investments: These investments are
primarily intended to be held until the maturity and are stated at
cost and carried at these values in the Balance Sheet until maturity.
Any impairment loss arising in such investments are provisioned
and charged to the Profit and Loss Account (Income Statement).
Premiums paid/ discount received while acquiring HTM Investments
is recognized as a part of the initial cost and subsequently adjusted
with the interest income on effective interest basis until the maturity.
ii. Held for Trading (HFT) Investments: These are marketable
investments and held with the primary intention of resale over a short
period of time. These investments are initially measured at cost and
subsequently recognised at market value. Gains or losses arising
from trading / revaluation are recognised in Profit and Loss Account
(Income Statement).
iii. Available for Sale (AFS) Investments: These are the investments
held with the primary intention to recover the value of investments
through sale rather than continuing to hold them. These investments
are initially measured at cost and subsequently recognised at market
value. Any gains or losses arising till the investments are held are
recognised on Investment Adjustment Reserve.Any gains or losses are
recognised in Profit and Loss accounts only at the time of disposal of
such investments.
While assessing the market value, consideration is given to the
transaction activities in the stock exchange and conservative approach
is adopted in order to avoid overstatement of the equity position.
Accordingly, those investments which are not actively traded at the
stock market are carried at cost and not measured at market prices.
Amount equivalent to 2% of such investments are earmarked on
Investment Adjustment Reserve from the retained earnings in line with
the requirement of NRB.

In case of unquoted investments other than the investments in the
Subsidiary, investment adjustment reserve is maintained to the extent of
100% of such investment:
- to the period of maximum 1 year from the date of investment, if the
company is already incorporated prior to the investment of the Bank and
the shares of such company are not listed in stock exchange within 1
year from the date of investment;
- to the period of maximum 2 years from the date of investment, if the
company is newly incorporated and the Bank has also promoted such
company and the shares of such company are not listed in the stock
exchange within 2 years from the date of investment.
In case of investment in the Subsidiary, whether listed or not in stock
exchange, investment adjustment reserve is maintained to the extent
of 100% of such equity investment. Such investment is also deducted
while determining the Tier 1 Capital for Capital Adequacy calculation
purpose in line with the requirement of NRB Directives.
- All investments are subject to periodic review as required by NRB
Directives.
iii. Property, Plant and Equipment (Fixed Assets)
- Property, plant and equipment are tangible items that are held for
use in the production or supply of services, for rental to others, or for
administrative purposes and are expected to be used during more than
one financial year.
- Groups property, plant and equipment comprise of the Banks and the
Subsidiarys land and premises registered under its ownership, office
equipments and furniture, vehicles, leasehold developments, software
applications and assets under construction or work-in-progress.
- Cost of an item of property, plant and equipment is recognised as
an asset, if and only if, it is probable that future economic benefits
associated with the item will flow to the entity and the cost of the
item can be measured reliably. The cost of an item of property, plant
and equipment comprises of purchase prices including taxes, custom
duties and any costs that is directly attributable to bring the asset to
the location and condition that is necessary for it to be capable for
operating in the manner intended by the management. Costs incurred
for dismantling / removal and for restoration of site are recognised as a
part of the new item of the property, plant and equipment. Cost of an
item of an asset includes cost of an asset under construction and work-
in-progress.
- Any subsequent cost incurred for the property, plant and equipment is
recognised as an asset if it meets the recognition criteria. The cost that
does not qualify as an asset is charged off in the Income Statement as
repair and maintenance.
- The carrying amount of an asset is derecognised at the time of
disposal or when no future economic benefits are expected to flow from
its use or disposal. The gain or loss arising from de-recognition of an
item of property, plant and equipment is included in profit or loss when
the item is derecognised.
Annual Report 2014/15 137
- The carrying amount of the property, plant and equipment is
the amount at which an asset is recognised after deducting any
accumulated depreciation and accumulated impairment losses.
- Non-consumable items costing less than NRs. 5,000 are expensed off
in the year of purchase.
- The Bank consistently adopts cost model for entire class of its
property, plant and equipment.
iv. Inventory
- Stationery
i. Stationery stocks are inventories in the form of materials or
supplies held by the Group to be consumed while rendering the
services. The Group does not hold any item of the inventory that is
in the state which is not readily usable (i.e. raw material or semi-
finished) for rendering the services or that for the selling purposes.
ii. Stationeries are measured either at the lower of cost or net
realisable value (NRV), except for certain items that are specifically
used only by the Group and the Bank. Such specific items are
measured at the lower of cost or replacement price.
iii. The stationeries are written down on an item by item basis, when
the inventories are damaged or have become wholly or partially
obsolete that affects the effective use while rendering services.
iv. Stationeries are recorded at actual cost basis and charged to
revenue at the time of its consumption.
- Bullion Stock under Consignment
The Bank holds precious metals (gold and silver) in its custody arising
from consignment transaction. Risks and rewards pertaining to the
asset prices are vested with the consignor. The Bank merely acts as a
consignee to the consignor and hence does not recognise the stock in its
books as an inventory.
v. Staff Loans
- Staff loans are loans granted to the staffs as per the Integrated Staff
Loan Policy of the Bank and are recognised as loans at the time of their
disbursement. They are derecognised at the time of recovery/settlement.
- Staff loans comprise of housing loan facility, personal loan facility and
vehicle loan facility and are presented under Staff Loans and Advances
in Schedule 16 of the Financial Statements.
vi. Interest Receivables
- Interest receivable comprise of interest accrued on loans (including
receivables on loans to staffs under Integrated Staff Loan Policy of the
Bank) and investments and are recognised on daily basis based on the
outstanding balance at the end of the day.
- Interest receivables on loans (except staff housing loans) are stated
at full value and are disclosed net of interest suspense under Accrued
Interest on Loan in Schedule 16 of the Financial Statements. Similarly,
Interest receivables on staff housing loans are presented under Others
in the same Schedule.
- Interest receivables on investments are stated at full value.
138 Nabil Bank Limited
vii. Prepayments
- Prepayments are the amount paid in advance on account of provision
of services in future. Prepayments comprise of amount paid in advance
for insurance services, rental of leased premises, communication
like internet connectivity, maintenance of services (AMCs) and other
miscellaneous services.
- Prepayments are recognised as asset at full value on the date of
payment.
- They are derecognised as and when services are received or at the
time service accrues or period mature.
viii. Security Deposits
- Security deposits are the amount deposited by the Bank or the Group
on account of security of fees on services that is being received from the
provider.
- They are recognised as security deposits until the receipt of service
continues and the Bank and the Group do not have any intentions to
discontinue the service.
ix. Non Banking Assets (NBA)
- Non Banking Assets of the Bank comprise of assets or the mortgaged
properties realised from the borrowers in lieu of settlement of the loan
after exercising all efforts for settlement in cash.
- NBA is recognised lower of recoverable amount from the market (Net
Realisable Value) and outstanding dues recoverable from the borrower,
immediately after the ownership of assets is transferred to the Bank
at the concerned authority. The recoverable amount from the market
is estimated on the basis of independent evaluation of the approved
Valuator. NBA is derecognized at the time of its disposal.
- 100% loss provision is maintained for NBA and continues to remain
until it is disposed off.
C. Liabilities
Liabilities are present obligations of the entity arising from past events,
the settlement of which are expected to result in an outflow from the
entity of resources embodying economic benefits. Liabilities of the
Group and the Bank comprise of borrowings, deposits, bills payable,
dividend payable, interest accruals, unearned income, sundry creditors
and other liabilities.
i. Borrowings
- Borrowings comprise of local and foreign currencies inter-bank
borrowing and the debentures issued to the public.
- Borrowings are recorded at the full value and recognised on the
effective dates mentioned in the deed or contract. Borrowings are
derecognised at the time of its disposal / settlement.
ii. Deposits
- Deposits of the Bank and the Group comprise of local and foreign
currencies current deposits, savings deposits, call deposits, time
deposits, margin deposits and other deposits of the customers held by
the Bank and the Group.
- Deposits are stated at full value and recognised on the date of
deposition. Deposits are derecognised at the time of its withdrawal /
maturity.
iii. Bills Payable
- Bills payable are negotiable instruments issued/endorsed by the Bank
for consideration received in exchange from the customer. Bills payable
comprise of manager cheques, travellers cheques, drafts issued in local
currency and foreign currencies payable at the counter of the Bank and
the cheques realised at Nostro banks on behalf of customer sent for
collection by endorsement.
- These are recorded at full value and recognised at the time of its
issuance for the consideration received. They are derecognised at the
time of its disposal at the Banks counter or after receipt of information
of disposal from other banks and financial institutions.
iv. Dividend Payable
- Dividend payables are the dividends, payable to its equity holders duly
ratified by the current or earlier Annual General Meetings.
- They are stated at full value immediately after Annual General Meeting
ratifies the Boards proposal on dividend. Immediately before the Annual
General Meetings ratification, it retains the status of Equity.
v. Interest Accruals
- Interest accruals comprise of interest payables on deposits, borrowings
and debenture. They are recognised on the outstanding balance at the
end of the day on daily basis.
- Interest accruals are derecognised at the due date i.e. on the date it is
credited in customers account.
vi. Unearned Income
- Unearned Income comprise of income received in advance on account
of loans under subvention scheme, LC fees and guarantee fees issued
with a risk period of more than 1 year period and for fees with more
than NRs.50,000 (fifty thousand).
- They are recognised as liability at the time of its receipt and are
derecognised as and when income accrues and / or risk period expires.
- Unearned interest income is presented in 13 Others in Schedule 7 of
the financial statements.
vii. Provisions for expenses
- Provisions are liabilities of uncertain timing or amount. They are
recognised as liabilities when the Group or the Bank has a present
obligation (legal or constructive) as a result of past event and that there

are probabilities of outflow of resources embodying economic benefits to
settle the obligation and can be estimated reliably.
- While making an estimate, consideration is given to immediate trends,
past practices and approved polices. In extremely rare circumstances,
where no reliable estimate can be made, a liability exists that cannot be
recognised. That liability is disclosed as a contingent liability.
- Provisions for utility expenses: Provisions for utility expenses are
recognised based on immediate trends. Excess or deficits are adjusted
in the subsequent months.
- Provisions for communication expenses: Provisions for communication
(viz., telephone, swift) are recognised based on immediate trends.
Activity log wherever possible is also considered while estimating the
provision. Excess or deficits are adjusted in the subsequent months.
- Provision for audit fee expenses: Audit fees are provisioned based
on the remuneration fixed by the equity holders at the Annual General
Meeting.
- Provision for staff bonus expenses: Staff bonus is provided as per
Bonus Act, 1974.The Bonus Act requires provision at the rate of 10%
on the amount of net profit before tax.
- Employee Leave:
i. Employee leave are compensated absences and comprises of annual
leave, sick leave, casual leave, maternity leave, paternity leave,
substitute leave and bereavement leave and are compensated as per
Employee Bye-Laws of the Bank and the Subsidiary.
ii. Entitlement to compensated absences fall into two category:
a. accumulating; and
b. non accumulating
iii. The Group recognizes cost of compensated absences as follows:
a. in case of accumulating, when the employees render service that
increases their entitlement to future compensated absences; and
b. in case of non accumulating, when the absences occur.
iv. Annual leave and sick leave are accumulated to the maximum extent
of 60 days and 45daysrespectively and is carried forward for the use in
future periods. Leave balance in excess of 105daysasatmid April is paid
each year. Leave earned and accrued on a proportionate basis as at the
balance sheet date (Mid July) is recognized as liability duly reduced by
the absences availed by the employees.
v. The bank does not value leave liability based on actuarial valuation.
viii. Gratuity, Insured benefits and Provident Fund:
- Gratuity, insured benefits and provident fund are post-employment
benefits available only to the permanent employees and after completing
designated service period or probation period.
Annual Report 2014/15 139
- The Bank and the Subsidiary make regular contribution to the
approved Retirement Fund and to the Insurance Company for the
disposal of gratuity, insurance and provident fund obligations. These
benefits are Defined Contributions Plans and the Bank and the
Subsidiary have limited legal or constructive obligation, only to the
extent that they agree to contribute to the fund, and in consequence,
actuarial risk (that benefits will be less than expected) and investment
risk (that the assets invested by the independent entity will be
insufficient to meet expected benefits) fall on the employee. As such the
bank does not value employee gratuity based on actuarial valuation.
- Gratuity, insured benefits and provident fund obligation to employees
are computed as per the approved policy of the Bank and the Subsidiary
and are expensed off in the Profit and Loss Account on accrual basis.
Provident fund obligation is settled every month while the insured
benefits are paid in advance and are recognized as prepayments and
settled on monthly basis. Gratuity obligation is determined and settled
on the last month of each financial year (i.e. Mid July). Contribution to
approved retirement fund against the gratuity obligations (incremental)
has been made since Mid July 2004 annually.
- The gratuity obligation disclosed as Gratuity Fund in Schedule 7
of the financial statement is the total gratuity obligation accrued till
Mid July 2003 and payable to the employees of the Bank who are
continuing their employment as at the balance sheet date. At the time
of retirement (including resignation) of the employee, the obligation is
settled by paying the amount from this Fund. The Bank does not bear
any further obligation (either legally or constructively) to pay return on
this fund to the employees.
D. Income
Incomes are increase in economic benefits during the accounting
period in the form of inflows or enhancements of assets or decreases of
liabilities that result in increases in than equity, other than those relating
to contributions from equity participants. Income comprises of interest
income, fees and commission, foreign exchange income, cards income,
disposal income etc.
i. Interest Income
- Interest income comprise of interest earnings on foreign currencies and
local currency loans & advances, investments in Bonds, Treasury Bills
and Placements.
- Interest income on loans and advances (except staff housing loan
under Integrated Staff Loan Policy) are recognised on cash basis as
prescribed by NRB Directives, which is not in accordance with NAS 7
Revenue that prescribes recognition of interest on effective interest
method. The practice followed by the Bank, as per NRB Directives, is
more conservative and prudent. Interest income on staff housing loans
is recognised on accrual basis as permitted by NRB.
- Interest income on Investments, including earnings from call accounts,
fixed deposits and staff house loan, is recognized on effective interest
method. Interest accruals on bonds and debentures at the time of
140 Nabil Bank Limited
purchase are reduced from the cost of acquisition. Discount or premium
on bonds / debentures and transaction costs are adjusted with the cost
of investment to determine effective interest rate. Interest Income on
treasury bills are capitalised in the bid value.
- Interest income received by the Bank from the vendors / dealers
under subvention scheme at the beginning of the loan tenure is initially
recognised as liability and subsequently charged to Profit or Loss
Account (Income Statement) as and when they are earned.
- All interest earnings (including on foreign currency assets) are
accounted in functional currency.
ii. Fees and Commission Income
- Fees and commission on credit service (management/ appraisal)
including renewals are recognised as and when credit line is approved
or renewed. All other fees ancillary to credit services is recognised as
and when services are rendered. The recognition of fees is not in line
with NAS 7 Revenue, which prescribes that the fees that are integral
part of the effective interest rate of a financial instrument and should
be recognised by making an adjustment in the effective interest rate but
is in accordance with NRB Directives which prescribes recognition of
interest on loans and advances on cash basis.
- Commission on guarantee exceeding NRs.50,000 covering period
more than a year is accounted for on accrual basis over the period of
guarantee. Commission other than above are recognised immediately
after issuance of guarantee.
- Commissions on LC issuance / amendment, LC acceptance, draft
issuance, card issuance are recognised at the time of issuance /
amendment /acceptance. Ancillary communication fees on LCs (issued,
amended, accepted and settlement) are recognised at the time of their
issuance, amendment, acceptance and settlement.
- Renewal fees and cancellation charges are recognised as and when
services are renewed or cancelled.
- Bill purchases, remittance are recognised at the time of transactions.
- Rental fees for letting safe deposit lockers are initially recognised when
the occupancy right is granted to the customer and subsequent renewal
fees are recognised immediately after rental period expires.
- Agency commission on insurance services which do not require
rendition of additional services in future are recognised on the effective
commencement or renewal dates of the policies.
- Commission from bullion operation is recognised at the time the risks
and rewards attributable to the bullion are transferred to the buyer.
- Fees for management service rendered to the Subsidiary are
recognised at the end of every month in line with the contract executed.
- All other commissions are accounted after rendering the services.
iii. Dividend Income
- Cash dividend on equity shares is recognised as and when right
to receive is established. Dividend declared from net profit of pre-
acquisition period is recognised as a recovery of part of cost unless it is
difficult to segregate into pre-acquisition and post-acquisition dividend.
In case there is a difficulty in segregation, such dividends are recognised
as revenue.
- Cash dividend declared by resident companies are recorded at net of
withholding tax, while declared by non resident companies are recorded
at gross value. Dividend income from resident Mutual Funds is recorded
at gross values. Tax deducted by Mutual Fund and non resident
companies is recognised as Advance Tax to the extent adjustable with
the Banks corporate tax liability.
- Bonus/Stock dividend declared and whose right to receive has been
established is not recognised as income. The quantity of shares received
as bonus/stock dividend is disclosed in Schedule 12(A) of the financial
statements.
iv. Foreign Exchange Transactions
- Foreign currency transactions are initially recognised in functional
currency, by applying to the foreign currency amount, the prevailing
exchange rate between the functional currency and the foreign currency
at the date of transaction.
- Each foreign currency assets and liabilities arising from foreign
currency transactions and outstanding at the end of the day are
revaluated by mid exchange rate prevailing at the end of each day. Mid
exchange rate is the average exchange rate of Non-Cash Ask Rate and
Bid rate.
- Gain or loss realized on trading of foreign currencies is recognized on
daily basis and accountedas Trading Gain / (Loss). This is presented
under Trading Gain / (Loss) in Schedule 22 of the financial statements.
- Gains/losses arising due to fluctuation in exchange rates of
different foreign currencies at every point of time (including intra-day
fluctuations) is recognized on daily basis and accounted as Revaluation
Gain / (Loss). This is presented under Revaluation Gain/(Loss) in
Schedule 22 of the financial statements.
- Premium/discount on foreign exchange forward contract is accounted
for as trading gain or loss at the time of transaction and presented under
Trading Gain / (Loss) in Schedule 22 of the financial statements.
- 25% of such revaluation gain is transferred to Exchange Fluctuation
Fund charging Profit and Loss Appropriation Account as per NRB
Directives.
v. Recovery from Written-Off Loans
- Recovery from written-off loans is recognised as income when the
amount is actually received from the borrower.

- All transaction costs viz., legal costs, notice publication expense,
negotiation fees etc. incurred for the recovery of written-off loans are
reduced from the gross recovery amount and disclosed in Schedule 28
of the financial statements.
vi. Gain / (Loss) arising on disposal of assets
- The gain or loss arising from the de-recognition of an item of property,
plant and equipment is included in profit or loss when the item is
derecognised. The gain or loss is determined as the difference between
the net disposal proceeds, if any, and the carrying amount of the item.
The carrying amount of an item of property, plant and equipment is
derecognised:
a. on disposal; or
b. when future economic benefits are not expected from its use or
disposal.
- The gain or loss arising on disposal of Available for Sale Investments is
included in the profit or loss when the investments are actually sold.
E. Expenses
Expenses are decrease in economic benefits during the accounting
period in the form of outflows or depletions of assets or incurrences of
liabilities that result in decreases in equity, other than those relating to
distributions to equity participants.
i. Interest Expense
- Interest expense comprise of interest expense accrued on foreign
currencies and local currency deposits, bonds and borrowings.
- All interest expenses are accounted in functional currency on accrual
basis.
ii. Employment Benefits
- Employee benefits are all forms of consideration given by the Bank and
the Subsidiary in exchange for service rendered by employees.
- This comprises of:
a. short term employee benefits viz., salary and all allowances, short
term compensated expenses, (annual leave, sick leave etc.), profit
sharing bonuses and perquisites (car facility, subsidized loans) that is
payable within twelve months after the end of the period;
b. post employment benefits that is payable after the completion of
employment; and
c. termination benefits that is payable as a result of the Banks and the
Subsidiarys decision to terminate an employees employment before the
normal retirement date or of an employees decision to accept voluntary
retirement in exchange of those benefits.
- Short term employee benefits are recognised as an expense when an
employee renders the service or at the time when the entitlement of
compensation increases due to rendition of service.
Annual Report 2014/15 141
- Post employment benefits are recognised as expense when the
entitlement of compensation accrues as a result of rendition of service.
iii. Depreciation
- Depreciation is the systematic allocation of depreciable amount of an
asset over its useful life.
- Each part of an item of property, plant and equipment of the
Group which is identifiable separately is depreciated separately. The
depreciation charge for each period is recognised in profit or loss unless
it is included in the carrying amount of another asset.
- Depreciation of an asset begins when it is available for use, i.e. when
it is in the location and condition necessary for it to be capable of
operating in the manner intended by the management. For simplicity,
depreciation is charged from the next month it is made available for
use. Depreciation of an asset ceases when it is derecognised at the time
of its disposal.
- Depreciationonassets ischarged to Income Statement on diminishing
balance method. Based on past experience regarding the economic life
of different classes of assets, their estimated life and depreciation rates
have been determined as follows, after considering for the likely scrap
value at the end of estimated life.
Nature of Assets Estimated Useful Life Depreciation Rate
Furniture 10 years 25%
Equipments 10 years 25%
Vehicles 7 years 20%
Computers 7 years 25%
Building 50 years 5%
- Furniture consists of metal / wooden working desks, chairs, sofa,
tables, etc. The useful economic life of these assets has been observed
to be about 10 years on an average, and the depreciation rate of 25%
on diminishing balance method has been derived also considering the
likely salvage value at the end of its useful economic life.
- Equipment consists of generators, UPS, inverters, water treatment
plants, etc. The useful economic life of these assets has been observed
to be about 10 years on an average, and the depreciation rate of 25%
on diminishing balance method has been derived also considering the
likely salvage value at the end of its useful economic life.
- The life of office vehicles varies from 6 years in case of vehicle scheme
to as high as 12 years at branches. Average life as such has been
estimated at 7 years and the depreciation rate of 20% on diminishing
balance method has been derived also considering the likely salvage
value at the end of its useful economic life.
- Computers are meant for specific use in Core Banking and the life may
run up to more than 10 years in some cases. Average life of computers
has been estimated at 7 years and the depreciation rate of 25% on
diminishing balance method has been derived also considering the likely
salvage value at the end of its useful economic life.
142 Nabil Bank Limited
- The useful economic life of building at 50 years and depreciation rate
of 5% have been estimated based on the generally accepted practice.
- Leasehold assets (improvements) and cost of Software licenses are
amortized over a period of useful life of the asset, estimated as 5 years
from the recorded date.
iv. Impairment Provision
- The amount of loss that results due to the reduction of recoverable
amount than the carrying amount of an asset or as a result of legal
requirement is charged to Profit and Loss Account as an impairment
loss. The impairment loss is provided for on the credit portfolios,
investments, receivables and fixed assets (if any) at every reporting
date.
a. Loan Loss Provision
- Provision for possible losses on loans is made to cover the risks
inherent in the Banks credit portfolio. Provision for possible losses from
loans, advances and bills purchased are made at the rates ranging from
0.25% (first slab for insured deprived sector loans) up to 100% (for
overdue loans exceeding one year) according to the classification of such
risk assets as per NRB Directives. Additional provision in excess of the
regulatory requirement (NRB Unified Directives) can also be made to
ensure comfortable cushion.
b. Provision on Investments
- Impairment on quoted investments is recognised by assessing the
recoverable amount of an investment from the stock exchange and
the cost of an investment. In case of investments that are not actively
traded at stock exchange, recoverable amount is computed on equity
basis. Impairment is determined when the carrying amount exceeds the
recoverable amount.
- In case of unquoted investments, recoverable amount of an investment
is determined on an equity basis. Impairment loss is recognised if the
recoverable amount so calculated on an equity basis is less than the
cost of an investment.
c. Impairment on Fixed Assets
- The Bank does not identify Cash Generating Unit (CGU) i.e. the
smallest group of fixed assets that generates cash inflows that are
largely independent of the cash inflows from other assets or group
of assets.Hence no impairment loss is provided unless there is clear
evidence that an assets market value has been reduced.
- The Bank and the Subsidiary assess, at each reporting date, whether
there is any indication that an impairment loss recognised in prior
periods for an asset no longer exist or may have reduced. If any such
indication exists, the Bank and the Subsidiary estimate the recoverable
amount of that asset. The Bank and the Subsidiary reverse impairment
loss to the extent it has been expensed off in prior years when the
recoverable amount exceeds the carrying amount.
v. Write Off expense
- Loan accounts graded Bad / Loss are written off from the books in
compliance with NRB Directives and Income Tax Act 2002, without
prejudice to the Banks right to recovery.
-Impairment provisions on loss accounts are written back at the time of
loan written-off.
vi. Income Tax Expense
- Income tax expense comprises of current tax, deferred income tax and
prior period tax i.e. additional income tax assessed by the tax auditor
and taxation authorities. Disclosure of additional income tax in the Profit
and Loss Account is made as required by NRB.
- Current tax liabilities (assets) are the amounts that are expected to
be paid to (recovered from) the Inland Revenue Department in respect
of income of current year. The tax rates (and tax laws) used for the
computation are those that are enacted or substantively enacted by
the Balance Sheet date. Accordingly, provision for current tax has been
made with reference to the profit of the financial year based on the
provisions of the Income Tax Act 2002 and amendments thereto.
- Deferred taxes are recognized and provided for on temporary
differences arising between taxable incomes and accounting incomes.
- Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply to the period when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the balance sheet date.
- Deferred tax assets are not recognised unless there is convincing
evidence that there will be sufficient future taxable income available to
realize such assets. Deferred tax assets & liabilities are netted off and
presented either under Other Assets or under Other Liabilities.
- Deferred Tax Reserve is earmarked to the extent of outstanding balance
of Deferred Tax Assets as per NRB guidelines.
F. Recovery of Principal and Interest on Loans
- The Bank applies amount recovered from borrowing customers,
first for recovery of overdue interest and then for recovery of overdue
principal. There is one exception to this treatment in case of
restructuring / rescheduling of non-performing loan accounts, where
the amount recovered from borrowing customer can be applied first
for recovery of a minimum 25% of overdue interest and thereafter
for recovery of overdue principal. This policy is consistent with the
regulatory provisions prescribed by NRB.
G. Contingent Liabilities
- The contingent liabilities comprise of:
a. possible obligations that arise from past events and whose existence
will be confirmed only by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the control of the Bank;
or

b. present obligations that arise from past events but is not recognised
because:
i. it is not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; or
ii. the amount of the obligation cannot be measured with sufficient
reliability.
- All letter of credit, bank guarantee and forward exchange contract
liabilities, within their validity period, have been shown in full amount
as contingent liabilities in accordance with the directive issued by NRB.
- Besides above, all known liabilities wherever material are provided for,
and liabilities, which are material and whose future outcome cannot
be ascertained with reasonable certainty, are treated as contingent and
disclosed under contingent liabilities.
H. Events after the Balance Sheet Date
Events after the Balance Sheet Date are those events, favorable and
unfavorable, that occur between the Balance Sheet date and the date
when the financial statements are authorized for issue.
- In this regard, all material and important events that occurred after the
balance sheet date have been considered and appropriate disclosures
are made in the financial statements underPoint No. 16 in Schedule 33
Notesto Accounts.
I. Earnings Per Share
a. Basic Earnings per Share is calculated for profit or loss attributable
to the Banks and the Subsidiarys ordinary equity holders and, if
presented, profit or loss from continuing operation attributable to those
equity holders. It is calculated by dividing profit or loss attributable to
ordinary equity holders (in the numerator) by the weighted average
number of ordinary shares outstanding (in the denominator) during the
period.
- The earnings attributable to the ordinary equity holders comprise of
the earnings of the Bank and the Subsidiary after adjustment of all
expenses including tax expense and preference dividends, differences
arising on the settlement of preference shares, and other similar effects
of preference shares classified as equity.
- Ordinary equity (share) comprises an equity instrument that is
subordinate to all other classes of equity instruments of the Bank and
the Subsidiary, if any.
- Weighted average number of ordinary shares outstanding during the
period is the number of ordinary shares outstanding at the beginning
of the period, adjusted by the number of ordinary shares bought back
or issued during the period, multiplied by a time-weighting factor.
The time-weighting factor is the number of days that the shares are
outstanding as a proportion of the total number of days in the period.
Annual Report 2014/15 143
- In a capitalization or bonus issue to share split, ordinary shares are
issued to existing shareholders for no additional consideration, therefore
the number of ordinary shares outstanding is increased without a
corresponding increase in resources. The number of ordinary shares
outstanding before the event is adjusted for the proportionate change in
the number of ordinary shares outstanding as if the event had occurred
at the beginning of the earliest period presented.
b. Diluted Earnings per Share is calculated for profit or loss attributable
to the Banks and the Subsidiarys ordinary equity holders and, if
presented, profit or loss from continuing operation attributable to those
equity holders. It is calculated by dividing profit or loss attributable to
ordinary equity holders (in the numerator) by the weighted average
number of ordinary shares outstanding (in the denominator) during the
period and is adjusted for the effects of all dilutive potential ordinary
shares.
- As a result of adjustment for the effects of dilutive potential ordinary
shares:
i. profit or loss attributable to ordinary equity holders of the Bank and
the Subsidiary is increased by the after-tax amount of dividends and
interest recognised in the period in respect of the dilutive potential
ordinary shares and is adjusted for any other changes in income or
expense that would result from the conversion of the dilutive potential
ordinary shares; and
ii. the weighted average number of ordinary shares outstanding is
increased by the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
- Dilutive potential ordinary share is a financial instrument or other
contract that may entitle its holder to ordinary shares. It comprises of
convertible instruments like convertible preference shares, convertible
debentures, options and warrants and similar such instruments.
J. Basis of Interest Computation
- Interest expenses on deposits/borrowings/bonds and interest income
on loans & local currency investments are computed on the basis of
365 days a year.
- Interest on foreign currency investments is computed on the basis of
365 days a year for GBP and 360 days a year for USD, EUR, DKK and
JPY.
8.2 The Bank and its subsidiary adopt uniform accounting policies for
like transactions and events in similar circumstances, to the extent that
do not contradict with regulatory provisions of Nepal Rastra Bank.
144 Nabil Bank Limited

Schedule: 33

Notes to Accounts
1. Share Capital

1.1. Paid-up equity capital

Nepal Rastra Bank (NRB), the licensing and regulatory authority, has prescribed NRs.2,000,000 thousands minimum paid up equity capital re-
quirement for class A licensed commercial banks as at the balance sheet. The Banks paid up equity capital stands at NRs. 3,657,654 thousands.

Over the years the Bank has enhanced its paid up equity capital organically, through issuance of stock dividends, as presented in th table hereunder.

(NRs. 000)

Particulars Equity enhancement Year of Issue

Initial issuance (469,707 @ NRs.60 per share) 28,182 1984 - 85
Additional issuance (3,820 @ NRs.60 per share) 229 1985 - 86
Additional issuance (180 @ NRs.60 per share) 11 1986 - 87
Additional issuance (23,333 @ NRs.60 per share) 1,400 1987 - 88
Additional issuance (2,960 @ NRs.60 per share) 178 1988 - 89
Final Call (500,000 @ NRs. 40 per share)* 20,000 1991 - 92
Issuance of 30% Bonus Shares 15,426 1992 - 93
Issuance of 100% Bonus Shares 65,426 1994 - 95
Issuance of 100% Bonus Shares 130,851 1996 - 97
Issuance of 50% Bonus Shares 131,094 1997 - 98
Issuance of 25% Bonus Shares 98,858 2000 - 01
Issuance of 40% Bonus Shares 197,562 2007 - 08
Issuance of 40% Bonus Shares 276,531 2008 - 09
Issuance of 50% Bonus Shares 483,377 2009 - 10
Issuance of 40% Bonus Shares 580,644 2010 - 11
Issuance of 20% Bonus Shares 407,072 2012 - 13
Issuance of 25% Bonus Shares 610,327 2013 - 14
Issuance of 20 % Bonus Shares 610,486 2014 - 15
Capital Issued and Paid up at balance sheet date 3,657,654

* Rs. 40 per share was called to make paid-up capital at Rs. 100 per share.

1.2. Proposed changes in paid-up equity capital

The Board of Directors of the Bank in its meeting dated September 29, 2015 has passed a resolution recommending for distribution of stock divi-
dend at 30% of paid up equity capital at year ended July 16, 2015. The Banks paid up equity capital shall increase by NRs.1,097,296 thousands
upon approval of the resolution from the upcoming shareholders Annual General Meeting. After approval of the proposed resolution, there shall also
be additional incremental impact due to upward rounding of fraction share adjustments in the paid-up equity.

2. Reserve and Surplus
2.1. General Reserve
Under section 44 of the Banks and Financial Institutions Act 2006,
licensed institutions are required to appropriate 20% of net profit to
general reserve fund each year. This is a statutory reserve fund and non-
distributable, except if specifically approved by the regulator. Institutions
are required to appropriate fund into this reserve until the reserve
balance is twice the size of paid up equity capital.
The Bank has appropriated NRs.419,000 thousands into general
reserve from current years profit. The banks reserve position is
presented hereunder:
(NRs. 000)
Particulars Amount Amount
Opening balance 3,084,500
Minimum regulatory requirement @
20% of net profit 418,763
Actual amount transferred to
General Reserve 419,000 419,000
Closing balance 3,503,500
2.2. Contingent Reserve
The Bank has appropriated NRs.1,000 thousands into contingent
reserve fromcurrent years profit.The Bank has paid a total sum of
NRs.450 thousands towards treatment of life-threatening ailments of
two of its employees. This amount has been transferred from contingent
reserve to retained earnings and recognized as medical expense
presented in Schedule 23 of the financial statements
(NRs. 000)
Particulars Amount
Opening balance 14,574
Add: Appropriation from current years Profit 1,000
Less: Transferred to Retained Earnings on
account of reimbursement to staff (450)
Closing balance 15,124
2.3. Deferred Tax Reserve
The banks Deferred tax reserve has increased by NRs.9,365 thousands
in the current year. As of balance sheet date the Banks deferred tax
reserve stands at NRs.52,544 thousands.
2.4. Investment Adjustment Reserve
The bank has maintained adequate Investment Adjustment Reserve
(IAR)asper regulatory requirement prescribed in NRB directives 04/071
and 08/071. The Bank has appropriated NRs.797 thousands into
IAR from current years profit. As of balance sheet date the balance
in IAR stands at NRs.139,190 thousands. Detail information on IAR
calculation and additional information on Available for Sale investment
portfolio is presented in point 5.6.3 of this notes to account.
Annual Report 2014/15 145
2.5. Exchange Fluctuation Fund
Under section 45 of the Banks and Financial Institutions Act 2006,
licensed institutions are required to appropriate 25% of net foreign
exchange revaluation gain to exchange fluctuation fund each year. This
applies to revaluation gain on foreign currency position except the Indian
currency.
The Bank has appropriated NRs.45,500 thousands into exchange
fluctuation fund from current years profit. The banks reserve position is
presented hereunder:
(NRs. 000)
Particulars Amount Amount
Opening balance 177,400
Minimum regulatory requirement @ 25% of
revaluation gain presented in Schedule 22 45,440
Actual amount transferred to
Exchange Fluctuation Fund 45,500 45,500
Closing balance 222,900
2.6. Capital Redemption Reserve
(Debenture redemption)
As per provisions in clause 5 of NRB directive 16/071 licensed
institutions are required to maintain a redemption reserve in respect of
debenture liability. Regulator has approved debenture issuance of the
Bank vide their letter bearing reference number Bai.Bi.Ni.Bi./Bi.R 2/
Nabil Bank/9/064/65 dated 09th May 2008 (27.01.2065 B.S.). As
per the approval terms the bank is required to transfer 20% of the face
value of debenture to capital redemption reserve each year, starting
from the 6th year of debenture issuance. Current Year being the 7th
year, the bank has appropriated NRs. 60,000 thousands to redemption
reserve this year. The total Capital Redemption Reserve stands at NRs.
120,000 at end of the current year.
3. Proposed Dividend
3.1. Nabil Bank
The Board of Directors of the Bank, at its meeting dated September
29,2015 has passed a resolution recommending for distribution of
dividend as stated hereunder, based on the paid up equity capital at
year ended July 16, 2015.
Stock dividend Nrs.30 per share. The Banks paid up equity capital
shall increase by NRs1,097,296 thousands upon approval of the board
resolution at the upcoming shareholders Annual General Meeting.
Proposed stock dividend is also presented as share capital on the face of
balance sheet, in line with the presentation format prescribed by NRB.
Cash dividend NRs.6.84per share. Total cash dividend payable for the
year will amount to NRs.250,261thousands.Proposed cash dividend
has been appropriated from the profit and disclosed separately on the
face of balance sheet, per presentation format prescribed by NRB.
146 Nabil Bank Limited
3.2. Subsidiary Co.
(Nabil Investment Banking Ltd.)
The Board of Directors of the Subsidiary, at its meeting dated August
19, 2015 has passed a resolution recommending for distribution of
cash dividend Nrs.20per share, based on the paid up equity capital at
year ended July 16, 2015.This will be decided at the upcoming share-
holders Annual General Meeting of the Subsidiary.
Total cash dividend payable for the year will amount to
NRs.21,000thousands.In line with the provisions in Nepal Accounting
Standard NAS 05 on Events after Balance Sheet Date the proposed
dividend has not been recognized as liability at balance sheet date. This
has been disclosed in Subsidiarys financial statements under Notes to
Accounts. This complies with the provisions of NAS 01 on Presentation
of Financial Statements.
3.3. No interim dividends were paid out during the year by the Bank
or the Subsidiary. All dividend payments attract withholding tax at
source at 5% of dividend amount.
4. Foreign Promoter Shareholding
NRB Circular 22/070/071 stipulates that shareholding by foreign com-
panies (other than financial institutions) be divested to foreign financial
institutions and/ or domestic individual / corporates latest by end of
financial year 2014-15. Shareholding of NB International Ltd., the
foreign promoter shareholder of the Bank stands at 50% as of balance
sheet, and has not been divested as required under the regulations.
5. Assets
5.1. Balance with Nepal Rastra Bank
(NRB)
Bank balance with NRB stands at NRs.12,924,604 thousands at the
balance sheet date. Reconciliation of the balances per ledger with
statements is presented hereunder:
Reconciliation statement (NRs. 000)
Particulars Ledger Statement
Unreconciled balance as on 16.07.2015 12,924,604 13,022,127
We Debit (115,081) -
They Debit (7,344) -
We Credit 136,576 -
They Credit 83,372 -
Reconciled balance as on 16.07.2015 13,022,127 13,022,127
Ageing Details (NRs. 000)
Age Ledger Statement Ledger Statement
Debit Debit Credit Credit
< 1 month 115,081 6,724 110,975 82,888
> 1 month < 3 months - 620 11,549 -
> 3 month < 6 months - - 4,471 -
> 6 month < 12 months - 1 2,223 352
> 12 month < 24 months - - 3,030 -
> 24 months - - 4,328 132
Total 115,081 7,344 136,576 83,372
5.2. Balance with domestic Banks and
Financial Institutions
Bank balance with domestic banks stands at NRs.149,529 thousands
at the balance sheet date. Reconciliation of the balances per ledger with
statements is presented hereunder:
Reconciliation statement (NRs. 000)
Particulars Ledger Statement
Unreconciled balance as on 16.07.2015 149,529 150,795
We Debit (269) -
They Debit (45) -
We Credit 1,312 -
They Credit 269 -
Reconciled balance as on 16.07.2015 150,795 150,795
Ageing Details (NRs. 000)
Age Ledger Statement Ledger Statement
Debit Debit Credit Credit
< 1 month 269 39 230 269
> 1 month < 3 months 0 6 942 -
> 3 month < 6 months - - 140 -
> 6 month < 12 months - - - -
> 12 month < 24 months - - - -
> 24 months - - - -
Total 269 45 1,312 269
5.3. Balance with foreign Banks and
Financial Institutions
Bank balance with foreign banks stands at NRs.1,109,406 thousands
at the balance sheet date. Reconciliation of the balances per ledger with
statements is presented hereunder:
Reconciliation statement (NRs. 000)
Particulars Ledger Statement
Unreconciled balance as on 16.07.2015 1,109,406 1,670,950
We Debit (977,184) -
They Debit (35,397) -
We Credit 1,428,640 -
They Credit 145,486 -
Reconciled balance as on 16.07.2015 1,670,950 1,670,950
Ageing Details (NRs. 000)
Age Ledger Statement Ledger Statement
Debit Debit Credit Credit
< 1 month 977,184 35,337 1,402,194 142,661
> 1 month < 3 months - 26 20,671 153
> 3 month < 6 months - 34 5,552 156
> 6 month < 12 months - - 223 -
> 12 month < 24 months - - - -
> 24 months - - - 2,517
Total 977,184 35,397 1,428,640 145,486
 Annual Report 2014/15 147

5.4. Inter-Branch Reconciliation

There are no un-reconciled balances in case of inter-branch transactions as on balance sheet date.

5.5. Loans and Advances

The Banks year-on-year gross loans and advances to customers increased by 19.5% to reach NRs.67,161,671 thousands at balance sheet date.
Business Loans that comprise of term loans, overdraft, trust receipt and other working capital loans occupy 74% of total lending portfolio. Similarly,
about 19% of the portfolio is occupied by consumer retail loans and credit card loans while 7% of total exposure is occupied by real estate loans.

(NRs. 000)

Type of Loan and advances Current Year Previous Year changes

volume %
1. Real Estate Loan 4,897,786 4,473,455 424,331 9.5
a. Residential Real Estate Loan (except Home Loan up to NRs.10 million) 1,517,725 1,100,801 416,924 37.9
b. Business Complex & Residential Apartment Construction Loan 754,977 616,487 138,490 22.5
c. Income generating Commercial Complex Loan 321,245 534,541 (213,296) (39.9)
d. Other Real Estate Loan (Including Land purchase & Plotting) 2,303,840 2,221,626 82,214 3.7
2. Personal Home Loan up to NRs.10 Million 5,884,760 5,161,490 723,270 14
3. Margin Type Loan - - - 0
4. Term Loan 10,604,097 8,566,788 2,037,309 23.8
5. Overdraft / TR Loan / Working Capital Loan 38,843,669 32,113,926 6,729,743 21
6. Others 6,931,359 5,887,418 1,043,941 17.7
Total 67,161,671 56,203,077 10,958,594 19.5

NRB Directive 03/071 has defined real estate loans as residential
real estate loans in excess of NRs.10 million; business complex and
residential apartment construction loans; loans to income generating
commercial complex; and other real estate loans for land purchasing
and plotting.
NRB Directives 03/071 has set a maximum ceiling of lending to total
real estate sector at 25% of gross loans and advances. At balance sheet
date, banks exposure under this head is 7% of total loan portfolio. The
Bank stands in compliance to this requirement.
5.6. Investments
5.6.1. Held for Trading
NRB Circular 05/071/72 dated 2071.05.04 (August 20th 2014) has
capped Held for Trading portfolio of licensed institutions at 1% of core
capital. As of balance sheet date the Bank does not hold investments
that are primarily intended for trading purpose because the bank does
not recognize securities trading activity as its core business activity.
5.6.2. Held to Maturity Investments
Overall held to maturity investments of current financial year have
increased by 70.52% over the previous financial year. HTM investment
listed on stock exchange is presented net of impairment provision on the
balance sheet date.

(NRs. 000)

Type of investments At Cost Impairment Current Previous %

Year Year change
1. Nepal Government Treasury Bills * 7,992,936 - 7,992,936 5,706,471 40.1
- 7 days (reverse repo) 1,200,000 - 1,200,000 -
- 91 days 1,349,400 - 1,349,400 5,706,471
- 126 days 1,518,260 - 1,518,260 -
- 139 days 99,863 - 99,863 -
- 182 days 848,208 - 848,208 -
- 363 days 198,326 - 198,326 -
- 364 days 2,778,878 - 2,778,878 -
2. Nepal Government Other Securities 2,183,994 - 2,183,994 2,583,715 (15.5)
3. NRB Bonds (Term Deposits) 4,750,000 - 4,750,000 - -
3. Foreign Bonds (denominated in US $) 253,902 - 253,902 240,312 5.7
4. Placement in local and foreign banks 15,383,505 - 15,383,505 9,393,788 63.8
Total 30,564,337 - 30,564,337 17,924,286 70.5

*The Accrued Interest Receivable on treasury bills at balance sheet date is NRs.8,208 thousands. This has been capitalized in the value of
treasury bills, being amortization of discount.
148 Nabil Bank Limited

Investment in reverse repo securities NRs.1,200,000 thousands has
been grouped under Treasury Bills. Similarly, investment in Term Deposit
auction of NRB, the central bank, NRs.4,750,000 thousands has been
grouped under NRB Bonds.
Investment in Foreign Bonds comprise of securities denominated in
USD, which is presented in functional currency i.e. NRs. equivalent
terms. The change in value from previous year is due to the change in
exchange rate. Nobonds were acquired or disposed during the current
financial year.
5.6.3. Available for Sale Investments (AFS)
The Banks Available for Sale investments (AFS) comprised of all
investments other than Held ToMaturity investments and Held For
Trading investments. These investments should be marked to market
on a regular basis and the difference to be adjusted through reserves
as required under NRB Directives 4 and 8. The bank has deviated from
this measurement method and continues to recognize AFS portfolio at
historical cost net of impairment loss. The rationale for this deviation is
elaborated in the following paragraphs for specific group of investments.
NRB Directive 04/071 stipulates requirement of Investment Adjust-
ment Reserve (IAR) to the extent of 2% of AFS portfolio. NRB Directive
08/071 has stipulated additional IAR requirement for investments in not
listed securities and allowed complete exemption for certain securities.
The Bank has complied to the IAR requirement by maintaining IAR at
2% of investments in listed securities and at 100% of investments in
not listed securities.The bank hasmaintained IAR at 100% of its equity
investment in subsidiary and has also deducted such investment under
Tier I Capital. Detail calculation of IAR for different groups of AFS
investment is presented hereunder:

(NRs. 000)

Type of Investments Historical Cost Impairment Net IAR

Investment Requirement
1. Listed Securities 276,401 6,987 269,413 5,388
- Equity in local licensed BFIs 128,097 6,987 121,110 2,422
- Mutual Fund units 148,304 - 148,304 2,966
2. Not listed Securities 138,737 - 138,737 133,802
- Equity in local licensed BFIs 44,000 - 44,000 44,000
- Equity in local BFIs under licensing process 10,000 - 10,000 10,000
- Equity in other local institutions 4,936 - 4,936 -
- Equity in SWIFT 1,802 - 1,802 1,802
- Equity in subsidiary company 78,000 - 78,000 78,000
Closing Balance 415,138 6,987 408,150 139,190
Opening balance of IAR 138,392
Additional appropriation to IAR in current year 797

Equity Investments in other local institutions (not listed) presented
above is exempted from IAR requirement. These include equity
investments in Credit Information Center Ltd., National Banking Training
Institute Ltd. and Nepal Clearing House Ltd.
5.6.3.1. Equity investments in local licensed BFIs
These comprise of equity investments in promoter shares of Class D
licensed micro financial institutions. The bank has invested as founding
promoter shareholder with the intention of aligning its priorities with
those of the government towards development of the microfinance
sector. These investments count towards regulatory deprived sector
lending requirement.
These investments are recognized at historical cost net of impairment,
considering inactive market and unavailability of market prices for this
class of shares. Ordinary class of shares are actively traded at Stock
Exchange but are generally quoted at price much higher than those
actually fetched by promoter class shares. Moreover, bulk promoter
shares are seldom traded due to trading restrictions imposed by the
regulators. The number of institutional investors required to ensure
active trading of these shares is also limited. Due to these reasons,
quoted market price cannot be used to estimate their fair value and
hence have been measured at historical cost rather than mark-to-
market measurement required under NRB directives 4 and 8.

These investments are tested for impairment on equity basis and
any impairment loss is recognized in the Profit and Loss account as
described in Schedule 32 Principal Accounting Policies.
5.6.3.2. Investment in Mutual Fund Unit
The Bank has obtained license from Security Exchange Board of Nepal
(SEBON) on 01st February 2012 to sponsor Mutual Fund schemes.
The bank has sponsored a Mutual Fund Scheme under name Nabil
Balanced Fund I. The Bank has subscribed to 10,500,000 units @
Rs.10 per Unit.
The Bank has invested in this fund to comply with the regulatory
provision that requires 15% seed capital injection by the Fund Manager
or the Fund Sponsor. The Banks investment constitutes 14% of the
fund size. Remaining 1% is subscribed by the Fund Manager. This
being seed capital, the prospect for the Bank to sell off this investment
is subject to regulators permission, which the bank has assessed to be
remote. Therefore the Bank has recognized this investment at historical
cost basis rather than mark-to-market measurement required under
NRB directives 4 and 8.
As at balance sheet date the Net Assets Value of Nabil Balanced
Fund I is NRs.15.87 per unit. Based on the closing market price of
NRs.13.50 on 16th July 2015 at Nepal Stock Exchange the market
value of this investment is NRs.141,750 thousands.
In the current year the bank also invested in initial offering of three
other mutual fund schemes, upon request from the respective fund
managers. As presented in Schedule 12 (A) of the financial statements
these investments are collective recognized at cost at NRs.43,304
thousands and their collective market value is NRs.43,477 thousands.
The bank has recognized these investments at historical cost, assessing
the prospects for bulk transactions to be remote at the current stage of
market development for mutual fund.
5.6.3.3. Equity investments in foreign entities
The Bank holds different classes of common stocks in MasterCard
International and VISA Inc.
MasterCard International on conversion into a private stock corporation
allocated its franchisee class B common stock to its members in
recognition of their membership interest. The bank presently holds
11,140 units of Class B Common Stock having a par value of USD
0.0001 each in MasterCard International Incorporated. Holders of
Class B common stock are entitled to receive equal amount of dividend
declared for Class A stock and confer equity rights but not the voting
rights in MasterCard Incorporated.
The shares of Class B common stock may be traded privately among the
eligible members of MasterCard International Incorporated (subsidiary of
MasterCard Incorporated) while Class A common stock is traded in New
York Stock Exchange. As on 16th July 2015, the closing price of Class
ACommonStock was USD 95.82 per share. The fair value of the Banks
holding of 11,140 units is around NRs.108,505 thousands.
Annual Report 2014/15 149
Similarly, the Bank currently holds 6,166 units of Class C Common
Stock of VISA Inc. having a par value of USD 0.0001 each allocated
after its conversion to VISA Inc. This class of stock is eligible for public
sale since 7thFebruary, 2011 and trades at same price as Class A or
Class B shares. Effective March 19, 2015 the conversion rate for Class
C Common Stock is equals to 4 units of Class A Common Stock. At
16th July 2015, Class A Common Stocks were priced at USD70.57,
which derives the equivalent price of Class C Common Stock at USD
282.28 per share.Based on this the fair value of Banks holding on that
date is NRs.176,926 thousands.
These shares were conferred to the bank without any transfer value
payment, and hence are not recognized in the financial statements,
except for disclosure of fair market value.
5.6.3.4. Equity investments in BFIs under
licensing process
This comprise of equity investments in promoter shares of Jeevan
LaghubittaBikas Bank Ltd., a micro financial institutions which is under
process of obtaining license from the regulator. This investment is
recognized at historical cost in absence of market price.
5.6.3.5. Equity investments in Subsidiary
As of balance sheet date, the Bank has invested NRs.78,000
thousands in its subsidiary, holding an effective equity interest of
74.29%. Subsidiarys corporate information is presented in Schedule
32 Principal Accounting Policies of this financial statement. These
investments are recognized at historical cost in absence of market price.
5.6.3.6. Equity investments in other
local institutions
These comprise equity investments made in local companies whose
services complement banking business. The Bank holds promoter group
equity shares in Karja Suchana Kendra Limited (Credit Information
Bureau of Nepal), National Banking Training Institute and Nepal
Clearing House Ltd. These investments are not listed ones and are
recognized at historical cost. NRB Directives 4 and 8 have exempted
these securities from measurement at mark-to-market.
5.6.3.7. Equity investments in SWIFT
The Bank holds eight unit shares in SWIFT (Society for Worldwide
Interbank Financial Telecommunication) having nominal value of EUR
125 per share. These shares are conferred to the Bank in respect of its
membership interest in SWIFT network. These shares are entitled to
voting rights at the annual General Meeting of SWIFT shareholders.
SWIFT shares are not listed at any stock exchange and do not confer
any dividend payments. Based on net assets valuation the transfer value
of one SWIFT share has been fixed at EUR 3,430 (EUR 125 capital
and EUR 3,305 premium) at the June 2014 General Meeting of SWIFT
shareholders. There has been no revision in transfer value since then.
This investment is recognized at historical cost being the actual transfer
value paid while subscribing to the shares awarded to the Bank. The
share is denominated in EUR but is presented in functional currency i.e.
150 Nabil Bank Limited
NRs. equivalent terms. The change in value from previous year is due
to the change in exchange rate. No shares were acquired or disposed
during the year.
5.7. Fixed Assets
5.7.1. Leasehold Assets
Summary of movement in leasehold assets of the Bank and
the Group is presented hereunder:
(NRs. 000)
Particulars Nabil Subsidiary Group
Bank Co.
At Cost 66,204 6,955 73,159
- opening balance 72,942 6,955 79,897
- additions this year 10,504 - 10,504
- deductions this year (17,242) - (17,242)
Amortization 42,635 2,218 44,853
- opening balance 47,006 827 47,833
- additions this year 12,871 1,391 14,262
- deductions this year (17,242) - (17,242)
Net closing balance 23,569 4,737 28,306
5.8. Other Assets
Following disclosure relate to Other Assets NRs.2,371,567 thousands
presented in the face of balance sheet and follow the order of
presentation in Schedule 16.
5.8.1. Stock of Stationery
As at balance sheet date, the Banks closing stock of stationery is valued
at NRs.9,441 thousands. Out of this stationery worth NRs.4,581
thousands are held at branches and those worth NRs.4,859 thousands
are held at central store. No material items that are disposable /
obsolete were held in possession at the balance sheet date.
5.8.2. Income Receivable on Investments
Income receivable on investments comprise of interest accrued on
placements, bonds and term deposit of central bank. Interest accrued
on treasury bills, being amortization of discount, has been capitalized in
the bid value.
(NRs. 000)
Particulars Local Foreign Total
Currency Currency
- Interest accrued on placements 44 63,868 63,911
- Interest accrued on bonds 8,981 3,417 12,399
- Term Deposit with NRB 77 - 77
Total 9,102 67,285 76,387
5.8.3. Accrued Interest Receivable on Loan
As at balance sheet date, the Banks accrued interest receivable on
loan is valued at NRs.581,099thousands.These comprise of interest
on loans, advances and bills purchased that have accrued but not yet
realized in cash at balance sheet date. The portion of interest that has
not yet fallen due stood at NRs.118,884 thousands while those that are
under overdue status stood at NRs.462,215 thousands.
The bank has recognized interest suspense equivalent to the entire
accrued interest that is not realized in cash at year end. This treatment
of recognizing interest income on loans in cash basis complies with
regulatory provisions, although deviates from NAS 07 Revenue.
5.8.4. Sundry Debtors
Sundry Debtors comprise of accounts receivables and deposits at Large
Tax Payers Office. Deposit at LTPO is made as per the requirement of
Income Tax Act which stipulates for deposition of 1/3 of disputed tax
before contesting at the Inland Revenue Department for administrative
review against the assessment order.
(NRs. 000)
Particulars current previous
year year
Account Receivables 677,816 1,214,835
- Nepal Rastra Bank 1,077 10,422
- Customers 107,309 146,696
- Employees 35,369 39,750
- Others 534,061 1,017,967
Deposit at Large Tax Payers Office 10,904 10,904
Total 688,720 1,225,739
5.8.5. Staff loans and advances
Staff Loans and Advances are extended in line with the integrated staff
loan policy of the bank. Eligibility criteria for availing staff loans are
directly linked to the period of service under permanent payroll of the
Bank.
Loans extended to staffs have increased during the year as more
staffs became eligible and actually availed such facilities. The loans
outstanding as at the balance sheet date were as under:
(NRs. 000)
Particulars current previous
year year
Auto Loan 34,995 34,111
Personal Loan 276,319 208,719
Housing Loan 977,568 889,421
Total 1,288,882 1,132,251
The Bank has been extending housing loans to its employees under
the integrated staff loan policy of the bank. As such provision for
staff housing fund as required by the Labour Act 1992 has not been
created. The Bank has recognized interest income on staff housing loan
on accrual basis upon obtaining specific approval from the regulator.
Interest income on staff auto and personal loans is recognized in cash
basis following the general regulatory guideline of cash based interest
income recognition on loans.
 Annual Report 2014/15 151

5.8.6. Prepayments 5.9. Bullion Stock

Prepayments relate to charges such as rent, insurance, communication,
asset maintenance contracts, etc. that require payment in advance
whereas recognized as expense on accrual basis. Break up of
prepayment balance at year end is presented hereunder:
(NRs. 000)
As at balance sheet date, the Bank holds 80 Kilograms of gold and
550 Kilograms of silver in its custody as a consignee. At balance sheet
date the fair market value of gold and silver in banks consignee is
NRs.297,772 thousands and NRs.26,908 thousands respectively,
based on the international market price and currency exchange rate.

Particulars current previous
year year
Prepaid items gold and 8,480 Kilograms of silver.
- Rent 8,957 8,574
- Insurance 12,313 13,097
- Maintenance 8,343 5,513
- Communication 3,330 2,511
- Others 2,085 883
Total 35,027 30,578
5.8.7. Others
This item consists of accrued interest receivable on staff loans and
security amount deposited by the bank for availing public utility
services.
(NRs. 000)
Particulars current previous
year year
AIR on Staff Loan 219,327 191,312
Advance deposits for utilities 1,241 1,250
Total 220,568 192,562
During the year the Bank received in consignment 200 Kilograms of
gold and 8,210 Kilograms of silver. Similarly, it sold 266 Kilograms of
(Kilograms)
Particulars gold silver
Opening balance 146 820
add : consignments received during the year 200 8,210
less : sold to commercial banks (192) (3,000)
less : sold to non bank parties (74) (5,480)
Closing balance 80 550
Value in USD
- Gold Price USD 1,144.65 per Ounce 2,929,388
- Silver Price USD 14.97 per Ounce 264,713
Value in NRs.000 (@ NRs.101.65 per USD) 297,772 26,908
As stated in Schedule 32 Principal Accounting Policies, the Bank acts
as a consignee to the consignor and hence does not recognize bullion
stock in its book as inventory.
6. Liabilities

AIR on Staff Housing Loan is realized out of proceeds from Endowment
Life Policy. Before disbursement of individual home loan to employees,
an endowment life policy is purchased by the Bank for insured sum
equivalent to the principal loan amount. The insured policy is purchased
for a period earlier of 20 years or remaining service period of the
employee till retirement. Employees pay insurance premium in respect
of individual policy on monthly basis. Upon maturity of the endowment
policy, the proceeds / bonus are applied towards settlement of interest
and principal loan amount in a single installment. Any surplus or
shortfall is entitled to the concerned employees.
6.1. Debentures and Bonds
The Bank allotted Nabil Bank Bond 2075 (2018 A.D.) of total face
value NRs.300,000 thousands in July/August 2008 A.D., redeemable
in July / August 2018 A.D. The Bond is listed in Nepal Stock Exchange
(NEPSE) with symbol NABILB2075.The carrying value of the debenture
at balance sheet date is NRs.300,000 thousands.
6.2. Deposits

6.2.1. During the current financial year, the Bank has been able to
increase overall deposits by 38.3% or NRs.28,849,119 thousands.
Movement in different deposit segments is presented hereunder:
(NRs. 000)

deposits Current Year Previous Year changes

volume %
Interest Free Deposits 14,709,850 11,247,608 3,462,242 30.8
- local currency 12,335,563 8,944,571 3,390,992 37.9
- foreign currency 2,374,287 2,303,037 71,250 3.1
Interest Bearing Deposits 89,528,060 64,141,183 25,386,877 39.6
- local currency 75,420,237 54,997,720 20,422,517 37.1
- foreign currency 14,107,823 9,143,463 4,964,359 54.3
Total 104,237,910 75,388,791 28,849,119 38.3
152 Nabil Bank Limited
6.2.2. Deposit Insurance
The bank has insured savings and fixed deposits of all natural per-
son account holders for balance up to NRs.200 thousands threshold
amount. For this the Bank has entered into an agreement with the
insurer, Deposit and Credit guarantee Corporation Pvt. Ltd. on 13th
December 2011. As of balance sheet date, the total insured deposit
portfolio is NRs.11,093,149 thousands and total number of insured
deposit accounts is 301,053.
6.3. Bills Payable
Bills payable comprise of managers check, local currency demand
drafts, travellers check issued by the Bank and bills (check) realized on
behalf of customers from Nostro banks but not yet credited in custom-
ers accounts. The bank also issues foreign currency demand drafts of
Nostro banks, in which case the respective Nostro accounts are credited
directly rather than recognizing payable against the issued instrument.
Sale of Travellers Check has since stopped in Nepal.
(NRs. 000)
Particulars current previous
year year
Local currency bills 46,868 71,374
- demand draft 1,118 2,665
- bill of exchange 226 0
- managers check 45,524 68,709
Foreign currency bills 196,565 142,205
- bill of exchange 195,057 137,933
- managers check 1,508 4,031
- travellers check - 241
Net closing balance 243,433 213,579
6.4. Other Liabilities
Following disclosure relate to Other Liabilities Nrs.1,467,541 thousands
presented in the face of balance sheet and follow the order of presenta-
tion in Schedule 7 of financial statements.
6.4.1. Gratuity Fund
The Bank has a separate Gratuity Fund in respect of gratuity obligation
that accrued till Mid July 2003. As per Income Tax Rules, 2003, this
portion of retirement benefit is tax free for employees. This obligation
is settled when staffs retire or resign from the services of the Bank.
During the current financial year the Bank settled gratuity obligation of
NRs.7,620 thousands from this fund.
(NRs. 000)
Particulars current previous
year year
Opening balance 69,311 76,931
- settled in respect of retired employees (5,804) (6,195)
- settled in respect of resigned employees (366) (1,425)
Closing balance 63,141 69,311
Gratuity obligations that have accrued after Mid July 2003 are being
settled in the same year in which they accrue, under the Defined Con-
tribution Plan as stated in Schedule 32 Significant Policies. As such
the bank does not value employee gratuity based on actuarial valuation..
6.4.2. Employees Welfare / Leave Fund
The banks obligation under accrued staff leave has increased by
NRs.21,522 thousands in the current year. Calculation of incremental
leave obligation is presented hereunder:
(NRs.) (months) (NRs. 000)
Particulars Average last drawn Weighted Total leave
monthly salary average leave obligation
accrued
A. Opening balance as at 16-Jul-2014 101,569
i. As at 16-Jul-2014 45,310 2,242 101,569
ii. As at 16-Jul-2015 55,598 2,214 123,091
B. Incremental leave obligation in current year 10,288 (28) 21,522
Closing balance as at 16-Jul-2015 123,091
Presented in Schedule 7 Other Liabilities
123,091
Incremental obligation due to impact of:
- salary raise (on leave balance at 16-Jul-2015) 10,288 23,061
- deccreased leave period
(on salary level at 16-Jul-2015) (28) (1,539)
Incremental leave obligation in current year 21,522
Employees leave obligation has increased this year due to the rise in
average salary scale. In the current year the average salary of bank em-
ployee increased by NRs.10 thousands to reach Nrs.56 thousands. The
total leave accrual period, on the other hand, has reduced slightly by
28 months. Salary of employee was revised upwards this year, following
the settlement of collective bargaining with employees union, which is
held once in every two years, per the provision in Labor Act. Likewise
salary of management level employees was also raised to maintain the
pay structure.
The bank does not value leave liability based on actuarial valuation.
6.4.3. Provision for Staff Bonus
In line with provision of Bonus Act 1974, the employee bonus is calcu-
lated hereunder:
(NRs. 000)
Particulars current previous
year year
Profit from all activities per profit and loss account 3,279,460 3,632,814
Adjustments:
- TDS reversal on final withholding
income of FY 2013-14 - (36)
Adjusted Net profit before bonus and
taxes for bonus calculation 3,279,460 3,632,778
Provision for staff bonus @ 10% of net profit before tax 298,133 330,253
Provision for staff bonus per Profit and Loss Account 298,133 330,253

6.4.4. Unearned income
As of balance sheet date, the Banks total outstanding on unearned
income stood NRs.56,804 thousands, detail of which is presented
hereunder:
(NRs. 000)
Particulars current previous
year year
- fees on bank guarantee 55,549 53,802
- interest loan extended under subvention schemes 1,255 2,069
Total 56,804 55,871
Unearned fee on guarantee and unearned interest on loans extended
under sub-vention schemes are both presented in Schedule 7 of the
financial statements in headings Unearned Discount and Commission
and Others respectively.
6.4.5. Sundry Creditors
A break-down of the sundry creditor balance is presented hereunder.
(NRs. 000)
Particulars current previous
year year
- TDS payable 113,604 101,999
- VAT payable 974 1,597
- Stale instruments 5,578 6,406
- Payable to Customers 444,044 399,049
- Payable to Employees 1,480 17,865
- Other Payables 230,832 728,718
Total 796,513 1,255,634
Payable to customers are mostly on account of items such as prepaid
cards, payable to cards and e-banking merchants, remittance awaiting
disposal, etc. TDS payable balances are those arising on regular banking
business and are deposited on monthly basis by the 25th of the follow-
ing month of TDS collection, which is in compliance to the Income Tax
Act. Other payable balance is mostly on account of outstanding payable
to the consignor of bullion stock.
6.4.6. Dividend Payable
In line with provision of Bonus Act 1974, the employee bonus is calcu-
lated hereunder:
(NRs. 000)
Particulars current previous
year year
Dividend relating to profit of Financial Year (FY)
1989 - 1990 to 1999 - 2000 2,259 2,869
2000 - 2001 to 2004 - 2005 4,567 4,274
2005 - 2006 to 2010 - 11 14,336 15,893
2011 - 2012 to 2013- 2014 88,980 511,825
Total 110,142 534,861
In compliance with Directive 16 of NRB Unified Directives and Section
82(3) Bank and Financial Institutions Act 2006 the Bank has published
a general notice to equity holders on 3rdAugust 2015 calling them to
collect unclaimed dividends.
Annual Report 2014/15 153
6.4.7. Others
NRs.19,801 thousands presented under this heading relate to provi-
sion for various expenses. Apart from this it also includes NRs.1,255
unearned interest income on loans under sub-vention scheme, whichis
also disclosed in point 6.4.4 Unearned Income.
7. Contingent Liabilities
(Off balance sheet items)
7.1. Claims on Institution but not
accepted by the Institution
The bank has received but not honored guarantee claims totaling
NRs.16,387 thousands. Theseclaimswere received from Customs
Officeafter expiry of guarantee. These are pending settlement owing to
differences in interpretations of legal provisions.
Additionally, there are guarantee claims totaling NRs.33,515 thousands
received by the bank but not honored at year end.The acceptance
and settlement of these claims will follow the normal course of banks
business.
7.2. Reconciliation of Guarantee
presented in Schedule 17 and
Schedule 30(B)
In calculation of risk weighted exposure for Capital Adequacy calculation
as per BASEL II guideline the bank has assigned zero risk weight to
contingent liability in respect of guarantee issued by the Bank against
Counter Guarantee backing of Foreign Financial Institution for an
infrastructure project. The bank has obtained regulators approval vide
NRB letter Bai.Bi.NniBi/BiR.2/Nabil Bank/17/067/68 and Bai.Bi.NniBi/
BiR.2/Nabil Bank/5/067/68 to this effect. Due to this reason, differ-
ent bank guarantee figures are presented in Schedule 17 Contingent
Liabilities and in Schedule 30(B) Credit Risk. Reconciliation of same
is presented hereunder:
(NRs. 000)
Particulars current previous
year year
Guarantee stated in Schedule 17 : 10,705,409 10,933,356
Guarantees (Bid Bond / Performance Bond) 5,271,970 4,320,547
- Advance Payment Guarantee 2,289,309 1,725,150
- Guarantee issued against Counter Guarantee
of Internationally rated banks 3,144,131 4,887,659
Guarantee stated in Schedule 30(B) : 8,980,982 7,308,751
- Advance payment guarantee 2,289,309 1,725,150
- Bid bond, performance bond and counter guarantee
domestic counterparty 5,271,970 4,320,547
foreign counterparty (ECA Rating: 0-1) 1,419,703 1,263,054
foreign counterparty (ECA Rating: 2) 233,632 255,374
foreign counterparty (ECA Rating: 3-6) 669,274 355,921
9,883,887 7,920,046
- Counter guarantee assigned zero risk weightage 821,522 3,013,310
Reconciled position 10,705,409 10,933,356
154 Nabil Bank Limited
7.3. Contingent Income Tax Liability
Large Tax Payers Office (LTPO) conducts its assessment of each years
tax filing done by the Bank generally within four years after end of
each year. Following its assessment, LTPO can issue its reassessment
order revising tax liability of the bank. However, the bank may choose
to contest against such decisions. Such process would follow, in order,
applying for administrative review to Director General at Inland Revenue
Department (IRD) level; case filing at Revenue Tribunal; and case filing
at Supreme Court.
Till the balance sheet date, the banks corporate tax liability up to
income year 2005-06 has been cleared by the tax authority. Further,
reassessment from LTPO has been completed for up to income year
2009-10. For the reassessment of last four years however, the bank
has contested against the upward revision in tax liability as issued
by LTPO in their reassessment order. Total contested amount of
NRs.30,915 thousands that include additional tax, interest surcharges
and penalty,inrespect of these four income years has been recognized
as Continent Liability and presented in Schedule 17 of Financial
Statements.
8. Income
8.1. Interest Income on
loans and advances
Regulatory provision requires recognition of interest income from
loans and advances on cash basis. NRB directive 04/070 proviso to
Section 5(1) has additionally allowed licensed institutions to recognize
as interest income, such amount that stood accrued at year end but
has been subsequently recovered in cash within 15 days after year-
end date. Further, following the devastating earthquake that hit Nepal
in April 2015, NRB circular no. 30/071/72 has allowed licensed
institutions to recognize interest income, such amount that accrued in
the current year and is realized in cash up to October 17, 2015. The
Bank did not chose to exercise these options and recognized in current
years interest income only that amount accrued and recovered in cash
within 16th July 2015.
The recognition of interest income on cash basis as required by
regulatory requirement is not in accordance with NAS 7 Revenue,
which stipulates that interest income be recognized on accrual basis.
8.2. Dividend Income
The Bank has recognizedNRs.43,784 thousands as dividend income
during the current financial year. NRs.14,700 thousands received from
Mutual Fund is accounted on gross basis. NRs.27,640 thousands
received from other domestic companies are accounted on net basis as
final withholding income. NRs.1,444 thousands received from foreign
entities (NRs.842 thousands from Visa Inc. and NRs.602 thousands
from MasterCard Inc.) are accounted on gross basis.
Tax deducted by mutual fund and foreign entities is claimed at the time
of filing income tax returns to the maximum extent available as per
Income Tax Act of Nepal.
9. Expenses
9.1. Staff Expense
9.1.1. Gratuity expense
The Bank, during the current financial year, settled NRs.98,667
thousands in respect of gratuity obligation accrued till the balance sheet
date by contributing in the approved retirement fund. The Bank does not
have any incremental gratuity obligation as of balance sheet date. The
gratuity expense is presented under Pension and Gratuity Contribution
in Schedule 23 of the Financial Statements.
9.1.2. Uniform expense
As per Employee By-laws, office uniform used to be provided to
employees up to certain corporate level once in every two years.
Effective from current year employee uniform policy has been changed
to provide uniform allowance once each year. Such expense is
recognized as operating expense in the same year. This expense is
also recognized as a component of taxable income while calculating
employees individual tax liability.
9.1.3. Others expense
(NRs. 000)
Particulars current previous
year year
- dashain allowance 33,705 33,190
- leave encashment and provisions 63,448 40,486
- Other Staff Expense 3,267 3,418
Net closing balance 100,420 77,093
Presented in Shedule 23 Personnel Expense 100,420 77,093
Each year during the annual dashain festival, employees are provided
with festival allowance equivalent to their one months gross salary.
During the current financial year, the bank accounted total leave
expense of NRs.63,448 thousands. Of thisNRs.21,522 thousands
was provided for incremental leave obligation (presented in Schedule
7) while NRs.41,926 thousands was paid to employees as leave
encashment. Calculation of incremental leave obligation is also
disclosed earlier in point 6.4.2 Employee Welfare/ Leave Fund.
Per Employee By-laws, accrued leave period can accumulate up to
maximum ceiling of 105 days. At Mid April each year, when fresh leave
is assigned to employees, accrued leave period in excess of 105 days is
settled in cash payment.
Under other staff expense the bank expensed NRs.427 thousands for
providing souvenir to staff serving in the bank for over 25 years, in
recognition of their contribution and dedication to the banks growth.
The bank also expense Nrs.1,020 thousands towards immediate relief
to staff whose property and life suffered extensive damage from the
earthquake. Besides, funeral grant Nrs.255 thousands, cash incentive
Nrs.343 thousands and overtime Nrs.1,222 thousands are also
grouped in this heading.

9.2. Impairment Loss
9.2.1. In case of investments in local listed companies, impairment
test is conducted based on their prevailing market price.
9.2.2. In case of investments in local non-listed companies,
impairment test is conducted on equity basis based on most recent
provisional financial statement at mid-April 2015 that the bank has
received from these institutions.
9.2.3. In case of accounts receivable, impairment test is conducted
by assessing level of doubt over its recoverability.
9.2.4. The bank recognized total impairment loss of NRs.164,975
thousands in the current year, calculation as presented hereunder:
(NRs. 000)
Particulars current previous
year year
Impairment loss (net of write back):
- on loans and advances (net of write back) 148,318 235,733
- on investments 4,295 (13,599)
- on FCY bonds - (11,773)
- on LCY equity instruments 4,295 (1,826)
- on account receivable from customers 12,362 1,154
Total 164,975 223,288
9.2.5. At previous year end the bank had recorded impairment loss
of NRs.2,692 thousands in its equity investment in three domestic
companies (licensed microfinance institutions). In the current year
all these microfinance institutions, along with two other microfinance
institutions, underwent merger to form Nepal Grameen Bikas Bank Ltd.
Government of Nepal has provided subsidy of Nrs.100,000 thousands
in the new company. The company has called for additional equity
injection from existing shareholders of one of the original companies
whose networth was negative. The merger process is not yet completed
at current year end and the new shareholding structure in the merged
entity is yet to be finalized at the shareholders special annual general
meeting. The bank has tested for impairment of its investment at cost in
the merged company on equity basis and recognized further impairment
loss of NRs.4,295 thousands in the current year.
9.2.6. In the current year the bank has recognized additional
impairment loss of NRs.12,362 thousands on receivables from
customers, assessing its recoverability as doubtful. Such receivable
mostly relate to expenses incurred towards maintaining security of
collateral in banks control in case of default borrowing customers.
Annual Report 2014/15 155
9.2.7. In the current year the bank has recognized net additional
impairment loss of NRs.148,318 thousands on loans and advances to
customers, calculated as per regulatory requirements and presented in
Schedule 13 of the financial statements.
9.3. Income and Deferred Tax
9.3.1. Corporate Tax Rate
The corporate tax liabilities of Group are computed and assessed
individually. As per Income Tax Act 2002, the tax rates enacted and
substantively enacted at the balance sheet date are 30% and 25%
respectively for the Bank and its Subsidiary.
9.3.2. Current Tax
After adjusting for disallowable and tax free items the Bank and its
subsidiary have computed current year corporate tax expense of
NRs.896,878 thousands and NRs.9,609 thousands respectively.
Calculation detail is presented hereunder.
(NRs. 000)
Particulars nabil Subsidiary
bank year
Profit from all activities 3,279,460 39,364
- provision for staff bonus (298,133) (3,579)
Profit before tax and tax related adjustments 2,981,327 35,786
Add back disallowable expenses 44,519 6,972
- donation 74 -
- provision on investments and receivables 16,658 1,955
- employees leave provision 21,522 262
- capital nature expense charged to revenue 1,265 -
- excess depreciation and repair expense - 4,745
- other disallowed expenses 5,000 10
Deduct allowable expenses and inadmissible income (36,252) (4,322)
- gain on sale of fixed assets (581) -
- gratuity expense paid to employees (6,170) -
- final with holding income - dividend, meeting fees (28,022) (72)
- excess depreciation charged for tax computation (1,479) (4,250)
Taxable Income 2,989,594 38,436
Corporate Tax Liability @ 30% and
@ 25% respectively 896,878 9,609
Current year tax presented in Profit and Loss account 896,878 9,609
Note: figures stated in parenthesis are deductible balance.
156 Nabil Bank Limited

9.3.3. Deferred Tax

The difference between Current Tax disclosed above in point 9.3.2 and Accounting tax computed below is recognized as deferred tax. Account-
ing tax is computed on accounting profit which is profit before tax (before adjustments of temporary difference) less any permanent differences.
Permanent difference in the case of Group arose on donation (not paid to tax exempt entity) and meeting fees and dividend received from domestic
companies (the tax of which is final withholding tax) where the bank has held equity interest. The banks and groups deferred tax calculation for
current year is disclosed hereunder.

(NRs. 000)

Particulars Nabil Subsidiary Inter-Co. Group

Bank co. adjustment Total

Profit from all activities 3,279,460 39,364 (14,820) 3,304,004

- provision for staff bonus (298,133) (3,579) - (301,711)
Profit before tax and adjustments 2,981,327 35,786 (14,820) 3,002,293
Adjustments for permanent difference:
- donation 74 - - 74
- other disallowed expenses 5,000 10 - 5,010
- final withholding income (28,022) (72) - (28,094)
Accounting profit after adjustments 2,958,379 35,724 (14,820) 2,979,283
Accounting tax @ 30% and @ 25% respectively (A) 887,514 8,931 - 896,445
Current Tax per Profit and Loss Account (B) 896,878 9,609 780 907,267
Deferred Tax Income (B-A) 9,365 678 10,043

Inter-company adjustments appearing above are in respect of dividend payout made by the Subsidiary to the Bank in the current year. NRs.14,820
thousands is the net dividend received by the Bank whereas NRs.780 thousands is the TDS on dividend payout. The Bank has accounted this
dividend income net of tax as final withholding income.

9.3.4. Reconciliation of Accounting tax with tax expense

The relationship between tax expense and accounting profit is explained reconciling figures as under:

(NRs. 000)

Particulars Nabil Subsidiary Inter-Co. Group

Bank co. adjustment Total

Profit before tax and tax related adjustments 2,981,327 35,786 (14,820) 3,002,293
- corporate tax rate 30% 25%
Corporate tax 894,398 8,946 903,345
Tax impact of permanent difference:
- donation 22 - 22
- other disallowed expenses 1,500 3 1,503
- final withholding income (8,407) (18) (8,425)
Prior period tax - - -
Total Accounting Tax 887,514 8,931 896,445
Accounting Tax as expensed in Profit and Loss account:
- current tax 896,878 9,609 780 907,267
- deferred tax (9,365) (678) (10,043)
- prior period tax - - -
Total tax expense in Profit and Loss account 887,514 8,931 780 897,225
 Annual Report 2014/15 157

9.3.5. Deferred Tax Assets

At current year end deferred tax assets of the Bank increased to NRs.52,544 thousands from previous years NRs.43,179 thousands.

The Subsidiarys deferred tax assetsincreased to NRs.810thousands from previous years NRs.132 thousands. Detail calculation of
temporary differences and deferred tax assets/liabilities at 16th July 2015 are presented hereunder:
(NRS. in million)

Particulars Current Year Previous Year

Nabil Bank Nabil Invest Group Nabil Bank Nabil Invest Group
Temporary difference on fixed assets (37,790) 413 (37,377) (36,995) (83) (37,077)
- tax base 533,134 15,255 548,389 564,626 16,776 581,402
- carrying value 570,923 14,842 585,765 601,621 16,859 618,479
Other Items of temporary differences 212,936 2,827 215,763 180,925 610 181,536
- provision for other assets 19,716 1,955 21,671 7,354 - 7,354
- employees leave provision 123,091 872 123,963 101,569 610 102,179
- employees gratuity provision 63,141 - 63,141 69,311 - 69,311
- investment impairment provision 6,987 - 6,987 2,692 - 2,692
Net temporary difference * 175,146 3,240 178,386 143,931 528 144,459
DTA calculation @ 30% / 25% 52,544 810 53,354 43,179 132 43,311
DTA presented in Schedule 16 (restated) 52,544 - 52,544 43,179

* Net Temporary difference presented in parenthesis represents net taxable difference.

9.3.6. Temporary Difference in Fixed Assets There is advance tax (net of tax liability) of NRs.4,465 thousands in
Detail on carrying amount and tax base of the Banks fixed assets the book of subsidiary as of balance sheet date.
having taxable / deductible differences are presented as under:
(NRs. 000)
(NRs. 000)
Details of advance Nabil Subsidiary Group
Particulars Carrying tax Taxable
tax payments Bank co.
Amount base difference
- 1st instalment 378,600 - 378,600
Asset Class :
- 2nd instalment 255,555 - 255,555
- vehicle 103,771 94,879 8,892
- 3rd instalment 255,555 - 255,555
- building 236,643 231,664 4,979
- tax deducted at source by withholder 6,204 11,540 17,743
- software 20,538 16,621 3,917
Total 895,914 11,540 907,453
- leasehold 23,569 15,437 8,132
- office equipment 186,402 172,673 13,729
- other assets - 1,859 (1,859)
10. Non-Controlling Interest (NCI)
The Banks effective interest in its Subsidiary remained at 74.29%
Total 570,923 533,134 37,790
while that of NCI remained at 25.71% at balance sheet date.

9.3.7. The Bank and its subsidiary have deposited advance tax in 10.1. NCIs share in the profit
line with Income Tax Act 2002. The amount is disclosed in the face of of Subsidiary
balance sheet by netting with income tax liabilities. Offsetting of ad- Net profit of Subsidiary attributable to NCI is disclosed as under:
vance tax and tax liabilities of the Bank and its subsidiary have not been
(NRs. 000)
done for presentation in consolidated financial statements.
(NRs. 000) Particulars current previous
Particulars Nabil Subsidiary Group year year
Bank co. Subsidiarys operating profit 39,364 46,431
Opening balance 2,511 (2,535) - less : provision for staff bonus (3,579) (4,221)
add : current tax 896,878 9,609 - less : provision for income tax (8,931) (10,555)
less : advance tax paid (895,914) (11,540) Subsidiarys net profit 26,855 31,655
less : previous years tax paid (2,511) - NCIs share @ 25.71% 6,905 8,140
Closing balance : liability / (asset) 964 (4,465) 964
Tax liability in Balance Sheet 964 964
158 Nabil Bank Limited
10.2. NCI in Consolidated Balance Sheet
With increase in Subsidiarys net worth, the proportionate equity attrib-
utable to NCI has also increased to NRs.38,742 thousands from previ-
ous years NRs.37,472 thousands. This is a year-on-year growth rate of
3.39%.Growth rate was recorded at 12.82% in the previous year.
(NRs. 000)
Subsidiary Co. NCIs share
particulars current previous current previous
year year year year
Carrying amount
- paid up equity capital 105,000 105,000 27,000 27,000
- reserves and surplus 45,661 40,725 11,742 10,472
Total 150,661 145,725 38,742 37,472
Increment in carrying amount 3.39% 3.39% account of stress test results and scenario analysis so as to align the
Besides, their share of growth in equity, NCI also benefited from a gross
dividend payout of NRs.5,400 thousands, or 20% on paid up equity,
out of previous years income that was subsequently distributed in the
current year.
11. Risk Management and
Basel II Disclosure
Risk is an inherent feature of any business and it drives an entity
towards income generation. Likewise, risk management objective of
the Bank is to strike balance between risk and return, and ensure
optimum risk-adjusted return on capital. A reasonable level of return
is essential for sustainability of the business. However, taking higher
risk in search of higher earnings may have chances to result in failure
of business. Thus effective risk management is a must for business
success. Towards this end Nabil Bank has implemented robust risk
management architecture as well as policies and processes approved
by the Board of Directors. These encompass independent identifica-
tion, measurement and management of risks across various facets of
banking operation.
Bank has been following the practices that are envisaged in Principles
of Basel Committee on Banking Supervision and are taken as refer-
ence before assuming risk exposure in any new business. The bank,
taking stock of local ingredients as well, defines different risk aspects
and designs system to minimize and remove those risks. The Banks
risk appetite and approach towards risk taking is discussed in detail
at management level and board level. These are always aligned with
the business, its return and sufficiency of capital.
The bank follows Internal Capital Adequacy Assessment Process
(ICAAP) and Risk Management Guidelines while taking decision on
any business. It has always taken note of ICAAP and has taken steps
accordingly in ensuring soundness of capital position and sustainabil-
ity of the business. Banks different committees like Audit Committee,
Risk Management Committee review the business and risks periodi-
cally and take account of stress test results, scenario analysis so as to
align risk, return and capital in sustainable manner.
Increasing complexities in risks, vulnerabilities of businesses and fast
changing world with intense competition pose a threat to sustain-
ability. The Bank, in order to address the varieties of risk that keep
coming out of business operations, has identified different risks and
adopted different measures to minimize them.
Capital is crucial component in any business and even more so in
case of banks. Hence, bank capital is regulated so as to withstand
the impact of adverse developments in its internal operations and its
external operating environment. Similarly the bank needs to maintain
sufficient capital for business growth. Nabil Bank has adopted
Internal Capital Adequacy Assessment Process and it follows Risk
Management Guidelines while taking decision on any business. Audit
Committee and Risk Management Committee of the Board review the
business and risks aspects periodically. These committees also take
banks risk / return portfolio and ensure adequacy of capital consider-
ing business sustainability at all times.
Capital planning is an integral part of the banks medium term
strategic planning and annual budget formulation process. Total risk
weighted exposures for the projected level of business operations
is calculated, the required capital level is projected, and a plan is
formulated to retain the required capital.
Ever since its establishment 31 years ago, the bank has been able to
generate and retain substantial earnings in order to ensure adequate
capital formation, as required for its business growth. The bank is
well capitalized and able to maintain the required capital through
internal generation, and equally through other means if needed.
The banks business is exposed to increasing complexities in risks
which pose a threat to sustainability. Failure in timely identification of
risk and its correction/management poses a serious threat to our busi-
ness success. As such risk management is a daunting task that has a
grave impact on our operations. Understanding the fact the bank has
been taken account of likely impact and has aligned its business that
addresses the issue under each risk area.
Banking business in Nepal is exposed to Credit Risk to a much larger
extent. Nabils business is also concentrated in its Credit Risk Expo-
sure. Bulk of its earnings is generated from credit related business,
be it in form of interest income, fee income or forex income. Given
the volatile economic environment that we operate in, the margin
between performing loan and non-performing loan can often be very
thin. Therefore it is always a major threat that any of the banks
credit customers may default.
Nabil has always placed Credit Risk Management high in the priority
list. The bank has Credit Policy and Investment Policy in place which
guides the dos and the donts in business generation. Any generation
of risk assets and their impact on long term value generation is well
deliberated in every credit proposals. Risks and returns are properly
weighed and risk mitigating measures are explicitly spelled out.

In its Risk Management Architecture the bank has set clear demarca-
tion between business generation division and risk management divi-
sion. Accordingly the bank has set up a separate Credit Risk Division,
which is headed by Chief Risk Officer (CRO), one of the most senior
level positions in the Bank. The division is independent to business
generation and does not have any targets, nor has any incentive for
growth in business. The division oversees global, macro, micro and
unit level risk that arise out of daily business operation as well as
out of changes in market conditions that affect particular borrowing
customers / counterparties.
The Banks credit functions are broadly categorized as Large and
Corporate (including infrastructure financing), SME and Retail credit.
Credit Risk Division is manned with separate set of skills for analyz-
ing risks in these different credit functions and all of them report to
the Chief Risk Officer. Besides, the bank has a system to check and
analyze the health of credit portfolio minutely at each borrowing unit
level irrespective of size of the exposure on defined periodic manner.
At all times this system ensures that any borrowing unit showing
smoke signal gets prompt doses of correction as deemed appropriate.
The Bank makes credit extension decision by assessing each business
proposal thoroughly. It also ensures that the inherent credit risks that
are associated with the business are addressed appropriately through
coverage of better safety margin, additional collateral back up and
lower exposure to keep the business at low leverage.
There is separate Credit Administration and Support Division (CAS
Division), which prepares security documents and retains custody
of same. This is a four eyes concept in verifying the security aspects
in line with the approved conditions. CAS Division is also indepen-
dent to business division and it ensures, on an ongoing basis, on
the safety and going concern of the borrowing customers, through
post relationship assessment. Periodic review of all accounts under
credit exposure is one of the prudent practices that the Bank follows
in order to take necessary steps to avert/minimize the risk. Quarterly
on-site inspection of the borrower and suggestion for timely corrective
actions itself help protect borrowers as well. Besides, in case any bor-
rower face difficulties and pose a risk to the Bank in terms of fall in
the value of assets, the Bank sets aside adequate loan loss provision.
Any business decision for credit exposure is taken only if it is vetted
and approved by the credit risk division. Business generation unit
singly cannot take a credit exposure decision except on instrument
purchase where security is instrument itself and the loan gets settled
once instrument is realized.
Bank has standardized Product Papers that stipulate proper gover-
nance and procedure for all credit relationship. Similarly, periodic
monitoring of business and annual review of credit relationship
provides the bank a fair idea on whether or not to continue the
relationship. Besides, periodic review of same by the Internal Audit
Department or Statutory Audit also assists in identifying the status
of exposure/relationship in line with guiding documents of the Bank.
Any weaknesses on the part of the business of borrower and the re-
lationship strength are independently assessed by Internal Audit and
Annual Report 2014/15 159
the advice is taken positively for necessary changes. Similarly there is
separate division Centralized Loan Administration Department (CLAD)
for exposure accounting, disbursement and settlement. This is again
independent to Business, Credit Risk Division and CAS.
Within the Credit Risk Management, processes are well defined
where checking, control and independence of the credit extension,
risk assessment, review, monitoring and exposure accounting is fully
complied with.
All such actions and processes are properly recorded, reported and
discussed. These reports on need basis and on a defined frequency
are put to the oversight of Senior Management, Risk Management
Committee and the Board. Internal Audit Department of the bank too
takes up the matter on credit observations and discusses the same at
Audit Committee. Senior Management or the Board, on need basis,
issue instruction as appropriate wherever necessary.
One of the growing risks among others these days is Operations Risk
that arises out of inefficient processes and people inside and outside
the Bank. Asset Liability Management Committee (Alco) is the
management committee where operating risk, market risk and other
risks are discussed, in line with ALM Policy. Banking System (BS) is
another area of concern where it has witnessed growing threat from
outside. Information and Technology Division in the bank reviews and
checks the security aspects in line with IT Policy of the Bank. Bank
has conducted an IS Audit of the banks system and suggestions
given by the audit with respect to safety and security standards are
being put in place.
Bank has separate division to oversee operation risk including
Compliance of KYC and AML. The division is headed by senior level
staff with adequate access to the daily report, operational processes
and right to recommend the changes in the system and procedures.
The head of operation risk directly reports to the Chief Risk Officer.
Bank has SIMs (Standing Instruction Manuals) for all businesses of
the bank. All the activities are undertaken in line with the set criteria
in the Standing Instruction Manual, policies and guidelines including
Directives and circulars from central bank (the regulatory authority).
Similarly daily functions at operations are independently reported
through separate reporting line other than business generation and
credit risk where independence of checking and control is complied
with.
Processes are reviewed periodically so that their perfection can
be weighed and any shortcoming can be addressed. Most of the
functions like line approval, bill payment, loan disbursement are
centralized which controls activities that can cause mistake due to
inadequate knowledge on the part of staff. Similarly awareness to the
public is made on our services and products periodically by placing
the notices in the website of the bank, or in branches or publishing
notices as appropriate. Staffs are given orientation on the job includ-
ing that of system of the bank before they are placed for the job and
are guided to follow the SIMs for the job. Any staff for the first time
in any job is put under the supervision of an experienced staff and is
160 Nabil Bank Limited
allowed to work independently after attaining required skills. Bank
has Whistle Blowing Policy to report to senior or management directly
on anyones suspicious conduct outside and inside the bank. Skill
development and skill enhancement programs are conducted on peri-
odic basis and staffs identified for the program get the opportunity for
training, seminar and workshop. Adequate numbers of trainings are
conducted and staffs required with training are given the opportunity
for skill enhancement. Knowledge sharing is one of the core methods
of skill development. If a staff gets any training, s/he is encouraged to
share the same among the peers in the division/branch.
In operations, the Bank has put in place a maker and checker
concept in which a transaction has to compulsorily go through two
individuals from a control standpoint with proper transaction right
to capture deviations, if any. Similarly MIS Reports are generated
to check correctness of transactions and any mistakes are promptly
addressed and rectified. The activities of a personnel and division /
branch can be viewed and monitored centrally through an integrated
system, which helps in minimizing the risk of misconduct, if any.
The Bank has an on-line replication Disaster Recovery Site (DRS)
which captures the record of each transaction that takes place at the
Production Server. Both the sites (Production Server and Disaster
Recovery Back up site) are housed in well-conditioned and high
shock resistant buildings and are at different seismic zone, far from
each other. DRS is outsourced to a professionally managed company
having expertise in the sector. Drill is being done periodically and is
being tested occasionally to assess the functioning of DRS.
Each desktop is implemented with Active Directory System (ADS)
which does not allow user to take away the data in devices like
data traveler (pen drive) or bring in data for processing or any other
purposes posing threat to the repository. Similarly individual data in
desk are also stored and backed up in periodic interval at data center
so that any loss of data in desktop can be retrieved from data center.
The Bank has a separate Legal division which is adequately manned
by qualified and experienced staff. All legal agreements, deeds and
documents including claims and charges are thoroughly studied prior
to making any decision involving such documents. Compliance with
existing rules and regulations and business practices globally and lo-
cally are taken into account before arriving at the decision. The cases
where the Bank needs experts opinion on any of the issues the same
is done through the expert in the respective field.
The Bank in line with Basel provisions calculates risk exposure and
allocates sufficient capital/cushion for perceived operational risks.
Market Risks are discussed at Asset Liability Management Committee
(ALCO) of the bank and even discussed at respective division level
on open position on daily basis. The limits for open position are
controlled, level wise which ensures in-depth knowledge of the
market and movement before taking decision (by choice). The month-
ly reports on such aspects are well discussed and dealt in ALCO. The
committee ensures functioning of the jobs in line with the policies
and procedures and suggests/recommends for necessary steps col-
lectively to address the risk on interest rate movement, exchange rate
movement and equity price changes. Most of the market operations
(investments) are done from the Treasury Front Office which reports
to the Chief Financial Officer and exposure accounting including
booking of income/expense is done from Treasury Back Office (TFO)
which reports to the Chief Operating Officer. The Bank assesses the
open position on daily basis and calculates risk exposure for alloca-
tion of required capital in line with Basel provisions. Likely impact
on earnings due to change in the market condition and change in the
standing of the counterparty are well assessed periodically and neces-
sary actions are taken as appropriate. TFO is equipped with advanced
dealing platform for timely and effectively concluding the deals.
Similarly the unit is equipped with modern and advanced information
system on global news, market movements and any incidents so that
bank can manage and maintain the position favorably.
The Bank takes on the capital adequacy norms pursuant to the cen-
tral banks statutory provision under Basel requirements, like ICAAP,
Risk Management Guidelines etc. The determinants to this end are
the past experiences with the products, Banks own risk assessment
culture and contingency management for unpredictable situations. To
this effect, going by the best international practices, the Bank pro-
vides for adequate capital to withstand the inherent risks against the
assets of the Bank. Wherever possible the Bank obtains additional
collateral, set aside higher safety margin and operates under prudent
banking norms. The Bank, equally through its annual plans, projects
the capital adequacy and risk exposure growth which is reviewed
monthly. The Bank also reviews its total risk weighted exposure and
Capital Adequacy Ratio (CAR) on daily basis. There are discussed at
ALCO and X-Com meetings on monthly basis. If growth exposure is
higher than the formation of capital in the Bank, the Bank pulls rein
on business generation so that CAR can be maintained. However the
Bank has not experienced such instances in its history of 30 years.
The adequacy of capital is seriously taken into consideration at regu-
lar meetings like ALCO, X-Com (Executive Committee), RMC and the
Board meetings.
 Annual Report 2014/15 161

11.1. Risk Management Framework and Reporting Line are presented as follows:

Board of the Directors

Committee relating to Staff

Services & Facilities Audit Committee

Risk Management
Committee

Chief Executive Officer

ALCO (including CEO)

(Operations Risks and

Market Risks -
exchange, interest,
equity price, liquidity
Chief Risk Officer and others risk)
(Credit Risks and Legal Risks)

Head-Legal, Operation Risk, Head Credit Risk Management

AML & Compliance of Infrastructure, Corporate,
SME, and Retail Credit
162 Nabil Bank Limited
11.2. Internal audit of the Bank is independent from the manage-
ment and directly reports to Audit Committee, a board level committee.
Internal Audit too has adopted risk based auditing approach. Further
the banks Planning Unit assesses macroeconomic indicators both on
a national and international level and observes the market trend and
suggests for necessary action to minimize the risks involved.
11.3. Bank has Risk Management Committee (a board level com-
mittee comprising member from risk divisions of the bank also) where
overall risk management including performance of the bank is discussed
in detail so as to assess the solvency of the bank and necessary instruc-
tions are issued to concerned division and recommendation are made to
the Board for necessary deliberation and implementation.
11.4. Bank has Human Resource Service Benefit Committee (a board
level committee comprising members from HRD and Finance divisions
of the bank also) where overall policy with respect to employment
management and staff benefit is assessed and necessary suggestions
are made to the Board taking account of market/environment.
11.5. The Bank has developed a risk assessment culture and has in
place the required reports for assessing concentration of risks. Periodic
performance reporting based on Balanced Scorecard, in line with capital
strength, to the Board is also in place. These reports are periodically put
up to the board. Board also reviews the same and issues instructions,
as appropriate, to the Banks management.
Deposits with Banks,
Deposits with other banks and financial institutions,
Securities / instruments issued by the Government and NRB,
Guarantee of government of Nepal,
Security / guarantee of other sovereigns,
Guarantee of domestic banks,
Security / guarantee of specified multilateral development banks, and
Security / guarantee of foreign banks.
11.6. Credit risk mitigating factors are recognized only
when following eligibility criteria is fulfilled:
That the Bank holds clear rights over the collateral to
liquidate in the event of default,
That the credit quality of the borrower (obligor) and
the collateral does not have material positive correlation,
That the maturity of the collateral is longer than
the maturity of the credit exposure being undertaken,
That the currency mismatches arising from possible differences in
denomination of currencies of collateral and credit exposure is
minimized to the extent possible. In case of existence of mismatches,
10% haircut is assigned on the gross value of CRM,
That the Bank employs policies and procedures to manage legal,
operational, liquidity and market risks that may be exposed from
the credit risk mitigating factors,
That the guarantees of domestic and foreign institutions are
unconditional whatsoever.
11.7. During the current financial year, the Bank has availed the
benefits of credit risk mitigation as under:
(NRs. 000)
Particulars current previous
year year
Benefits availed of following credit risk mitigants :
- deposit with own bank 1,987,618 1,630,925
- deposit with other banks and financial institutions - -
- securities and bank guarantees
issued by foreign banks 2,193,108 2,195,597
- securities issued by nepal government and
nepal rastra bank 10,525 6,525
Total 4,191,251 3,833,047
While availing the benefits of credit risk mitigation, supervisory haircuts
have been assigned on case to case basis by:
20%, in case of CRM in the form of deposits with other banks and
financial institutions,
20% and 50%, in case of CRM in the form of security /
guarantee of foreign banks with ECA rating 0 - 1 and ECA rating 2.
11.8. Capital Structure and Capital Adequacy:
As at balance sheet date, the Banks capital adequacy status is
presented as under:
(NRs. 000)
Particulars current previous
year year
Total Capital Fund 10,154,456 8,259,651
- Core Capital Fund (Tier - I) 8,937,834 7,149,441
- Supplementary Capital Fund (Tier - II) 1,216,622 1,110,210
Total Risk Weighted Exposures (RWE) 87,766,261 73,854,239
Tier - I Capital Fund to Total RWE (%) 10.18 9.68
Total Capital Fund to Total RWE (%) 11.57 11.18
Details on calculation of the Banks Capital Adequacy Ratio at balance
sheet date is presented in financial statements under Schedule 30 (A1),
30 (B), 30 (C), 30 (D) and 30 (E). Major aspects of the banks risk
exposure, capital structure and capital ratios are also disclosed in this
section.

11.8.1. Components of Tier I Capital Fund:
(NRs. 000)
Particulars current previous
year year
Eligible items for Tier - I Capital Fund : Eligible items for Tier - II Capital Fund :
a. Paid up equity share capital 3,657,654 3,047,168
b. Irredeemable Non-cumulative preference shares - -
c. Share Premium 74 74
d. Proposed Bonus Shares 1,097,296 609,434
e. General Reserves 3,503,500 3,084,500
f. Retained Earnings 674,732 463,687
g. Current year Profit/(loss) - -
h. Debenture Redemption Reserves 120,000 60,000
i. Capital Redemption Reserves - -
j. Capital Adjustment Reserves - -
k. Dividend Equalization Reserves - -
l. Other Free Reserves 55,122 45,831
m. Less: Goodwill - -
n. Less: Fictitious Assets not written off - -
o. Less: Deferred Tax Reserve (52,544) (43,253)
p. Less: Investment in equity of licensed
Financial Institutions - -
q. Less: Investment in equity of institutions
with financial interests (78,000) (78,000)
r. Less: Loans & Facilities extended to
Related Parties & Restricted Lending (40,000) (40,000)
Core Capital Fund (Tier - I) 8,937,834 7,149,441
Other Free reserve includes deferred tax reserve and interest spread
reserve presented in Schedule 2 of the financial statements.
11.8.2. Deductions from Capital:
Deductions in Tier I Capital Fund have been made for equivalent
amounts in respect of following items:
Banks equity investment in its Subsidiary NRs.78,000 thousands
Loan extended to individual / company holding more than 1%
shares of the bank NRs.40,000 thousands.
Deferred tax assets NRs.52,544 thousands.
Annual Report 2014/15 163
11.8.3. Components of Tier II Capital Fund:
(NRs. 000)
Particulars current previous
year year
a. Cumulative and / or Redeemable Preference Share - -
b. Subordinated Term Debt 180,000 240,000
c. Hybrid Capital Instruments - -
d. General loan loss provision 659,409 539,844
e. Exchange Equalization Reserves 222,900 177,400
f. Investments Adjustment Reserves 139,190 138,392
g. Assets Revaluation Reserves - -
h. Other Reserves 15,124 14,574
Supplementary Capital Fund (Tier - II) 1,216,622 1,110,210
Subordinated Term Debt presented at NRs.180,000 thousands above
is net of debenture redemption reserve NRs.120,000 thousands
that is presented under Tier I Capital Fund. This presentation reflects
the diminishing value of these instruments as a continuing source of
strength and complies with the requirement of applying a cumulative
discount (amortization) factor of 20% per annum for capital adequacy
computations, during the last 5 years to maturity. This presentation
ensures avoidance of a sudden drop in the banks capital fund, by
debenture value, in the final year of debenture redemption. The
carrying value of debenture continues at its face value of NRs.300,000
thousands in the banks financial statements.
General Loan loss provision created in respect of performing loans is
eligible for inclusion in Tier II Capital Fund. The maximum threshold
is set at 1.25% of total risk weighted exposures i.e. NRs.1,097,178
thousands derived from total risk exposures of the bank as of current
year end. However, the additional loan loss provision created for
performing loans in respect of loans secured by personal guarantee and
loans extended in excess of the banks single obligor limit are defined as
specific provision and do not qualify for inclusion in Tier II Capital Fund.
The bank has thus presented NRs.659,409 thousands general loan
loss provision component under Tier II capital fund in above table. This
figure differs with the loan loss provision of NRs.684,840 thousands in
respect of pass loans (including watch list) presented in Schedule 13
due to the reason explained above.
Other Reserves NRs.15,124 thousands presented under Tier II Capital
Fund is the contingent reserve fund disclosed in this notes to accounts
earlier in point 2.2.
164 Nabil Bank Limited

11.8.4. Details of Subordinated Term Debt: 11.8.6. Risk Weighted Exposures under 11
The Bank issued Nabil Bank Bond 2075 (2018 A.D.) for face value of categories of Credit Risk:
NRs.300 million in July/August 2008. Main features of the bond are as
follows:
(NRs. 000)

Maturity period: 10 Years. Particulars current previous

Interest rate: 8.5% per annum. year year
Interest Payment frequency: Half Yearly.
Claim in case of liquidation: After depositors. Risk exposure categories under Credit Risk :

Creation of Debenture Redemption Reserve from year 2013/14
(i.e. from 6th year). Accordingly debenture redemption reserve of
NRs.60,000 thousands i.e.20% of NRs.300,000 thousands is being
credited into the reserve fund since previous year. The total fund in
debenture redemption reserve stands at Nrs.120,000 thousands.
a. Claims on Government & Central Bank - -
b. Claims on Other Financial Entities - -
c. Claims on Banks 5,064,876 3,388,574
d. Claims on Domestic Corporates and
Securities Firms 46,482,941 37,155,695

11.8.5. Risk Weighted Exposures for Credit Risk, e. Claims on Regulatory Retail Portfolio 4,350,790 2,489,642
Market Risk and Operational Risk: f. Claims Secured by Residential Properties 5,149,503 4,377,070
The Banks total Risk Weighted Exposures at current year end is g. Claims secured by Commercial real estate 675,398 1,678,757
recorded at NRs.87,774,207 thousands, that is a 18.85% growth h. Past due claims 1,110,415 1,855,718
over NRs.73,854,239 thousands at previous year end.
i. High Risk claims 3,017,147 1,854,266
(NRs. 000) j. Other Assets 1,857,107 4,608,853
k. Off Balance Items 11,066,714 8,885,970
Particulars current previous
Total risk weighted Exposure under Credit Risk 78,774,890 66,294,545
year year
Risk Weighted Exposures :
for Credit Risk 78,774,890 66,294,545
for Operational Risk 6,896,370 5,902,880
for Market Risk 374,093 208,693
Adjustments under Pillar - II
add: . % of the total RWE due to non
compliance to Disclosure Requirement - -
add: % of the total Deposit due to
insufficient Liquid Assets - -
add: 2% of the total RWE upon
Supervisory Review 1,720,907 1,448,122
Total Risk Weighted Exposures
(after banks adjustments of Pillar II) 87,766,261 73,854,239
 Annual Report 2014/15 165

12. Statement of Liquidity Risk Analysis

As at 16 July 2015

NPR in Lakhs

period 0-7 8-30 31-90 91-180 181-270 271-365 1 year

days days days days days days and above Total
Assets
1. Cash Balances 18,202 - - - - - - 18,202
2. Balances held with Banks
and Financial Institutions 12,589 - - - - - 129,246 141,835
3. Investments in Foreign Banks - 20,991 33,900 48,564 33,545 16,835 2,539 156,374
4. Call Money 3,235 - - - - - - 3,235
5. Government Securities - - 79,172 7,484 10,415 18,358 - 115,429
6. NRB Bonds - - - - 2,426 6,629 12,785 21,840
7. Inter-Bank / Financial Lending /
Investments in Local Banks - - - - - - - -
8. Loans and Advances
(including staff loans) 13,122 27,171 71,521 61,390 43,929 43,929 423,443 684,506
9. Accrued Interest Receivables
(including AIR from staff loans) 182 343 1,102 1,056 1,021 883 3,417 8,004
10. Reverse Repo 12,000 - - - - - - 12,000
11. Receivable under Commitment - - - - - - - -
12. Receivable under facility
mentioned in S. No. 20, 21 and 22 13,696 20,317 66,783 52,807 54,706 35,426 37,461 281,196
13. Others 11 39 791 39 - - 244 1,124
Total Assets 73,037 68,862 253,269 171,339 146,042 122,061 609,135 1,443,746
Liabilities
14. Current Deposits (Including
Margin Deposits and Matured TDs) 5,820 9,132 - - - - 132,147 147,099
15. Savings Deposit 14,528 21,792 - - - - 390,830 427,151
16. Fixed Deposits 2,307 15,828 40,279 44,383 21,287 23,136 11,499 158,719
17. Bonds / Debentures - - - - - - 3,000 3,000
18. Borrowings: - - - - - - - -
Call / Short Notice - - - - - - - -
Inter-Bank / Financial Institutions - - - - - - - -
Refinance - - - - - - - -
Others (Standing Liquidity Facility) - - - - - - - -
19. Other Liabilities and Provisions 2,001 5,730 1,607 696 142 155 2,766 13,098
Sundry Creditors - - - - - - - -
Bills Payable 487 730 730 487 - - - 2,434
Accrued Interest Payable - - - - - - - -
Provisions - - - - - - - -
Others 1,514 5,000 876 210 142 155 2,766 10,664
20. Payable to Institutions under
Commitment (Customer Acceptance) 1,642 4,605 7,003 638 - - - 13,888
21. Unutilised Credit Facilities 5,377 8,675 22,142 23,692 27,161 10,916 135 98,098
22. Letter of Credit / Guarantee (Net) 8,198 9,295 45,059 26,099 28,020 22,315 34,003 172,989
23. Repo - - - - - - - -
24. Payable of facilities under
mentioned in S. No. 11 - - - - - - - -
25. Call Deposit 17,142 25,713 - - - - 266,556 309,411
26. Others 85 - - - - - - 85
Total Liabilities 57,101 100,769 116,089 95,509 76,610 56,522 840,936 1,343,537
Net Assets 15,936 (31,907) 137,181 75,830 69,432 65,539 (231,801) 100,209
Cumulative Net Assets 15,936 (15,971) 121,209 197,039 266,471 332,010 100,209
166 Nabil Bank Limited

13. Related Parties Disclosures (NRs. 000)

Managerial level Head Short term Post total

13.1. Key Management Personnel
Key Management Personnel of the Bank include members of the Board,
Chief Executive Officer and all managerial level executives. Following is
a list of Board of Directors and CEO bearing office at 16th July 2015.
Mr. Shambhu Prasad Poudyal - Chairman Total 51 175,580 37,181 212,761
Mr. Dayaram Gopal Agrawal - Director
Mr. Nirvana Kumar Chaudhary - Director
Mr. Ashish Sharma - Director
Mr. Mohiuddin Ahmed - Director
Mr. Sashin Joshi - Chief Executive Officer
13.2. Compensation to
Key Management Personnel
13.2.1. Compensation to Board of Directors
All members of the Board are non-executive directors and no executive
compensation is paid to the directors. Specific non-executive allowances
paid to directors are as under:
(NRs. 000)
Nature of Transaction current previous
year year
Meeting Fees Paid 1,877 1,192
Allowance and other expenses
relating to Board Meetings 2,307 1,793
Total Compensation Paid 4,184 2,985
Directors are paid a monthly allowance of NRs.15 thousands towards
coverage of newspaper and communication expenses. Other expenses
are incurred for conducting board meeting and towards reimbursement
of travelling, accommodation and daily allowances paid to directors
who do not reside in Nepal and have to come to Nepal for attending
board meetings.
13.2.2.Compensation to
Management Level Employees
During the current financial year NRs.225,608 thousands was incurred
towards compensation to executive Management Team of the Bank.
The table presented hereunder in segregation of such compensation into
short term benefits and post-retirement benefits. Short term benefits
are paid to employees in the same year these accrued. Post-retirement
benefits include incremental leave provision, payment to gratuity fund,
employers contribution to employees provident fund, and employees
life insurance premium paid by the employer. These benefits accrue
over employment period but are realizable to employee post-retirement
from employment.
count benefits retirement benefits
benefits
Chief Executive Officer 1 13,193 122 13,315
Asst. General Manager and above 4 22,780 5,994 28,774
below Asst. General Manager 46 139,607 31,065 170,672
Other benefits (perquisites) are provided to CEO and managerial
level employees as per the Banks policy. Above, head count and
total benefits also include payment made in current year to those
management personnel who retired/resigned during the year. As of
balance sheet date, total 48 management personnel (including CEO)
are in the services of the Bank.
Post-retirement benefit to CEO NRs.122 thousands presented above
is the provident fund and incremental leave provision expensed in the
current year.
13.3. Transactions with Subsidiary
13.3.1. The Bank entered into a Management Service Agreement
(MSA) with Subsidiary for providing management services.Provisions
laid in MSA are in line with arms-length principle. The Bank receives
reimbursement of human resource cost for its employee deputed at the
Subsidiary. Reimbursed amount is the actual cost incurred by the Bank.
13.3.2. The Bank has entered into a Service Level Agreement (SLA)
with Subsidiary for providing various administrative services. Provisions
laid in SLA are in line with arms-length principle. The Bank received
NRs.500 thousands annual fee in respect of providing administrative
services.
SLA also covers outsourcing of the Banks bullion business operations
to the Subsidiary. The Bank pays 30% of net income earned from
bullion business to the Subsidiary as outsourcing fee. The Bank paid
NRs.2,061 thousands to Subsidiary under this head.
13.3.3. Subsidiarys deposits balance with the Bank is
NRs.280,814 thousands and total interest payments ondeposit is
NRs.2,502 thousands. Similarly, Subsidiarys overdraft balance with
the Bank standsnil and total interest receipts on overdraft is NRs.8
thousands.
13.3.4. Subsidiary is the Banks share registrar for the current year.
The Bank paid NRs. 425 thousands to Subsidiary as annual fee under
this head.

13.3.5. The Bank sells Portfolio Management Service (PMS)
products of the Subsidiary through its branches. The Bank receives,
as commission, 50% of net income from PMS sale in the first year of
product sale, and thereafter 20% of net income in the subsequent years
of product renewal. The bank recognized net commission income of
NRs.369 thousands in the current year.
SLA also coversoutsourcingof the Banks bullion business operations
to the Subsidiary. The Bank pays 30% of net income earned from
bullion business to the Subsidiary as outsourcing fee. The Bank paid
NRs.2,061 thousands to Subsidiary under this head.
13.3.6. The Bank accounted net dividend receipts of NRs.14,820
thousands from Subsidiary. Subsidiary distributed 20% dividend on
paid up capital from the profit of previous financial year 2013-14.
13.3.7. All receipt and payment transactions entered into by the
Bank with Subsidiary were made net of TDS. The TDS has been duly
deposited at Tax Office.
13.4. Transactions with companies
where directors have financial
interest
In the current financial year the Bank entered into financial transactions
with following related entities where directors of the Bank have financial
interest.
13.4.1. United Insurance Company
(Nepal) Ltd. (UIC)
Mr. Ashish Sharma, director of the Bank, held chairmanship at UIC.
Atcurrent year end UIC maintained deposit balance of NRs.538
thousands in its current account with the Bank.
UIC has appointed the Bank as one of its insurance agents. The bank
has included insurance policies issued by UIC under its bancassurance
products.In the current year UIC paid NRs.497 thousands to the Bank
as insurance agency commission for its policies sold by the Bank.
No loans were granted andall transactions with UIC were conducted in
arms-length.
13.4.2. CG Finco Pvt. Ltd. (CGF)
Mr. Nirvana Chaudhary, director of the Bank, held chairmanship at CGF.
CGF is a depository client of the Bank and has maintained NRs.4,383
thousands in its deposit account maintained with the Bank. The
BankpaidNRs.40 thousands interest to CGF in the current year.
CGF is a 25.71% shareholder in the banks Subsidiary Co. Nabil
Investment Banking Ltd.The Subsidiary recorded gross dividend payout
of NRs.5,400 thousands to CGF during the current year that was
distributed out of previous years profit. The payment was made net of
5% TDS.
Annual Report 2014/15 167
No loans were granted and all transactions with CGF were conducted in
arms-length.
13.5. Transactions with the Banks
Post - Employment Benefit Plan
13.5.1. The Banks post-employment benefit plan is managed by
Nabil Bank Limited Retirement Fund (NRF).In the current financial year
the Bank has entered into financial transactions with NRF as explained
below.
13.5.2. The Bank paid NRs.119,996 thousands to NRF towards
employers Provident Fund and Gratuity contribution of its employees
for the year.
13.5.3. The Bank has entered into a Service Level Agreement (SLA)
with NRF wherein the bank shall provide necessary Human Resource
to NRF with sole purpose of delivering quality service as per the set
standard structures of the Bank in exchange for an annual fee of
NRs.1,500 thousands. In the current financial year the Bank received
NRs.1,500 thousands in SLA fees from NRF.
13.5.4. NRFs deposit balance with the Bank is NRs.284,211
thousands and total interest payments on deposit is NRs.5,435
thousands. NRF also avails overdraft limit of NRs.100,000 thousands
with the bank and the outstanding was nil at year end. The Bank
recorded total interest receipts on overdraft of NRs.228 thousands.
13.5.5. NRFs has invested in debentures issued by the Bank
for NRs.149,905 thousands and interest payments on debenture is
NRs.12,742 thousands.
13.5.6. All receipts and payment transactions entered into by the
Bank with Nabil RF have been subject to withholding tax. Deducted
amounts have been duly deposited at Tax Office.
14. Ratios and other information
14.1. Weighted average interest
rate spread
The current year witnessed surplus liquidity in the domestic financial
system for the entire year. As a result both the yield on loans and
investment as well as the cost of deposit recorded a decline from
previous years level.
Nature of Transaction current previous
year year
Weighted average interest :
- yield on loans and investments 6.53% 7.72%
- cost on deposit and borrowings 2.56% 2.69%
Net Interest Spread 3.97% 5.03%
168 Nabil Bank Limited

Above yield and cost is calculated based on the annual average volume
of loans, investments, deposits and bonds/borrowings. The actual
interest income and interest expense reported in the banks profit and
loss account have been taken in the above calculations.
14.2. Interest spread for
the month of Asar 2072
Under regulatory requirement, licensed banks and financial Institutions
are required to publish monthly interest spread of local currency
deposits and local currency loans / investment in government securities.
The Banks local currency interest spread for the month of Asar 2072
(the last month of current financial year) is recorded at 4.55%.
(NRs. 000)
Particulars Average Income / yield/
Volume Expense cost
LCY Loans and Investments 73,931,580 468,048 7.45
- local currency loans 63,128,129 452,984 8.45
- investment in government securities 10,803,451 15,065 1.64
LCY Deposits 84,184,562 207,446 2.90
LCY Interest Spread for Asar 2072 month 4.55
The Banks and the Groups EPS has decreased by NRs.18.88 and
NRs.19.15 respectively. The decrease is due to the rise in number of
outstanding equity shares and the negative growth rate in net profit in
the current year. In the current year the banks paid up capital increased
by 20%, out of bonus shares issuance. On the other hand the banks
net profit has also declined by 9.73%.
The Bank and the Group has not issued any form of capital raising
instruments with embedded options of conversion into equity shares.
Consequently, the Banks and the Groups basic and diluted earnings
per share both stand at NRs.57.24 and NRs.57.36 respectively.
(NRs. 000)
Particulars nabil group
bank
Net Profit for the year (in NRs. 000) 2,093,814 2,098,163
Weighted average number of outstanding shares 36,576,540 36,576,540
Earnings per Share in NRs. 57.24 57.36
Earnings per Share in NRs. (previous year) 76.12 76.51
Annual growth rate in Earnings per Share -24.80% -25.02%

Note: Interest income and Interest Expense are annualised for spread
calculation.
14.3. Earnings per Share
The Banks and the Groups earnings per share has been disclosed in
line with Nepal Accounting Standard (NAS) 26 on Earning per Share
in financial statements under Schedule 31 Principal Indicators. As
on balance sheet date, the Banks and the Groups earnings per share
stood at NRs.57.24 and NRs.57.36 respectively.
14.4. Non-performing assets
14.4.1. Amount of non-performing assets
(both gross and net)
The Banks gross non-performing loans is recorded at NRs.1,220,819
thousands, which is 1.82% of total loan. The bank has set aside
possible loss provisioning of NRs.974,906 thousands in respect of
these loan assets. The provision (related to non-performing loans)
coverage for gross non-performing loans is 79.86%. Similarly total loan
loss provision coverage of NRs.1,659,746 thousands over gross non-
performing loans is 135.95%.

(NRs. 000)

Particulars current previous

year year changes %

Loan Classification per NRBs definition

- pass loan (including watch list) 65,940,852 54,947,001 10,993,850 20.0
- non performing loans 1,220,819 1,256,075 (35,256) (2.8)
- restructured / rescheduled - - - -
- substandard 58,293 97,637 (39,344) (40.3)
- doubtful 404,682 443,962 (39,279) (8.8)
- loss 757,844 714,476 43,367 6.1
Gross loans and advances 67,161,671 56,203,076 10,958,595 19.5
 Annual Report 2014/15 169

NPA Ratios 14.7. Movement in loan loss provision

(NRs. 000)
Particulars gross loss net
npl provision loan
Performing Loan 65,940,852 684,840 65,256,012
Non Performing Loans (NPL) : 1,220,819 974,906 245,913
- restructured / rescheduled - - -
- substandard 58,293 14,721 43,572
- doubtful 404,682 202,341 202,341
- loss 757,844 757,844 -
Total 67,161,671 1,659,746 65,501,925
NPL Ratios :
Gross NPL to Gross loans and advances 1.82%
Net NPL to Net loans and advances 0.38%
and interest suspense
The banks loan loss provision has increased by NRs.148,318 thou-
sands or 9.81% and reached NRs.1,659,746 thousands at year end.
Of this, NRs.134,392 thousands is set aside for incremental performing
loan volume (including watch list) while the remaining NRs.13,925
thousands is set aside for adverse movement in non-performing loan.
Interest suspense also increased by NRs.67,988 thousands or 13.25%
and reached NRs.581,099 thousands at year end. The suspended
interest figures is about 10.08% of the banks gross interest income
reported in Profit and Loss account. Interest accruals on non-performing
loans continue to be booked under suspense.
(NRs. 000)
Particulars current previous changes %
year year

14.5. Write off loans and Loan Loss Provision 1,659,746 1,511,428 148,318 9.81
interest suspense Interest Suspense (581,099) (513,111) (67,988) 13.25
Written off loan is presented in Schedule 28(A) of the financial state-
ments. Additional information on interest suspense related to such loan
is presented as under:
(NRs. 000)

amount
Particulars
Loan Written Off 10,145
Interest Suspense related to written off loan 5,773

14.6. Summary of book write off loan and recovery

(NRs. 000)

Particulars Principal Interest Total

- loan written off till previous year 708,983 283,534 992,517
- loan written off in current year 10,145 5,773 15,918
Total loan written off (A) 719,128 289,307 1,008,435
- recovered till previous year (488,692) (82,382) (571,074)
- recovered in current year (3,645) (3,933) (7,578)
Total recovery from written off loan (B) (492,337) (86,315) (578,652)
Net not recovered portion (A-B) 226,792 202,992 429,783
- book write off 201,534 145,176 346,710
- actual write off * 25,257 57,816 83,073
Recovery ratio (on total write-off amount) 68.46% 29.84% 57.38%

* The bank has relinquished its recovery rights considering remote possibil-
ity of loan recovery. The bank made actual write off of interest amounting to
NRs.5,222 thousands in full and final settlement of written off accounts in
the current year.
170 Nabil Bank Limited

15. Disclosure of components of cash and cash equivalents in Cash Flow Statement:

15.1. From operating activities:

15.1.1. Interest Income

(NRs.)

Particulars Current Year (CY) Previous Year (PY)

Interest Income in Income Statement 5,762,345,126 5,636,158,253
Interest Income from Long term Investment (166,152,409) (220,720,327)
Income Receivable on Short Term Investments (Current Year) (63,985,784) (69,640,561)
Income Receivable on Short Term Investment (Previous Year) 69,640,561 92,594,687
Interest Receivable on Staff Housing Loan (Current Year) (219,327,295) (191,312,536)
Interest Receivable on Staff Housing Loan (Previous Year) 191,312,536 173,755,044
Unearned Interest Income - Vehicle Loan (Current Year) 161,726 429,389
Unearned Interest Income - Vehicle Loan (Previous Year) (429,389) (909,046)
Unearned Interest Income - Housing Loan (Current Year) 1,093,175 1,639,763
Unearned Interest Income - Housing Loan (Previous Year) (1,639,763) (2,263,079)
Unearned Interest Income - Bills (Current Year) - -
Unearned Interest Income - Bills (Previous Year) - -
Cash Inflow 5,573,018,484 5,419,731,587

15.1.2. Commission and Discount Income

(NRs.)

Particulars Current Year (CY) Previous Year (PY)

Commission and Discount Income in Income Statement 480,279,523 466,314,790
Unearned Commission - Guarantee (Current Year) 55,549,016 53,801,855
Unearned Commission - Guarantee (Previous Year) (53,801,855) (67,000,243)
Cash Inflow 482,026,684 453,116,402

15.1.3. Income from Foreign Exchange Transaction

(NRs.)

Particulars Current Year (CY) Previous Year (PY)

Exchange Income in Income Statement 512,477,284 529,995,584
Unearned Commission - Forward (Current Year) - -
Unearned Commission - Forward (Previous Year) - (23,663,585)
Cash Inflow 512,477,284 506,331,999

15.1.4. Interest Expense

(NRs.)

Particulars Current Year (CY) Previous Year (PY)

Interest Expense in Income Statement (2,236,063,893) (1,939,745,260)
Interest Payable on Deposit (Current Year) 25,202 1,378
Interest Payable on Deposit (Previous Year) (1,378) (64,854)
Interest Payable on Borrowing (Current Year) 171,531 90,560
Interest Payable on Borrowing (Previous Year) (90,560) (3,712,957)
Cash Outflow (2,235,959,098) (1,943,431,133)
 Annual Report 2014/15 171

15.1.5. Staff Expense

(NRs.)

Particulars Current Year (CY) Previous Year (PY)

Staff Expenses as per Income Statement (743,484,326) (627,573,275)
Bonus Expenses (regrouped from other liabilities) (298,132,732) (330,252,563)
Total Staff Expenses (1,041,617,058) (957,825,838)
Grauity Fund Balance (Current Year) 63,141,191 69,310,823
Grauity Fund Balance (Previous Year) (69,310,823) (76,931,147)
Leave Provision (Current Year) 123,091,223 101,569,076
Leave Provision (Previous Year) (101,569,076) (81,653,026)
Other Staff Expenses Payable (Current Year) - -
Other Staff Expenses Payable (Previous Year) - -
Staff Bonus Payable (Current Year) 298,132,732 330,252,563
Staff Bonus Payable (Previous Year) (330,252,563) (316,255,521)
Cash Outflow (1,058,384,374) (931,533,070)

15.1.6. Office Operating Expense

(NRs.)

Particulars Current Year (CY) Previous Year (PY)

Office Operating Expenses as per Income Statement (613,018,342) (543,158,113)
Depreciation / Amortisation on Fixed Assets / Intangibles 113,316,856 117,831,211
Accrued Expense Payable (Current Year) 10,891,893 9,862,372
Accrued Expense Payable (Previous Year) (9,862,372) (6,732,393)
Cash Outflow (498,671,965) (422,196,923)

15.1.7. Income Tax Payments

(NRs.)

Particulars Current Year (CY) Previous Year (PY)

Income Tax Expense in Income Statement (Current Year) (896,878,251) (980,684,051)
Prior Period Tax - (735,675)
Current Year Tax Liability 964,391 2,510,756
Previous Year Tax Liability (2,510,756) (64,667,824)
Cash Outflow (898,424,616) (1,043,576,794)

(NRs.)

Reconciliation of Income Tax Paid from Tax Exhibit Current Year (CY) Previous Year (PY)
1st Instalment of Corporate Tax Paid in Advance 378,600,000 401,640,000
Advance Tax Deposited at the request of LTPO - 50,000,000
2nd Instalment of Corporate Tax Paid in Advance 255,555,000 228,340,000
3rd Instalment of Corporate Tax Paid in Advance 255,555,000 291,420,000
Payment of Previous Years Tax 2,510,756 66,872,707
Payment of Priors Year Tax - 735,675
TDS Deposition (Insurance Commision, TSF, Dividend) 6,203,859 4,532,637
Effect of PY reinstatements (35,775)
Cash Outflow 898,424,615 1,043,505,244
172 Nabil Bank Limited

15.1.8. Other Expense

(NRs.)

Particulars Current Year (CY) Previous Year (PY)

Income/(Expense) from Extra-ordinary Activities as per Income Statement (2,924,675) 34,002,205
Recovery of Loan Write Off (7,577,824) (36,821,504)
Bad Loan Write Off 10,145,112 2,221,325
Cash Outflow (357,387) (597,974)

15.1.9. (Increase)/Decrease in Other Short Term Investment

FY 2014/15 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Total Investment in Balance Sheet 30,972,487,414 18,276,752,741 (12,695,734,673)
Nepal Government Other Securities (2,183,994,157) (2,583,715,343) (399,721,186)
Foreign Bonds (253,902,471) (240,311,307) 13,591,164
Organized Institutions Shares (265,032,600) (248,034,800) 16,997,800
Organized Institutions Bonds and Debentures - - -
Indexed Linked and Credit Linked Deposits - - -
Mutual Fund (148,303,530) (105,000,000) 43,303,530
SWIFT Investment (1,801,545) (2,124,214) (322,669)
Provision for Investments 6,987,391 2,691,919 (4,295,472)
Cash Inflow (Outflow) 28,126,440,502 15,100,258,996 (13,026,181,506)

FY 2013/14 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Total Investment in Balance Sheet 18,276,752,741 16,332,043,012 (1,944,709,729)
Nepal Government Other Securities (2,583,715,343) (3,310,078,588) (726,363,245)
Foreign Bonds (240,311,307) (239,654,168) 657,139
Organized Institutions Shares (248,034,800) (210,034,800) 38,000,000
Organized Institutions Bonds and Debentures - - -
Indexed Linked and Credit Linked Deposits - - -
NCM Mutual Fund (105,000,000) (105,000,000) -
SWIFT Investment (2,124,214) (2,041,186) 83,028
Provision for Investments 2,691,919 16,291,166 13,599,247
Cash Inflow (Outflow) 15,100,258,996 12,481,525,436 (2,618,733,560)

15.1.10. (Increase)/Decrease in Loans, Advances and Bills Purchase FY 2014/15 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Loans and Advances in Balance Sheet (Net of Provision & Loan Write-Off) (65,501,925,164) (54,691,648,194) (10,810,276,970)
Net Provision Change (148,317,536) (148,317,536)
Loan Write Off During the Year (10,145,112) (10,145,112)
Cash Inflow (Outflow) (65,660,387,812) (54,691,648,194) (10,968,739,618)

FY 2013/14 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Loans and Advances in Balance Sheet (Net of Provision & Loan Write-Off) (54,691,648,194) (46,369,834,571) (8,321,813,623)
Net Provision Change (235,732,907) - (235,732,907)
Loan Write Off During the Year (2,221,325) - (2,221,325)
Cash Inflow (Outflow) (54,929,602,426) (46,369,834,571) (8,559,767,855)
 Annual Report 2014/15 173

15.1.11. (Increase) / Decrease in Other Assets

FY 2014/15 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Other Assets in Balance Sheet (Net of Provision) (2,371,567,317) (2,731,670,461) 360,103,144
Income receivable on Investment 76,384,776 100,710,966 (24,326,190)
Interest receivable from Staff Housing Loan 219,327,295 191,312,536 28,014,759
Deferred Tax 52,543,819 43,179,280 9,364,539
Provision on Receivables (19,715,883) (7,353,673) (12,362,210)
Cash Outflow (2,043,027,310) (2,403,821,352) 360,794,042

FY 2013/14 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Other Assets in Balance Sheet (2,731,670,461) (2,150,374,151) (581,296,310)
Income receivable on Investment 100,710,966 125,808,564 (25,097,598)
Interest receivable from Staff Housing Loan 191,312,536 173,755,044 17,557,492
Deferred Tax 43,179,280 44,763,482 (1,584,202)
Provision on Receivables (7,353,673) (6,199,349) (1,154,324)
Cash Outflow (2,403,821,352) (1,812,246,410) (591,574,942)

FY 2014/15 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Bills Payable as per Balance Sheet 243,433,464 213,579,243 29,854,221
Other Liabilities as per Balance Sheet 1,467,541,449 2,357,452,783
Interest Payable on Deposits (25,202) (1,378)
Interest Payable on Borrowings (171,531) (90,560)
Gratuity Fund (63,141,191) (69,310,823)
Employees Welfare Fund / Leave Fund (123,091,223) (101,569,076)
Provision for Staff Bonus (298,132,732) (330,252,563)
Dividend Payable (110,141,802) (534,861,266)
Unearned Income (Int on Housing/Vehicle Loans and Bills) (1,254,901) (2,069,152)
Accrued Expense Payable (10,891,893) (9,862,372)
Unearned Income (Guarantee) (55,549,016) (53,801,855)
Other Staff Expenses Payable - -
805,141,958 1,255,633,738 (450,491,780)
Cash Outflow (420,637,559)

15.1.12. (Increase) / Decrease in Other Liabilities

FY 2013/14 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Bills Payable as per Balance Sheet 213,579,243 529,597,845 (316,018,602)
Other Liabilities as per Balance Sheet 2,357,452,783 1,071,099,849
Interest Payable on Deposits (1,378) (64,854)
Interest Payable on Borrowings (90,560) (3,712,957)
Gratuity Fund (69,310,823) (76,931,147)
Employees Welfare Fund / Leave Fund (101,569,076) (81,653,026)
Provision for Staff Bonus (330,252,563) (316,255,521)
Dividend Payable (534,861,266) (41,097,769)
Unearned Income (Int on Housing/Vehicle Loans and Bills) (2,069,152) (3,172,125)
Accrued Expense Payable (9,862,372) (6,732,393)
Unearned Income (Guarantee) (53,801,855) (90,663,828)
Other Staff Expenses Payable - -
1,255,633,738 450,816,229 804,817,509
Cash Outflow 488,798,907
174 Nabil Bank Limited

15.2. From investing activities:

15.2.1. (Increase) / Decrease in Long Term Investments

FY 2014/15 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Foreign Bonds 253,902,471 240,311,307 (13,591,164)
Long Term Government Bonds 2,183,994,157 2,583,715,343 399,721,186
Shares Investment 265,032,600 248,034,800 (16,997,800)
Mutual Fund 148,303,530 105,000,000 (43,303,530)
SWIFT Investment 1,801,545 2,124,214 322,669
Indexed Linked Deposits / Credit Linked Deposits - - -
Cash Outflow 2,853,034,303 3,179,185,664 326,151,361

FY 2013/14 in NRs.

Particulars Current Year (CY) Previous Year (PY) Inflow/(outflow)

Foreign Bonds 240,311,307 239,654,168 (657,139)
Long Term Government Bonds 2,583,715,343 3,310,078,588 726,363,245
Shares Investment 248,034,800 210,034,800 (38,000,000)
Mutual Fund 105,000,000 105,000,000 -
SWIFT Investment 2,124,214 2,041,186 (83,028)
Indexed Linked Deposits / Credit Linked Deposits - - -
Cash Outflow 3,179,185,664 3,866,808,742 687,623,078

15.2.2. (Increase) / Decrease in Fixed Assets

NRs.

Particulars Current Year (CY) Previous Year (PY)

Addition during the Year (Excluding LeaseHold) (78,747,198) (146,726,490)

Addition during the Year (LeaseHold) (10,504,119) (2,618,289)
Closing Work In Progress - -
Opening Work In Progress - 49,447,381
Disposal During the Year 7,212,288 14,234,098
Cash Outflow (82,039,029) (85,663,300)

15.2.3. Interest Income from Long Term Investment

NRs.

Particulars Current Year (CY) Previous Year (PY)

Interest Income in Income Statement 166,152,409 220,720,327

Income Receivable on Long Term Investment (Current Year) (12,398,992) (31,070,405)
Income Receivable on Long Term Investment (Previous Year) 31,070,405 33,213,877
Cash Inflow 184,823,822 222,863,799
 Annual Report 2014/15 175

15.3. From investing activities:

15.3.1. Dividend Payments

NRs.

Particulars Current Year (CY) Previous Year (PY)

Closing Dividend Payable in Balance Sheet 110,141,802 534,861,266

Proposed Cash Dividend Previous Year (1,371,225,780) (974,736,560)
Opening Dividend Payable in Balance Sheet (534,861,266) (41,097,769)
Cash Outflow (1,795,945,244) (480,973,063)

16. Events after the Balance Sheet date Schedule 20

No circumstances have arisen since the Balance Sheet date which
Commission and Nabil group
would require adjustments to or disclosure in the Financial Statements
other than those disclosed below. Discount Income (NRs.)
Commission and Discount Income presented
16.1. Proposed Dividend in last years financial statements 459,164,723 473,809,792
The Board of Directors of the Bank have recommended the payment Regrouping effect in following items :
of dividend of NRs.36.84 per share which consists of a cash dividend
- Cards and E-Banking 5,415,876
of NRs.6.84 per share and a stock dividend of NRs.30 per share for
- Agency Commission 13,881,785
the year ended July 16, 2015. This will be decided at the forthcoming
Annual General Meeting of the Bank. - Others (12,147,594)
Net effect of regrouping 7,150,067 7,150,067
16.2. Recognition of Interest Income on Restated in current years financial statements
deferred cash basis under Previous Year Column 466,314,790 480,959,859
Regulatory provision requires recognition of interest income from loans
and advances on cash basis. NRB directive 04/070proviso to Section
As a result of above regrouping, there has been equivalent restatement
5(1) has additionally allowed licensed institutions to recognize as
of NRs.7,150,067 in cash flow statements under Cash Flow from
interest income, such amount that stood accrued at year end but has
Operating Activities item 1.2 Cash Received Commission and
been subsequently recovered in cash within 15 days after year-end
Discount Income.
date. Further, following the devastating earthquake that hit Nepal
in April 2015, NRB circular no. 30/071/72 has allowed licensed
institutions to recognize interest income, such amount that accrued in Schedule 21
the current year and is realized in cash up to October 17, 2015. The
Bank did not chose to exercise these options and recognized in current Other Income (NRs.) Nabil group

years interest income only that amount accrued and recovered in cash Other Income presented in last years
within 16th July 2015. financial statements 267,837,635 306,768,884
Regrouping effect in following items :
17. Rounding off, Regrouping - Others (2,511,029) (2,511,029)
and Restatements
Restated in current years financial statements

17.1. All figures have been rounded off to the nearest rupee. under Previous Year Column 265,326,606 304,257,855

As a result of above regrouping, there has been equivalent restatement

17.2. Previous years figures have been regrouped/restatedin some
of NRs.2,511,029 in cash flow statements under Cash Flow from
places for better presentation and explained as under:
Operating Activities item 1.5 Cash Received Other Incomes.
17.2.1. Regrouping effect in Profit and Loss Account
176 Nabil Bank Limited

Schedule 23 17.2.2. Restatement effect in Profit and

Personnel Expense (NRs.) Nabil group
Loss Account
Personnel Expense presented in last years
Deferred Tax Expense (NRs.) Nabil group
financial statements 651,835,425 662,128,521
Deferred Tax Expense in previous years
Regrouping effect in following items :
financial statements 1,510,642 1,533,590
- Salary (Contract Staff Expense) (24,262,150) (24,262,150)
- Impact of reconciliation of Deferred
Restated in current years financial statements
Tax Assets with Tax Base as per Income Tax 73,560 73,560
under Previous Year Column 627,573,275 637,866,371
Restated in current years financial statements
under Previous Year Column 1,584,202 1,607,150
As a result of above regrouping, there has been equivalent restatement
of NRs.24,262,150 in cash flow statements under Cash Flow from
Operating Activities item 2.2 Cash Payment Staff Expenses. As a result of above restatements, there have been equivalent restate-
ments in opening equity (deferred tax reserves in statement of change in
equity), Other assets (deferred tax assets in Schedule 16) and Net Profit
Schedule 24 (tax expense).
Office Operating Expense (NRs.) Nabil group
Office Operating Expense presented in last
years financial statements 514,256,925 528,315,773
Regrouping effect in following items :
- Salary (Contract Staff Expense) 24,262,150
- Postage, Telex, Telephone 4,639,038
Net effect of regrouping 28,901,188 28,901,188
Restated in current years financial statements
under Previous Year Column 543,158,113 557,216,961

As a result of above regrouping, there has been equivalent restatement

of NRs.28,901,188 in cash flow statements under Cash Flow from
Operating Activities item 1.2 Cash Payment Office Operating
Expenses.
 Annual Report 2014/15 177

Statement of Loans availed by promoters / shareholders clas-

sified under promoters group from other banks and financial
institutions by pledging shares under their ownership
Schedule 34

(In NPR)

Promoter/ Shareholding Statement of Loans

Shareholders under Total No % on Total Name of Banks Loan Amount No of
Promoter Group of shares Paid up Capital and Financial Shares Remarks

NIDC Development Bank Ltd, one of the founding promoters of Nabil Bank Ltd., has divested its holding through public auction in order to comply with the
regulatory directives on cross holding. These shares are now held by general public and are freely traded at Nepal Stock Exchange Ltd. As of balance sheet
date, 190 of those shareholders have pledged total 788,622 units promoter share with various Banks and Financial Institutions and Co-operative Societies.

Comparison of Unaudited and Audited Financial Statement

As of 16.07.2015 of Financial Year 2014-15
Schedule 35

NPR 000

Particulars As per Unaudited As per Audited Variance Reasons for

Financial Financial in Amount In % Variance
Statement Statement
1. Total Capital and Liabilities (1.1 to 1.7) 117,652,435 115,985,701 (1,666,733) -1.42%
1.1 Paid up Capital 3,657,654 4,754,950 1,097,296 30.00% Note 1
1.2 Reserve and Surplus 6,082,988 4,980,902 (1,102,086) -18.12% Note 2
1.3 Debenture and Bonds 300,000 300,000 - 0.00%
1.4 Borrowings - - - 0.00%
1.5 Deposits (a+b) 104,237,910 104,237,910 - 0.00%
Domestic Currency (a) 87,706,843 87,706,843 - 0.00%
Foreign Currency (b) 16,531,067 16,531,067 - 0.00%
1.6 Income Tax Liability 874 964 90 10.32% Note 3
1.7 Other Liabilities 3,373,009 1,710,975 (1,662,034) -49.27% Note 4
2. Total Assets (2.1 to 2.7) 117,652,435 115,985,701 (1,666,733) -1.42%
2.1 Cash and Bank Balance 16,003,740 16,003,740 - 0.00%
2.2 Money at Call and Short Notice 323,541 323,541 - 0.00%
2.3 Investments 30,979,475 30,972,487 (6,987) -0.02% Note 5
2.4 Loans and Advances 67,161,671 65,501,925 (1,659,746) -2.47% Note 6
2.5 Fixed Assets 812,440 812,440 - 0.00%
2.6 Non Banking Assets - - - 0.00%
2.7 Other Assets 2,371,567 2,371,567 - 0.00%
Continued...
178 Nabil Bank Limited

Continued...

Comparison of Unaudited and Audited Financial Statement

As of 16.07.2015 of Financial Year 2014-15
Schedule 35

NPR 000

Particulars As per Unaudited As per Audited Variance Reasons for

Financial Financial in Amount In % Variance
Statement Statement
3. Profit and Loss Account
3.1 Interest Income 5,762,345 5,762,345 - 0.00%
3.2 Interest Expense 2,236,064 2,236,064 - 0.00%
A. Net Interest Income (3.1-3.2) 3,526,281 3,526,281 - 0.00%
3.3 Fees,Commission and Discount 480,280 480,280 - 0.00%
3.4. Other Operating Income 240,460 240,460 - 0.00%
3.5. Foreign Exchange Gain/Loss (Net) 512,477 512,477 - 0.00%
B. Total Operating Income (A+3.3+3.4+3.5) 4,759,498 4,759,498 - 0.00%
3.6. Staff Expense 743,484 743,484 - 0.00%
3.7. Other Operating Expense 608,018 613,018 5,000 0.82% Note 7
C. Operating Profit Before Provision (B-3.6-3.7) 3,407,996 3,402,996 (5,000) -0.15%
3.8. Provision for Possible Losses 166,902 167,071 169 0.10% Note 8
D. Operating Profit (C-3.8) 3,241,094 3,235,925 (5,169) -0.16%
3.9. Non Operating Income/Expenses (Net) 44,364 44,364 - 0.00%
3.10. Write Back of Provision for Possible Loss 2,096 2,096 - 0.00%
E. Profit from Regular Activities (D+3.9+3.10) 3,287,554 3,282,385 (5,169) -0.16%
3.11. Extra Ordinary Income/Expense (Net) (2,925) (2,925) - 0.00%
F. Profit before Bonus and Taxes (E+3.11) 3,284,629 3,279,460 (5,169) -0.16%
3.12 Provision for Staff Bonus 298,603 298,133 (470) -0.16%
3.13 Provision for Tax 887,424 887,514 90 0.01%
G. Net Profit/(Loss) (F-3.12-3.13) 2,098,603 2,093,814 (4,790) -0.23%

Note 1: Impact of Nrs.1,097,296 thousands out of profit appropriation for stock dividend @ 30% on paid up equity capital.
Note 2: Impact of Nrs. 1,097,296 thousands due to stock dividend declaration and of Nrs.4,790 thousands due to changes in Profit and Loss Account.
Note 3: Impact of changes in Provision for Tax expense in Profit and Loss Account.
Note 4: Impact of Provision for possible losses (also refer Note 5 and Note 6) presented in Other Liabilities in Un-audited statements but netted off
with specific assets in Audited statements.
Note 5: Investments reported net of loss provision Nrs.6,987 thousands in Audited Financial Statements.
Note 6: Loans and Advances reported net of loss provision Nrs.1,659,746 thousands in Audited Financial Statements.
Note 7: Additional expense booked following Statutory Audit.
Note 8: Additional expense booked following Statutory Audit.
 Annual Report 2014/15 179

Unaudited Financial Highlights

As at 4th Quarter End of FY 2014/15

(NRS. in million)

Particulars As at 16-jul- 2015 As at 13-Apr-15 16-Jul-2014 (audited)

group nabil group nabil group nabil
1. Total Capital and Liabilities (1.1 to 1.7) 120,362,731 117,652,435 105,268,411 105,164,563 91,807,158 88,788,740
1.1 Paid up Capital 3,657,654 3,657,654 3,657,654 3,657,654 3,656,602 3,656,602
1.2 Reserve and Surplus 6,116,907 6,082,988 5,633,999 5,604,234 5,385,936 5,355,684
1.3 Debenture and Bond 300,000 300,000 300,000 300,000 300,000 300,000
1.4 Borrowings - - - - - -
1.5 Deposits (a+b) 103,957,096 104,237,910 90,836,938 91,292,874 75,360,769 75,388,791
Domestic Currency (a) 87,426,029 87,706,843 73,773,845 74,229,782 63,914,269 63,942,291
Foreign Currency (b) 16,531,067 16,531,067 17,063,093 17,063,093 11,446,500 11,446,500
1.6 Income Tax Liability 874 874 33,046 33,046 2,511 2,511
1.7 Other Liabilities 6,291,458 3,373,009 4,769,470 4,276,754 7,063,867 4,085,152
1.8 Non-Controlling Interest 38,742 - 37,303 - 37,472 -
2. Total Assets (2.1 to 2.7) 120,362,731 117,652,435 105,268,411 105,164,563 91,807,158 88,788,740
2.1 Cash and Bank Balance 18,651,728 16,003,740 12,201,749 12,158,024 12,953,436 9,993,483
2.2 Money at Call and Short Notice 323,541 323,541 867,655 867,655 737,854 737,854
2.3 Investments 30,985,921 30,979,475 22,224,071 22,218,532 18,286,284 18,279,445
2.4 Loans and Advances 67,161,671 67,161,671 66,306,796 66,306,796 56,195,522 56,203,076
a. Real Estate Loan 4,910,265 4,910,265 4,792,108 4,792,108 4,473,455 4,473,455
1. Residential Real Estate Loan
(Except Personal Home Loan up to Rs.10 Million) 1,542,582 1,542,582 1,385,940 1,385,940 1,100,801 1,100,801
2. Business Complex & Residential Apartment
Construction Loan 728,594 728,594 790,677 790,677 616,487 616,487
3. Income generating Commercial Complex Loan 304,643 304,643 325,662 325,662 534,541 534,541
4. Other Real Estate Loan
(Including Land purchase & Plotting) 2,334,446 2,334,446 2,289,829 2,289,829 2,221,626 2,221,626
b. Personal Home Loan up to Rs.10 Million 5,850,715 5,850,715 5,725,040 5,725,040 5,161,490 5,161,490
c. Margin Type Loan - - - - - -
d. Term Loan 10,556,047 10,556,047 9,676,123 9,676,123 8,566,788 8,566,788
e. Overdraft Loan/TR Loan/WC Loan 38,869,529 38,869,529 39,164,783 39,164,783 32,106,371 32,113,926
f. Others 6,975,115 6,975,115 6,948,7 41 6,948,741 5,887,418 5,887,418
2.5 Fixed Assets 827,283 812,440 818,430 802,797 859,996 843,138
2.6 Non Banking Assets - - - - - -
2.7 Other Assets 2,412,588 2,371,567 2,849,712 2,810,760 2,774,065 2,731,744
180 Nabil Bank Limited

(NRS. in million)

Particulars 16-Jul-2015 13-Apr-15 16-Jul-2014 (audited)

group nabil group nabil group nabil
3. Profit and Loss Account 4th Quarter This Year 3rd Quarter This Year 4th Quarter Last Year
3.1 Interest Income 5,778,166 5,762,345 4,289,443 4,278,177 5,652,370 5,636,158
3.2 Interest Expense 2,233,742 2,236,064 1,608,484 1,610,241 1,938,750 1,939,745
A. Net Interest Income (3.1-3.2) 3,544,423 3,526,281 2,680,959 2,667,936 3,713,620 3,696,413
3.3 Fees,Commission and Discount 500,560 480,280 374,229 361,423 473,809 459,165
3.4 Other Operating Income 271,608 240,460 222,635 195,946 306,769 267,838
3.5 Foreign Exchange Gain/Loss (Net) 512,477 512,477 347,333 347,333 529,996 529,996
B. Total Operating Income (A+3.3+3.4+3.5) 4,829,069 4,759,498 3,625,156 3,572,638 5,024,194 4,953,411
3.6 Staff Expenses 754,704 743,484 504,401 496,112 662,129 651,835
3.7 Other Operating Expenses 625,050 608,018 415,720 403,056 528,316 514,257
C. Operating Profit Before Provision (B-3.6-3.7) 3,449,315 3,407,996 2,705,034 2,673,470 3,833,750 3,787,319
3.8 Provision for Possible Losses 168,857 166,902 173,080 173,080 237,955 237,955
D. Operating Profit (C-3.8) 3,280,458 3,241,094 2,531,954 2,500,390 3,595,795 3,549,363
3.9 Non Operating Income/(Expenses) Net 29,544 44,364 40,871 40,871 23,666 34,781
3.10 Write Back of Provision for Possible Loss 2,096 2,096 563 563 14,667 14,667
E. Profit from Regular Activities (D+3.9+3.10) 3,312,098 3,287,554 2,573,388 2,541,824 3,634,128 3,598,812
3.11 Extra Ordinary Income/Expenses (Net) (2,925) (2,925) (9,024) (9,024) 34,002 34,002
F. Profit before Bonus and Taxes (E+3.11) 3,309,174 3,284,629 2,564,364 2,532,800 3,668,130 3,632,814
3.12 Provision for Staff Bonus 302,181 298,603 233,124 230,255 334,474 330,253
3.13 Provision for Tax 897,134 887,424 689,943 682,770 994,071 982,930
G. Net Profit/(Loss) (F-3.12-3.13) 2,109,858 2,098,603 1,641,297 1,619,776 2,339,586 2,319,631
3.14 Share of Non-Controlling Interest on
Profit of Subsidiary 6,905 - 5,534 - 8,140 -
H. Net Profit/(Loss) (G-3.14) 2,102,952 2,098,603 1,635,763 1,619,776 2,331,446 2,319,631

4. Ratios & Others (%) As at 16-Jul-15 As at 13-Apr-15 As at 16-Jul-2014 (audited)

4.1 Capital Fund to RWA 11.91 11.86 11.81 11.71 11.31 11.24
4.2 Non Performing Loan (NPL) to Total Loan 1.82 1.82 2.05 2.05 2.23 2.23
4.3 Total Loan Loss Provision to Total NPL 135.94 135.94 123.28 123.28 120.33 120.33
4.4 Cost of Funds (Annualized) 3.18 3.18 3.20 3.20 3.34 3.34
4.5 CDC Ratio 65.12 65.12 76.19 76.19 77.51 77.51
4.6 Base Rate 5.78 5.78 6.07 6.07 5.67 5.67
4.7 LCY Interest Spread (per NRB Directive) 4.55 4.55 4.56 4.56 5.71 5.71
 Annual Report 2014/15 181

06
Shareholders
Information
Structure of Shareholders
Share Capital Profile
As at balance sheet date (16th July, 2015), the Banks Share
Registrar, M/s. Nabil Investment Banking Ltd. has recorded
following details of shareholders:

SHAREHOLDING RANGE NO. OF TOTAL

SHAREHOLDERS SHARES HELD
1-100 3,861 209,630
101-500 6,435 1,434,244
501-1000 2,108 1,490,449
1001-2500 1,537 2,603,452
2501-5000 545 1,947,278
5001-10000 187 1,328,594
10001-25000 81 1,132,919
25001-50000 22 721,898
50001-100000 14 1,029,856
Above 100000 15 24,678,220
Total 14,805 36,576,540

Representation Stock Symbol

in the Board of
Nabil Banks Shares are traded on the Nepal Stock Exchange
Ltd. (NEPSE) with stock symbol NABIL for ordinary shares

Directors
and NABILP for promoter shares.

Annual General
Representation of A Class Shareholders
(in relation to 50% interest of NB International Ltd.)

Meeting
1. Mr. Dayaram Gopal Agrawal
2. Mr. Nirvana Chaudhary
3. Mr. Mohiuddin Ahmed The 31st Annual General Meeting (AGM) of the Bank will
4. Mr. Virender Paul Dani be held on 28th December 2015 at 12:00 noon at Nepal
Academy Hall, Kamaladi, Kathmandu, Nepal. Following
Representation of B Class Shareholders agendas will be discussed in the meeting:
(in relation to 20% interest of promoter shares with
Financial Institutions/General Public)
Ordinary Resolution
To be elected by 32nd AGM.
1. To approve Directors Report 2014/15 (2071/72);

Representation of C Class Shareholders

2. To approve Balance Sheet as of 16 July 2015, Profit and
(in relation to 30% interest of public shareholders)
Loss Account and Cash Flow Statement for the year ended
1. Mr. Shambhu Prasad Poudyal
thereat, together with Auditors Report;
2. Mr. Ashish Sharma
182 Nabil Bank Limited
3. To approve consolidated books of accounts i.e. including
books of accounts of Banks subsidiary Nabil Investment
Banking Ltd. for the F.Y. 2014/15(2071/72);
4. To approve cash dividend @ 6.842% of the paid up capital
as proposed by the Board; and
5. To appoint Auditor, as per Section 111 of Companies Act,
2063, for the Fiscal Year 2015/16 (2072/73) and to fix the
auditors remuneration (Pursuant to Sec. 60(2) of the Banks
& Financial Institutions Act, 2063, the present Auditor T.R.
Upadhya & Co. can be reappointed).
Special Resolution
1. To approve increment of Banks Authorized Capital to
Rs. 5 billion;
2. To approve to issue Bonus shares at the rate of 10:3 (i.e.
3 bonus shares for presently held every 10 shares) from the
profit of F.Y. 2014/15, for increasing issued and paid up capital
to Rs. 4,754,950,200/- and also to approve conversion of
fraction shares, if any, arisen due to the said ratio, into whole by
adjusting against cash dividend, so as to maintain the present
shareholding ratio of the different groups of shareholders;
3. To approve amendment in Clause 5(1), 5(2) and 5(3) of
Memorandum and Rule 8(3), 20(5) and 27(5) of Articles
of Association of the Bank and to authorize the Board (or
its nominee) for making necessary changes in the proposed
amendments if the same is advised by Regulatory Authority(ies);
and
4. To provide approval as per Clause 105(1)(c) of the
Companies Act, 2063.
Shareholder
Enquiries and
Communication
Communication
The Bank regularly communicates all the pertinent information
to shareholders, customers and general public through print
media (national daily) and electronically through Banks official
website www.nabilbank.com. The detailed information on AGM
including ordinary agendas and special agendas to be discussed
in the meeting is published in the national daily newspapers 21
days prior to the date of AGM.
Similarly, interim financial highlights are published within the
stipulated deadline of 30 days prescribed by the Securities
Board of Nepal. These statements along with Basel II
Disclosures as prescribed by Point 7.4(b) of Capital Adequacy
Framework 2007 (updated July 2008) under Directive 1 of
NRB Unified Directives are posted in the Banks official website.
Enquires
Any enquiries related to the shareholders of Nabil Bank on
the share register viz., maintenance of shareholders record,
share transfer including domestic transfer in case of death of
a shareholder, replacement of lost share certificates, pledge of
shares, dividend warrants/bonus shares declared and ratified
by the AGM, payment against dividend/lost warrant, opening of
Demat Account, dematerialization of shares should be sent at
the address given below:
Nabil Investment Banking Ltd.
Naxal, Narayan Chaur, Kathmandu, Nepal
Tel : 977-1-4411604, 4411733
Fax : 977-1-4410554
Email : nabilinvest@nabilbank.com
Web :www.nabilinvest.com.np
Taxation on Dividends and Bonus Shares
Taxation on Dividends
Pursuant to Section 88(2) of the Income Tax Act 2002, the
tax on dividend, both cash and bonus shares, received by the
shareholders of Nabil Bank from the Nabil Bank is subject to
withholding tax at the rate of 5%. The tax is final withholding
tax as per Section 92(1) (a) of the Act and need not require
further assessment while filing annual tax return under Section
96.
However, the dividend distributed by the Bank from the
dividend earned from the resident company is not subject to
tax at the time of its distribution as per Section 54(3).The
Bank has received dividend of NRs. 115.64 million from the
resident companies from financial year 2001- 02 till 2014-15.
Capitalization of profits is deemed as distribution under Section
53(1) (b) of the Act and hence, issuance of bonus shares by
the Bank from the profits earned (excluding dividend received)
is subject to withholding tax at the rate of 5% under Section
88(2).
 Annual Report 2014/15 183

Dividends received by the bank through its shareholding in computed as per Section 37 of the Act is subject to with
different companies from the period 2058/59 to 2071/72 are holding tax at the rate of 5%, in case, the beneficiaryof the gain
presented hereunder: is resident natural person and at the rate of 10%, in case of
any other person other than resident natural person. Shares of
Nabil Bank are listed both in the Securities Board of Nepal and
YEAR NRs. 000
Nepal Stock Exchange Ltd.for the purpose of public trading and
1. FY 2001-02 (2058-59) 323
therefore the gain ondisposal of Banks shares is subject to with
2. FY 2002-03 (2059-60) 418
holding tax in accordance to clause (a) of Section 95A (2).
3. FY 2003-04 (2060-61) 456
4. FY 2004-05 (2061-62) 477
Gain or loss arising from disposal of shares under Section37
5. FY 2005-06 (2062-63) 469
of the Act shall be the amount that is determined by reducing
6. FY 2006-07 (2063-64) 720
the amount incurred while acquiring the shares with the
7. FY 2007-08 (2064-65) 1,851
amount that is received at the time of its disposal.The amount
8. FY 2008-09 (2065-66) 2,409
of disposal in case the Nabil Banks shares are sold through
9. FY 2009-10 (2066-67) 7,765
stock exchange shall be the net amount received from the
10. FY 2010-11 (2067-68) 10,527
buyer less brokerage and other costs incurred during the
11. FY 2011-12 (2068-69) 16,074
transaction. The costs incurred forthe shares by the way of an
12. FY 2012-13 (2069-70) 18,065
acquisition through stock exchange shall be the amount paid
13. FY 2013-14 (2070-71) 28,447
to the beneficiary plus all costs attributable to the acquisition.
14 FY 2014-15 (2071-72) 27,640
Further, thecosts incurred for the shares by the way of transfer
Total 115,640
from the deceased person shall be the market value prevailing
immediately before the death of the transferor. The tax being
Capital Gains on Disposal of Shares withheld on the gains arising from disposal of sharesis an
Pursuant to clause (a) of Section 95A (2) of the Income Tax advance tax and the tax credit is available at the time of filing
Act, 2002 (amended by Finance Ordinance 2071), the gain annual tax returns.
on disposal of shares listed in the Securities Board of Nepal

Nabil Investment
Banking Limited
Directors Report
For the Fiscal Year 2014/15
Respected Shareholders,
On behalf of Nabil Investment Banking Limited, I would like
to welcome all the shareholders in the Sixth Annual General
Meeting (AGM) of the Company. Nabil Bank Limited with its
mission to be the First Choice Provider of Complete Financial
Solutions incepted Nabil Investment Banking Ltd. (Nabil
Invest) as a Subsidiary in order to develop the company as
Investment Banker of First Choice in the long run expanding
continuously its scope of activities.
I will be presenting achievements of the Company during the
review FY 2014/15, policies and strategies adopted by and
future plans of the Company in this AGM for your endorsement
and resolution. In this context, I would like to seek your consent
for presenting financial glimpses of the company for the review
period including audited Balance Sheet, Income Statement and
Cash Flow Statement for your approval. I request you all to
discuss and approve the same.
Now, I proceed to briefly inform the overall capital market
situations along with expansion in financial systems of the
Country during the review fiscal year:
Expansion in Financial System:
1. Presence of Banks and Financial Institutions
The number of BFIs and Insurance Companies as of July 16,
2015 are as follows:
BFIs/Insurance Companies Mid July 2015 Mid July 2014
Commercial Banks 30 30
Development Banks 76 84
Finance Companies 48 53
Microfinance Institutions 39 37
Co-operatives Licensed by NRB
(for Limited Banking Services) 15 15
Insurance Companies 25 25
Merchant Bankers licensed by SEBON 16 14
Annual Report 2014/15 185
07
The number of BFIs licensed by NRB as of mid July 2014
was 200 which reduced to 193 as of mid July 2015. After
the issuance of Mergers Bylaws, 2012 by NRB, several BFIs
were merged causing the decline for the total number of
BFIs. Accordingly, the number of commercial banks as of mid
July 2015 is 30 whereas the number of development banks,
finance companies and micro-finance development banks are
respectively 76, 48 and 39.
2. Deposit mobilization
During the review FY 2014-15, the total deposit of BFIs has
increased by 20.1 percent (NRS. 282 billion 60 million). The
deposit increased by 18.4 percent (NRS. 218 billion 680
million) in previous FY. During the review period, the deposits
of commercial banks and development banks have increased
by 21.4 percent and 15.2 percent respectively, whereas
the deposit of finance companies has decreased by 0.6%.
During the previous year, the deposits of commercial banks,
development banks and finance companies had increased by
17.8, 29.1 and 5.7 percent respectively.
3. Loans and Investment
In the FY 2014-15, loans and investment of BFIs increased
by 17.5 percent (NRS. 229 Billion 300 Million). Last FY
it was increased by 14.4 percent (NRS. 165 Billion 480
Million). During the review period, loans and investment of
commercial banks, development banks and financial institutions
has increased by 18.8 percent, 3.5 percent and 0.3 percent
respectively. Similarly, loans provided to private sector by BFIs
has increased by 19.8 percent (NRS. 221 billion 610 million)
in the review period. Loans and investment had increased by
18.7 percent (NRS. 176 Billion 140 Million) in the last FY. Out
of the loans disbursed to private sectors in the review period,
loans disbursed by commercial banks, development banks and
financial institutions have increased by 20.0 percent, 16.0
percent and 0.4 percent respectively.
186 Nabil Bank Limited
4. Interest rates
There was slight rise on the interest rates on 91 days TB and
weighted average interest rate in interbank transactions as of
mid July 2015 as compared to mid July 2014. The weighted
average interest rate on 91 days TB remained 0.1739 percent
as of mid July 2015 which was 0.02 percent as of mid July
2013. Similarly, the weighted average interest rate on interbank
transactions among commercial banks as of mid July 2015 was
1.01 percent as compared to 0.16 percent in the same period
previous year. The weighted average interest rate on interbank
transactions among other financial institutions as of mid July
2015 stood up at 3.89 percent while the similar rate was 2.40
percent last year.
As on mid July 2015, spread on weighted average interest rate
of commercial banks is 4.61 percent. During the same point
of time last year, the spread rate was 5.21 percent. Similarly,
average base rate of commercial banks is 7.88 percent as of
mid July 2015 in comparison to 8.36 percent as on mid July
2014.
Securities Market:
The main glimpses of securities market of the country during FY
2014/15 are as follows:
a. By the mid of July 2015 NEPSE index reached a level of
961.2 points with a decrease of 7.2 percent over the previous
year same period where it was 1,036.1 points. NEPSE index
made an exceptional rise by 99.9 percent on mid July 2013 to
reach 1036.1 points.
b. During the review, there was a decline of 6.4% in market
capitalization and remained at NRS. 989.4 billion at the end of
review period. During FY 2014/15, market capitalization stood
46.6 percent of total GDP of the country as compared to 54.4
percent as on mid July 2014.
c. The entire market capitalization as on mid July 2015
comprised of 77.8 percent banks and financial institutions
(including insurance companies), 7.0 percent hydropower,
3.0 manufacturing and processing companies, 2.5 percent
hotels, 0.1 percent trading companies and 9.6 percent other
companies.
d. The number of listed companies with NEPSE reached 232
by the mid July 2015 whereas it was 237 in mid July 2014. A
small decrease in the count of listed companies was observed
because of merger of some BFIs. The listed companies comprise
of 198 banks and financial institutions (including insurance
companies), 18 manufacturing and processing companies, 4
hotels, 4 trading companies, 6 hydropower companies and 2
others.
e. In the review period, the paid up capital of listed companies
increased by 22.6 percent to be NRS. 179 billion 690 million.
During the FY 2014/15, a total of NRS. 24.45 billion worth
shares have been listed including ordinary shares of NRS. 9.94
billion, bonus share equivalent to NRS. 1.05 billion and right
shares of NRS. 12.97 billion.
f. Securities Business: During the review period, 16 Securities
Business Persons (Merchant Banker) licensed by SEBON have
been providing their services of Issue Management, Share
Registration, Portfolio Management and Underwriting in
accordance with their paid up capital. Some of the institutions
are also rendering the services of Fund Manager/Depository and
Depository Participant (CDS) under the provisions of prevailing
laws.
g. Approval of Securities Issue: During the review period,
SEBON approved issuance of common shares (IPO) of 22
corporate bodies (including mutual fund schemes) comprising
NRS. 9.03 billion, right issues of 22 companies comprising
NRS. 2.31 billion which resulted to share registration, approval
of prospectus and share issuance worth equivalent to NRS.
11.34 billion of 44 companies and debenture issue of 5
commercial banks consisting of NRP 2.90 billion. Similarly,
bonus shares of NRS. 15.22 billion of 103 companies have
been registered with SEBON during the review period.
In the previous year, SEBON approved issuance of NRS. 7.41
billion worth common shares of 44 companies including IPO
of 19 corporate bodies comprising NRS. 3.17 billion and right
issues of 25 companies comprising NRS. 4.24 billion and
debenture issue of 3 commercial banks consisting of NRS. 1.45
billion. Similarly, bonus shares of 84 companies equivalent to
NRS. 6.66 billion was registered with SEBON during the review
period.
Summary of Financial Information
of FY 2014/15
The major activities of the company and its financial highlights
during FY 2014/15 have been presented below:

Major Activities:
Issue Management: During the review period, the company in
the capacity of Issue Manager signed agreement for debenture
issue of 2 commercial banks and right share issue of 4 body
corporates. The company successfully managed debenture issue
of 1 commercial bank and 2 right share issues during the review
period. The company has been providing debenture trusteeship
services to 7 commercial banks. Further, under the agreement
signed last year for issuing IPO, the Company has successfully
completed issue management of a microfinance company and
allotted the shares to the eligible applicants within mid August
2015.
Portfolio Management Service: As per the objective of the
company to cater its services to the investors, the company
has been providing Portfolio Management Services (PMS) to
its broader clientele in a professional manner. Accordingly, the
asset under management (AUM) of 272 PMS clients as at the
end of the review period stands at NRS.874 million.
Mutual Fund: The Company has been successfully rendering
services of Fund Manager and Depository to Nabil Balanced
Fund I under the Nabil Mutual Fund. The Company has already
filed application and prospectus of the second scheme, Nabil
Equity Fund, with size of Rs. 1 billion to SEBON for approval.
Depository Participant and Registrar to Shares: The Company
has already obtained the DP license from SEBON in FY
2012/13 and took the membership of CDS and Clearing
Limited in order to provide DP services to its clientele. Until the
review period, 1,768 demat accounts have been opened with
the company. Likewise, the company has been rendering RTS
service to 8 listed companies including Nabil Balanced Fund I.
Corporate Advisory Service: During the review period, the
Company has been rendering services of Loan Syndication,
Investment Advisory and Business Valuation under the
Corporate Advisory Services. The Company has adopted policy
of expanding such services in the coming years and extending
required co-operation, through co-ordination with Nepal
Merchant Bankers Association, to SEBON to amend the existing
laws and regulation related to merchant banking services.
Further, the Company has continued, as in the previous years,
providing administrative services to its promoter Nabil Bank
Limited in the current FY also.
Annual Report 2014/15 187
During FY 2014/15, the company has earned about NRS. 20.7
million from securities business (including PMS), NRS. 28.1
million from mutual fund and remaining income constitute the
return of NRS. 18.3 million from investment of its share capital
and the fund received during issue management; and service
fees of NRS. 2.06 million in lieu of various administrative/
operational supports provided to its promoter Nabil Bank
Limited. Similarly, the Companys attempt to maximize the short
term returns by investing in the IPOs including mutual funds
units resulted to an income of NRS. 1.92 million during the
review period.
Financial Highlights:
The financial position of the company as on mid July 2015 is
as under:
(NRS. in million)
Particulars FY 2014/15 FY 2013/14 Growth (%)
Share Capital 105 105 -
Total Assets* 171 163 4.86%
Total Income 74 75 -2.55%
Total Expenses 34 29 17.72%
Operating Profit 39 46 -15.22%
Net Profit
(After Employees Bonus and Tax) 27 32 -15.16%
Proposed Dividend 21 21 -
No. of Shares (in thousands) 1,050 1,050 -
Earnings Per Share (Rs.) 25.58 30.15 -15.16%
Return on Assets (Rs.) 15.67 19.37 -19.10%
Net worth per Share
(after Dividend)(Rs.) 143.49 138.79 3.39%
*Excluding the monies placed with bankers to the issue account to be
refunded to the applicants after allotment of securities in the IPO.
The company witnessed a slight decrease of 2.55 percent in
its revenue in the review period as compared to previous period
whereas total expense has increased by 17.72 percent resulting
to a decrease in net profit by 15.16 percent. Despite the impact
of high magnitude earthquake that struck Nepal adversely
affecting the share market, the performance of the company
seems to be satisfactory in the review period. Like in previous
year, this year also the company has proposed to distribute 20
percent cash dividend (NRS. 21 million) to its shareholders.
The additional details as required by section 109(4) of
prevailing Companies Act has been presented in Annexure.
188 Nabil Bank Limited
Expression of Gratitude:
On behalf of the Board, I would like to express sincere gratitude
to all the customers, well-wishers, promoter company Nabil
Bank Limited and its employees; and institutional shareholder
CG Finco Pvt. Ltd. for their continuous support and cooperation.
I also thank all the Regulators for their cooperation and
guidance. On behalf of the board, I would like to thank the
former chairman of the company, Mr. Anil Gyawali, for bringing
this company in the state it is today through his leadership
role and professional contribution. I extend my sincere thanks
to Mr. Sujan Kumar Kafle of M/s Sujan Kafle & Associates,
Chartered Accountants and Mr. Sudarshan Raj Pandey of M/s
S.R. Pandey & Co., Chartered Accountants for professionally
completing the audit of the company and Nabil Balanced Fund
I under Nabil Mutual Fund for the review period and suggestion
and contributions made during the course of audit. Similarly,
my especial thanks go to all the employees of the company for
their noteworthy contributions for achieving objectives of the
company and expect similar contributions in the days ahead.
Further, I would like to express my warmest gratitude to the
board members for their valuable suggestions and support.
Thank you.
On behalf of the Board
Sashin Joshi
Chairman
Date: October 11, 2015
Information
under section
109(4) of
Companies Act,
2063
a) Business assessment of review fiscal year:
During the review period, the Company, as issue manager,
signed an agreement for a debenture issue of 2 commercial
banks and right share issue of 4 companies and successfully
managed debenture issue of 1 commercial bank and 2 right
share issues. The Company has been providing debenture
trusteeship services to 7 commercial banks RTS services to 8
companies including Nabil Balance Fund I.
The company has already started rendering full fledged PMS
services and rendering Fund Management and Depository
services to Nabil Balance Fund I under Nabil Mutual Fund
with an objective of establishing the company as Investment
Banking company in addition to Issue Manager. The Company
has been taking necessary actions for the issuance of second
scheme, Nabil Equity Fund, with size of Rs. 1 billion. The
Company has started Loan Syndication, Investment Advisory
and Business Valuation under the Corporate Advisory Services.
b) Any impact that caused to the business of
the company due to national and international
condition: In the context of Nepalese capital market not
being directly linked with International markets, the changes
in the international conditions do not have significant impact
on Nepalese market. SEBON has already issued policies,
regulations and directives relating to mutual fund, credit rating
and central depository system and accordingly institutions have
made their presence in the market to provide such services. In
addition to that, Nepal Rastra Banks recent Monetary Policy
stipulating requirement for the increment of paid up capital
for all banks and financial institutions may further improve
the market in the days to come. As a result of which, it is sure
that there will be relative increment in the number of issues of
IPOs/rights resulting a positive impact on the overall revenue of
the company. However, as the time of issuance of constitution
of the country is approaching, several political parties have
set various demonstration and protest campaigns creating
political instability and resulting in the delay of finalization of
the constitution which might have adverse impact on the capital
market and the company itself.
c) Current years achievement until the date
of preparation of Report from the Board of
Directors view on future activities of the
company: Till the date of this report, the company has already
started refund of the monies to the applicants post allotment of
the IPO shares of one microfinance development bank and is
on the final stage for the issue of right shares of 2 commercial
banks and 1 microfinance development bank. Similarly, the
Company has been regularly rendering services like Depository
Participant and Registrar to shares, scheme manager of Nabil
Balanced Fund I, Depository and advisory services.

In addition to the above services, the Company shall coordinate
with the regulators to provide high level investment banking
services (private equity, venture capital, investment advisory) to
its clientele as provided by the regional level investment bankers
after customizing them as per Nepalese requirement.
d) Industrial and professional relation of the
company: The company has been maintaining cordial
relationship with industrial and professional corporate bodies
and enhancing its business substantially therefrom. The
company has always placed high priority to the compliance with
related acts, laws and directives issued by the regulators from
time to time. The company has been conducting its business on
the basis of healthy competition with other licensed merchant
bankers. The company has been contributing growth of overall
capital market with association with the Merchant Bankers
Association in the capacity of President. There is amicable
relationship between the management and other employees in
the company.
e) Board of Directors:
The details of Board of Directors and the Chief Executive Officer
have been presented below:
Mr. Sashin Joshi, Chairman
Repesentative Group A
Mr. Krishna Dutta Bhattarai, Director
Repesentative Group A
Mr. Kapil Adhikari, Director
Repesentative Group B
Mr. Mahesh Kumar Karki,
Independent Professional Director k) Information provided on personal interest
Mr. Bharat Adhikari,
Independent Professional Director regarding contract or agreement done with the
Mr. Pravin Raman Parajuli,
Chief Executive Officer/Company Secretary
Note: 39th Board Meeting held on 2015-01-26 appointed Mr. Bharat Adhikari
as Independent Professional Director of the company. On the 42nd Board
meeting of the Company held on 2015-06-14, it was informed that the
agreement between the former chairman of the company Mr. Anil Gyawali who
was representing from the bank and Nabil Bank Limited was expired. The vacant
position was filled with unanimous decision of the 43rd Board meeting of the
Company to appoint Mr. Sashin Joshi representing from the bank as Chairman of
the Company.
f) Board of Directors response
on Independent Auditors Report:
The audit of review period was carried out by auditor Mr.
Sujan Kumar Kafle of M/s Sujan Kafle & Associates, Chartered
Annual Report 2014/15 189
Accountants appointed unanimously by the Sixth AGM of the
company. The suggestions and remarks pointed by the auditor
shall be addressed gradually. The Board discussed the auditors
report and unanimously approved the audited annual accounts,
Balance Sheet, Profit & Loss A/c, P/L Appropriation A/c and
Cash Flow Statement of the company.
g) Details of shares forfeited:
The company has not forfeited any shares.
h) Review of the progresses made by the company
and its subsidiary and the position of the same at
the end of the fiscal year:
The progresses made and major activities undertaken by the
company during the review period have already been mentioned
above. Until now the company does not have any subsidiary.
i) Any information given to the company
by its fundamental shareholders:
The information provided by promoter shareholder Nabil Bank
Limited under group A and institutional shareholder CG Finco
Pvt. Ltd. under group B have been maintained by the company.
j) Shares held by the directors and officials of
the company and information received by the
company on their involvement in trading shares:
The directors of the company have been nominated
by institutional shareholders and the directors have no
shareholding and involvement of trading thereon. The same fact
applies in case of independent professional directors.
of Board of Directors and their close relatives
company:
The company has not received any such information.
l) Buy back of shares by the company and
information pertaining to this:
The company has not bought back any shares
m) Information of internal control system:
The internal audit of the company for the review period was
carried out by the Internal Audit Department of the bank as
per the provision of Service Level Agreement entered between
the bank and the company. Further, the Board of the company
has approved Financial Administration Bylaws, HR Bylaws
including Product Paper and Standard Instruction Manual (SIM)
190 Nabil Bank Limited
of services rendered for maintaining effective internal control
system and enhancing service quality. The Company has been
reviewing and revising the above mentioned documents as per
necessity.
n) Details of management expenses
incurred during the year:
The total management expenses under the heading of employee
and administrative expense incurred by the company during the
review period is NRs. 27,367,147.
o) Remuneration, allowances and benefits paid
to directors, managing director, chief executive
officer and officials:
The Articles of Association of the company lays down a
provision of granting meeting allowance of NRs. 10,000 to
the chairman and directors in each meeting of the Board.
Accordingly, the company has the provision of paying NRs.
4,000 per month to its Professional Independent Directors as
transportation and communication facility. During the review
period, the company paid a total of NRs. 320,000 to its
Professional Independent Directors and Directors representing
from Group A as meeting allowance and a total of NRs. 32,000
as transportation and communication facility to its Professional
Independent Directors. However, the Board of Directors
representing Group A have not taken any meeting fees during
the review period. The Company does not provide any other
financial benefits to its Board of Directors.
The employees of the company are being provided
remuneration, allowances and benefits as provided in the
Employees Bylaws of the company approved by the Board.
In case of employees deputed by the promoter bank, the
remuneration, allowances and benefits have been provided
as per the Bylaws of the bank and agreements between the
bank and the company. Accordingly, the salary, allowances and
addition to Provident Fund paid to Chief Executive Officer of the
company in the review period amounts to NRs. 2,840,193.
p) Income Tax:
The company has provided NRs. 8,930,939 for income tax
liability for the review period which was calculated at the rate
of 25% on net profit (after provision for staff bonus) of NRs.
38,436,164 i.e. NRs. 9,609,041 and adjusting deferred tax of
NRs. 678,102 thereon.
q) Location of office:
The company currently has its office at Naxal, Kathmandu.
r) Technology:
The company has been using Accounting Software purchased
from MicroBanker Pvt. Ltd. for recording all financial and
accounting transactions.
Similarly, the company has been using different software
developed by local vendor for transactions relating to issue
management, RTS, PMS and fund management and depository
under mutual fund. In addition, the company is operating its
separate official website for its customers. Further, the Company
has been customizing the software as required.
independent auditors report
-nabil invest
 Annual Report 2014/15 193

financial statements
-nabil invest

Balance Sheet
As at 16 July 2015 (31 Ashadh 2072)

(in NPR)

Capital & Liabilities Schedule This Year Previous Year

Share Capital 1 105,000,000 105,000,000
Reserves and Surplus 2 45,661,413 40,724,819
Other Liabilities and Provisions 3 2,918,449,186 2,986,269,568
Total 3,069,110,601 3,131,994,387

Assets Schedule This Year Previous Year

Cash and Bank Balance 4 2,920,801,813 2,979,974,661
Fixed Assets 5 14,842,048 16,858,626
Investments 6 92,446,211 92,839,684
Other Assets 7 41,020,528 42,321,416
Total 3,069,110,601 3,131,994,387

Significant Accounting Policies Schedule 13

Notes to Accounts Schedule 14

Schedules 1 to 7 form integral part of the Balance Sheet.

Suman Kumar Bohara Pravin Raman Parajuli Sashin Joshi As per our Report of even date
Head - Accounts Chief Executive Officer Chairman

Kapil Adhikari Krishna Dutta Bhattarai Bharat Adhikari Mahesh Kumar Karki Sujan Kumar Kafle, FCA
Director Director Professional Independent Director Professional Independent Director For and on behalf of
Sujan Kafle & Associates
Date: August 19, 2015 Chartered Accountants
Place: Naxal, Kathmandu
194 Nabil Bank Limited

Income Statement
(For the period from 17 July 2014 to 16 July 2015)

(in NPR)

Particulars Schedule This Year Previous Year

Income
Income from Merchant Banking Activity 8 20,705,597 15,070,069
Income from Mutual Fund operations 9 28,071,513 24,394,407
Interest Income 18,331,148 18,178,724
Other Income 10 6,416,575 17,806,627
Total Income 73,524,833 75,449,828
Expenses
Personnel Expenses 11 11,219,574 10,293,096
General Operating Expenses 12 16,147,573 13,775,832
Depreciation Charge 5 4,649,320 3,977,802
Interest Expenses 189,211 971,970
Provision for Doubtful Receivable 1,955,000 -
Total Expenses 34,160,678 29,018,700
Profit from Regular Activities 39,364,155 46,431,128
Provision for Staff Bonus 3,578,560 4,221,012
Profit Before Income tax 35,785,595 42,210,116
Provision for Income Tax 8,930,939 10,555,190
Current Tax 9,609,041 10,532,242
Deferred Tax (678,102) 22,948
Net Profit/(Loss) for the year 26,854,656 31,654,926

Schedules 8 to 12 form integral part of the Income Statement.

Suman Kumar Bohara Pravin Raman Parajuli Sashin Joshi As per our Report of even date
Head - Accounts Chief Executive Officer Chairman

Kapil Adhikari Krishna Dutta Bhattarai Bharat Adhikari Mahesh Kumar Karki Sujan Kumar Kafle, FCA
Director Director Professional Independent Director Professional Independent Director For and on behalf of
Sujan Kafle & Associates
Date: August 19, 2015 Chartered Accountants
Place: Naxal, Kathmandu
 Annual Report 2014/15 195

Profit and Loss Appropriation Account

Fiscal Year 2014/15 (2071/2072)

(in NPR)

Particulars Schedule This Year Previous Year

Income
Accumulated Profit up to Last Year (Restated Balance) 39,415,738 23,487,863
Current Years Profit 26,854,656 31,654,926
Deferred Tax Reserve - 22,948
Total 66,270,394 55,165,738
Expense
Accumulated Loss up to Last Year - -
Current Years Loss - -
Deferred Tax Reserve 678,102 -
Dividend Payment 21,000,000 15,750,000
Total 21,678,102 15,750,000
Retained Earnings 44,592,292 39,415,738

Suman Kumar Bohara Pravin Raman Parajuli Sashin Joshi As per our Report of even date
Head - Accounts Chief Executive Officer Chairman

Kapil Adhikari Krishna Dutta Bhattarai Bharat Adhikari Mahesh Kumar Karki Sujan Kumar Kafle, FCA
Director Director Professional Independent Director Professional Independent Director For and on behalf of
Sujan Kafle & Associates
Date: August 19, 2015 Chartered Accountants
Place: Naxal, Kathmandu
196 Nabil Bank Limited

Cash Flow Statement

(For the period from 17 July 2014 to 16 July 2015)

(in NPR)

Particulars This Year Previous Year

(a) Cash Flow from Operating Activities (35,540,107) 2,887,802,712
1. Cash Received from Income 73,524,833 75,449,828
1.1 Income from Merchant Banking Operation 20,705,597 15,070,069
1.2 Income from Mutual Fund Operation 28,071,513 24,394,407
1.3 Interest Income 18,331,148 18,178,724
1.4 Other Income 6,416,575 17,806,627
2. Cash Payment (43,316,880) (37,331,242)
2.1 Personnel Expenses (15,440,586) (13,115,427)
2.2 Office Operating Expenses (16,147,573) (13,775,832)
2.3 Interest Expenses (189,211) (971,970)
2.4 Income Tax Paid (11,539,510) (9,468,014)
Cash Flow before changes in Working Capital 30,207,953 38,118,586
(Increase)/Decrease in Current Assets 1,429,870 26,895,470
1. (Increase)/Decrease in Available for Sale and Trading Investments (524,590) 1,322,700
2. (Increase)/Decrease in Other Assets 1,954,460 25,572,770
Increase/(Decrease) in Current Liabilities (67,177,929) 2,822,788,656
3. Increase/(Decrease) in Borrowings (7,554,561) (21,653,811)
4. Increase/(Decrease) in Other Liabilities (59,623,368) 2,844,442,467
(b) Cash Flow from Investment Activities (2,632,742) (9,822,224)
1. (Increase)/Decrease in HTM Investment - 4,875,000
2. (Increase)/Decrease in Fixed Assets (2,632,742) (14,697,224)
3. Interest income from Long term Investment - -
(c) Cash Flow from Financing Activities (21,000,000) (15,750,000)
1. Increase/(Decrease) in Share Capital - -
2. Payment of Dividend (21,000,000) (15,750,000)
(d) Income/(Loss) from change in exchange rate in Cash & Bank balance - -
(e) Current Years Cash Flow from All Activities (59,172,849) 2,862,230,488
(f) Opening Cash and Bank Balance 2,979,974,662 117,744,174
(g) Closing Cash and Bank Balance 2,920,801,813 2,979,974,662

Suman Kumar Bohara Pravin Raman Parajuli Sashin Joshi As per our Report of even date
Head - Accounts Chief Executive Officer Chairman

Kapil Adhikari Krishna Dutta Bhattarai Bharat Adhikari Mahesh Kumar Karki Sujan Kumar Kafle, FCA
Director Director Professional Independent Director Professional Independent Director For and on behalf of
Sujan Kafle & Associates
Date: August 19, 2015 Chartered Accountants
Place: Naxal, Kathmandu
 Annual Report 2014/15 197

Statement of Changes in Equity

Fiscal Year 2014/15 (2071/72)
(in NPR)

Particulars Share Capital Retained Deferred Available for total

Earnings Tax Reserve Sale Reserve amount
Balance as on 17 July 2014 105,000,000 39,415,738 131,897 1,177,184 145,724,819
Changes in Accounting Policy - -
Share Capital Adjustment -
Changes in Tax Accounting Policy - -
Restated Balance 105,000,000 39,415,738 131,897 1,177,184 145,724,819
Net Gains and Losses not recognised
in the Income Statement -
Net Profit for the period 26,854,656 26,854,656
Adjustments: -
Issuance of Share Capital - -
General Reserve Fund -
Proposed Stock Dividend -
Cash Dividend (21,000,000) (21,000,000)
Available for Sale Reserve (918,063) (918,063)
Dividend Equalization Fund - -
Deferred Tax Reserve (678,102) 678,102 -
Closing Balance 105,000,000 44,592,292 809,999 259,121 150,661,413

Suman Kumar Bohara Pravin Raman Parajuli Sashin Joshi As per our Report of even date
Head - Accounts Chief Executive Officer Chairman

Kapil Adhikari Krishna Dutta Bhattarai Bharat Adhikari Mahesh Kumar Karki Sujan Kumar Kafle, FCA
Director Director Professional Independent Director Professional Independent Director For and on behalf of
Sujan Kafle & Associates
Date: August 19, 2015 Chartered Accountants
Place: Naxal, Kathmandu
198 Nabil Bank Limited

Share Capital Schedule 1

(As at 16 July 2015)

(in NPR)

Particulars This Year Previous Year
1. Share Capital
1.1 Authorized Capital 200,000,000 200,000,000
a) 2,000,000 Ordinary Shares of Rs. 100 each 200,000,000 200,000,000
b) ...Non-redeemable Preference Shares of Rs.. each
c) Redeemable Preference Shares of Rs.. each
1.2 Issued Capital 150,000,000 150,000,000
a) 1,500,000 Ordinary Shares of Rs. 100 each 150,000,000 150,000,000
b) ...Non-redeemable Preference Shares of Rs.. each
c) Redeemable Preference Shares of Rs.. each
1.3 Paid Up Capital 105,000,000 105,000,000
a) 1,050,000 Ordinary Shares of Rs. 100 each 105,000,000 105,000,000
b) ...Non-redeemable Preference Shares of Rs.. each
c) Redeemable Preference Shares of Rs.. each
1.4 Proposed Bonus Shares - -
1.5 Calls in Advance - -

Share Ownership
As at 16 July 2015
(in NPR)

Particulars % This Year % Previous Year

1. Local Ownership 100.00 105,000,000 100.00 105,000,000
1.1 Government of Nepal - - - -
1.2 Ka Class Licensed Institutions 74.29 78,000,000 74.29 78,000,000
1.3 Other Licensed Institutions - - - -
1.4 Other Entities 25.71 27,000,000 25.71 27,000,000
1.5 General Public - - - -
1.6 Others - - - -
2. Foreign Ownership - - -
Total 100.00 105,000,000 100 105,000,000

Details of Shareholders Holding 0.5% Shares

(in NPR)

Particulars THIS YEAR

% AMOUNT
Nabil Bank Limited 74.29 78,000,000
CG Finco Pvt. Ltd. 25.71 27,000,000
General Public - -
 Annual Report 2014/15 199

Reserves & Surplus Schedule 2

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Deferred Tax Reserve 810,000 131,897
2. Available for Sale Reserve 259,121 1,177,184
3. Retained Earnings 44,592,292 39,415,738
Total 45,661,413 40,724,819

Other Liabilities & Provisions Schedule 3

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Creditors and Accounts Payable 15,984,983 4,947,431
2. Payables and Refundables to Investors 2,897,734,364 2,968,565,241
3. Provision for Expenses 872,233 610,214
4. Provision for Staff Bonus 3,578,560 4,221,012
5. Deferred Tax Liability - -
6. Short Term Loan - 7,554,561
7. Others 279,048 371,109
Total 2,918,449,188 2,986,269,568
200 Nabil Bank Limited

Cash and Bank Balance Schedule 4

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

Cash Balance - -
Petty Cash Fund - -
Current Account 70,184,353 199,240,949
1. Nepal Rastra Bank 60,300,000 197,764,000
2. Nabil Bank Limited - -
3. Everest Bank Limited - 136,164
4. Sunrise Bank Limited (Current A/c - PMS) 310,031 37,877
5. NIDC Development Bank Ltd. (Current A/c- PMS) 1,264,641 125,311
6. Nabil Bank Limited - RTS 830,754 451,693
7. Civil Bank Limited 965,656 77,796
8. Commerz & Trust Bank Ltd. (Global IME Bank Ltd.) - 154,669
9. Grand Bank Ltd. (Current A/c - PMS) 761,988 95,762
10. Janata Bank Ltd. (Current A/c - PMS) 1,118,565 57,898
11. Global IME Bank Ltd. (Current A/c - PMS) 386,329 61,348
12. Citizens Bank International Ltd. (Current A/c - PMS) 1,025,305 -
13. Clean Energy Development Bank Ltd. (PMS) 591,482 111,792
14. Nepal Investment Bank Ltd. 185 185
15. Sanima Bank Ltd. (Current -PMS) 1,202,240 136,503
16. Lumbini Bank Ltd. (Current A/c - PMS) 816,254 4,595
17. Mega Bank Ltd. (Current A/c - PMS) 13,411 25,357
18. NMB Bank Ltd. (Current A/c - PMS) 136,774 -
19. NIC Asia Bank Ltd. (Current A/c - PMS) 460,737 -
Call Account 337,459,046 9,718,563
1. Nabil Bank Limited 7,543,985 6,695,473
2. Pacific Development Bank Limited - -
3. Sanima Bank Limited 303,758,113 685,089
4. Nabil Bank Limited -RTS (SWBBL) 2,494,886 2,005,008
5. Nabil Bank Limited -RTS (Sana Kisan Bikas Bank) 6,115,192 332,994
6. Nabil Bank Limited - RTS (NBF I) 17,546,870 -
Bankers to the Issue Account 2,513,158,414 2,771,015,148
1. Nabil Bank Limited (06 Account) 1,949,723 9,144,100
2. Mega Bank Nepal Limited 1,129,648 15,167
3. NMB Bank Limited - 300,128,578
4. Commerz & Trust Bank Limited - 32,336
5. Civil Bank Limited - 5,000
6. Sunrise Bank Limited - 76,880
7. Century Commercial Bank Ltd. 1,959,661
8. Janata Bank Nepal Ltd. - 200,045,425
9. Nepal SBI Bank Limited - 13,101
10. Global IME Bank Limited - 71
11. Laxmi Bank Limited 100,456,527 757,782,227
12. NIC Asia Bank Ltd. 23,043 1,031

Continued...
 Annual Report 2014/15 201

Continued...

Particulars This Year Previous Year

13. Nabil Bank Limited - MF 235,036 389,402
14. Nabil Bank Ltd. (Mega IPO) 6,991 995,158
15. Kumari Bank Limited - 1,000
16. Machhapuchhre Bank Ltd. - 37,607
17. Nabil Bank Ltd. (Mahila Sahayatra IPO) 236,090,838 7,839
18. Rastriya Banijya Bank Ltd. 115,493 10,000
19. NCC Bank Ltd. 300,192,123 350,067,243
20. Nepal Bangladesh Bank Ltd. 714,149,884 750,175,240
21. Citizens Bank International Ltd. - 400,128,082
22. Lumbini Bank Limited 13,513,577 -
24. Prabhu Bank Limited 524,394,229
25. Everest Bank Limited 261,454,317
26. Prime Commercial Bank Ltd. 209,407,552
27. Nepal Investment Bank Ltd. 4,500
28. Siddhartha Bank Limited 150,034,932
Total 2,920,801,813 2,979,974,661
 202 Nabil Bank Limited

Schedule 5
Fixed Assets
As at 16 July 2015

(in NPR)

Particulars ASSETS This Previous

Building Vehicles Furniture computer & Software Others Year Year
Office Equipment
1. Cost Price
a. Previous Year Balance - 3,253,127 4,858,045 7,139,321 1,297,007 - 16,547,500 8,521,421
b. Addition during the Year - 2,086,400 - 546,342 - - 2,632,742 8,883,824
c. Revaluation/Write Back This Year - - - - - - -
d. Sold during the Year - - - - - - - -
e. Write off during the Year - - - - - - - (857,744)
Total Cost (a+b+c+d+e) - 5,339,527 4,858,045 7,685,663 1,297,007 - 19,180,242 16,547,501
2. Depreciation
a. Up to Previous Year - 1,471,830 875,480 2,860,601 608,779 - 5,816,691 3,679,967
b. For This Year - 669,219 995,641 1,334,098 259,401 - 3,258,359 2,687,545
c. Revaluation/Write Back This Year - - - - - - - -
d. Depreciation on Sold Assets - - - - - - -
e. Depreciation on Writen Off Assets - - - - - - - (550,821)
Total Depreciation - 2,141,049 1,871,121 4,194,699 868,181 - 9,075,050 5,816,691
3. Book Value (WDV*) (1-2) - 3,198,478 2,986,924 3,490,964 428,827 - 10,105,192 10,730,810
4. Land - - - - - - - -
5. Pending Capitalization - - - - - - - -
6. Leasehold Assets - - - - - 4,736,856 4,736,856 6,127,817
Total (3+4+5+6) - 3,198,478 2,986,924 3,490,964 428,827 4,736,856 14,842,048 16,858,626
 Annual Report 2014/15 203

Investments Schedule 6

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

Fixed Deposits 8,000,000 8,000,000
1. Nabil Bank Limited 8,000,000 8,000,000
Shares, Debentures & Mutual Fund units 84,446,211 84,839,684
1. 12.5% Nepal SBI Bank Debenture 60,000,000 60,000,000
2. 11% Siddhartha Bank Debenture 15,000,000 15,000,000
3. Nabil Balanced Fund I (Seed Capital) 7,500,000 7,500,000
4. Century Commercial Bank Ltd IPO - 1,655,000
5. Ridi Hydropower Company Ltd. IPO - 31,584
6. Ekta Bikas Bank Ltd. IPO - 653,100
7. Rapbheri Bikas Bank Ltd. - IPO 424,943 -
8. Barun Hydropower Company Ltd. - IPO 1,000 -
9. Vijaya Laghubitta Bittiya Sanstha Ltd. - IPO 2,300 -
10. ILFCO Laghubitta Bittiya Sanstha Ltd. - IPO 1,500 -
11. NMB Sulav Fund I 522,000 -
12. NIBL Samriddhi Fund I 351,248 -
13. Laxmi Value Fund-1 643,220 -
Total 92,446,211 92,839,684
204 Nabil Bank Limited

Other Assets Schedule 7

As at 16 July 2015
(in NPR)

Particulars This Year Previous Year

1. Deferred Tax Assets 810,000 131,897
2. Account Receivables 32,088,257 38,721,991
Less: Provision for doubtful receivable (2,030,000) -
3. Advance Tax ( Net of Tax Liability) 4,465,254 2,534,785
4. Deposits 118,500 118,500
5. Advance Salary 60,000 161,062
6. Others 5,508,518 653,181
Total 41,020,529 42,321,416

Income from Merchant Banking Activity Schedule 8

(For the period from 17 July 2014 to 16 July 2015)

(in NPR)

Particulars This Year Previous Year

1. Issue Management Income 5,180,817 7,817,868
2. Underwriting Commission 156,750 439,375
3. Registrar to Shares 3,383,554 2,367,805
4. Portfolio Management Services 7,179,832 4,445,022
5. Income from Auction of Shares Management 4,804,645 -
Total 20,705,597 15,070,069

Income from Mutual Fund Operations Schedule 9

(For the period from 17 July 2014 to 16 July 2015)

(in NPR)

Particulars This Year Previous Year

1. Fund Management Fees - NBF I 22,457,210 19,515,526
2. Depository Fees - NBF I 5,614,303 4,878,881
Total 28,071,513 24,394,407
 Annual Report 2014/15 205

Other Income Schedule 10

(For the period from 17 July 2014 to 16 July 2015)

(in NPR)

Particulars This Year Previous Year

1. Operational Support/Advisory Fees 2,060,508 7,459,433
2. Business Advisory 738,375 438,750
3. Gain on Sale of Securities 1,925,159 9,717,449
4. Dividend Income 1,121,841 9,396
5. Income from Depository Participant Service 278,540 -
6. Miscellaneous Income 292,152 181,599
Total 6,416,575 17,806,627

Personnel Expenses Schedule 11

(For the period from 17 July 2014 to 16 July 2015)

(in NPR)

Particulars This Year Previous Year

1. Salary 4,829,443 4,316,984
2. Allowances 4,145,813 3,906,397
3. Contribution to Provident Fund 482,944 381,783
4. Overtime 1,975 7,506
5. Training Expenses 38,270 151,177
6. Dashain Expenses 771,523 664,494
7. Staff Insurance Premium 284,629 183,321
8. Leave Encashment 477,936 417,338
9. Gratuity Expenses 187,042 264,096
Total 11,219,574 10,293,096
206 Nabil Bank Limited

General Operating Expenses Schedule 12

(For the period from 17 July 2014 to 16 July 2015)

(in NPR)

Particulars This Year Previous Year

1. Supplies and Stationeries 322,626 654,280
2. Communication Expenses 309,128 272,021
3. Expenses relating to Audit
a. Audit Fees 65,000 55,000
b. Other Expenses - -
4. Repairs & Maintenance 808,431 281,327
5. Water 81,045 69,139
6. Electricity 416,844 393,364
7. Janitorial 30,228 35,959
8. Advertisement & Business Promotions 357,383 436,246
9. Insurance - Fire & Others 93,087 28,132
10. Board Meeting Fees 352,000 210,000
11. Professional Services - Others 500,000 500,000
12. Technical Management Service Fees 2,840,193 2,769,786
13. Fuel Expensses - Vehicle 354,249 377,119
14. Fuel Expensses - Generator 465,506 471,846
15. Newspapers/Periodicals/ Books 32,782 33,570
16. Tea, Coffee & Snacks 450,822 427,059
17. Membership Fees 45,000 45,000
18. Other Taxes & Fees (SEBON) 300,000 300,000
19. Vehicle Registration & Renewal 61,662 55,100
20. Contract Service Expenses 3,323,792 2,464,598
21. Miscellaneous Expenses 37,122 34,423
22. AGM Expenses 19,780 17,299
23.Travelling Expenses 43,243 17,277
24. AMC Charges 444,547 455,907
25. Bank Charges 18,902 35,050
26. Inaguration Expenses - 133,137
27. Office Shifting Expenses - 57,830
28. Rent Expenses 3,709,200 2,627,350
29. Loss on Disposal of Fixed Assets - 518,014
30. Credit Rating Charges 565,000 -
31. Donation to PM Diaster Relief Fund 100,000 -
Total 16,147,573 13,775,832
208 Nabil Bank Limited
Schedules to and forming part of financial
statements as of 16th July 2015
Schedule: 13
Significant
Accounting Policies
1. Corporate information
Nabil Investment Banking Limited (Nabil Invest) is a limited liability
Company, incorporated on 7th February, 2010 and domiciled in Nepal.
It is a licensed Merchant Bank as a subsidiary of Nabil Bank Ltd.
with CG Finco Pvt. Ltd. as its Institutional shareholder, licensed under
Securities Businessperson (Merchant Banker) Rules, 2064 from the
Securities Board of Nepal (SEBON). The registered address of Nabil
Invest is Kathmandu, Nepal.
2. Approval of Financial Statements
by the Board of Directors
The Financial Statements for the year ended on 16th July, 2015 was
approved for issuance by the Board of Directors on August 19, 2015.
3. Principal Activities and Operations
Nabil Invest obtained license for commercial operation as a Securities
Businessperson (Merchant Banker) from SEBON on May 26, 2010.
The major activities of the Company are issue management, portfolio
management services, underwriting of securities, securities trustee,
registrar to shares, fund management & depository services of Nabil
Mutual fund, depository participant services in a central depository
services, corporate advisory services, allied support services etc.
Issue Management
During the review period, Nabil Invest has entered into Agreements with
following institutions for managing their public/right offer.
First Microfinance Development Bank Ltd. (Right Issue)
Nepal Bangladesh Bank Ltd. (Debenture Issue)
Everest Bank Ltd. (Debenture Issue)
Sana Kisan Bikas Bank Ltd.
Machapuchchhre Bank Ltd. (Right Issue)
Prabhu Bank Ltd. (Right Issue)
The IPO of Mahila Sahayatra Microfinance Bittiya Sanstha Ltd. was
opened in the review period for which agreement was entered in last
fiscal year. The IPO was excessively oversubscribed and the allotment
of the same has been completed on August 5, 2015. The IPO of
debentures of Everest Bank Ltd. was successfully managed and
correspondingly allotted on July 16, 2015.
Further, the Company has also successfully managed the right issues of
City Development Bank & First Microfinance Development Bank Ltd.
Underwriting:
During the review period, Nabil Invest has not entered into any
agreements to undertake the underwriting commitment of the IPOs.
However, the underwriting commitment of IPO of Mahila sahayatra
Microfinance Bittiya Sanstha Ltd. has been ceased as the issue was
highly oversubscribed.
Registrar to Shares (RTS) & Depository Participant (DP) Services:
Nabil Invest has been rendering RTS services to the following
companies:
Nabil Bank Limited
Swabalamban Laghubitta Bikas Bank Limited.
Mega Bank Nepal Limited.
Sanima Bank Limited.
Prime Life Insurance Company Limited.
Sana Kishan Bikas Bank Limited.
Surya Life Insurance Company Limited
During the review period, the Company has entered into RTS agreement
with Surya Life Insurance Company Limited while others are of
continuation of earlier years.
In addition, Nabil Invest under Depository services has been rendering
depository services to unit holders of Nabil Balanced Fund I under
Nabil Mutual Fund.
Nabil Invest has already started providing Depository Participant (DP)
services in full fledge and has earned revenue of Rs. 278,540 in the
reporting period. The number of De-mat accounts opened with the
Company has crossed 1,768 by the end of Asar 2072 and the number
is expected to grow further in the coming year.
Portfolio Management Services (PMS)
PMS is a professional service offered by Portfolio Managers to their
Clients to help them manage their wealth professionally. The Portfolio
Manager manages the assets of the Client considering their investment
goals and risk appetite. As managing investments requires time,
knowledge, experience and constant monitoring, investors who lag these
aspects seek the support of professional Portfolio Managers.
Nabil Invest provides the following services to the investors under PMS:
Discretionary Portfolio Management Services
Non Discretionary Portfolio Management Services
Advisory Services

The size of the total Assets under Management (AuM) has reached
Rs 874 Million with client base of 272 including institutional clients
at the end of the review period. Out of the total size, Rs 650 Million)
constitutes the guaranteed returns portfolio.
Fund Management & Depository Services to Nabil Mutual Fund
The Sponsor Nabil Bank appointed Nabil Invest, an institution licensed
by SEBON to render Fund Management services to the schemes of
Nabil Mutual Fund. The Company has been managing the assets of
Nabil Balance Fund I, first scheme under Nabil Mutual Fund, as Fund
Manager.
The Company has also been rendering Depository services to the unit
holders of Nabil Balanced Fund I as per its license obtained from
SEBON & in line with the provisions of prevailing regulations on mutual
funds.
Further, the Company is preparing to launch Nabil Equity Fund, second
scheme under Nabil Mutual Fund with a size of Rs. One Billion and has
already filed a prospectus of the same with SEBON. SEBON has given
feedback on the prospectus and has directed us to rate the Sponsor and
Fund Manager to obtain final approval on the scheme. The process of
credit rating is likely to take some more time to move ahead.
Corporate Advisory Services
Nabil Invest has started rendering advisory services to few institutions
in the form of Loan Syndication, Investment Advisory and Business
Valuation. During the review period, the Company has earned income
of NRs. 738,375 from advisory services. The Company targets to
widen the scope of advisory services in order to improve the revenue
from this segment in the next fiscal year as SEBON has incorporated
the additional scope of work that the Merchant Bankers will be allowed
to render under Advisory Services in days ahead in line with regional
markets in its proposed amendment on related draft regulation.
Other Support Services
Nabil Invest continued rendering its operational support services to
Nabil Bank in their bullion operations in coordination with Treasury &
the Branches of the Bank.
4. Responsibility for
Financial Statements
The Management of Nabil Invest is responsible for the preparation
of financial statements. The Management & the Board of Directors
acknowledges the accountability of the Financial Statements prepared
as set out in the Annual Report of the Board of Directors.
These Financial Statements include the following components:
a. a Balance Sheet disclosing the information on financial position of
Nabil Invest;
b. an Income Statement disclosing the financial performance of Nabil
Invest for the period under review;
c. a Statement of Changes in Equity showing all changes in equity of
Nabil Invest;
Annual Report 2014/15 209
d. a Cash Flow Statement disclosing the information on the ability of
Nabil Invest to generate cash and cash equivalents; and
e. Notes to the Financial Statements comprising a summary of principal
accounting policies and other relevant explanatory notes.
5. Statement of Compliance
The Financial Statements which comprises components mentioned
above have been prepared in accordance with Nepal Accounting
Standards (NAS) pronounced by the Institute of Chartered Accountants
of Nepal and in compliance with Companies Act, 2007.
6. Basis of Preparation
The Financial Statements are presented in Nepalese Rupees (NRs)
and are prepared on historical cost basis. Preparation of financial
statements in conformity with NAS and GAAP requires the use of certain
critical accounting estimates and also requires management to exercise
judgement in the process of applying Nabil Invests accounting policies.
7. Summary of Principal
Accounting Policies
The principal accounting policies adopted by the Board of Directors
are presented below.
7.1 Income Recognition
a. Income from Investments
Interest earnings on fixed deposits, call deposits and bonds and
debentures are recognised on accrual basis.
Dividend on share investments is recognised as and when the right
to receive is established.
b. Fee Income
Issue Management Income is recognised when the issue
management services are fully rendered.
Underwriting Commission is recognised when the Issuing Company
complies with all the terms of underwriting commitment Agreement.
Portfolio / Assets Management Income is recognised when the
contract with the Client for the Portfolio Management Service is
executed.
Bond / Debenture Trusteeship Income are accounted for on accrual
basis when the Trust Deed provides lump sum fee covering period
more than 1 year, it shall be accounted on pro-rata basis.
Income with respect to advisory services are recognised:
- after the services are fully rendered, if the right to receive the fee is
subject to the fulfilment of terms of advisory services,
- on accrual basis, if the right to receive the fee is established after
elapse of a time.
Income from facilitation services to Banks customers for securities
is recognised after the transactions are executed.
Loan Syndication Fee is recognised after the loan syndication
services are rendered.
210 Nabil Bank Limited
Fee from Business Outsourcing Services are recognised:
- after the services are fully rendered, if the right to receive the fee is
subject to the fulfilment of terms of business outsourcing services,
- on accrual basis, if the right to receive the fee is established after
elapse of a time.
Fee from Cross Sale Services are recognised when the cross selling
services are rendered.
Commission on ETF is accounted for as and when contract for ETF
is executed.
c. Gains / Losses on trading and available for securities (sell)
Gains and losses arising from trading are recognised after the
securities are sold while gains and losses arising from revaluation are
recognised on daily basis.
7.2 Expense Recognition
a. Interest on Borrowings
Interest expenses on borrowings are accounted for on accrual basis.
Interest assured on funds received for Portfolio Management are
accounted for on accrual basis.
b. Staff Bonus
Provision for staff bonus is provided for as per the Bonus Act, 1974.
7.3 Investments
a. The investments held by Nabil Invest are classified under 3
categories:
Investments Held for Trading:
These are marketable investments and held with the primary intention
of resale over a short period of time. These investments are initially
measured at cost and subsequently accounted at market value.
Investments Available for Sale:
These are investments held with the primary intention to recover
value of investments through sale rather than continuing to hold.
These investments are initially measured at cost and subsequently
accounted at market value.
Investments Held Till Maturity (HTM):
These investments are primarily intended to be held till maturity and
are valued at cost and carried at these values in the Balance Sheet
till maturity. Any impairment losses arising in such investments are
provisioned and charged in the Income Statement. Premiums paid while
acquiring HTM Investments shall be recognized as the part of initial cost
and subsequently amortized on proportionate basis till maturity.
b. Investments in unlisted companies are initially stated at cost and
carried at these values in the Balance Sheet. Any impairment losses
arising in such investments are provisioned and charged in the
Income Statement. Nabil Invest recognizes equity method to calculate
impairment losses on unlisted investments.
7.4 Fixed Assets and Depreciation
a. Fixed assets are stated at cost less accumulated depreciation.
b. Depreciation is charged to Income Statement on Written Down
Value method over the estimated useful lives of the fixed assets. The
depreciation rates applied for various asset categories are as follows:
Nature of Assets Depreciation Rate Estimated Useful Life
Furniture 25% 15 years
Equipments 25% 15 years
Vehicles 20% 7 years
Computers 40% 5 years
Building 5% 50 years
Leasehold Items 20% (Straight Line) 5 years
c. In case of fixed assets purchased during the year and booked for more
than one month, depreciation is charged from the subsequent month
of booking. Depreciation on fixed assets sold or disposed off during the
year is charged to the previous month of such disposal.
d. Leasehold improvements are amortized over the period of lease.
e. Cost of computer software licences are capitalised and are amortized
over a period of useful life of the software, estimated as 5 years from
the date of acquisition.
f. Non-consumable items having life less than one year and/or costing
less than NRs. 5,000 are expensed off during the year of purchase.
7.5 Contingent Liabilities
All types of guarantees & claims whose future outcome cannot be
ascertained with reasonable certainty is recognized as contingent
liabilities in accordance with NAS 12 Provisions, Contingent
Liabilities and Contingent Assets.
7.6 Stationery Stock
Stationery purchased are charged to revenue at the time of consumption
and valued at average cost basis.
7.7 Income Taxes
a. Provision for current tax is made based on the provisions of the
Income Tax Act, 2058 and amendments thereto.
b. Deferred tax is recognized and provided for on the timing differences
between taxable income and accounting income.
c. Deferred tax assets are not recognised unless there is a virtual/
reasonable certainty that there will be sufficient future taxable income
available to realize such assets. Deferred tax assets & liabilities are
netted off and presented either under Other Assets or under Other
Liabilities.
d. The equivalent amount of outstanding Deferred Tax Assets is earmarked
under Deferred Tax Reserve in order to make the accounting policy uniform
with the accounting policy of Nabil Bank Limited, the parent Company.
 Annual Report 2014/15 211

Schedule: 14

Notes to Accounts
1. Paid up Capital
The issued and paid up capital of Nabil Invest is Rs.150 Million and
Rs. 105 Million respectively. The remaining portion of the issued capital
shall be issued by the Company in future in such a manner as the Board
of the Company deems appropriate. Out of paid-up capital of Rs.105
Million, Nabil Bank Limited holds Rs.78 Million while the balance of
Rs.27 Million is held by CG Finco Pvt. Ltd.
2. Income Tax and Deferred Tax
The tax liability of Nabil Invest for the review period, after adjusting
for inadmissible and tax free items computed on self-assessment basis
under Income Tax Act, 2002 is Rs. 9,609,041.
Before Tax Profit as per Income Statement 35,785,596
Add: Disallowable Expenses 6,972,478
Expenses without proper supporting 10,000
Excess Repair and Maintenance 96,138
Leave Provision 262,019
Provision for doubtful receivable 1,955,000
Depreciation as per Books 4,649,320
Less: allowable exp & exempt income 4,321,909
Depreciation as per Tax 4,250,068
Dividend Income (Net of tax) 71,841
taxable income 38,436,164
Income tax liability @ 25% 9,609,041
Accounting tax has been computed on accounting profit which is
profit before tax and adjustments for permanent difference arising
out of dividend income from resident company as the tax on dividend
from resident company is considered to be final withholding tax. The
accounting tax has been calculated as under:
Profit from Regular Activities 39,364,156
Provision for staff Bonus 3,578,560
Profit Before Tax and Tax related adjustment 35,785,596
Adjustment for permanent difference:
Disallowable Expenses 10,000
Dividend Income (71,841)
Accounting Profit after adjustment 35,723,755
Accounting Tax @ 25% 8,930,939
Current year tax 9,609,041
Deferred Tax 678,102
Deferred tax income of Rs.678,102 has been booked in the income
statement this year on the taxable temporary difference arising due to
charge of depreciation and on creating provision for Leave Encashment
& doubtful receivable as shown hereunder:

Deferred Tax Previous Year (in NPR)

Items Carrying Amount Tax Base Taxable Temporary Deductible Temporary Deferred Tax Liability /
Differences Differences (Assets)
Fixed Assets 16,858,626 16,775,997 82,629 - 20,657
Provision for Leave Encashment 610,214 - (610,214) - (152,554)
Total (527,584) - (131,897)

Deferred Tax This Year (in NPR)

Items Carrying Amount Tax Base Taxable Temporary Deductible Temporary Deferred Tax Liability /
Differences Differences (Assets)
Fixed Assets 14,842,048 15,254,810 (412,762) - (103,190)
Provision for Leave Encashment 872,233 - (872,233) - (218,058)
Provision for Doubtful Receivable 1,955,000 - (1,955,000) (488,750)
Total 17,669,281 15,254,810 (3,239,994) - (809,999)

Deferred Tax income booked in the review period is Rs. 678,102.

212 Nabil Bank Limited

3. Related Parties Disclosures

a. Nabil Invest has the following related parties:

Name Relationship
Nabil Bank Limited Holding Company
CG Finco Pvt. Limited An Associate Company

The Company has entered into following transactions with its related parties during F.Y.2071/72:

Related Party Transactions Amount

Nabil Bank Limited Balance in Call/Current Account Closing Balance Rs. 27,2814,275
Nabil Bank Limited Balance in Fixed Deposit Closing Balance Rs. 8,000,000
Nabil Bank Limited Interest Income on Call & Fixed Deposit Accounts Rs. 2,502,222
Nabil Bank Limited Proceeds realised from rendering operational support assistance for the Bank NRs.2,060,508
Nabil Bank Limited Annual Fee of RTS Service Provided Rs. 425,000
Nabil Bank Limited Interest paid on Short term loan Rs. 8,416
Nabil Bank Limited Service Level Agreement (SLA) Fees paid Rs.5,00,000
Nabil Bank Limited Technical Management Service Fee paid Rs.2,840,193

b. Key Management Personnel d. Transaction with Key Management Personnel of the Bank
Key Management Personnel of Nabil Invest includes the Board of The Board of Directors representing the Bank have decided not to
Directors and the Chief Executive Officer: accept any meeting fees until otherwise decided at a later stage.
However, this decision does not apply to the director representing CG
Mr. Sashin Joshi Chairman Finco Pvt. Ltd. and Professional Independent Directors. The Company
Mr. Krishna Dutta Bhattarai Director has paid Rs.320,000 to its Directors as meeting fee during the review
Mr. Kapil Adhikari Director period. In addition to meeting fee, the Company pays Rs. 4,000 per
Mr. Mahesh Kumar Karki Independent Professional Director month to Professional Independent Directors towards communication
Mr. Bharat Adhikari Independent Professional Director and transportation allowance and Rs. 32,000 has been incurred by the
Mr. Pravin Raman Parajuli Chief Executive Officer/Company Secretary Company under this heading in the review period. The Company does
not provide any other financial benefits to its Board of Directors except
Note: The 39th Board meeting dated January 26, 2015 has appointed
mentioned above.
Mr. Bharat Adhikari as Independent Professional Director of the
Company. 4. Usage of Nabil Banks
Infrastructure/Resources
The terms of service of the CEO, Nabil Bank Mr. Anil Gyawali who
was also the Chairman of Nabil Invest as one of the representatives a. Nabil Invest has entered into Service Level Agreement (SLA) with
from Banks end expired on 19th May, 2015 and the Board of the Nabil Bank under which the Company receives services of the Bank in
Company as per the information received from the Bank in writing vide areas like Administration, Operations, Accounts, Finance & Planning,
their letter dated June 9, 2015 took note of the same from its 42nd Information Technology, Clearing & Settlement, Human Resources,
Board meeting dated June 14, 2015. Legal, Treasury etc. at an annual fees of Rs. 5,00,000.

Further, the Board acknowledged the nomination of Mr. Sashin Joshi as
the Director of the Company representing Nabil Bank as per the letter
received from Nabil Bank dated July 13, 2015 & also unanimously
selected Mr. Joshi as the Chairman as per Clause 27(6) of AOA of the
Company vide its 43rd Board meeting dated July 14, 2015.
b. Nabil Invest has also been availing services of the CEO deputed by
the Bank. During the year, the Company has reimbursed Rs. 2,840,193
to the Bank as fees paid on actual cost basis for the deputed staff as
per the provisions of Management Service Agreement (MSA) entered
between Nabil Bank & the Company.

c. Compensation to Key Management Personnel of Nabil Invest

The total employee benefits paid to Mr. Pravin Raman Parajuli in the
capacity as Chief Executive Officer of Nabil Invest in the review period
amounts to Rs.2.84 Million.
 Annual Report 2014/15 213

5. Investments
The investments of Nabil Invest constitute investment in Debentures, Time Deposits, Mutual Fund Units and Equity Shares purchased through
IPO. Some of these investments have been made with objective of holding them till maturity for regular returns and hence valued at cost. The
investments in equity shares through IPO shall be sold once they are listed with NEPSE and upon receipt of reasonable targeted returns. Such
investments have been classified under Available for Sale Category and valued at fair value that is market price as on Balance Sheet date in case of
shares which are listed with NEPSE. In case of shares which are not listed till the Balance Sheet date, they are valued at cost. The Company does
not hold any investments which are classified as Held for Trading.

The details of investments of the Company as on Balance Sheet date is as follows: (in NPR)

Particulars Cost Price Market Value Market Price

as on Asar End 2072
Held to Maturity Investments
Fixed Deposits 8,000,000.00 8,000,000.00
1. Nabil Bank Limited 8,000,000.00 8,000,000.00
Bonds/ Debentures 75,000,000.00 75,000,000.00
1. 12.5% Nepal SBI Bank Debenture (60,000 Debentures @ Rs. 1000 each) 60,000,000.00 60,000,000.00
2. 11% Siddhartha Bank Debenture (15,000 Debentures @ Rs. 1000 each) 15,000,000.00 15,000,000.00
Mutual Fund Units 7,500,000.00 7,500,000.00
1. Nabil Balanced Fund I -Seed Capital (750,000 units @ Rs. 10 each) 7,500,000.00 7,500,000.00 13.50
Total 90,500,000.00 90,500,000.00
Available for Sale Investments
Investment in Equity Shares/Mutual Fund Units
1.Rapti Bheri Bikas Bank Limited IPO (1,693 shares @ Rs. 100 each) 169,300.00 424,943.00 251
2. Barun Hydropower Company Limited IPO (10 shares @ Rs. 100 each) 1,000.00 1,000.00 Not Listed
3. Bijaya Laghubitta Bittiya Sanstha Ltd. IPO (23 shares @ Rs. 100 each) 2,300.00 2,300.00 Not Listed
4. ILFCO Laghubitta Bittiya Sanstha Ltd. IPO (15 shares @ Rs. 100 each) 1,500.00 1,500.00 Not Listed
5. NMB Sulav Fund I (52,200 units @ Rs. 10 each) 522,000.00 522,000.00 10.00
6. NIBL Samriddhi Sulav Fund I (34,777 units @ Rs. 10 each) 347,770.00 351,247.70 10.10
7. Laxmi Value Fund I (64,322 units @ Rs. 10 each) 643,220.00 643,220.00 10.00
Total 1,687,090.00 1,946,210.70
Total Investments 92,187,090.00 92,446,210.70

6. Gain on Sale of Securities

During the review period, Nabil Invest earned a realised gain of Rs. 1.93 Million from sale of shares which were purchased from Primary market
(IPO) as detailed below:
(in NPR)

Name of Company No. of Units Cost Price Net Sale Proceeds Net Gain
Century Commercial Bank Ltd. 5,000 500,000 1,635,893 1,135,893
Ridhi Hydro Power Company Limited 94 9,400 69,855 60,455
Laxmi Laghubitta Bikas Bank Limited 41 4,100 24,918 20,818
Ekta Bikas Bank Limited 6,531 653,100 1,361,092 707,992
Total 1,166,600 3,091,759 1,925,159
214 Nabil Bank Limited

7. Provision for Doubtful Receivables Laghubitta Bittiya Sanstha Ltd. that has been placed in various Bankers
The Company has created provision of Rs.14.25 lacs against receivable to the Issue (BTI) account and with Nepal Rastra Bank. The Company
of issue management fees from Nabil Equity Fund which is in the final has already made the allotment of said share and will be refunding
stage of approval from SEBON as first comment on the review of draft excess amount to the concerned applicants from August 10, 2015.
prospectus has been received from SEBON. The delay in approval
On the review date, the Company has Rs. 761,988 balance at current
process is mainly due to technical issues in credit rating. Further, Rs.
account maintained with Grand Bank Nepal Limited for which Nepal
5.3 lacs has been provided against the receivable from one of the
Rastra Bank has taken Prompt Corrective Action (PCA) due to failure to
corporate clients in lieu of providing valuation related services by the
maintain capital adequacy ratio (CAR) as prescribed. However, the said
Company. However, the Company is using its best efforts to realize/
balance has already been transferred to the operating account of the
recover the receivables at the earliest possible.
Company maintained with Nabil Bank Limited.
8. Interest Income
Nabil Invest has earned total interest income of Rs. 18,331,148 which
10. Proposed Dividend
The Board of Directors of Nabil Invest has decided to propose 20
includes Rs. 8,595,874.05 earned from placement of subscription
percent of cash dividend for approval in its forth coming Annual General
amount raised from public offers with Bankers to the Issue and the
Meeting.
remaining interest is received from Investment on Debentures and Bank
Deposits. 11. Previous years figures have been
9. Bank Balance regrouped/rearranged wherever
The total bank balance of Nabil Invest as on Balance Sheet date
necessary.
stands at Rs. 2,920,801,813 which includes Rs. 2,609,534,900
of application money collected during the IPO of Mahila Sahatra
 Annual Report 2014/15 215

Winner- National Best Presented Winner- National Best Presented Winner- National Best Presented Accounts
Accounts (BPA) Award, 2009 Accounts (BPA) Award, 2010 (BPA) Award, 2011

Winner- National Best Presented Winner- National Best Presented Winner- National Best Presented
Accounts (BPA) Award, 2012 Accounts (BPA) Award, 2013 Accounts (BPA) Award, 2014

Recognition as Highest Tax Payer Among Recognition as Highest Tax Payer Among
Commercial Banks, 2011 Commercial Banks, 2014
Annual Report 2014/15 217