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ANNUAL REPORT 2012/13

www.nabilbank.com

ANNUAL REPORT 2012/13

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PARTNERSHIP ON A LONG JOURNEY

Pioneering modern banking in

the country the Bank has developed

partnership with multitude of

institutions and individuals and has

generated value for all. Partnership

sown 30 years back has grown

manifold, enriching every relationship,

creating manifold benefits and

complementing each others progress.

We value and foster every partnership

all along on our long journey ahead.

2
Nabil Bank Limited

INSIDE

2 OPERATING &
FINANCIAL REVIEW 4 GOVERNANCE
Analysis of key items of Statement The Board of Directors 52
of Financial Position of past 5 years 22
Board Committees 54
Analysis of key items of Income Statement of past 5 years 25
Internal Controls 58
Achievements of Current Year 28
Employees 60
Value Addition 35
Corporate Sustainability 64
Segmental performance of the Bank 36
Corporate Social Responsibility 66
Interim position and performance (unaudited) 38
General overview of Nabil Invest 40

1 OVERVIEW 3 PRODUCT & SERVICES

About Nabil Bank 5 Lending Products 44
Vision, Mission and Value Statement 6 Deposit Products 46
Financial Highlights 7 Card Products 47
Chairmans Message 11 Remittance Products 49
The Board of Directors 14 Bancassurance 49
CEO's Message 16 Investment Banking / Merchant Banking 50
Macro-economic Outlook 18 Other products/services 50
 3
ANNUAL REPORT 2012/13

6 SHAREHOLDERS
INFORMATION
Structure of Share Capital 176
Shareholders Profile 177
Stock symbol 177
Annual general meeting 178
Shareholder enquiries and communication 179
Taxation on dividends and shares 180

5 FINANCIAL STATEMENTS 7 NABIL INVESTMENT

& OTHER INFORMATIONS BANKING LIMITED
Statement of directors responsibility 70 Directors Report 181
Disclosure of information under Section 109(4) of Companies Act 2006 71 Information under section
independent Auditors Report 74 109(4) of Companies Act, 2006 184

Financial Statements with Schedules 75 Financial Statements with Schedules 186

AWARDS 205

OFFICE NETWORKS 206

C R I S P

CUSTOMER
FOCUSED
Nabil introduced the concept of customer care and
delight in the banking industry in Nepal 29 years ago.
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
availing the services to the best suit of customer need
which manifests our approach to keep our customer
at core of our activities in serving them.
01
OVERVIEW

ABOUT NABIL BANK

Nabils inception as the first foreign joint Bancassurance Division for risk as well as journey of glorious 29 years; however
venture bank in the year 1984 was one of wealth management; Deposit Relationship despite adversities, it has been able to stay
the important years in the history of Unit for deposits management through atop in terms of customer base, geographic
Nepalese banking. Founded with the various schemes; and Remittance Unit for outreach, business portfolio and profitability.
technical collaboration of then Dubai Bank easy transfer of funds domestically and These are all testaments of strong
Ltd., along with the institutions like Nepal internationally. Besides, the businesses of foundations the predecessors have laid and
Industrial Development Bank, Rastriya Nabil have also grown multitudinously. The the legacies that have been inherited to
Beema Sansthan, and Nepal Stock Exchange Bank's balance sheet size has crossed to sustain in a big way.
it soon became a great icon for customer NRs.73 billion (NRs.268 million in 1984-
service in the Nepalese financial industry. 85) and shareholders' fund to NRs.6.6 The culture the Bank has inculcated, the HR
Even then when the modern banking was billion (NRs.28 Million) and are ever growing it has groomed, the structure it has
way too far for general public and technology steadily. Having said that the journey for developed and continuous oversight and
was just budding, the then Board of Nabil Nabil had not been that too easy. There were guidance from the Board strongly supports
and its management team contemplated ebbs and flows in its business during its the bank surging ahead on sustainable
about computerizing its operations from growth path.
initial days. Reduced transaction time at the CHRONOLOGY OF BRANCH EXPANSION IS PRESENTED AS UNDER
counter and prompt delivery of customer
S. NO. YEAR BRANCHES CUMULATIVE NUMBER
account statements were the main thrust for
the then Nabil team. Today, this noble 1 1984/85 *Tripureshwor, Kantipath 2
thought has become one of the strong 2 1985/86 Jorpati, New Road 4
3 1987/88 **Power House Chowk 5
foundations to grow its business in manifold.
4 1988/89 Birgunj 6
5 1991/92 Biratnagar 7
Today it has expanded its service networks to 6 1992/93 Lalitpur 8
48 branches, 2 extension counters and 81 7 1995/96 Butwal 9
ATMs, 1050 rented and owned POS 8 1996/97 Bhalwadi, Pokhara 11
machines at merchant outlets, 1237 7 2000/01 Itahari 12
Western Union and 1263 Nabil Remit 8 2001/02 Bhairahawa, Lakeside Pokhara, Nepalgunj 15
9 2003/04 Dharan 16
agents and various arrangements for using
10 2004/05 Maharajgunj 17
delivery points of other banks and financial
11 2007/08 Baglung, Dhangadhi, Mahendranagar, Damak,
institutions through Mechi to Mahakali to Narayangadh, Ghorahi, Tulshipur, Birtamod, Hetauda 26
deliver services efficiently to its customers. 12 2008/09 New Baneshwar, Halchowk, Thamel, Kaushaltar 30
There are number of customized products 13 2009/10 Chabahil, Maitidevi, Satdobato, Balaju, Kuleshwar, Khandbari, Charikot 37
and various units designed to cater diverse 14 2010/11 Dhulikhel, Gorkha, Besisahar, Chandragadhi, Teendhara,
needs of corporate houses and individuals. Dhapashi, Anamnagar, Sinamangal, Gwarko, Attarkhel 47
15 2011/12 Janakpur 48
Corporate Banking, SME and Micro
Financing, Project and Infrastructure * The branch currently located at Tripureshwor was initially established at Durbar Marg which was subsequently relocated at Kamaladi
and thereafter to World Trade Centre premises at Tripureswor on 27th May 2007.
Financing, Personal Lending and Cards are
** The branch currently at Power House Chowk was initially established at Sugauli which was relocated to Birgunj dry port
there for catering credit needs; on 21st March 2001 and thereafter to Power House Chowk, Birgunj on 3rd July 2006.
 6
Nabil Bank Limited
01
VISION, MISSION
AND VALUE 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 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.
 7
ANNUAL REPORT 2012/13

01
FINANCIAL HIGHLIGHTS

TOTAL OPERATING INCOME NET PROFIT AFTER TAX TOTAL DEPOSIT

NRs. in Billion NRs. in Billion NRs. in Billion
4.61 2.22 63.61
55.02
3.99
49.70
1.70 46.41
3.05
2.76 1.34 37.35
1.14
2.22 1.03

08/09 09/10 10/11 11/12 12/13 08/09 09/10 10/11 11/12 12/13 2009 2010
2011 2012 2013
As of Mid - July
Growth Rate of 2012/13: 15% Growth Rate of 2012/13: 31% Growth Rate of 2012/13: 16%
CAGR (last 5 years): 22.5% CAGR (last 5 years): 24% CAGR (last 5 years): 15%

GROSS LOANS AND ADVANCES SHAREHOLDER'S FUND TOTAL ASSETS

NRs. in Billion NRs. in Billion NRs. in Billion
47.65 6.69 73.24
42.87
63.20
39.91 5.45
58.14
33.03 4.57 52.15
44.87
28.00 3.83
3.13

2009 2010
2011 2012 2013 2009 2010
2011 2012 2013 2009 2010
2011 2012 2013
As of Mid - July As of Mid - July As of Mid - July
Growth Rate of 2012/13: 11% Growth Rate of 2012/13: 13.23% Growth Rate of 2012/13: 16%
CAGR (last 5 years): 17% CAGR (last 5 years): 22% CAGR (last 5 years): 15%
8
Nabil Bank Limited

AVERAGE RETURN ON ASSETS RETURN ON EQUITY

in Percentage in Percentage

2.80 3.25 32.78

2.55 33.93
2.38 2.43 30.27
30.25
29.02

08/09 09/10 10/11 11/12 12/13 08/09 09/10 10/11 11/12 12/13

CREDIT TO DEPOSIT RATIO CAPITAL ADEQUACY RATIO

in Percentage 78.29 77.91 in Percentage

11.59
74.90 11.01
73.87
10.70
10.58
10.50
71.17

08/09 09/10 10/11 11/12 12/13 08/09 09/10 10/11 11/12 12/13

GROSS NPA RATIO NET NPA RATIO EARNINGS PER SHARE DIVIDEND PER SHARE
in Percentage in Percentage
1.77
2.33 2.13 113.44
1.48
83.81
95.14
85.00 83.57
70.67
0.80 60.00
65.00
70.00
0.50 0.38
0.35
0.19 0.45 30.00

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
As of Mid - July As of Mid - July

CLOSING PRICE IN NEPSE MARKET CAPITALIZATION

in NRs. Nrs. in Billion
35.15
31.84*
4,899 28.62
2,384
23.67*
1,815 20.21
1,252 1,355

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
As of Mid - July As of Mid - July
*For Mid July 2012 and 2013, the market capitalization is computed taking into
account the share prices of promoters shares and ordinary shares.
C R I S P

RESULT
ORIENTED
The action and activities should bear the sweet fruit
and Nabil architects business ideas, designs products
and serve the customer keeping the end result always
in mind. All its actions and services are intended to
yield desired results.
10
Nabil Bank Limited

01
CHAIRMANS MESSAGE
I am very pleased to announce that the year 2012-13 remained satisfactory for all of us.
We achieved good growth and we were
successful in maintaining our portfolio
healthy. We made some changes in our
systems and processes to strengthen our
internal control system.
In terms of the financials, we have been able
to maintain the growth rate at the level we
have achieved so far over the last five years.
We have registered growth on every fronts
viz. balance sheet size, shareholder's fund,
deposits and loans and more importantly the
profit. The growth of 23% in shareholders
fund after setting aside a cash dividend of
40% against the growth in balance sheet
size of 16% is marvelous. Growth under
loans and deposits of 16% and 11%
respectively is also steady and growth of
31% under net profit is overwhelming. The
reasons behind such growth under
profitability are growth in Net Interest
Income of 18% despite reduction in interest
rates and limited investment opportunities;
and significant reduction of 99.3% in net
loss provisioning. The bank recorded
recovery from some loss category loans
which helped us keep provision expense at
the lowest level in the last five years.
The frequency of online fraud has grown over
the past couple of years. In order to cope up
with the challenges posed by the fraud
perpetrator, more stringent measures have
been put in place to make our system more
robust. In this connection, the Bank has
successfully implemented forceful PIN
change on all new and renewed cards and
implementation of E-secure on all online
payments. The Bank is also consulting with
vendors for implementation of 2 factor
authentication on all online payments. In
addition, we have always encouraged for
good corporate governance. We have
implemented Whistle Blowing Policy to
promote good voices against unnoticed
fraudulence, misappropriation, exploitation,
and / or harassment happening inside the
organization.
The Bank has always made us feel proud by
winning awards. In the year 2012-13 also
the bank was conferred with the Best
Presented Accounts Award . In fact, winning
this award conducted by the Institute of
Chartered Accountants of Nepal
consecutively for the last four years is a
testament of our standard in respect of
accounting system and disclosures practiced
in the Bank. The Merit Certificate awarded
by the South Asian Federation of Accountants
also stamps this fact. Apart from this, the
Ministry of Finance, Government of Nepal
also recognized the bank as the highest
taxpayer among banking and financial
institutions for the year 2067/068. Recently
we were conferred the Peoples' Excellence
Award by the Federation of Nepalese
Chamber of Commerce and Industry. Four
awards from different institutions and for
different reasons give us tremendous pleasure
and motivation to move ahead.
Challenges are there in every leg of our
businesses and we want to stand firm and
move ahead in the search for excellence. We
will not stay with complacency; instead we
will move forward always striving to ensure
safety and security of every ground we cover.
11
ANNUAL REPORT 2012/13
We will maintain the best governance
practices to earn trust from all business
partners, regulators and stakeholders.
Finally, I would like to thank my dear fellow
board members for bestowing me with the
responsibility of chairmanship and showing
upon me the trust for leading this Bank
towards the zenith. I would also like to
express my gratitude to the depositors,
borrowers and business partners for their
trust and cooperation that have made us the
first choice bank. Similarly, I would also like
to thank the regulators for their support and
guidance to implement best corporate
practices. On behalf of the Board I would
like to express appreciation to the employees
and thank them for the incessant dedication
and devotion that they have displayed in
achieving this extraordinary result.
We have been
5
able to maintain
the growth rate
at the level we
have achieved so
years
far over the last
Krishna Bahadur Manandhar
Chairman
12
Nabil Bank Limited

01
SENIOR DIRECTORS MESSAGE
Modern banking in Nepal started after the
inception of Nabil Bank back on 12 July
1984. It has designed its services
specifically for a customer that meets his
requirement and standard. Being associated
with the bank for about 28 years
intermittently on the Board of the Bank, I
too feel privileged to be part of this
institution which changed the definition of
banking. It has always played a pioneer role
in introducing products and services in the
country. It has also given a confidence to
the society that the service it provides is for
all and is there at everyones reach.
I being first public director in the joint
venture bank, public aspirations were high
from the organization and that from the
directors too, since other public companies
then had not given returns to the
shareholders. Reminiscing the memory
back then when banks 30% public share
were not subscribed fully and todays craze
for Nabils share has huge passage of time
and enormous effort of the bank and
directors. The bank issued public shares
with just 60% call money. My personal
initiation to make the share fully paid up by
keeping the un-called money of 40% gave
positive signal in the share market, which
was at its infancy.
Additionally, the practice of interim dividend
which Nabil Bank started for the first time
created immense confidence in the public
13
ANNUAL REPORT 2012/13
sector. Such a public confidence has given thanks who are very much important in
new dimension in the share market and sustainable growth of the bank and keeping
today the market creation of this size has the spirit of shareholders live and high.
an important role of the Bank and the
directors for constructive role in developing
confidence among the shareholders.
Achievements
I also feel proud in taking few examples of
the initiatives like introducing Credit Card in in the year
the country, Consumer Finance at a larger
scale, Infra Project Financing with a 2012/13 are
dedicated unit, felicitating Public
Shareholder for their silent but valuable testimony of
contribution and the like. Similarly I would
like to take few names of key role players in this fact that
the success story of Nabil bank. They are
Mr. Sashi Narayan Shah, the first chairman helped in
of the board, late Mr. Kalyan Bikram
Adhikary, the former governor of Nepal providing
Rastra Bank, Mr. G.S. Srivastav and Mr. S.
C. Kabadkar two Executive Directors of the highest return
bank and my fellow board members and late
Mr. Supriya Gupta a veteran banker and to the
board member. They deserve deep respect
and an accreditation for the contribution shareholders
they have made for this success of the bank.
in banking
The results are there when an institution
with dedication and hard efforts take up any industry.
business. Achievements in the year 2012/13
are testimony of this fact that helped in
providing highest return to the shareholders
in banking industry. All the contributors to
this result from customers to regulators to Shambhu Prasad Poudyal
board members to staff deserve special Senior Director
14
Nabil Bank Limited
01
THE
BOARD
MR. KRISHNA BAHADUR
OF MANANDHAR
Chairman of the Board
DIRECTORS REPRESENTS
GROUP A SHAREHOLDERS
Mr. Manandhar, aged 62, was
appointed as Director of the
Board in April 2011. He was
elected as Chairman in January
2013. His earlier directorship in
the Board of Nabil was during
19992002 as representative of
Nepal Rastra Bank. He was
Deputy Governor of Nepal Rastra
Bank during 20052010. He has
also held directorship in the
Board of Rastriya Banijya Bank
Ltd. (19981999), Securities
Exchange Board of Nepal (2004
2005) and Purbanchal Grameen
Bikash Bank Ltd. (20042005)
as representative of Nepal Rastra
Bank. He holds Masters Degree
in Economics from Tribhuvan
University, Nepal and Post
Graduate Diploma in
Development Economics from
University of Manchester,
England. His banking experience
spans over three and a half
decade of service in the central
bank.
MR. SHAMBHU MR. DAYARAM
PRASHAD POUDYAL GOPAL AGRAWAL
Board Member Board Member
REPRESENTS
GROUP C SHAREHOLDERS
REPRESENTS
GROUP A SHAREHOLDERS
Mr. Poudyal, aged 70, has held Mr. Agrawal, aged 48, has held
directorship in the Bank since directorship in the Bank since
2004. He also held directorship 2004. He also held directorship
in the Bank during 19861994. in the Bank during 19942003.
He was the Executive Chairman Mr. Agrawal is an entrepreneur, a
of Rastriya Beema Sansthan, a social activist and a media
public sector corporation carrying person. He has been in the
out both life and general (non- business for the last two decades.
life) insurance business and is
one of the largest insurers in the
country. He held the said position
during 19992002. He has also
served as a director in the Board
of Unilever Nepal Limited. He
also held Chairman of Board of
Nepal Housing and Development
Finance Co. Ltd. Besides, he has
also been associated with 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. He also has 17 years of
banking experience at Nepal
Rastra Bank, the central bank of
Nepal.

MR. KRISHNA
PRASHAD ACHARYA
Board Member
REPRESENTS
GROUP B SHAREHOLDERS
Mr. Acharya, aged 40, has held
directorship in the Bank since
October 2010. He also held
directorship in the Bank during
20082009. He is a Chartered
Accountant qualified from the
Institute of Chartered
Accountants of India. He had
previously served as the General
Manager in Nepal Industrial
Development Corporation (NIDC)
and as the CEO in United
Insurance Company (Nepal) Ltd.
He is presently with Employees
Provident Fund in the capacity of
Chief Administrator appointed by
the Ministry of Finance,
Government of Nepal.
MR. NIRVANA CHAUDHARY
Board Member
REPRESENTS
GROUP A SHAREHOLDERS
Mr. Chaudhary, aged 31, has
held directorship in the Bank
since November 2010. Mr.
Chaudhary is Managing Director
of Chaudhary Group, a Nepali
business conglomerate. He also
holds directorship in United
Insurance Company. He had
previously held directorship in
United Finance Company.
15
ANNUAL REPORT 2012/13
MR. MOHIUDDIN AHMED MR. ASHISH SHARMA
Board Member Board Member
REPRESENTS REPRESENTS
GROUP A SHAREHOLDERS GROUP C SHAREHOLDERS
Mr. Ahmed, aged 75, has held Mr. Sharma is an MBA from AIT,
directorship in the Bank since Thailand and has been
July 2011. In the past also he associated with different business
held directorship in the Bank and social organizations. He is
intermittently and represented Chairman of United Insurance
Class A shareholders. Mr. Ahmed Company, a general insurance
holds Masters degree in company.
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 affair service and has
served in India, Indonesia, and
the United Kingdom in various
capacities. He also held
directorship in Janata Bank,
Bangladesh.
 16
Nabil Bank Limited
01
CEO'S MESSAGE
I am pleased with the results Nabil has achieved in the financial year 2012-13.
The financial statements clearly display the
Bank's strong financial health and financial
performance. Despite negative growth in
interest earnings due to fall in lending rates,
we have managed a growth of 18% on net
interest income. Fee and forex income has
grown by 8% through better positioning of
our portfolio and from new product/services.
Improvement in the health of overall assets
resulted in write back of provisions. We also
took judicious call on top line growth and
managed our portfolio in a balanced manner,
which contributed to our bottom line
positively. These combined efforts helped the
Bank to post net profit growth of 31%.
We followed four-pronged plan that drives
the bank forward in a sustainable manner.
Financial growth, improvement in process
and control, better positioning of products
and services and investment in HR
development; the key pillars complementing
each other in taking the bank to a new
height. Growth of business volume, growth
of customer base, and refinement in
relationships were some of our actions last
year that yielded overall growth in profit,
quality relationship and desired top line
volumes. Business activities were subdued in
light of political stalemate in the country.
Delayed budget formulation and further
delay in release of budget could not propel
the activities for higher growth.
We continue to be committed and driven
towards positioning our systems, processes
and corporate practices at par with
international standards. Some of the work
processes have been centralized that are
intended to enhance control mechanism and
the standards of service. We have
implemented additional measures and
continue to implement latest technologies in
order to mitigate risks of fraud emerging
through technology and to provide security
and safety to our customers. Our focus is to
make the best utilization of technology by
automating processes to improve service
levels and efficiency as well as manage
These
combined
efforts
helped the
Bank to post
net profit
growth of
31 %
costs. Through the centralization of core
operation back office functions we are
enabled to scale up our services while at the
same time better equipped to effectively
manage increasing operations risk with larger
volumes and scattered branch network. We
continue to provide in-house and outside
training to employees across all levels to
equip them with the skills necessary to raise
efficiency and effectiveness.
Going forward and amidst challenges in the
country, we plan to build a strong base of
customer, further refining our products and
services, focusing towards automation and
addressing the risk aspects through
introduction of risk assessment culture in the
bank.
Finally, I take this opportunity to thank
regulators and Board members for their
continued support and guidance to maintain
good corporate culture and practices in the
Bank. Also I would like to thank
shareholders, depositors, borrowers and
business partners for the trust and
confidence they have shown on us. Likewise,
I would also thank all the employees, past
and present, for their relentless dedication
and initiative they have taken to make
NABIL what it is today.
Anil Gyawali
Chief Executive Officer
 17
ANNUAL REPORT 2012/13
 01
MACRO-ECONOMIC OUTLOOK

DOMESTIC OUTLOOK

Nepal is on the cusp of changeover. It's political system is However a mixed result is making difficult to
give a clear picture of the shape of new
to be defined through a new constitution for which Constitution and it is less likely to have an all
parties accepted Constitution where burning

Constituent Assembly Election was held on 19 November issues like a number of states, their
formation and administration systems are

2013, for the second time.

still not the agreed agenda. Further lingering
in the promulgation of a new Constitution
may lead to poor business sentiments.

Nonetheless following the peaceful election,
the nation is keeping high hope towards
parties to bring the Constitution drafting
process to a logical conclusion and pave the
way for faster economic activities.
Maturities shown by the parties in finalizing
the current year's (2013) budget helped
government spending to ride at a normal
pace. The Kathmandu valley which was on
the road expansion spree was the immediate
beneficiary as delayed project soon went
underway after the release of the budget.
However policy issues in the absence of the
legislative body could not be addressed and
consequently it did have some repercussion
on business activities. Considering the
positive sentiment, the government projected
GDP growth rate of 5.5% for year 2014 (mid
July) more than by around 190 basis points
in comparison to preliminary estimates of
3.6% by Central Bureau of Statistics for year
2013 (Mid July). Good rainfall for the
summer crop has favored this projection.
Rising inflation due to depreciation of NPR
with major currencies (except INR), perennial
power crisis, rising labor issues and poor
tourist inflow may cause some dent to the
economy and achievement of projected
growth is a herculean task.
BOP surplus, low interest rate, increased
money supply and easy processes for doing
business are key drivers for the business
growth. Assuming these factors to remain
favorable, the businesses are expected to
grow on incremental basis. The remittance
inflow, which has been key component for
the economy to withstand surplus BOP, is
likely to give further drive as NPR with major
currencies has depreciated further in
comparison to last year. This will eventually
lead to increased consumer spending and
domestic consumption from private sector
including that for private construction. Once
the confidence is instilled in public, the
correction in price of real estate property which
has subdued for almost five years is likely to
take place which has signaled by the price
correction of shares in the recent times. It is
expected to help investors/owners to heave a
sigh of relief as these sectors have undergone
serious phase of distress and have almost
succumbed to bankruptcy. More importantly,
the transactions in these sectors will also
contribute on generating additional government
revenues.
19
ANNUAL REPORT 2012/13
In retrospect, the economy has been facing
problems during the last several years. Post
real estate bust, the economy witnessed
severe instances of volatility in the money
market. The interbank interest rates surged
as high as 10% while at times it remained
passive to trade below 1% as well. Despite
of volatility, the banking sector fared well.
Government owned banks steadily recovered
from the mire of non-performing assets. And
in couple of years henceforth, the net worth
of these institutions is likely to strengthen
further in the positive zone.
However with a limiting spread to 5%,
revised stringent provision for NDF, poor
credit growth, excess liquidity leading to
lending rate reduction and unclear issues of
multiple banking is likely to impact the
earning of banks adversely. In addition,
limited areas of investment to mobilize the
current excess liquidity are barring banks to
recover the cost of deposits. These
conditions have warranted introduction of
instruments to soak up excess liquidity
which however have not been that effective.
Similarly falling rate under money market
investments are also cause for concern.
Short terms rates are at its lowest level.
Some sectors which were affected due to
sharp price drop and resultant impact on
entire business will have some impact on the
NPA and earning in the years ahead as well.
In spite of these adversities, positive
development on the economic front is likely.
The country has geographical advantage of
being located in between China and India,
two of the worlds largest and fastest growing
economies. Nepal itself is rich in terms of
natural resources and youthful work force.
These aspects are likely to keep giving
positive vibe in the business communities
and some activities will keep coming as
business as usual. However this largely
depends on the political development at
home and stability of the situation including
government programs and policies.
 20
Nabil Bank Limited
INTERNATIONAL OUTLOOK
The global economy is gradually faring well. The United
States has gained substantial confidence post QE Infinity
(USD 85 billion per month) measure which provided much
needed remedy for stimulus that the interest rate even
bringing down to zero level could not help.
Job creation and the price of properties have
increased which is believed to have
increased the business sentiment. Heavy
dose of quantitative easing which was put in
place for letting go the economic activities in
a normal pace however has been decided to
pull out gradually, starting from January
2014 by reducing the amount of bond
buying ceiling to USD 75 billion per month.
Performance of the large corporate has
improved remarkably. Increased money
supply through bond buying and cheap
interest rate has given growth to public
spending. Debt of the government has
increased remarkably which has even
brought to complete closure of some of the
government agencies in the absence of
budget for couple of weeks. Nonetheless it is
believed to have come back on track and will
function satisfactorily.
China the factory of world has also regained
the confidence although its growth rate has
come down to some extent from the level of
pre-financial crisis era, mainly dragged
down by falling import orders from most of
the advanced economies like US and
Europe. However growing domestic
consumption, investment at abroad and
benefit from these investments are likely to
keep the economy going at a comfortable
level. Most of the worlds large companies
place orders in China for production at
cheaper cost so that they can survive in
competition. These factors are still giving
competitive edge to China. With vast
population and potentials at home, the
economy is poised for better growth than
other major economies.
Japans cheap currency policy has given a
drive to its export and is showing signs of
improvement. It is likely to report an inflation
which it got deprived of for about one and a
half decades. Monetary expansion and bond
buying measures by central government have
caused excess money supply which has
boosted spending and led to the inflation.
EU whose existence had come into question
has also sailed successfully through crisis. The
rates however are still at the lower level and
ECB has bailed out most of the member
nations and equally acting as disciplinary
instructor for adopting austerity measures. All
the member countries are having one or the
other problem which make them busy in fixing
the same under the guidance of ECB and IMF.
Austerity measures followed in most of the
economies have given some respite. Stable
energy price, cut on spending and heavy dose
of bail out bid by ECB and IMF dragged down
government bond rate. The sentiment is high
on ECBs move though it is not timely, at
times. ECBs move brought the Cyprus back
on track where entire banking business was
closed for couple of weeks in a fear of heavy
withdrawal of deposit from the banks.
Iran agreeing the proposal to let its nuclear
enrichment facilities to be inspected by
international community and stop further
enrichment of nuclear program, the
sanctions imposed are lifted and it is allowed
to produce and sell its oil. Hard measures
like strike on Iran have been averted which
saved cost of war and human life. This
joyous event brought down the energy price
and countries like India which has heavy
reliance on Iran crude oil is likely to benefit.
Our immediate impact is from the economic
activities that occur in India as our exchange
rate is pegged with Indian currency and we
are heavily reliant on India for our major
imports. Following the slow action on
tapering by US, India could build substantial
forex reserve and contain CAD (current
account deficit). This helped its exchange
rate bring down to some extent and gave a
message that currency free fall has stopped
for the time being. Incentives offered in
export sector and easing out FDI/FII rules
helped boost the sentiment of institutional
investors and consequently bolstered Sensex
to peak up once again to reach at one of the
highest levels.
Taking account of all these events and the
actions adopted in major economies, the
world growth in the year 2013 is expected to
be 3.25% and that in the year 2014 is
projected to be 4%. Major economies are
still favoring low interest rate policy and
increasing money supply so that economic
activities and credit expansion can take place
which ultimately increase the consumption
and business activities. Taking positive note
from WTO Bali summit, Iran deal, US slow
move on tapering, ECB finding solutions for
coming out of crisis, domestic consumption
growth in China, Japan following the model
of cheap currency, currency stability in India
and stable commodity price around the
globe, the world economy growth will be at a
satisfactory level. It will boost up consumer
confidence and economic activities in the
year 2014 are expected to be better than
preceding couple of years.
 C R I S P

INNOVATIVE
With the passage of time every aspect undergoes through change. To live up to
the customer delight, Nabil keeps its process and techniques innovating that
serve customer the best. Use of technology gives better mileage to an innovation
and Nabil always runs ahead in identifying the need of the customer and
designing the products that meet the requirements.
 02
OPERATING
AND FINANCIAL
REVIEW
ANALYSIS OF KEY ITEMS OF STATEMENT
OF FINANCIAL POSITION OF PAST 5 YEARS
The bank has recorded steady growth in its business size, operating avenues and income generation over the past five year
period. The bank has significantly strengthened its delivery channels, IT infrastructure, operating policies and risk
management practices. Tables presented in this section reflect on the banks financial position during the past five years.
NRs.000

AT MID JULY 2013 2012 2011 2010 2009

CAPITAL & LIABILITIES

1. Share Capital 3,046,052 2,435,723 2,029,769 2,028,774 1,448,621
2. Reserves & Surplus 3,643,093 3,008,278 2,536,748 1,807,933 1,681,620
3. Debentures & Bonds 300,000 300,000 300,000 300,000 300,000
4. Borrowings - 311,080 1,650,599 74,900 1,681,305
5. Deposits 63,609,808 55,023,695 49,696,113 46,410,701 37,348,256
6. Bills Payable 529,598 179,142 415,768 425,444 463,139
7. Proposed Dividend 974,737 811,908 608,931 434,737 338,011
8. Income Tax Liabilities 66,873 51,107 44,104 24,904 80,232
9. Other Liabilities 1,071,100 1,072,481 859,406 644,291 526,214
Total 73,241,260 63,193,414 58,141,437 52,151,684 43,867,398

ASSETS
1. Cash Balance 1,140,212 1,050,659 744,592 635,987 674,395
2. Balance with Nepal Rastra Bank 4,789,295 3,681,980 1,473,986 549,455 2,648,596
3. Balance with Banks/Financial Institutions (46,939) (456,817) 217,971 214,657 49,521
4. Money at Call and Short Notice 1,634,306 826,436 2,452,512 3,118,144 552,888
5. Investment 16,332,043 14,048,966 13,081,206 13,703,024 10,826,379
6. Loans, Advances and Bills Purchased 46,369,835 41,605,683 38,034,098 32,268,873 27,589,933
7. Fixed Assets 872,322 887,543 935,089 779,540 660,989
8. Non Banking Assets - - - - -
9. Other Assets 2,150,186 1,548,964 1,201,984 882,005 864,696
Total 73,241,260 63,193,414 58,141,437 52,151,684 43,867,398
 23
ANNUAL REPORT 2012/13

BALANCE SHEET SIZE
The bank's balance sheet size has increased
robustly from NRs.37.13 billion at 15 July
2008 to NRs.73.24 billion at 15 July 2013.
This is nearly a two-fold increment or an
absolute growth of 97.24% in five years.
The compounded annual growth rate of the
balance sheet size during this period is
14.55%.
DEPOSITS
The deposit, occupying the substantial share
on Capital and Liabilities front, has increased
from NRs.31.92 billion at 15 July 2008 to
NRs.63.61 billion at 15 July 2013 posting
compounding annual growth rate of around
15% per annum. More importantly, the Bank
has been able to improve deposit mix over
the last 5 years. The absolute growth under
fixed deposit (FD) is negligible (NRs.11
billion vs. NRs.8 billion) considering the
growth of total deposit volume. Mix
proportion wise the share of FD has reduced
to 17% from 27%. Following graph displays
the mix proportion in Mid July 2008 and
2013 respectively.
INTEREST
Growth in share of call deposits while
reduction in share of current deposits
(including other non-interest bearing
accounts) may be attributed to the rising
interest sensitivity in depositors along with
their attitude of remaining liquid. By and
large, the deposits have remained stable over
these years and the Bank was able to
manage its deposits successfully even during
the volatility and liquidity crisis.
LOANS
Banks gross loans and advances have
increased from NRs.21.76 billion at 15 July
2008 to NRs.47.65 billion at 15 July 2013,
recording a compounded annual growth rate
of 16.97% through five years. The bank has
maintained steady growth in its lending
volume and has capitalized the opportunities
of booking quality assets.
National economic conditions have not fared
well in recent years, particularly following
the real estate bubble post 2009. New
business ventures have been scarce and
demand for credit has been limited.
Although some sectors, including agriculture,
have been identified as productive sectors
and regulations require the banks to
CALL
provisioned to cover for possible losses. The
retail credit segment also witnessed higher
default rate in this period. The banks non-
performing assets to gross loan ratio, which
stood at 0.74% at mid July 2008, jumped
to 2.13% at mid July 2013. Meanwhile,
adequate loss provisions have been set aside
to cover for entire non-performing loans.
Recovery effort is also augmented and result
has been encouraging.
SHAREHOLDERS' FUND
The shareholders' fund of the Bank has been
increasing steadily since inception.
Increment is achieved through retention of
profit in the form of reserves or by issue of
stock dividend. During the journey of 29
years, it has capitalized profits for 12 times
(including proposed bonus shares from
profits of current year) and in the last 5 years
it has done for 4 times. In addition, it has
also retained profits to enhance its equity
base. Total shareholders' fund that stood at
NRs.2.44 billion at 15 July 2008 has since
increased to NRs.6.69 billion at 15 July
2013, recording a compounded annual
growth rate of 22.38%. Additionally the
bank has proposed distribution of cash
dividend totaling NRs.3.17 billion out of net

maintain certain level of exposure in these profit generated in the last five years.
FREE 33%
13% 21 billion

sectors, market conditions have not been

8 billion
INTEREST CALL

favorable. On top of that, there is a cut The bank's focus on enhancing shareholder's
FREE 17%
18%
throat competition among lenders and hence fund may be assessed appropriately from the
6 billion
6 billion

resulting in over supply of credit. This has dividend payout ratio and reserves volume.
exposed banks to greater credit risk as
evident from increasing non-performing
assets in general. However, non-performing
SHAREHOLDERS' FUND

assets of commercial banks which was NRs. in Million 6,689

6.08% at mid July 2008 has reduced
DEPOSIT MIX

tremendously to 2.60% at mid July 2013.

2008 2013
5,444

The reduction is attributed to the

34%

4,567
improvement in the quality of lending
33%

3,837
portfolios of two government-owned
30%

3,130
29%

commercial banks.
30%

SAVINGS FIXED
38% 27% Adverse development in operating
environment also had some impact on the
12 billion 8 billion

SAVINGS FIXED banks lending books. Some large borrowers

could not serve debts on time. Consequently
37% 17% 2009 2010 2011 2012 2013

these accounts had to be downgraded and

23 billion 11 billion

SHAREHOLDERS FUND ROE IN %

 24
Nabil Bank Limited

DIVIDEND PAYOUT

PARTICULAR 2008/09 2009/10 2010/11 2011/12 2012/13

Earnings Per Share 113.44 83.81 70.67 83.23 95.14

Cash Dividend Per Share 35.00 30.00 30.00 40.00 40.00
Bonus Share Per Share 50.00 40.00 0.00 20.00 25.00
Profit Retention Per Share 28.44 13.81 40.67 23.23 30.14
Cash Dividend Payout 31% 36% 42% 48% 42%

As obvious from the above table, the Bank
has retained more than 50% of its earnings
during these last 5 years. Growing
businesses and profit may be directly
attributed to the growing shareholder's fund
as its growth gives bank an edge to expand
its businesses by maintaining healthy
capital adequacy ratio. And this relationship
can be established from the fact that the
businesses of Nabil have grown significantly
in these 5 years.
DISTRIBUTION OF DIVIDEND
The bank has distributed cash dividend at
the rate of 35%, 30%, 30% and 40% from
profit of financial years ending mid July
2009, 2010, 2011 and 2012 respectively.
Similarly the bank also distributed stock
dividend at the rate of 50%, 40% and 20%
from profit of financial years ending mid
COMPOUNDED ANNUAL GROWTH RATE
July 2009, 2010 and 2012 respectively.
The Board has proposed distribution of
40% cash dividend and 25% stock
dividend out of profit for financial year
2012-13. The bank maintains its position
of enhancing capital base and rewarding
shareholders with fair return as key factors
of long term success.
NRs.000

During the year 2012/13, the bank's risk AT MID JULY 2013 2008 CAGR
weighted exposure grew by around
NRs.8,102.28 million, which is 9.23 times Total deposits 63,609,808 31,915,047 14.8%
of profit retention of year 2011/12. Net fixed assets 872,322 598,039 7.8%
Similarly, the RWE in year 2011/12 grew Gross loans and advances 47,645,530 21,759,460 17.0%
NRs.6,388.35 million from the last year, Gross investments (including money at call) 17,966,349 11,918,923 8.6%
which is 8.77 times of the profit retention Capital fund (per Basel II) 8,339,251 2,363,599 28.7%
of year 2010/11. Shareholder's fund (excluding proposed dividend) 6,689,145 2,437,199 22.4%

Following table presents the ceiling of

additional risk weighted exposure computed
on the basis of ideal 10% capital adequacy
ratio that the bank can take or could have
taken in subsequent financial year as a
result of profit retention.

EXTRA RISK WEIGHTED EXPOSURE

Rs. in Million

PARTICULAR 2008/09 2009/10 2010/11 2011/12 2012/13

Cash Dividend 338.01 434.74 608.93 811.91 974.74

Net Profit After Tax 1,031.05 1,139.10 1,337.75 1,689.39 2,218.76
Profit Retention 693.04 704.36 728.81 877.48 1,244.03
Extra Risk Weighted Exposure @ 10% 6,930.42 7,043.62 7,288.15 8,774.84 12,440.25
 25
ANNUAL REPORT 2012/13

02
ANALYSIS OF KEY ITEMS OF
INCOME STATEMENT OF PAST 5 YEARS

PERIOD ENDING MID JULY 2013 2012 2011 2010 2009

1. Interest Income 5,702,123 6,126,855 5,254,030 4,047,726 2,798,486

2. Interest Expense 2,186,185 3,155,490 2,955,431 1,960,108 1,153,280
Net Interest Income 3,515,938 2,971,364 2,298,600 2,087,618 1,645,206
3. Commission and Discount Income 393,051 366,387 290,855 215,482 179,693
4. Other Operating Income 209,905 201,085 180,570 169,548 144,164
5. Foreign Exchange Income 489,051 447,070 276,103 291,441 251,920
Total Operating Income 4,607,945 3,985,907 3,046,128 2,764,088 2,220,983
6. Staff Expense 646,760 500,713 454,042 366,940 339,898
7. Other Operating Expense 468,781 430,909 401,425 334,186 265,158
8. Foreign Exchange Loss - - - - -
Operating Profit before Loan Loss Provision 3,492,404 3,054,285 2,190,661 2,062,962 1,615,927
9. Provision for Possible Losses 27,451 413,949 109,470 355,829 45,722
Operating Profit 3,464,953 2,640,336 2,081,190 1,707,133 1,570,205
10. Non Operating Income /(Expense) 13,469 13,840 6,981 6,455 2,190
11. Provision for Possible Losses Write Back 24,728 - 7,101 39,792 10,618
Profit from Regular Activities 3,503,149 2,654,176 2,095,273 1,753,379 1,583,013
12. Income/(Expense) from Extra-ordinary Activities (17,454) (3,037) 3,148 34,322 43,522
Profit from All Activities 3,485,695 2,651,139 2,098,421 1,787,701 1,626,534
13. Provision for Staff Bonus 316,256 241,639 190,943 162,518 147,867
14. Provision for Income Tax 950,678 720,109 569,733 486,083 447,615
Net Profit/(Loss) 2,218,762 1,689,392 1,337,745 1,139,099 1,031,053

NET PROFIT NET INTEREST INCOME

The banks after tax net profit in the last ANNUAL GROWTH RATE AND INTEREST RATES
five years has been very good both in terms IN NET PROFIT
of volume and growth rate. Annual growth Net interest income of the bank has
rate during this period ranged from 10% to increased from NRs.1.22 billion at 15 July
38%

31%. While compounded annual growth 2008 to NRs.3.52 billion at 15 July 2013,
rate achieved during this period is 24.34%. recording a compounded annual growth rate
31%

From volume perspective, the profit in year of 23.57% through five years. This is
2007/08 was mere NRs.746.47 million 26% almost a three-fold increment or an
which grew tremendously and reached to absolute growth of 188.13%.
NRs.2,218.76 million in year 2012/13. 17%
Nabil's performance in this period could be As depicted in the adjacent graph, the bank
regarded as one of the best performances in has maintained fairly a good amount of net
the nepalese banking industry. interest margin throughout the period of 5
10%

2009 2010 2011 2012 2013 years. Starting from the financial year
2008-09 through 20012-13, the share of
 26
Nabil Bank Limited

net interest margin over total interest

revenue for each of the five years is 59%, INTERBANK INTEREST (2008 MID JULY TO 2013 MID JULY)
52%, 44%, 48% and 62% respectively.

Interest spread is primarily guided by the

12.83%

liquidity conditions in the market. There

had been instances when liquidity crunch
was at its peak. Post real estate bubble,
banks and financial institutions faced stiff
challenge to maintain liquidity ratios. 5.77%
Interbank interest rates rose as high as
12.83% (January 2010) and banks
competed with each other offering high
rates on deposits. Despite increment in the 0.33%
cost of deposits, banks had to raise rates on
lending slowly without hurting much on the

August
August

August

August

August

April

April
April

April

April

March

March
March

March

March

June

June
Novembe

June

June

June

January
February

May

July

January
February

May

July
January
February

May

July

January
February

May

July

January
February

May

July

December

September
October
November
December
September
October

December

September
October
November
December

September
October
November
December

September
October
November
borrower's repayment capacity, as
significant jump could have hindered banks' 08-09 09/10 10/11 11/12 12/13

credit quality. This significantly impacted on

net interest margin in general. However,
Source: Macroeconomic Statistics prepared by Nepal Rastra Bank

Nabil managed its asset liability incredibly

during these periods and was still able to FEES, COMMISSION
reap the share of 50% net interest margin INTEREST EARNING TREND AND OTHER INCOME
over its total interest revenue. On the latter The income under these headings during
half of these 5 years period, the interest 2012/13 has increased by NRs.349 million
59% 52% 44% 48% 62%

rates subsided tremendously with inflow of 2,971

in comparison to that of year 2008-09
deposits. The government funds also got
3,516
2,299 posting an absolute growth of 137.68%.
frozen due to delay in budget sanctioning as The compounded annual growth rate during
a result of political impasse. The 2,090
this period is 18.90%.
disbursement of selective proposals also
continued as banks were quite reluctant to
3,155
One of the key focus areas has been to
1,645 2,955

encourage new business. Interbank rate increase the contribution of non-interest

1,960 2,186

hovered below 0.5% most of the time after 1,153 income in the bottom line performance.
year 2010/11 with brief rise to 5.77% Accordingly the bank has been expanding
during May 2013. Rates on new T-bills also its fee income streams by further
slumped below 0.5% mark, the lowest
2009 2010 2011 2012 2013
augmenting on existing avenues and
hitting to 0.15% in September 2012. Due offering new products. Income from letter of
INTEREST EXPENSE NET INTEREST INCOME

to the surplus of liquidity, the banks had to
curtail interest rates both ways. Moreover
with limited investment opportunities,
banks and financial institutions had the
challenge of maintaining margin amid
growing idle fund. The reduction in cost of
deposit was not sufficient to compensate
the cost of idle fund. As a result, banks had
to take measured steps while reducing
interest rates on loans and advances. Lower
rate credit schemes emerged quite late
(March - May 2013) that gave respite for a
brief period to raise interest rates to some
extent.
Considering the conditions that have
prevailed in these 5 years, the rising volume
of net interest income of Nabil could be
regarded as remarkable. With
implementation of regulatory requirements
for limiting LCY interest spreads to 5%
recently, the shrinking of net interest
income in the days ahead is quite obvious,
which could hinder profitability significantly
thereby pressurizing financial institutions to
enhance their credit volumes which perhaps
would not be in favour of banking industry
at the moment.
credit, bank guarantee, remittance, cards
and loan management has been important
contributors of growth. Similarly, new
avenues like bullion, insurance and
electronic channels have also shown
encouraging signs for the future.
FOREIGN EXCHANGE INCOME
The bank's foreign exchange earning has
increased to NRs.489 million in the year
2012/13 from NRs.196 million in year
2008/09, recording a growth of 148.90%.
The compounded annual growth rate
achieved during this period is 20.01%. The
 27
ANNUAL REPORT 2012/13

bank has been running its treasury COMPOUNDED ANNUAL GROWTH RATE OF
operations efficiently, ideally capitalizing on MAJOR INCOME STATEMENT ITEMS: NRs.000
favorable correspondent banking
PERIOD ENDING MID JULY 2013 2008 CAGR
relationships, tapping market opportunities
and offering innovative treasury services to Operating Income 4,607,945 1,670,427 22%
its clients.
- Net Interest Income 3,515,938 1,220,261 24%
- Fees, Commission and Other 602,956 253,679 19%
STAFF EXPENSE
- Foreign Exchange 489,051 196,487 20%
The bank's staff expense has increased to
Operating Expense 1,115,541 483,658 18%
NRs.647 million in the year 2012/13 from
NRs.263 million in year 2008/09, - Staff 646,760 262,908 20%

recording a sizable growth of 146.0%. The - Other Operating 468,781 220,751 16%

compounded annual growth rate posted Net profit after tax 2,218,762 746,468 24%
during this period is 19.73%. The
increased HR workforce due to expansion of
business, promotions and rise in pay / COST TO INCOME RATIO
benefits due to annual appraisal and bi- This is the ratio of gross cost of operation to COST TO INCOME RATIO
annual collective bargaining have been the gross income from operation. Years
major causes for the rise in staff costs. 2008/09 through 2010/11 was the period 63%

when Nabil expanded its businesses.

In addition, the employees have also been
benefited of good amount of bonus. Total
staff bonus which was provisioned NRs.109
million in year 2008/09 years has now
risen to NRs.316 million for the financial
year 2012-13, recording a compounded
annual growth rate of 23.77%.
Number of branches / extension counters
grew to 48 from 28, ATM grew to 68 from
32 and number of permanent staffs grew to 57%
657 from 416. As expansion was on initial 56%
days the operating leverage was below than
optimum and obviously cost to income ratio
grew steadily. Apart from this, the rising
52%

demand of deposits to maintain the liquidity

49%

OTHER OPERATING EXPENSE
In financial year 2012-13, the expense
under this head has increased to NRs.469
Million from NRs.221 Million incurred in
year 2008/09, recording a growth of
112.36%. The compounded annual growth
rate posted during this period is 16.26%.
Managing operating expense is one of the
important aspects for long term
sustainability. The bank has implemented
rigorous process for expense authorization
which includes budgetary planning,
monitoring and variance reporting, and
centralized expense approval structure. The
expense growth is at normal level and
driven by mainly by business expansion and
inflation.
ratios while tightening of credit due to fall 2009 2010 2011 2012 2013
out of real estate also contributed for rising
interest costs while slowing growth rates of
net interest income to some extent.
Post 2010/11, the bank witnessed steady
improvement in cost to income ratio. The
improvement may be attributed to better
net interest margin in years 2011/12 and
2012/13 through better use of resources
and infrastructure. Moreover, the bank has
always maintained its position towards
generating non-interest income in excess of
its non-interest expenses every year. During
the last five years, the compounded annual
growth rate of non-interest income and non-
interest expenses were 19.39% and
18.19% respectively.
 28
Nabil Bank Limited

02
ACHIEVEMENTS OF CURRENT YEAR
The bank has implemented three years strategic plan beginning with financial year 2012-13. By and large,
the performance of the bank has been satisfactory both in terms of top-line as well as bottom-line.

DEPOSITS AND LOANS
The deposits and loans have grown by
NRs.8.59 billion and NRs.4.78 billion
respectively achieving growth of 16% and
11% respectively. These growth rates are
slightly behind the national average achieved
as 18% and 22% respectively.
The growth of lending lagging behind the
national average may be attributed to the
bank's cautious approach towards booking
additional risk assets such that portfolio
quality and yield are maintained at the
satisfactory level. In tandem with the lending
growth, the credit risk assets have also
grown by 14% to reach NRs.57.19 billion
from last year's NRs.50.02 billion.
On average basis, the total loans have grown
by NRs.3.1 billion mainly due to growth of
business loans (by NRs.3.7 billion). The
average volume of retail loans however
observed reduction of NRs.559 million.
In the deposit segment, the growth is mainly
on interest free deposits posting growth of
13.9%, savings posting growth of 29.7%
and calls posting growth of 35.1%. Fixed
deposit in contrast recorded decline this year
with negative growth of 23.2%. On average
basis, the total deposits have grown by
NRs.4.2 billion mainly due to the growth of
saving deposits. The savings, call and
current (including margin and matured
deposits) have grown by NRs.5.2 billion,
NRs.2.2 billion and NRs.1.1 billion
respectively, while fixed deposits registered
decline of NRs.4.2 billion.

DETAILS OF LOANS AND THEIR YIELD: NRs.000

PERIOD ENDING MID JULY 2013 2012

VOLUME* INTEREST YIELD VOLUME* INTEREST YIELD

Business Loan 35,354,284 3,953,057 11.18% 31,667,188 3,955,901 12.49%

Retail Loan 9,478,478 1,227,368 12.95% 10,038,411 1,359,921 13.55%
Total 44,832,762 5,180,425 11.55% 41,705,600 5,315,822 12.75%
*Volume in this table represents daily outstanding average volume.

The deposits and loans

8.59 billion
have grown by NRs.

and NRs.4.78 billion respectively

 29
ANNUAL REPORT 2012/13

DETAILS OF AVERAGE VOLUME OF DEPOSITS AND THEIR COSTS ARE PRESENTED AS UNDER: NRs.000

PERIOD ENDING MID JULY 2013 2012

VOLUME* INTEREST COST VOLUME* INTEREST COST

LCY
Current Accounts 5,901,938 - 0.00% 5,114,570 - 0.00%
Savings Accounts 19,203,360 692,442 3.61% 14,432,096 596,273 4.13%
Fixed Accounts 10,878,834 872,138 8.02% 15,104,746 1,629,839 10.79%
Call Accounts 13,896,241 515,498 3.71% 12,093,697 825,383 6.82%
Total LCY Accounts 49,880,373 2,080,078 4.17% 46,745,109 3,051,495 6.53%

FCY
Current Accounts 1,704,459 - 0.00% 1,438,935 - 0.00%
Savings Accounts 1,650,258 7,774 0.47% 1,221,511 7,982 0.65%
Fixed Accounts 1,422,844 15,083 1.06% 1,431,998 24,912 1.74%
Call Accounts 3,672,869 33,775 0.92% 3,263,823 36,666 1.12%
Total FCY Accounts 8,450,430 56,632 0.67% 7,356,267 69,560 0.95%
Total LCY and FCY 58,330,803 2,136,710 3.66% 54,101,376 3,121,055 5.77%

*Volume in this table represents daily outstanding average volume

INVESTMENTS
The investments (including money at call)
grew by around NRs.3.1 billion registering
growth of 21% in comparison to last year.
The growth rate achieved by the bank is
higher than the national average (of
commercial banks) which posted a growth
of 19%. The growth in volume of
investments of entire commercial banks for
the year is NRs.35.2 billion. Considering
the bank's cautious approach towards credit
and amid lack of investment opportunities
owing to reluctance of business
communities towards venturing on new
projects, the bank has made efforts to
manage its idle funds through investments
in government securities and placements
despite lower yield.
On average basis, the total investments
have grown by NRs.2.0 billion which is
mainly contributed by FCY placements
(NRs.1.2 billion). The development bonds
(Nepal Government Bonds) and treasury
bills registered average volume growth of
NRs.733 million and NRs.174 million
respectively while other LCY investments
registered reduction of NRs.66 million.
Despite overall volume growth, the
replenishment of high yielding development
bonds after their maturity during the review
year by the low yielding bonds has caused
reduction in overall yield by 70 basis
points. Similarly, lower T-bill rates sustained
from second half of the last financial year
through the review year has contributed on
realizing lower yield of 1.7% as against
7.45% achieved during last year. The
cumulative effect of reduced yield on every
front has affected on overall reduction of
yield to 2.97% from 5.23% achieved last
year.
 30
Nabil Bank Limited

INVESTMENTS NRs.000

PERIOD ENDING MID JULY 2013 2012

VOLUME* INTEREST YIELD VOLUME* INTEREST YIELD

Nepal Government Bonds 3,434,354 225,271 6.56% 2,700,713 196,063 7.26%

Nepal Government T Bills 5,714,261 99,131 1.73% 5,540,180 412,618 7.45%
Other Investments - LCY # 117,208 2,655 2.27% 183,826 8,591 4.67%
Other Investments - FCY # 8,278,734 194,641 2.35% 7,071,386 193,761 2.74%
Total 17,544,558 521,698 2.97% 15,496,105 811,033 5.23%

*Volume in this table represents daily average volume # excludes equity investments and dividend income

NET INTEREST INCOME COST OF RESOURCES NRs.000

The net interest income posted healthy

PERIOD ENDING MID JULY 2013 2012 CHANGES
growth rate of 18.3% during the review
period. The growth was achieved mainly Aggregate volume of interest
due to reduction in cost of resources though bearing liabilities 59,630,912 54,985,995 8.45%
there was also reduction in yield on assets.
- average deposits 58,330,805 54,101,374 7.82%
The bank's weighted average cost of
- average borrowings 1,300,108 884,621 46.97%
resources decreased by 207 basis points
Interest expense on liabilities 2,186,185 3,155,490 -30.72%
from 5.74% to 3.67%. While the cost of
- on deposits 2,136,709 3,121,055 -31.54%
borrowing remained at more or less same
level with slight reduction (to 3.81% from - on borrowings 49,476 34,435 43.68%

3.89%) during the review period; the cost Weighted Average Cost 3.67% 5.74% -36.11%

of deposits fell by 211 basis points to - cost of deposit 3.66% 5.77% -36.50%
remain at 3.66% from 5.77%. The decline - cost of borrowing 3.81% 3.89% -2.24%
in cost of deposits has positively
contributed on reduction of total interest
expense by 31.54%, despite growth of
average deposit volume by 7.82%. The MONTHLY WEIGHTED AVERAGE INTER BANK RATE - PRIME IN YEAR 2012 - 13
growth of interest expenses of commercial
banks also fell into negative zone posting
decline of 11.88% amid growth in volume
6.72%

by 17.62% in comparison to last year.

The declining costs of deposits was affected 4.32%

largely due to liquidity condition. The entire

4.44%
3.62%
financial system remained flush in most of
the periods of review year with some
tightness during 7th through 10th month.
After a sustained period of liquidity
1.00%
0.35% 0.58%
0.30% 0.36% 0.54% 0.54%
abundance, the banks started launching
0.72%

newer and attractive credit schemes

specially on retail front in order to ease out 1 2 3 4 5 6 7 8 9 10 11 12
idle funds. However, due to the growth of
deposits outperforming the growth of credit,
the interbank rates soon fell below 1%
again. As per monthly statistics published banks and financial institutions climbed to banks and FIs surged nominally to reached
by Statistics Division of NRB for Mid July NRs.1,250 billion as against NRs.1,147 NRs.956 billion in Mid July 2013 from
2013 (Ashad end, 2070) the deposits of billion in Mid May 2013 while the credit of NRs.924 billion in Mid May 2013.
 31
ANNUAL REPORT 2012/13

Taking stock of liquidity flush, the

management decided to shed off high cost MONTHLY INTER BANK TRANSACTION VOLUME - PRIME
deposits and prioritized on expanding low
cost current and savings deposit base. NRs. in Million

Consequently, bank's deposit mix with low 8600

cost deposits improved by the year-end.
Current and savings segment registered a 7040

growth of 25.09%, thereby increasing its 5764

share to 50% of total deposit. More volatile 4603
call deposit segment also witnessed a
growth of 35.1% as large number of
3390

institutional clients chose to increase their 2285 1860

business with the bank, despite reduction in
1490 1720
1100
interest rate. On the other hand with
640
80

downward revision in fixed deposit rates

and maturity of existing higher coupon 1 2 3 4 5 6 7 8 9 10 11 12
deposits, this segment registered a decline
of 23.2%. These all contributed on saving
of interest expense to large extent by around
30.7% (in amount NRs.969 million). YIELD ON EARNING ASSETS NRs.000

PERIOD ENDING MID JULY 2013 2012 CHANGES

The effects of liquidity remained on the
earning side, though the rate of reduction Aggregate volume of interest earning assets 62,377,320 57,201,704 9.05%
was not as severe as on the cost side. The
- average loan and advances 44,832,762 41,705,600 7.50%
yield on interest earning assets reduced by
- average investments 17,544,558 15,496,105 13.22%
157 basis points while the average volume
Interest Income on earning assets 5,702,123 6,126,855 -6.93%
of earning assets increased by 9.05%.
- on loans and advances 5,180,425 5,315,822 -2.55%
Demand of fresh credit from the business
- on investments 521,698 811,033 -35.67%
communities was low while bank also
discouraged disbursing credits on Weighted Average Yield 9.14% 10.71% -14.65%

unproductive sector. The bank in essence - yield on loans and advances 11.55% 12.75% -9.34%
looked towards strengthening its existing - yield on investments 2.97% 5.23% -43.19%
portfolio and encouraged low risk profile
credit proposals.
FEES, COMMISSION AND OTHER OPERATING INCOME NRs.000

FEES, COMMISSION AND PERIOD ENDING MID JULY 2013 2012 CHANGES

OTHER OPERATING INCOME AMOUNT %

The bank's fees, commission and other Total Fees, Commission and Other Income 602,956 567,472 35,484 6.3%
operating income grew satisfactorily posting Major areas:
overall growth of 6.3%. The major - Guarantee 72,269 64,505 7,763 12.0%
contributors of this growth are guarantee - Remittance 82,430 76,322 6,108 8.0%
commission, LC commission, remittance - Letter of Credit 60,880 54,675 6,205 11.3%
commission and remittance commission - Insurance Agency 11,180 11,975 (795) -6.6%
(including remittance rebate). The fee - Loan Management 118,710 118,921 (211) -0.2%
income under loan management, insurance - Cards Commission 114,088 113,690 398 0.4%
agency and bullion trade have however - Remittance Rebate 40,701 33,278 7,423 22.3%
witnessed decline this year. The bank has - Bullion Commission 15,631 15,792 (161) -1.0%
given more focus on enhancing non-interest - Communication Fees 15,141 13,367 1,774 13.3%
income by tapping income potentials on - Cards Issuance and Renewal 30,523 29,740 783 2.6%
non-funded exposures. - Other income 41,402 24,452 16,950 69.3%
 32
Nabil Bank Limited

FOREIGN EXCHANGE INCOME FOREIGN EXCHANGE INCOME NRs.000

In the last few years, there has been

significant rise in the foreign exchange PERIOD ENDING MID JULY 2013 2012 CHANGES
AMOUNT %
income. The bank achieved an overall growth
rate of 9.4% mainly due to growth under Total exchange income 489,051 447,070 41,981 9.4%
trading (18.4%) while it faced decline under - Trading income 393,360 332,138 61,223 18.4%
revaluation (16.7%). The achievement may - Revaluation income 95,691 114,933 (19,242) -16.7%
be considered satisfactory amid high volatility
in exchange rates observed during the second
half of the financial year. The uncertainty of
US dollar rates vis--vis INR led the bank not
NON OPERATING INCOME NRs.000
to take exposure and consequently the bank
could not achieve growth under revaluation it PERIOD ENDING MID JULY 2013 2012 CHANGES
may have desired. AMOUNT %

Total non operating income / (loss) 13,469 13,840 (371) -2.7%

Last year (2011-12), the foreign exchange
- dividend income 20,588 16,619 3,969 23.9%
earnings grew significantly by 61.9%
- on sale of investment (8,102) - (8,102) -100.0%
(79.5% in revaluation and 56.6% in
- on sale of fixed assets 983 (2,780) 3,762 135.3%
trading) over the previous year's figures and
the rise was attributed to the earnings
through NDF that it started in that year.

NON OPERATING INCOME STAFF EXPENSE NRs.000

The bank observed decline under this head

mainly due to the loss the bank incurred on PERIOD ENDING MID JULY 2013 2012 CHANGES
AMOUNT %
the disposal of low yielding treasury bills
during Mid February through early March Total staff expense 646,760 500,713 146,047 29.2%
2013. Besides that the bank registered Major areas:
growth on dividend earning by 23.9% - Training expense 8,737 8,935 (197) -2.2%
despite refund of dividend of NRs.6.2 - Uniform allowance 14,562 - 14,562 100.0%
million to Rural Microfinance Development - Dashain allowance 25,337 25,455 (118) -0.5%
Centre (RMDC). Similarly it registered - Gratuity and Pension 103,919 48,570 55,349 114.0%
growth on sale of fixed assets by 135.3%. - Leave provision / encashment 48,409 31,212 17,197 55.1%
- Salary, allowance, provident fund 435,623 377,680 57,943 15.3%
STAFF EXPENSE - Other employee benefits 10,173 8,861 1,312 14.8%
The staff expense grew by 29.2% during
the review year totaling NRs.647 million
from NRs.501 million last year which may
be attributed mainly to rise in pay following
collective bargaining on all levels,
promotion on different levels and
recruitment of 100 staffs in assistant level. The bank achieved
The impact of rise in pay and promotion
significantly impacted salary, allowance and
PF registering growth of NRs.58 million
an overall growth rate of
(15.3%); gratuity provision registering
growth of NRs.55 million (114%) and leave
expenses registering growth of 17 million
(55.1%). Furthermore, the booking of
uniform expenses distributed biennially also
9.4% in foreign exchange.
contributed on the growth of staff expense.
 33
ANNUAL REPORT 2012/13

OTHER OPERATING EXPENSE OTHER OPERATING EXPENSE NRs.000

The operating expense of the Bank grew by

NRs.38 million (8.8%) during the review PERIOD ENDING MID JULY 2013 2012 CHANGES
AMOUNT %
year mainly due to rise in deposit insurance
premium (NRs.14 million; 1,145%), fuel Total operating expense 468,781 430,909 37,872 8.8%
and lubricants (NRs.8.5 million; 33.6%), Major areas:
house rent (NRs.6.1 million; 11.1%), - House rent 60,879 54,798 6,081 11.1%
consultancy service fees (NRs.3.8 million; - Security service 38,895 39,833 (939) -2.4%
15.1%) and communication expenses - Contract service 11,232 10,969 264 2.4%
(NRs.3.6 million; 14.4%). Owing to - Asset insurance 10,306 9,679 627 6.5%
national consumer price index of 10% on - Deposit insurance 15,279 1,227 14,051 1144.8%
non-food and services, the growth rate of - Fuel and lubricants 33,622 25,171 8,451 33.6%
other operating expenses may be deemed - Water and electricity 15,969 14,359 1,610 11.2%
reasonable. In fact, the growth of deposit - Printing and stationery 21,398 21,184 214 1.0%
insurance was due to the payment of two - Postage, telephone, fax 28,855 25,221 3,634 14.4%
installments of semi-annual insurance - Repair and maintenance 16,603 16,795 (192) -1.1%
premiums, which was actually implemented - Consultancy service fees 29,169 25,336 3,832 15.1%
only during the second half of last year and - Fixed assets depreciation 123,904 130,516 (6,612) -5.1%
accordingly had paid only one installment - Other expenses 62,672 55,821 6,851 12.3%
for that year.

PROVISION FOR
POSSIBLE LOSSES
Booking of loss provision saw significant
PROVISION FOR POSSIBLE LOSSES NRs.000
turnaround during the review year as the
bank wrote back significant amount of loss PERIOD ENDING MID JULY 2013 2012 CHANGES
provision on loans set aside for some big AMOUNT %

accounts during earlier financial years.

Total provision expense 2,723 413,949 (411,226) 99.3%
Consequently, current year's incremental net
- on loan impairment 13,610 390,695 (377,085) 96.5%
loss provision on loans was mere NRs.13
- on investment impairment (net) (11,525) 23,254 (34,779) 149.6%
million. In addition, due to the improvement
- on other assets 639 - 639 -100.0%
in price of ICICI bond (denominated in US$)
the bank wrote-back loss provision by
around NRs.12 million. The cumulative
impact of both incremental provision on
loans and write back of provisions on
investments is incremental NRs.2.7 million. INCOME / (EXPENSE) FROM EXTRA ORDINARY ACTIVITIES NRs.000

INCOME / (EXPENSE) FROM PERIOD ENDING MID JULY 2013 2012 CHANGES
EXTRA ORDINARY ACTIVITIES AMOUNT %

The bank witnessed significant rise in Net expense (17,454) (3,037) (14,417) -474.7%
expense (by 474.7%) under this head due - loan written off expense (27,843) (3,006) (24,837) -826.1%
mainly to increment in bad loan write-off - recovery from written off loan 10,442 16,771 (6,329) -37.7%
(by 826.1%) in comparison to last year. - voluntary retirement scheme - (11,717) 11,717 100.0%
Moreover, it also recorded decline in - others (53) (5,084) 5,031 99.0%
recovery from written off accounts (by
37.7%) in comparison to last year.
 34
Nabil Bank Limited

DETAILS OF LOANS DETAILS OF LOANS WRITTEN-OFF NRs.000

WRITTEN-OFF
In line with bank's Loan Write-off Policy and PRINCIPAL INTEREST TOTAL

NRB Unified Directive, it has written off

Total loan written off (A) 706,762 281,220 987,983
NRs.42 million pertaining to business loans
- written off in FY 2012-13 27,843 14,748 42,592
and consumer loans during the review year.
- written off till FY 2011-12 678,919 266,472 945,391
Total written-off amount include interest of
Total recovery from written off loan (B) (456,434) (77,819) (534,253)
NRs.14 million. In contrast, the bank has
- recovered in FY 2012-13 (8,322) (2,120) (10,442)
been able to recover NRs.10 million that
- recovered till FY 2011-12 (448,112) (75,699) (523,811)
include interest of NRs.2.1 million. With
Net not recovered portion (A-B) 250,328 203,401 453,730
this, the bank still has to recover NRs.398
- book write off 234,318 164,604 398,923
million (including interest of NRs.164
- actual write off * 16,010 38,797 54,807
million) from the written off accounts. As of
Recovery ratio (on total write-off amount) 64.6% 27.7% 54.1%
balance sheet date, it has relinquished
* The bank has relinquished its recovery rights in view of remote possibility of loan recovery.
rights of recovery on loan accounts of
NRs.54.8 million.

NET PROFIT, INCOME TAX

AND STAFF BONUS
The impact of growth under various income
heads and decline particularly of loss The bank's operating
provisions has enabled bank to achieve
notable profit figure. The net profit after tax
for the review year 2012/13 is NRs.2.22
billion registering growth of 31.3% in results is
comparison to last year. The achievement of
Nabil is second highest among 31
commercial banks as per published
unaudited financials. Similarly, the bank's
operating results (operating profit before
provision) is NRs.3.49 billion recording
NRs. 3.49 billion
growth of 14.3% and is highest in the
banking industry.
recording growth
The income tax provision and staff bonus

14.3% and
also recorded good growths reaching
NRs.946.89 million and NRs.316.26
million from NRs.728.30 million and of
NRs.241.64 million of last year
respectively. The provision of income tax
and staff bonus by the Bank is also the
highest in the banking industry. is highest in the

banking industry.
 35
ANNUAL REPORT 2012/13

02
VALUE ADDITION

Nabil, along with its stakeholders, created TOTAL VALUE ADDITION NRs.000

the value of NRs.4.28 billion during the

review financial year, a growth of PERIOD ENDING MID JULY 2013 2012 CHANGES
AMOUNT %
NRs.544.16 million (14.5%) against the
last financial year. Value addition from the Interest Income 5,702,123 6,133,739 (431,616) -7.0%
financial intermediation occupied 74.5% of Interest Expense (2,160,685) (3,129,990) 969,306 -31.0%
total value addition while the financial Operating Cost (379,893) (308,951) (70,942) 23.0%
services occupied 25.5% of the total value Other Income from financial intermediation 31,030 33,390 (2,360) -7.1%
addition. Value addition from financial intermediation 3,192,575 2,728,188 464,387 17.0%
Income from financial services 1,092,007 1,012,231 79,776 7.9%
The value created during the review Total Value Addition 4,284,581 3,740,418 544,163 14.5%
financial year has been applied in the
interests of all stakeholders. While applying
the value to the stakeholders, the Bank has corporate tax (current tax and prior period The growth of 20.1% of the total value
addressed the interests of its stakeholders tax). The share of corporate tax applied towards the investors reveals the fact
in a reasonable manner by prioritizing the demonstrates the significance of Banks that the Bank is capable of providing
long term interests of its business. contribution towards the development of the reasonable return and also maintains and
nation. Similarly, around 22.7% of the total meets enthusiasm and expectation of the
Around 22.5% of the total value is applied value has been applied towards the shareholders. Slight reduction of 3.7% on
to employees in the form of employees investors in the form of dividend. Bank, in application towards the business expansion
benefits and bonuses in lieu of the services order to maintain and extend its business and maintenance is mainly due to lower
rendered while around 22.2% is applied to for long term sustainability, retained around booking of provision for possible losses
the Government towards payment of 31.9% of the total value created. during the review year in comparison to last
financial year.

APPLICATION OF VALUE ADDITION: NRs.000

PERIOD ENDING MID JULY 2013 2012 CHANGES

AMOUNT SHARE % AMOUNT SHARE % AMOUNT %

To Employee 963,015 22.5% 754,069 20.2% 208,947 27.7%

To Governments 952,677 22.2% 728,302 19.5% 224,375 30.8%
To Long term Financier 25,500 0.6% 25,500 0.7% - 0.0%
To Investor 974,737 22.7% 811,908 21.7% 162,829 20.1%
To Provide for maintenance and expansion 1,368,653 31.9% 1,420,640 38.0% (51,987) -3.7%
- Depreciation and Amortisation 123,904 2.9% 130,516 3.5% (6,612) -5.1%
- Provision for Loan and Investment Loss 2,723 0.1% 413,949 11.1% (411,225) -99.3%
- Deferred Tax (1,999) 0.0% (8,193) -0.2% 6,194 -75.6%
- Capital / Retained Earning / Reserves 1,244,025 29.0% 884,368 23.6% 359,657 40.7%
Total Value Addition 4,284,581 100.0% 3,740,418 100.0% 544,163 14.5%
 36
Nabil Bank Limited

02
SEGMENTAL PERFORMANCE OF THE BANK

For the purpose of assessing segmental
performance the bank has identified
business segment as its primary segment
and geographical segment as its secondary
segment.
By their nature, the different businesses
carried by the bank can be grouped into
distinct business segments. Product
portfolio under each of these segments has
noticeable variations in their nature and
also in terms of the involved risk and
reward. As such this segmentation
predominantly affects 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 predominantly affect 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 viz. Banking, Treasury, Cards
and Others. Each of these business
segments has a contribution ratio of 74.1%,
17.8%, 3.6% and 4.5% respectively in the
overall net profit of the bank for year ending
mid July 2013. Detail segmental
performance is set out in the table below.
The Bank's business is mainly concentrated
in "Banking" segment. The core business of
deposit mobilization and lending activities
along with other auxiliary banking services
apart from card operations, treasury
operations and other businesses are
reported under the Banking segment.
Treasury segment comprise of entire
treasury operations including the bank's
investment portfolio, foreign currency
transactions and overall fund management.
Card segment comprise of all card related
operations including debit and credit card
issuance, merchant relationships, e-
banking, m-banking and ATM management.
Others segment comprise of bancassurance
business and bullion operations. Interest
earnings and foreign exchange gains/losses
generated while conducting businesses
under distinct segments are presented
under related segment.

PRIMARY BUSINESS SEGMENT NRs.000

BANKING TREASURY CARDS OTHERS TOTAL

Revenue
Interest Income (Including Transfer Pricing) 7,317,474 2,498,884 19,580 - 9,835,938
Fee Income 409,891 13,012 295,307 152,199 870,409
Forex Income 117,064 316,413 26,025 29,550 489,051
Non Operating Income 2,733 10,736 - - 13,469
Total Revenue 7,847,161 2,839,045 340,912 181,749 11,208,867
Expense
Interest Expense (Including Transfer Pricing) 4,097,106 2,217,836 5,058 - 6,320,000
Staff Expense 613,153 7,050 16,225 10,332 646,760
Operating Expense 523,232 5,022 192,579 15,402 736,235
Provision for possible Loss 14,536 (12,262) 450 - 2,723
Non Operating Expense 17,454 - - - 17,454
Total Expense 5,265,480 2,217,646 214,312 25,734 7,723,172
Segment Result 2,581,681 621,399 126,600 156,015 3,485,695
Staff Bonus 316,256
Profit before Tax 3,169,439
Income Tax 950,678
Net Profit for the Year 2,218,762
% Share 74.1 17.8 3.6 4.5 100.0
 37
ANNUAL REPORT 2012/13

SECONDARY SEGMENT
The bank has identified five secondary
segments based on the geographic locations
of its business viz. Eastern, Central,
Western, Mid-Western and Far-Western. For
year ending mid July 2012 each of these
geographical segments has a contribution
ratio of 10.5%, 79.4%, 5.9%, 2.5% and
1.8% respectively in the overall net profit of
the bank. Detail segmental performance is
set out in the table below.
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. As set out in the table
below, 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.

SECONDARY GEOGRAPHIC SEGMENT NRs.000

EASTERN CENTRAL WESTERN MID WESTERN FAR WESTERN TOTAL

Revenue
Interest Income (Including Transfer Pricing) 724,505 8,454,761 411,162 153,281 92,230 9,835,938
Fee Income 47,211 771,468 31,009 10,421 10,301 870,409
Forex Income 11,050 470,732 4,559 1,708 1,002 489,051
Non Operating Income - 13,469 - - - 13,469
Total Revenue 782,766 9,710,430 446,730 165,409 103,532 11,208,867
Expense
Interest Expense (Including Transfer Pricing) 324,553 5,760,781 159,844 51,232 23,591 6,320,000
Staff Expense 41,465 547,420 37,648 12,976 7,251 646,760
Operating Expense 45,610 623,523 41,707 15,171 10,223 736,235
Provision for possible Loss 6,439 (6,506) 3,048 (1,253) 994 2,723
Non Operating Expense - 17,454 - - - 17,454
Total Expense 418,067 6,942,671 242,248 78,126 42,059 7,723,172
Segment Result 364,698 2,767,759 204,482 87,283 61,473 3,485,695
Staff Bonus 316,256
Profit before Tax 3,169,439
Income Tax 950,678
Net Profit for the Year 2,218,762
% Share 10.5 79.4 5.9 2.5 1.8 100.0

Central region has

the largest contribution

in overall profitability of the bank.
 38
Nabil Bank Limited

02
INTERIM POSITION AND PERFORMANCE (UNAUDITED)

INTERIM FINANCIAL POSITION
During the year under review, amid liquidity
flush and limited opportunities for quality
investments, the bank took cautious steps
towards deposit mobilization. Proactive
strategies taken by the bank in deposit
mobilization front played a significant role
in framing the banks financial position and
performance throughout the year.
The quarter to quarter growth rate in
balance sheet size was recorded at 8.1%, -
0.8%, -2.4% and 10.4% respectively in the
1st, 2nd, 3rd and 4th quarters of the year.
These corresponded to absolute change in
volume of NRs. 4,465 million, NRs. 493
million negative, NRs. 1,398 million
negative and NRs.6,012 million
respectively during these quarters.
In the absence of political stability, business
sentiment continued to be on the lower side
throughout the year. Consequently major
additional investments in production and
infrastructure sectors as well as sectors
identified as new ones under government
policies could not accelerate at desired
pace. The bank moved along cautiously
while entertaining new credit proposals.
The focus remained towards business
consolidation, risk reduction and product
pricing that continued from last year.

INTERIM FINANCIAL POSITION NRs.in Million

AT QUARTER ENDING MID OCT 12 MID JAN 13 MID APR 13 MID JUL 13
Q1 Q2 Q3 Q4

Capital and Liabilities

Paid up capital 2,436 2,437 2,437 2,437
Reserve and surplus 3,605 4,121 4,536 5,225
Debenture and bond 300 300 300 300
Borrowings - 2,925 1,450 -
Deposits 59,489 58,996 57,598 63,610
- domestic currency 50,787 51,243 49,243 54,278
- foreign currency 8,702 7,753 8,355 9,332
Income tax liability 247 119 34 67
Other liabilities 3,956 3,511 3,500 2,892
Total 70,033 72,409 69,854 74,531

Assets
Cash and bank balance 6,029 3,553 4,452 5,883
Money at call and short notice 976 1,927 942 1,634
Investments 17,650 18,698 16,701 16,348
Loans and advances 42,417 45,455 45,100 47,646
- Real estate loan 4,633 4,722 4,371 4,436
- Home loan (upto 100 Million) 2,465 2,576 2,753 3,270
- Margin loan - - - -
- Term loan 6,434 6,582 6,432 6,948
- Working capital loan 22,402 24,897 24,247 24,555
- Others loan 6,484 6,678 7,297 8,436
Fixed assets 870 863 876 872
Non banking assets - - - -
Other assets 2,090 1,912 1,783 2,148
Total 70,033 72,409 69,854 74,531
 39
ANNUAL REPORT 2012/13

INTERIM FINANCIAL
PERFORMANCE
Amid liquidity flush scenario, interest rate
on bank deposits across the industry
witnessed a continuous decline throughout
the year. The bank's interest expense also
decreased, thereby reducing the overall cost
of fund and increasing net interest spread.
Weighted average interest spread for the
year increased to 5.48% level from 4.95%
level in the previous year.
The quarter to quarter growth rate in net
interest income was recorded at -8.9%,
7.2%, 0.2% and 14.9% respectively in the
1st, 2nd, 3rd and 4th quarters of the year.
These corresponded to absolute change in
net interest income of NRs.78.6 million
negative, NRs.58 million, NRs.2 million
and NRs.129 million respectively during
these quarters. Total net interest income for
the year was recorded at 18.1% or
NRs.537.7 million higher than that of
previous year.
Apart from interest earnings, improvement
under headings like possible loss
provisioning, foreign exchange gains and
other operating income enabled the bank to
post year end net profit at a level
significantly higher than that of previous
year. Significant net write back of loss
provisions by NRs.119 million and
NRs.173 million was made during the 1st
and 4th quarters.
Quarterly net profit after tax increased at
0.1%, -11.1%, -19.5% and 63.7%
respectively in each of 1st, 2nd, 3rd and
4th quarters respectively. These
corresponded to absolute change in net
profit after tax of NRs.0.7 million,
NRs.65.7 million negative, NRs.102.0
million negative and NRs.268.4 million
respectively. Year end net profit after tax
was recorded at 31.6% or NRs.533.9
million higher than that of previous year.

INTERIM FINANCIAL PERFORMANCE NRs.in Million

FOR QUARTER ENDING MID OCT 12 MID JAN 13 MID APR 13 MID JUL 13
Q1 Q2 Q3 Q4 TOTAL

Interest Income 1,435 1,390 1,380 1,497 5,702

Interest Expense (632) (530) (518) (507) (2,186)
Net Interest Income 802 860 862 991 3,516
Fees,Commission and Discount 116 117 100 60 393
Other Operating Income 40 29 32 109 210
Foreign Exchange Gain 106 124 113 147 489
Total Operating Income 1,064 1,130 1,107 1,307 4,608
Staff Expenses (145) (123) (122) (256) (647)
Other Operating Expenses (115) (107) (116) (131) (469)
Operating Profit Before Provision 804 900 869 920 3,492
Provision for Possible Losses (163) (91) (226) (12) (493)
Operating Profit 641 809 643 907 3,000
Non Operating Income / (Expenses) 2 1 (1) 16 18
Write Back of Provision for Possible Loss 282 12 11 185 491
Profit from Regular Activities 925 821 653 1,109 3,508
Extra Ordinary Income / (Expenses) 0 1 6 (24) (17)
Profit before Bonus and Taxes 925 822 659 1,085 3,491
Provision for Staff Bonus (84) (75) (60) (98) (317)
Provision for Tax (252) (224) (178) (297) (951)
Net Profit 589 523 421 690 2,223
 40
Nabil Bank Limited
02
GENERAL OVERVIEW OF NABIL INVEST
Nabil Investment Banking Ltd. (Nabil
Invest in short), a subsidiary of Nabil Bank,
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) 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 financial year of
the subsidiary has a common financial year
with that of Nabil Bank (parent company)
that ended on July 15, 2013.
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. In the review financial year
2012/13, the major activities performed by
the Company are as under:
 Management of IPOs of equity capital of
2 A Class Financial Institution
(Total NRs.2.09 billion);
 Management of new fund offer of
Mutual Fund Units of Nabil Balance
Fund 1 (NRs.750 million);
 Management of debenture issue of 2 "A"
Class Financial Institutions
(NRs.1.10 billion);
 Management of assets of the customers
under Investment Management Service
(NRs.617 million as at 15th July 2013);
 Finalization of Product Paper and
Standing Instruction Manual for loan
syndication and merger & acquisitions;
 Being appointed as a fund manager and
depository of Nabil Balance Fund 1;
 Acquired three additional RTS
businesses and is rendering RTS related
services to a total of 6 companies
including the unit holders of Nabil
Balanced Fund I.
 Actions initiated to relocate head office
from Chabahil to Naxal, Kathmandu.
The office has been successfully relocated
on November 21, 2013;
 In a position to render depository
participant services from the office at
Anamnagar Kathmandu (now at Naxal)
from the review year.
The Nabil Invest had been rendering its
services from its registered office located at
Chabahil, Kathmandu. For this purpose, the
Company had established its office in the
building taken in lease by Nabil Bank on cost
to cost sharing basis. Moreover, the company
had also occupied space at Anamnagar
branch to provide administration and record
keeping of securities of its clients. These
offices have since been relocated to Naxal
Narayan Chaur from November 21, 2013.
The Bank has deputed its staff Mr. Pravin
Raman Parajuli as the CEO of Nabil Invest
under Management Service Agreement. The
Bank also provides various administrative
services necessary for service operations of
the subsidiary under Service Level
Agreement. The administrative services
include general administration, accounting,
finance and planning, information
technology, cheque clearing, human resource
administration, legal advisory and fund
management service.
The transactions between Bank and its
subsidiary during the review year 2012/13
have been presented in point 13.5 of
Schedule 33 Notes to Accounts of financial
statements annexed herewith.
 41
ANNUAL REPORT 2012/13

FINANCIAL POSITION 2013 in comparison to last year. The growths

AND PERFORMANCE OF under both equity and liability remained more
NABIL INVEST or less same. The reserves and surplus during
The balance sheet of the Company expanded the review year has increased by 86.2% to
by 12% or NRs.31 million as at Mid July reach NRs.24 million.

BALANCE SHEET NRs.000

AT MID JULY 2013 2012 2011 2010

Capital and Liabilities

Share Capital 105,000 105,000 105,000 70,000
Reserves & Surplus 24,165 12,975 7,457 (528)
Accounts Payable 119,287 109,208 7,218 2,628
Provision for Staff Bonus 2,822 1,436 1,065 -
Deferred Tax Liability - 47 60 -
Other Liabilities and Provisions 32,765 24,427 694 17
Total 284,039 253,093 121,494 72,117

Assets
Cash and Bank Balance 110,536 128,243 26,337 70,000
Investments 98,383 107,000 83,400 -
Advance Tax (Net of Tax Liability) 3,599 4,527 4,453 -
Fixed Assets (net of accumulated depreciation) 6,139 6,952 6,169 1,941
Deferred Tax Assets 155 - - -
Other assets 65,228 6,371 1,135 176
Total 284,039 253,093 121,494 72,117

Nabil Bank as at the Balance Sheet date

holds 74.29% controlling interest in

the total paid up capital of Nabil Invest.
 42
Nabil Bank Limited

For review year 2012/13, the net profit of
the Company increased by 96.6% or
NRs.10.4 million compared to that of
previous year. This growth may be attributed
to the significant growth posted on income
side in comparison to expenses. The gross
income of the Company increased by 81.2%
or NRs.23.1 million, while the gross
expenses increased by 62.2% or NRs.7.9
million. As set out in the table below the
income from IPO management and other
management services have grown
substantially. Also the company's effective
fund management enabled it to earn good
amount of interest from the bank placements
amidst declining rates of bank deposit.
The Company has proposed distribution of
15% cash dividend from the current year's
profit.

INCOME STATEMENT NRs.000

PERIOD ENDING MID JULY 2013 2012 2011 2010

Gross Income 51,696 28,522 19,480 -

IPO Fees 12,424 3,601 305 -
Interest Income 22,455 14,633 12,979 -
Other Income 16,817 10,288 6,196 -
Gross Expenses (20,650) (12,728) (7,768) (705)
Interest Expenses (3,588) (71) - -
Personnel Expenses (5,603) (4,296) (1,574) (222)
General Operating Expenses (9,466) (6,647) (4,927) (483)
Depreciation Charge (1,992) (1,714) (1,267) -
Operating Profit 31,046 15,794 11,712 (705)
Provision for Staff Bonus (2,822) (1,435) (1,065) -
Profit before tax 28,224 14,359 10,647 (705)
Tax Expense (7,056) (3,590) (2,662) 176
- Current Tax (7,258) (3,603) (2,425) -
- Deferred Tax 202 13 (237) 176
Profit after tax 21,168 10,769 7,985 (529)
Opening Retained Earning 12,975 7,456 (529) -
Dividend Payout (10,500) (5,250) - -
Deferred Tax Reserve (155) - - -
Closing Retained Earning 23,488 12,975 7,456 (529)
 C R I S P

SYNERGISTIC
Value creation of sums greater than the value of all its parts is only possible when
entire components work in sync and create synergy. Nabil has fostered the
culture of working together for better and faster result from the activities thereby
creating harmony among all the stakeholders. In our drive to take the bank atop
coheres all in togetherness for common good of the stakeholders.
 03
PRODUCTS
AND SERVICES
Nabil is always
03
LENDING PRODUCTS
concerned about how
CORPORATE BANKING
Nabil Corporate Banking is constituted to
it can create values for incorporate myriad corporate products with
the concept of a one window solution.
Nabil has a wealth of experience and
knowledge to this end and therefore focuses
its customers the on presenting itself as a financial
intermediary to bridge the gap between
those who have surpluses of funds and
best in the market. those who desperately crave for them. We
understand their enterprises better having
co-worked with each other.
It at different intervals
The guiding principle is to reach out the
banks finances to the larger clientele bases
no matter where they come from. With this
designs products and objective in mind, we at Nabil have
diversified our loan products making it
more inclusive keeping in focus our diverse
services in sync with customer bases and their varied needs: viz.,
working/fixed capital loans, import/export
loans, hire purchase, mortgage, discounting
time, technology and purchasing bills. Nabil keeps itself busy
architecting new and inventive loan
products to maximally deliver especially
customized services and products through
and market. national and international undertakings.
INFRASTRUCTURE AND
PROJECT FINANCING
Infrastructural development is
indispensable for economic growth and to
elevate the living standards of the residents
thereby contributing the nation get to an
economic pinnacle. Considering the leading
role of the Bank like ours in the industry,
we have formed an exclusive unit consisting
of high spirited team having major focus of
contributing with finances to unleash
potential projects like hydroelectricity,
cement, roads, rails, telecommunication,
airports, oil and gas explorations etc. that
remain inertly powerless for want of
financing. Moreover, these mega projects
foster and promote many other small
ancillary projects augmenting overall
business clime in the nation. Needlessly to
say, these economic activities breed an
array of employment opportunities and give
an impetus to the overall economic
development of the nation.

SME BANKING
Nepal, being a small economy, development
and economic growth largely depends on the
contribution of small and medium scale
business enterprises (SME) which are
abundant in the country. Therefore, prime
interest of the nation lies on the growth of
SME sector and wellbeing of majority of the
people associated with it. This sector is
pedestal for the countrys total economic
growth as they also stand auxiliary to big
corporate projects. Understanding the
endless potentials within SME, the Bank has
set up a separate hub at New Baneshwor,
Kathmandu with exclusive services related to
SME Banking. The services include a wide
array of financing in the form of cash credits,
overdrafts, time loans, import loans for
working capital requirement of business; and
term loans to finance purchase of capital
goods, like fixed assets, plants, equipments,
machineries, premises, vehicles etc as
required for business establishment and
expansions. Hence, it encompasses all
financial needs of SME customers associated
with manufacturing, trading and service
sectors across the country.
MICROFINANCE
Microfinance is indeed a product specially
designed to extend financial support to the
socio-economically disadvantaged people of
the nation to develop entrepreneurship
within themselves to uplift their living
standard. Nabil always feels accountable for
the community of poor and marginalized
people, and observes enormous potentials at
the bottom of the socio-economic pyramid
too. Nabil sees the enterprising poor not as a
burden of society and has been coming up
with specially designed credit lines with a
motive to eliminate poverty in the nation,
through direct financing, and also through
indirect financing in partnership and
coordination with various development
banks, microfinance institutions, FINGOs
(Financial Intermediary Non Government
Organizations) and Cooperatives. Hence, in
line with the governments policies &
priorities and the central banks directives as
well, Nabil sees micro finance sector under
utmost priority. It also has invested equity in
number of microfinance and rural
development banks of the country for further
contribution in the sector.
PERSONAL LENDING
This product has the exclusivity of tailoring
personal financial needs of our customers
hailing from diverse socioeconomic zones.
This meticulously and professionally
engineered varied product range covers the
following:
Nabil Housing
We always are attentive to our customers
needs and expectations and owning a home
is a dream of the many who qualify for
credibility but for want of funds cannot
realize their aspirations. We at Nabil have an
understanding of our customers financial
needs and have come up with a Nabil
Housing scheme with features of competitive
interest rates, extended loan tenures, with
flexible repayments and partial payment
facilities. Our customers can avail
themselves of whether it is purchase of land,
construction, refurnishing or refurbishing,
extension or purchase of a ready-made
house or purchase of home appliances.
Nabil Properties
This is an all inclusive scheme to cater to
diverse financial needs of our customers and
the arrangement is done by mortgaging idle
properties in order to finance varied needs
like education, marriage, travel, equity
infusion and of course beyond that. The loan
45
ANNUAL REPORT 2012/13
application is easy, and the process is
simple, and the sanction and delivery of
loans are prompt. This is especially and
resiliently packaged keeping in focus our
customers familial needs and hopes and the
loans can be extended up to 15 years.
Nabil Auto
Understanding our customers passion for
travel we have pioneered varied schemes for
auto loans with flexible repayment options
for a large variety of vehicles with diverse
schemes. Facilities to withdraw cash by
pledging vehicles in the banks name are
also available under the Cash for Car
scheme. The bank has revised the terms of
NabilAuto to cater to the entire need of the
customer that ranges from brand new
commercial and personal vehicles to used
personal vehicles to commercial vehicles.
Nabil Sikshya
Keeping in focus the growing numbers of
students we at Nabil have tailored trouble-
free and convenient education loans to the
students aspiring to pursue higher education
with the option of repayment in installments
or in full. This facility is not limited to
meeting the tuition fees of the students but it
is tailored to meet their other expenses like
boarding costs, travelling expenses,
consultancy fees and the like. Nabil is
recognized as one of the two banks for
financing higher education in Australia.
Personal Overdraft
This is a quick solution to our customers
immediate and contingent fund requirements
with the loan processes simplified and
expedited featuring convenient payback
facilities together with reinstating credit
lines.
 46
Nabil Bank Limited
03
DEPOSIT PRODUCTS
Nabil values its customers needs and
expectations and at different intervals comes
up with diverse deposit products with
competitive interest rates in the market
keeping in tone with their specific needs.
The fundamentals that make Nabil the bank
of choice for our customers are as follows:
 Nabil has a large network nationally and
internationally with good reputation.
 Nabil has a substantial capital base.
 Nabil harvests the trust and loyalty of its
customers and now with completion of
29 years of unabated banking in the
nation speaks up amply about this fact.
 Nabil is a technically savvied bank; and
its information technology is advanced
and thus it has an instantaneous global
connection.
 It is always keeping abreast of the latest
technical knowhow comes up with varied
deposit schemes.
Nabil has now the
following deposit products:
NABIL LOK BACHAT
With this scheme the customer can open a
deposit account with a minimum balance of
NRs.500 and can enjoy interest earnings
once his or her deposit crosses NRs.15,000.
The Lok Bachat scheme is reengineered to
inculcate banking habits across
socioeconomic stratums of society and for
small savers as well. Additionally,
prospective investors who need bank
accounts compulsorily for investing in an
initial purchase offer for share subscriptions
by an amount above a certain sum also can
avail of the option Nabil Lok Bachat offer.
NABIL BACHAT
This premier scheme provides a good return
on their deposits with a variety of services.
The minimum balance to open this account
is NRs.500 and the customers earn interests
once the minimum balance reaches
NRs.50,000 and above at all times. With
this scheme our customers can avail
themselves of Visa Electron Debit Cards, Any
Branch Banking Services (ABBS), Internet
Banking Service Nabil Net, Issuance of
Balance Certificates all free of charges.
NABIL BAL BACHAT
It is about encouraging saving habits of
minors (aged below 16 years). Indeed
parents want to see their childrens future
secured and to help our customers to that
end, the Bank has a special scheme for
children. The customers can open account
by depositing a minimum balance of
NRs.500 and earn interest once the balance
reaches NRs.15,000 and above at all times.
NABIL JESTHA MUDDATI AND NABIL
FIXED DEPOSITS
This scheme puts citizen aged 50 years and
above in focus and caters to meeting their
personal expenses and securing their savings
with a competitive interest rate. In addition
to this we have an exclusive scheme of Fixed
deposits on which the interest is paid on a
monthly basis.
NABILNARI BACHAT
Under this exclusive scheme female
accountholders are offered Visa Electron
Debit Cards exclusively designed and
dedicated for women offered by Nabil Bank
only in Nepal.
NABIL EDU SAVE
This product is designed to meet the specific
needs of students with double features: a
deposit product and other loan product. The
account can be opened with a minimum
balance of NRs.500 that attracts a host of
exclusive facilities, competitive interest rates,
and instant access to online banking
services, privileged education loans, free
check books, special discounts on Bank
drafts, Swift Transfer and much more.
CALL DEPOSITS
Nabil offers specially structured call deposit
schemes to our valued customers designed
considering their specific deposit needs.
PRIVILEGE LOUNGE
Specially tailored services in a queue free and
pleasant environment, our customers get a
special attention from a dedicated team of
Relationship Managers geared up to serve our
customers for their various banking services
and financial requirements and advices.
OTHER PRODUCTS AND SERVICES
Being pioneer of modern banking service
provider, we have taken digital culture at
next the level by providing entirely new
digital experience in the context of Nepalese
banking industry in the form of:
 Electronic online A/c opening form In
this form of A/c opening request, customer
simply needs to fill up online form attached
with recent photo ID and submit it online
into their desired branch location. Our basic
motto towards launching this is to give new
dimension to online banking and
conventional A/c opening approach.
 Nabil Business A/c Unlike other current
A/c we are not only targeting customers by
offering freebies & discounted rate on trading
activities but also providing electronically
processed transaction through the use of
high end technology in a smart & easy way.
 Smart Fixed Deposit This is a paperless
fixed deposit opening scheme, which has
various smart features.

03
CARD PRODUCTS
Nabil is one of the principal members of
internationally renowned payment agencies:
Visa Worldwide Inc., MasterCard Worldwide
Inc., Union Pay International (CUP) and
SmartChoice Technologies (P) Ltd. (SCT) and
employs with state-of-art technology. Nabil
provide online services, issues credit, debit
and prepaid payment cards under both Visa
and MasterCard brands that are accepted
directly for purchase of goods/services, cash
withdrawals and online payment
transactions through 3D secured e-
commerce payment solution. The rupee
cards are accepted over 500,000 merchant
outlets and 100,000 ATMs in Nepal and
India while the USD cards are accepted over
millions of merchant outlets and ATMs
worldwide. Nabil also accepts payment of
Visa, MasterCard, CUP and SCT brands of
cards issued by banks all around the world
through its wide network of ATMs &
merchant members across Nepal.
NABIL MASTERCARD INTERNATIONAL
CREDIT AND NABIL MASTERCARD
INTERNATIONAL PREPAID CARDS
Nabil MasterCard International credit card is
accepted at merchant outlets and ATMs
worldwide (except India) against the FCY
accounts maintained in Nabil. It is
exceptionally convenient mode of payment
and serves as a single currency across
borders while travelling to countries other
than India. Also, it offers interest free credit
period of 15 to 45 days. Nabil MasterCard
International Prepaid card is a convenient
mode of availing travel quota facilities
provisioned by foreign exchange regulations
of NRB. Carrying Nabil MasterCard
International Prepaid card is hassle free and
most preferred mode of payment unlike
Cash, Drafts or Travelers Cheques.
NABIL VISA AND MASTERCARD RUPEE
CREDIT CARDS
Nabil Visa and MasterCard Rupee Credit
cards are accepted for purchase of
goods/services, cash withdrawals and online
payment transactions through 3D secured e-
commerce payment solution throughout
Nepal and India. It offers a flexible
repayment option at the choice of
cardholders with interest free credit period of
15 to 45 days.
NABIL INSTALLMENT
Nabil installment is a supplementary service
introduced by Nabil Cards & e-Banking
Division for its rupee credit cardholders
because of its simplicity and easy access.
Nabil installment offers easy Equated
Monthly Installments (EMIs) at 0% interest
with minimum 6 to maximum 18 months
tenure for its credit cardholders for purchase
of goods with minimum purchase amount of
NPR 20,000/- to maximum NPR 200,000/-
from its selected merchant locations.
NABIL VISA ELECTRON DEBIT/
PREPAID CARDS
Nabil Visa Electron Debit and Prepaid cards
are the most reliable and convenient mode of
payment duly acknowledged by our valued
customers. Free from the hassles of limits,
interests, late payment fees and other
penalties any customer maintaining a bank
account with Nabil can subscribe to Nabil
Visa Electron Debit card. To simplify the
process further, NabilKoolCash known as
Nabil Visa Prepaid card can be availed
instantly at any of our branch without having
to open bank account with Nabil. Nabil Visa
Electron debit and prepaid cards are
accepted at merchant outlets and ATMs all
over Nepal and India.
47
ANNUAL REPORT 2012/13
NABIL ESECURE
Nabil Visa and MasterCard card members
(debit and credit) can now enjoy internet
shopping experience with their cards through
3D secured ecommerce payment solution
called Nabil eSecure. With Nabil eSecure,
card members can make payments for
internet transactions at merchant's website
easily after one time registration to Nabil
eSecure services and the transactions are
protected by card member chosen
passwords. Railway tickets, airlines tickets,
goods/services, hotel reservations, tour
packages and many more can be
conveniently and safely purchased with the
help of hassle free Nabil eSecure.
MOBILE COMMERCE
The utility of e-Commerce is growing
exponentially. With the intention of providing
all modern banking services to its customers,
Nabil has launched Mobile Banking service
called Nabil M-Bank. Nabil initiated mobile
recharging service through SMS for NTC
prepaid numbers. It offers Menu based
mobile commerce solution which allows our
valued customers to use their mobile set in a
simpler form in order to perform non
financial transactions like Balance Enquiry,
Mini Statement, Cheque Book Request, Full
Statement Request and Pin Change and
financial transactions such as Third Party
Fund Transfer (within Nabil Bank), payment
of Nabil Credit Card Bill, Purchase of NTC
Prepaid Mobile (Namaste) Recharge Card,
Purchase of NTC CDMA Mobile (Sky Phone)
Recharge Card, Payment of NTC Post Paid
Mobile Bill, Payment of NTC Landline Bill,
Payment of ADSL Bill and Merchant
Payment. The entire range of the above
services could be availed from both Ncell
and NTC mobile services.
48
Nabil Bank Limited

NABILNET
Through Nabils Internet Banking facility
NabilNet customers can bring the Bank
right to their homes and offices. Customers
ranging from individuals, NGOs, INGOs,
development agencies, and corporate houses
etc. can enjoy a host of services like
transferring funds, viewing account balances,
downloading and printing account
statements, payment of credit card bills,
payment of NTC/Ncell postpaid bills,
payment of NTC ADSL bills. Nabilnet is
highly secured and in order to make the
environment more secure it has initiated
publicizing awareness programs through
newspapers and is constantly updating its
products and services to serve banks valued
customers.

ATMS
Nabil has a large domestic network of 81
ATMs in the Kathmandu valley and outside
at locations like Birtamod, Damak, Itahari,
Khandbari, Dharan, Biratnagar, Birgunj,
Hetauda, Charikot, Narayangadh, Gorkha,
Beshisahar, Pokhara, Baglung, Butwal,
Bhalwari, Bhairahawa, Ghorahi, Tulsipur,
Nepalgunj, Dhangadhi, Janakpur,
Chandragadhi and Mahendranagar. These
ATMs serve customers 24 hours a day, 365
days a year. Nabil ATMs also accept credit
and debit card products of Visa, MasterCard,
China Union Pay and SCT. Further extension
of ATMs in various locations inside and
outside Kathmandu valley is still under
Nabils immediate business plan.
 49
ANNUAL REPORT 2012/13

03
REMITTANCE PRODUCTS

Nabils remittance products are a top-
quality and has a diverse and selected
service range designed to cater to the
different and exclusive requirements of our
valued customers capitalizing on its large
international network and branches at
different parts of the country.
WESTERN UNION
Nabil is one of the 8 principal agents and
the only bank agent for Western Union
Money Transfer Services in Nepal. Since
1999 Nabil is associated with Western
Union and now through 1,237 authorized
subagents located at different parts of the
country, Nabil ensures its services reach one
and all no matter what geographic regions
our customers come from.
NABIL REMIT
NABILREMIT is a project designed to cater
to domestic remittance services for money
transfers from one place to another in Nepal
and the bank has selected 1,263
NABILREMIT agents established in different
parts of the country that delivers domestic
money transfer services and the location
numbers have been increasing day by day.
DRAFT AND SWIFT TRANSFERS
Drafts and SWIFT transfers are some of our
expedited services our customers are
facilitated at branches through our different
renowned correspondent banks in India and
abroad. Nabil has been providing account
opening facilities to the Nepalese
expatriates and migrants in Qatar, UAE &
Bahrain.

03
BANCASSURANCE

This arrangement between the Bank and

insurance companies to sell insurance
products to the Banks customers benefits
mutually both at the same time. The Bank
acts as an agent for selling diverse
products/schemes under life and non-life
providing speedy and professional services
to the customer. Nabil, as always
pioneering in innovative products, has
commenced this product in 2010 through
arrangements with several insurance
companies with a distribution model
through its branches. Bancasurrance
Division coordinates with the insurers for
expeditious settlement of claims in
compliance with the standard procedures.
 50
Nabil Bank Limited
03
INVESTMENT BANKING / MERCHANT BANKING
Nabil Bank Limited with its mission to be
the 1st Choice Provider of Complete
Financial Solutions ventured into capital
market related activities and incepted its
Subsidiary Company Nabil Investment
Banking Ltd. (Nabil Invest) with CG Finco
Pvt. Ltd. as its Institutional Shareholder.
Nabil Invest is licensed by Securities Board
of Nepal (SEBON) to provide Merchant
Banking Services. Nabil Invest in its short
span of operation has established itself as
03
OTHER PRODUCTS/SERVICES
ANY BRANCH BANKING
SERVICES (ABBS)
In todays world, technology is paramount
and its role in a service industry like banking
is growing all the more in the twenty first
century. Nabil, realizing this fact has made
all its services and products technology
savvy. The objectives are always to ensure
Nabils products and services are accessible
to its customers no matter where they are
regionally located. With its IT connectivity
and core-banking software, Finacle, Nabils
uninterrupted 24 hours services and
products are reachable from all points of
representations be it branches or ATMs or
merchant establishments from Mechi to
Mahakali 365 days a year. Nabils customers
opening their accounts at one branch can
operate it from any Nabil branch across the
country hassle free. Since Nabils branch
network is extensive, customers are
privileged to enjoy their transactional needs
with ease and convenience.
one of the leading Merchant Bank and
targets to establish itself as a leading
Investment Bank introducing innovative
products and services in the Nepalese
capital market with strict adherence to
prevailing rules and regulations.
Nabil Invest renders its clients wide array of
services and also targets to introduce
innovative products/services which the market
demands over a period of time. The service
EXTENDED BANKING HOURS
Nabil has been extending "365 days banking
services" and "extended counter services"
from select branches to cater to the banking
needs of customers busy during regular
banking hours/days. Kantipath and Pulchowk
branches offer 365 days banking services
and extended counter services while many
more within and outside Kathmandu Valley
offer extended counter services.
BULLION OPERATIONS
Nabil has been importing gold and silver on
consignment basis and has now become one
of the credible names to cater the demand of
the domestic market. The Bank not only
caters its own clients but also renders
services to other Gold Importing Banks.
Further, in near future, the Bank is also
planning to sell gold and silvers in the small
quantity to its retail customers.
Nabil Invest currently renders includes
Management of Public Offers/Further Public
Offers/Right Issues, Underwriting, Registrar to
Securities (RTS), Portfolio Management
Services, Trusteeship Services, Depository
Participant (DP) services in a Central
Depository Services (CDS), Fund Manager &
Depository in Nabil Mutual Fund and
Corporate Advisory Services like Investment
Advisory, Valuation, Loan Syndication,
Mergers & Acquisitions etc.
NABIL TREASURY
Nabil Bank offers complete solution for
foreign exchange transaction need of its
customers. The bank is well equipped with
network of correspondents to offer real time
and competitive spot and forward rates. The
bank undertakes all FX activities as
permitted by the regulation to support its
customer business need.
 C R I S P

PROFESSIONAL
The experienced team with service attitude in the Bank over a stretch of 29 years
displays unrelenting professionalism the Bank practices. We have always honored
and valued the need of the customer and it has necessitated us to be perfect with
speed and accuracy while serving them. 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.
 04
GOVERNANCE

04
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 with six 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 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 shareholder 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 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
organization structure.
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.
Total thirteen board meetings were held
during the year. The following table shows
attendance of individual directors at the
meetings.

BOARD MEETING ATTENDANCE RECORD FOR YEAR 2012/13

The directors are from diverse business and
service backgrounds with varieties of ATTENDANCE SITTING FEES.
knowledge, experiences and expertise. The
entire board comprise of non-executive K B Manandhar 13/13 NRs.114,000
directors who, jointly or severally, do not take S P Poudyal 13/13 NRs.108,000
part in day to day management of banks D G Agrawal 13/13 NRs.104,000
business operations. The Board members K P Acharya 11/13 NRs.88,000
bring about an external perspective on
N Chaudhary 12/13 NRs.96,000
company affairs and provide constructive
M Ahmed1 6/13 NRs.48,000
suggestions to the CEO. The Board sets
strategic path for the organization, identifies A Sharma 10/13 NRs.72,000
business objectives, reviews managements S P Shrestha2 2/2 NRs.20,000
performance and provides guidance to the Total NRs.650,000
management towards achieving the targeted 1
In five meetings he was represented by his alternate director Mr. J P Kanoria.
goals and objectives. 2
Mr. Shrestha resigned from the Board in October 2012.

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 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. Position of professional director was
vacant during the year. None of the directors
has 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, Banking 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
53
ANNUAL REPORT 2012/13
with the required set of skills and acumen at
all times. The Board has consistently
demonstrated adequate knowledge and
expertise in its decisions.
The Banks 28th Annual General Meeting
held on 17th October 2012 re-elected Mr.
SP Poudyal and elected Mr. Ashish Sharma
as director representing Group C
Shareholders.
Similarly, Mr. D.G. Agrawal was appointed as
director representing Group A. Prior to this
he represented Group C shareholders in
the Banks board.
RELATIONS WITH
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.
 54
Nabil Bank Limited

04
BOARD COMMITTEES

Pursuant to Section 5 of NRB Unified Committee. Banks Head of Internal Audit is remuneration and reviewing that the
Directive No. 6 banks and financial the Secretary of the Committee. auditors actions in course of banks audit,
institutions are only allowed to constitute do not contravene with applicable laws and
board committees for Audit, Risk ROLE OF AUDIT COMMITTEE provisions.
Management and Human Resource The committees role is extensive and
Management. Any other committee can only strongly supports the board in dealing with AUDIT COMMITTEE
be constituted for specific purpose and for aspects of good corporate governance, ATTENDANCE RECORD
specified time duration. Following board internal control, risks management, financial
ATTENDANCE SITTING FEES.
committees were in function during the year: reporting, legal and regulatory compliance
and ethical conduct of business. - D G Agrawal1 8/8 NRs.72,000
1. Board Audit Committee (BAC) The Committees major responsibilities - K P Acharya 2/8 NRs.16,000
2. Risk Management Committee (RMC) include:
- A Sharma 2
4/4 NRs.32,000
- K B Manandhar3 4/4 NRs.40,000
MEMBERSHIP OF 1. Reviewing the Banks overall system
THE BOARD COMMITTEES of internal controls. Total NRs.160,000

DIRECTORS AUDIT RISK Committee Secretary attended all eight meetings

COMMITTEE MANAGEMENT
COMMITTEE
D G Agrawal
K P Acharya
N Chaudhary
A Sharma
CONVENER MEMBER
BOARD AUDIT COMMITTEE (BAC)
Audit Committee of the Bank is formed in line
with provisions of NRB Directives and the
Company Act. The Committee has been
functioning and discharging its duties and
responsibility in line with the provisions laid down
in Section 5 of NRB Directives 6/2069, Section
6 of NRB Directive 7/2069 and Sections 164
and 165 of the Company Act 2063.
Internal Auditors and Statutory Auditors have
direct access to the Audit Committee.
Currently director Mr. D G Agrawal is the
Convener and directors Mr. A Sharma and
Mr. K P Acharya are members of the Audit
2. Reviewing observations and
recommendations made in reports of
auditors (statutory, regulatory and
internal).
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
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 to the Board on
appointing statutory auditor, auditors
held during the year.
1
Mr. D G Agrawal attended first four meetings as a member
and remaining four meetings, beginning March 2013,
as Convener.
2
Mr. A Sharma attended four meetings beginning March
2013 as a member.
3
Mr. K B Manandhar attended four meetings as Convener
until October 2012 immediately before assuming the
position of chairman of the Board.
COMMITTEE ACTIVITIES
BAC meetings reviews and discusses a
number of internal audit reports, statutory
audit report and regulators inspection report
of the Bank. The committee updates the
Board of its actions by sending copies of its
minutes, which are discussed in Board
meetings. BAC issues recommendations for
strengthening banks system of internal
controls and its effectiveness in practice.
A number of agenda items were discussed in
the meetings and numerous
recommendations were given by the BAC for
strengthening overall risk management
systems of the Bank. For effective
discussions of the agenda, members from
senior management team of the bank were
also invited to BAC meetings on need basis.

AGENDA DISCUSSED DURING
MEETINGS
1. Report on Past Dues Corporate Loans &
Retail Lending for 12 months.
2. Status Report on Nostro Accounts for 12
months.
3. Audit Report on Reconciliation of Nostro
Accounts 2 reports.
4. Audit Report on Administration
Department 1 report
5. Audit Report on NPA Management 1
report
6. Audit Report on Center Processing Center
1 report
7. Audit Report on Central Accounts
Department 1 report
8. Audit report on import L/C at CTO
Teendhara 2 reports
9. Audit report on Operations of Branches -
45 reports.
10.Preliminary audit report of newly opened
Branch 1 report
11. Audit report on Corporate & SME
Banking of Branches - 34 reports.
12. Audit report on PLU of Branches - 35
reports.
13.Audit report on Export L/C at CTO 1
report.
14. Audit report on Guarantee Business at
CTO 1 report.
15. Audit report on Bancassurance Unit 1
report.
16. Audit report on Nabil Investment
Banking 1 report.
17. Audit report on Global Markets
Treasury 1 report.
18. Audit report on Corporate &
Infrastructure Accounts 1 report.
19. Audit report on PLU Lalitpur 1 report
20. Semi-Annual verification of Cash and
Cash Value Items of all Branches.
OTHERS
21. Review of Compliances and Branch
Responses on Audit reports - 109
reports.
22. Investigations & Inspections on Specific
Events.
23. Memorandum on Response to
Preliminary Audit Report (PAR) for the FY
2068/69.
24. Memorandum on Submission of Annual
Financial Statements of the Bank for FY
2068/69 (2011-12).
25. Memorandum on NRB Inspection Report
2069.
26. Memorandum on Revised SIMs, SIM on
CAS & NPA Management, SIM of
Corporate Communication Corporate
Social Responsibility unit.
27. Memorandum on Third Party Process
Audit undertaken by Paladion Networks
Pvt. Ltd. of M/s Electra Card Services
(ECS).
28. Memorandum on Reappointment of
Statutory Auditor for FY 2069/70
(CSC & Co.).
29. 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 2068-69.
30. Memorandum in relation to updates on
various investigations and inspections.
31. Certification of Unaudited Financial
Results as on 4th Quarter of FY 2068/69
(2011/12), 1st, 2nd and 3rd Quarters of
FY 2069/70 (2012/13).
32. Certification of Capital Adequacy Ratio
and Risk Weighted Assets of the Bank on
a monthly basis.
33. Half yearly review of Investment
Portfolio of the Bank as of 15.07.2012
and 13.01.2013.
34. Memorandum on Annual Audit Plan for
FY 2069/70.
35. Memorandum on Audit Programme for
1st, 2nd, 3rd and 4th Quarters of FY
2069/70.
36. Memorandum on Budget for FY
2070/71 (2013/14).
37. Memorandum on review of Stress
Testing conducted by the management
for Jestha end 2069 (FY 2068/69) and
1st, 2nd and 3rd Quarters of FY
2069/70.
RECOMMENDATIONS ISSUED
TO MANAGEMENT
1. Monthly review on past due loan
accounts and appropriate measures were
advised to the Management to deal with
and keep a watch on overdue loan
accounts.
55
ANNUAL REPORT 2012/13
2. Monthly review on status on old and
unreconciled items in the nostro
accounts of the Bank and appropriate
directions were given to the Management
for timely reconciliation.
3. Review of various investigations/
inspections carried out by Internal Audit
Department on the instruction of the
Audit Committee / Management and
suggested various precautionary
measures to be adopted by the Bank
Management.
4. Review the compliance of the branches in
regard to NRB directives, Banks credit
policy, internal rules & guidelines and
compliance of prevailing laws of the
country.
5. 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.
6. 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
the Management for compliance and
recommended the Board for adoption of
annual accounts of the Bank.
7. Review and discussions made on the
risks mitigation (such as business,
operations, regulatory, external etc.),
internal check and control and security
position in respect of Corporate
/ Infrastructure & Project Financing,
Branch Operations, PLU Business, CTO,
SME & Micro Lending, Treasury and
Correspondent Banking, CVD verification,
Nabil Investment Banking, Remittance
Business Unit, NPA Management,
Central Accounts and Administration,
Reconciliation of Nostro Accounts of the
Bank.
 56
Nabil Bank Limited
RISK MANAGEMENT
COMMITTEE (RMC)
Directors 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.
Besides, representation in the committee
from management, director Mr. K P Acharya
is the Convener and directors Mr. N
Chaudhary and Mr. D G Agrawal are
members of RMC. Banks Chief Risk Officer
is the Committee Secretary.
ROLE 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. RMC
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. RMC 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 (competitor's 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, RMC is responsible for
overseeing the risk governance structure and
monitoring the effectiveness of risk
management and internal control systems.
As advised by RMC, the management
ensures presence of strong risk governance
culture in the bank which guides its risk
strategies. Chief Risk Officer, member
secretary of RMC, 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 business areas
participate in RMC meetings and highlight
the key risks faced in their specific areas.
This helps the Board, together with RMC, to
ensure that a strong risk management frame
work is maintained. Following is the
attendance record of board members in the
RMC:
ATTENDANCE SITTING FEES.
- K P Acharya 5/5 NRs.48,000
- N Chaudhary 5/5 Nrs.40,000
- D G Agrawal 1
2/2 NRs.16,000
- K B Manandhar1 1/1 NRs.8,000
Total NRs.112,000
Committee Secretary attended all five meetings
held during the year.
1
Regulatory requirement requires the Convener of BAC to
be a member of RMC. Accordingly, in November 2012 Mr.
K B Manandhar attended one RMC meeting and beginning
April 2013 Mr. D G Agrawal attended two RMC meetings in
capacity of Convener of BAC.
 57
ANNUAL REPORT 2012/13

COMMITTEE ACTIVITIES
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 authority delegated by the
Board to the management.
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. Revision of following documents:
a. Credit Policy Guidelines revision
2013
b. Product Paper for Mortgage Loans
SME, Corporate and Infrastructure
c. Product Paper for Education Loan
d. Product Papers for Retail Loans
Housing, Mortgage and Personal
Overdraft
8. Internal Credit Risk Rating Model of the
Bank.
9. Credit Concentration reports, including top
exposures at borrower, group and sector
level.
The committee took note of the following 10. Need to cover review of specific risks
and issued appropriate instructions to the which otherwise may not be routinely
management. covered in ALCO meetings or in standard
1. Budget achievements and capital strength performance reviews. Succession
of the Bank. planning, for example, has been identified
2. Development in market conditions and as one such area.
likely impact on the Banks earning.
3. Recovery efforts and strategy pursued to Following each meeting, the Committee
regularize in large non-performing loan instructs necessary actions to the
accounts. management and reports to the Board,
4. Requirement of regular reporting informing of its decisions.
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.
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 review the Deprived Sector
lending norms such that our business
model is sustainable and the target end
user benefits the most from our lending.

The Bank equally takes account of

participation, transparency, and

accountability within the procedures and

structures by which risk related

decisions are made and implemented.

 58
Nabil Bank Limited
04
INTERNAL CONTROLS
Within NABIL, effective implementation and
monitoring of internal control system is the
responsibility of the Board. In doing so the
Board acts through the Boards Audit
Committee which 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.
Every aspect of our business involves some
degree of risk. Risk and reward are
inherently linked and each of our decisions
involves 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 need to mitigate adverse
consequences of taking risks. For this we
have implemented key procedures designed
in such ways to provide effective internal
controls across the organization. Such
procedures for continuous assessment,
identification, evaluation and management of
key risks have been in place throughout the
entire financial year.
Following were the key internal control
procedures in place during the year:
 The Board has delegated the authority to
operate banks business and assigned
responsibilities for regular functioning of
the Bank to CEO.
 The CEO is empowered to further
delegate the authority and assign
responsibility including specific business
targets to managers. The functional
responsibility line is clearly defined in the
organization structure.
 The primary responsibility for effective
practice of internal control procedures
rests on branches, strategic business
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
operational units at least once each year.
 It is the managements responsibility to
ensure that Internal Auditors
recommendations are implemented within
an appropriate and reasonable time
frame. Banks Audit Policy specifies 60
days period for closure of each audit
report from the date of its issue. This
involves review of each 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.
 Executive committee headed by CEO
comprise of SBU heads and heads of
other functional departments. Weekly
Xcom meeting reviews the Banks
performance and the developments in it
operating environment at length. It also
discusses measures to be taken for
improvement of operating system and
procedures. The issues related to Asset
and Liability management including risks
are discussed at ALCO that takes place
every month.
 Credit marketing unit and Credit risk unit
are independent. Credit marketing unit
conducts marketing activities and forward
credit proposal for approval. Then
onwards credit risk unit independently
analyze each credit proposal in light of
inherent and external risks involved in the
business. Under co-signing / dual
approval arrangement both marketing and
risk units have to approve each credit
proposal within their authority.
 Credit Administration and Support unit,
directly reporting to CRO and independent
from credit marketing and credit risk
functions, is assigned with specific
responsibilities of conducting periodic on-
site 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.
 The Board has delegated foreign currency
dealing and investment decision limits to
CEO. The CEO has further delegated the
authority to Chief Investment Officer,
Head of Treasury and individual dealers.
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.
 The CEO has approved a number of
Standard Instruction Manuals (SIM)
which, in essence, are standardized detail
procedural guidelines for specific areas of
banking business. Activities at all level
confirm to the procedures in SIM.
 Standard budgeting and variance
reporting mechanism is 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 four facets viz. financial;
product/service and customer
care/process and control and activities on
human resource. 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
centralized functional control over all
expenses of the Bank. All expenses within
the budget are approved by CEO upon
recommendation of management level
Financial Directive Committee. All
expenses in excess of budget are
approved by CEO on urgent basis and are
periodically placed before the Board for
its post ratification.
 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
Senior Manager - Operations. All
decisions on procuring IT equipment and
services are reviewed by IT Department
for technical feasibility beforehand.
 The Bank publishes notice, keep the
same in website, periodically for public
awareness in order to safeguard from
fraudulent activities through our internet
banking platform. Similar instructions are
regularly issued to all employees.
 Compliance unit, reporting directly to the
CRO, operates as guided by the Banks
Know Your Customer and Anti Money
Laundering policies. Reporting
mechanism requires branches to confirm
compliance to these policies. Transactions
above a threshold limit are periodically
reported to the Compliance unit which
scans and ensures compliance is
maintained at transaction level. All
statutory reporting requirements like
suspicious transaction report (STR) and
any other specific report are submitted to
concerned authority including NRB as per
the reporting provisions.
 Standardized mechanisms are in place for
business and operational units to
periodically report on business volumes
and outstanding balances with specific
reporting requirements on exceptional
transactions, overdue transactions, foreign
currency transactions, un-reconciled
balances, etc. Report generation is
automated in MIS. Reports are reviewed
at different levels within the management
and appropriate instructions are issued to
concerned operation managers.
 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), 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.
59
ANNUAL REPORT 2012/13
 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 Senior Manager
- Operations. 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 regular
basis.
 60
Nabil Bank Limited
04
EMPLOYEES
Good management of human resources is
critical for implementing business strategies
and meeting corporate goals. To this end,
careful attention and devotion from supervisor
level staff is 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, by nurturing talent,
sharing knowledge and putting in place strong
ethical practices while conducting Banks
businesses. 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.
The good practices that the bank has adopted
consistently have never been affected by the
growing size of HR strength. As at 15th July
2013 the Bank has employed 742
permanent employees and 528 contract
employees. Contract employees include 525
outsourced staff (clerical staff - 104 and
support staff - 421) and 3 staff under direct
contract with the Bank (support staff - 2 and
CEO). The following table provides level wise
permanent employees head count:
STAFF CATEGORY
Senior Manager*
Middle Manager
Officers
Assistants
Support Staffs
Total
* employees bearing corporate title AGM and above excluding CEO
Over the years we have witnessed that
employees are the ones shaping a high
performance culture. We encourage
managers to promote open communication
at all levels, both vertical and lateral.
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.
Our core corporate values CRISP Customer
Focused, Result Oriented, Innovative,
Synergistic and Professional are embedded in
our daily work culture. Operating in a service
industry we believe every action of ours
should create some value to our customers.
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 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
MALE FEMALE TOTAL
7 - 7
37 6 43
135 39 174
241 160 401
102 14 116
523 219 742
implemented point scoring based appraisal
rating system that endeavors objective
assessment of employees' performance
through 12 dimensions. Moreover, appraisal
allows appraisee staffs 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 one's abilities and growth potential.
Performance appraisal system is fair and
career progression is based on objective
assessment of ones performance and team
work. Placement transfer, job rotation, job
enrichment, 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.

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 the
basic and variable component 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 2013),
employees taxable income is taxed applying
the tax rates presented in the table below:
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 upto
NRs.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 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.300,000 for single and
NRs.375,000 for couple.
TAX ON REMUNERATION INCOME
TAX RATE
1%#
15%
25% 300,001 2,500,000
35%*
# 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.
61
ANNUAL REPORT 2012/13
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 500,000 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.258
million with NLWF in respect of staff bonus
allocated for up to Financial Year 2011/12.
In respect of undistributed staff bonus for
current financial year (2012/13), the Bank
will be depositing NRs.64.93 million at
NLWF.
ANNUAL INCOME SLAB NRS.
SINGLE COUPLE
200,000 250,000
200,001 300,000 250,001 350,000
350,001 2,500,000
Above 2,500,000 Above 2,500,000
 ABOVE LINE: LEFT TO RIGHT
Senior Deepak Shrestha, Head - Corporate Banking and Infrastructure
Management Mohan Subba, Head - Treasury
Rajesh Kumar Upadhyaya, Head - Information Technology
Team Jyoti Bahadur K.C., Head - Central Trade Operations
Gyanendra Pratap Shah, Sr. Relationship Manager, Corporate Banking
Anil Gyawali, Chief Executive Officer
Yagya Prasad Sharma, Branch Magager, Birgunj
Binaya Nath Neupane, Senior Credit Analyst
Rajendra Bahadur Malla, Head - PLU Credit
Praveen Raman Parajuli, CEO- Nabil Investment Banking
Anil Kumar Khanal, Chief Risk Officer
BELOW LINE: LEFT TO RIGHT
Krishna Dutta Bhattarai, Chief Finance Officer
Binaya Kumar Regmi, Chief Operating Officer
Sanjay Nepal, Sr. Relationship Manager, Corporate Banking
Saroj Pyakurel, Head - PLU
Namita Dixit, Sr. Relationship Manager, Infrastructure & Project Financing
Neelam Tuladhar, Head - Branches and Distribution Network
Neena Thapa, Head- Credit Risk Management
Gyaneshwor Acharya, Head SME
Ramesh Prasad Lohani, Head- Deposit Relation Management
 64
Nabil Bank Limited
04
CORPORATE SUSTAINABILITY
The banking institutions play an important
role in the economic development of a nation.
Banks collect scattered deposits and make it
available to the entrepreneurs seeking fund for
business activities. In doing so they provide
safety of the depositors, fair return to them
and equally support to establish, operate and
expand business ventures which otherwise
would not have been possible for the want of
funding. This has manifold benefits to the
nation which ignites production, distribution
and consumption in the country. The whole
economic system achieve much needed
multiplier effect through banks as they
promote capital formation, employment
generation, international trade and
government revenue.
Myriad of risks continually pose a threat to
the success of the Bank. At times, a bank
goes out of the scene if its business model
adopted is not sustainable. This requires
forward looking on the part of management,
where a business approach should be
considered on long term sustainability basis
which creates long term value to all the
stakeholders and equally by managing risks.
At Nabil we have always kept a longer term
perspective on our business. We also consider
aspects that are important in protecting social
values and environmental balances. We have,
long before, recognized that our business
goals are inseparable from the society and
environment where we operate in. The results
of our operations must be sowed back into
the environment and communities. This
approach has helped us achieve long term
shareholders value by profiting from positive
public perception, sustainable branding,
higher employee satisfaction and overall
productivity.
We ensure that our business goals continue to
remain sustainable through the following
initiatives.
TRANSPARENCY AND
GOOD GOVERNANCE
The transparency and good governance
practices are topmost priority for any
institution and the financial sector which runs
its business through the trust of public needs
to keep it at helm. The debacle of many big
enterprises pre and post financial crisis across
the globe has rightly portrayed the greater
importance of good governance practices. And
recent downfall of some of the financial
institutions in Nepal itself has given a good
lesson to all of us to embrace good
governance practices.
In Nabil, we have always thrived on
disclosing our business affairs transparently to
the public, regulators and to all its
stakeholders. The disclosure requirements
provisioned by the Nepal Rastra Bank through
guidelines and circulars, Companies Act,
Securities Exchange Act and Rules, Banks
and Financial Institutions Act, and Nepal
Accounting Standards are duly complied with
and are performed consistently at all times. In
addition, the information are adequately
provided to the statutory auditors, bank's
internal auditors and NRB Inspection team so
as to enable them to make fair assessment on
our operation and to form an independent
opinion in respect of bank's financial position
and performance. The Bank has always
considered the suggestions and feedbacks
from the auditors with highly positive and has
implemented recommendations as
appropriately. The bank firmly believes that
good corporate practices and transparency are
key ingredients for its long term sustainability
and thus is determined to inculcate a culture
of living up with high professional and ethical
standards across all levels.
CONTRIBUTION TO
NATIONAL ECONOMY
Our commitment of arranging finances to
national priority projects like those in
renewable energy sector and to export based
industries is high. We have also prioritized
financing on sectors that use local materials,
generate employment and replace imports.
Toward this end, the Bank, through the
separate division - Infrastructure and Project
Financing, has accounted big volume lending
in large sized national priority projects viz.,
hydro projects and cement industries. Retail
consumer loans that keep the domestic
economy vibrant and stable also occupies a
significant portion in our total lending
portfolio.
The recognition we hold from the national
treasury as one of the highest contributors in
the form of payments in taxes gives us a great
satisfaction. The proliferation of commercial
activities we have facilitated through
extending credit and arranging foreign trade
also generate significant tax revenues to the
government. And Nabil's regular contribution
to the government has been a feature in the
banking industry for last several years. In the
review year alone, we set aside a current tax
provision of NRs.947 million and deposited
NRs.937 million in the government's coffer.
Apart from this we also contributed NRs.6.7
million to the government in the form of
properties and vehicle taxes. Within our
national economy Nabil desires to function as
a great multiplier.
Contribution to government in any form is
extremely essential to build the nation and we
cherish this responsibility for our own
satisfaction and longevity.
SPREADING FORMAL
BANKING CHANNELS
It is a well accredited fact that middle and
low income group constitute major portion of
our communities. As a leading commercial
bank we acknowledge we have a role in
bringing this segment into the formal banking
ambit. To maintain a focus on this segment

we have constituted a separate SME and
Microfinance division. This division is
specialized in catering to the specific financial
requirements of fresh entrepreneurs and the
growth aspirants.
Our SME project is implemented through all
our branch offices. With our focused approach
relationship managers in the branches share
best business practices and management
skills with the customers and motivate them
for achieving better and higher in order to
ensure success of such entrepreneurial
ventures. As a financing partner our
contribution has increased economic activities
at local level generated employment, fostered
investment and increased consumptions.
Our Microfinance project is operated through
selected partner organizations (MFIs) viz.
microfinance institutions, cooperatives and
non-governmental organizations working as
financial intermediaries. We have also
invested on promoter equity in selected MFIs
and extended our managerial expertise
through representation on their Board. We
have also extended credit to Youth Self
Employment Project of the government. Our
target end users are economically
disadvantaged population and they receive
micro credit through our partner organizations
to which we are extending credit in bulk to
these MFIs. These initiatives are intended for
self-employed income generating activities or
small businesses with which the aspirants
having skills and energy do not deprive of
financial need and make their living standard
up-graded.
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. Financing
these activities give a kind of satisfaction and
make the life of common people easier and
disciplined. Buying a house with own money
for a salaried person may need him to wait for
decades, whereas bank can meet the
requirement of the person to own a house and
extend the credit for a period as high as 15-
20 years, who on installment can pay off the
loan gradually and enjoy a decent life with
comfort and ease.
All these drives must have brought the larger
mass into banking net and have increased
their contribution accounted in the national
economy.
ENVIRONMENTAL INITIATIVE
Environment is one of the crucial aspects that
we need to look it seriously in order to
preserve, protect and improve if possible for
the generations to come. Global warming,
climate change, drying up of water resources,
extinction of many species of flora/fauna and
seasonal odds have now become regular
headlines across the globe which perhaps is
the outcome of adverse human actions.
To neutralize the impacts of our adverse
actions, we are committed towards facilitating
for development of clean and renewable
energy projects. Some of the initiatives we
have undertaken as of date amply speak of
our priorities. By mid-July 2013 we have
arranged a total financing commitment of
NRs.5.95 billion for construction of a number
of hydropower projects. Projects where we
have participated as financing partners hold a
combined installed capacity of 148.93
Megawatt of clean energy. In our daily
business operations we have reduced
consumption of paper, water and fossil fuel
energy through application of technological
developments and energy efficient
equipments. Investments in Core Banking
System, Management Information System and
various application software have helped us
reduce paper consumption to a greater extent.
Up-gradation in our e-banking channels
including mobile, internet and cards have
allowed our customer to execute a number of
banking transactions without visiting our
offices thereby saving significant time and
energy which would otherwise have been
consumed. We believe our small steps will
pave the way for great leap for entire mankind
as we go along with the concept.
HUMAN RESOURCE
MANAGEMENT
Human resources are the drivers of banks
success. Employees, as stakeholders, are core
to every activities as their serving attitude and
perfect job knowledge creates value for the
65
ANNUAL REPORT 2012/13
customer and ultimately for the bank. We
encourage a learning culture throughout the
organization and motivate them through
enrollment in various training programs for
upgrading their job skills, personality
development and emotional intelligence.
We equally implement excellent
compensation and benefits to the employees
instilling in them the vital feeling of social and
financial security for them, their children and
their families. During the review period, Nabil
incurred a cash remuneration of NRs.638
million towards its employees while it also set
aside NRs.316.3 million as bonus. Apart
from cash remuneration, the bank has also
provisioned loan facilities at concessional
rates to all the staffs and vehicle facilities to
managerial level staffs. The Bank has also
prioritized in providing required infrastructure
and internal ambience so that employees
could discharge their duties at comfort
thereby delivering results with efficiency and
with increased productivity.
Nonetheless, at the end of the day whatever
we compensate, it is the talent, the skill, the
maturity and dedication of staff that
determines the result. We promote this
culture in the bank and provide opportunities
to instill it in all the employees. Till date, the
bank's employees by and large have set a
high standard of efficiency and thus we have
been reaping the benefits for years. Moreover,
financial industry has also been the
beneficiary of resource pool which comprised
of many individuals who at some point of
time had been associated with Nabil as a
staff member.
The results of our Employee Survey 2013
indicated very high degree of employee
commitment and expressed satisfaction over
the career development. Employees also
expressed high ratings for their present job
experience and organizational leadership. The
Bank understands these as essential drivers of
success and long term sustainability.
 66
Nabil Bank Limited
04
CORPORATE SOCIAL RESPONSIBILITY
The basis of the very existence of a corporate
body lies in creating values and then sharing
the values with its stakeholders. In a broader
perspective, stakeholders do not only entail
shareholders but encompass a larger
spectrum that include employees,
depositors, borrowers, creditors, regulators,
business partners and the general public.
The institutions like banks interact
extensively with these stakeholders and it is
very common to expect sharing of fair values
by the stakeholders. Nabil reveres such
expectation and feels a moral duty to share
created value fairly with the stakeholders.
The sharing of value generally happens to be
the compensation of value received which
could take form of capital or services.
However at times we share our value with
our stakeholders, particularly the
philanthropic institutions or individuals
working for noble cause, with no such
expectation of value in exchange or in
monetary terms. Such contribution has been
an essential part of Nabil's business which is
evident through its involvement and
partnerships with various institutions on
different occasions from the last so many
years.
During the year 2012-13, the Bank entered
into a three years partnership with the
International Centre for Integrated Mountain
Development (ICIMOD) for improving
facilities at the ICIMOD Knowledge Park at
Godavari. The ICIMOD is engaged in
betterment of the livelihoods of people
residing in hilly and mountainous areas
through knowledge sharing and cooperation
thereby enabling sustainable and resilient
mountain development. With improvement
in facilities, the immediate beneficiaries like
farmers, researchers, students and
development practitioners are likely to get
immense benefit from the park. The Bank
has contributed NRs.1.35 million to ICIMOD
and for this it has recognized the Bank as its
Gold Partner.
In addition, the Bank has also made
contribution of NRs.100K for environmental
awareness event organized by Alternative
Energy Promotion Centre (AEPC). As a part
of Government's program to disseminate and
promote clean cooking solutions to 3 million
households by 2017, the AEPC organized
the "Clean Cookstove Market Place 2013"
event during Mid of July 2013. The event,
which consisted of seminar, expo and field
visit was participated by international
entrepreneurs, national entrepreneurs,
investors, bankers, development partners
and policy makers. Such events are stepping
stones towards achieving broader goals
formulated specifically for the protection of
environment and Nabil is privileged for being
part of such noble objectives by any means.
Apart from this, the Bank also provided
NRs.200K for organizing an orientation
program on "Zero Budget Natural Agriculture
Farming" by the Commercial Agriculture
Alliance (CAA). CAA is a non-profit making
company incorporated to promote
commercial agriculture in Nepal by
developing alliance with the agricultural
stakeholders. Commercial agriculture is
something that Nepal should look seriously
for future since majority of its citizens still
rely heavily on agriculture for their livelihood
and more importantly Nepal has not become
independent on food as of date. Recent
figures on import and export figures (NRs.
20 billions vs. NRs.10 billions in year 2012-
13) of agricultural produce substantiates this
fact. We believe such programs will
ultimately help in educating concerned
stakeholders and motivate for doing
commercial farming on large scale.
Furthermore, the Bank has contributed
NRs.300K for constructing Traffic Police
Office Building at Durbar Marg and
NRs.120K to bear the educational cost of
one girl child at Shree Gargi Kanya Gurukul
Pratisthan. The shuttle service to the doctors
volunteering their service at free health
camps organized weekly at Indrawati
Community Health Centre, Sipaghat Dhat
Khola, Sindhupalchowk, Nepal were also
continued during the year.
These all speak plenty about Nabils selfless
commitment towards society it is part of. As a
matter of creating a strong bond with the
society, Nabil will strive on doing everything it
is capable of. It would be of great delight
doing something commendable towards the
society, whether explicit or implicit, through
creation of values in partnership with one and
all for the community. In the days to come,
the Bank's major CSR objectives would be
directed towards regeneration of environment
and economic prosperity of deprived and
disadvantaged groups of the nation.
 67
ANNUAL REPORT 2012/13

Nabil Bank and ICIMOD

partner to promote
sustainable green
technologies and biodiversity
conservation. Mr. Anil
Gyawali, CEO of Nabil Bank
(R) handing over cheque to
Dr. David Molden. Director
General of ICIMOD

Nabil Bank provided

financial assistance to
Traffic Police for
construction of their office
building at Durbarmarg. Mr.
Anil Gyawali, CEO of Nabil
Bank(2nd from Right)
handing over a cheque to
Mr. Sitaram Hachhethu,
coordinator of Traffic Police
Building Construction
Committee (3rd from Left)

Nabil Bank's token support

to Shree Gargi Kanya
Gurukul Pratisthan for
educating girls. Mr. Anil
Gyawali, CEO of Nabil Bank
(2nd from Right) handing
over a cheque to Mrs. Angur
Baba Joshi, Senior Social
Worker & Founder Patron
(3rd from Left)
68
Nabil Bank Limited

Director, Mr. Shambhu Prasad

Poudyal and Nabil Union President,
Mr. Purna B Bhat with Nabil Union
officials and staff members during
a program organized for handing
over relief materials and cash
collected for Far Western Region
Flood Victims.

Staff members participating

in blood donation program
organized by Nabil Union.
 69
ANNUAL REPORT 2012/13

Nabil Cricket Team during Soaltee Crown Plaza

Super Six Cricket Tournament.

Nabil Badminton team during a tournament.


05
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 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 together read 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 2013
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 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
05
FINANCIAL
STATEMENTS AND
OTHER INFORMATION
1 Presentation and Preparation of Financial
Statements and Section 109(2) of Companies
Act 2006 require companies to prepare
financial statements that achieve 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;
make judgements 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 the going concern
basis unless it is not appropriate. Since the
directors are satisfied that the Group and the
Bank have the resources to continue in
business for the foreseeable future and there
are no indicators that casts the Banks and its
subsidiarys going concern assumption in
doubt, the financial statements is continued to
be prepared on the going concern basis. It is
fundamental that the directors are also
responsible for keeping adequate accounting
records that are sufficient to show and explain
the parent companys transactions and
disclose with reasonable accuracy at any time
the financial position of the parent company
and enable them to ensure that its financial
statements comply with the NAS. Section 1(7)
of Directive 6 of NRB Unified Directives 2012
specifies the requirement of maintaining
records of transactions up-to-date at all times.
Moreover, it restricts the directors to
add/modify official accounting records in the
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 three 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.
On behalf of the Board
Krishna Bahadur Manandhar
Chairman

05
DISCLOSURE OF INFORMATION
UNDER SECTION 109(4) OF COMPANIES ACT 2006
a. Business review of last year - This has
been disclosed under sections C.
Achievement of Current Year under 02.
Operating and Financial Review of the
Directors Report.
b. Any impact that caused to the business of
the Company due to national and
international condition Nepal being import
based economy, depreciation of NPR in
comparison to foreign currencies has
contributed to push inflation rates further as
national consumer price index surged to 9.9%
in comparison to 8.3% of last year. This has
adversely affected national economy as well as
the entire banking industry. Huge trade deficit,
suppressed GDP growth and intense
competition are some of the impediments in
robust growth of the business.
Prolonged power crisis, rising cost of
petroleum products due to significant
depreciation of NPR and effects of rising
inflation all have contributed to increasing cost
of operations.
c. Current years (2013/14) achievement
until the date of preparation of Report from
the Directors and Board of Directors view on
future activities of the Company:
The adverse impact of political deadlock,
excessive liquidity in some period and liquidity
crunch during some period and challenges of
limited investment opportunities in the review
year 2012/13 is likely to continue in the
financial year 2013/14. In the absence of new
policies and attractive programs that will lure
growth in investments, the possibilities on
growth of business activities is also not likely.
Similarly, policy changes on multiple banking
facilities, interest spread on investments and
deposits are also likely to bring challenges to
the banking community. There is also a
likelihood of adverse impact on the income
deriving from Non Deliverable Forwards.
Further, due to higher number of banks and
financial institutions, the banks' operations
and expansions are also likely to become more
competitive and challenging than ever.
In the mean time, your Bank has managed to
achieve very good result in the first four
months. The Bank's operating profit (before
loss provision) in the first four months is
NRs.1,216.6 million, which is higher by
NRs.106 million or 9.02% in comparison to
the profit during the same period of review
year 2012/13. In addition, the growth under
deposit is 10.6% or NRs.6.76 billion than the
Mid July, 2013 while growth under loans and
advances is 3.5% or NRs.1.65 billion than the
Mid July 2013. The major challenges during
the year 2013/14 for the Bank are to maintain
the quality of asset, manage liquidity and raise
loans and advances to expand the income.
Despite challenges in economic and social
outlook, the Bank shall endeavor to maintain
the growth rate of earlier years in the current
financial year as well.
In line with the mission of becoming "First
Choice Provider of Complete Financial
Solutions" the Bank like in the earlier years
shall utilize the resources spread across the
nation effectively to give optimum return to the
investors, thereby creating direct and indirect
employment and also assisting in the nation
building through the contribution to the
national coffer to achieve Bank's broader
goals. The Bank will always make a persistent
effort to contribute in the sectors prioritized by
the nation. In this connection, the Bank in
addition to enhancing the quality of the
services, it shall also increase investments in
productive sectors, agriculture sector and
energy sector. Further, the Bank shall also
71
ANNUAL REPORT 2012/13
formulate strategies to initiate on
implementing technology based services and
penetrate newer markets.
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
the 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 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 A.5 Changes in
the Board under 05. Governance.
f. Main factors that affect business activities:
1. Increased Competition
2. Adverse political environment that affect
stability in the business
3. Lack of investment growth opportunities
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.40 per share cash dividend
and NRs.25 per share stock dividend (at the
rate of 1 share for every 4 shares).
 72
Nabil Bank Limited

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 2012/13 and the position of the
same at the end of fiscal year Disclosed in C.
Achievement of Current Year and H. Financial
position and performance of Nabil Invest under
02. 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 Merchant banking
activities like IPO management, wealth
management, securities underwriting, mutual
fund scheme management, depository
participant's service and share registrar service.
No changes in the transactions of the Bank
and its subsidiary company except launching
of Mutual Fund Scheme - Nabil Balance Fund
- 1 during year 2012/13.
l. Any information given to the Company by
its principal shareholder (who holds 5% 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. DIRECTOR AND OFFICIALS OWNERSHIP

Director 2663 Mr. Shambhu Prashad Poudyal 3930

Director 90 Mr. Dayaram Gopal Agrawal 2343
Director 14990 Mr. Krishna Prasad Acharya 84
CEO 464 Mr. Anil Gyawali 4047
Manager 8258 Mr. Kanhaiya Lal Rajwant 70
Manager 5076 Mr. Rajeshwor Lal Shrestha 192
Manager 5761 Mr. Yagya Prasad Sharma 246
Manager 4852 Mr. Yugesh Lal Bijukchhe 490
Manager 2174 Ms. Neena Thapa 662
Manager 4866 Mr. Deepak Shrestha 742
Manager 4804 Mr. Binaya Regmi 891
Manager 4733 Mr. Rajendra Bahadur Malla 4077
Manager 4821 Mr. Iswar Man Shrestha 4552
Manager 4773 Mr. Babu Ratna Bajracharya 596
Manager 8898 and 11391 Mr. Jaya Krishna Shrestha (248 and 706 units) 954

SHARES ACQUIRED DURING 2012/13

Officer 5367 Mr. Kamal Prasad Lacaul 623

Officer 5817 Mr. Prakash Basukala 202
Officer 17242 Mr. Rajeev Shrestha 26
Officer 18058 Mr. Niraj Rajbhandari 93
Officer 13694 Mr. Purna Dev Karanjit 98

Shares disposed during 2012/13

Officer 15011 Mr. Keshab Raj Subedi 100


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 share 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 C. Internal Control under 05.
Governance.
q. Details of management expenses incurred
during the year Disclosed in Schedule 23
Personnel Expense and Schedule 24 Office
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 15th July 2013, the committee had
following members
1. Director D G Agrawal Convenor
2. Director K P Acharya Member
3. Mr. Ashish Sharma Member
Apart from sitting fee 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 point B.2.3
and B.2.4 under 05. Governance.
s. Dues payable to the Company by any
director, MD, CEO, principal shareholders
(holding share more than 5%) or their
relatives or firms or institutions in which they
have their involvement (interest) Disclosed
in Schedule 29 of the financial statement.
73
ANNUAL REPORT 2012/13
t. Remuneration, allowances and benefits
paid to director, MD, CEO and officials
Disclosed in Point 9 Related Parties
Disclosures of Schedule 33 Notes to
Accounts of the financial statement.
u. Uncollected dividend by the shareholder
NRs.41,097,769.
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.
 75
ANNUAL REPORT 2012/13

Consolidated Balance Sheet

as at 15 July 2013 (31 Ashadh 2070)

CAPITAL & LIABILITIES THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Share Capital 3,046,051,750 2,435,723,280

2. Reserves & Surplus 3,661,043,984 3,017,916,565
3. Non Controlling Interest 33,213,885 30,336,486
4. Debentures & Bonds 300,000,000 300,000,000
5. Borrowings - 311,080,000
6. Deposits 63,506,102,707 54,905,676,208
7. Bills Payable 529,597,845 179,142,358
8. Proposed Dividend 974,736,560 811,907,760
9. Income Tax Liabilities 66,872,707 51,106,490
10. Other Liabilities 1,225,973,710 1,207,599,073
Total 73,343,593,148 63,250,488,220

ASSETS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Cash Balance 1,140,212,319 1,050,668,504

2. Balance with Nepal Rastra Bank 4,789,295,130 3,681,980,327
3. Balance with Banks/Financial Institutions (32,108,638) (438,602,825)
4. Money at Call and Short Notice 1,634,306,157 826,435,677
5. Investment 16,344,425,612 14,069,965,792
6. Loans, Advances and Bills Purchased 46,369,834,571 41,605,682,634
7. Fixed Assets 878,461,243 894,495,291
8. Non Banking Assets - -
9. Other Assets 2,219,166,754 1,559,862,820
Total 73,343,593,148 63,250,488,220

Anil Gyawali K. B. Manandhar S. P. Poudyal D. G. Agrawal K. P. Acharya As per our report of even date.
Chief Executive Officer Chairman Director Director Director

Krishna Bhattarai N. Chaudhary Ashish Sharma M. Ahmed CA. L. D. Mahat

Chief Financial Officer Director Director Director Partner
CSC & Co.
Chartered Accountants

DATE: 06th September 2013

PLACE: Nabil Centre, Durbar Marg, Kathmandu
 76
Nabil Bank Limited

Consolidated Profit and Loss Account

For the period 16 July 2012 to 15 July 2013 (1 Shrawan 2069 to 31 Ashadh 2070)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Interest Income 5,721,105,506 6,138,866,625

2. Interest Expense 2,186,300,942 3,152,940,354
Net Interest Income 3,534,804,564 2,985,926,271
3. Commission and Discount 405,474,783 367,676,396
4. Other Operating Income 222,385,463 207,295,626
5. Exchange Income 489,051,079 447,070,485
Total Operating Income 4,651,715,889 4,007,968,778
6. Staff Expense 652,362,895 505,008,894
7. Other Operating Expense 475,903,506 432,880,991
8. Exchange Loss - -
Operating Profit before Provision for Possible Losses 3,523,449,488 3,070,078,893
9. Provision for Possible Losses 27,450,911 413,948,680
Operating Profit 3,495,998,577 2,656,130,213
10. Non Operating Income /(Expense) 6,058,572 9,939,751
11. Provision for Possible Losses Write Back 24,727,701 -
Profit from Regular Activities 3,526,784,850 2,666,069,964
12. Income/(Expense) from Extra-ordinary Activities (17,454,214) (3,036,749)
Profit from All Activities 3,509,330,636 2,663,033,215
13. Provision for Staff Bonus 319,077,852 243,074,316
14. Provision for Income Tax 958,123,456 723,698,440
Current Tax 954,532,945 731,904,979
Prior Period Tax 5,791,658 -
Deferred Tax (2,201,147) (8,206,539)
15. Share of Non-Controlling Interest in the Profit of Susbsidiary 5,443,068 2,769,072
Net Profit/(Loss) 2,226,686,260 1,693,491,387

Anil Gyawali K. B. Manandhar S. P. Poudyal D. G. Agrawal K. P. Acharya As per our report of even date.
Chief Executive Officer Chairman Director Director Director

Krishna Bhattarai N. Chaudhary Ashish Sharma M. Ahmed CA. L. D. Mahat

Chief Financial Officer Director Director Director Partner
CSC & Co.
Chartered Accountants

DATE: 06th September 2013

PLACE: Nabil Centre, Durbar Marg, Kathmandu
 77
ANNUAL REPORT 2012/13

Consolidated Profit & Loss Appropriation Account

Fiscal Year 2012/13 (2069/2070)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

Income
1. Accumulated Profit up to Last Year (Restated Balance) 562,584,391 498,933,103
2. Current Year's Profit 2,226,686,260 1,693,491,387
3. Exchange Equalization Fund - -
4. Capital Adjustment Reserve - -
5. Deferred Tax Reserve - -
6. Investment Adjustment Reserve - -
7. Dividend Equalisation Fund - -
8. Contingent Reserve 400,000 226,430
Total 2,789,670,651 2,192,650,920

Expense
1. Accumulated Loss up to Last Year - -
2. Current Year's Loss - -
3. General Reserve 444,000,000 340,000,000
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 974,736,560 811,907,760
9. Proposed Stock Dividend (Bonus Shares) 609,210,350 405,953,880
10. Special Reserve Fund - -
11. Exchange Fluctuation Fund 24,000,000 28,800,000
12. Capital Redemption Reserve - -
13. Capital Adjustment Fund - -
14. Deferred Tax Reserve 2,154,126 8,193,129
15. Investment Adjusment Reserve 12,191,027 34,211,760
Total 2,067,292,063 1,630,066,529
16. Accumulated Profit/(Loss) 722,378,588 562,584,391

Anil Gyawali K. B. Manandhar S. P. Poudyal D. G. Agrawal K. P. Acharya As per our report of even date.
Chief Executive Officer Chairman Director Director Director

Krishna Bhattarai N. Chaudhary Ashish Sharma M. Ahmed CA. L. D. Mahat

Chief Financial Officer Director Director Director Partner
CSC & Co.
Chartered Accountants

DATE: 06th September 2013

PLACE: Nabil Centre, Durbar Marg, Kathmandu
Consolidated Statement of Changes in Equity 78
For the period 16 July 2012 to 15 July 2013 (1 Shrawan 2069 to 31 Ashadh 2070)

PARTICULARS SHARE CAPITAL ACCUMULATED GENERAL PROPOSED CAPITAL SHARE CONTINGENT DIVIDEND CAPITAL EXCHANGE INTEREST DEFERRED INVESTMENT TOTAL
PROFIT/(LOSS) RESERVE BONUS SHARE RESERVE PREMIUM RESERVE EQUALIZATION ADJUSTMENT EQUALIZATION SPREAD TAX ADJUSTMENT AMOUNT
Nabil Bank Limited

FUND FUND RESERVE FUND RESERVE RESERVE RESERVE

Balance as on 16 July 2012 2,029,769,400 569,468,654 2,176,500,000 405,953,880 - 74,000 13,273,570 - - 126,300,000 2,578,000 42,575,441 94,031,164 5,460,524,109
Changes in Accounting Policy - - - - - - - - - - - - - -
Bonus Share issued 405,953,880 - - (405,953,880) - - - - - - - - - -
Fraction Share Adjustment
from Cash Dividend 1,118,120 - - - - - - - - - - - - 1,118,120
Error adjustment - (6,884,263) - - - - - - - - - - - (6,884,263)
Changes in Tax Accounting Policy - - - - - - - - - - - - - -
Adjustments in Fixed / Other Assets - - - - - - - - - - - - - -
Refund of Dividend Income
as per the Instruction of NRB - - - - - - - - - - - - - -
Restated Opening Balance 2,436,841,400 562,584,391 2,176,500,000 - - 74,000 13,273,570 - - 126,300,000 2,578,000 42,575,441 94,031,164 5,454,757,966
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 - 2,226,686,260 - - - - - - - - - - - 2,226,686,260
Adjustments: - - - - - - - - - - - - - -
Issuance of Share Capital - - - - - - - - - - - - - -
Deficit on Revaluation of Properties - - - - - - - - - - - - - -
Surplus on Revaluation of Properties - - - - - - - - - - - - - -
Cash Dividend - (974,736,560) - - - - - - - - - - - (974,736,560)
Proposed Stock Dividend - (609,210,350) - 609,210,350 - - - - - - - - - -
General Reserve Fund - (444,000,000) 444,000,000 - - - - - - - - - - -
Contingent Reserve - (1,000,000) - - - - 1,000,000 - - - - - - -
Equivalent amount of medical expense
under Hospitalization Scheme - 400,000 - - - - (400,000) - - - - - - -
Dividend Equalization Fund - - - - - - - - - - - - - -
Capital Adjustment Fund - - - - - - - - - - - - - -
Exchange Fluctuation Reserve - (24,000,000) - - - - - - - 24,000,000 - - - -
Interest Spread Reserve - - - - - - - - - - - - - -
Deferred Tax Reserve - (2,154,126) - - - - - - - - - 2,154,126 - -
Investment Adjustment Reserve - (12,191,027) - - - - - - - - - - 12,579,096 388,069
Closing Balance 2,436,841,400 722,378,588 2,620,500,000 609,210,350 - 74,000 13,873,570 - - 150,300,000 2,578,000 44,729,567 106,610,260 6,707,095,735
 79
ANNUAL REPORT 2012/13

Consolidated Cash Flow Statement

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

(a) Cash Flow from Operating Activities 1,634,682,264 3,504,297,743

1. Cash Received 6,507,803,903 6,960,784,041
1.1 Interest Income 5,399,592,282 5,866,808,864
1.2 Commission and Discount Income 350,245,632 419,236,920
1.3 Income from Foreign Exchange Transaction 512,714,664 447,070,485
1.4 Recovery of Loan Written Off 10,441,593 16,770,964
1.5 Other Incomes 234,809,732 210,896,808
2. Cash Payment (4,357,987,973) (4,709,192,637)
2.1 Interest Expenses (2,186,417,719) (3,154,542,659)
2.2 Staff Expenses (880,256,345) (508,569,523)
2.3 Office Operating Expenses (348,020,879) (304,303,047)
2.4 Income Tax Paid (943,240,498) (724,976,186)
2.5 Other Expenses (52,532) (16,801,222)
Cash Flow before changes in Working Capital 2,149,815,930 2,251,591,404
(Increase)/Decrease in Current Assets (9,135,643,762) (2,412,117,132)
1. (Increase)/Decrease in Money at Call and Short Notice (807,870,480) 1,626,076,101
2. (Increase)/Decrease in Other Short Term Investment (2,873,822,930) 173,944,342
3. (Increase)/Decrease in Loans, Advances and Bills Purchase (4,805,605,359) (3,965,286,395)
4. (Increase)/Decrease in Other Assets (648,344,993) (246,851,180)
Increase/(Decrease) in Current Liabilities 8,620,510,096 3,664,823,471
1. Increase/(Decrease) in Deposits 8,600,426,499 5,221,899,862
2. Increase/(Decrease) in Certificates of Deposits - -
3. Increase/(Decrease) in Short Term Borrowings (313,080,000) (1,315,519,178)
4. Increase/(Decrease) in Other Liabilities 333,163,597 (241,557,213)
(b) Cash Flow from Investment Activities 776,650,153 (1,058,810,249)
1. (Increase)/Decrease in Long-term Investment 611,411,009 (1,188,558,463)
2. (Increase)/Decrease in Fixed Assets (108,879,254) (88,247,024)
3. Interest income from Long term Investment 269,042,367 197,670,874
4. Dividend Income 13,178,465 20,324,364
5. Other (8,102,434) -
(c) Cash Flow from Financing Activities (807,979,612) (609,991,078)
1. Increase/(Decrease) in Long term Borrowings (Bonds, Debentures etc) - -
2. Increase/(Decrease) in Share Capital* 1,118,120 -
3. Increase/(Decrease) in Other Liabilities - -
4. Increase/(Decrease) in Refinance/facilities received from NRB - -
5. Dividend Paid (809,097,732) (609,991,078)
(d) Income/(Loss) from change in exchange rate in Cash & Bank balance - -
(e) Current Year's Cash Flow from All Activities 1,603,352,805 1,835,496,416
(f) Opening Cash and Bank Balance 4,294,046,006 2,458,549,590
(g) Closing Cash and Bank Balance 5,897,398,811 4,294,046,006
*Increment in share capital by virtue of issuance of bonus shares have not been reflected.
However, fraction share adjusted with Cash Dividend is disclosed as increment.
 80
Nabil Bank Limited

Balance Sheet
as at 15 July 2013 (31 Ashadh 2070)

CAPITAL & LIABILITIES SCHEDULE THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Share Capital 1 3,046,051,750 2,435,723,280

2. Reserves & Surplus 2 3,643,092,761 3,008,277,828
3. Debentures & Bonds 3 300,000,000 300,000,000
4. Borrowings 4 - 311,080,000
5. Deposits 5 63,609,808,199 55,023,695,253
6. Bills Payable 6 529,597,845 179,142,358
7. Proposed Dividend 974,736,560 811,907,760
8. Income Tax Liabilities 66,872,707 51,106,490
9. Other Liabilities 7 1,071,099,849 1,072,481,023
Total 73,241,259,671 63,193,413,992

ASSETS SCHEDULE THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Cash Balance 8 1,140,212,319 1,050,658,504

2. Balance with Nepal Rastra Bank 9 4,789,295,130 3,681,980,327
3. Balance with Banks/Financial Institutions 10 (46,938,948) (456,816,781)
4. Money at Call and Short Notice 11 1,634,306,157 826,435,677
5. Investment 12 16,332,043,012 14,048,965,792
6. Loans, Advances and Bills Purchased 13 46,369,834,571 41,605,682,634
7. Fixed Assets 14 872,322,039 887,543,274
8. Non Banking Assets 15 - -
9. Other Assets 16 2,150,185,391 1,548,964,565
Total 73,241,259,671 63,193,413,992
Schedules 1 to 17 form integral part of the balance sheet

Contingent Liabilities Schedule 17 Market Risk Schedule 30(E)

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

Anil Gyawali K. B. Manandhar S. P. Poudyal D. G. Agrawal K. P. Acharya As per our report of even date.
Chief Executive Officer Chairman Director Director Director

Krishna Bhattarai N. Chaudhary Ashish Sharma M. Ahmed CA. L. D. Mahat

Chief Financial Officer Director Director Director Partner
CSC & Co.
Chartered Accountants

DATE: 06th September 2013

PLACE: Nabil Centre, Durbar Marg, Kathmandu
 81
ANNUAL REPORT 2012/13

Profit and Loss Account

For the period 16 July 2012 to 15 July 2013 (1 Shrawan 2069 to 31 Ashadh 2070)

PARTICULARS SCHEDULE THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Interest Income 18 5,702,122,918 6,126,854,828

2. Interest Expense 19 2,186,184,871 3,155,490,469
Net Interest Income 3,515,938,047 2,971,364,359
3. Commission and Discount 20 393,050,514 366,387,194
4. Other Operating Income 21 209,905,066 201,084,866
5. Exchange Income 22 489,051,079 447,070,485
Total Operating Income 4,607,944,706 3,985,906,904
6. Staff Expense 23 646,759,675 500,712,844
7. Other Operating Expense 24 468,781,187 430,909,132
8. Exchange Loss 22 - -
Operating Profit before Provision for Possible Losses 3,492,403,844 3,054,284,928
9. Provision for Possible Losses 25 27,450,911 413,948,680
Operating Profit 3,464,952,933 2,640,336,248
10. Non Operating Income /(Expense) 26 13,468,572 13,839,751
11. Provision for Possible Losses Write Back 27 24,727,701 -
Profit from Regular Activities 3,503,149,206 2,654,175,999
12. Income/(Expense) from Extra-ordinary Activities 28 (17,454,214) (3,036,749)
Profit from All Activities 3,485,694,992 2,651,139,250
13. Provision for Staff Bonus 316,255,521 241,638,501
14. Provision for Income Tax 950,677,628 720,108,902
Current Tax 946,885,251 728,302,031
Prior Period Tax 5,791,658 -
Deferred Tax (1,999,281) (8,193,129)
Net Profit/(Loss) 2,218,761,843 1,689,391,847

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

Anil Gyawali K. B. Manandhar S. P. Poudyal D. G. Agrawal K. P. Acharya As per our report of even date.
Chief Executive Officer Chairman Director Director Director

Krishna Bhattarai N. Chaudhary Ashish Sharma M. Ahmed CA. L. D. Mahat

Chief Financial Officer Director Director Director Partner
CSC & Co.
Chartered Accountants

DATE: 06th September 2013

PLACE: Nabil Centre, Durbar Marg, Kathmandu
 82
Nabil Bank Limited

Profit & Loss Appropriation Account

Fiscal Year 2012/13 (2069/2070)

PARTICULARS SCHEDULE THIS YEAR Rs. PREVIOUS YEAR Rs.

Income
1. Accumulated Profit up to Last Year (Restated Balance) 552,945,653 493,393,905
2. Current Year's Profit 2,218,761,843 1,689,391,847
3. Exchange Equalization Fund - -
4. Capital Adjustment Reserve - -
5. Deferred Tax Reserve - -
6. Investment Adjustment Reserve - -
7. Dividend Equalisation Fund - -
8. Contingent Reserve 400,000 226,430
Total 2,772,107,496 2,183,012,182

Expense
1. Accumulated Loss up to Last Year - -
2. Current Year's Loss - -
3. General Reserve 444,000,000 340,000,000
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 974,736,560 811,907,760
9. Proposed Stock Dividend (Bonus Shares) 609,210,350 405,953,880
10. Special Reserve Fund - -
11. Exchange Fluctuation Fund 24,000,000 28,800,000
12. Capital Redemption Reserve - -
13. Capital Adjustment Fund - -
14. Deferred Tax Reserve 1,999,281 8,193,129
15. Investment Adjusment Reserve 12,191,027 34,211,760
Total 2,067,137,218 1,630,066,529
16. Accumulated Profit/(Loss) 704,970,278 552,945,653

Anil Gyawali K. B. Manandhar S. P. Poudyal D. G. Agrawal K. P. Acharya As per our report of even date.
Chief Executive Officer Chairman Director Director Director

Krishna Bhattarai N. Chaudhary Ashish Sharma M. Ahmed CA. L. D. Mahat

Chief Financial Officer Director Director Director Partner
CSC & Co.
Chartered Accountants

DATE: 06th September 2013

PLACE: Nabil Centre, Durbar Marg, Kathmandu
Statement of Changes in Equity
For the period 16 July 2012 to 15 July 2013 (1 Shrawan 2069 to 31 Ashadh 2070)

PARTICULARS SHARE CAPITAL ACCUMULATED GENERAL PROPOSED CAPITAL SHARE CONTINGENT DIVIDEND CAPITAL EXCHANGE INTEREST DEFERRED INVESTMENT TOTAL
PROFIT/(LOSS) RESERVE BONUS SHARE RESERVE PREMIUM RESERVE EQUALIZATION ADJUSTMENT EQUALIZATION SPREAD TAX ADJUSTMENT AMOUNT
FUND FUND RESERVE FUND RESERVE RESERVE RESERVE

Balance as on 16 July 2012 2,029,769,400 559,829,916 2,176,500,000 405,953,880 - 74,000 13,273,570 - - 126,300,000 2,578,000 42,575,441 94,031,164 5,450,885,371
Changes in Accounting Policy -
Bonus Share issued 405,953,880 (405,953,880) -
Fraction Share Adjustment
from Cash Dividend 1,118,120 1,118,120
Error adjustment (6,884,263) (6,884,263)
Changes in Tax Accounting Policy -
Adjustments in Fixed / Other Assets -
Refund of Dividend Income
as per the Instruction of NRB - -
Restated Opening Balance 2,436,841,400 552,945,653 2,176,500,000 - - 74,000 13,273,570 - - 126,300,000 2,578,000 42,575,441 94,031,164 5,445,119,228
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 2,218,761,843 2,218,761,843
Adjustments: -
Issuance of Share Capital -
Deficit on Revaluation of Properties -
Surplus on Revaluation of Properties -
Cash Dividend (974,736,560) (974,736,560)
Proposed Stock Dividend - (609,210,350) 609,210,350 - -
General Reserve Fund (444,000,000) 444,000,000 -
Contingent Reserve (1,000,000) 1,000,000 -
Equivalent amount of medical
expense under Hospitalization Scheme 400,000 (400,000)
Dividend Equalization Fund - - -
Capital Adjustment Fund - -
Exchange Fluctuation Reserve (24,000,000) 24,000,000 -
Interest Spread Reserve - -
Deferred Tax Reserve (1,999,281) 1,999,281 -
Investment Adjustment Reserve (12,191,027) 12,191,027 -
ANNUAL REPORT 2012/13
83

Closing Balance 2,436,841,400 704,970,278 2,620,500,000 609,210,350 - 74,000 13,873,570 - - 150,300,000 2,578,000 44,574,722 106,222,191 6,689,144,511
 84
Nabil Bank Limited

Cash Flow Statement

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

(a) Cash Flow from Operating Activities 1,647,367,834 3,480,247,625

1. Cash Received 6,475,748,293 6,942,481,055
1.1 Interest Income 5,392,441,338 5,858,317,820
1.2 Commission and Discount Income 350,245,632 419,236,920
1.3 Income from Foreign Exchange Transaction 512,714,664 447,070,485
1.4 Recovery of Loan Written Off 10,441,593 16,770,964
1.5 Other Incomes 209,905,066 201,084,866
2. Cash Payment (4,339,373,075) (4,892,143,360)
2.1 Interest Expenses (2,186,301,648) (3,157,092,774)
2.2 Staff Expenses (873,217,310) (695,216,492)
2.3 Office Operating Expenses (342,890,893) (301,733,260)
2.4 Income Tax Paid (936,910,692) (721,299,612)
2.5 Other Expenses (52,532) (16,801,222)
Cash Flow before changes in Working Capital 2,136,375,218 2,050,337,695
(Increase)/Decrease in Current Assets (9,076,787,611) (2,406,880,684)
1. (Increase)/Decrease in Money at Call and Short Notice (807,870,480) 1,626,076,101
2. (Increase)/Decrease in Other Short Term Investment (2,873,822,930) 173,944,342
3. (Increase)/Decrease in Loans, Advances and Bills Purchase (4,805,605,359) (3,965,286,395)
4. (Increase)/Decrease in Other Assets (589,488,842) (241,614,732)
Increase/(Decrease) in Current Liabilities 8,587,780,227 3,836,790,614
1. Increase/(Decrease) in Deposits 8,586,112,946 5,327,582,319
2. Increase/(Decrease) in Certificates of Deposits -
3. Increase/(Decrease) in Short Term Borrowings (311,080,000) (1,339,519,178)
4. Increase/(Decrease) in Other Liabilities 312,747,281 (151,272,527)
(b) Cash Flow from Investment Activities 764,268,229 (1,039,939,081)
1. (Increase)/Decrease in Long-term Investment 602,271,209 (1,164,958,463)
2. (Increase)/Decrease in Fixed Assets (107,699,734) (85,750,103)
3. Interest income from Long term Investment 257,210,723 194,150,121
4. Dividend Income 20,588,465 16,619,364
5. Other (8,102,434) -
(c) Cash Flow from Financing Activities (804,889,612) (601,036,078)
1. Increase/(Decrease) in Long term Borrowings (Bonds, Debentures etc) - -
2. Increase/(Decrease) in Share Capital* 1,118,120 -
3. Increase/(Decrease) in Other Liabilities - -
4. Increase/(Decrease) in Refinance/facilities received from NRB - -
5. Dividend Paid (806,007,732) (601,036,078)
(d) Income/(Loss) from change in exchange rate in Cash & Bank balance - -
(e) Current Year's Cash Flow from All Activities 1,606,746,451 1,839,272,466
(f) Opening Cash and Bank Balance 4,275,822,050 2,436,549,584
(g) Closing Cash and Bank Balance 5,882,568,501 4,275,822,050
*Increment in share capital by virtue of issuance of bonus shares have not been reflected.
However, fraction share adjusted with Cash Dividend is disclosed as increment.
 85
ANNUAL REPORT 2012/13

Share Capital and Ownership Schedule 1

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Share Capital
1.1 Authorized Capital 2,500,000,000 2,100,000,000
a) 25,000,000 Ordinary Shares of Rs. 100 each 2,500,000,000 2,100,000,000
b) ...Non-redeemable Preference Shares of Rs.. each
c) Redeemable Preference Shares of Rs.. each
1.2 Issued Capital 2,436,841,400 2,029,769,400
a) 20,297,694 Ordinary Shares of Rs. 100 each 2,436,841,400 2,029,769,400
b) ...Non-redeemable Preference Shares of Rs.. each
c) Redeemable Preference Shares of Rs.. each
1.3 Paid Up Capital 2,436,841,400 2,029,769,400
a) 24,368,414 Ordinary Shares of Rs. 100 each 2,436,841,400 2,029,769,400
b) ...Non-redeemable Preference Shares of Rs.. each
c) Redeemable Preference Shares of Rs.. each
1.4 Proposed Bonus Shares 609,210,350 405,953,880
1.5 Calls in Advance - -
1.6 Total (1.3 + 1.4 + 1.5) 3,046,051,750 2,435,723,280
*Share Capital at the face includes paid up capital and proposed bonus shares.

Share Ownership
PARTICULARS % THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Local Ownership 50.00 1,218,420,700 1,014,884,700

1.1 Government of Nepal - - -
1.2 "Ka" Class Licensed Institutions - - -
1.3 Other Licensed Institutions 5.07 123,514,400 124,846,400
1.4 Other Entities 10.00 243,719,400 202,996,800
1.5 General Public 30.00 731,052,400 608,930,800
1.6 Others* 4.93 120,134,500 78,110,700
2. Foreign Ownership 50.00 1,218,420,700 1,014,884,700
Total 100.00 2,436,841,400 2,029,769,400
*Others include promoters shares divested by NIDC, which is freely traded in stock exchange, NEPSE.
 86
Nabil Bank Limited

Details of Shareholders Holding 0.5% Shares

S.N. PARTICULARS THIS YEAR

% Rs.

1 NB International Limited 50.00 1,218,420,700

2 Rastriya Beema Sansthan 9.67 235,581,800
3 Nepal Industrial Development Corporation 5.07 123,514,400
4 Mr. Arjun Bandhu Regmi 0.90 21,825,100
5 Mr. Nirvana Kumar Chaudhary 0.89 21,717,300
6 Mr. Barun Chaudhary 0.85 20,704,700
7 Mrs. Sarika Chaudhary 0.78 19,062,200
8 Nepal Trust 0.59 14,447,200
9 Mr. Rahul Chaudhary 0.59 14,428,100

Reserves & Surplus Schedule 2

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. General Reserve 2,620,500,000 2,176,500,000

2. Capital Reserve 74,000 74,000
a. Share Premium 74,000 74,000
3. Capital Redemption Reserve - -
4. Capital Adjustment Fund - -
5. Other Reserve and Fund 167,248,483 152,458,175
a. Contingent Reserve 13,873,570 13,273,570
b. Institution Development Fund - -
c. Dividend Equalization Fund - -
d. Special Reserve Fund - -
e. Assets Revaluation Reserve - -
f. Deferred Tax Reserve 44,574,722 42,575,441
g. Other Free Reserve (Interest Spread Reserve) 2,578,000 2,578,000
h. Other Reserve (Investment Adjustment Reserve) 106,222,191 94,031,164
6. Accumulated Profit/(Loss) 704,970,278 552,945,653
7. Exchange Fluctuation Fund 150,300,000 126,300,000
Total 3,643,092,761 3,008,277,828
 87
ANNUAL REPORT 2012/13

Debentures & Bonds Schedule 3

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. 8.5% 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.)
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

Debentures & Bonds Schedule 4

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

A. Local
1. Government of Nepal - -
2. Nepal Rastra Bank (SLF) - -
3. Repo Liability - -
4. Inter-Bank and Financial Institutions - 311,080,000
5. Other Organized Institutions - -
6. Others - -
Total - 311,080,000
B. Foreign
1. Banks - -
2. Others - -
Total - -
Total (A+B) - 311,080,000
 88
Nabil Bank Limited

Deposits Schedule 5

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Interest Free Deposits

A. Current Deposits 7,271,123,319 6,572,215,166
1. Local Currency 5,322,049,977 5,139,289,623
1.1 Nepal Government - 9,916,978
1.2 "Ka" Class Licensed Institutions 106,574,321 170,855,227
1.3 Other Licensed Financial Institutions 297,511,499 284,707,641
1.4 Other Organized Institutions 4,687,122,966 3,992,576,131
1.5 Individuals 230,841,191 681,233,646
1.6 Others - -
2. Foreign Currency 1,949,073,342 1,432,925,543
2.1 Nepal Government - -
2.2 "Ka" Class Licensed Institutions 15,886,470 12,681,359
2.3 Other Licensed Financial Institutions - -
2.4 Other Organized Institutions 1,847,325,212 1,333,179,156
2.5 Individuals 85,861,660 87,065,028
2.6 Others - -
B. Margin Deposits 959,008,907 682,910,236
1. Employees 5,965,754 4,377,307
2. Guarantee 310,454,309 268,782,546
3. Letter of Credit 370,394,782 400,272,273
4. Others 272,194,062 9,478,110
C. Others 221,716,407 162,252,012
1. Local Currency 202,526,407 158,371,112
1.1 Financial Institutions - 10,000,000
1.2 Other Organized Institutions 14,019,708 13,260,399
1.3 Individual 188,506,699 135,110,713
2. Foreign Currency 19,190,000 3,880,900
2.1 Financial Institutions - -
2.2 Other Organized Institutions 19,190,000 -
2.3 Individual - 3,880,900
Total (A+B+C) 8,451,848,633 7,417,377,414
Contd.
 89
ANNUAL REPORT 2012/13

Deposits Contd.
Schedule 5

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

2. Interest Bearing Deposits

A. Savings Deposits 23,336,146,029 17,994,746,591
1. Local Currency 21,371,962,963 16,651,890,755
1.1 Institutions 458,262,370 505,997,148
1.2 Individuals 20,913,700,593 16,145,893,607
1.3 Others - -
2. Foreign Currency 1,964,183,066 1,342,855,836
2.1 Institutions 686,618,636 418,825,972
2.2 Individuals 1,277,564,430 924,029,864
2.3 Others - -
B. Fixed Deposits 10,786,028,419 14,044,887,821
1. Local Currency 9,073,217,949 12,805,029,718
1.1 Institutions 3,012,297,969 3,149,951,635
1.2 Individuals 6,060,919,980 9,655,078,083
1.3 Others - -
2. Foreign Currency 1,712,810,470 1,239,858,103
2.1 Institutions 1,658,739,350 1,110,872,953
2.2 Individuals 54,071,120 128,985,150
2.3 Others - -
C. Call Deposits 21,035,785,118 15,566,683,427
1. Local Currency 17,369,596,157 12,142,966,918
1.1 "Ka" Class Licensed Institutions - -
1.2 Other Licensed Financial Institutions 236,819,553 220,332,060
1.3 Other Organized Institutions 15,352,521,107 9,879,939,330
1.4 Individuals 1,780,255,497 2,042,695,528
1.5 Others - -
2. Foreign Currency 3,666,188,961 3,423,716,509
2.1 "Ka" Class Licensed Institutions 1,200,450 659,281
2.2 Other Licensed Financial Institutions - 70,748
2.3 Other Organized Institutions 3,647,750,661 3,406,021,458
2.4 Individuals 17,237,850 16,965,022
2.5 Others - -
D. Certificate of Deposit - -
1. Organized Institutions - -
2. Individuals - -
3. Others - -
Total (A+B+C+D) 55,157,959,566 47,606,317,839
Total Deposits (1+2) 63,609,808,199 55,023,695,253
 90
Nabil Bank Limited

Bills Payable Schedule 6

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Local Currency 315,681,009 70,813,386

2. Foreign Currency 213,916,836 108,328,972
Total 529,597,845 179,142,358

Other Liabilities Schedule 7

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Gratuity Fund 76,931,147 78,441,012

2. Employees Provident Fund - -
3. Employees Welfare/ Leave Fund 81,653,026 64,892,721
4. Provision for Staff Bonus 316,255,521 241,638,501
5. Interest Payable on Deposits 64,854 38,399
6. Interest Payable on Borrowings 3,712,957 3,856,189
7. Unearned Discount and Commission 90,663,827 109,805,125
8. Sundry Creditors 450,816,230 488,594,009
9. Branch Reconciliation Account - -
10. Provision for Audit Expense 1,100,000 1,002,000
11. Deferred Tax Liabilities - -
12. Dividend Payable 41,097,769 35,197,741
13. Others 8,804,518 49,015,326
Total 1,071,099,849 1,072,481,023

Cash Balance Schedule 8

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Local Currency (Including Coins) 1,092,489,614 1,013,649,263

2. Foreign Currency 47,722,705 37,009,241
Total 1,140,212,319 1,050,658,504
 91
ANNUAL REPORT 2012/13

Balance with Nepal Rastra Bank Schedule 9

(As at 15 July 2013)

PARTICULARS LOCAL CURRENCY FOREIGN CURRENCY THIS YEAR Rs. PREVIOUS YEAR Rs.
INR CONVERTIBLE FCY TOTAL

1. Nepal Rastra Bank 4,789,946,137 - (651,007) (651,007) 4,789,295,130 3,681,980,327

a. Current Account 4,789,946,137 - (651,007) (651,007) 4,789,295,130 3,681,980,327
b. Other Account - - - - - -

Note: Balance as per the confirmation statements is Rs.3,972,779,186.71

Balance with Banks / Financial Institutions

Schedule 10

(As at 15 July 2013)

PARTICULARS LOCAL CURRENCY FOREIGN CURRENCY THIS YEAR Rs. PREVIOUS YEAR Rs.
INR CONVERTIBLE FCY TOTAL

1. Local Licensed Institutions 57,747,347 - - - 57,747,347 53,031,610

a. Current Account 57,747,347 - - - 57,747,347 53,031,610
b. Other Account - - - - - -
2. Foreign Banks - 138,902,725 (243,589,020) (104,686,295) (104,686,295) (509,848,391)
a. Current Account - 138,902,725 (243,589,020) (104,686,295) (104,686,295) (509,848,391)
b. Other Account - - - - - -
Total 57,747,347 138,902,725 (243,589,020) (104,686,295) (46,938,948) (456,816,781)

Note: Balance as per the confirmation statements is Rs.1,755,994,457.05. Reconcilation is presented in Schedule 33 "Notes to Accounts" point 2.2.

Money at Call and Short Notice Schedule 11

(As at 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Local Currency - -
2. Foreign Currency 1,634,306,157 826,435,677
Total 1,634,306,157 826,435,677
 92
Nabil Bank Limited

Investments Schedule 12

(As at 15 July 2013)

PARTICULARS PURPOSE THIS YEAR Rs. PREVIOUS YEAR Rs.

TRADING OTHERS

1. Nepal Government Treasury Bills - 4,603,923,845 4,603,923,845 4,494,594,116

2. Nepal Government Saving Bonds - - - -
3. Nepal Government Other Securities - 3,310,078,588 3,310,078,588 3,498,498,924
4. Nepal Rastra Bank Bonds - - - -
5. Foreign Bonds - 239,654,168 239,654,168 220,280,173
6. Local Licensed Institutions - 431,775,000 431,775,000 1,080,450,000
7. Foreign Banks - 7,445,826,591 7,445,826,591 4,578,658,390
8. Organized Institutions' Shares - 210,034,800 210,034,800 201,284,800
9. Organized Institutions' Bonds and Debentures - - - -
10. Other Investments: - - - -
10.1. NCM Mutual Fund (100,000 units @ Rs.10 & 100,000 units - - - 1,257,000
issued subsequently @ Rs. 2.57. Since Matured & realized)

10.2. Nabil Balance Fund - Scheme 1 105,000,000 105,000,000 -

(10,500,000 units of Rs. 10 each)
10.3. SWIFT Investment (denominated in ) - 2,041,186 2,041,186 1,759,054
Total Investment - 16,348,334,178 16,348,334,178 14,076,782,457
Provision - 16,291,166 16,291,166 27,816,665
Net Investment - 16,332,043,012 16,332,043,012 14,048,965,792
Investment in Shares, Debentures and Bonds Schedule 93
12(A)

(As at 15 July 2013) ANNUAL REPORT 2012/13

PARTICULARS COST PRICE MARKET VALUE PROVISION THIS YEAR Rs. PREVIOUS YEAR Rs.

1. Investment in Shares 210,034,800 481,197,805 4,518,248 205,516,552 197,503,308

1.1 Rural Microfinance Development Centre Limited Not Listed - 50,720,000 50,720,000
(507,200 ordinary shares of Rs. 100 paid up)
1.2 Nirdhan Utthan Bank Limited 16,711,200 77,532,000 - 16,711,200 16,711,200
[276,900 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 109,788)]
1.3 Chhimek Laghu Bitta Bikash Bank Limited 7,380,100 96,580,533 - 7,380,100 7,380,100
[189,003 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 115,202)
1.4 Deprosc MicroFinance Development Bank Limited 9,726,700 50,045,515 - 9,726,700 9,726,700
[137,111 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 39,844)
1.5 Sudur Paschimanchal Grameen Bikash Bank Limited 1,500,000 Not Listed 1,500,000 - -
(15,000 ordinary shares of Rs. 100 paid up)
1.6 Purbanchal Grameen Bikash Bank Limited (Refer Note 2) 3,000,000 28,950,000 1,573,694 1,426,307 2,272,600
(30,000 ordinary shares of Rs. 100 paid up)
1.7 Madhya Paschimanchal Grameen Bikash Bank Limited 3,500,000 Not Listed 1,444,555 2,055,445 1,945,908
(35,000 ordinary shares of Rs. 100 paid up)
1.8 Sanakisan Bikash Bank Limited 6,070,800 Not Listed - 6,070,800 6,070,800
(60,708 ordinary shares of Rs. 100 paid up)
1.9 Swabalamban Bikash Bank Limited 12,490,500 51,841,056 - 12,490,500 12,490,500
[158,052 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 33,146)]
1.10 NADEP Laghubitta Bittiya Sanstha Ltd. 2,000,000 Not Listed - 2,000,000 2,000,000
(400,000 ordinary shares of Rs. 5 each)
1.11 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)
1.12 Jeevan Laghu Bittiya Bikas Bank Ltd. 10,000,000 Not Listed - 10,000,000 1,250,000
(25,000 ordinary shares of Rs. 50 paid up)
1.13 Karja Suchana Kendra Limited 1,235,500 Not Listed - 1,235,500 1,235,500
[30,499 ordinary shares of Rs. 100 paid up
(Including Bonus Shares 18,144)]
1.14 National Banking Training Institute 1,200,000 Not Listed - 1,200,000 1,200,000
(12,000 ordinary shares of Rs. 100 paid up)
1.15 Nepal Clearing House Limited 2,500,000 Not Listed - 2,500,000 2,500,000
(25,000 ordinary shares of Rs. 100 paid up)
1.16 Nabil Investment Banking Limited 78,000,000 Not Listed - 78,000,000 78,000,000
(780,000 ordinary shares of Rs. 100 each)
1.17 Visa Inc. (6,166 units of Class C Common Stock) - 112,557,170 - - -
1.18 MasterCard Incorporated - 63,691,531 - - -
(1114 units Class B Common Stock)
2. Investment in Debentures and Bonds 239,654,168 227,881,250 11,772,918 227,881,250 196,245,000
2.1 ICICI Bank Bonds 239,654,168 227,881,250 11,772,918 227,881,250 196,245,000
(Bonds of face value USD 2,500,000
at coupon rate 6.375% maturing on 30 April 2022)
3. Investment in Derivatives Instruments - - - - 441,000,000
3.1 Index Linked Deposit (denominated in US $) - - - - 441,000,000
3.2 Credit Linked Deposit (denominated in US $) - - - - -
Total Investment 449,688,968 709,079,055 16,291,166 433,397,802 834,748,308
4. Provision for Loss
3.1 Up to Previous Year 27,816,665 - - 4,562,809
3.2 Addition/(Writeback) This Year (11,525,499) - - 23,253,856
Total Provision 16,291,166 - - 27,816,665

Note: 1. Sudur Paschimanchal Grameen Bikash Bank Limited, Madya Paschimanchal Grameen Bikash Bank Limited, Sana Kishan Bikash Bank, National Banking Training
Institute, Nepal Clearing House Limited have not declared and distributed cash dividend in the last three years.
2. Shares of Purbanchal Grameen Bikash Bank Ltd. was last traded on 25th November 2009.
 94
Nabil Bank Limited

Held for Trading Investments Schedule 12.1

(As at 15 July 2013)

PARTICULARS COST PRICE MARKET PRICE AS AT PROFIT / LOSS REMARKS

15-JUL-2013 15-JUL-2012 THIS YEAR PREVIOUS YEAR

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 15 July 2013)

PARTICULARS COST PRICE IMPAIRED AMOUNT TILL PROFIT / LOSS REMARKS

15 JULY 2013 15 JULY 2012 THIS YEAR PREVIOUS YEAR

1. Nepal Government Treasury Bills 4,603,923,845

2. Nepal Government Saving Bonds -
3. Nepal Government Other Securities 3,310,078,588
4. Nepal Rastra Bank Bonds -
5. Foreign Bonds (denominated in $) 239,654,168 11,772,918 24,035,173 12,262,255 (23,253,856)
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 7,445,826,591 - N/A
10. Other Investments 431,775,000
Total Investments 16,031,258,192 11,772,918 24,035,173 12,262,255 (23,253,856)
 95
ANNUAL REPORT 2012/13

Available for Sale Investments Schedule 12.3

(As at 15 July 2013)

PARTICULARS COST PRICE MARKET PRICE AS AT THIS YEAR LAST YEAR REMARKS

15-JUL-2012 (A) 13-JUL-2013 (B) INVESTMENT PROFIT/ LOSS

ADJUSTMENT

RESERVE (B -A)

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 127,099,300 192,707,273 205,516,552 -
7. Debentures and Bonds of Local
Licensed Institutions -
8. Shares, Debentures and Bonds of
Local Organised Institutions 82,935,500 - - -
9. Placement in Foreign Banks -
10. Other Investments 107,041,186 115,135,517 281,878,701 -
Total Investments 317,075,986 307,842,790 487,395,253 - -

Note: Other Investments include investment in units of Nabil Balance Fund - Scheme 1 and shares in SWIFT. The Market Value of SWIFT is not available while Market Value of
Nabil Balance Fund - Scheme 1 is considered as Rs.10.06 per unit last traded on 15.07.2013 before the Balance Sheet date.
 Schedule 13
Classification of Loans, Advances and Bills Purchased & Provisioning 96
(As at 15 July 2013)

PARTICULARS LOANS & ADVANCES BILLS PURCHASED & DISCOUNTED THIS YEAR RS. PREVIOUS YEAR RS.
Nabil Bank Limited

DOMESTIC FOREIGN TOTAL DOMESTIC FOREIGN TOTAL

DEPRIVED SECTOR OTHER

INSURED UNINSURED

1. Performing Loans - 1,695,492,004 43,095,489,438 1,780,479,684 46,571,461,126 38,141,498 20,750,555 58,892,053 46,630,353,179 41,867,708,655
1.1 Pass - 1,695,492,004 43,095,489,438 1,780,479,684 46,571,461,126 38,141,498 20,750,555 58,892,053 46,630,353,179 41,867,708,655
2. Non-Performing Loans - 29,951,600 982,781,008 896,418 1,013,629,026 69,142 1,478,530 1,547,672 1,015,176,698 1,000,059,138
2.1 Restructured / Rescheduled - - - - - - - - - 17,204,234
2.2 Sub-Standard - - 204,961,933 - 204,961,933 - - - 204,961,933 162,440,668
2.3 Doubtful - - 104,422,437 - 104,422,437 - - - 104,422,437 36,784,473
2.4 Loss - 29,951,600 673,396,638 896,418 704,244,656 69,142 1,478,530 1,547,672 705,792,328 783,629,763
A. Total Loan (1+2) - 1,725,443,604 44,078,270,446 1,781,376,102 47,585,090,152 38,210,640 22,229,085 60,439,725 47,645,529,877 42,867,767,793
3. Loan Loss Provision
3.1 Pass - 16,954,920 431,976,829 17,804,797 466,736,546 381,415 207,506 588,921 467,325,467 420,433,013
3.2 Restructured / Rescheduled - - - - - - - - - 4,301,058
3.3 Sub-Standard - - 51,289,328 - 51,289,328 - - - 51,289,328 40,610,167
3.4 Doubtful - - 52,320,157 - 52,320,157 - - - 52,320,157 18,392,237
3.5 Loss * - 29,951,600 672,364,664 896,418 703,212,682 69,142 1,478,530 1,547,672 704,760,354 778,348,684
B. Total Provisioning - 46,906,520 1,207,950,978 18,701,215 1,273,558,713 450,557 1,686,036 2,136,593 1,275,695,306 1,262,085,159
4. Provisioning up to previous year
4.1 Pass 9,955 14,249,597 377,293,364 28,078,154 419,631,070 411,802 390,141 801,943 420,433,013 384,882,171
4.2 Restructured / Rescheduled - - 4,301,058 - 4,301,058 - - - 4,301,058 2,713,671
4.3 Sub-Standard - 127,002 40,483,165 - 40,610,167 - - - 40,610,167 42,553,205
4.4 Doubtful - 554,502 17,837,735 - 18,392,237 - - - 18,392,237 52,329,608
4.5 Loss 1,760,360 29,951,600 745,013,177 1,318,192 778,043,329 35,119 270,236 305,355 778,348,684 388,911,680
C. Total Previous Year's Provision 1,770,315 44,882,701 1,184,928,499 29,396,346 1,260,977,861 446,921 660,377 1,107,298 1,262,085,159 871,390,335
D. Written Back This Year 1,770,315 - - 10,695,131 12,465,446 - - - 12,465,446 -
E. Addition This Year - 2,023,819 23,022,479 25,046,298 3,636 1,025,659 1,029,295 26,075,593 390,694,824
F. Changes This Year (1,770,315) 2,023,819 23,022,479 (10,695,131) 12,580,852 3,636 1,025,659 1,029,295 13,610,147 390,694,824
Net Loan (A-B) - 1,678,537,084 42,870,319,468 1,762,674,887 46,311,531,439 37,760,083 20,543,049 58,303,132 46,369,834,571 41,605,682,634

* Loan to borrower availing OD facility and outstanding at 15th July 2013 amounting NRs.1,375,966.05 is insured at DCGC. The loan is not a deprived sector loan and hence accordingly disclosed under "Loans and Advances - Other".
 97
ANNUAL REPORT 2012/13

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

(As at 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

A. Secured 47,490,639,601 42,711,024,657

1. Movable/Immovable Assets 43,574,303,618 38,291,102,150
2. Guarantee of Local Licensed Institutions - -
3. Government Guarantee - -
4. Internationally Rated Bank Guarantee 96,220,588 -
5. Export Documents 202,322,469 92,457,261
6. Fixed Deposit Receipts 281,380,615 423,402,074
a. Own 281,380,615 393,924,741
b. Other Licensed Institutions - 29,477,334
7. Government Securities 581,625,331 76,563,975
8. Counter Guarantee - -
9. Personal Guarantee 5,388,619 8,086,337
10. Other Securities 2,749,398,362 3,819,412,861
B. Unsecured 154,890,276 156,743,136
Total 47,645,529,877 42,867,767,793

Note: Unsecured Loans, Advances and Bills Purchased represent credit card loans.
 Schedule 14
Fixed Assets 98
(As at 15 July 2013)

PARTICULARS ASSETS THIS YEAR RS. PREVIOUS YEAR RS.

Nabil Bank Limited

BUILDING VEHICLES MACHINERY OFFICE EQUIPMENT SOFTWARE OTHERS

1. Cost Price
a. Previous Year Balance 282,133,642 206,258,395 - 552,043,105 69,137,523 - 1,109,572,665 1,095,375,935
b. Addition during the Year 836,409 28,826,000 35,305,032 1,709,770 - 66,677,211 77,329,458
c. Revaluation/Write Back This Year - - -
d. Sold during the Year (13,721,919) (7,108,307) - (20,830,226) (21,554,180)
e. Write off during the Year (11,642,168) (3,232,223) - (14,874,391) (41,578,548)
Total Cost (a+b+c+d+e) 282,970,051 221,362,476 - 568,597,662 67,615,070 - 1,140,545,259 1,109,572,665
2. Depreciation
a. Up to Previous Year 66,088,023 89,438,462 - 333,548,619 30,729,906 - 519,805,010 455,742,311
b. For This Year 10,833,646 25,496,634 57,464,036 13,812,463 - 107,606,779 114,281,259
c. Revaluation/Write Back This Year - - -
d. Depreciation on Sold Assets (9,575,477) (5,566,875) - (15,142,352) (12,155,940)
e. Depreciation on Writen Off Assets (10,647,343) (3,232,223) - (13,879,566) (38,062,620)
Total Depreciation 76,921,669 105,359,619 - 374,798,437 41,310,146 - 598,389,871 519,805,010
3. Book Value (WDV*) (1-2) 206,048,382 116,002,857 - 193,799,225 26,304,924 - 542,155,388 589,767,655
4. Land - - - - - 241,517,149 241,517,149 241,517,149
5. Pending Capitalization 49,447,381 - - - - 49,447,381 6,553,648
6. Leasehold Assets - - - - - 39,202,121 39,202,121 49,704,822
Total (3+4+5+6) 255,495,763 116,002,857 - 193,799,225 26,304,924 280,719,270 872,322,039 887,543,274
* Written down value.
 99
ANNUAL REPORT 2012/13

Non Banking Assets Schedule 15

(As at 15 July 2013)

NAME & ADDRESS DATE OF ACQUISITION TOTAL AMOUNT OF LOSS PROVISION THIS YEAR'S NET PREVIOUS YEAR

OF BORROWER / PARTY OF NON BANKING NON BANKING % AMOUNT NON-BANKING

ASSETS ASSETS ASSETS

GRAND TOTAL - - -

Other Assets Schedule 16

(As at 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Stock of Stationery 7,553,837 6,963,113

2. Income receivable on Investment 125,808,564 152,535,579
3. Accrued Interest on Loan 382,296,328 - 371,152,257
Less: Interest Suspense Account (382,296,328) (371,152,257)
4. Commission Receivable - -
5. Sundry Debtors 889,159,544 363,405,605
6. Staff Loans & Advances 875,339,586 813,596,213
7. Pre - Payments 32,516,964 31,639,720
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 44,574,722 42,575,441
14. Others 175,232,174 138,248,894
Total 2,150,185,391 1,548,964,565
 100
Nabil Bank Limited

Other Assets (Additional Statement) Schedule 16 (A)

(As at 15 July 2013)

PARTICULARS THIS YEAR PREVIOUS YEAR UP TO 1 YEAR

1 TO 3 YEAR ABOVE 3 YEARS TOTAL

1. Accrued Interest on Loan 268,538,836 58,538,569 55,218,923 382,296,328 371,152,257

2. Drafts Paid without notice - -
3. Branch Reconciliation Account - -

Contingent Liabilities Schedule 17

(As at 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Claims on Institution but not accepted by the Institution 22,916,755 16,386,500

2. Letter of Credit (Full Amount) 5,450,366,800 5,622,522,137
a. Maturity up to 6 Months 3,566,950,915 5,510,153,931
b. Maturity more than 6 Months 1,883,415,885 112,368,206
3. Rediscounted Bills - -
4. Guarantees/Bonds 4,015,235,762 3,912,222,111
a. Bid Bonds 193,130,923 109,362,913
b. Performance Bonds 3,822,104,839 3,802,859,198
c. Other Guarantees/Bonds - -
5. Unpaid portion of Partly paid shares 39,250,000 39,250,000
6. Forward Exchange Contract Liabilities 7,750,100,520 4,224,977,742
7. Bills under Collection 381,079,757 231,357,521
8. Acceptance & Endorsement 1,006,152,586 682,166,582
9. Underwriting Commitment - -
10. Irrevocable Loan Commitment 4,558,539,994 3,380,746,197
11. Guarantee issued against Counter Guarantee of Internationally Rated Banks 1,416,358,619 5,764,500,481
12. Advance Payment Guarantee 1,756,223,528 444,652,570
13. Financial Guarantee - -
14. Income Tax 14,987,477 772,031
Total 26,411,211,798 24,319,553,872
 101
ANNUAL REPORT 2012/13

Interest Income Schedule 18

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

A. Loans, Advances and Overdraft 5,123,174,284 5,259,587,989

1. Loans & Advances 3,389,931,080 3,454,903,905
2. Overdraft 1,733,243,204 1,804,684,084
B. Investment 341,139,732 628,420,372
1. Government Securities 324,402,324 608,680,845
a. Treasury Bills 99,131,426 412,618,279
b. Development Bonds 225,270,898 196,062,566
c. National Saving Certificates - -
2. Foreign Securities 14,093,687 12,865,214
a. Development Bank of Singapore Bond - -
b. ICICI Bank Bond 14,093,687 12,865,214
3. Nepal Rastra Bank Bonds - -
4. Debenture & Bonds - -
a. Bank/Financial Institutions - -
b. Other Organizations - -
5. Interbank Investment 2,643,721 6,874,313
a. Bank/Financial Institutions 2,643,721 6,874,313
b. Other Organizations - -
C. Agency Balances 401,667 54,175
1. Local Banks/Financial Institutions - -
2. Foreign Banks 401,667 54,175
D. Money at Call and Short Notice 45,107 2,969,609
1. Local Banks/Financial Institutions 11,235 1,716,789
2. Foreign Banks 33,872 1,252,820
E. Others 237,362,128 235,822,683
1. Certificate of Deposits - -
2. Inter-Bank/Financial Institutions Loan - -
3. FCY Placements 180,111,282 179,588,691
4. Staff Loan 57,250,846 56,233,992
Total 5,702,122,918 6,126,854,828
 102
Nabil Bank Limited

Interest Expense Schedule 19

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

A. Deposits 2,136,709,080 3,121,055,418

1. Fixed Deposits 887,220,630 1,728,977,624
1.1 Local Currency 872,137,876 1,704,065,707
1.2 Foreign Currency 15,082,754 24,911,917
2. Savings Deposits 700,215,856 530,028,570
2.1 Local Currency 692,442,281 522,046,670
2.2 Foreign Currency 7,773,575 7,981,900
3. Call Deposits 549,272,594 862,049,224
3.1 Local Currency 515,497,508 825,382,960
3.2 Foreign Currency 33,775,086 36,666,264
4. Certificate of Deposits - -
B. Borrowings 49,475,791 34,435,051
1. Debentures & Bonds 25,500,000 25,500,000
2. Loan from Nepal Rastra Bank - -
3. Inter Bank /Financial Institutions Borrowing 23,975,791 8,935,051
4. Other Organized Institutions - -
5. Others - -
C. Others - -
Total 2,186,184,871 3,155,490,469

Commission & Discount Schedule 20

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

A. Bills Purchase & Discount 1,971,080 2,939,727

1. Local 459,269 767,068
2. Foreign 1,511,811 2,172,659
B. Commission 331,755,164 311,286,271
1. Letters of Credit 60,880,350 54,675,012
2. Guarantees 72,268,559 64,505,196
3. Collection Fees 2,087,571 2,093,617
4. Remittance Fees 82,430,457 76,322,396
5. Cards 114,088,227 113,690,050
6. Share Underwriting/Issue - -
7. Government Transactions - -
8. Agency Commission - -
9. Exchange Fee - -
C. Others 59,324,270 52,161,196
Total 393,050,514 366,387,194
 103
ANNUAL REPORT 2012/13

Other Income Schedule 21

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Safe Deposit Lockers Rental 7,332,091 6,221,644

2. Issue & Renewals of Credit Cards 5,671,682 5,239,723
3. Issue & Renewals of Debit Cards 24,851,810 24,500,317
4. Telex / T. T. / Communication Fees 15,141,047 13,366,841
5. Service Charges 129,941,913 129,675,292
6. Renewal Fees - -
7. Others 26,966,523 22,081,049
Total 209,905,066 201,084,866

Exchange Gain/ (Loss) Schedule 22

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

a. Revaluation 95,690,898 114,932,879

b. Trading (except Exchange Fees) 393,360,181 332,137,606
Total Gain/(Loss) 489,051,079 447,070,485

Personnel Expense Schedule 23

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Salary 215,423,061 188,078,674

2. Allowances 203,343,659 175,189,788
3. Contribution to Provident Fund 16,856,445 14,411,528
4. Training Expenses 8,737,232 8,934,625
5. Uniform 14,562,204 -
6. Medical 518,738 310,394
7. Insurance 8,356,175 7,332,709
8. Pension and Gratuity Contribution 103,918,643 48,569,949
9. Others 75,043,518 57,885,177
Total 646,759,675 500,712,844
 104
Nabil Bank Limited

Office Operating Expense Schedule 24

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. House Rent 60,878,932 54,798,007

2. Electricity & Water 15,968,729 14,358,884
3. Repair & Maintenance 5,427,040 6,460,664
a. Building 2,506,321 3,643,552
b. Vehicles 2,920,719 2,817,112
c. Others - -
4. Insurance 10,306,216 9,679,225
5. Postage, Telex, Telephone & Fax 28,854,697 25,220,647
6. Office Equipment and Furniture Repair 11,176,046 10,334,251
7. Travelling Allowances & Expenses 6,936,318 4,214,400
8. Printing & Stationery 21,397,806 21,183,711
9. Books & Periodicals 754,918 684,340
10. Advertisements 8,725,960 9,345,385
11. Legal Expenses 1,204,140 1,246,115
12. Donations 15,000 57,800
13. Expenses relating to Board of Directors 2,456,413 3,244,132
a. Meeting Fees 922,000 1,076,000
b. Other Expenses 1,534,413 2,168,132
14. Annual General Meeting Expenses 1,433,948 1,193,788
15. Expenses relating to Audit 1,100,000 1,002,000
a. Audit Fees 1,100,000 1,002,000
b. Other Expenses - -
16. Commission on Remittances - -
17. Depreciation on Fixed Assets 123,903,510 130,515,883
18. Amortization of Pre-Operating Expenses - -
19. Share Issue expenses - -
20. Technical/Consultancy Services Fee 29,168,505 25,336,243
21. Entertainment - -
22. Written Off Expenses - -
23. Security Expenses 38,894,664 39,833,365
24. Deposit & Credit Guarantee Premium 15,278,517 1,227,414
25. Commission & Discount - -
26. Others 84,899,828 70,972,878
a. Fuel Expenses 33,621,994 25,170,699
b. Tea/ Coffee/ Snacks 5,808,531 5,248,254
c. Contract Service Expense 11,232,073 10,968,519
d. Prize Expense - -
e. Customer Relations and Sponsorship 5,434,985 4,749,372
f. Membership Fees 1,034,300 1,909,050
g. Janitorial 8,429,279 7,455,298
h. Others 19,338,666 15,471,686
Total 468,781,187 430,909,132
 105
ANNUAL REPORT 2012/13

Provision for Possible Losses Schedule 25

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Loans and Advances 26,075,593 390,694,824

2. Investments 736,756 23,253,856
3. Non-Banking Assets
4. Other Assets 638,562 -
Total 27,450,911 413,948,680

Non-Operating Income/(Loss) Schedule 26

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Profit/(Loss) on Sale of Investments (8,102,434) -

2. Profit/(Loss) on Sale of Fixed Assets 982,541 (2,779,613)
3. Dividend 20,588,465 16,619,364
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) 13,468,572 13,839,751

Provision for Possible Losses / Write Back Schedule 27

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Loans and Advances 12,465,446 -

2. Non-Banking Assets - -
3. Investments 12,262,255 -
4. Other Assets - -
Total 24,727,701 -
 106
Nabil Bank Limited

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

(For the period from 16 July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Recovery of Write off Loan 10,441,593 16,770,964

2. Voluntary Retirement Scheme Expenses - (11,717,325)
3. Bad Loan Written Off [28 (a)] (27,843,275) (3,006,491)
4. Other Income/(Expense) (52,532) (5,083,897)
Total (17,454,214) (3,036,749)

Details of Loans Written Off Schedule 28 (A)

(For the period from 16 July 2012 to 15 July 2013)

TYPES OF LOAN WRITTEN OFF TYPE OF BASIS OF LOAN EFFORTS MADE REMARKS
AMOUNT (Rs.) SECURITY SECURITY APPROVED FOR RECOVERY OF LOANS

1 Working Capital Loan

2 Project Loan 14,465,210
3 Fixed Capital Loan 6,503,311
4 Personal Loan 259,989 Notice publication,
regular follow ups and blacklisting
5 Credit Card Loan 622,863
6 Others 5,991,901
Total Loan 27,843,275
 Schedule 29
Statement of Loans and Advances extended to Directors/ Chief Executive/ Promoters/ Employees
and Shareholders with more than 1% Shares
(As at 15 July 2013)

NAME OF PROMOTER/DIRECTOR/CHIEF EXECUTIVE OFFICER OUTSTANDING UP TO LAST YEAR RECOVERED IN CURRENT YEAR ADDITIONAL OUTSTANDING AS OF 15 JULY 2013
PRINCIPAL INTEREST PRINCIPAL INTEREST LENDING IN CY PRINCIPAL INTEREST

A. Directors - - - - - - -
1. . - - - - - - -
2. ..... - - - - - - -
3. . - - - - - - -
B. Chief Executive Officer - - - - - - -
1. . - - - - - - -
2. ..... - - - - - - -
3. . - - - - - - -
C. Promoters - - - - - - -
1. . - - - - - - -
2. ..... - - - - - - -
3. . - - - - - - -
D. Family Members of Employees 55,905,656 1,063,040 5,051,637 3,689,960 1,909,457 52,763,476 4,198
1 Subash Chandra / Chandra Prasad / Nanda Kumar Bhattarai 18,983,085 636,096 31,623 636,096 - 18,951,462 -
2 Ramesh Maharjan / Ram Maharjan 460,151 4,275 36,239 55,196 - 423,912 4,198
3 Laxmi Shrestha / Padam Prasad Shrestha 2,056,602 11,703 1,335,266 214,789 - 721,336 -
4 Shanta Gyawali / Vinod Kumar Gyawali 476,038 4,408 55,593 58,028 - 420,446 -
5 Prakash Dahal 2,224,165 10,688 303,692 30,035 2,254,200 -
6 Ganja / Kalyani Dahal 1,164,312 - 127,775 161,318 255,531 1,292,068 -
7 Shulav Ausadhalaya 2,208,070 - - - 328,217 2,536,287 -
8 Dipendra Giri 968,286 158,627 376,656 112,264 - 591,630 -
9 Gita Adhikari / Dilli Ram Adhikari 1,787,409 20,372 852,254 204,711 - 935,155 -
10 Muna Pyakurel / Dilip Kumar Pyakurel - - 895,674 895,674 -
11 Usha Khanal / Rajaram Khanal 800,000 9,118 116,121 165,617 400,000 1,083,879 -
12 Durga Rajya Laxmi 739,084 7,371 96,964 96,433 - 642,120 -
13 Mohan Prasad Pandey / Sobha Pathak 12,306,298 94,517 1,307,986 343,383 - 10,998,311 -
14 Sanjay Tripathee 11,432,156 105,865 708,767 1,294,311 - 10,723,389 -
15 Tara Neupane & Ram Chandra Neupane 300,000 - 6,392 44,123 - 293,608 -
E. Shareholders - - - - - - -
1. . - - - - - - -
2. ..... - - - - - - -
3. . - - - - - - -
Total 55,905,656 1,063,040 5,051,637 3,689,960 1,909,457 52,763,476 4,198
Note:
1 Loan given to employees as per Employees' Rules and against Fixed Deposits/Government Securities not presented above.
ANNUAL REPORT 2012/13
107
Table
108
of Capital Fund
Nabil Bank Limited
Schedule 30(A1)

(As at 15 July 2013)

PARTICULARS AS AT 15 JULY 2013 AS AT 15 JULY 2012

1.1 Risk Weighted Exposures

a. Credit Risk 57,191,503,224 50,021,684,138
b. Operation Risk 5,011,133,921 4,088,674,543
c. Market Risk 89,170,240 79,167,220
Total Risk Weighted Exposures Before Adjustment 62,291,807,385 54,189,525,901
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 1,245,836,148 1,083,790,518
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 63,537,643,533 55,273,316,419
1.2 Capital As at 15 July 2013 As at 15 July 2012
Core Capital (Tier 1) 6,340,748,750 5,139,280,637
a. Paid up Equity Share Capital 2,436,841,400 2,029,769,400
b. Irredeemable Non-cumulative preference shares
c. Share Premium 74,000 74,000
d. Proposed Bonus Equity Shares 609,210,350 405,953,880
e. Statutory General Reserves 2,620,500,000 2,176,500,000
f. Retained Earnings 704,970,278 559,829,916
g. Un-audited current year cumulative profit
h. Capital Redemption Reserves
i. Capital Adjustment Reserves
j. Dividend Equalization Reserves - -
k. Debenture Redemption Reserves
l. Deferred Tax Reserve 44,574,722 42,575,441
m. Other Free Reserves 2,578,000 2,578,000
n. Less: Goodwill
o. Less: Fictitious Assets
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
Supplementary Capital (Tier 2) 1,023,765,936 947,460,587
a. Cumulative and/or Redeemable Preference Share
b. Subordinated Term Debt 300,000,000 300,000,000
c. Hybrid Capital Instruments
d. General loan loss provision 453,370,175 413,855,853
e. Exchange Equalization Reserves 150,300,000 126,300,000
f. Investments Adjustment Reserves 106,222,191 94,031,164
g. Assets Revaluation Reserves
h. Other Reserves 13,873,570 13,273,570
Total Capital Fund (Tier 1 and Tier 2) 7,364,514,686 6,086,741,224
1.3 Capital Adequacy Ratio As at 15 July 2013 As at 15 July 2012
Tier 1 Capital to Total Risk Weighted Exposures 9.98% 9.30%
Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures 11.59% 11.01%
 Schedule 30(B)
Credit Risk
(As at 15 July 2013)

AS AT 15 JULY 2013 AS AT 15 JULY 2012

PARTICULARS 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 1,140,212,319 - - 1,140,212,319 0% - 1,050,658,504 -
Balance With Nepal Rastra Bank 4,789,295,130 - - 4,789,295,130 0% - 3,681,980,327 -
Gold - - - - 0% - - -
Investment in Nepalese Government Securities 7,914,002,433 - - 7,914,002,433 0% - 7,999,977,303 -
All Claims on Government of Nepal 279,990,121 - - 279,990,121 0% - 280,267,465 -
Investment in Nepal Rastra Bank Securities - - - - 0% - - -
All claims on Nepal Rastra Bank 6,918,313 - - 6,918,313 0% - 1,307,346 -
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 1,410,633,237 - - 1,410,633,237 20% 282,126,647 1,446,038,038 289,207,608
Claims on domestic banks that do not meet capital adequacy
requirements 376,429,060 - - 376,429,060 100% 376,429,060 44,408,511 44,408,511
Claims on foreign bank (ECA Rating 0-1) 2,094,707,520 - - 2,094,707,520 20% 418,941,504 1,598,647,498 319,729,500
Claims on foreign bank (ECA Rating 2) 46,025,659 46,025,659 50% 23,012,829 - -
Claims on foreign bank (ECA Rating 3-6) - - - - 100% - 42,037,754 42,037,754
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 7,489,865,180 - - 7,489,865,180 20% 1,497,973,036 4,035,282,052 807,056,410
Claims on Domestic Corporates 33,229,362,385 203,990 705,778,015 32,523,380,380 100% 32,523,380,380 27,605,552,631 27,605,552,631
Claims on Foreign Corporates (ECA 0-1) - - - 20% - - -
ANNUAL REPORT 2012/13
109

Contd.
 Schedule 30(B)
Credit Risk Contd. 110
(As at 15 July 2013)

AS AT 15 JULY 2013 AS AT 15 JULY 2012

PARTICULARS BOOK VALUE SPECIFIC ELIGIBLE NET VALUE RISK RISK WEIGHTED NET VALUE RISK WEIGHTED
Nabil Bank Limited

PROVISION CRM WEIGHT EXPOSURE EXPOSURE

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) 1,936,991,031 - 29,198,534 1,907,792,497 75% 1,430,844,373 2,071,166,528 1,553,374,896
Regulatory Retail Portfolio Except for Granularity - - - - 100% - - -
Claims secured by residential properties 3,237,979,245 - - 3,237,979,245 60% 1,942,787,547 2,839,960,950 1,703,976,570
Claims not fully secured by residential properties - - - - 150% - - -
Claims secured by residential properties (Overdue) 98,758,145 18,201,838 - 80,556,307 100% 80,556,307 15,174,145 15,174,145
Claims secured by Commercial real estate 864,878,700 - - 864,878,700 100% 864,878,700 4,197,671,386 4,197,671,386
Past due claims (except for claim secured by residential properties) 2,194,955,058 802,953,366 - 1,392,001,692 150% 2,088,002,538 592,888,869 889,333,304
High Risk claims 2,484,197,941 965,937 34,015,328 2,449,216,676 150% 3,673,825,014 1,865,864,774 2,798,797,162
Investments in equity and other capital instruments
of institutions listed in the stock exchange 397,191,864 13,346,612 - 383,845,252 100% 383,845,252 256,708,081 256,708,081
Investments in equity and other capital instruments
of institutions not listed in the stock exchange 84,767,486 2,944,555 - 81,822,931 150% 122,734,397 71,953,862 107,930,793
Staff loan secured by residential property 673,977,091 - - 673,977,091 60% 404,386,254 640,251,473 384,150,884
Interest Receivable/claim on government securities 29,984,682 - - 29,984,682 0% - 36,049,252 -
Cash in transit and other cash items in the process of collection - - - - 20% - - -
Other Assets 5,408,248,181 1,024,827,559 94,014,070 4,289,406,551 100% 4,289,406,551 3,220,513,211 3,220,513,211
TOTAL 76,189,370,779 1,863,443,857 863,005,947 73,462,920,976 50,403,130,391 63,594,359,961 44,235,622,844
B. Off Balance Sheet Exposures Gross Book a b c d=a-b-c e f=d*e
Revocable Commitments - - - 0% - - -
Bills Under Collection 381,079,757 - 381,079,757 0% - 231,357,521 -
Forward Exchange Contract 7,750,100,520 - 7,750,100,520 10% 775,010,052 4,224,977,742 422,497,774
LC Commitments With Original Maturity Up to 6 months
domestic counterparty 3,566,950,915 168,450,830 3,398,500,085 20% 679,700,017 4,714,248,677 942,849,735
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% - - -
Contd.
 Schedule 30(B)
Credit Risk Contd.
(As at 15 July 2013)

AS AT 15 JULY 2013 AS AT 15 JULY 2012

PARTICULARS BOOK VALUE SPECIFIC ELIGIBLE NET VALUE RISK RISK WEIGHTED NET VALUE RISK WEIGHTED
PROVISION CRM WEIGHT EXPOSURE EXPOSURE

LC Commitments With Original Maturity Over 6 months

domestic counterparty 1,883,415,885 727,791,224 1,155,624,661 50% 577,812,331 96,662,233 48,331,116
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 4,015,235,762 338,846,652 3,676,389,110 50% 1,838,194,555 3,557,395,235 1,778,697,617
foreign counterparty (ECA Rating: 0-1) 890,176,235 712,140,988 178,035,247 20% 35,607,049 164,679,818 32,935,964
foreign counterparty (ECA Rating: 2) 280,692,377 140,346,188 140,346,188 50% 70,173,094 171,287,056 85,643,528
foreign counterparty (ECA Rating: 3-6) 245,490,008 - 245,490,008 100% 245,490,008 229,855,926 229,855,926
foreign counterparty (ECA Rating: 7) - - - 150% - - -
Underwriting commitments - 50% - - -
Lending of Bank's Securities or Posting of Securities as collateral - 100% - - -
Repurchase Agreements - 100% - - -
Advance Payment Guarantee 1,756,223,528 1,125,240,630 630,982,898 100% 630,982,898 847,111,964 847,111,964
Financial Guarantee - 100% - - -
Acceptances and Endorsements 1,006,152,586 - 1,006,152,586 100% 1,006,152,586 682,166,582 682,166,582
Unpaid portion of Partly paid shares and Securities 39,250,000 - 39,250,000 100% 39,250,000 39,250,000 39,250,000
Irrevocable Credit commitments (short term) 4,554,990,199 334,156,534 4,220,833,665 20% 844,166,733 3,219,740,434 643,948,087
Irrevocable Credit commitments (long term) 50% - -
Other Contingent Liabilities - 100% - - -
Guarantee claimed but not accepted / honoured 22,916,755 - 22,916,755 200% 45,833,510 16,386,500 32,773,000
TOTAL 26,392,674,527 - 3,546,973,046 22,845,701,481 6,788,372,833 18,195,119,688 5,786,061,293
Total RWE for credit Risk (A) +(B) 102,582,045,306 1,863,443,857 4,409,978,993 96,308,622,456 57,191,503,224 81,789,479,648 50,021,684,138
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 Bank's Adjustment of Pillar - II) 102,582,045,306 1,863,443,857 4,409,978,993 96,308,622,456 57,191,503,224 81,789,479,648 50,021,684,138
ANNUAL REPORT 2012/13
111
 Schedule 30(C)
Credit Risk Mitigation 112
For the period 16 July 2012 to 15 July 2013 (1 Shrawan 2069 to 31 Ashadh 2070)

DEPOSITS G'TEE OF SEC/G'TEE OF G'TEE OF

Nabil Bank Limited

DEPOSITS WITH OTHER GOVT.& NRB GOVT. OF OTHER DOMESTIC G'TEE OF SEC/G'TEE OF TOTAL

CREDIT EXPOSURES WITH BANK BANKS/ FIS GOLD SECURITIES NEPAL SOVEREIGNS BANKS MDBS FOREIGN 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) -
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 128,370,299 577,407,717 705,778,015
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) 29,198,534 29,198,534
Regulatory Retail Portfolio (Overdue)
Regulatory Retail Portfolio Except for Granularity -
Claims secured by residential properties -
Contd.
 Schedule 30(C)
Credit Risk Mitigation Contd.
For the period 16 July 2012 to 15 July 2013 (1 Shrawan 2069 to 31 Ashadh 2070)
DEPOSITS G'TEE OF SEC/G'TEE OF G'TEE OF

DEPOSITS WITH OTHER GOVT.& NRB GOVT. OF OTHER DOMESTIC G'TEE OF SEC/G'TEE OF TOTAL

CREDIT EXPOSURES WITH BANK BANKS/ FIS GOLD SECURITIES NEPAL SOVEREIGNS BANKS MDBS FOREIGN BANKS

Claims not fully secured by residential properties -

Claims secured by residential properties (Overdue) -
Claims secured by Commercial real estate -
Past due claims (except for claim secured by residential properties) -
High Risk claims 34,015,328 34,015,328
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 89,796,455 4,217,614 94,014,070

Off Balance Sheet Exposures a b c d e f g h i

Revocable Commitments -
Bills Under Collection -
Forward Exchange Contract Liabilities -
LC Commitments With Original Maturity Up to 6 months
domestic counterparty 168,450,830 168,450,830
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 727,791,224 727,791,224
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 338,846,652 338,846,652
foreign counterparty (ECA Rating: 0-1) 712,140,988 712,140,988
foreign counteparty (ECA Rating: 2) 140,346,188 140,346,188
foreign counterparty (ECA Rating: 3-6) -
foreign counterparty (ECA Rating: 7) -
Gurantee claimed but not honored -
Underwriting commitments -
Lending of Bank's Securities or Posting of Securities as Collateral -
Repurchase Agreements -
Advance Payment Guarantee 12,653,604 1,112,587,026 1,125,240,630
Financial Guarantee -
Acceptances and Endorsements -
Unpaid portion of Partly paid shares and Securities -
Irrevocable Credit commitments (short term) 73,766,865 260,389,669 334,156,534
ANNUAL REPORT 2012/13
113

Irrevocable Credit commitments (long term) -

Other Contingent Liabilities -
4,409,978,993
 114
Operations
Nabil Bank Limited Risk Schedule 30(D)

(As at 15 July 2013)

PARTICULARS YEAR 1 YEAR 2 YEAR 3 LAST YEAR

Net Interest Income 2,978,248,622 2,298,599,711 2,089,606,277

Commission and Discount Income 364,075,214 290,855,057 215,481,543
Other Operating Income 201,084,866 180,570,348 184,024,512
Exchange Fluctuation Income 447,070,485 276,102,798 276,964,251
Additional Interest Suspense during the period 98,947,274 51,116,013 69,520,870
Gross income (a) 4,089,426,461 3,097,243,927 2,835,597,453
Alfa (b) 15% 15% 15%
Fixed Percentage of Gross Income [c=(ab)] 613,413,969 464,586,589 425,339,618
Capital Requirement for operational risk (d) (average of c) 501,113,392 408,867,454
Risk Weight (reciprocal of capital requirement of 10%) in times (e) 10 10
Equivalent Risk Weight Exposure [f=(de)] 5,011,133,921 4,088,674,543
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) 5,011,133,921 4,088,674,543

Market Risk Schedule 30(E)

(As at 15 July 2013)

THIS YEAR Rs. PREVIOUS YEAR Rs.

S.NO. OPEN POSITION RELEVANT OPEN RELEVANT OPEN
CURRENCY OPEN POSITION (FCY) (NPR) POSITION POSITION

1 USD 317,152 30,430,756 30,430,756 109,652,725

2 GBP 51,781 7,502,036 7,502,036 3,641,860
3 EUR 29,476 3,695,656 3,695,656 2,274,283
4 CAD 42,987 3,960,350 3,960,350 3,143,591
5 AUD 64,995 5,649,360 5,649,360 2,286,373
6 JPY 2,335,665 2,257,887 2,257,887 1,628,899
7 CHF 42,751 4,337,038 4,337,038 3,047,060
8 CNY 59,019 922,467 922,467 258,190
9 DKK 85,457 1,437,385 1,437,385 2,812,736
10 HKD 2,600 32,162 32,162 47,981
11 INR 71,962,722 115,194,328 115,194,328 26,435,484
12 QAR 5,575 146,901 146,901 163,480
13 SAR 16,044 410,566 410,566 487,287
14 SGD 24,068 1,826,768 1,826,768 2,153,243
15 SEK 6,160 88,642 88,642 1,508
16 AED 4,045 105,696 105,696 109,125
17 MYR 6,781 204,379 204,379 121,040
18 THB 44,840 138,107 138,107 69,582
Total Open Position (a) 178,340,484 178,340,484 158,334,447
Fixed Percentage (b) 5% 5%
Capital Charge for Market Risk [c=(ab)] 8,917,024 7,916,722
Risk Weight (reciprocal of capital requirement of 10%) in times (d) 10 10
Equivalent Risk Weight Exposure [e=(cd)] 89,170,240 79,167,220
 115
ANNUAL REPORT 2012/13

Principal Indicators Schedule 31

(As at 15 July 2013)

S.N. PARTICULARS FINANCIAL YEAR

INDIC-ATORS 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13

1 Net Profit/Gross Income % 29.68 30.56 24.11 22.29 23.74 32.66

2 Earnings Per Share Rs. 115.86 113.44 83.81 70.67 83.23 95.14
3 Market Value per Share Rs. 5,275 4,899 2,384 1,252 1,355 1,815
4 Price Earning Ratio Times 45.53 43.19 28.45 17.72 16.21 19.08
5 Dividend (including bonus) on share capital % 100.00 85.00 70.00 30.00 60.00 65.00
6 Cash Dividend on Share Capital % 60.00 35.00 30.00 30.00 40.00 40.00
7 Interest Income/Loans & Advances % 8.04 8.82 10.41 12.50 12.85 11.64
8 Employee Expense/Total Operating Expense % 21.17 23.96 13.79 11.91 12.26 19.59
9 Interest Expense on Total Deposit and Borrowings % 2.64 3.22 4.43 6.15 5.74 3.67
10 Exchange Gain/Total Income % 7.81 7.47 6.17 4.60 6.26 7.20
11 Staff Bonus/ Total Employee Expenses % 41.42 43.50 44.29 42.05 48.26 48.90
12 Net Profit/Loans & Advances % 3.96 4.02 3.47 3.73 4.14 5.04
13 Net Profit/ Total Assets % 2.32 2.55 2.37 2.43 2.80 3.25
14 Total Credit/Deposit % 68.18 73.87 71.17 78.29 77.91 74.90
15 Total Operating Expenses/Total Assets % 3.86 4.34 5.54 6.91 6.73 4.84
16 Adequacy of Capital Fund on Risk Weighted Assets
a. Core Capital % 8.75 8.74 8.77 8.83 9.30 9.98
b. Supplementary Capital % 2.35 1.96 1.73 1.75 1.71 1.61
c. Total Capital Fund % 11.10 10.70 10.50 10.58 11.01 11.59
17 Liquidity (CRR) % 8.37 9.03 3.02 4.90 8.60 9.32
18 Non Performing Loans/Total Loans % 0.74 0.80 1.48 1.77 2.33 2.13
19 Weighted Average Interest Rate Spread 3.94 4.16 4.40 4.37 4.95 5.48
20 Book Net Worth per Share Rs. 354 324 265 225 269 275
21 Total Shares Number 6,892,160 9,657,470 14,491,240 20,297,694 20,297,694 24,368,414
22 Total Permanent Employees Number 416 505 557 657 650 742
23 Weighted Average Number of Ordinary
Shares Outstanding Number 6,442,910 9,089,256 13,590,702 18,929,598 20,297,694 23,320,064
24 Return on Equity % 29.35 33.93 30.27 29.02 30.25 32.78
25 Return on Assets % 2.32 2.55 2.38 2.43 2.80 3.25
26 Dividend Payout Ratio % 92.33 79.62 89.05 42.45 71.80 68.32
27 Earnings Yield % 2.20 2.32 3.52 5.64 6.17 5.24
28 Dividend Yield % 1.90 1.74 2.94 2.40 4.43 3.58
29 Cost to Income Ratio % 51.14 52.11 56.31 63.50 57.16 48.60
30 Total Assets to Shareholders' Fund times 15.24 14.01 13.59 12.73 10.09 9.56
31 Shareholders' Fund to Liability including
Contingent Liability % 5.74 5.98 6.21 6.61 7.71 8.33
32 Number of Offices Number 28 38 49 49 52 51
33 Number of ATMs Number 32 48 63 68 78 81
contd.
 116
Nabil Bank Limited
NOTE:
1. Gross Income in S.N. 1 comprises of
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 that requires computation of EPS
dividing earnings attributable to equity holders
by weighted average number of shares.
Weighted average number of ordinary shares
outstanding (in S.No.23) 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. Bank's basic
and diluted EPS is same since there are no
potential ordinary shares outstanding as on the
balance sheet date.
3. Market Value per Share in S.N. 3 is the
closing price quoted in Nepal Stock Exchange
on Monday, the 15th July 2013.
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.43,997,640,455.17.
5. Total Operating Expense in S.N. 8
comprises 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.58,330,804,734.32
and Rs.1,300,107,665.58 respectively.
7. Total Income in S.N. 10 is same as Gross
Income in S.N. 1 comprising of 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
6.22%.
12. Return on Equity in S.N. 24 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.

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.
The Bank has employed 1,270 people in
total as at 15 July 2013 that comprises of
742 permanent staff (650 as at 15 July
2012) and 528 outsourced and contract
staffs (604 as at 15 July 2012).
1.2 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 Subsidiary has employed 17 people in
total as at 15 July 2013 that comprises of
12 permanent staff (8 as at 15 July 2012)
and 5 outsourced and contract staffs (4 as at
15 July 2012). Additional 2 personnel are
deputed by the Bank to work in the
Subsidiary.
The financial year of the Subsidiary is
common to that of the Bank (parent
company). The current Financial Year ended
on July 15, 2013.
1.3 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 management of mutual
fund schemes, depository participant's
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 September
06, 2013 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(2) 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.
117
ANNUAL REPORT 2012/13
Schedule 32
4.2 These financial statements include the
following components:
a. a Balance Sheet (including Consolidated
Balance Sheet) disclosing the information on
financial position of the Group and the Bank;
b. a 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. a 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. a 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 Except otherwise stated by Nepal Rastra
Bank (NRB) Directives, Bank & Financial
Institutions Act 2006 and Company Act
2006, 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 10 "Consolidated
Financial Statements".
 118
Nabil Bank Limited
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 six 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
for the preparation and presentation of
financial statements.
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.
6. BASIS OF PREPARATION
6.1 The 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 which is 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 judgement
in process of applying the Group's 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 15, 2013
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.
Para 7 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
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 and CEO of the Bank represents
in the Board of the Subsidiary in the capacity
of Chairman. The Bank thus has the ability to
exercise its power over the Subsidiary to affect
the amount of the Banks return.
requirement. There is no such statutory
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. Dividend proposed by
the Subsidiary company are eliminated from
proposed dividend while consolidation and
are restated in the consolidated retained
earnings and non-controlling interest.
 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 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 maintains
equivalent amount in the reserve.
 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
contributed to the staff in the year of such
contribution. 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. Group's 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 provided
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:
a. Held till Maturity (HTM) Investments:
These investments are primarily intended to
hold until the maturity and are stated at cost
and carried at these values in the Balance
Sheet until the maturity. Any impairment
losses 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 the part of initial
119
ANNUAL REPORT 2012/13
cost and subsequently adjusted with the
interest income on effective interest basis
until the maturity.
b. Held for Trading (HFT) Investments:
These are the 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).
c. Available for Sale (AFS) Investments:
These are the 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
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 amount equivalent to at least 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;
 120
Nabil Bank Limited
 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 use during more than one financial year.
 Group's property, plant and equipment
comprise of the Bank's and the Subsidiarys
land & 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 derecognition of an item of
property, plant and equipment is included in
profit or loss when the item is derecognised.
 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 having life more
than one year and/or costing less than NRs.
5,000 are expensed off during the year of
purchase.
 The Bank consistently adopts cost model
for entire class of its property, plant and
equipment.
iv. Inventory
a. 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.
b. Bullion Stock under Consignment
i. The Bank holds precious metals (gold and
silver) in its possession arising from
consignment transaction. All risks and
rewards pertaining to the assets are vested
with the consignor. The Bank merely acts as
an agent of 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
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 loans are presented under
Others in the same Schedule.
 Interest receivables on investments are
stated at full value.
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
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ANNUAL REPORT 2012/13
consideration received. They are derecognised
at the time of its disposal at the Bank's
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 AGMs.
 They are stated at full value immediately
after AGM ratifies the Board's proposal on
dividend. Immediately before the AGM
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 Rs.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.
vii. Provisions
 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.
 122
Nabil Bank Limited
 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: 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 fees: Audit fees are
provisioned based on the remuneration fixed
by the equity holders at the Annual General
Meeting.
 Provision for staff bonus: 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 30 days (15 days till last year)
respectively and is carried forward for the use
in future periods. Leave balance in excess of
90 days (75 days till last year) as on mid
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.
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.
 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.
 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 increases 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 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 loan under Integrated Staff Loan
Policy) are recognised on cash basis as
prescribed by NRB Directives, which is not in
accordance with NAS 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 loans is
recognised on accrual basis.
 Interest income on Investments including
earnings from call accounts and fixed deposits
and staff house loan is recognized on effective
interest method. Interest accruals on bonds
and debentures at the time of 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 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
currencies' 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 Recognition, which
prescribes that the fees that are integral part of
the effective interest rate of a financial
instrument 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.
 Prepayment fee levied for pre-mature
settlement of loans and advances are
recognised at the time of credit settlement.
 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.
 TC sales, 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 related 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. Tax deducted by
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.
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ANNUAL REPORT 2012/13
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
accounted as 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.
 124
Nabil Bank Limited
vi. Gain / (Loss) arising on disposal of assets
 The gain or loss arising from the
derecognition 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 decreases 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 Bank's and the Subsidiary's
decision to terminate an employee's
employment before the normal retirement date
or of an employee's 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.
 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
the 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.
 Depreciation on following assets is
charged to Profit and Loss Account on
Diminishing Balance method over the
estimated useful life of depreciable assets.
Land is not depreciated.
 Leasehold assets (improvements) are
amortized over the period of lease using
Straight Line Method.
 Cost of software licences and are
amortized over a period of useful life of the
software, estimated as 5 years from the date
of acquisition.
NATURE OF ASSETS USEFUL
LIFE
DEPRECIATION
RATE
Furniture 10 years 25%
Equipments 10 years 25%
Vehicles 7 years 20%
Computers 7 years 25%
Building 50 years 5%
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 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 smallest group
of fixed assets that generates cash inflows
that are largely independent of the cash
inflows from other assets or group of assets
and hence no impairment loss is provided
unless there is clear evidence that its 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
 Loan accounts graded Bad / Loss in
compliance with NRB Directives are written
off in the books as per Loan Write off By-Law
of the Bank approved by NRB and in
compliance with Income Tax Act 2002,
without prejudice to the Bank's right to
recovery.
 Impairment provisions held for the loss
accounts are written back immediately after
the loans are written-off.
vi. Income Tax Expense
 Income tax expense comprises of current
and deferred income tax and 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. 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
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ANNUAL REPORT 2012/13
ii. the amount of the obligation cannot be
measured with sufficient reliability.
 All letter of credit, bank guarantee and
forward exchange contract liabilities 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.
G. 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 Note 16 to the
financial statements.
H. Earnings Per Share
Basic Earnings per Share is calculated for
profit or loss attributable to the Bank's and
the Subsidiary's 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.
 126
Nabil Bank Limited
 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.
Diluted Earnings per Share is calculated for
profit or loss attributable to the Bank's and
the Subsidiary's 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 I. Basis of Interest Computation
dilutive potential ordinary shares:  Interest expenses on
i. profit or loss attributable to ordinary equity deposits/borrowings/bonds and interest
holders of the Bank and the Subsidiary is income on loans & local currency investments
increased by the after-tax amount of are computed on the basis of 365 days a
dividends and interest recognised in the year.
period in respect of the dilutive potential
ordinary shares and is adjusted for any other  Interest on foreign currency investments is
changes in income or expense that would computed on the basis of 365 days a year for
result from the conversion of the dilutive GBP and 360 days a year for USD, EUR,
potential ordinary shares; and DKK and JPY.
ii. the weighted average number of ordinary 8.2 The Bank and its subsidiary adopt
shares outstanding is increased by the uniform accounting policies for like
weighted average number of additional transactions and events in similar
ordinary shares that would have been circumstances.
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.
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ANNUAL REPORT 2012/13

Schedule 33

Notes to Accounts

1. EQUITY
1.1. Changes in paid-up equity capital
Nepal Rastra Bank (NRB), the licensing and regulatory authority, has prescribed NRs.2 billion as
minimum equity capital requirement for class A licensed commercial banks.The Banks capital
position at balance sheet date is as follows:
NRs. 000
PARTICULARS REGULATORY MINIMUM NABIL BANK

Paid Up Capital 1,600,000 3,046,052

Reserves eligible for Tier - I Capital Fund 400,000 3,372,697
Total Equity Capital 2,000,000 6,418,749

1.2. Proposed changes in paid-up equity capital

The Board of Directors of the Bank, in its meeting dated September 6, 2013, has passed a resolution
recommending for distribution of stock dividend at 25% of paid up equity capital at year ended July
15, 2013. The Banks paid up equity capital shall increase by NRs.609,210 thousands upon
approval from the upcoming shareholders Annual General Meeting.

1.3. Chronology of stock issuance

Since incorporation, the Bank has increased its paid up equity capital to NRs.3,046,052 thousands
from initial level of NRs.28,182 thousands.

NRs. 000
PARTICULARS EQUITY ENHANCEMENT DURING
ENHANCEMENT FINANCIAL YEAR

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) 177 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 580,645 2010 - 11
Issuance of 20% Bonus Shares 407,073 2012 - 13
Capital Issued and Paid up at balance sheet date 2,436,842
*NRs.40 per share was capitalized from retained earnings to make paid up value NRs.100.
128
Nabil Bank Limited

1.4. General Reserve

The banks reserve position is presented hereunder:
NRs. 000
PARTICULARS AMOUNT AMOUNT

Opening balance 2,176,500

Minimum regulatory requirement @ 20% of net profit 443,752
Actual amount transferred to General Reserve 444,000 444,000
Closing balance 2,620,500

1.5. Contingent Reserve

The Bank has appropriated NRs.1,000 thousands in contingent
reserve out of current years net profit.

In the current year the bank paid NRs.400 thousands to an employee as reimbursement of medical
expenses incurred for his heart surgery performed in India. 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 13,274

Add: Appropriation from current year's Profit 1,000
Less: Transferred to Retained Earnings on account of Hospitalization expense reimbursement to staff (400)
Closing balance 13,874

1.6. Deferred Tax Reserve

Deferred tax reserve has increased due to creation of additional deferred tax assets during the current year.

NRs. 000
PARTICULARS TEMPORARY DIFFERENCE AMOUNT

Opening balance 42,575

Capital nature expense charged in Profit & Loss Account 614 184
Deferred tax assets on other temporary differences 6,050 1,815
Closing balance 44,575
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ANNUAL REPORT 2012/13

1.7. Investment Adjustment Reserve (IAR)

The bank has maintained adequate IAR as required in NRB directives 04/069 and 08/069. Detail
calculation of IAR requirement under different categories of investment is presented hereunder:

NRs. 000
PARTICULARS NET INVESTMENTS RESERVE REQUIREMENT MOVEMENT IN RESERVE

Opening balance 94,031

Shares of local licensed institutions 122,581 24,081 9,834
- Listed securities @ 2% 47,735 955 29
- Not listed securities @ 100% 22,071 22,071 8,750
- Not listed securities @ 2% 52,775 1,056 1,056
Shares of local organized institutions 82,936 78,000 -
- Not listed securities (Subsidiary) @ 100% 78,000 78,000 -
- Exempted securities * 4,936 - -
Other Investments 107,041 4,141 2,357
- Listed securities (Nabil Balance Fund I) @ 2% 105,000 2,100 2,075
- Not listed securities (SWIFT shares) @ 100% 2,041 2,041 282
Closing balance 312,558 106,222 106,222

* These investments are exempted from IAR requirement per provisions in

NRB Directives 4/069 and 8/069.

The bank has maintained IAR equivalent to 100% of its equity investment in subsidiary company in
compliance to clause 3 of NRB Directive 8/069. The bank has also deducted such investment while
calculating Tier I Capital per the same clause.

1.8. Exchange Fluctuation Fund

Licensed institutions are required to appropriate 25% of net revaluation income to exchange
fluctuation fund each year. This is a requirement under section 45 of the Banks and Financial
Institutions Act 2006 and applies to revaluation gain on foreign currency position except the Indian
currency. The bank is in compliance to this requirement and the calculation of such appropriation is
presented hereunder:

NRs. 000
PARTICULARS AMOUNT AMOUNT

Opening balance 126,300

Minimum regulatory requirement @ 25%
of revaluation gain presented in Schedule 22 23,923
Actual amount transferred to Exchange Fluctuation Fund 24,000 24,000
Closing balance 150,300
130
Nabil Bank Limited

2. PROPOSED DIVIDEND
2.1. Nabil Bank
For the year ended on July 15, 2013, the Board of Directors of the Bank have recommended for
distribution of dividend NRs.65 per share (65%) that consists of a cash dividend of NRs.40 per share
(40%) and a stock dividend of NRs.25 per share (25%). This will be decided at the forthcoming
Annual General Meeting of the Bank. Total cash dividend proposed for the year will amount to
NRs.974,737 thousands.

Proposed cash dividend has been appropriated from the profit and disclosed separately on the face of
balance sheet per provisions in NRB Directive 4/069.

2.2. Subsidiary (Nabil Invest)

Until endorsement of Bank's financial statement, the Board of Directors of Nabil Invest is yet to
endorse its financial statements. The company's total distributable reserve as of balance sheet date is
NRs. 23,643 thousands an increase by NRs.21,167 thousands from last year's figure.

2.3. No interim dividends were paid during the year by the Bank or Subsidiary. Withholding tax will be
deducted at source at 5% at the time of dividend payment.

3. CAPITAL REDEMPTION RESERVE

Per provisions in clause 5 of NRB directive 16/069 licensed institutions are required to maintain a
capital 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. As such the bank is required to create debenture redemption reserve starting from
financial year 2013/14.

4. ASSETS
4.1. Balance with Nepal Rastra Bank (NRB)
Reconciliation of NRB Balance (Ledger and Statement Balance)

NRs. 000
PARTICULARS LEDGER STATEMENT

Unreconciled balance as on 15.07.2013 4,789,295 3,972,779

We Debit (960,500)
They Debit (288)
We Credit 77,187
They Credit 67,085
Reconciled balance as on 15.07.2013 3,972,779 3,972,779
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ANNUAL REPORT 2012/13

Ageing details of pending items is presented as under:

NRs. 000

AGE LEDGER DEBIT STATEMENT DEBIT LEDGER CREDIT STATEMENT CREDIT

< 1 month 960,500 288 67,836 19,018

> 1 month < 3 months - - 5,522 972
> 3 month < 6 months - - 769 47,000
> 6 month < 12 months - - 1,382 96
> 12 month < 24 months - - 168 -
> 24 months - - 1,510 -
Total 960,500 288 77,187 67,085

4.2. Balance with domestic Banks and Financial Institutions

Reconciliation of domestic BFIs balance (Ledger and Statement Balance)
NRs. 000

PARTICULARS LEDGER STATEMENT

Unreconciled balance as on 15.07.2013 57,747 68,625

We Debit (1,394)
They Debit (121)
We Credit 7,267
They Credit 5,126
Reconciled balance as on 15.07.2013 68,625 68,625

Ageing details of pending items is presented as under:

AGE LEDGER DEBIT STATEMENT DEBIT LEDGER CREDIT STATEMENTNRs. 000

CREDIT

< 1 month 1,394 121 5,730 5,123

> 1 month < 3 months - - 4 3
> 3 month < 6 months - - 1533 -
> 6 month < 12 months - - - -
> 12 month < 24 months - - - -
> 24 months - - - -
Total 1,394 121 7,267 5,126
132
Nabil Bank Limited

4.3. Balance with foreign Banks and Financial Institutions

Reconciliation of foreign BFIs balance (Ledger and Statement Balance)

PARTICULARS LEDGER STATEMENT

Unreconciled balance as on 15.07.2013 (104,686) 1,687,369

We Debit (427,542)
They Debit (18,412)
We Credit 1,854,013
They Credit 383,997
Reconciled balance as on 15.07.2013 1,687,369 1,687,369

Ageing details of pending items is presented as under:

NRs. 000
AGE LEDGER DEBIT STATEMENT DEBIT LEDGER CREDIT STATEMENT CREDIT

< 1 month 427,542 13,721 1,853,612 342,139

> 1 month < 3 months - 24 186 35,379
> 3 month < 6 months - 4,667 5 3,465
> 6 month < 12 months - - 46 2,838
> 12 month < 24 months - - 101 -
> 24 months - - 63 176
Total 427,542 18,412 1,854,013 383,997

4.4. Inter-Branch Reconciliation

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

4.5. Loans and Advances

The Bank's year-on-year gross loans and advances rose by 11% to reach NRs.47,645,530 thousands.
Business Loans that comprise of term loans, overdraft, trust receipt and other working capital loans
occupy 66% of total lending portfolio. Similarly, about 25% of the portfolio is occupied by consumer retail
loans and credit card loans while 9% of total exposure is occupied by real estate loans.

During the current year major volume growth was achieved under business loans reporting 12%
increment. Real estate lending saw a decline of 5%.

NRB Directives 03/069 has defined real estate loans as residential real estate loans in excess of NRs.10
million; business complex and residential apartment construction loans; income generating commercial
complex loans; and other real estate loans for land purchasing and plotting.

NRs. 000
TYPE OF LOAN AND ADVANCES CURRENT YEAR PREVIOUS YEAR CHANGES VOLUME %

1. Real Estate Loan 4,435,751 4,671,457 (235,706) (5.0)

a. Residential Real Estate Loan
(except Home Loan up to NRs.10 million) 554,870 353,620 201,250 56.9
b. Business Complex & Residential Apartment Construction Loan 820,231 786,269 33,962 4.3
c. Income generating Commercial Complex Loan 614,565 610,300 4,265 0.7
d. Other Real Estate Loan
(Including Land purchase & Plotting) 2,446,085 2,921,268 (475,183) (16.3)
2. Personal Home Loan up to NRs.10 Million 3,270,349 2,446,109 824,240 33.7
3. Margin Type Loan - - 0.0
4. Term Loan 6,948,455 5,832,773 1,115,682 19.1
5. Overdraft / TR Loan / Working Capital Loan 24,555,456 22,402,265 2,153,191 9.6
6. Others 8,435,519 7,515,164 920,355 12.2
Total 47,645,530 42,867,768 4,777,762 11.1
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ANNUAL REPORT 2012/13

NRB Directives 03/069 has set a maximum ceiling of lending to total real estate sector at 25% of gross loans and
advances. Within this total ceiling there is a separate ceiling for lending to other real estate loans for land purchasing
and plotting at 10% of gross loans and advances. As at balance sheet date, bank has mere 9% exposure under this
head. The Bank stands in compliance to this requirement.

4.6. Investments
4.6.1. Held for Trading
The Bank does not hold investments that are primarily intended for trading purpose as of balance sheet date.

4.6.2. Held to Maturity Investments

Overall held to maturity investments of current financial year have increased by 15.6% over the previous financial year.
The HTM investment listed on the exchange market is presented net of impairment provision on the balance sheet date.

NRs. 000

TYPE OF INVESTMENTS AT COST IMPAIR-MENT CURRENT YEAR PREVIOUS YEAR CHANGE (%)

1. Nepal Government Treasury Bills * 4,603,924 - 4,603,924 4,494,594 2.4

- 91 days 998,042 - 998,042 1,996,147
- 182 days 595,442 - 595,442 198,428
- 251 days - - - 348,428
- 362 days 998,286 - 998,286 -
- 363 days 395,980 - 395,980 -
- 364 days 1,616,173 - 1,616,173 1,951,591
2. Nepal Government Other Securities 3,310,079 - 3,310,079 3,505,383 (5.6)
3. Foreign Bonds (denominated in US $) 239,654 11,773 227,881 196,245 16.1
4. Placement in local and foreign banks 7,877,602 - 7,877,602 5,659,108 39.2
Total 16,031,258 11,773 16,019,485 13,855,330 15.6

The Accrued Interest Receivable on treasury bills amounting to NRs.21,099 thousand on the balance sheet
date has been capitalised in the value of treasury bills, being amortisation of discount.

The increment reflected on Foreign Bonds (denominated in US $) in comparison to last year was due to
appreciation of US Dollar vis--vis NRs. No other foreign bonds were further acquired or disposed during the
current financial year.

4.6.3. Available for Sale Investments

The Bank's Available for Sale investments comprised of all investments other than held to maturity
investments and held for trading investments.

NRs. 000
TYPE OF INVESTMENTS AT COST IMPAIRMENT NET MARKET

INVESTMENT VALUE

1. Listed Securities 154,309 1,574 152,735 586,198

- Equity in local licensed BFIs 49,309 1,574 47,735 304,949
- Mutual Fund units 105,000 - 105,000 105,000
- Equity in foreign entities - - - 176,249
2. Not listed Securities 162,767 2,945 159,823 -
- Equity in local licensed BFIs 65,791 2,945 62,846 -
- Equity in local BFIs under licensing process 12,000 - 12,000 -
- Equity in other local institutions 4,936 - 4,936 -
- Equity in SWIFT 2,041 - 2,041 -
- Equity in subsidiary company 78,000 - 78,000 -
Total 317,076 4,518 312,558 586,198
134
Nabil Bank Limited
4.6.3.1. Equity investments in local licensed BFIs
These comprise of equity investments in promoter shares of
licensed rural development banks and micro financial
institutions. These investments are also intended for compliance
of mandatory requirements of deprived sector lending as
prescribed by the regulator. These investments are recognized at
cost considering inactive trading for bulk promoter's shares and
unavailability of market prices for such shares.
The market price in Stock Exchange generally represents closing
trading price of ordinary shares issued to public equity holders.
Promoter shares are often traded at lower price compared to
ordinary 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.
The Bank, with due compliance to the regulatory provisions, has
appropriated fund from retained earnings to investment
adjustment reserve for these investments. In addition, these
investments are also tested for impairment on equity basis and
any impairment loss is recognized in the Profit and Loss account
as described in Principal Accounting Policies under Provision on
Investment.
4.6.3.2. 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. During the current year the bank 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% has been subscribed by
the Fund Manager. The last traded price at Nepal Stock
Exchange was NRs.10.06 per unit.
As at balance sheet date the Net Assets Value of Nabil Balanced
Fund I is NRs.10.22 per unit.
4.6.3.3. 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 1,114 units of Class B Common Stock having a
par value of USD 0.0001 each. 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
15th July 2013, the adjusted closing price (for stock splits and
dividends) of Class A common stock was USD 595.87 per
share. The fair value of the Bank's holding of 1,114 units of
common stock is around NRs.63,692 thousands (USD
663,799 @ NRs.95.95 per USD).
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 7th February, 2011 and
trades at same price as Class A or Class B shares. At 15th July
2013, the Class A common stock were priced at USD 190.25
per share and the fair value of the Bank's holding on that date is
NRs.112,557 thousands (USD 1,173,082 @ NRs.95.95 per
USD).
4.6.3.4. Equity investments in BFIs under licensing process
These comprise of equity investments in promoter shares of
micro financial institutions which are under approval process for
obtaining license from the regulator. Investment is these entities
are intended towards meeting the regulatory minimum deprived
sector lending requirement.
4.6.3.5. Equity investments in Subsidiary
As of balance sheet date, the Bank has invested NRs.78,000
thousand in its subsidiary holding an effective equity interest of
74.29%.
4.6.3.6. Equity investments in other local institutions
These comprise equity investments made in local companies
complementary to the banking industry. The Bank holds
promoter group equity shares in KarjaSuchana Kendra Limited,
National Banking Training Institute and Nepal Clearing House
Ltd.

4.6.3.7. 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
denominated in EUR. 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
3,300 at the June 2011 General Meeting of SWIFT
shareholders. There has been no revision in transfer value since
then.
These shares are recognized at cost being the actual transfer
value paid while subscribing to the shares awarded to the Bank.
135
ANNUAL REPORT 2012/13
4.7. Fixed Assets
4.7.1. Capital Work in Progress (WIP)
Carrying amount of capital work-in-progress building include
costs incurred for construction of the banks own building for
Birgunj Branch. As of balance sheet date the entire civil
structure work has been completed and 90% of interior work
has also been completed. Accordingly, proportionate project
work valuations have been recognized as capital work in
progress.
4.7.2. Leasehold Assets
Summary of movement in leasehold assets of the Bank and
Group is presented hereunder:
136
Nabil Bank Limited

NRs. 000

PARTICULARS NABIL BANK SUBSIDIARY CO. GROUP

At Cost 77,144 2,625 79,769

- opening balance 90,009 2,458 92,467
- additions this year 5,976 167 6,143
- deductions this year (18,841) - (18,841)
Amortization 37,942 1,327 39,269
- opening balance 40,304 808 41,112
- additions this year 16,297 519 16,816
- deductions this year (18,659) - (18,659)
Net closing balance 39,202 1,298 40,500

4.8. Other Assets

4.8.1. Stock of Stationery
As at balance sheet date, the Banks closing stock of stationery is valued at NRs.7,554 thousands.
Out of this stationery worth NRs.2,996 thousands are held at branches and those worth NRs.4,558
is held at central store. No material items that are disposable at the balance sheet date were held in
possession.

4.8.2. Income receivable on Investments

Income receivable on investments comprised of interest accrued on placements and bonds. Interest
accrued on treasury bills, being amortisation of discount, has been capitalised in the bid value of bills.

NRs. 000
PARTICULARS LOCAL CURRENCY FOREIGN CURRENCY TOTAL

- Interest accrued on placements - 92,566 92,566

- Interest accrued on bonds 29,985 3,258 33,243
Total 29,985 95,824 125,809

4.8.3. Accrued Interest Receivables (AIR) on loans

This comprise of interest on loans, advances and bills accrued but not yet due at balance sheet date
as well as those that stand overdue but not realized in cash. As at balance sheet date the interest
accrued but not yet due totaled NRs.80,361 thousands and overdue interest totaled NRs.301,935
thousands.

Per regulatory provisions interest suspense has been recognized equivalent to the entire AIR which is
not realised in cash. This is presented in Schedule 16 of the Financial Statements.

4.8.4. Sundry Debtors

Sundry debtors comprise of accounts receivables and deposits at Large Tax Payer's Office. Deposit at
LTPO is made in line with the requirement of Income Tax Act which stipulates for deposition of 1/3 of
disputed tax before contesting at the IRD for Director General's review against the assessment order.
The deposit reported under this head pertains to assessment of income years 2006-07 and 2007-08.
This tax deposit is not clubbed with advance tax in order to make appropriate presentation of the
bank's net corporate tax liabilities.
 137
ANNUAL REPORT 2012/13

NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Account Receivables 885,086 363,129

- Nepal Rastra Bank 6,918 1,307
- Customers * 119,169 346,633
- Employees ** 15,527 15,159
- Others 743,472 30
Deposit at Large Tax Payers Office 4,074 277
Total 889,160 363,406

* Provision on Accounts Receivable Customers amounting NRs.638 thousands has been set off with receivables from customers.
** Similarly, Provision on Accounts Receivable Employees amounting NRs.506 thousands has been set off with receivables from employees above.

4.8.5. Staff loans and advances

Staff loan 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 YEAR PREVIOUS YEAR

Auto Loan 32,579 25,020

Personal Loan 168,784 148,325
Housing Loan 673,977 640,251
Total 875,340 813,596

4.8.6. Prepayments
Following is the details of prepayments outstanding as on balance sheet date.

NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Prepaid items
- Rent 7,526 7,614
- Insurance 13,154 10,905
- Maintenance 5,626 6,290
- Communication 3,500 4,373
- Others 2,711 2,458
Total 32,517 31,640
138
Nabil Bank Limited

4.8.7. Others
Items presented under this head are security deposits for availing
public utility services and interest receivable on staff loans.
NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR

AIR on Staff Housing Loan 173,755 136,657

Advance deposits for utilities 1,477 1,592
Total 175,232 138,249

Interest receivable on Staff Housing Loan are realised 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. The employees
pay insurance premium in respect of 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 surpluses or shortfalls are on account of concerned employees.

4.9. Bullion
As at balance sheet date, the Bank has held 309 Kilograms of gold in its possession.
The fair market value of the gold as on that date is NRs.1,223,510 thousands.
Kilograms

PARTICULARS GOLD SILVER

Opening balance 160 -

add : consignments received during the year 3,750 48,500
less : sold to local commercial banks (3,224) (22,500)
less : sold to local non bank parties (377) (26,000)
Closing balance 309 -
Value in USD
- Gold USD 1,290.00 per Ounce 12,751,534
- Silver USD per Ounce -
Value in NRs.000 (@ NRs.95.95 per USD) 1,223,510 -

As detailed in Schedule 32 on Significant Accounting Policies, the Bank acts as an agent of the
consignor and hence does not recognise bullion stock in its books as an inventory.

5. LIABILITIES
5.1. 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.

5.2. Deposits
5.2.1.During the current financial year, the Bank has been able to increase overall deposits by 15.6%
or NRs.8,586,113 thousands. Movement in different deposit segments is presented hereunder:
 139
ANNUAL REPORT 2012/13

NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR CHANGES %

VOLUME

Interest Free Deposits 8,451,849 7,417,377 1,034,472 13.9

- local currency 6,462,890 5,963,884 499,006 8.4
- foreign currency 1,988,958 1,453,493 535,465 36.8
Interest Bearing Deposits 55,157,960 47,606,318 7,551,642 15.9
- local currency 47,814,777 41,599,887 6,214,890 14.9
- foreign currency 7,343,182 6,006,431 1,336,751 22.3
Total 63,609,808 55,023,695 8,586,113 15.6

5.2.2. Deposit Insurance

The bank has insured savings and fixed deposits of all natural person 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 on 13th December 2011. As of balance sheet date,
the total insured deposit portfolio is NRs.7,926,497 thousands and total number of insured deposit
account holders is 215,633.

5.3. Bills Payable

Bills payable comprise of manager's cheques, demand drafts, traveller's cheques issued by the Bank
and bills (cheques) realised on behalf of customers from Nostro banks but not yet credited in
customers' accounts. Cheques (drafts) of nostro banks issued by the bank are credited in the
respective nostro accounts instead of bills payable.

NRs. 000
PARTICULARS CURRENT YEAR PREVIOUS YEAR

Local currency bills 315,681 70,813

- demand draft 10,580 41,431
- bill of exchange 44 27
- manager's cheque 305,058 29,355
- travellers' cheque - -
Foreign currency bills 213,917 108,329
- demand draft - -
- bill of exchange 195,176 91,971
- manager's cheque 5,372 4,771
- travellers' cheque 13,369 11,587
Net closing balance 529,598 179,142
140
Nabil Bank Limited

5.4. Other Liabilities

5.4.1. 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 NRs.2,133 thousands from this fund.

NRs. 000

PARTICULARS CURRENT YEAR

Opening balance 78,441

- settled in respect of retired employees (310)
- settled in respect of resigned employees (1,823)
Closing balance 76,308

Gratuity obligations that have accrued after Mid July 2003 have been settled
in the same year they arose.

5.4.2. Employees Welfare / Leave Fund

Calculation for current years incremental obligation under leave liability in respect of accrued
employees leave is presented hereunder:

NRs. 000

PARTICULARS AVERAGE LAST WEIGHTED TOTAL LEAVE

DRAWN MONTHLY AVERAGE LEAVE OBLIGATION
SALARY ACCRUED (MONTHS)

As at 15-Jul-2012 37,813 1,716 64,893

As at 15-Jul-2013 44,830 1,821 81,653

Incremental leave obligation in current year 7,017 105 16,760

Incremental impact of:

- salary raise (on leave balance at 15-Jul-2012) 7,017 12,043

- increased leave period ( @ salary level at 15-Jul-2013) 105 4,718

Incremental leave obligation in current year 16,760

 141
ANNUAL REPORT 2012/13

Employees leave obligation increased as a result of increase in total number of weighted average leave
accrued (in months). Employees start earning leave accrual days as they spend first few years in
service. Afterwards, accrual days start to reach ceiling, if not utilized, and the pace of leave
accumulation subside. Increase in total number of weighted average leave is due to the same reason.
Salary of permanent employees at all corporate levels were raised in the current year leading to raise
in average salary.

5.4.3. Staff Bonus

In line with provision of Bonus Act 1974, employee bonus is provided as under:

NRs. 000

APARTICULARS CURRENT YEAR PREVIOUS YEAR

Net profit before bonus and taxes as per CY's PL 3,485,695 2,651,139
Adjustments:
- Error rectification on Premium Amortisation of NRB Dev. Bonds 6,884
- Error restated on Previous Year's Profit (6,884)
Adjusted Net profit before bonus and taxes of CY for bonus calculation 3,478,811
Net profit before bonus and taxes reported in PY's PL 2,658,024
Provision for staff bonus @ 10% of net profit before tax (316,256) (241,639)

5.4.4. Unearned income

As of balance sheet date, the Bank's total outstanding on unearned income stood NRs.93,836
thousands, detail of which is presented hereunder:

NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR

- on letter of credit - 40,369

- on bank guarantee 90,144 109,805
- on forward forex deals 520 -
- on loan extended under subvention schemens 3,172 4,903
Total 93,836 155,077
142
Nabil Bank Limited

Unearned income on guarantee and forward deals is presented under Unearned Discount and
Commission in Schedule 7 and unearned income on loans are presented under Others in the same
schedule of the Financial Statements.

5.4.5. Sundry creditors

NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR

- TDS payable 106,445 97,846

- VAT payable 497 678
- Stale instruments 4,073 5,364
- Payable to Customers 335,115 369,160
- Payable to Employees 1,419 826
- Other Payables 3,268 14,720
Total 450,816 488,594

5.4.6. Dividend Payable

The Bank's dividend payable at balance sheet date stands NRs.41,098 thousands,
details of which is presented hereunder:
NRs. 000

PARTICULARS CURRENT YEAR

Dividend relating to profit of Financial Year (FY)

1989 - 1990 to 1999 - 2000 2,399
2000 - 2001 to 2004 - 2005 5,074
2005 - 2006 to 2010 - 11 20,900
2011 - 2012 12,725
Total 41,098

In consonance of 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 1st August 2012
calling them to collect unclaimed dividends.

5.4.7. Others
Detail of items presented as S.No.13 Others in Schedule 7 is presented hereunder:

NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Accrued expense payable 5,632 3,744

Unearned income on Loans 3,172 45,272
Total 8,805 49,015

5.5. Staff Housing Fund
The Bank has been extending housing loans to its employees
and therefore provision for staff housing fund as required by the
Labour Act 1992 has not been made. The Bank has recognized
interest income on staff housing loan on accrual basis in line
with NRBs approval.
6. CONTINGENT LIABILITIES (OFF BALANCE
SHEET ITEMS)
Bank's outstanding claim at the beginning of current financial
year from the beneficiaries of expired bank guarantees stood at
NRs.16,387 thousand. These claims were not honoured during
the current financial year and were continued to report under
"Claims on Institution but not accepted by the Institution".
In addition, claims from two beneficiaries of unexpired
guarantees received during the current year and remained
pending as of reporting date has been disclosed under this head.
Of these claims, the concerned applicant paid NRs.29,130
thousand directly to the beneficiary for full settlement of
NRs.32,400 thousand and sought for release of guarantee. Until
the reporting date, as no release was obtained from the
beneficiary, the Bank recognized the difference of NRs.3,470
thousand as its contingent liability. In respect of another claim,
the applicant received a stay order from the Patan Appellate
Court. Until reporting date, the case is pending and accordingly
the Bank has recognized NRs.3,060 thousand as its contingent
liability.
Together with opening claims and aforementioned 2 claims,
Bank's closing contingent liability under "Claims on Institution
but not accepted by the Institution" is NRs. 22,916 thousand.
7. INCOME
7.1. Interest Income on loans and advances
In addition to regulatory provision of recognising interest income
from loans and advances on cash basis, NRB directive 04/069
proviso to Section 5(1) has allowed BFIs to recognise such
interest income, that accrued till year end but was recovered in
cash within 15 days after year-end, in the income of current
year. The Bank did not chose to exercise this option and
recognized only those interest accrued and recovered in cash
within 15th July 2013 as interest income for current year.
7.2. Dividend income
The Bank has recognized NRs.20,588 thousands as dividend
income during the current financial year. This includes dividend
earned from domestic entities NRs.26,098 thousands
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ANNUAL REPORT 2012/13
(accounted net of tax deduction at source @ 5%), NRs.6,263
thousands refunded to RMDC vide instruction of CIAA and
dividend earned from foreign entities NRs.754 thousand
(NRs.664 thousand from Visa Inc. and NRs.90 thousand from
MasterCard Inc. accounted on gross basis).
Tax deducted by foreign entities is claimed at the time of filing
income tax returns to the maximum extent available as per
Income Tax Act of Nepal.
7.3. Income from Non Deliverable Forward (NDF)
The Bank has recognized premium on Non Deliverable Forward
transactions as Foreign Exchange Income. During the current
financial year, Bank's net earnings against Non Deliverable
Forwards as proprietary income is NRs.110,075 thousands and
same from customer (on behalf of other banks) is Rs.56,935
thousands. As of 15th July 2013, Bank's NDF exposure was
USD16 million equivalent to NPR.1,535,200 thousands (at
NRs.95.95 per USD).
8. EXPENSES
8.1. Staff Expense
8.1.1. Gratuity expense
The Bank, during the current financial year, settled Rs.103,919
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.
Current years gratuity expense is NRs.55,349 thousands or
114% higher than that of previous year. The main reason is due
to increment in employees salary. Cumulative impact of salary
revision on gratuity expense falls only in the year of the
increment. Hence the expense figure is high for current year.
8.1.2. Uniform
The bank expensed NRs.14,562 thousands as uniform expense
in the current year. As per Employee By-laws, office uniform is
provided to employees up to certain corporate level once in
every two years. 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.
8.1.3. Others
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Nabil Bank Limited

Employees expense Others NRs.75,044 thousand presented under Others in Schedule 23 comprise of
overtime expenses, dashain expense (festival allowance), funeral grant, leave encashment, vehicle
maintenance expenses and cash incentives.

NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR

- funeral grant 270 135

- cash incentive 132 285
- overtime expense 896 798
- dashain allowance 25,337 25,455
- leave encashment and provisions 48,409 31,212
Net closing balance 75,044 57,885

During the current financial year, the Bank accounted leave expense of NRs.48,409 thousands in
total. Of total, NRs.16,760 thousands was to provided for incremental leave obligation (presented in
Schedule 7) while NRs.31,648 thousands was paid in cash. Per Employee By-laws, accrued leave in
excess of ceiling for accumulation are settled on every Mid April through cash.

8.2. Impairment Loss

Impairment loss on investments was recognized respectively for foreign bonds and equity investments.
Impairment loss on foreign bond was recognized as per international market price prevalent on 15th
July 2013. Impairment on equity investments was recognized on equity basis for three micro-financial
institutions based on provisional financial statement received from these institutions.
NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Impairment loss (net of write back) :

- on loans and advances (net of write back) 13,610 356,536
- on investments (11,525) 23,254
- on FCY bonds (12,262) 21,998
- on FCY derivative instruments - (214)
- on LCY equity instruments 737 1,470
- on account receivable from customers 639 0
Total 2,723 379,790
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ANNUAL REPORT 2012/13

8.3. Income and Deferred Tax

8.3.1.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 Nabil Invest.

8.3.2.After adjusting for disallowable and tax free items the Bank and Nabil Invest have computed
corporate tax liability of NRs.946,885 thousands and NRs.7,258 thousands respectively.

NRs. 000

PARTICULARS NABIL BANK SUBSIDIARY CO.

Profit from all activities 3,485,695 31,046

- provision for staff bonus (316,256) (2,822)
Profit before tax and tax related adjustments 3,169,439 28,223
Add back disallowable expenses 20,697 807
- donation 15 -
- employees' leave provision 16,760 182
- capital nature expense charged to revenue 614 -
- excess repair expense - 275
- excess depreciation expense 3,308 351
Deduct allowable expenses and inadmissible income (33,852) -
- gain on sale of fixed assets (983) -
- gratuity expense paid to employees (1,510) -
- write back of provision on investment (11,525) -
- dividend income from domestic companies (net) (19,835) -
- excess depreciation charged for tax computation -
Taxable Income 3,156,284 29,031
Corporate Tax Liability @ 30% and @ 25% respectively 946,885 7,258
Note: figures stated in parenthesis are deductible balance.
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Nabil Bank Limited

8.3.3.Accounting 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 dividend received from domestic companies (the
tax of which is final withholding tax).

NRs. 000
PARTICULARS NABIL BANK SUBSIDIARY CO. INTER-CO. GROUP TOTAL

ADJUSTMENTS

Profit from all activities 3,485,695 31,046 (7,410) 3,509,331

- provision for staff bonus (316,256) (2,822) - (319,078)
Profit before tax and tax related adjustments 3,169,439 28,223 (7,410) 3,190,253
Adjustments for permanent difference: -
- donation 15 - - 15
- dividend income from domestic companies (19,835) - - (19,835)
Accounting profit after adjustments 3,149,620 28,223 (7,410) 3,170,433
Accounting tax @ 30% and @ 25% respectively (A) 944,886 7,056 - 951,942
Current Tax (B) 946,885 7,258 - 954,143
Deferred tax income in profit and loss account (B-A) 1,999 202 - 2,201

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

NRs. 000
PARTICULARS NABIL BANK SUBSIDIARY CO. INTER-CO. GROUP TOTAL

ADJUSTMENTS

Profit before tax and tax related adjustments 3,169,439 28,223 (7,410) 3,190,253
- corporate tax rate 30% 25%
Corporate tax 950,832 7,056 957,888
Tax impact of permanent difference:
- donation 5 - 5
- dividend income from domestic companies (5,950) - (5,950)
Prior period tax 5,792 - 5,792
Total Accounting Tax 950,678 7,056 390 958,123
Accounting Tax as expensed in Profit and Loss account:
- current tax 946,885 7,258 390 954,533
- deferred tax (1,999) (202) (2,201)
- prior period tax 5,792 - 5,792
Total tax expense in Profit and Loss account 950,678 7,056 390 958,123
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ANNUAL REPORT 2012/13

8.3.5.The Banks deferred tax assets (DTA) as at 15th July 2013 rose to NRs.44,575 thousand from
last years NRs.42,575 thousands. The rise in DTA is mainly attributable to increase in leave liability.
On the other hand, Nabil Invests deferred tax liability as at 15th July 2013 reduced to nil from last
years NRs.47 thousands.

Details of temporary differences and deferred tax assets/liabilities as at 15th July 2013 are presented
below:
NRs. 000

CURRENT YEAR PREVIOUS YEAR

PARTICULARS NABIL BANK NABIL INVEST GROUP NABIL BANK NABIL INVEST GROUP

Temporary difference on fixed assets (31,854) 296 (31,558) (34,793) (330) (35,123)
- tax base 549,504 6,435 555,939 604,679 6,622 611,301
- carrying value 581,358 6,139 587,497 639,472 6,952 646,424
- unused tax losses - - - - - -
Other Items of temporary differences 180,436 324 180,760 176,711 142 176,853
- provision for other assets 5,561 - 5,561 5,561 - 5,561
- employees' leave provision 81,653 324 81,977 64,893 142 65,035
- employees' gratuity provision 76,931 - 76,931 78,441 - 78,441
- investment impairment provision 16,291 - 16,291 27,817 - 27,817
Net temporary difference * 148,582 619 149,202 141,918 (188) 141,730
Deferred tax assets @ 30% / 25% 44,575 155 44,730 42,575 42,575
Deferred tax liability @ 30% / 25% - - (47) (47)

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

8.3.6.The carrying amount and tax base of fixed assets of the Bank having taxable / deductible
differences are presented as under:

NRs. 000
PARTICULARS CARRYING AMOUNT TAX BASE TAXABLE DIFFERENCE

Asset Class :
- vehicle 116,003 108,100 7,903
- building 206,048 201,870 4,178
- software 26,305 23,084 3,221
- leasehold 39,202 34,113 5,089
- office equipment 193,799 181,402 12,398
- other assets - 934 (934)
Total 581,358 549,504 31,854
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Nabil Bank Limited

8.3.7.The Bank and its subsidiary have deposited advance tax in line with Income Tax Act 2002. The
amount is disclosed in the face of balance sheet by netting with income tax liabilities. The advance tax
and tax liabilities of the Bank and its subsidiary have not been offset while presenting it in
consolidated financial statements.

NRs. 000

PARTICULARS NABIL BANK SUBSIDIARY CO. GROUP

Opening balance 51,106 (4,527)

add : current tax 946,885 7,258
less : advance tax paid (880,013) (6,330)
less : previous year's tax paid (51,106) -
Closing balance : liability / (asset) 66,873 (3,599)

NRs. 000
DETAILS OF ADVANCE TAX PAYMENTS NABIL BANK SUBSIDIARY CO. GROUP

- 1st instalment 350,640 - 350,640

- 2nd instalment 262,980 - 262,980
- 3rd instalment 262,980 - 262,980
- tax deducted at source by withholder 3,413 6,330 9,742
Total 880,013 6,330 886,342

8.3.8.In addition to current tax and prior period tax, the Bank has also borne dividend tax of
NRs.1,670 thousands in respect of cash and bonus dividend received from the domestic company.
Tax on dividend being final withholding tax, the dividend earnings are accounted on net basis.

9. CONTINGENT INCOME TAX LIABILITY

Large Tax Payers Office (LTPO) conducts reassessment of each years tax filing done by the Bank
within four years after end of each year. Following reassessment, LTPO can issue reassessment order
for revision in 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 2008-09. For the reassessment of last three years however, the bank has contested against the
upward revision in tax liability as issued by LTPO in their reassessment order. Total contested amount
for NRs.14,987 thousands in respect of these three income years has been recognized as Continent
Liability and presented in Schedule 17 of Financial Statements.

10. NON CONTROLLING INTEREST (NCI)

As at balance sheet date, the Banks effective interest in Nabil Invest remained at 74.29% while that
of NCI remained at 25.71%.
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ANNUAL REPORT 2012/13

10.1. Share of non-controlling interest (NCI) in the profit of subsidiary

For current financial year, the gross earnings of Nabil Invest is NRs.31,046 thousand and attributable
bonus and corporate tax is NRs.9,878 thousand. Based on NCIs effective interest of 25.71% held in
the subsidiary as at balance sheet date the net profit attributable to NCI is shared as under:

NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Subsidiary's operating profit 31,046 15,794

- less : provision for staff bonus (2,822) (1,436)
- less : provision for income tax (7,056) (3,589)
Subsidiary's net profit 21,167 10,769
NCI's share @ 25.71% 5,443 2,769

10.2. Non-controlling interest (NCI) in consolidated balance sheet

With share in profit and the funds invested, the equity of NCI as at balance sheet date stands
NRs.33,178 thousands recording a growth of 9.49% over that of previous year as stated hereunder:

NRs. 000
SUBSIDIARY CO. NCI'S SHARE

PARTICULARS CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Carrying amount
- paid up equity capital 105,000 105,000 27,000 27,000
- reserves and surplus 24,165 12,975 6,214 3,336
Total 129,165 117,975 33,214 30,336
increment in carrying amount (%) 9.49% 9.49%

11. Risk Management and Basel II
Disclosure
11.1.Basel II disclosure has always been a
guiding principle at Nabil Bank in addressing
the risks and adopting measures to minimize
their impact. Increasing complexities in risks
and fast changing world pose a threat to
sustainability. 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. Risk Management is a
daunting task that has a grave impact on our
operations. Failure in identifying the risk and
its correction/management in time poses a
serious threat on sustainability.
11.2. The major risk the Bank faces in the
business is Credit where about three fourth of
its incomes come from. Equally this poses a
major threat when any account turns to NPA
as margin against the same is very thin.
Therefore Banks Credit Risk Management has
always been kept in high priority. Any risk
generation and their impact on long term
perspective is well deliberated in the proposal,
risks and returns are properly weighed and
mitigating measures are properly spelled. The
bank has clear demarcation on business
generation and risk management where any
proposal for approval is passed through proper
fitness test, long term soundness test with
knowledge on business, against which credit is
to be sanctioned. Looking at the criticality of
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Nabil Bank Limited
the businesses and their importance, the Bank has re-aligned its
structure and processes in a way whereby such risks can be
minimized and assessed in a quantifiable manner. Accordingly the
Bank has set up a separate credit risk division, which is headed
by the Chief Risk Officer, one of the most senior level positions in
the Bank. The division oversees global, macro, micro and unit
level risk that arises out of daily business operation and equally
due to changes in the market conditions with that particular
business of the unit. The Banks credit functions are broadly
categorised as Large and Corporate (including infrastructure
financing), SME and Retail credit. Credit Risk Division is manned
with separate set of skills for analysing risks in these different
credit functions, all of them report to the Chief Risk Officer. Daily
report from central level and periodic review of facilities too gives
input for timely action on any relationship which warrant for
correction.
11.3.The Bank makes decision to finance by assessing the
business. It also ensures 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. 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 inspection of the business and
suggestion for timely corrective actions help protecting the
business from the viewpoint of borrower as well. Besides, where
any business faces difficulties and poses a risk to the Bank in
terms of fall in the value of assets, in those circumstances it
makes adequate 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.
11.4.Bank has the policies and operation manuals that stipulate
proper governance and procedure for all credit relationship.
Similarly monitoring of business and annual review of entire
relationship including review of the facilities gives the bank an
idea whether or not to take forward the relationship. Besides this,
periodic review of same by the Internal Audit Department 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 relationship strength are
independently assessed by Internal Audit and the advice is taken
positively for necessary changes. Processes are well defined where
checking, control and independency of the credit risk function is
fully complied with.
11.5.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
and the Board. Senior Management or the Board on need basis
issue instruction as apt wherever necessary.
11.6.One of the growing risks among other these days is
Operation Risk that arises out of inefficient processes and people
inside and outside the Bank. Equally system is another area of
concern where it has witnessed growing threat from outside. 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.
11.7.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 at
remote/branch. Similarly awareness to the public is made on our
service and products periodically. Staff is well educated and is put
to the operation for action once one gets well acquainted with the
banks functioning. Any staff for the first time in any job is put
under the supervision of an experienced staff and is 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.
11.8.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 MIS
to capture deviations, if any. 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.
11.9.Each desktop is implemented with Active Directory
System (ADS) which does not allow user to take away the data
in devices like data traveller (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 centre so that any loss
of data in desk top can be retrieved from data centre.
11.10.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 locally are
taken into account before arriving at the decision. The cases
where the Bank needs expert's 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.
11.11.Market Risks are addressed through the Asset and
Liability position and management of same on daily basis. The
limits for open position are controlled level wise which ensures
151
ANNUAL REPORT 2012/13
in-depth knowledge of the market and movement before taking
decision (by choice). The monthly reports on such aspects are
well discussed and dealt in ALCO (Asset Liability Management
Committee). The committee ensures functioning of the jobs in
line with the policies and procedures and
suggests/recommends for necessary steps collectively 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 front office which
reports to the Chief Financial Officer and exposure accounting
including booking of income/expense is done from back office
which reports to the Chief Operating Officer. The Bank
assesses the open position on daily basis and calculates risk
exposure for allocation of required capital in line with Basel
provisions.
11.12.Further the Bank takes on the capital adequacy norms
pursuant to the central bank's statutory provision for Basel
requirement under Basel - II. 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 provides for adequate capital
to withstand the inherent risks against the assets the Bank
finances. 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
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 29 years.
The adequacy of capital is seriously taken into consideration at
regular meetings like ALCO, X-Com and board meetings.
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Nabil Bank Limited
11.13. Risk Management and Reporting Line are presented as follows:
Chief Executive Officer
Chief Risk Officer
Head-Operation Risk, Head Infrastructure,
AML & Compliance Corporate, SME, PLU Credit
11.14.Internal audit of the Bank is independent from the
management and directly reports to Audit Committee, a board
level committee. Internal Audit too has adopted risk based
auditing approach and keeps recommending the suggestions for
the area needing higher attention. Further the Banks Strategic
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.
11.15.The Bank has developed a risk assessment culture and
has in place the required reports for assessing concentration of
risks. Periodical 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.
11.16.Pursuant to the guidance of Capital Adequacy Framework
2007 (updated July 2008) issued under NRB Unified Directives,
the Bank recognises following credit risk mitigating factors in
order to manage the Banks credit risks:
 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.
ALCO (including CEO)
(Market Risks -
exchange, interest,
Head Legal equity price, liquidity
(Legal Risks)
and other risks)
Legal, Share &
Company Secretariat
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.
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ANNUAL REPORT 2012/13

During the current financial year, the Bank has availed the benefits of credit risk mitigation as under:

NRs. 000

PARTICULARS CURRENT YEAR

Benefits availed of following credit risk mitigants :

- deposit with own bank 1,602,890
- deposit with other banks and financial institutions -
- securities and bank guarantees issued by foreign banks 1,965,074
- securities issued by Nepal Government and Nepal Rastra Bank 842,015
Total 4,409,979

While availing the benefits of credit risk mitigation, supervisory haircuts have been assigned on case
to case basis by:

 20%, in case of CRM that is deposits with other banks and financial institutions,
 20% and 50%, in case of CRM that is security / guarantee of foreign banks
with ECA rating 0 - 1 and 2.

11.17. Capital Structure and Capital Adequacy:

As at balance sheet date, the Bank's capital adequacy status is as under:

11.17.1. Tier 1 capital and a breakdown of its components:

NRs. 000

PARTICULARS CURRENT YEAR

Eligible items for Tier - I Capital Fund :

a. Paid up equity share capital 2,436,841
b. Irredeemable Non-cumulative preference shares -
c. Share Premium 74
d. Proposed Bonus Shares 609,210
e. General Reserves 2,620,500
f. Retained Earnings 704,970
g. Current year Profit/(loss) -
h. Capital Redemption Reserves -
i. Capital Adjustment Reserves -
j. Dividend Equalization Reserves -
k. Deferred Tax Reserve 44,575
l. Other Free Reserves 2,578
m. Less: Goodwill -
n. Less: Fictitious Assets not written off -
o. Less: Investment in equity of licensed Financial Institutions -
p. Less: Investment in equity of institutions with financial interests (78,000)
Core Capital Fund (Tier - I) 6,340,749
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Nabil Bank Limited

11.17.2. Tier 2 capital and a breakdown of its components:

NRs. 000

PARTICULARS CURRENT YEAR

Eligible items for Tier - II Capital Fund :

a. Cumulative and / or Redeemable Preference Share -
b. Subordinated Term Debt 300,000
c. Hybrid Capital Instruments -
d. General loan loss provision * 453,370
e. Exchange Equalization Reserves 150,300
f. Investments Adjustment Reserves 106,222
g. Assets Revaluation Reserves -
h. Other Reserves 13,874
Supplementary Capital Fund (Tier - II) 1,023,766

* Maximum available limit is NRs.794,221 thousands being 1.25% of total risk weighted exposures.

11.17.3. Details of Subordinated Term Debt:

The Bank has issued Nabil Bank Bond 2075 (2018 AD) for NRs.300 million in July/August 2008.
Main features of Nabil Bank Bond 2075 are as follows:

 Maturity period: 10 Years.

 Interest rate: 8.5% per annum.
 Interest Payment frequency: Half Yearly.
 Claim in case of liquidation: After depositors.
 Capital Redemption Reserve shall be created from year 2013/14 (i.e. from 6th year).

11.17.4. Deductions from Capital:

The Bank has deducted NRs.78,000 thousands in respect of its equity investment in subsidiary,
while calculating its core capital.

11.17.5.Risk weighted exposures for Credit Risk, Market Risk and Operational Risk:

NRs. 000

PARTICULARS CURRENT YEAR

Risk Weighted Exposures :

- for Credit Risk 57,191,503
- for Operational Risk 5,011,134
- for Market Risk 89,170
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 1,245,836
Total Risk Weighted Exposures (after bank's adjustments of Pillar II) 63,537,644
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ANNUAL REPORT 2012/13

11.17.6. Risk weighted exposures under each 11 categories of Credit Risk:

NRs. 000

PARTICULARS CURRENT YEAR

Risk exposure categories under Credit Risk :

a. Claims on Government & Central Bank -
b. Claims on Other Financial Entities -
c. Claims on Banks 2,982,328
d. Claims on Domestic Corporates and Securities Firms 32,523,380
e. Claims on Regulatory Retail Portfolio 1,430,844
f. Claims Secured by Residential Properties 2,427,730
g. Claims secured by Commercial real estate 864,879
h. Past due claims 2,088,003
i. High Risk claims 3,796,559
j. Other Assets 4,289,407
k. Off Balance Items 6,788,373
Total risk weighted Exposure under Credit Risk 57,191,503

11.17.7. Capital Adequacy and Risk Weighted Exposure

NRs. 000

PARTICULARS CURRENT YEAR

Total Capital Fund 7,364,515

- Core Capital Fund (Tier - I) 6,340,749
- Supplementary Capital Fund (Tier - II) 1,023,766
Total Risk Weighted Exposures (RWE) 63,537,644
Tier - I Capital Fund to Total RWE (%) 9.98
Total Capital Fund to Total RWE (%) 11.59
12. Statement of Liquidity Risk Analysis as at 15 July 2013
NRs. 000 156

S.NO. PERIOD: 0 - 7 DAYS 8 - 30 DAYS 31 - 90 DAYS 91 - 180 DAYS 181 - 270 DAYS 271 - 365 DAYS 1 YEAR ABOVE TOTAL

Assets :
1 Cash Balances 1,140,212 - - - - - - 1,140,212
Nabil Bank Limited

2 Balances held with Banks and Financial Institutions (47,590) - - - - - 4,789,946 4,742,356
3 Investments in Foreign Banks - 2,044,083 1,423,778 1,885,284 191,900 1,421,031 719,405 7,685,481
4 Call Money 1,634,306 - - - - - - 1,634,306
5 Government Securities - - 1,996,328 1,337,334 407,178 1,562,973 2,610,190 7,914,002
6 NRB Bonds - - - - - - - -
7 Inter-Bank / Financial Lending / Investments in Local Banks - 335,825 95,950 - - - - 431,775
8 Loans and Advances (including staff loans) 801,912 2,023,569 4,730,343 4,252,443 2,841,446 2,841,446 31,029,711 48,520,869
9 Accrued Interest Receivables (including AIR from staff loans) 22 124,281 98,028 73,658 53,253 50,870 281,749 681,860
10 Reverse Repo - - - - - - - -
11 Receivable under Commitment - - - - - - - -
12 Receivable under facility mentioned in S. No. 20, 21 and 22 1,157,191 1,761,466 5,394,507 3,213,939 1,545,751 1,105,750 6,293,849 20,472,454
13 Others 7,010 23,804 43,778 3,135 - - 35,060 112,787
Total Assets 4,693,063 6,313,029 13,782,713 10,765,792 5,039,527 6,982,070 45,759,909 93,336,103
Liabilities :
14 Current Deposits (Including Margin Deposits and Matured TDs) 339,436 509,155 - - - - 7,603,258 8,451,849
15 Savings Deposit 1,084,179 1,626,269 - - - - 20,625,698 23,336,146
16 Fixed Deposits 394,765 863,498 1,848,052 1,651,848 1,950,290 2,585,698 1,491,879 10,786,028
17 Bonds / Debentures - - - - - - 300,000 300,000
18 Borrowings: - - - - - - - -
Call / Short Notice - - - - - - - -
Inter-Bank / Financial Institutions - - - - - - - -
Refinance - - - - - - - -
Others (Standing Liquidity Facility) - - - - - - - -
19 Other Liabilities and Provisions 162,806 448,952 185,432 109,807 4,729 4,661 178,780 1,095,167
Sundry Creditors - - - - - - - -
Bills Payable 103,373 155,060 155,060 103,373 - - - 516,865
Accrued Interest Payable - - 65 - - - - 65
Provisions - - - - - - - -
Others 59,432 293,892 30,308 6,434 4,729 4,661 178,780 578,237
20 Payable to Institutions under Commitment (Customer Acceptance) 218,911 383,875 316,425 49,172 - - - 968,382
21 Unutilised Credit Facilities 720,191 488,280 1,050,871 760,794 674,585 541,782 125 4,236,627
22 Letter of Credit / Guarantee (Net) 346,666 1,085,030 4,626,601 2,095,090 720,132 531,861 6,186,359 15,591,740
23 Repo - - - - - - - -
24 Payable of facilities under mentioned in S. No. 11 - - - - - - - -
25 Call Deposit 761,957 1,142,935 - - - - 19,130,894 21,035,785
26 Others 220 - - - - - - 220
Total Liabilities 4,029,130 6,547,993 8,027,381 4,666,710 3,349,736 3,664,002 55,516,992 85,801,945
Net Assets 663,933 (234,964) 5,755,332 6,099,082 1,689,791 3,318,068 (9,757,084) 7,534,159
Cumulative Net Assets 663,933 428,969 6,184,302 12,283,384 13,973,175 17,291,242 7,534,159 -
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ANNUAL REPORT 2012/13

13. Related Parties Disclosures
13.1.The Bank has entered into financial transactions with the
following entities where the directors have financial interest.
13.1.1.United Insurance Company (Nepal) Ltd. - Mr. Ashish
Sharma and Mr. Nirvana Chaudhary have held positions of
chairman and director respectively in the Company during the
current financial year. As at 15th July 2013, Nabil Bank owed
NRs.1,338 thousands to United Insurance in current account
deposit.
No loans were granted to the Company. All transactions with the
Company were on arms length.
13.1.3.Employees Provident Fund - Mr. Krishna Prasad
Acharya, director of the Bank, has held position of Chief
Administrator (CEO) until the balance sheet date. The
Employees Provident Fund, one of the largest provident fund
mobiliser in Nepal, has depository relationship with Nabil Bank.
As at balance sheet date, total deposit liability owed to
Employees Provident Fund amounted NRs.53,119 thousands
and total interest paid totaled to NRs.3,300 thousands.

In addition, Bank purchased various insurance policies to secure No loans were granted to the EPF. All transactions with the EPF
risks on assets. The coverage of risks inter alia encompassed were on arms length.
bankers' blanket insurance on cash in vault, transit and ATM;
fire insurance on Office Equipment, Wooden Furniture, Building 13.2.All related party transactions between the Bank and its
& Leasehold Assets; machinery breakdown insurance on Office subsidiary are disclosed under note 13.5 Transactions with
Equipment;burglary insurance on Office Equipment, Wooden Nabil Invest. Such transactions are eliminated in Consolidated
Furniture; and fire and burglary insurance on bullions. Total risk Financial Statements.
exposures secured was NRs.1,509,402 thousands and total
insurance premium paid for these insurances amounted 13.3. Key management personnel
NRs.3,669 thousands. The Bank has however discontinued Key Management Personnel of the Bank include members of the
purchasing policies from the Company and has not renewed Board, Chief Executive Officer and all managerial level
since expiry. executives. Following is a list of Board of Directors and CEO
bearing office as at 15th July 2013.
Furthermore, Bank carried agency services on behalf of
Company in line with the agency agreement to solicit Company's
Mr. Krishna BahadurManandhar Chairman
policies to the Bank's customer. During the current financial
Mr. Shambhu Prasad Poudyal Director
year, Bank has earned NRs.827 thousand through the agency
service from the Company. Mr. Dayaram Gopal Agrawal Director
Mr. Krishna Prasad Acharya Director
No loans were granted to the Company. All transactions carried Mr. Nirvana Kumar Chaudhary Director
with the Company were on arms length. Mr. Ashish Sharma Director
Mr. Mohiuddin Ahmed Director
13.1.2.CG Finco Pvt. Ltd. - Mr. Nirvana Chaudhari is a Mr. Anil Gyawali Chief Executive Officer
Chairman of the Company and it has depository relationship
with the Bank. As at balance sheet date, the Bank owed
NRs.2,644 thousands and has paid interest NRs.106
thousands during the current financial year.

CG Finco is also shareholder of Nabil Invest, the subsidiary of

Nabil Bank. During the current financial year, the Company
received NRs.2,565 thousands net dividend declared @ 10%
from the profit of last financial year.
158
Nabil Bank Limited

13.4. Compensation to key management personnel of the Bank

13.4.1. 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 YEAR PREVIOUS YEAR

Meeting Fees Paid 922 1,076

Allowance and other expenses relating to Board Meetings 1,534 2,168
Total Compensation Paid 2,456 3,244

Allowances paid to directors include Rs.15 thousand per month paid for covering newspaper and
communication expenses. Other expenses include 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.

13.4.2. Compensation to Management Level Employees

During the current financial year NRs.215,421 thousands was incurred towards compensation to
Management Team. This includes NRs.1,886 thousands for additional leave expense accrued
during the year.
NRs. 000
MANAGERIAL LEVEL HEAD SHORT TERM POST RETIREMENT TOTAL
COUNT BENEFITS BENEFITS BENEFITS

Chief Executive Officer 1 15,985 935 16,920

Asst. General Manager and above 8 45,725 6,974 52,699
below Asst. General Manager 43 110,193 35,610 145,803
Total 52 171,903 43,518 215,421

Other benefits (perquisites) are provided to CEO and managerial
level employees as per the Bank's policy. Above, head count and
total benefits paid is including in respect of those management
personnel who retired/resigned during the year. As of balance
sheet date, total 50 management personnel (including CEO) are
in the services of the Bank.
13.5. Transactions with Nabil Invest
13.5.1.The Bank has entered into a Service Level Agreement
(SLA) with Nabil Invest for the provision of management services.
Provisions laid in SLA are in line with arms length principle.
13.5.2.In line with the SLA, the Bank received NRs.500
thousands in respect of providing various administrative services
and NRs.3,836 thousands in respect of providing technical
management services to Nabil Invest.
13.5.3.The Bank paid NRs.3,472 thousands to Nabil Invest as
interest on deposit accounts maintained by Nabil Invest with the
Bank. Such deposit balances of Nabil Invest as of 15th July
2013 is NRs.104,352 thousands.
13.5.4.The Bank also paid management fee for operating bullion
business in line with SLA. The SLA prescribed fees @ 30% on
the net income from bullion business after deduction of all
related charges. During the year, the Bank paid NRs.9,982
thousands to Nabil Invest for the operation of bullion business.
13.5.5.The Bank received net dividend NRs.7,410, thousands
from Nabil Invest distributed at the rate of 10% from the profit of
last financial year (2011-12).
13.5.6.All receipt and payment transactions entered into by the
Bank with Nabil Invest were made net of TDS. The TDS has
been duly deposited at the Large Taxpayer's Office.
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ANNUAL REPORT 2012/13

14. Ratios and other information

14.1. Weighted average interest rate spread
During the current financial year, in line with market rates, weighted average yield on loans and advances has decreased.
Similarly, weighted average cost on deposits and borrowings has decreased due to similar reasons. However, better
reduction under cost of deposit has bolstered improve spread.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Weighted average interest :

- yield on loans and investments 9.14% 10.69%
- cost on deposit and borrowings 3.67% 5.74%
Net Interest Spread 5.48% 4.95%

Annual average of loans, investments, deposits and bonds/borrowings have been taken while computing the above data.

14.2. 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 Schedule 31 "Principal Indicators". As on balance sheet date, the Banks and the Groups earnings per
share stood at NRs.95.14 and NRs.95.48 respectively. Compared to last year, these figures are higher by NRs.11.57 and
NRs.11.71 respectively.

PARTICULARS NABIL BANK GROUP

Net Profit for the year (in NRs. 000) 2,218,762 2,226,686
Weighted average number of outstanding shares 23,320,064 23,320,064
Earnings per Share in NRs. 95.14 95.48
Earnings per Share in NRs. (previous year) 83.23 83.43
Annual growth rate in Earnings per Share 14.31% 14.45%

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.95.14 and
NRs.95.48 respectively.

14.3. Non-performing assets

14.3.1. Amount of non-performing assets (both gross and net)
The Bank's non-performing assets as at balance sheet date amounted NRs.1,015,177 thousands, which is 2.13% of total
loan. The bank has set aside possible loss provisioning of NRs.808,370 thousands in respect of these loan assets. The
provision (related to non performing assets) coverage for the non performing assets is 80%. Similarly total provision coverage
(NRs.1,275,695 thousands) over the non performing assets is 126%.
NRs. 000

PARTICULARS CURRENT YEAR PREVIOUS YEAR CHANGES %

Loan Classification per NRB's definition

- pass loan 46,630,353 41,867,709 4,762,645 11.4
- non performing loans 1,015,177 1,000,059 15,118 1.5
- restructured / rescheduled - 17,204 (17,204) (100)
- substandard 204,962 162,441 42,521 26.2
- doubtful 104,422 36,784 67,638 183.9
- loss 705,792 783,630 (77,837) (9.9)
Gross loans and advances 47,645,530 42,867,768 4,777,762 11.1
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Nabil Bank Limited

14.3.2. NPA Ratios

NRs. 000

PARTICULARS GROSS NPL LOSS PROVISION NET NPL

Performing Loan (pass loan) 46,630,353 467,325 46,163,028

Non Performing Loans (NPL) : 1,015,177 808,370 206,807
- restructured/ rescheduled - - -
- substandard 204,962 51,289 153,673
- doubtful 104,422 52,320 52,102
- loss 705,792 704,760 1,032
Total 47,645,530 1,275,695 46,369,835

NPL Ratios :
Gross NPL to Gross loans and advances 2.13%
Net NPL to Net loans and advances 0.45%
This year NPA ratio has improved to 2.13% when compared to 2.33% in the previous year.

14.4. Write off loans and interest suspense

Written off loan is presented in Schedule 28(A) of the financial statements.
Additional information on interest suspense related to such loan is presented as under:

NRs. 000
PARTICULARS AMOUNT

Loan Written Off 27,843

Interest Suspense related to written off loan 14,748

14.5. Summary of book write off loan and recovery

NRs. 000
PARTICULARS PRINCIPAL INTEREST TOTAL

- loan written off till previous year 678,919 266,472 945,391

- loan written off in current year 27,843 14,748 42,592
Total loan written off (A) 706,762 281,220 987,983
- recovered till previous year (448,112) (75,699) (523,811)
- recovered in current year (8,322) (2,120) (10,442)
Total recovery from written off loan (B) (456,434) (77,819) (534,253)
Net not recovered portion (A-B) 250,328 203,401 453,730
- book write off 234,318 164,604 398,923
- actual write off * 16,010 38,797 54,807
Recovery ratio (on total write-off amount) 64.58% 27.67% 54.08%

*The bank has relinquished its recovery rights considering remote possibility of loan recovery.
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ANNUAL REPORT 2012/13

14.6. Movement in loan loss provision and interest suspense

With increase in business volumes figures of loan loss provisions and interest suspense has also
increased. The rise in loan loss provision of 1% is mainly due to incremental gross loan volume.
Gross loan volume has increased by 11% compared to that of previous year. Per regulatory
provisions the bank is required to maintain loss provisioning in respect of performing loans at 1% of
loan amount. Similarly, 3% rise in interest suspense is against 7% fall in gross interest income.

NRs. 000
PARTICULARS CURRENT YEAR PREVIOUS YEAR CHANGES %

Loan Loss Provision 1,275,695 1,262,085 13,610 1.08

Interest Suspense 382,296 371,152 11,144 3.00

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 PREVIOUS YEAR

Interest Income in Income Statement 5,702,122,918 6,126,854,828

Interest Income from Long term Investment (239,364,585) (215,912,363)
Income Receivable on Short Term Investments (Current Year) (92,594,687) (101,475,564)
Income Receivable on Short Term Investment (Previous Year) 101,475,564 56,982,150
Interest Receivable on Staff Housing Loan (Current Year) (173,755,044) (136,656,764)
Interest Receivable on Staff Housing Loan (Previous Year) 136,656,764 112,624,270
Unearned Interest Income - Vehicle Loan (Current Year) 909,046 1,992,921
Unearned Interest Income - Vehicle Loan (Previous Year) (1,992,921) (4,069,060)
Unearned Interest Income - Housing Loan (Current Year) 2,263,079 2,909,903
Unearned Interest Income - Housing Loan (Previous Year) (2,909,903) (672,550)
Unearned Interest Income - Bills (Current Year) - 40,368,893
Unearned Interest Income - Bills (Previous Year) (40,368,893) (17,744,581)
Cash Inflow 5,392,441,338 5,865,202,083

15.1.2. Commission and Discount Income

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Commission and Discount Income in Income Statement 393,050,514 366,387,194

Unearned Commission - Guarantee (Current Year) 67,000,243 109,805,125
Unearned Commission - Guarantee (Previous Year) (109,805,125) (54,643,419)
Cash Inflow 350,245,632 421,548,900
162
Nabil Bank Limited

15.1.3. Income from Foreign Exchange Transaction

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Exchange Income in Income Statement 489,051,079 447,070,485

Unearned Commission - Forward (Current Year) 23,663,585 -
Unearned Commission - Forward (Previous Year) - -
Cash Inflow 512,714,664 447,070,485

15.1.4. Interest Expense

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Interest Expense in Income Statement (2,186,184,871) (3,155,490,469)

Interest Payable on Deposit (Current Year) 64,854 38,399
Interest Payable on Deposit (Previous Year) (38,399) (1,108,860)
Interest Payable on Borrowing (Current Year) 3,712,957 3,856,189
Interest Payable on Borrowing (Previous Year) (3,856,189) (4,388,033)
Cash Outflow (2,186,301,648) (3,157,092,774)

15.1.5. Staff Expense

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Staff Expenses as per Income Statement (646,759,675) (500,712,844)

Bonus Expenses (regrouped from other liabilities) (316,255,521) (241,638,501)
Total Staff Expenses (963,015,196) (742,351,345)
Grauity Fund Balance (Current Year) 76,931,147 78,441,012
Grauity Fund Balance (Previous Year) (78,441,012) (87,626,265)
Leave Provision (Current Year) 81,653,026 64,892,721
Leave Provision (Previous Year) (64,892,721) (59,337,671)
Other Staff Expenses Payable (Current Year) - 69,574
Other Staff Expenses Payable (Previous Year) (69,574) -
Staff Bonus Payable (Current Year) 316,255,521 241,638,501
Staff Bonus Payable (Previous Year) (241,638,501) (190,943,019)
Cash Outflow (873,217,310) (695,216,492)
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ANNUAL REPORT 2012/13

15.1.6. Office Operating Expense

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Office Operating Expenses as per Income Statement (468,781,187) (430,909,132)

Depreciation / Amortisation on Fixed Assets / Intangibles 123,903,510 130,515,883
Accrued Expense Payable (Current Year) 6,732,393 4,745,609
Accrued Expense Payable (Previous Year) (4,745,609) (8,397,600)
Cash Outflow (342,890,893) (304,045,240)

15.1.7. Income Tax Payments

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Income Tax Expense in Income Statement (Current Year) (946,885,251) (728,302,031)

Prior Period Tax (5,791,658) -
Current Year Tax Liability 66,872,707 51,106,490
Previous Year Tax Liability (51,106,490) (44,104,071)
Cash Outflow (936,910,692) (721,299,612)

NRs.

RECONCILIATION OF INCOME TAX PAID FROM TAX EXHIBIT CURRENT YEAR PREVIOUS YEAR

Adv. Tax Deposited at the request of LTPO 20,000,000 -

1st Instalment of Corporate Tax Paid for FY 2069-70 330,640,000 262,000,000
Adv. Tax Deposited at the request of LTPO - 20,000,000
2nd Instalment of Corporate Tax Paid for FY 2069-70 262,980,000 176,500,000
Adv. Tax Deposited at the request of LTPO 30,000,000 20,000,000
3rd Instalment of Corporate Tax paid for FY 2069-70 232,980,000 196,000,000
Payment of Previous Year's Tax 51,106,490 44,104,071
Payment of Prior's Year Tax 5,791,658 -
TDS Deposition (Insurance Commision,
Technical Service Fee, Dividend) 3,412,544 2,695,541
Cash Outflow 936,910,692 721,299,612
164
Nabil Bank Limited

15.1.8. Other Expense

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Income/(Expense) from Extra-ordinary Activities

as per Income Statement (17,454,214) (3,036,749)
Recovery of Loan Write Off (10,441,593) (16,770,964)
Bad Loan Write Off 27,843,275 3,006,491
Cash Outflow (52,532) (16,801,222)

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

FY 2012/13 in NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Total Investment in Balance Sheet 16,332,043,012 14,048,965,792 (2,283,077,220)

Nepal Government Other Securities (3,310,078,588) (3,498,498,924) (188,420,336)
Foreign Bonds (239,654,168) (220,280,173) 19,373,995
Organized Institutions' Shares (210,034,800) (201,284,800) 8,750,000
Organized Institutions' Bonds and Debentures - - -
Indexed Linked and Credit Linked Deposits - (441,000,000) (441,000,000)
NCM Mutual Fund - (1,257,000) (1,257,000)
SWIFT Investment (2,041,186) (1,759,054) 282,132
Provision for Investments 16,291,166 27,816,665 11,525,499
Cash Inflow (Outflow) 12,586,525,436 9,712,702,506 (2,873,822,930)

FY 2011/12 in NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Total Investment in Balance Sheet 14,048,965,792 13,081,205,527 (967,760,265)

Nepal Government Other Securities (3,498,498,924) (2,255,275,527) 1,243,223,397
Foreign Bonds (220,280,173) (178,059,588) 42,220,585
Organized Institutions' Shares (201,284,800) (192,489,000) 8,795,800
Organized Institutions' Bonds and Debentures - - -
Indexed Linked and Credit Linked Deposits (441,000,000) (570,400,000) (129,400,000)
NCM Mutual Fund (1,257,000) (1,257,000) -
SWIFT Investment (1,759,054) (1,640,373) 118,681
Provision for Investments 27,816,665 4,562,809 (23,253,856)
Cash Inflow (Outflow) 9,712,702,506 9,886,646,848 173,944,342
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ANNUAL REPORT 2012/13

15.1.10. (Increase)/Decrease in Loans, Advances and Bills Purchase

FY 2012/13 in NRs.
PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Loans and Advances in Balance Sheet

(Net of Provision & Loan Write-Off) (46,369,834,571) (41,605,682,634) (4,764,151,937)
Net Provision Change (13,610,147) (13,610,147)
Loan Write Off During the Year (27,843,275) (27,843,275)
Cash Inflow (Outflow) (46,411,287,993) (41,605,682,634) (4,805,605,359)

FY 2011/12 in NRs.
PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Loans and Advances in Balance Sheet

(Net of Provision & Loan Write-Off) (41,605,682,634) (38,034,097,554) (3,571,585,080)
Net Provision Change (390,694,824) (390,694,824)
Loan Write Off During the Year (3,006,491) (3,006,491)
Cash Inflow (Outflow) (41,999,383,949) 38,034,097,554 (3,965,286,395)

15.1.11. (Increase) / Decrease in Other Assets

FY 2012/13 in NRs.
PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Other Assets in Balance Sheet

(Net of Provision) (2,150,185,391) (1,548,964,565) (601,220,826)
Income receivable on Investment 125,808,564 152,535,579 (26,727,015)
Interest receivable from Staff Housing Loan 173,755,044 136,656,764 37,098,280
Deferred Tax 44,574,722 42,575,441 1,999,281
Provision on Receivables (638,562) - (638,562)
Cash Outflow (1,806,685,623) (1,217,196,781) (589,488,842)

FY 2011/12 in NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Other Assets in Balance Sheet (1,548,964,565) (1,201,984,291) (346,980,274)

Income receivable on Investment 152,535,579 79,395,660 73,139,919
Interest receivable from Staff Housing Loan 136,656,764 112,624,270 24,032,494
Deferred Tax 42,575,441 34,382,312 8,193,129
Provision on Receivables - - -
Cash Outflow (1,217,196,781) (975,582,049) (241,614,732)
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Nabil Bank Limited

15.1.12. (Increase) / Decrease in Other Liabilities

FY 2012/13 in NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Bills Payable as per Balance Sheet 529,597,845 179,142,358 350,455,487

Other Liabilities as per Balance Sheet 1,071,099,849 1,072,481,023
Interest Payable on Deposits (64,854) (38,399)
Interest Payable on Borrowings (3,712,957) (3,856,189)
Gratuity Fund (76,931,147) (78,441,012)
Employees' Welfare Fund / Leave Fund (81,653,026) (64,892,721)
Provision for Staff Bonus (316,255,521) (241,638,501)
Dividend Payable (41,097,769) (35,197,741)
Unearned Income
(Int on Housing/Vehicle Loans and Bills) (3,172,125) (45,271,717)
Accrued Expense Payable (6,732,393) (4,745,609)
Unearned Income (Guarantee) (90,663,828) (109,805,125)
Other Staff Expenses Payable - (69,574)
450,816,229 488,524,435 (37,708,206)
Cash Outflow 312,747,281

FY 2011/12 in NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Bills Payable as per Balance Sheet 179,142,358 415,767,753 (236,625,395)

Other Liabilities as per Balance Sheet 1,072,481,023 859,405,624

Interest Payable on Deposits (38,399) (1,108,860)
Interest Payable on Borrowings (3,856,189) (4,388,033)
Gratuity Fund (78,441,012) (87,626,265)
Employees' Welfare Fund / Leave Fund (64,892,721) (59,337,671)
Provision for Staff Bonus (241,638,501) (190,943,019)
Dividend Payable (35,197,741) (27,302,999)
Unearned Income
(Int on Housing/Vehicle Loans and Bills) (45,271,717) (22,486,191)
Accrued Expense Payable (4,745,609) (8,397,600)
Unearned Income (Guarantee) (109,805,125) (54,643,419)
Other Staff Expenses Payable (69,574) -
488,524,435 403,171,567 85,352,868
Cash Outflow (151,272,527)
 167
ANNUAL REPORT 2012/13

15.2. From investing activities:

15.2.1. (Increase) / Decrease in Long Term Investments
FY 2012/13 in NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Foreign Bonds 239,654,168 220,280,173 (19,373,995)

Long Term Government Bonds 3,310,078,588 3,498,498,924 188,420,336
Shares Investment 210,034,800 201,284,800 (8,750,000)
Mutual Fund - 1,257,000 1,257,000
SWIFT Fund 2,041,186 1,759,054 (282,132)
Indexed Linked Deposits / Credit Linked Deposits - 441,000,000 441,000,000
Cash Outflow 3,761,808,742 4,364,079,951 602,271,209

FY 2011/12 in NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR INFLOW / (OUTFLOW)

Foreign Bonds 220,280,173 178,059,588 (42,220,585)

Long Term Government Bonds 3,498,498,924 2,255,275,527 (1,243,223,397)
Shares Investment 201,284,800 192,489,000 (8,795,800)
Mutual Fund 1,257,000 1,257,000 -
SWIFT Fund 1,759,054 1,640,373 (118,681)
Indexed Linked Deposits / Credit Linked Deposits 441,000,000 570,400,000 129,400,000
Cash Outflow 4,364,079,951 3,199,121,488 (1,164,958,463)

15.2.2. (Increase) / Decrease in Fixed Assets

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Addition during the Year (Excluding LeaseHold) (66,677,211) (77,329,458)

Addition during the Year (LeaseHold) (5,976,438) (14,649,650)
Closing Work In Progress (49,447,381) (6,553,648)
Opening Work In Progress 6,553,648 2,582,168
Disposal During the Year 7,847,648 10,200,485
Cash Outflow (107,699,734) (85,750,103)
168
Nabil Bank Limited

15.2.3. Interest Income from Long Term Investment

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Interest Income in Income Statement 239,364,585 215,912,363

Income Receivable on Long Term Investment (Current Year) (33,213,877) (51,060,015)
Income Receivable on Long Term Investment (Previous Year) 51,060,015 22,413,510
Cash Inflow 257,210,723 187,265,858

15.3. From investing activities:

15.3.1. Dividend Payments

NRs.

PARTICULARS CURRENT YEAR PREVIOUS YEAR

Closing Dividend Payable in Balance Sheet 41,097,769 35,197,741

Proposed Cash Dividend Previous Year (811,907,760) (608,930,820)
Opening Dividend Payable in Balance Sheet (35,197,741) (27,302,999)
Cash Outflow (806,007,732) (601,036,078)

16. Events after the Balance Sheet date

No circumstances have arisen since the Balance Sheet date which would require adjustments to or
disclosure in the Financial Statements other than those discussed below.

16.1. Proposed Dividend

The directors have recommended the payment of dividend of NRs.65 per share which consists of a
cash dividend of NRs.40 per share and a stock dividend of NRs.25 per share for the year ended
July 15, 2013. This will be declared at the forthcoming Annual General Meeting of the Bank for
approval of the shareholders.

16.2. Recognition of Interest Income on deferred cash basis

NRB directive 04/069 Section 5 has allowed BFIs to recognise interest income on loans and
advances that accrued till year end but was recovered in cash within 15 days after year-end, in the
income of current year. The Bank did not opt to exercise this option.
 169
ANNUAL REPORT 2012/13

17. Rounding off &regrouping

17.1. All figures have been rounded off to the nearest rupee.

17.2.Previous years figures have been regrouped/rearranged wherever necessary and explained as under:

17.2.1. Restatement of items in Balance Sheet

INVESTMENT NRS.

Balance disclosed in PY's Balance Sheet 14,055,850,055

- Reduction of erroneous unamortized Premium (6,884,263)
Restated Balance disclosed in CY's Balance Sheet 14,048,965,792

17.2.2. Restatement of items in Profit and Loss Account

INTEREST INCOME NRS.

Balance disclosed in PY's Profit and Loss Account 6,133,739,091

- Reduction of erroneous unamortized Premium (6,884,263)
Restated Interest Income disclosed in CY's Profit and Loss Account 6,126,854,828

17.2.3. Restatement of items in Schedules of Financial Statements

INTEREST INCOME NRS.

Balance disclosed in PY's Schedule 18 B.1.b. 202,946,829

- Rectification of erroneous Unamortized Premium on Bonds (6,884,263)
Restated Balance disclosed in CY's Schedule 18 B.1.b. 196,062,566

BOND NRS.

Balance disclosed in PY's Schedule 12 3,505,383,187

- Rectification of erroneous Unamortized Premium on Bonds (6,884,263)
Restated Balance disclosed in CY's Schedule 12 3,498,498,924

COMMISION INCOME CARDS NRS.

Balance disclosed in PY's Schedule 20 B.5. 111,378,070

- Rectification of erroneous offsetting of ATM Management Fee 2,311,980
Restated Balance disclosed in CY's Schedule 20. B.5. 113,690,050

HOUSE RENT NRS.

Balance disclosed in PY's Schedule 24 1. 52,486,027

- Regrouping of ATM Management Fee under Rent 2,311,980
Restated Balance disclosed in CY's Schedule 20. B.5. 54,798,007
170
Nabil Bank Limited

17.2.4. Restatement of items in Cash Flow Statements

CASH RECEIVED - INTEREST INCOME NRS.

Balance disclosed in PY's Cash Flow Statement a.1. 1.1 5,865,202,083

- Reduction of erroneous unamortized Premium (6,884,263)
Restated Balance disclosed in CY's Cash Flow Statement 5,858,317,820

(INCREASE)/DECREASE IN LONG-TERM INVESTMENT NRS.

Balance disclosed in PY's Cash Flow Statement b.1. (1,171,842,726)

- Rectification of erroneous Unamortized Premium on Bonds 6,884,263
Restated Balance disclosed in CY's Cash Flow Statement (1,164,958,463)

17.2.5. Restatement of items in Consolidated Balance Sheet

INVESTMENT NRS.

Balance disclosed in PY's Consolidate Balance Sheet 14,076,850,055

- Reduction of erroneous unamortized Premium (6,884,263)
Restated Balance disclosed in CY's Consolidated Balance Sheet 14,069,965,792

17.2.6. Restatement of items in Consolidated Profit and Loss Account

INTEREST INCOME NRS.

Balance disclosed in PY's Consolidated Profit and Loss Account 6,145,750,888

- Reduction of erroneous unamortized Premium (6,884,263)
Restated Interest Income disclosed in CY's Consolidated Profit and Loss Account 6,138,866,625

17.2.7. Restatement of items in Consolidated Cash Flow Statement

CASH RECEIVED - INTEREST INCOME NRS.

Balance disclosed in PY's Consolidated Cash Flow Statement a.1. 1.1 5,873,693,127
- Reduction of erroneous unamortized Premium (6,884,263)
Restated Balance disclosed in CY's Consolidated Cash Flow Statement 5,866,808,864

(INCREASE)/DECREASE IN LONG-TERM INVESTMENT NRS.

Balance disclosed in PY's Consolidated Cash Flow Statement b.1. (1,195,442,726)

- Rectification of erroneous Unamortized Premium on Bonds 6,884,263
Restated Balance disclosed in CY's Consolidated Cash Flow Statement (1,188,558,463)
 Schedule 34
Statement of Loans availed by promoters / shareholders classified under promoters' group
from other banks and financial institutions by pledging shares under their ownership

SHARES REGISTERED IN THE NAME OF PROMOTERS STATEMENT OF LOANS REMARKS

S. No. PROMOTERS / SHAREHOLDERS CLASSIFIED UNDER PROMOTERS GROUP TOTAL NO. OF SHARES % ON TOTAL PAID NAME OF BANKS / FINANCIAL LOAN AMOUNT NO. OF SHARES PLEDGED
UP CAPITAL INSTITUTION PROVIDING LOANS

Note: None of the promoters have borrowed money by pledging bank's shares. One of the promoters, NIDC, holding 10% shares of the Bank from the beginning, disposed 3.85% shares in F/y 2007-08 to the general public through auction.
Furthermore, it has disposed 1.08% shares during F/y 2012-13. These shares can be freely traded in NEPSE. 119 such shareholders holding 465,222 shares have pledged 368,239 shares with banks / financial institutions / cooperative societies
for borrowing money.
ANNUAL REPORT 2012/13
171
 172
Nabil Bank Limited

Comparison of Unaudited and Audited Financial Statement Schedule 35

As of 15.07.2013 of Financial Year 2012-13

VARIANCE.
S.N. PARTICULARS AS PER UNAUDITED AS PER AUDITED IN AMOUNT IN REASONS FOR
FINANCIAL STATEMENT FINANCIAL STATEMENT (NPR) % VARIANCE

1. Total Capital and Liabilities (1.1 to 1.7) 74,531,125 73,241,260 (1,289,865) -1.73%
1.1 Paid up Capital 2,436,841 3,046,052 609,210 25.00% Note 1
1.2 Reserve and Surplus 5,225,337 4,617,829 (607,508) -11.63% Note 2
1.3 Debenture and Bonds 300,000 300,000 - 0.00%
1.4 Borrowings - - - #DIV/0!
1.5 Deposits (a+b) 63,609,808 63,609,808 - 0.00%
Domestic Currency (a) 54,277,667 54,277,667 - 0.00%
Foreign Currency (b) 9,332,141 9,332,141 - 0.00%
1.6 Income Tax Liability 66,736 66,873 136 0.20% Note 3
1.7 Other Liabilities 2,892,402 1,600,698 (1,291,704) -44.66% Note 4
2. Total Assets (2.1 to 2.7) 74,531,125 73,241,260 (1,289,865) -1.73%
2.1 Cash and Bank Balance 5,882,569 5,882,569 - 0.00%
2.2 Money at Call and Short Notice 1,634,306 1,634,306 - 0.00%
2.3 Investments 16,348,334 16,332,043 (16,291) -0.10% Note 5
2.4 Loans and Advances 47,645,530 46,369,835 (1,275,695) -2.68% Note 6
2.5 Fixed Assets 872,322 872,322 - 0.00%
2.6 Non Banking Assets - - -
2.7 Other Assets 2,148,064 2,150,185 2,121 0.10% Note 7
3. Profit and Loss Account
3.1 Interest Income 5,702,123 5,702,123 - 0.00%
3.2 Interest Expense 2,186,185 2,186,185 - 0.00%
A Net Interest Income (3.1-3.2) 3,515,938 3,515,938 - 0.00%
3.3 Fees,Commission and Discount 393,051 393,051 - 0.00%
3.4 Other Operating Income 209,905 209,905 - 0.00%
3.5 Foreign Exchange Gain/Loss (Net) 489,051 489,051 - 0.00%
B Total Operating Income (A+3.3+3.4+3.5) 4,607,945 4,607,945 - 0.00%
3.6 Staff Expense 646,751 646,760 9 0.00%
3.7 Other Operating Expense 468,780 468,781 1 0.00%
C Operating Profit Before Provision (B-3.6-3.7) 3,492,414 3,492,404 (10) 0.00%
3.8 Provision for Possible Losses 492,700 27,451 (465,250) -94.43% Note 8
D Operating Profit (C-3.8) 2,999,714 3,464,953 465,239 15.51%
3.9 Non Operating Income/Expenses (Net) 17,832 13,469 (4,364) -24.47% Note 9
3.10 Write Back of Provision for Possible Loss 490,714 24,728 (465,986) -94.96% Note 10
E Profit from Regular Activities (D+3.9+3.10) 3,508,260 3,503,149 (5,111) -0.15%
3.11 Extra Ordinary Income/Expense (Net) (17,454) (17,454) - 0.00%
F Profit before Bonus and Taxes (E+3.11) 3,490,806 3,485,695 (5,111) -0.15%
3.12 Provision for Staff Bonus 316,720 316,256 (465) -0.15% Note 11
3.13 Provision for Tax 950,762 950,678 (85) -0.01% Note 12
G Net Profit/(Loss) (F-3.12-3.13) 2,223,323 2,218,762 (4,561) -0.21%
 173
ANNUAL REPORT 2012/13

NOTE:
1 Increase in Equity Capital as a result of proposed stock dividend @ 25% on paid up equity capital.
2 Impact on reserve due to stock dividend declaration of Rs. 609,210 thousand. In addition,
impact of dividend income Rs.1.9 million accounted post publication.
3 Impact on current tax liability due to booking of dividend (increment less reversal) giving arise to staff bonus (net) .
4 Provision on possible losses on Investments and Loans presented under Other Liabilities while publishing
fourth quarter unaudited financial results.
5 Investments reported on gross basis in fourth quarter unaudited financial results.
6 Loans, Advances and Bills reported on gross basis in fourth quarter unaudited financial results.
7 Booking of accounts receivable (dividend receivable) and other receivables.
8 Provision presented on net basis (incremental less writeback) in the Profit and Loss Account.
Additional loan loss provision of NRs.34,159 thousand booked.
9 Initially, dividend refund to RMDC vide instruction of CIAA was reported/adjusted directly to opening retained earning.
Considering non-applicability of NAS 2, Accounting Policiies, Changes in Accounting Estimates & Errors,
this has been reported/adjusted under extraordinary income.
10 Provision presented on net basis (incremental less writeback) in the Profit and Loss Account.
11 Proportional Impact of additional loan loss provisioning and dividend income in provision for staff bonus.
12 Proportional Impact of additional loan loss provisioning and staff bonus in provision for tax.
 174
Nabil Bank Limited

Unaudited Financial Highlights Schedule 4(A)

As at 4th Quarter End of FY 2012/13

AS AT
S.N. PARTICULARS 15 JULY 2013 13 APRIL 2012 15 JULY 2012 (AUDITED)
GROUP NABIL GROUP NABIL GROUP NABIL

1. Total Capital and Liabilities (1.1 to 1.7) 74,644,964 74,531,125 71,145,589 69,854,407 64,547,274 64,490,200
1.1 Paid up Capital 2,436,841 2,436,841 2,436,841 2,436,841 2,435,723 2,435,723
1.2 Reserve and Surplus 5,243,231 5,225,337 4,548,493 4,536,175 3,024,801 3,015,162
1.3 Debenture and Bond 300,000 300,000 300,000 300,000 300,000 300,000
1.4 Borrowings - - 1,450,000 1,450,000 311,080 311,080
1.5 Deposits (a+b) 63,517,756 63,609,808 57,308,041 57,597,877 54,905,676 55,023,695
Domestic Currency (a) 54,185,615 54,277,667 48,953,312 49,243,148 47,445,752 47,563,771
Foreign Currency (b) 9,332,141 9,332,141 8,354,729 8,354,729 7,459,924 7,459,924
1.6 Income Tax Liability 66,736 66,736 38,385 33,683 51,106 51,106
1.7 Other Liabilities 3,047,205 2,892,402 5,032,565 3,499,830 3,488,551 3,353,433
1.8 Non-Controlling Interest 33,194 - 31,264 - 30,336 -
2. Total Assets (2.1 to 2.7) 74,644,964 74,531,125 71,145,589 69,854,407 64,547,274 64,490,200
2.1 Cash and Bank Balance 5,909,059 5,882,569 5,661,561 4,451,850 4,294,046 4,275,822
2.2 Money at Call and Short Notice 1,634,306 1,634,306 942,300 942,300 826,436 826,436
2.3 Investments 16,360,194 16,348,334 16,754,428 16,701,252 14,104,667 14,083,667
2.4 Loans and Advances 47,645,530 47,645,530 45,100,468 45,100,468 42,867,768 42,867,768
a. Real Estate Loan 4,435,751 4,435,751 4,370,587 4,370,587 4,671,457 4,671,457
1. Residential Real Estate Loan (Except
Personal Home Loan up to Rs.10 Million) 554,870 554,870 427,930 427,930 353,620 353,620
2. Business Complex & Residential
Apartment Construction Loan 820,231 820,231 648,529 648,529 786,269 786,269
3. Income generating Commercial Complex Loan 614,565 614,565 569,284 569,284 610,300 610,300
Other Real Estate Loan
(Including Land purchase & Plotting) 2,446,085 2,446,085 2,724,845 2,724,845 2,921,267 2,921,267
b. Personal Home Loan up to 80 Lacs 3,270,349 3,270,349 2,753,004 2,753,004 2,446,109 2,446,109
c. Margin Type Loan - - - - - -
d. Term Loan 6,948,455 6,948,455 6,432,481 6,432,481 5,832,773 5,832,773
e. Overdraft Loan/TR Loan/WC Loan 24,555,456 24,555,456 24,246,954 24,246,954 22,402,265 22,402,265
f. Others 8,435,519 8,435,519 7,297,442 7,297,442 7,515,164 7,515,164
2.5 Fixed Assets 878,461 872,322 881,988 875,667 894,495 887,543
2.6 Non Banking Assets - - - - - -
2.7 Other Assets 2,217,414 2,148,064 1,804,844 1,782,870 1,559,863 1,548,965

Contd.
 175
ANNUAL REPORT 2012/13

Unaudited Financial Highlights Contd.

Schedule 4(A)

For the period ending on 4th Quarter of FY 2012/13

FOR THE PERIOD ENDING ON

S.N. PARTICULARS 15 JULY 2013 13 APRIL 2012 15 JULY 2012 (AUDITED)
GROUP NABIL GROUP NABIL GROUP NABIL

3. Profit and Loss Account 4 Quarters This Year 3 Quarters This Year 4 Quarters Last Year
3.1 Interest Income 5,721,591 5,702,123 4,218,025 4,204,779 6,145,751 6,133,739
3.2 Interest Expense 2,186,301 2,186,185 1,679,977 1,679,677 3,152,940 3,155,490
A Net Interest Income (3.1-3.2) 3,535,290 3,515,938 2,538,048 2,525,102 2,992,811 2,978,249
3.3 Fees,Commission and Discount 405,255 393,051 342,176 332,560 367,676 364,075
3.4 Other Operating Income 223,080 209,905 110,536 100,944 207,296 201,085
3.5 Foreign Exchange Gain/Loss (Net) 489,051 489,051 342,522 342,522 447,070 447,070
B Total Operating Income (A+3.3+3.4+3.5) 4,652,676 4,607,945 3,333,283 3,301,129 4,014,853 3,990,479
3.6 Staff Expenses 652,339 646,751 394,330 390,356 505,009 500,713
3.7 Other Operating Expenses 476,318 468,780 345,690 338,200 432,881 428,597
C Operating Profit Before Provision (B-3.6-3.7) 3,524,019 3,492,414 2,593,262 2,572,573 3,076,963 3,061,169
3.8 Provision for Possible Losses 492,700 492,700 480,289 480,289 413,949 413,949
D Operating Profit (C-3.8) 3,031,319 2,999,714 2,112,973 2,092,284 2,663,014 2,647,221
3.9 Non Operating Income/(Expenses) Net 10,422 17,832 1,587 1,587 9,940 13,840
3.10 Write Back of Provision for Possible Loss 490,714 490,714 305,365 305,365 - -
E Profit from Regular Activities (D+3.9+3.10) 3,532,455 3,508,260 2,419,925 2,399,236 2,672,954 2,661,060
3.11 Extra Ordinary Income/Expenses (Net) (17,454) (17,454) 6,557 6,557 (3,037) (3,037)
F Profit before Bonus and Taxes (E+3.11) 3,515,001 3,490,806 2,426,482 2,405,793 2,669,917 2,658,024
3.12 Provision for Staff Bonus 319,593 316,720 220,589 218,708 243,074 241,639
3.13 Provision for Tax 958,271 950,762 658,147 653,445 723,698 720,109
G Net Profit/(Loss) (F-3.12-3.13) 2,237,136 2,223,323 1,547,745 1,533,639 1,703,145 1,696,276
3.14 Share of Non-Controlling Interest
on Profit of Subsidiary 5,558 - 3,627 - 2,769 -
H Net Profit/(Loss) (G-3.14) 2,231,579 2,223,323 1,544,118 1,533,639 1,700,376 1,696,276

AS AT
4. RATIOS & OTHERS (%) 15 JULY 2013 13 APRIL 2012 15 JULY 2012 (AUDITED)

4.1 Capital Fund to RWA 13.29 13.17 12.93 12.85 11.18 11.01
4.2 Non Performing Loan (NPL) to Total Loan 2.13 2.13 3.40 3.40 2.33 2.33
4.3 Net Non Performing Loan to Net Loan 0.45 0.45 1.17 1.17 0.38 0.38
4.4 Cost of Funds 4.36 4.36 4.59 4.59 6.85 6.85
4.5 CD Ratio (as per NRB Directive) 74.42 74.43 76.60 76.33 74.69 74.65
 06
SHAREHOLDER
INFORMATION

06
STRUCTURE OF SHARE CAPITAL
GENERAL NB INTERNATIONAL
PUBLIC LIMITED

30% 50%

REPRESENTATION IN
THE BOARD OF DIRECTORS

Representation of A class shareholders

(in relation to 50% interest of NB International Ltd.)
1. Mr. K.B. Manandhar
2. Mr. Nirvana Chaudhary
OWNERSHIP 3. Mr. Dayaram Gopal Agrawal
4. Mr. Mohiuddin Ahmed
STRUCTURE OF NABIL
Representation of B class shareholders
(in relation to 20% interest of NIDC, other
institutional investors and other promoters group)
1. Mr. K.P. Acharya

Representation of C class shareholders

(in relation to 30% interest of public shareholders)
1. Mr. Shambhu Prasad Poudyal
2. Mr. Ashish Sharma

OTHER OTHER NIDC DEVELOPMENT

PROMOTER ENTITIES BANK
GROUP 10% 5.07%
4.93%
 177
ANNUAL REPORT 2012/13

06
SHAREHOLDERS PROFILE

As at balance sheet date (15th July 2013), the Banks share registrar,
M/s Nabil Investment Banking Ltd. has recorded following details of shareholders:

SHAREHOLDING RANGE NO. OF SHAREHOLDERS TOTAL SHARES HELD

1-100 4,001 216,645

101-500 4,683 1,212,391
501-1000 1,041 751,585
1001-2500 1,200 1,993,479
2501-5000 248 867,648
5001-10000 89 623,457
10001-25000 36 549,403
25001-50000 12 477,541
50001-100000 7 552,209
Above 100000 11 17,124,056
Total 11,328 24,368,414

06
STOCK SYMBOL

Nabil Banks shares are traded on the Nepal Stock Exchange Ltd. (NEPSE) with stock
symbol "NABIL" for ordinary shares and "NABILP" for promoter shares.
178
Nabil Bank Limited
06
ANNUAL GENERAL MEETING
The 29th Annual General Meeting (AGM) of the Bank
will be held on 27th December 2013 at 1:00 p.m.
Following agendas will be discussed in the meeting.
ORDINARY RESOLUTION
1. To receive and adopt Directors
Report 2012/13;
2. To receive and approve Balance Sheet as
of 15th July 2013, Profit/Loss Account and
Cash Flow Statement for the year ended
thereat, together with Auditors Report;
3. To approve consolidated books of
accounts i.e. including books of accounts of
Banks subsidy Nabil Investment Banking
Limited for F.Y. 2012/13;
4. To approve cash dividend @ 40% of the
Paid-up Capital (i.e Rs.40/- per share) as
proposed by the Board; and
5. To appoint Auditor(s) for the financial year
2013/14 (2070/71) and to fix the auditors
remuneration as per Section 111 of the
Companies Act 2006.
(Proviso to Section 60(2) of the Bank and
Financial Institutions Act 2006 (B.S.
2063), present Auditor M/s CSC & Co. will
be eligible for re-appointment)
SPECIAL RESOLUTION
1. To ratify the amendment of Banks
Memorandum of Association and to
authorize Board of Directors for needful
adjustment in case of changes made by the
Nepal Rastra Bank in the proposed
amendment.
2. To increase authorized capital of the Bank
to NRs.3,100,000,000 (in words rupees
three billion and hundred million).
3. To increase the issued and paid capital to
NRs.3,046,051,750 by issuing bonus
shares at the ratio of 4:1 (for every 4 share
to issue 1 share or 25% of each share) from
the profit of year that ended on July 15,
2013 and to approve the adjustment in paid
up capital, keeping intact the shareholding
ratio, due to adjustment of fraction share
into whole from the cash dividend as a
consequence of issuance of bonus shares in
such proportion.
All resolutions considered at 28th AGM held
on 17th October 2012 were ratified by the
shareholders in the meeting.

06
SHAREHOLDER ENQUIRIES
AND COMMUNICATION
COMMUNICATION
All information related and relevant to
shareholders that are necessary and
mandatory in accordance to law is
communicated via print media (national
daily) and electronically through Banks
official website www.nabilbank.com. The
detailed information of AGM including
agendas that will be discussed is notified
publicly through national daily 21 days
before the date of AGM. Similarly, interim
financial highlights are published within the
stipulated deadline of 30 days prescribed by
Securities Exchange 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.
179
ANNUAL REPORT 2012/13
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 certificate, pledge of shares, dividend
warrants/bonus shares declared and ratified
by the AGM, payment against dividend/ lost
warrant 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
180
Nabil Bank Limited
06
TAXATION ON DIVIDENDS
AND SHARES
TAXATION ON DIVIDENDS
(CASH AND BONUS DIVIDENDS)
Pursuant to Section 88(2) of the Income Tax
Act 2002, the tax on dividend 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
NRs.61,323 thousand from the resident
companies from financial year 2001-02 till
2012-13.
S.N. YEAR NRS.
1 FY 2001-02 (2058-59) 323,000
2 FY 2002-03 (2059-60) 418,000
3 FY 2003-04 (2060-61) 456,000
4 FY 2004-05 (2061-62) 476,853
5 FY 2005-06 (2062-63) 469,205
6 FY 2006-07 (2063-64) 720,323
7 FY 2007-08 (2064-65) 1,850,862
8 FY 2008-09 (2065-66) 2,409,200
9 FY 2009-10 (2066-67) 7,764,735
10 FY 2010-11 (2067-68) 10,526,931
11 FY 2011-12 (2068-69) 16,073,799
12 FY 2012-13 (2069-70) 19,834,571
Total 61,323,479
Capitalization of profits is deemed as
distribution under Section 53(1)(b) of the
Act and hence, issuance of bonus shares by
the Bank from the profits earned (excluding
dividend received) is subject to withholding
tax at the rate of 5% under Section 88(2).
CAPITAL GAINS ON
DISPOSAL OF SHARES
Pursuant to clause (a) of Section 95A(2) of
the Income Tax Act, 2002 (amended by
Finance Ordinance 2013), the gain on
disposal of shares listed in Securities Board
of Nepal computed as per Section 37 of the
Act is subject to withholding tax at the rate
of 5%, in case, the beneficiary of the gain 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 Securities Board of
Nepal and Nepal Stock Exchange for the
purpose of public trading and therefore the
gain on disposal of Banks shares are subject
to withholding tax in accordance to clause
(a) of Section 95A(2).
Gain or loss arising from disposal of shares
under Section 37 of the Act shall be the
amount that is determined by reducing the
amount incurred while acquiring the shares
with the amount that is received at the time
of its disposal. The amount of disposal in
case the Nabil Banks shares are sold
through stock exchange shall be the net
amount received from the buyer less
brokerage and other costs incurred during
the transaction. The costs incurred for the
shares by the way of an acquisition through
stock exchange shall be the amount paid to
the beneficiary plus all costs attributable to
the acquisition. Further, the costs incurred
for the shares by the way of transfer from the
deceased person shall be the market value
prevailing immediately before the death of
the transferor. The tax being withheld on the
gains arising from disposal of shares is an
advance tax and the tax credit is available at
the time of filing annual tax returns.
07
NABIL
INVESTMENT
BANKING LIMITED
DIRECTORS REPORT For the Fiscal Year 2012/13

Respected Shareholders, EXPANSION IN FINANCIAL SYSTEM:

The number of BFIs and Insurance Companies as of July 15, 2013 are as follows:
On behalf of Nabil Investment Banking
Limited, I would like to welcome all the BFIs/Insurance Companies Mid July 2013 Mid July 2012
shareholders in the Fourth Annual General
Meeting (AGM) of the Company. Nabil Bank Commercial Banks 31 32
Limited with its mission to be the First Choice Development Banks 86 88
Provider of Complete Financial Solutions Finance Companies 59 70
incepted "Nabil Investment Banking Ltd. Microfinance Institutions 31 24
(Nabil Invest)" as a Subsidiary so as to develop
Co-operatives Licensed by NRB (for Limited Banking Services) 16 16
the company as Investment Banker of First
NGOs Licensed by NRB (for Microfinance activities) 31 36
Choice in the long run introducing innovative
products and services in the Nepalese capital Insurance Companies 25 25
market. Source: Websites of NRB and Insurance Board

I will be presenting achievements of the
Company during the review FY 2012/13,
policies and strategies adopted by and future
plans of the Company in this AGM which shall
be passed after your approval. In this context,
I would like to seek your consent for
presenting audited financials of the company
for the review period including 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:
Deposit mobilization and credit extension of
banks and financial institutions licensed by
Nepal Rastra Bank as of mid July 2013 stood
at NPR 1252 billion 890 million and NPR
987 billion 770 million respectively compared
to NPR 1076 billion 620 million and NPR
807 billion 570 million as of mid July 2012
having increased by 17.4% towards deposit
mobilization and 18.6% towards credit
extension in FY 2012/13. The growth rate of
deposit mobilization being lesser than the
growth rate of loans & advances has resulted
lower liquidity in the banking industry.
SECURITIES MARKET:
The main glimpses of securities market of the
country during FY 2012/13 are as follows:
a. FY 2012/13 witnessed remarkable
improvements in the securities market. By the
mid of July 2013 NEPSE index reached a level
of 518.3 points with an increase of 33 percent
over the previous year same period where it
was 389.7 points.
b. During the review period securities
transactions volume recorded a significant
growth of 114.5 percent as compared to
previous year. During FY 2012/13 NEPSE
posted a transaction volume of NPR 22.05
 182
Nabil Bank Limited
billion comprising of 81.6 million units of
shares while it was NPR 10.26 billion of 41.9
million shares in the previous year.
c. The number of listed companies with
NEPSE reached 230 by the mid July 2013
whereas it was 216 in mid July 2012.
d. In the review period, the market
capitalization of listed companies increased by
39.7 percent to be NPR 514 billion as
compared to market capitalization of NPR 368
billion in the previous fiscal year.
e. Banks and Financial Institutions including
Insurance Companies constitute 71.7%,
Manufacturing and Processing Companies 3%,
Hotels 1.7%, Trading Organizations 0.2%,
Hydropower Companies 6% and Others
17.4% share in the total market capitalization
of listed companies. The trend of dominating
the capital market by BFIs continues this year
as in the past.
f. The total value of listed securities as of July
15, 2013 increased by 14% as compared to
previous year and reached to NPR 126.06
billion.
g. During the review period, 14 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.
h. During the review period, SEBON approved
issuance of common shares (IPO) of 23
corporate bodies comprising NPR 3.11 billion,
right issues of 5 companies comprising NPR
3.93 billion and debenture issue of 7
commercial banks consisting of NPR 3.55
billion.
In the previous year, SEBON approved
issuance of common shares (IPO) of 15
corporate bodies comprising NPR 4.05 billion,
right issues of 7 companies comprising NPR
0.45 billion and debenture issue of 4
commercial banks consisting of NPR 1.50
billion.
SUMMARY OF FINANCIAL
INFORMATION OF FY 2012/13
The major activities of the company and its
financial highlights during FY 2012/13 have
been presented below:
A) MAJOR ACTIVITIES
Issue Management: During the review period,
the Company, as joint issue manager,
successfully managed IPOs of three
commercial banks and debenture issues of two
commercial banks. The company has been
providing debenture trusteeship services to five
commercial banks.
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 to its
wide clientele in a professional manner.
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.
During the review period, the Company as the
Fund Manager successfully launched Nabil
Balanced Fund I under the Nabil Mutual Fund,
Due to the overwhelming response from the
market, the issue was highly oversubscribed
and hence 75 million units of NPR 10 each
were allotted against the issue size of 60
million units of NPR 10 each as per the
prevailing Mutual Fund Regulation.
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.
Depository Participant and Registrar to
Shares: The Company has obtained the DP
license from SEBON and took the membership
of CDS and Clearing Limited in order to
provide DP services to its clientele. The
required logistics and infrastructure have also
been prepared. The company started rendering
RTS services to Nabil Bank Limited and
Swabalamban Laghubitta Bikas Bank Limited
from its Anamnagar premises in the review
period.
Corporate Advisory Service: The Company has
already prepared the Product Papers and SIM
to launch Corporate Advisory Services like
Loan Syndication and Merger & Acquisition
Advisory Services. The Company is exploring
business opportunities in these new areas and
reached a few institutions in order to provide
such services. In addition, the Company also
provided advisory services to few institutions
in the form of Investment Advisory and
Business Valuation Reports during the review
period.
During FY 2012/13, the company has earned
about NPR 7.1 million from securities
business (including PMS), NPR 3.7 million
from mutual fund and remaining income
constitute the return from investment of its
share capital and service fees in lieu of various
administrative/operational supports provided to
its promoter Nabil Bank Limited. The company
expects to generate additional revenue from
DP and share registration services, loan
syndication and merger & acquisitions services
under corporate advisory services and from
second scheme under Nabil Mutual Fund
providing fund management and depository
services to it in the current fiscal year.
 183
ANNUAL REPORT 2012/13

B) FINANCIAL HIGHLIGHTS:

PARTICULARS NPR IN THOUSAND NPR IN THOUSAND GROWTH (%)

FY 2012/13 FY 2011/12

Share Capital 105,000 105,000 -

Total Assets 284,038 253,093 12.23
Total Income 51,695 28,522 81.25
Total Expenses 20,650 12,728 62.24
Operating Profit 31,045 15,794 96.56
Net Profit (After Employees Bonus and Tax) 21,167 10,769 96.55
Proposed Dividend 15,750 10,500 50.00
No. of Shares (in thousands) 1,050 1,050 -
Earnings Per Share (Rs.) 20.16 10.26 96.57
Return on Assets (Rs.) 16.39 9.13 79.54
Net worth per Share (after Dividend)(Rs.) 108.01 102.36 5.52

The amount to be refunded to the applicants
after allotment of the IPO amounting to NPR
100 million (approx.) has been placed in
various Bankers to the Issue (BTI) accounts.
The company attained a growth of approx.
12% in its total assets in the review period
2012/13 because of increased balance in the
BTI accounts and income generating activities
carried out by the company during the year.
The company witnessed an encouraging
growth of 96% in net profits in the review
period as compared to previous period.
Similarly, total income of the company has
increased by 81% whereas total expenses
have increased by 62% in the review period.
This shows that the overall transactions and
financial situation of the company remained
satisfactory during the review period. In the
previous year, the company distributed 10%
cash dividend (NPR 10.5 million) while this
year the company has proposed to distribute
15% cash dividend (NPR 15.75 million), an
increment of 50%.
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. I appreciate tremendous
contributions made by Mr. Sabin Joshi,
Director and Mr. Rewat Bahadur Karki,
Independent Professional Director during their
association (till the acceptance of resignation)
with the company. I extend my sincere thanks
to Mr. Sujan Kumar Kafle of M/s Sujan Kafle &
Associates, Chartered Accountants for
professionally completing the audit of the
company 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.

The additional details as required by section Thank you.

109(4) of prevailing Companies Act has been On behalf of the Board
presented in Annexure.
Anil Gyawali
Chairman
 184
Nabil Bank Limited
07
INFORMATION UNDER SECTION 109(4)
OF COMPANIES ACT, 2006
a) Business assessment of review fiscal year:
During the review period, the Company, as
joint issue manager, successfully managed
IPOs of three commercial banks and debenture
issues of two commercial banks. The company
has been providing debenture trusteeship
services to five commercial banks.
The company has already started rendering
full fledge PMS services with an objective of
establishing the company as Investment
Banking company in addition to Issue
Manager. The company has brought Nabil
Balanced Fund I under Nabil Mutual Fund into
operation in the review period. During the
review year, the company has made an action
plan of creating a separate unit for providing
Corporate Advisory Services in full fledge from
the coming year and has performed a few
Business Valuation jobs.
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. However, few impacts can
be observed sometimes.
If the political situations of the country move
towards positive direction, Nepal can be
benefitted a lot from the attractive economic
growth of its neighboring countries China and
India which ultimately result positive impact
on the business of the company.
The new investors have not attracted towards
the capital market of Nepal as the Nepalese
capital market has not become lucrative for a
long period. Because of this, there were less
participation in the IPO and Rights issued by
majority of the companies except commercial
banks and microfinance development banks.
Therefore, while providing underwriting
services by the company, the overall financial
conditions of Issuer Company need to be
correctly evaluated. 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. It can be expected that
these new services will have a positive impact
to boost the market in the days to come.
Similarly, there will be positive impact on the
market if elections for Constituent Assembly
completes within the deadline in a fearless
environment.
c) Current years achievement until the date
of preparation of Report from the Board of
Directors view on future activities of the
company:
The company has already signed an
agreement as Issue Manager for IPO of a
commercial bank and Debenture Issue
(through public and private placement) of
another commercial bank till the date of this
report.
The company has successfully launched Nabil
Balanced Fund I under Nabil Mutual Fund and
serving as Fund Manager and Depository to
the Scheme. Similarly, the Company has
obtained the DP license from SEBON and took
the membership of CDS and Clearing Limited
in order to provide DP services.
The company shall improvise the above
services; the existing services rendered by the
company and adopt the services rendered by
the regional investment bankers as per need in
the context of Nepalese market so as to cater
high level services to its customers. For this,
the company will make necessary coordination
with the regulators.
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 to 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 General
Secretary. 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. Anil Gyawali - Chairman
Mr. Krishna Dutta Bhattarai - Director
Mr. Kapil Adhikari - Director
Mr. Krishna Kumar Pradhan -
Independent Professional Director
Mr. Mahesh Kumar Karki -
Independent Professional Director
Mr. Pravin Raman Parajuli -
Chief Executive Officer/Company Secretary
During the review period, Mr. Sabin Joshi,
Director and Mr. Rewat Bahadur Karki,
Independent Professional Director tendered
their resignation due to business and personal
reasons respectively. Both the resignations
were approved the Board.
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 Accountants
appointed unanimously by the third AGM of
the company. 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.
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.
k) Information provided on personal interest
of Board of Directors and their close relatives
regarding contract or agreement done with
the 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) of services rendered
for maintaining effective internal control
system and enhancing service quality.
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 NPR 15,069,450.
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 NPR 10,000 to the chairman and directors
in each meeting of the Board. Accordingly, the
company has paid NRs. 100,000 to its
Professional Independent Directors as meeting
fee during the review period. However, the
Board of Directors representing the Bank & CG
Finco Pvt. have decided not to accept any
meeting fees until otherwise decided at a later
stage. The Company does not provide any other
financial benefits to its Board of Directors
except meeting fee to the Professional
Independent Director.
The employees of the company are being
provided remuneration, allowances and
185
ANNUAL REPORT 2012/13
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 total
employee benefits paid to Chief Executive
Officer of the company in the review period
amounts to NPR 1.91 Million.
p) Income Tax:
The company has provided NPR 7,055,828
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
NPR 28,223,313 i.e. NPR 7,257,694 and
adjusting deferred tax of NPR 201,866
thereon.
q) Location of office:
The company currently has its office at
Chabahil, 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.
 186
Nabil Bank Limited

Nabil Investment Banking Limited

Chabahil, Kathmandu, Nepal

Balance Sheet
as at 15 July 2013 (31 Ashadh 2070)

CAPITAL & LIABILITIES SCHEDULE THIS YEAR Rs. PREVIOUS YEAR Rs.

Share Capital 1 105,000,000 105,000,000

Reserves and Surplus 2 24,165,108 12,975,223
Other Liabilities and Provisions 3 154,873,861 135,118,050
Proposed Dividend - -
Total 284,038,969 253,093,273

ASSETS SCHEDULE THIS YEAR Rs. PREVIOUS YEAR Rs.

Cash and Bank Balance 4 110,535,802 128,243,001

Fixed Assets 5 6,139,204. 6,952,017
Investments 6 98,382,600 107,000,000
Other Assets 7 68,981,363 10,898,255
Total 284,038,969 253,093,273

Significant Accounting Policies Schedule 12

Notes to Accounts Schedule 13

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

Suman Kumar Bohara Pravin Raman Parajuli Anil Gyawali As per our report of even date.
Head-Accounts Chief Executive Officer Chairman

Krishna Dutta Bhattarai Kapil Adhikari Krishna Kumar Pradhan Mahesh Kumar Karki Sujan Kumar Kafle, FCA
Director Director Professional Independent Professional Independent For and on behalf of sujan
Director Director kafle & Associates Chartered
Accountants

DATE: September 15, 2013

PLACE: Chabahil, Kathmandu
 187
ANNUAL REPORT 2012/13

Income Statement
(For the period from 16July 2012 to 15 July 2013)

PARTICULARS SCHEDULE THIS YEAR Rs. PREVIOUS YEAR Rs.

Income
Commission Income 8 12,424,269 3,601,182
Interest Income 22,454,763 14,632,926
Other Income 9 16,816,641 10,287,962
Total Income 51,695,673 28,522,070
Expenses
Personnel Expenses 10 5,603,220 4,296,050
General Operating Expenses 11 9,466,230 6,646,989
Depreciation Charge 5 1,992,333 1,714,052
Interest Expenses 3,588,246 71,014
Total Expenses 20,650,029 12,728,105
Operating Profit 31,045,644 15,793,965
Profit from Regular Activities 31,045,644 15,793,965
Provision for Staff Bonus 2,822,331 1,435,815
Profit Before Income tax 28,223,313 14,358,150
Provision for Income Tax 7,055,828 3,589,538
Current Tax 7,257,694 3,602,948
Deferred Tax (201,866) (13,410)
Net Profit/(Loss) for the year 21,167,485 10,768,612

Schedules 8 to 11 form integral part of the Income Statement.

Suman Kumar Bohara Pravin Raman Parajuli Anil Gyawali As per our report of even date.
Head-Accounts Chief Executive Officer Chairman

Krishna Dutta Bhattarai Kapil Adhikari Krishna Kumar Pradhan Mahesh Kumar Karki Sujan Kumar Kafle, FCA
Director Director Professional Independent Professional Independent For and on behalf of sujan
Director Director kafle & Associates Chartered
Accountants

DATE: September 15, 2013

PLACE: Chabahil, Kathmandu
 188
Nabil Bank Limited

Profit and Loss Appropriation Account

Fiscal Year 2012/13 (2069/2070)

PARTICULARS SCHEDULE THIS YEAR Rs. PREVIOUS YEAR Rs.

Income
Accumulated Profit up to Last Year (Restated Balance) 12,975,223 7,456,611
Current Year's Profit 21,167,485 10,768,612
Deferred Tax Reserve - -
Total 34,142,708 18,225,223
Expense
Accumulated Loss up to Last Year - -
Current Year's Loss - -
Deferred Tax Reserve 154,845 -
Dividend Payment 10,500,000 5,250,000
Total 10,654,845 5,250,000
Retained Earnings 23,487,863 12,975,223

Suman Kumar Bohara Pravin Raman Parajuli Anil Gyawali As per our report of even date.
Head-Accounts Chief Executive Officer Chairman

Krishna Dutta Bhattarai Kapil Adhikari Krishna Kumar Pradhan Mahesh Kumar Karki Sujan Kumar Kafle, FCA
Director Director Professional Independent Professional Independent For and on behalf of sujan
Director Director kafle & Associates Chartered
Accountants

DATE: September 15, 2013

PLACE: Chabahil, Kathmandu
 189
ANNUAL REPORT 2012/13

Cash Flow Statement

(For the period from 16July 2012 to 15 July 2013)

PARTICULARS THIS YEAR Rs. PREVIOUS YEAR Rs.

(a) Cash Flow from Operating Activities (26,999,123) 129,732,575

1. Cash Received from Income 39,864,029 25,001,317
1.1 Income from Merchant Banking Operation 12,424,269 3,601,182
1.2 Interest Income 10,623,119 11,112,173
1.2 Other Income 16,816,641 10,287,962
2. Cash Payment (26,423,317) (14,690,627)
2.1 Personnel Expenses (7,039,035) (4,296,050)
2.2 Office Operating Expenses (9,466,230) (6,646,989)
2.3 Interest Expenses (3,588,246) (71,014)
2.4 Income Tax Paid (6,329,806) (3,676,574)
Cash Flow before changes in Working Capital 13,440,712 10,310,690
(Increase)/Decrease in Current Assets (58,856,151) (5,236,448)
1. (Increase)/Decrease in Available for Sale and Trading Investments - -
2. (Increase)/Decrease in Other Assets (58,856,151) (5,236,448)
Increase/(Decrease) in Current Liabilities 18,416,316 124,658,333
3. Increase/(Decrease) in Borrowings (2,000,000) 24,000,000
4. Increase/(Decrease) in Other Liabilities 20,416,316 100,658,333
(b) Cash Flow from Investment Activities 19,791,924 (22,576,168)
1. (Increase)/Decrease in HTM Investment 9,139,800 (23,600,000)
2. (Increase)/Decrease in Fixed Assets (1,179,520) (2,496,921)
3. Interest income from Long term Investment 11,831,644 3,520,753
(c) Cash Flow from Financing Activities (10,500,000) (5,250,000)
1. Increase/(Decrease) in Share Capital - -
2. Payment of Dividend (10,500,000) (5,250,000)
(d) Income/(Loss) from change in exchange rate in Cash & Bank balance - -
(e) Current Year's Cash Flow from All Activities (17,707,199) 101,906,407
(f) Opening Cash and Bank Balance 128,243,001 26,336,594
(g) Closing Cash and Bank Balance 110,535,802 128,243,001

Suman Kumar Bohara Pravin Raman Parajuli Anil Gyawali As per our report of even date.
Head-Accounts Chief Executive Officer Chairman

Krishna Dutta Bhattarai Kapil Adhikari Krishna Kumar Pradhan Mahesh Kumar Karki Sujan Kumar Kafle, FCA
Director Director Professional Independent Professional Independent For and on behalf of sujan
Director Director kafle & Associates Chartered
Accountants

DATE: September 15, 2013

PLACE: Chabahil, Kathmandu
 190
Nabil Bank Limited

Statement of Changes in Equity

Fiscal Year 2012/13 (2069/70) Rs.

PARTICULARS SHARE RETAINED DEFERRED AVAILABLE TOTAL

CAPITAL EARNINGS TAX RESERVE FOR SALE RESERVE AMOUNT

Balance as on 16 July 2012 105,000,000 12,975,223 - 117,975,223

Changes in Accounting Policy - -
Share Capital Adjustment -
Changes in Tax Accounting Policy - -
Restated Balance 105,000,000 12,975,223 - 117,975,223
Net Gains and Losses not recognised in the Income Statement -
Net Profit for the period 21,167,485 21,167,485
Adjustments: -
Issuance of Share Capital - -
General Reserve Fund -
Proposed Stock Dividend -
Cash Dividend (10,500,000) (10,500,000)
Available for Sale Reserve 522,400 522,400
Dividend Equalization Fund - -
Deferred Tax Reserve (154,845) 154,845 -
Closing Balance 105,000,000 23,487,863 154,845 522,400 129,165,108

Share Capital Schedule 1

(As at 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

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 150,000,000 105,000,000
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 - -
 191
ANNUAL REPORT 2012/13

Share Ownership
PARTICULARS % THIS YEAR RS. % PREVIOUS YEAR RS.

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 100.00 105,000,000 100.00 105,000,000

Details of Shareholders Holding 0.5% Shares

S.N. PARTICULARS THIS YEAR

% Rs.

1 Nabil Bank Limited 74.29 78,000,000

2 CG Finco Pvt. Ltd. 25.71 27,000,000
3 General Public - -

Reserves & Surplus Schedule 2

(As at 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Deferred Tax Reserve 154,845 -

2. Available for Sale Reserve 522,400 -
3. Retained Earnings 23,487,863 12,975,223
Total 24,165,108 12,975,223

Other Liabilities & Provisions Schedule 3

(As at 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Accounts Payable 119,287,004 109,207,831

2. Provision for Audit Expense - 45,000
3. Provision for Expenses 323,708 64,900
4. Provision for Staff Bonus 2,822,331 1,435,815
5. Deferred Tax Liability - 47,021
6. Short Term Loan 22,000,000 24,000,000
7. Others 10,440,818 317,483
Total 154,873,861 135,118,050
 192
Nabil Bank Limited

Cash and Bank Balance Schedule 4

(As at 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

Cash Balance - 10,000

Petty Cash Fund - 10,000
Current Account (4,715,934) 10,000
1. Nepal Rastra Bank - -
2. Nabil Bank Limited (7,208,372) -
3. Everest Bank Limited 35,392 10,000
4. Sunrise Bank Limited 143,808 -
5. NIDC Development Bank Limited 617,987 -
6. Nabil Bank Limited - RTS 191,316 -
7. Civil Bank Limited 472,052 -
8. Commerz & Trust Bank Nepal Limited 301,922 -
9. Grand Bank Nepal Limited (Current A/c - PMS) 182,864 -
10. Janata Bank Nepal Limited (Current A/c - PMS) 20,310 -
11. Global IME Bank Limited (Current A/c - PMS) 114,238 -
12. Citizens Bank International Limited (Current A/c - PMS) 206,194 -
13. Clean Energy Development Bank Limited 206,355 -
Call Account 7,787,172 18,007,439
1. Nabil Bank Limited 4,806,383 4,459,769
2. Pacific Development Bank Limited 36,881 34,863
3. Sanima Bank Limited 96,513 13,512,807
4. Nabil Bank Limited -RTS (SWBBL) 2,847,395 -
Bankers to the Issue Account 107,464,564 110,215,562
1. Nabil Bank Limited 86,497,436 105,559,276
2. Mega Bank Nepal Limited 851,380 73,270
3. NMB Bank Limited 583,365 909,001
4. Commerz & Trust Bank Nepal Limited 31,986 277,527
5. Civil Bank Limited 5,000 5,000
6. Sunrise Bank Limited 1,172,332 84,378
7. Century Commercial Bank Limited 84,572 19,580
8. Janata Bank Nepal Limited 7,000 7,000
9. Nepal SBI Bank Limited 13,101 534,760
10. Siddhartha Bank Limited - 70,795
11. Global IME Bank Limited - 2,674,975
12. Laxmi Bank Limited 20,056 -
13. Bank of Asia Nepal Limited 1,672,632 -
14. Nabil Bank Limited - MF 7,874,375 -
15. Nabil Bank Limited (Mega Bank Limited - IPO) 696,959 -
16. Kumari Bank Limited 306,849 -
17. Machhapuchhre Bank Limited 163,031 -
18. Nepal Investment Bank Limited 7,484,490 -
Total 110,535,802 128,243,001
 Schedule 5
Fixed Assets
(As at 15 July 2013)

PARTICULARS ASSETS THIS YEAR RS. PREVIOUS YEAR RS.

BUILDING VEHICLES FURNITURE COMPUTER & SOFTWARE OTHERS TOTAL

OFFICE EQUIPMENT

1. Cost Price
a. Previous Year Balance - 3,253,127 653,415 2,779,725 822,407 - 7,508,674 5,011,753
b. Addition during the Year - - 35,349 502,798 474,600 - 1,012,747 2,496,921
c. Revaluation/Write Back This Year - - - - - - - -
d. Sold during the Year - - - - - - - -
e. Write off during the Year - - - - - - - -
Total Cost (a+b+c+d+e) - 3,253,127 688,764 3,282,523 1,297,007 - 8,521,421 7,508,674
2. Depreciation
a. Up to Previous Year - 469,850 236,126 1,334,214 166,816 - 2,207,006 984,539
b. For This Year - 556,655 111,687 622,058 182,561 - 1,472,961 1,222,467
c. Revaluation/Write Back This Year - - - - - - - -
d. Depreciation on Sold Assets - - - - - - - -
e. Depreciation on Writen Off Assets - - - - - - - -
Total Depreciation - 1,026,505 347,813 1,956,272 349,377 - 3,679,967 2,207,006
3. Book Value (WDV*) (1-2) - 2,226,622 340,951 1,326,251 947,630 - 4,841,454 5,301,668
4. Land - - - - - - - -
5. Pending Capitalization - - - - - - - -
6. Leasehold Assets - - - - - 1,297,750 1,297,750 1,650,349
Total (3+4+5+6) - 2,226,622 340,951 1,326,251 947,630 1,297,750 6,139,204 6,952,017
ANNUAL REPORT 2012/13
193
 194
Nabil Bank Limited

Investments Schedule 6

(As at 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

Fixed Deposits 12,875,000 8,000,000

1. Nabil Bank Limited 8,000,000 8,000,000
2. NIDC Development Bank Limited 4,875,000 -
Bonds & Debentures 85,507,600 99,000,000
1. 12.5% Nepal SBI Bank Limited Debenture 60,000,000 60,000,000
2. 11% Siddhartha Bank Limited Debenture 15,000,000 15,000,000
3. 10% Global Bank Limited Debenture - 24,000,000
4. 8% Laxmi Bank Limited Debenture - -
5. Siddhartha Mutual Fund 552,000 -
6. Commerz & Trust Bank Nepal Limited- IPO 1,646,400 -
7. Nabil Balanced Fund I (Seed Capital) 7,500,000 -
8. NLG Insurance Company Limited - IPO 78,300 -
9. Mega Bank Nepal Limited - IPO 730,900 -
Total 98,382,600 107,000,000

Other Assets Schedule 7

(As at 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Deferred Tax Assets 154,845 -

2. Account Receivables 30,485,692 6,330,282
3. Advance Tax (Net of Tax Liability) 3,599,013 4,526,901
4. Deposit for Telephone 112,000 12,000
5. Advance Salary - -
6. Others 34,629,813 29,072
Total 68,981,363 10,898,255

Commission Income Schedule 8

(For the period from 16July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Issue Management Commission 6,853,731 2,133,809

2. Underwriting 1,477,326 210,000
3. Registrar to Issue 633,878 -
4. Portfolio Management Services 3,459,334 1,257,373
Total 12,424,269 3,601,182
 195
ANNUAL REPORT 2012/13

Other Income Schedule 9

(For the period from 16July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Operational Support/Advisory Fees 9,981,575 10,161,472

2. Fund Management Fees (NBF I) 2,777,982 -
3. Depository Fees (NBF I) 925,994 -
4. Business Advisory 511,200 -
5. Miscellaneous Income 2,619,890 126,490
Total 16,816,641 10,287,962

Personnel Expenses Schedule 10

(For the period from 16July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Salary 2,666,914 1,946,405

2. Allowances 1,997,282 1,280,588
3. Contribution to Provident Fund 222,411 171,726
4. Overtime - -
5. Training Expenses 55,000 156,240
6. Uniform Expenses - -
7. Dashain Expenses 314,128 275,871
8. Staff Insurance Premium 106,247 75,916
9. Contract Staff Expenses 8,000 150,281
10. Leave Encashment 233,238 239,023
Total 5,603,220 4,296,050
 196
Nabil Bank Limited

General Operating Expenses Schedule 11

(For the period from 16July 2012 to 15 July 2013)

PARTICULARS THIS YEAR RS. PREVIOUS YEAR RS.

1. Supplies and Stationeries 226,245 114,551

2. Communication Expenses 167,267 109,597
3. Expenses relating to Audit
a. Audit Fees 50,000 45,000
b. Other Expenses 2,558 1,610
4. Repairs & Maintenance 502,705 179,485
5. Water 63,547 47,133
6. Electricity 205,162 131,844
7. Janitorial 56,737 17,373
8. Advertisement Expenses 256,306 449,335
9. Insurance - Fire & Others 28,517 57,717
10. Board Meeting Fees 100,000 60,000
11. Professional Services - Others 645,063 720,060
12. Technical Management Service Fees 3,873,100 3,577,202
13. Fuel Expensses - Vehicle 354,508 188,293
14. Fuel Expensses - Generator 267,156 76,529
15. Newspapers/Periodicals/ Books 18,021 13,349
16. Tea, Coffee & Snacks 255,014 123,526
17. Membership Fees 70,000 20,000
18. Other Taxes & Fees (SEBON) 425,000 246,869
19. Vehicle Registration & Renewal 58,615 36,980
20. Contract Service Expenses 1,236,564 383,574
21. Miscellaneous Expenses 51,202 31,285
22. AGM Expenses 8,421 11,716
23.Travelling Expenses 144,475 2,780
24. AMC Charges 354,477 -
25. Bank Charges 45,570 1,181
Total 9,466,230 6,646,989

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 15th July, 2013 was approved for
issuance by the Board of Directors on
September 15, 2013
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 in a mutual fund,
depository participant services in a central
depository services, corporate advisory
services, provide allied support services etc.
ISSUE MANAGEMENT
During the review period, the Company, as
joint issue manager, entered into Agreements
with four commercial banks for managing
their IPOs. Of these, IPO of the following
three banks were successfully managed:
 Civil Bank Limited
 Commerz and Trust Bank Nepal Limited
 Mega Bank Nepal Limited
IPO of Century Commercial Bank Limited is
in the process of approval with SEBON and is
targeted to be completed by second quarter
of coming fiscal year.
Further, the Company was able to
successfully manage the debenture issues of
the following Commercial Banks:
 8% Laxmi Bank Limited Debentures
 8% Everest Bank Limited Debentures
The Company was awarded Debenture issue
management job of the following Commercial
Banks which was underway till the end of the
review period:
 8% Nepal Investment Bank Limited
Debentures
 8% Everest Bank Limited Debentures
UNDERWRITING
The Company entered into Agreements to
undertake the underwriting commitment of
the IPOs of the following Commercial Banks:
COMMERCIAL BANKS
Civil Bank Limited
Commerz and Trust Bank Nepal Ltd.
Mega Bank Nepal Limited
Century Commercial Bank Limited
197
ANNUAL REPORT 2012/13
Schedule 12
All the above issues were oversubscribed.
Hence, the Company did not incur any
financial liability towards its underwriting
commitment. However, the IPO of Century
Commercial Bank is yet to hit the market.
REGISTRAR TO SHARES (RTS) &
DEPOSITORY PARTICIPANT (DP) SERVICES:
The Company started rendering RTS from its
Anamnagar premises in the review period. In
F.Y. 2069-70, the Company entered into
Agreements and started rendering RTS
services to the following Companies:
 Nabil BanK Limited
 Swabalamban Laghubitta Bikas Bank
Limited
The Company also obtained the DP license
from SEBON and took the membership of
CDS and Clearing Limited in order to provide
DP services to its clientele. The required
logistics and infrastructure have been
prepared at Anamnagar premises of the
Company to render the said services and we
target to render full fledged services in
coming FY once CDSC renders its full scale of
operations.
UNDERWRITING AMOUNT (RS.)
66,666,667 (666,667 shares of Rs.100 each)
94,000,000 (940,000 shares of Rs.100 each)
90,000,000 (900,000 shares of Rs.100 each)
62,500,000 (625,000 shares of Rs.100 each)
 198
Nabil Bank Limited
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.
The Company provides the following services
to the investors under PMS:
 Discretionary Portfolio Management Services
 Non Discretionary
Portfolio Management Services
 Advisory Services
 Administrative Services
 Customized Portfolio Management Services
The size of the total Assets under Management
(AuM) has reached NRs. 616,595,480 at the
end of the review period. Out of the total size,
NRs 574,876,129 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
render Fund Management services to the
schemes of Nabil Mutual Fund. During the
review period, the Company as the Fund
Manager successfully launched Nabil
Balanced Fund I under the Nabil Mutual
Fund, Due to the overwhelming response
from the market, the issue was highly
oversubscribed and hence 75 million units of
NPR 10 each were allotted against the issue
size of 60 million units of NPR 10 each as
per the prevailing Mutual Fund Regulation.
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.
CORPORATE ADVISORY SERVICES
The Company has already prepared the
Product Papers and SIM to launch Corporate
Advisory Services like Loan Syndication and
Merger & Acquisition Advisory Services. The
Company is exploring business opportunities
in these new areas and reached a few
institutions in order to provide such services.
The process is positively moving ahead and
probably would materialize in the coming FY.
In addition, the Company also provided
advisory services to few institutions in the
form of Investment Advisory and Business
Valuation Reports.
OTHER SUPPORT SERVICES
The Company 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 Board of Directors of the Company is
responsible for the preparation of financial
statements. The Board of Directors
acknowledges this responsibility 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;
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.
8. 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.
 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.
9. 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.
10. 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 sell 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.
199
ANNUAL REPORT 2012/13
11. 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 ASSETSDEPRECIATION 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 after
(after or previous) 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.
12. 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.
 200
Nabil Bank Limited

13. STATIONERY STOCK
Stationery purchased are charged to revenue
at the time of consumption and valued at
average cost basis.
14. 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 D. The equivalent amount of outstanding
on the timing differences between taxable Deferred Tax Assets is earmarked under
income and accounting income. Deferred Tax Reserve in order to make the
accounting policy uniform with the
C. Deferred tax assets are not recognised accounting policy of Nabil Bank Limited, the
unless there is a virtual/reasonable certainty parent Company.
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'.
 201
ANNUAL REPORT 2012/13

Notes to Accounts Schedule 13

1. PAID UP CAPITAL
The issued and paid up capital of the Company is NRs.150 Million and NRs. 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 NRs.105
Million, Nabil Bank Limited holds NRs.78 Million while the balance of NRs.27 Million is held by
CG Finco Pvt. Ltd.

2. INCOME TAX AND DEFERRED TAX

The tax liability of the Company for the review period is NRs. 7,257,694.25, detailed as under:

PARTICULARS CURRENT YEAR

Accounting Net Profit Before Tax 28,223,312

Tax Rate 25%
Tax on Accounting Profit 7,055,828
Deferred Tax Income 201,866
Current Tax 7,257,694

Deferred tax income of NRs. 201,866 has been recognised in the income statement this year on the
taxable temporary difference arising due to charge of depreciation and on creating provision for
Leave Encashment as shown hereunder:

Deferred Tax of Previous Year

ITEMS CARRYING AMOUNT TAX BASE TAXABLE DEDUCTIBLE DEFERRED TAX

TEMPORARY TEMPORARY LIABILITY /
DIFFERENCES DIFFERENCES (ASSETS)

Fixed Assets 6,952,017 6,622,044 329,973 82,493

Provision for
Leave Encashment 141,889 - - (141,889) (35,472)
Total 329,973 (141,888) 47,021

Calculation of Deferred Tax -This Year

ITEMS CARRYING AMOUNT TAX BASE TAXABLE DEDUCTIBLE DEFERRED TAX

TEMPORARY TEMPORARY LIABILITY /
DIFFERENCES DIFFERENCES (ASSETS)

Fixed Assets 6,139,204 6,434,875 (295,671) (73,918)

Provision for
Leave Encashment 323,708 - (323,708) (80,927)
Total (619,379) - (154,845)

Deferred Tax Income Recognised in the review period is Rs. 201,866.00

202
Nabil Bank Limited

3. RELATED PARTIES DISCLOSURES

A. THE COMPANY 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.2069/70:

RELATED PARTY TRANSACTIONS AMOUNT

Nabil Bank Limited
Nabil Bank Limited
Nabil Bank Limited
Nabil Bank Limited
Nabil Bank Limited
Nabil Bank Limited
Balance in Call Account Closing Balance NRs. 110,542,740.01
Balance in Fixed Deposit Closing Balance NRs. 8,000,000
Interest Income on Call &
Fixed Deposit Accounts NRs. 3,472,174.84
Proceeds realised for rendering
operational support assistance
for the Bank NRs.9,981,575.02
Service Level Agreement
(SLA) Fees paid NRs.5,00,000
Technical Management Service
Fee paid NRs.3,873,099.89

B. KEY MANAGEMENT PERSONNEL

Key Management Personnel of Nabil Invest includes
the Board of Directors and the Chief Executive Officer:
Mr. Anil Gyawali - Chairman
Mr. Krishna Dutta Bhattarai - Director
Mr. Kapil Adhikari - Director
Mr. Krishna Kumar Pradhan - Independent Professional Director
Mr. Mahesh Kumar Karki - Independent Professional Director
Mr. Pravin Raman Parajuli - Chief Executive Officer/Company Secretary

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 NRs.1.91 Million.

D. TRANSACTION WITH KEY MANAGEMENT PERSONNEL OF THE BANK

The Board of Directors representing the Bank & CG.Finco Pvt. have decided not to accept any
meeting fees until otherwise decided at a later stage. However, this decision does not apply to the
Professional Independent Directors. The Company has paid NRs.100,000 to its Professional
Independent Directors as meeting fee during the review period. The Company does not provide any
other financial benefits to its Board of Directors except meeting fee to the Professional Independent
Director.

4. USAGE OF NABIL BANKS
INFRASTRUCTURE
a.The Company has entered into Service Level Agreement
(SLA) with Nabil Bank under which the Company receives
services of the Bank in areas like Administration, Operations,
Accounts, Finance & Planning, Information Technology,
Clearing & Settlement, Human Resources, Legal, Treasury etc.
at an annual fees of NRs. 5,00,000.
b.The Company has been using the premises of Nabil Bank at
Chabahil and Anamnagar. The Company has reimbursed
NRs.1,127,388 i.e. the rental cost of the premises used by
the Company as per the provisions of Management Service
Agreement (MSA), entered between Nabil Bank & the
Company, to the Bank on actual cost basis.
c.The Company has been receiving services from two staffs
deputed by the Bank including the CEO of the Company.
During the year, the Company has reimbursed
NRs.2,745,712 to the Bank as fees paid on actual cost basis
for the deputed staffs as per the provisions of Management
Service Agreement (MSA) entered between Nabil Bank & the
Company.
203
ANNUAL REPORT 2012/13
5. BORROWING
The Company has borrowed NRs. 22 Million against the
pledge of "12.5% Nepal SBI Debenture 2078" worth NRs. 60
Million. Further, the Company has obtained an Overdraft
Facility of NPR 7.6 Million from Nabil Bank Limited against
the pledge of banks own FD receipt worth NPR 8 Million.
Out of the approved limit, the actual utilization as on Ashadh
End 2070 (15 July, 2013) stands to be NPR 7.21 Million.
6. INVESTMENTS
The investments of Company constitute investments 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.
204
Nabil Bank Limited

The details of investments of the Company as on Balance Sheet date is as follows;

PARTICULARS COST PRICE, NRS. MARKET VALUE, NRS MARKET PRICE AS

ON ASAR END 2070, NRS.

Held to Maturity Investments

Fixed Deposits 12,875,000 12,875,000
1. Nabil Bank Limited 8,000,000 8,000,000
2. NIDC Development Bank Limited 4,875,000 4,875,000

Bonds/ Debentures 75,000,000 75,000,000

1. 12.5% Nepal SBI Bank Limited
Debenture (60,000 Units
@ Rs. 1,000 each) 60,000,000 60,000,000
2. 11% Siddhartha Bank Limited
Debenture (15,000 Units
@ Rs. 1,000 each) 15,000,000 15,000,000
Mutual Fund Units 7,500,000 7,545,000
1. Nabil Balanced Fund I -Seed
Capital (750,000 units @ Rs. 10 each) 7,500,000 7,545,000
Total 95,375,000 95,375,000

Available for Sale Investments

Equity Shares and Mutual Fund Units 2,485,200 3,007,600
1. Siddhartha Mutual Fund
(50,000 units @ Rs.10 each) 500,000 552,000 Rs. 11.04
2. Commerz & Trust Bank Nepal Limited
- IPO (11,760 Units @ Rs. 100 each) 1,176,000 1,646,400 Rs. 140
3. NLG Insurance Company Ltd. - IPO
(783 Units @ Rs. 100 each and bonus
shares 157 Units - total 940 Units) 78,300 78,300 Not Listed
4. Mega Bank Nepal Limited IPO
(7,309 Units @ Rs. 100 each) 730,900 730,900 Not Listed
Total 2,485,200 3,007,600
Total Investments 97,860,200 98,382,600

7. INTEREST INCOME
The Company has earned total interest income of NRs. 22,454,763 which includes NRs.
13,269,397 earned from placement of subscription amount raised from public offers with Bankers
to the Issue and NRs. 13,269,397 received from Investment on Debentures and Bank Deposits.

8. PROPOSED DIVIDEND
The Board of Directors of the Company has decided to propose 15 percent of cash dividend for
approval in its forth coming Annual General Meeting.

9. PREVIOUS YEAR'S FIGURES HAVE BEEN REGROUPED/REARRANGED

WHEREVER NECESSARY.
 205
ANNUAL REPORT 2012/13

AWARDS

Mr. Anil Gyawali, Chief Executive Officer of Mr. Krishna Dutta Bhattarai, Chief
Nabil Bank Limited receiving the Peoples Finance Officer of Nabil Bank Limited
Excellence Award 2013 from Rt. Honorable receiving the prestigeous BPA Award
President Dr. Ram Baran Yadav 2012 from Honorable Finance Minister
Mr. Shankar Prasad Koirala

WINNER WINNER WINNER Highest Tax Payer Award

National Best Presented National Best Presented National Best Presented among banking and financial
Accounts Award, 2011 Accounts Award, 2010 Accounts Award, 2009 institution category for year
2010/11
 206
Nabil Bank Limited

NABIL BANK LTD. Nabil Center

HEAD OFFICE Beena Marga, Durbar Marga, Kathmandu, Nepal
Tel: 01-4221718, 01-4227181, Fax: 01-4226905
SWIFT: NARBNPKA
Email: info@nabilbank.com
OFFICE NETWORK www.nabilbank.com

1. KANTIPATH BRANCH 12. POKHARA BRANCH 25. DHANGADI BRANCH 38. DHULIKHEL BRANCH
Kantipath, Kathmandu Dipendra Sabha Griha, New Road, Pokhara, Main Road, Dhangadi, Kailali Dhulikhel, Kavre
Phone: 01-4239204, 01-4239205 Kaski Phone: 091-526681/85 Phone: 011-490730, 011-490731
Fax: 01-4239203 Phone: 061-525715, 061-532951 Fax: 091-526682 Fax: 011-490732
P.O. Box no.: 3729, Kathmandu Fax: 061-525203 P.O. Box no.: 3729, KTM
P.O. Box no.: 442, Pokhara 26. MAHENDRANAGAR BRANCH
2. TRIPURESHWOR BRANCH Mahendranagar, Kanchanpur 39. GORKHA BRANCH
UWTC Building, Tripureshwor, Kathmandu 13. BHAIRAHAWA BRANCH Phone: 099-525450, 099-525431 Gorkha, Gorkha
Phone: 01-4117014/15/16/17 Narayanpath, Bhairahawa, Rupandehi Fax: 099-525601 Phone: 064-421529
Fax: 01-4117018 Phone: 071-524041 P.O. Box no.: 16, Kanchanpur Fax: 064-421530
P.O. Box no.: 3729, KTM Fax: 071-524141
P.O. Box no.: 18, Butwal 27. NEW BANESHWOR BRANCH 40. BESHISAHAR BRANCH
3. NEW ROAD BRANCH New Baneshwor, Kathmandu Beshisahar, Lamjunj
New Road, Kathmandu 14. NEPALGUNJ BRANCH Phone: 01-4485212, 4492125 Phone: 066-520805, 066-520806
Phone: 01-4224592, 01-4224533, 01- Dhamboji, Nepalgunj, Banke Fax: 01-4490882 Fax: 066-520807
4225420 Phone: 081-524221 P.O. Box no.: 3729, KTM
Fax: 01-4224837 Fax: 081-524222 41. CHANDRAGADHI BRANCH
P.O. Box no.: 3729, KTM P.O. Box no.: 22, Nepalgunj 28. HALCHOWK BRANCH Chandragadhi, Jhapa
Halchowk, Kathmandu Phone: 023-457021, 023-457022
4. JORPATI BRANCH 15. LAKESIDE BRANCH Phone: 01-4033553/54 Fax: 023-457023
Jorpati, Kathmandu Lakeside, Pokhara, Kaski Fax: 01-4033552
Phone: 01-4917498, 01-4917569 Phone: 061-464268 P.O. Box no.: 3729, KTM 42. DHAPASI BRANCH
Fax: 01-4917343 Fax: 061-461969 Dhapasi, Kathmandu
P.O. Box no.: 3729, KTM P.O. Box no.: 442, Pokhara 29. THAMEL BRANCH Phone: 01-4384990, 01-4384991
Thamel, Kathmandu Fax: 01-4384855
5. BIRGUNJ BRANCH 16. DHARAN BRANCH Phone: 01-4212167, 01-4212606 P.O. Box no.: 3729, KTM
Aadarsha Nagar, Birgunj, Parsa Mahendrapath, Dharan, Sunsari Fax: 01-4238543
Phone: -051-521476, 051-521746, 051- Phone: 025-530130, 025-530621 P.O. Box no.: 3729, KTM 43. ANAMNAGAR BRANCH
530723 Fax: 025-530131 Anamnagar, Kathmandu
Fax: 051- 523156 P.O. Box no.: 208, Biratnagar 30. KAUSHALTAR BRANCH Phone: 01-4249884, 01-4245274
P.O. Box no.: 73, Birgunj Kaushaltar, Bhaktapur Fax: 977-1-4250339
17. MAHARAJGUNJ BRANCH Phone: 01-6635184, 01-6635460 P.O. Box no.: 3729, KTM
6. POWER HOUSE CHOWK BRANCH Maharajgunj, Kathmandu Fax: 01-6635199
Shreepur, Birgunj, Parsa Phone: 01-4720870/71, 01-4720875/77 P.O. Box no.: 3729, KTM 44. GWARKO BRANCH
Phone: 051-525449, 530216 Fax: 01-4720844 Gwarko, Kathmandu
Fax: 051-528680 P.O. Box no.: 3729, KTM 31. CHABAHIL BRANCH Phone: 01-5541590, 5554190
P.O. Box no.: 73, Birgunj Chabahil, Kathmandu Fax: 01-5538190
18. BIRTAMODE BRANCH Phone: 01-4464470, 4461895 P.O. Box no.: 3729, KTM
7. BIRATNAGAR BRANCH Hicola Road, Anarmani, Jhapa Fax: 01-4464469
Goshwara Road, Biratnagar, Morang Phone: 023-543727 P.O. Box no.: 3729, KTM 45. ATTERKHEL BRANCH
Phone: 021-526213, 021-522752, 021- Fax: 023-543400 Atterkhel, Kathmandu
525372, 021-526214 32. MAITIDEVI BRANCH Phone: 01-4912990, 4912991
Fax: 21-524800 19. DAMAK BRANCH Maitidevi, Kathmandu Fax: 01-4912992
P.O. Box no.: 208, Biratnagar Main Highway Road, Damak, Jhapa Phone: 01-4439488, 01-4443706 P.O. Box no.: 3729, KTM
Phone: 023- 585190/91 Fax: 01-4434045
8. LALITPUR BRANCH Fax: 023-585192 P.O. Box no.: 3729, KTM 46. SINAMANGAL BRANCH
Kupoundol, Kathmandu Sinamangal, Kathmandu
Phone: 01-5542891, 01-5520431, 01- 20. HETAUDA BRANCH 33. BALAJU BRANCH Phone: 01-4110852, 4110851
5532189 Bank Road, Hetauda, Makwanpur Balaju, Kathmandu Fax: 01-4110850
Fax: 01-5542890 Phone: 057-524667/689 Phone: 01-4388915, 01-4388916 P.O. Box no.: 3729, KTM
P.O. Box no.: 3729, KTM Fax: 057-524690 Fax: 01-4388918
P.O. Box no.: 3729, KTM 47. TEENDHARA BRANCH
9. ITAHARI BRANCH 21. NARAYANGARH BRANCH Teendhara, Kathmandu
Main Road, Itahari, Sunsari SahidChowk, Narayangarh, Chitwan 34. KULESHWOR BRANCH Phone: 01-4227181, 01-4221718
Phone: 025-580741, 01-581400 Phone: 056-523033, 056-532487 Kuleshwor, Kathmandu Fax: 01-4226905, 4241808
Fax: 025-581054 Fax: 056-523034 Phone: 01-4287576, 01-4287596 P.O. Box no.: 3729, KTM
P.O. Box no.: 208, Biratnagar Fax: 01-4287547
22. TULSIPUR BRANCH P.O. Box no.: 3729, KTM 48. JANAKPUR BRANCH
10. BUTWAL BRANCH Sitalpur Road, Tulsipur, Dang Dhanusa, JanakpurDham
Main Road, Butwal, Rupandehi Phone: 082-522673/74 35. SATDOBATO BRANCH Phone: 041-528706, 528709
Phone: -071-541059, 071-542274 Fax: 082-522672 Satdobato, Lalitpur Fax: 041-528708
Fax: 071-541210 Phone: 01-5550332
P.O. Box no.: 18, Butwal 23. GHORAHI BRANCH Fax: 01-5548766 49. EXTENSION COUNTER
Ganesh Hall Road, Ghorahi, Dang P.O. Box no.: 3729, KTM Kathmandu Metropolitan City Office
11. BHALWADI BRANCH Phone: 082-561685/86 Baghdurbar, Kathmandu
Bhalwadi, Rupandehi Fax: 082-561687 36. CHARIKOT BRANCH Phone: 01-4216070
Phone: 071-560357, 071-561357 Bhimeshwor, Charikot, Dolakha P.O.Box No.: 3729, KTM
Fax: 071-560957 24. BAGLUNG BRANCH Phone: 049-421882, 049-421883
P.O. Box no.: 18, Butwal Mahendrapath, Baglung, Baglung Fax: 049-421887 50. EXCHANGE COUNTER
Phone: 068-522193/94 Pokhara Airport, Pokhara
Fax: 068-522195 37. KHADBARI BRANCH
Khadbari, Sankhuwasabha
Phone: 029-560874/84/85
Fax: 029-560883
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Mahendranagar (1)

Dhangadi (1)

Baglung (1) Pokhara (2) Beshisahar (1)

Tulsipur (1)

Gorkha (1)
Nepalgunj (1)
Ghorahi (1)
Charikot (1)
Butwal (1) Narayanghdh (1) Kathmandu (17)
Khandbari (1)
Lalitpur (3) Dhulikhel (1)
Bhalwadi (1)
Bhaktapur (1)
Bhairahawa (1)
Hetauda (1)

Dharan (1)
Birtamod (1)
Birgunj (2)
Janakpur (1) Damak (1)
Itahari (1)
Chandragadi (1)

Biratnagar (1)

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ANNUAL REPORT 2012/13